Document:

exv10w1

 

EXHIBIT
10.1

PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS

BY AND BETWEEN

NEXUS EQUITY VI, LLC, a California limited liability company, and

LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation

(collectively, “Seller”)

and

SLOUGH ESTATES USA INC., a Delaware corporation

(“Buyer”)

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE 1 AGREEMENT OF PURCHASE AND SALE
	 	 	3	 
	1.1 Agreement for Purchase and Sale
	 	 	3	 
	1.2 Property
	 	 	3	 
	1.2.1 Improvements on the Land
	 	 	3	 
	1.2.2 Fixtures on the Land
	 	 	3	 
	1.2.3 Personal Property
	 	 	3	 
	1.3 Opening of Escrow
	 	 	3	 
	1.4 Payment of the Purchase Price
	 	 	3	 
	1.4.1 Buyer’s Initial Deposit
	 	 	3	 
	1.4.2 Buyer’s Additional Deposit
	 	 	4	 
	1.4.3 Applicability of Deposit
	 	 	4	 
	1.4.4 Disposition of Buyer’s Deposit Upon Termination of this Agreement
	 	 	4	 
	1.5 Balance of Purchase Price
	 	 	4	 
	1.6 Allocation of Purchase Price
	 	 	4	 
	 
	 	 	 	 
	ARTICLE 2 DUE DILIGENCE PERIOD
	 	 	5	 
	2.1 Due Diligence Period
	 	 	5	 
	2.2 Access Agreement
	 	 	5	 
	2.3 Preliminary Report
	 	 	6	 
	2.4 Supplemental Report
	 	 	6	 
	2.5 Property Documents
	 	 	7	 
	2.6 On-Site Inspections of the Property
	 	 	7	 
	 
	 	 	 	 
	ARTICLE 3 CONDITIONS PRECEDENT TO THE CLOSE OF ESCROW
	 	 	7	 
	3.1 Seller’s Conditions Precedent
	 	 	7	 
	3.1.1 Representations and Warranties
	 	 	7	 
	3.1.2 Covenants
	 	 	7	 
	3.1.3 Existing Financing
	 	 	7	 
	3.1.4 Lease
	 	 	8	 
	3.1.5 Agreement for Right to Lease
	 	 	8	 
	3.1.6 Improved Lot Title Policy
	 	 	8	 
	3.1.7 Lot 14 Title Policy
	 	 	8	 
	3.2 Buyer’s Conditions Precedent
	 	 	8	 
	3.2.1 Conveyance of Title
	 	 	8	 
	3.2.2 Seller’s Due Performance
	 	 	8	 
	3.2.3 Covenants
	 	 	8	 
	3.3 Failure of Conditions Precedent in Favor of Buyer
	 	 	8	 
	 
	 	 	 	 
	ARTICLE 4 COVENANTS AND AGREEMENTS
	 	 	9	 
	4.1 Delivery of Property Documents
	 	 	9	 
	4.2 Property Service Contracts
	 	 	9	 
	4.3 Reimbursement
	 	 	9	 

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	 	 	Page
	4.4 Natural Hazards Disclosures
	 	 	9	 
	4.5 Operations
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 5 AS-IS PURCHASE AND REPRESENTATIONS AND WARRANTIES
	 	 	10	 
	5.1 Survival of Disclaimers and Indemnity
	 	 	10	 
	5.2 Buyer’s Independent Investigations Regarding Property
	 	 	10	 
	5.3 Hazardous Materials
	 	 	10	 
	5.4 AS IS CONDITION
	 	 	11	 
	5.5 BUYER’S WAIVER AND RELEASE
	 	 	12	 
	5.6 LIMITATION OF LIABILITY
	 	 	14	 
	5.7 Post-Closing Indemnity by Buyer
	 	 	14	 
	5.8 Buyer’s Authority
	 	 	14	 
	5.9 Representations and Warranties of Seller
	 	 	15	 
	5.9.1 Seller’s Authority
	 	 	15	 
	5.9.2 No Litigation
	 	 	16	 
	5.9.3 Governmental Actions
	 	 	16	 
	5.9.4 Foreign Person or Entity
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 6 THE CLOSING
	 	 	16	 
	6.1 Closing Date
	 	 	16	 
	6.2 Deliveries to Escrow Agent
	 	 	16	 
	6.2.1 Buyer’s Deliveries
	 	 	16	 
	6.2.2 Seller’s Deliveries
	 	 	17	 
	6.3 Dating Documents
	 	 	18	 
	6.4 Close of Escrow
	 	 	18	 
	6.4.1 Funds and Instruments
	 	 	18	 
	6.4.2 Satisfaction of Conditions Precedent
	 	 	18	 
	6.5 Recordation
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 7 PRORATION, FEES AND COSTS
	 	 	19	 
	7.1 Prorations
	 	 	19	 
	7.1.1 Taxes and Assessments
	 	 	19	 
	7.1.2 Utilities and Other Expenses
	 	 	19	 
	7.1.3 Service Contracts and Other Expenses and Revenues
	 	 	19	 
	7.2 Actual Days of Month
	 	 	19	 
	7.3 Seller’s Fees and Costs
	 	 	19	 
	7.4 Buyer’s Fees and Costs
	 	 	19	 
	7.5 Other Fees and Costs
	 	 	20	 
	7.6 Final Closing Statement
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 8 DISTRIBUTION OF FUNDS AND DOCUMENTS
	 	 	20	 
	8.1 Recorded Documents
	 	 	20	 
	8.2 Other Documents
	 	 	20	 
	8.3 Payment of Funds at Closing
	 	 	20	 

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	 	 	Page
	ARTICLE 9 ASSIGNMENT BY BUYER
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 10 DEFAULT
	 	 	21	 
	10.1 Breach by Buyer
	 	 	21	 
	10.2 LIQUIDATED DAMAGES
	 	 	21	 
	10.3 BREACH BY SELLER
	 	 	22	 
	 
	 	 	 	 
	ARTICLE 11 CONDEMNATION
	 	 	23	 
	11.1 Eminent Domain
	 	 	23	 
	11.2 Condemnation
	 	 	23	 
	 
	 	 	 	 
	ARTICLE 12 DAMAGE AND DESTRUCTION
	 	 	24	 
	 
	 	 	 	 
	ARTICLE 13 GENERAL PROVISIONS
	 	 	24	 
	13.1 Construction of Agreement
	 	 	24	 
	13.2 Captions
	 	 	24	 
	13.3 Business Day
	 	 	24	 
	13.4 Governing Law
	 	 	24	 
	13.5 Judicial Reference
	 	 	24	 
	13.5.1 Participation by Parties
	 	 	25	 
	13.5.2 Venue
	 	 	25	 
	13.5.3 Referee
	 	 	25	 
	13.5.4 Commencement and Timing of Proceeding
	 	 	25	 
	13.5.5 Pre-hearing Conferences
	 	 	26	 
	13.5.6 Motions
	 	 	26	 
	13.5.7 Rules of Law
	 	 	26	 
	13.5.8 Record
	 	 	26	 
	13.5.9 Statement of Decision
	 	 	26	 
	13.5.10 Post-Hearing Motions
	 	 	26	 
	13.5.11 Appeals
	 	 	26	 
	13.5.12 Expenses
	 	 	26	 
	13.5.13 Severability
	 	 	26	 
	13.5.14 Statutes of Limitation
	 	 	26	 
	13.6 Time of the Essence
	 	 	27	 
	13.7 Successors and Assigns
	 	 	27	 
	13.8 Waiver
	 	 	27	 
	13.9 Attorney’s Fees
	 	 	27	 
	13.10 Severability
	 	 	28	 
	13.11 Gender and Number
	 	 	28	 
	13.12 No Real Estate Brokerage Commission
	 	 	28	 
	13.13 Entire Agreement
	 	 	28	 
	13.14 Notice and Payment
	 	 	28	 
	13.15 No Partnership or Joint Venture
	 	 	29	 
	13.16 Modification
	 	 	29	 
	13.17 Agreement Survives Close of Escrow
	 	 	29	 
	13.18 No Warranties
	 	 	29	 

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	 	 	Page
	13.19 Counterparts
	 	 	29	 
	13.20 Construction of Agreements
	 	 	29	 
	13.21 Duty of Confidentiality
	 	 	29	 
	13.22 Exhibits
	 	 	30	 
	13.23 Cooperation in Exchange
	 	 	30	 
	13.24 AGREEMENT WHEN SIGNED
	 	 	30	 

EXHIBITS

			
	Exhibit “A”
	 	Legal Description of Land
	 	 	 
	Exhibit “A-1”
	 	List of Property Documents
	 	 	 
	Exhibit “B”
	 	Bill of Sale
	 	 	 
	Exhibit “C”
	 	Intentionally Deleted
	 	 	 
	Exhibit “D”
	 	Assignment of Warranties and General Intangibles
	 	 	 
	Exhibit “E”
	 	Access Agreement
	 	 	 
	Exhibit “F”
	 	Deed
	 	 	 
	Exhibit “G”
	 	Lease
	 	 	 
	Exhibit “H”
	 	Agreement for Right to Lease

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PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS

     This PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS (“Agreement”) is made and effective as of
October 25, 2006 (“Effective Date”), by and between Seller and Buyer and constitutes (i) a contract
of purchase and sale between the parties and (ii) escrow instructions to Escrow Agent.

BASIC TERMS

     The following Basic Terms are applied under and governed by the particular Sections in this
Agreement addressing the matters below:

	 	 	 	 	 
	1.

	 	Seller:
	 	Nexus Equity VI, LLC, a California limited
liability company (“Nexus”), and Ligand
Pharmaceuticals Incorporated, a Delaware
corporation (“Ligand”) (Nexus and Ligand are
collectively “Seller”)
	 
	 	 	 	 
	2.

	 	Buyer:
	 	Slough Estates USA Inc., a Delaware corporation
	 
	 	 	 	 
	3.

	 	Property:
	 	All real property and improvements (including
buildings containing approximately 82,500
square feet) known as 10275 Science Center
Drive (“Improved Lot”), 10265 Science Center
Drive (“Lot 14”), and 10285 Science Center
Drive (“Lot 16”), as more fully described in
Section 1.2 hereof.
	 
	 	 	 	 
	4.

	 	Purchase Price:
	 	Forty-Seven Million Six Hundred Forty-Two

Thousand Five Hundred Eighty Dollars

($47,642,580)
	 
	 	 	 	 
	 

	 	     Initial Deposit:
	 	Five Hundred Thousand Dollars ($500,000)
	 
	 	 	 	 
	 

	 	     Additional Deposit:
	 	Five Hundred Thousand Dollars ($500,000)
	 
	 	 	 	 
	5.

	 	Due Diligence Period:
	 	Expires upon execution and delivery of this
Agreement by Buyer.
	 
	 	 	 	 
	6.

	 	Closing Date:
	 	November 9, 2006, subject to extension as set
forth in Section 6.1.
	 
	 	 	 	 
	7.

	 	Escrow Agent:
	 	Chicago Title Company
	 
	 	 	 	 
	8.

	 	Title Company:
	 	Chicago Title Company

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	9.

	 	Broker:
	 	Burnham Real Estate (Lynn LaChapelle, Robert
Prendergast, Brent Jacobs, Greg Visconti and
Brian Cooper) for Seller, and Burnham Real
Estate (Jed Stirncorb) for Buyer
	 
	 	 	 	 
	10.

	 	Addresses for Notices:	 	 
	 
	 	 	 	 
	 

	 	To Seller at its business office:
	 	Nexus Equity VI, LLC, and
	 

	 	 	 	Ligand Pharmaceuticals
	 

	 	 	 	10275 Science Center Drive
	 

	 	 	 	San Diego, CA 92121
	 

	 	 	 	Attn: Chief Financial Officer
	 

	 	 	 	Telephone No.: (858) 550-7500
	 

	 	 	 	Facsimile No.: (858) 550-7506
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Luce, Forward, Hamilton & Scripps LLP
	 

	 	 	 	600 West Broadway, Suite 2600
	 

	 	 	 	San Diego, CA 92101-3391
	 

	 	 	 	Attn: Robert D. Buell, Esq.
	 

	 	 	 	Telephone No.: (619) 699-2539
	 

	 	 	 	Facsimile No.: (619) 645-5337
	 
	 	 	 	 
	 

	 	To Buyer at its business office:
	 	Slough Estates USA Inc.
	 

	 	 	 	400 Oyster Point Boulevard, Suite 409
	 

	 	 	 	South San Francisco, CA 94080
	 

	 	 	 	Attn: Jonathan M. Bergschneider
	 

	 	 	 	Telephone No.: (650) 875-1002
	 

	 	 	 	Facsimile No.: (650) 875-1003
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Bell, Boyd & Lloyd
	 

	 	 	 	70 West Madison Street, Suite 3300
	 

	 	 	 	Chicago, Illinois 60602-4207
	 

	 	 	 	Attn: Andrew Andreasik, Esq.
	 

	 	 	 	Telephone No.: (312) 807-4385
	 

	 	 	 	Facsimile No.: (312) 827-8042
	 
	 	 	 	 
	 

	 	If to Escrow Agent to:
	 	Chicago Title Company
	 

	 	 	 	701 B Street, Suite 1700
	 

	 	 	 	San Diego, CA 92101
	 

	 	 	 	Attn: Renee Marshall
	 

	 	 	 	Telephone No.: (619) 744-4408
	 

	 	 	 	Facsimile No.: (619) 544-6229

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ARTICLE 1

AGREEMENT OF PURCHASE AND SALE

     1.1 Agreement for Purchase and Sale. In consideration of Buyer’s payment of the Purchase Price to
Seller and other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller agrees to sell the Property to Buyer and Buyer agrees to purchase the Property
from Seller on the terms and conditions set forth in this Agreement.

     1.2 Property. The Property to be conveyed by Seller pursuant to this Agreement consists of (a) one
(1) building containing approximately 82,500 square feet (the “Building”) and the land on which the
Building is situated, located at 10275 Science Center Drive, San Diego, California (“Improved
Lot”), and (b) two (2) adjacent parcels of land, one located at 10265 Science Center Drive, San
Diego, California (“Lot 14”), and one located at 10285 Science Center Drive, San Diego, California
(“Lot 16”). Lot 14 and Lot 16 are sometimes collectively referred to herein as the “Vacant Lots.”
The legal description of the Improved Lot and the Vacant Lots is more particularly described in
Exhibit “A” attached hereto (the “Land”). In addition to the Land, the Property to be conveyed
hereunder also includes the following:

          1.2.1 Improvements on the Land. The Building and other improvements currently located on the Land
(“Improvements”).

          1.2.2 Fixtures on the Land. All right, title and interest of Seller in and to any equipment,
machinery or other property which is affixed to the Improvements so as to constitute fixtures under
California law on the date of Closing (“Fixtures”), and with the Land, Improvements and Fixtures
collectively referred to in this Agreement as the “Real Property.”

          1.2.3 Personal Property. All right, title and interest of Seller, if any, in and to all tangible
personal property now existing and located upon the Real Property as of the date of Closing, if
any, to be conveyed pursuant to the Bill of Sale attached to this Agreement as Exhibit “B” (“Bill
of Sale”); Buyer and Seller agree that no service contracts in effect as of the date hereof or
executed subsequent to the date hereof in accordance with provisions of Section 4.5 below are being
assigned to Buyer; and all other intangible property rights described in the Assignment of
Warranties and General Intangibles (“General Assignment”) attached to this Agreement as Exhibit “D”
(collectively the “Personal Property”). The Real Property and Personal Property are collectively
referred to herein as the “Property.”

     1.3 Opening of Escrow. Upon the execution of this Agreement, the parties shall open escrow by delivering three (3)
originals of this Agreement to Escrow Agent. No later than one (1) Business Day after receipt of
this Agreement, Escrow Agent shall execute the Consent of Escrow Agent attached to this Agreement
and return one (1) original to Seller’s counsel and one (1) original to Buyer’s counsel at the
address specified in the Basic Terms.

     1.4 Payment of the Purchase Price. The Purchase Price will be paid by Buyer to Seller in
accordance with the provisions set forth below.

          1.4.1 Buyer’s Initial Deposit. Prior to the Effective Date and pursuant to that certain letter of
intent dated September 21, 2006, between Buyer and Seller (“LOI”), Buyer has

3

 

already delivered to
Escrow Agent the Initial Deposit. The Initial Deposit shall be in immediately available federal
funds by wire transfer to Escrow Agent.

          1.4.2 Buyer’s Additional Deposit. Buyer will, not later than one (1) Business Day after Buyer’s
delivery of a Notice of Approval under Section 2.1 of this Agreement, deliver Buyer’s Additional
Deposit to Escrow Agent in immediately available federal funds by wire transfer. The failure of
Buyer to timely deliver the Additional Deposit shall constitute a material default by Buyer under
this Agreement. Within one (1) Business Day after Escrow Agent receives the Additional Deposit,
Escrow Agent shall release and pay to Seller the Initial Deposit and the Additional Deposit (which
shall collectively be the “Deposit”) without the requirement of further instruction from either
Buyer or Seller.

          1.4.3 Applicability of Deposit. If Escrow closes for the Property, Buyer’s Deposit shall be
applicable to the Purchase Price. Until released to Seller, the Deposit (and any portion thereof
held by Escrow Agent) shall be deposited by Escrow Agent in an interest bearing account with a
federally insured state or national bank (“Account”) located in California and all interest accrued
on the Deposit shall be held in the Account and credited to Buyer at Closing if Buyer acquires the
Property.

          1.4.4 Disposition of Buyer’s Deposit Upon Termination of this Agreement. If Buyer disapproves or
is deemed to have disapproved of the Property during its Due Diligence Period pursuant to Section
2.1 of this Agreement, Buyer shall be entitled to a refund of Buyer’s Initial Deposit and all
interest earned thereon. Upon Buyer’s delivery of a Notice of Approval, Buyer’s Deposit shall be
nonrefundable (unless Buyer’s performance is excused hereunder by reason of Seller’s breach, the
failure of a condition precedent not within Buyer’s control, or as otherwise set forth herein, in
which event the Deposit shall be refunded to Buyer by Escrow Agent or Seller, as the case may be),
and shall constitute liquidated damages to Seller pursuant to Section 10.2 of this Agreement if
Escrow fails to close due to Buyer’s default. Upon any termination of this Agreement and subject
to the payment of liquidated damages as described
herein, each party shall be released from any further obligations under this Agreement, except that
(i) Buyer shall be required to deliver all originals of any Property Documents back to Seller and
to destroy all copies of any Property documents in Buyer’s possession, and (ii) Buyer’s
indemnification obligations under Section 2.5 of this Agreement will survive such termination
(“Surviving Obligations”).

     1.5 Balance of Purchase Price. Not less than one (1) Business Day before the Closing Date, Buyer
shall deposit into Escrow in immediately available federal funds by wire transfer, an amount equal
to the Purchase Price, less the amount of the Buyer’s Deposit and as adjusted by the amount of any
credits due or any items chargeable to Buyer under this Agreement.

     1.6 Allocation of Purchase Price. The Purchase Price shall be allocated, for transfer tax, title
insurance, and other purposes, as follows: Thirty-Eight Million Three Hundred Forty-Two Thousand
Five Hundred Eighty Dollars ($38,342,580) for the Improved Lot, Six Million Dollars ($6,000,000)
for Lot 14, and Three Million Three Hundred Thousand Dollars ($3,300,000) for Lot 16.

4

 

ARTICLE 2

DUE DILIGENCE PERIOD

     2.1 Due Diligence Period. Prior to the execution hereof, Buyer and its agents, employees,
representatives, contractors and consultants have entered onto the Property pursuant to and
according to the terms, provisions, and conditions of that certain Access Agreement dated September
21, 2006, by and between Seller and Buyer which is attached as Exhibit “F” and incorporated herein
by this reference (“Access Agreement”). To the extent there is any conflict between the terms and
provisions of the Access Agreement and the terms and provisions of this Agreement, including
without limitation the confidentiality provisions, the terms and provisions of this Agreement shall
control. By execution hereof, Buyer represents, warrants, and acknowledges to Seller that Buyer is
undertaking any and all investigations, inspections, tests and studies which Buyer deems necessary
to determine the feasibility of its acquisition of the Property (hereinafter collectively referred
to as “Tests and Studies”). Such Tests and Studies include, without limitation, an investigation
and review of all matters that Buyer deems relevant to its proposed acquisition of the Property,
including, without limitation: (a) the status of title; (b) the physical condition of the Property,
including applicable geologic, environmental, physical, mechanical, structural and seismic
conditions and all other aspects regarding the condition of the Property, including, without
limitation, whether and to what extent the Property complies with applicable building codes and
other laws; (c) the economic feasibility of operating the Property; (d) the terms of the Service
Contracts; (e) the results of any reports, studies, or survey commissioned by Buyer; (f) the
content of the Property Documents (as defined below); (g) the content and force and effect of any
warranties; (h) the presence of any Hazardous Materials (as defined below); and (i) all physical,
mechanical, structural, seismic and all other issues relating to the Property and Buyer’s
decision whether or not to acquire the Property. Prior to expiration of the Due Diligence Period,
if Buyer has approved of its investigations, studies and analyses of the Property, Buyer shall
deliver to Escrow Agent and Seller written approval of its investigations regarding the Property
(“Notice of Approval”), which shall constitute Buyer’s acknowledgment and agreement that Buyer has
conducted all investigations regarding the Property and has approved of its investigations, the
Property Documents, all other matters relating to the Property, and has elected to purchase the
Property, subject to the terms of this Agreement. The failure of Buyer to timely deliver a Notice
of Approval, together with Buyer’s Additional Deposit, or notice of disapproval prior to the
expiration of the Due Diligence Period will be deemed to be Buyer’s disapproval of its
investigations during such Due Diligence Period, and in such case this Agreement shall terminate
and each party shall be released from its obligations under this Agreement except the Surviving
Obligations. Notwithstanding anything to the contrary in this Agreement, the execution and
delivery to each other of this Agreement by Buyer and Seller shall constitute Buyer’s Notice of
Approval.

     2.2 Access Agreement. The Access Agreement, as incorporated herein, shall continue in full force
and effect except that (i) Subsection (b) of Section 7 of the Access Agreement is hereby deleted in
its entirety, and (ii) Subsection (c) of Section 7 is hereby modified by deleting the phrase
“October 11, 2006,” and inserting in lieu thereof the phrase “October 25, 2006.”

5

 

     2.3 Preliminary Report. No later than three (3) days after the Effective Date, Seller shall cause
the Title Company to deliver to Buyer a copy of a preliminary report and copies of any recorded
exceptions listed in the preliminary report with respect to the Real Property (collectively
“Preliminary Report”). Buyer shall, within ten (10) business days after receipt of the Preliminary
Report (“Initial Title Notice Date”), deliver to Seller and Escrow Agent notice of its approval or
disapproval of the items set forth in the Preliminary Report (“Title Notice”). The failure of
Buyer to deliver a Title Notice on or before the Initial Title Notice Date with respect to the
Preliminary Report, or with respect to a Supplemental Report within the earlier of (a) three (3)
Business Days after receipt or (b) the Closing Date, shall constitute Buyer’s approval thereof. If
Buyer delivers a Title Notice disapproving of any exceptions, Seller may elect to remove, cure or
cause the Title Company to affirmatively insure around the disapproved items at or prior to the
Close of Escrow by delivering written notice thereof to Buyer within five (5) Business Days after
receipt of Buyer’s Title Notice. Notwithstanding the foregoing, Seller will be obligated to cause
Title Company to issue a Buyer Title Policy (as defined in Section 3.2.1 below) to Buyer without an
exception for any deeds of trust, mortgages, broker’s liens, judgment liens, mechanics’ liens and
materialmen’s liens or other liens which can be discharged monetarily. If Seller does not deliver
such notice to Buyer, Seller will be deemed to have elected not to cure the disapproved item. If
Seller elects not to cure any disapproved items or is deemed to have elected not to cure any
disapproved items, Buyer shall elect, within five (5) days after receipt of Seller’s notice of its
election not to cure or within five (5) days after Seller’s deemed election not to cure, to waive
its prior disapproval or terminate this Agreement, in which case Escrow Agent shall within one (1)
Business Day thereafter, return to Buyer, Buyer’s Initial Deposit, including all interest earned
thereon and, if deposited, Buyer’s Additional Deposit, including all interest earned thereon. If
Seller has elected to cure any disapproved items, but fails to cure such matter on or prior to the
scheduled Closing Date, Buyer shall have the right, by providing written notice to Seller and to
Escrow Agent within three (3) days after the scheduled Closing Date (and escrow and the Closing
Date shall be extended accordingly) to either (i) waive such disapproved items, or (ii) terminate
this Agreement, receive a refund of the Buyer’s Deposit and all interest earned thereon and collect
from Seller out-of-pocket expenses incurred by Buyer in accordance with Section 10.3 hereof. Buyer
agrees that it will take title to the Property subject to the items set forth in the Preliminary
Report and any Supplemental Reports which are approved or deemed approved by Buyer pursuant to the
terms of this Section, matters referred in the Deed (as defined below), all matters apparent or
that would be disclosed by an inspection of all or any portion of the Property, and the items set
forth in Section 3.2.1 below (collectively “Permitted Exceptions”).

     2.4 Supplemental Report. Upon any changes to the Preliminary Report, Escrow Agent will deliver to
Buyer a Supplemental Preliminary Report setting forth any new items not previously included in the
Preliminary Report or deleting any items previously included, together with copies of any recorded
exceptions listed therein (“Supplemental Report”). Buyer’s approval of any Supplemental Report
shall not be unreasonably withheld. The parties agree that it shall be unreasonable for Buyer to
withhold its approval to any item which will not have material adverse impact on Buyer’s ability to
use, operate and develop the Property subject to the Supplemental Report item.

6

 

     2.5 Property Documents. Pursuant to the Access Agreement, prior to the Effective Date Seller has
provided to Buyer copies of documents and information in Seller’s possession relating to the
Property, excluding Seller’s internal financial analysis, Seller’s credit analysis and collection
plans, materials relating to Seller’s cost to acquire the Property, appraisals of the Property,
documents relating to Seller’s financing of the Property, and any documents and communications
subject to the attorney/client privilege, as listed on Exhibit “A-1” attached hereto (the “Property
Documents”). It is understood by the Parties that neither Seller nor anyone acting for or on
behalf of Seller has made or is making any representation or warranty, express or implied, as to
the accuracy of any information contained in the Property Documents. The Property Documents
delivered by Seller (including any updates or new Property Documents delivered prior to the Close
of Escrow) are being made available solely as an accommodation to Buyer and Seller makes no
representation or warranty regarding the authenticity, source, accuracy, completeness or
thoroughness of the Property Documents. Seller shall have no liability to Buyer for any inaccuracy
or omission in such Property Documents. With the exception of any Claims against any of the Seller
Parties for fraud or intentional misrepresentation, Buyer waives any claims, actions, causes of
action, suits, liens, demands, liabilities, damages, costs, penalties, forfeitures, losses or
expenses, including attorneys’ fees (collectively “Claims”) of any nature against Seller and its
members, partners, managers, officers, directors, owners, employees or agents (the “Seller
Parties”) and any other person or entity, if any information, conclusion, projection, or other
statement of any nature
contained in any of those materials should prove not to be true, complete or accurate for any
reason or in any manner.

     2.6 On-Site Inspections of the Property. Pursuant to the Access Agreement, Buyer shall have the
right to enter onto the Property during the Due Diligence Period to conduct its investigations.

ARTICLE 3

CONDITIONS PRECEDENT TO THE CLOSE OF ESCROW

     3.1 Seller’s Conditions Precedent. The following shall constitute conditions precedent to the
Close of Escrow for the Property for the benefit of Seller, which conditions must either be
satisfied as a condition to Seller’s obligation to sell the Property to Buyer or may be waived by a
written waiver executed by Seller and delivered to Buyer and Escrow Agent prior to the Closing
Date.

          3.1.1 Representations and Warranties. All representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects as of the date made and as of the
Close of Escrow.

          3.1.2 Covenants. Buyer shall have performed and satisfied all agreements and covenants required
hereby to be performed by Buyer prior to the Close of Escrow.

          3.1.3 Existing Financing. At Closing, Seller shall have repaid or obtained the reconveyance of the
deed of trust encumbering title to the Building and Improved Lot, security a loan from Tokai Bank
to Nexus.

7

 

          3.1.4 Lease. The Lease by and between Buyer, as landlord, and Ligand, as tenant, in the form
attached hereto as Exhibit G (“Lease”) shall become effective as of Closing.

          3.1.5 Agreement for Right to Lease. The Agreement for Right to Lease by and between Buyer and
Ligand in the form attached hereto as Exhibit H (“Right to Lease”) shall become effective as of
Closing.

          3.1.6 Improved Lot Title Policy. Title Company shall be committed to issue an ALTA leasehold
policy of title insurance in favor of Ligand, insuring Ligand’s leasehold estate pursuant to the
Lease with no monetary
encumbrances senior or prior to such leasehold estate, in an amount selected by Ligand (“Improved
Lot Title Policy”).

          3.1.7 Lot 14 Title Policy. Title Company shall be committed to issue an ALTA optionee policy of
title insurance in favor of Ligand, insuring Ligand’s interest in Lot 14 pursuant to the Right of
First Refusal, with no monetary encumbrances senior or prior to such interest, in an amount
selected by Ligand (“Lot 14 Title Policy”).

     3.2 Buyer’s Conditions Precedent. The following shall constitute conditions precedent to the Close
of Escrow for the Property for the benefit of Buyer, which conditions must either be satisfied as a
condition to Buyer’s obligation to purchase the Property from Seller or may be waived by a written
waiver executed by Buyer and delivered to Seller and Escrow Agent prior to the Closing Date.

          3.2.1 Conveyance of Title. The Title Company shall be committed to issue a CLTA standard title
policy (the “Buyer Title Policy”) in an amount equal to the Purchase Price of the Property, showing
Buyer taking title to the Property subject to: (a) all county and city taxes, assessments, special
taxes and bonds which are a lien not yet delinquent, (b) Permitted Exceptions; (c) the Lease as to
the Improved Lot; (d) the Right of First Refusal as to Lot 14; and (e) title exceptions caused by
the acts or omissions of Buyer. If Buyer requests an ALTA extended title policy, Buyer will be
solely responsible to provide an ALTA survey, if necessary. In no event will obtaining a survey or
such extended policy be a condition to Closing or extend or delay the Closing. After the
expiration of Buyer’s Due Diligence Period, Buyer shall not have the right to terminate this
Agreement as a result of any items appearing in any ALTA survey or inspection or any new item
appearing in a Supplemental Report as a result of the ALTA survey or inspection, unless caused by
Seller or any Seller Party.

          3.2.2 Seller’s Due Performance. All of the representations and warranties of Seller set forth in
this Agreement shall be true and correct in all material respects as of the Effective Date and the
Close of Escrow.

          3.2.3 Covenants. Seller shall have performed and satisfied all agreements and covenants required
hereby to be performed by Seller prior to the Close of Escrow.

     3.3 Failure of Conditions Precedent in Favor of Buyer. In addition to Buyer’s rights under Section
10.3 below with respect to a default by Seller, if any of the foregoing conditions precedent are
neither satisfied nor waived by Buyer by the Closing Date, Buyer may terminate the Escrow and this
Agreement by giving a written notice of
termination to Seller and

8

 

Escrow Agent, and the Deposit, and all interest earned thereon, shall be
immediately returned to Buyer. Upon the Close of Escrow, the foregoing conditions precedent shall
be deemed satisfied or waived.

ARTICLE 4

COVENANTS AND AGREEMENTS

     4.1 Delivery of Property Documents. If Escrow fails to close for any reason, Buyer shall deliver
all originals of the Property Documents to Seller within three (3) days of the scheduled Closing
and destroy all copies of the Property Documents in Buyer’s possession.

     4.2 Property Service Contracts. Buyer agrees and acknowledges that the Property is currently
subject to the certain Service Contracts as identified on Schedule 2 of Exhibit C which will, if
requested by Buyer, be assigned and transferred to Buyer and assumed by Buyer as described in and
pursuant to the provisions of Exhibit “C”. Any Service Contracts not desired to be assumed by
Buyer shall be terminated by Seller prior to the Close of Escrow provided Buyer provides Seller
written notice of such election prior to the end of the Due Diligence Period.

     4.3 Reimbursement. Should Buyer, either prior to or subsequent to the Close of Escrow, receive any
credit, rebate, reimbursement or reduction in amounts otherwise payable by Buyer as a result of any
fees, deposits or charges previously paid by Seller or as a result of any work performed or
obligation assumed by Seller or any deposits made by Seller to any governmental agency, such
amounts shall be due and payable by Buyer to Seller within ten (10) days after receipt of such
amounts by Buyer. If any such amounts due under this Section are not paid to Buyer, Buyer
covenants and agrees that it will cooperate (at no cost or liability to Buyer) with Seller and
complete any applications and an assignment of rights to receive credits required in order for
Seller to obtain reimbursement of such amounts. The rights and obligations set forth in this
Section shall be mutual and shall be deemed to run in favor of Buyer in the event Seller should
receive any credit, rebate, reimbursement or reduction in amounts otherwise payable by Seller. All
credits, rebates, reimbursements, fees or other amounts described in this Section shall be
collectively referred to as the “Reimbursable Fees.”

     4.4 Natural Hazards Disclosures. As used herein, the term “Natural Hazard Area” shall mean those
areas identified as natural hazards in the Natural Hazard Disclosure Act, California Government
Code Sections 8589.3, 8589.4, and 51183.5, and California Public Resources Code Sections 2621.9,
2694, and 4136, and any successor statutes or laws (the “Act”). Buyer acknowledges that prior to
the Effective Date, Seller has provided to Buyer a Natural Hazard Disclosure Statement (“Disclosure
Statement”). Buyer acknowledges that Seller retained the services of the Title Company or its
affiliate to examine the maps and other information made available to the public by government
agencies for the purpose of enabling Seller to fulfill its disclosure obligations with respect to
the Act and to prepare a written report of the result of its examination (the “Report”), which
Report was delivered to Buyer along with the Disclosure Statement. Buyer acknowledges that the
Report will fully and completely discharge Seller from its disclosure obligations under the Act,
and, for the purpose of this Agreement, the provisions of Civil Code Section 1103.4 regarding the
non-liability of Seller for errors or omissions not within its personal knowledge shall be deemed
to apply. Buyer acknowledges and agrees that the

9

 

matters set forth in the Disclosure Statement or
Report may change on or prior to the Close of Escrow and that unless Seller receives information
concerning a change to the matters set forth in the Disclosure Statement, Seller has no obligation
to update, modify, or supplement the Disclosure Statement or Report.

     4.5 Operations. Seller shall continue to operate the Project in materially the same manner as it
has prior to the Effective Date. After the Effective Date, Seller shall not enter into any binding
occupancy agreements or Service Contracts without Buyer’s prior written consent, which consent may
be given or withheld in Buyer’s sole and absolute discretion.

ARTICLE 5

AS-IS PURCHASE AND REPRESENTATIONS AND WARRANTIES

     5.1 Survival of Disclaimers and Indemnity. The provisions of this Article 5 shall survive Close of
Escrow or any termination of this Agreement and shall not be merged with the Deed or any other
closing documents.

     5.2 Buyer’s Independent Investigations Regarding Property. Buyer, by its execution of this
Agreement, acknowledges that it has made or will make its own independent investigations as deemed
necessary or appropriate concerning the ownership, use, condition, development or suitability of
the Property, including, without limitation, any desired investigation or analysis of present or
future laws, statutes, rules, regulations, ordinances, limitations, restrictions or requirements
concerning the use, density, location or suitability of the Property, the condition of the Property
and the Improvements, the status of the land use approvals for the Property, any income to be
derived from the Property, the presence or absence of Hazardous Materials on, within and adjacent
to the Property, the location of the Property within any Natural Hazard Areas, the economic value
of the Property, the adequacy of access to the Property, water, sewage and utilities servicing the
Property, the presence or adequacy of infrastructure near or concerning the Land, any surface soil,
subsoil, geologic or groundwater conditions or other physical conditions affecting the Property and
the status of any existing, pending or future entitlements and/or the necessity or existence of any
fees, dedications, charges or costs or future regulations relating to the Property or whether any
approvals or permits may be required or granted, compliance of the Property or its operation with
any law, ordinance, rule, regulation or any other matter relating to the Property (collectively
with the matters described in Section 5.4 below, the “Property Conditions”).

     5.3 Hazardous Materials. Certain California and federal laws, including the Comprehensive Environmental Response
Compensation & Liability Act of 1980 (“CERCLA”), 42 U.S.C. Section 9601 et seq., and California
Health & Safety Code Section 25359.7, require sellers of certain real estate to disclose the
existence of Hazardous Materials located on or beneath the property being transferred. To satisfy
such obligations under any and all applicable laws, ordinances, rules and regulations, Seller, on
behalf of itself and the Seller Parties has provided to Buyer the Disclosure Statement. Subject to
Seller’s representations and warranties in this Agreement, Buyer acknowledges and agrees (i) that
Seller has not made any representations or warranties regarding the Property Documents or the
Disclosure Statement, and (ii) that Seller shall have no liability for any of the soil,
environmental or structural conditions or

10

 

any other conditions or matters described in any Property
Documents or the Disclosure Statement, or otherwise. Seller agrees that Buyer shall have the right
to retain its own consultants and experts to conduct its own inspections and examinations of the
Property and all matters relating to the Property pursuant to the Access Agreement. By its
execution of this Agreement, subject to Seller’s representations and warranties in this Agreement,
Buyer (1) acknowledges its receipt of the Disclosure Statement given pursuant to Section 25359.7 of
the California Health and Safety Code and that it is aware of the benefits conferred to Buyer by
Section 1542 of the California Civil Code and the risks it assumes by any waiver of its benefits
thereunder; (2) is fully aware of or prior to the expiration of the Due Diligence Period will be
fully aware of the matters described in the Property Documents; and (3) after receiving advice of
its legal counsel, waives any and all rights or remedies whatsoever, express or implied, Buyer may
have against Seller, including remedies for actual damages under Section 25359.7 of the California
Health and Safety Code, arising out of or resulting from any unknown, unforeseen or unanticipated
presence or releases of Hazardous Substances or other Hazardous Substances from or on the Property.
Notwithstanding anything to the contrary contained herein, nothing in this Section 5.3 shall
limit, waive, amend, modify or negate any obligation or liability of Ligand or any other Seller
Party pursuant to the Lease, which Lease provisions are intended to be a narrow exception to the
provisions of this Agreement. The provisions of this paragraph shall survive the Close of Escrow
and shall not be merged with the Deed.

     5.4 AS IS CONDITION. BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY PROVIDED IN THIS
AGREEMENT, AND SUBJECT TO THE SPECIFIC TERMS OF THE LEASE, SELLER HAS NOT MADE, DOES NOT MAKE AND
SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS
OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN,
PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO: (I) THE VALUE OF ALL OR PART OF
THE PROPERTY; (II) THE INCOME TO BE DERIVED FROM THE PROPERTY; (III) THE SPECIFIC TERMS AND
PROVISIONS OF ANY OCCUPANCY AGREEMENTS; (IV) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL
ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON, INCLUDING THE POSSIBILITIES FOR FUTURE
DEVELOPMENT OF THE PROPERTY; (V) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (VI) THE MANNER,
QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (VII) THE NATURE, QUALITY OR CONDITION
OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY; (VIII) THE COMPLIANCE
OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY
APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (IX) THE MANNER OR QUALITY OF THE CONSTRUCTION OR
MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY; (X) COMPLIANCE WITH ANY ENVIRONMENTAL
PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATION, ORDERS OR REQUIREMENTS, INCLUDING BUT
NOT LIMITED TO, TITLE III OF THE AMERICANS WITH DISABILITIES ACT OF 1990, CALIFORNIA HEALTH &
SAFETY CODE, THE FEDERAL WATER POLLUTION CONTROL ACT, THE FEDERAL RESOURCE CONSERVATION AND
RECOVERY ACT,

11

 

THE U.S. ENVIRONMENTAL PROTECTION AGENCY REGULATIONS AT 40 C.F.R., PART 261, THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, THE
RESOURCE CONSERVATION AND RECOVERY ACT OF 1976, THE CLEAN WATER ACT, THE SAFE DRINKING WATER ACT,
THE HAZARDOUS MATERIALS TRANSPORTATION ACT, THE TOXIC SUBSTANCE CONTROL ACT, AND REGULATIONS
PROMULGATED UNDER ANY OF THE FOREGOING; (XI) THE PRESENCE OR ABSENCE OF HAZARDOUS SUBSTANCES AT,
ON, UNDER, OR ADJACENT TO THE PROPERTY; (XII) THE CONTENT, COMPLETENESS, OR ACCURACY OF THE
PROPERTY DOCUMENTS; (XIII) THE CONFORMITY OF THE IMPROVEMENTS TO ANY PLANS OR SPECIFICATIONS FOR
THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY HAVE BEEN OR MAY BE PROVIDED TO
BUYER; (XIV) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE APPLICABLE ZONING OR
BUILDING REQUIREMENTS; (XV) DEFICIENCY OF ANY UNDERSHORING; (XVI) DEFICIENCY OF ANY DRAINAGE;
(XVII) THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT
LINE; (XVIII) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE
PROPERTY; OR (XIX) WITH RESPECT TO ANY OTHER MATTER OTHER THAN AS SET FORTH IN THIS AGREEMENT.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, NOTHING IN THIS SECTION 5.4 SHALL LIMIT,
WAIVE, AMEND, MODIFY OR NEGATE ANY OBLIGATION OR LIABILITY OF LIGAND OR ANY OTHER SELLER PARTY
PURSUANT TO THE LEASE, WHICH LEASE PROVISIONS ARE INTENDED TO BE A NARROW EXCEPTION TO THE
PROVISIONS OF THIS AGREEMENT.

     5.5 BUYER’S WAIVER AND RELEASE. AS PART OF BUYER’S AGREEMENT TO PURCHASE AND ACCEPT THE PROPERTY
“AS-IS WHERE-IS,” AND NOT AS A LIMITATION ON SUCH AGREEMENT, BUT SUBJECT TO BUYER’S RIGHT TO RELY
ON SELLER’S EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, AND SUBJECT TO THE
SPECIFIC TERMS OF THE LEASE, BUYER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY AND ALL ACTUAL
OR POTENTIAL RIGHTS BUYER MIGHT HAVE REGARDING ANY FORM OF WARRANTY, EXPRESS OR IMPLIED, OF
ANY KIND OR TYPE, RELATING TO THE PROPERTY, THE PROPERTY CONDITIONS, OR ANY OF THE MATTERS REFERRED
TO IN SECTION 5.4 ABOVE. SUCH WAIVER IS ABSOLUTE, COMPLETE, TOTAL AND UNLIMITED IN ANY WAY. SUCH
WAIVER INCLUDES, BUT IS NOT LIMITED TO, A WAIVER OF EXPRESS WARRANTIES, IMPLIED WARRANTIES,
WARRANTIES OF FITNESS FOR A PARTICULAR USE, WARRANTIES OF MERCHANTABILITY, WARRANTIES OF
HABITABILITY, STRICT LIABILITY RIGHTS, AND CLAIMS, LIABILITIES, DEMANDS OR CAUSES OF ACTION OF
EVERY KIND AND TYPE, WHETHER STATUTORY, CONTRACTUAL OR UNDER TORT PRINCIPLES, AT LAW OR IN EQUITY,
INCLUDING, BUT NOT LIMITED TO, CLAIMS REGARDING DEFECTS WHICH MIGHT HAVE BEEN DISCOVERABLE, CLAIMS
REGARDING DEFECTS WHICH WERE NOT OR ARE NOT DISCOVERABLE, PRODUCT LIABILITY CLAIMS, PRODUCT
LIABILITY TYPE CLAIMS, ALL OTHER EXTANT OR LATER CREATED OR CONCEIVED OF STRICT LIABILITY OR STRICT
LIABILITY TYPE

12

 

CLAIMS AND RIGHTS, AND ANY CLAIMS UNDER CERCLA. EFFECTIVE UPON THE CLOSING DATE,
AND TO THE FULLEST EXTENT PERMITTED BY LAW, BUT SUBJECT TO BUYER’S RIGHT TO RELY ON SELLER’S
EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, BUYER HEREBY RELEASES,
DISCHARGES AND FOREVER ACQUITS EACH SELLER AND EACH OF THE SELLER PARTIES AND THE SUCCESSOR OF EACH
AND EVERY ONE OF THEM FROM ALL DEMANDS, CLAIMS, LIABILITIES, OBLIGATIONS, COSTS AND EXPENSES WHICH
BUYER MAY SUFFER OR INCUR RELATING TO THE PROPERTY, THE PROPERTY CONDITIONS OR ANY OTHER ASPECT OF
THE PROPERTY. AS PART OF THE PROVISIONS OF THIS SECTION, BUT NOT AS A LIMITATION THEREON, BUYER
HEREBY AGREES, REPRESENTS AND WARRANTS THAT THE MATTERS RELEASED HEREIN ARE NOT LIMITED TO MATTERS
WHICH ARE KNOWN OR DISCLOSED, AND BUYER HEREBY WAIVES ANY AND ALL RIGHTS AND BENEFITS WHICH IT NOW
HAS, OR IN THE FUTURE MAY HAVE CONFERRED UPON IT, BY VIRTUE OF THE PROVISIONS OF FEDERAL, STATE OR
LOCAL LAW, RULES OR REGULATIONS, INCLUDING WITHOUT LIMITATION, SECTION 1542 OF THE CIVIL CODE OF
THE STATE OF CALIFORNIA, WHICH PROVIDES AS FOLLOWS:

     “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST
HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

	 	 	 	 	 
	 

	 	/s/ JMB      /s/ ML	 	 
	 

	 	 

BUYER’S INITIALS
	 	 

     IN THIS CONNECTION AND TO THE EXTENT PERMITTED BY LAW, BUYER HEREBY AGREES, REPRESENTS AND
WARRANTS THAT BUYER REALIZES AND ACKNOWLEDGES THAT FACTUAL MATTERS NOW UNKNOWN TO IT MAY HAVE GIVEN
OR MAY HEREAFTER GIVE RISE TO CAUSES OF ACTION, CLAIMS, DEMANDS, DEBTS, CONTROVERSIES, DAMAGES,
COSTS, LOSSES AND EXPENSES WHICH ARE PRESENTLY UNKNOWN, UNANTICIPATED AND UNSUSPECTED, AND BUYER
FURTHER AGREES, REPRESENTS AND WARRANTS THAT THE WAIVERS
AND RELEASES HEREIN HAVE BEEN NEGOTIATED AND AGREED UPON IN LIGHT OF THAT REALIZATION AND THAT
BUYER NEVERTHELESS HEREBY INTENDS TO RELEASE, DISCHARGE AND ACQUIT SELLER FROM ANY SUCH UNKNOWN
CAUSES OF ACTION, CLAIMS, DEMANDS, DEBTS, CONTROVERSIES, DAMAGES, COSTS, LOSSES AND EXPENSES WHICH
MIGHT IN ANY WAY BE INCLUDED IN THE WAIVERS AND MATTERS RELEASED AS SET FORTH IN THIS SECTION. THE
PROVISIONS OF THIS SECTION ARE MATERIAL AND INCLUDED AS A MATERIAL PORTION OF THE CONSIDERATION
GIVEN TO SELLER BY BUYER IN EXCHANGE FOR SELLER’S PERFORMANCE HEREUNDER. NOTWITHSTANDING ANYTHING
TO THE CONTRARY CONTAINED HEREIN, NOTHING IN THIS SECTION 5.5 SHALL LIMIT, WAIVE, AMEND, MODIFY OR
NEGATE ANY OBLIGATION OR LIABILITY OF LIGAND OR ANY OTHER SELLER PARTY PURSUANT TO THE LEASE, WHICH
LEASE

13

 

PROVISIONS ARE INTENDED TO BE A NARROW EXCEPTION TO THE PROVISIONS OF THIS AGREEMENT.

     5.6 LIMITATION OF LIABILITY. BUYER ACKNOWLEDGES AND AGREES THAT NEITHER BUYER NOR ITS
SUCCESSORS OR ASSIGNS SHALL HAVE ANY RECOURSE AGAINST SELLER OR ANY OF THE SELLER PARTIES OR ANY
PERSON, FIRM, AGENT OR REPRESENTATIVE ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER AND/OR ANY OF
THE SELLER PARTIES WITH RESPECT TO THE MATTERS WAIVED AND RELEASED UNDER THIS SECTION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, NOTHING IN THIS SECTION 5.6 SHALL LIMIT,
WAIVE, AMEND, MODIFY OR NEGATE ANY OBLIGATION OR LIABILITY OF LIGAND OR ANY OTHER SELLER PARTY
PURSUANT TO THE LEASE, WHICH LEASE PROVISIONS ARE INTENDED TO BE A NARROW EXCEPTION TO THE
PROVISIONS OF THIS AGREEMENT.

     SELLER HAS GIVEN BUYER CONCESSIONS REGARDING THIS TRANSACTION IN EXCHANGE FOR BUYER AGREEING
TO THE PROVISIONS OF THIS SECTION. THE TERMS AND PROVISIONS OF THIS SECTION SHALL SURVIVE THE
CLOSING OR THE TERMINATION OF THIS AGREEMENT FOR ANY REASON. SELLER AND BUYER HAVE EACH INITIALED
THIS SECTION TO FURTHER INDICATE THEIR AWARENESS AND ACCEPTANCE OF EACH AND EVERY PROVISION HEREOF.

	 	 	 	 	 	 	 
	 

	 	/s/ PVM      /s/ WRB
	 	/s/ JMB      /s/ ML	 	 
	 

	 	 

SELLER’S INITIALS
	 	 

BUYER’S INITIALS
	 	 

     5.7 Post-Closing Indemnity by Buyer. Except as specifically set forth in the Lease, Buyer
agrees to indemnify, defend and hold Seller, the Seller Parties, and Seller’s members, managers,
shareholders, officers, directors, partners, agents, employees, affiliates, heirs, successors and
assigns (collectively, “Seller’s Indemnified Parties”) harmless from and against any and all
liabilities, liens, claims, damages, costs, expenses, suits, actions or judgments paid or incurred
by any of Seller’s Indemnified
Parties and all expenses related thereto, including, without limitation, court costs and
attorneys’ fees arising out of or in any way connected or related to (i) the ownership,
maintenance, or operation of the Property and arising from events or conditions that occur after
the Closing, or (ii) the breach of any representation, warranty or covenant of Buyer contained in
this Agreement. The indemnities set forth in this Section shall survive Closing without
limitation.

     5.8 Buyer’s Authority. Buyer warrants and represents that it is duly organized and a validly
existing corporation formed under the laws of the State of Delaware and as of the Close of Escrow
will be duly qualified to transact business in the State of California. The entry by Buyer into
the transaction contemplated by this Agreement and the performance by Buyer of all of its
obligations in connection herewith have been duly and validly authorized by all necessary
action(s), are in accordance with applicable laws and are not in violation of Buyer’s
organizational documents. This Agreement and all additional documents delivered in connection with
this Agreement have been duly and validly executed and delivered to Seller and constitute the
legal, valid and binding obligations of Buyer.

14

 

     5.9 Representations and Warranties of Seller. In consideration of Buyer entering into this
Agreement, Seller makes the representations and warranties set forth below. Each such
representation and warranty shall be true and correct on the Effective Date only. Seller will
notify Buyer if Seller has actual knowledge prior to the Close of Escrow that any of the
representations and warranties set forth in this Section are not true and correct in any material
respect and Seller shall have the right to take the actions necessary to make such representation
materially true and correct or may elect not to take such actions and in such case Buyer may elect
(a) to terminate this Agreement and receive, as Buyer’s sole and exclusive remedy, a refund of
Buyer’s Deposit and Buyer’s out of pocket expenses as set forth in Section 10.3 hereof, or (b)
proceed to Close of Escrow, without exercising the right of termination set forth above and, in
such case, each representation or warranty shall be deemed automatically amended to conform with
the matters contained in Seller’s notice as of the Closing and Seller shall have no liability
whatsoever for such previously inaccurate representation or warranty. The representations and
warranties of Seller contained in this Section shall survive the Close of Escrow only for a period
of twelve (12) months (“Survival Period”), and (i) if Buyer does not deliver written notice to
Seller setting forth a specific and detailed description of any alleged breach of such
representations and warranties within the Survival Period, and (ii) if Buyer does not commence an
action against Seller for breach of the representations and warranties specified in such written
notice within six (6) months after the Survival Period, Buyer shall be deemed to have waived any
Claims relating to the representations and warranties set forth in this Section. Subject to the
specific terms of the Lease, Seller’s total liability in the aggregate for all Claims shall not
exceed Five Hundred Thousand Dollars ($500,000) and Seller shall not be liable for any Claims
unless and until such Claims in the aggregate, exceed Ten Thousand Dollars ($10,000) (and then
shall be liable from the first dollar of such Claims). The term “actual knowledge” or any similar
term shall mean the actual knowledge, without duty of inquiry or investigation, of Mr. Paul Maier,
in his capacity as Chief Financial Officer and an employee of Ligand, and not in his individual
capacity. For the purposes hereof, Buyer shall be
deemed to have knowledge of any fact or circumstance expressly set forth in the Property Documents
delivered to Buyer prior to the end of the Due Diligence Period and in any environmental assessment
or other report, study, analysis or investigation received by Buyer, and the representations and
warranties herein contained shall be deemed automatically modified to the extent information
contained in any Property Documents delivered to Buyer prior to the end of the Due Diligence
Period, or in any environmental assessment or other report, study, investigation or analysis
received by Buyer prior to Close of Escrow, is inconsistent with the matters covered herein.

     5.9.1 Seller’s Authority. Seller warrants and represents that (i) Nexus is a duly organized and
validly existing limited liability company formed under the laws of the State of California, and
(ii) Ligand is a duly organized and validly existing corporation under the laws of the State of
Delaware, and each of Nexus and Ligand is qualified to transact business in the State of
California. The entry by Seller into the transaction contemplated by this Agreement and the
performance by Seller of all of its obligations in connection herewith have been duly and validly
authorized by all necessary action(s), are in accordance with applicable law and are not in
violation of Seller’s organizational documents. This Agreement and all additional documents
delivered in connection with this Agreement have been duly and validly executed and delivered to
Buyer and constitute the legal, valid and binding obligations of Seller.

15

 

          5.9.2 No Litigation. Seller has no actual knowledge of, and to Seller’s actual knowledge, Seller
has not received any notice of, any actual or pending or threatened litigation being filed against
Seller or the Property which would materially adversely affect Seller’s ability to perform its
obligations hereunder.

          5.9.3 Governmental Actions. Seller has not received written notice that Seller is in violation of
any permits or approvals from a governmental authority relating to the Property. Seller has not
received written notice of any pending special assessments, condemnation proceedings, change in
zoning or roadway, or water or sewer construction affecting any portion of the Property. Seller
has not received written notice of violation of any restrictive covenants, governmental
requirements, zoning laws or deed restrictions relating to the Property.

          5.9.4 Foreign Person or Entity. Seller is not a foreign person, nonresident alien, foreign
corporation, foreign partnership, foreign trust, or foreign estate, as those terms are defined in
the Internal Revenue Code and the Income Tax Regulations promulgated thereunder. At Closing,
Seller shall deliver to Buyer certificates of nonforeign status and of California
residency/permanent place of business status (or substantially equivalent certificates) in form
required by the Income Tax Regulations and the California Revenue and Taxation Code and reasonably
acceptable to Buyer. In the event Seller does not deliver such certificate to Buyer at Close of
Escrow or shall not otherwise sufficiently
evidence Seller’s exemption from withholding requirements, Buyer may withhold the required portion
of the purchase price and submit such withholding to the Internal Revenue Service pursuant to
Section 1445 of the Internal Revenue Code and may withhold any required additional portion of the
purchase price and submit that withholding to the California Franchise Tax Board pursuant to
California Revenue and Taxation Code Sections 18805 and 26131.

ARTICLE 6

THE CLOSING

     6.1 Closing Date. The Close of Escrow shall occur on or before the Closing Date; provided,
however, Seller may extend the Closing Date for up to fifteen (15) days by delivering written
notice to Buyer at least five business (5) days prior the originally scheduled Closing Date. Upon
Seller delivering such notice, the term “Closing Date” shall mean the extended date.
Notwithstanding the foregoing, if the Closing Date is scheduled for Monday, November 27, 2006, the
Parties agree to extend such Closing Date to Tuesday, November 28, 2006, due to the Thanksgiving
weekend.

     6.2 Deliveries to Escrow Agent.

          6.2.1 Buyer’s Deliveries. Unless an earlier date for delivery is required under the terms of this
Agreement, Buyer shall, on or before the Closing Date, deliver to Escrow Agent each of the
following items:

               (a) Purchase Price. Cash in an amount equal to the balance of the Purchase Price;

16

 

               (b) General Assignment. Three (3) originals of the General Assignment in the form attached hereto
as Exhibit “B”, executed in counterpart by Buyer;

               (c) Lease. Three (3) originals of the Lease, executed in counterpart by Buyer;

               (d) Memorandum of Lease. One (1) original of the Memorandum of Lease, attached as part of the
Lease, executed in counterpart by Buyer;

               (e) Right to Lease. Three (3) originals of the Right to Lease, executed in counterpart by Buyer;

               (f) Memorandum of Agreement for Right to Lease. One (1) original of the Memorandum of Agreement
for Right to Lease, attached as part of the Right to Lease, executed in counterpart by Buyer;

               (g) Prorations, Fees and Costs. The amounts, if any, required of Buyer under Article 7 of this
Agreement and any other amounts required to be paid by Buyer prior to or on the Close of Escrow
under this Agreement;

               (h) Authorization and Other Documents. Instruments acceptable to the Title Company reflecting the
proper power, good standing and authorization for the acquisition of the Property by Buyer and such
affidavits of Buyer or other documents as may be reasonably required by the Escrow Agent or the
Title Company in order to effect the Close of Escrow and issue the Buyer Title Policy, the Improved
Lot Title Policy, and the Lot 14 Title Policy; and

               (i) Documents. Counterparts of any other documents required to be executed under the terms of this
Agreement, including written approval of the final closing statement and instructions to Escrow
Agent to close the Escrow.

          6.2.2 Seller’s Deliveries. Unless an earlier date for delivery is required under the terms of this
Agreement, Seller shall, at least one (1) Business Day prior to the Closing Date, deliver to Escrow
Agent each of the following items:

               (a) Deed. The Deeds in the form of Exhibit “F” attached hereto, executed by Seller;

               (b) Certificate of Non-Foreign Status. A Certificate of Non-Foreign Status as to Seller,
certifying Seller is a non-foreign person, and a completed California Resident Affidavit;

               (c) Bill of Sale. A bill of sale conveying the Personal Property to Buyer in the form attached
hereto as Exhibit “B”;

               (d) General Assignment. Three (3) originals of the General Assignment, executed in counterpart by
Seller;

17

 

               (e) Lease. Three (3) originals of the Lease executed in counterpart by Ligand;

               (f) Memorandum of Lease. One (1) original of the Memorandum of Lease, attached as part of the
Lease, executed in counterpart by Ligand;

               (g) Right to Lease. Three (3) originals of the Right to Lease, executed in counterpart by Ligand;

               (h) Memorandum of Agreement for Right to Lease. One (1) original of the Memorandum of Agreement
for Right to Lease, attached as part of the Right to Lease, executed in counterpart by Ligand;

               (i) Vendor Notice Letters. One (1) original of a letter in the form reasonably prescribed by
Buyer, executed by Seller addressed to vendor under each of the Service Contracts informing such
vendor of the sale of the Property and the assignment to Buyer of Seller’s interest under the
applicable service contract; and

               (j) Documents. Executed counterparts of any other documents required to be executed under the
terms of this Agreement, including written approval of the Final Closing Statement and instructions
to Escrow Agent to close the Escrow, and any and all documents the Title Company requires to be
executed by Seller to ensure issuance of the Buyer Title Policy, the Improved Lot Title Policy, and
the Lot 14 Title Policy.

     6.3 Dating Documents. Escrow Agent shall date any of the documents deposited into Escrow under
Sections 6.2.1 and 6.2.2 above as of the date of the Close of Escrow.

     6.4 Close of Escrow. Escrow Agent shall close the Escrow on or before the Closing Date, as the
same may be extended pursuant hereto, by (i) filing for record the Deed, the Memorandum of Lease
and the Memorandum of Right of First Refusal, and such other documents as may be necessary to
procure the Buyer Title Policy, the Improved Lot Title Policy, and the Lot 14 Title Policy, and
(ii) delivering funds and documents as set forth in Article 8 WHEN AND ONLY WHEN each of the
conditions set forth below has been satisfied.

          6.4.1 Funds and Instruments. All funds and instruments required under Sections 6.2.1 and 6.2.2 have been delivered to Escrow
Agent.

          6.4.2 Satisfaction of Conditions Precedent. Each of the conditions precedent set forth in Article
3 has been, or upon such Close of Escrow shall be, satisfied as provided for in Article 3.

     6.5 Recordation. Escrow Agent shall record the Deed (with documentary transfer tax, if any, to be
shown by a separate, unrecorded affidavit), the Memorandum of Lease, the Memorandum of Right of
First Refusal, and any other documents which the parties may mutually direct to be recorded in the
Office of the County Recorder for the County.

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ARTICLE 7

PRORATION, FEES AND COSTS

     7.1 Prorations. The following items shall be prorated between Seller and Buyer at the Close of
Escrow by increasing or decreasing, as the case may be, the funds to be delivered by Buyer at the
Close of Escrow.

          7.1.1 Taxes and Assessments. Real property taxes, assessments and personal property taxes with
respect to the Property shall be prorated based upon the latest available tax information such that
Seller shall be responsible for all such taxes and assessments levied against the Property to and
including the day prior to the Close of Escrow, and Buyer shall be responsible for all such taxes
and assessments levied against the Property on and after the Close of Escrow. Any real property
taxes and assessments arising out of the sale of the Property to Buyer or Buyer’s assignee or a
subsequent sale or change in ownership thereafter, and/or arising out of any construction
pertaining to the Property following the Close of Escrow, shall, subject to the terms of the Lease,
be paid by Buyer when assessed. Seller represents that it has paid or will pay, if bills relating
to supplemental taxes have not yet been received, all supplemental real property taxes and
assessments resulting from its purchase of the Property due and payable for any period prior to the
Closing Date and this obligation of Seller will survive the Closing Date. Notwithstanding the
foregoing, to the extent any such taxes and assessments on the Improved Lot are payable by Ligand
pursuant to the Lease, there shall be no proration of such items at the Close of Escrow, and Ligand
shall be responsible for the payment of the same after the Close of Escrow.

          7.1.2 Utilities and Other Expenses. Seller shall notify all water, gas, electric and other utility
companies servicing the Property (collectively “Utility Companies”) of the sale of the Property to
Buyer but shall request that all Utility Companies continue to send all utility bills to Ligand.

          7.1.3 Service Contracts and Other Expenses and Revenues. Escrow Agent shall prorate the periodic
charges under the Service Contracts assumed by Buyer and any other periodic Property expenses and
revenues that are not the responsibility of Ligand under the Lease.

     7.2 Actual Days of Month. All proration shall be made as of 11:59 p.m. on the date preceding the
date of Close of Escrow on the basis of the actual days of the month in which the Close of Escrow
occurs.

     7.3 Seller’s Fees and Costs. Seller will pay (i) Documentary Transfer Tax in the amount Escrow
Agent determines to be required by law, (ii) the fee for the Buyer Title Policy, including without
limitation the cost for an ALTA extended title policy, (iii) one-half of Escrow Agent’s escrow fee,
(iv) the fees for recording the Deed(s), and (v) usual Seller’s document-drafting and recording
charges.

     7.4 Buyer’s Fees and Costs. Buyer will pay (i) one-half of Escrow Agent’s escrow fee; (ii) the fee
for the Improved Lot Title Policy; (iii) the fee for Lot 14 Title Policy, (iv) the

19

 

fees for
recording the Memorandum of Lease and the Memorandum of Right of First Refusal; (v) usual Buyer’s
document-drafting and recording charges, (vi) the fee for any ALTA survey obtained by Buyer; and
(vii) any fee for any endorsements requested by Buyer.

     7.5 Other Fees and Costs. All other fees and costs of Escrow or any other item to be prorated
shall be paid by the parties or prorated as is customary in the County.

     7.6 Final Closing Statement. Escrow Agent shall have prepared for Buyer a final Buyer closing
statement and for Seller a final Seller closing statement (each “Final Closing Statement”) which
shall have been approved by Buyer and Seller, respectively, prior to the Close of Escrow.

ARTICLE 8

DISTRIBUTION OF FUNDS AND DOCUMENTS

     8.1 Recorded Documents. Escrow Agent will cause the County Recorder of the County to mail Seller’s
Deed, the Memorandum of Lease, and the Memorandum of Right of First Refusal (and each other
document which is herein expressed to be, or by general usage is, recorded) after recordation, to
the grantee, beneficiary or person (i) acquiring rights under said document or (ii) for whose
benefit said document was acquired.

     8.2 Other Documents. No later than two (2) Business Days after the Close of Escrow, Escrow Agent
shall combine any original counterparts of a document into fully executed originals and deliver (i)
to Buyer’s counsel, the original Certificate of Non-Foreign Status and the California Resident
Affidavit and the original Buyer Title Policy, when available; (ii) to Ligand, the Improved Lot
Title Policy and the Lot 14 Title Policy; and (iii) to Seller’s and Buyer’s counsel, originals (or
if applicable copies) of any other nonrecorded document deposited into Escrow at any time during
the Escrow and to each party conformed copies of all recorded documents.

     8.3 Payment of Funds at Closing. Escrow Agent will, at the Close of Escrow, wire (i) to Seller’s
account, in accordance with instructions of Seller, the Seller funds as indicated on the Final
Closing Statement and (ii) to Buyer, any excess funds theretofore delivered to Escrow Agent by
Buyer as indicated on the Final Closing Statement.

ARTICLE 9

ASSIGNMENT BY BUYER

     Buyer may not, voluntarily or by operation of law, assign or otherwise transfer any of its
rights or obligations under this Agreement without obtaining the prior written consent of Seller,
which consent may be given or withheld in Seller’s sole and absolute discretion. If such consent
is received, any assignee shall assume all obligations imposed on Buyer as if the assignee were the
original Buyer named in this Agreement; provided that no such assignment shall release Buyer from
liability hereunder. Any attempted assignment made in violation of this provision shall be null
and void. Notwithstanding the foregoing, Buyer shall have the right, without Seller’s prior
written consent, to assign this Agreement to (a) any entity that is wholly-owned by

20

 

Buyer, or (b)
any qualified exchange intermediary utilized by Buyer to effectuate a 1031 tax deferred exchange
pursuant to Section 13.23 hereof.

ARTICLE 10

DEFAULT

     10.1 Breach by Buyer. If Buyer fails to complete the acquisition of the Property on the Closing
Date by reason of any default by Buyer which is not cured before the expiration of all applicable
notice and cure periods, and Seller shall not be in breach or default of this Agreement, Seller
shall be entitled to terminate this Agreement by written notice to Buyer, in which event Seller
shall be entitled to retain any and all of the Buyer’s Deposit held by Escrow Agent as liquidated
damages pursuant to the provisions set forth below, and this Agreement shall terminate.
Notwithstanding any such termination, Seller shall have the continuing right to enforce any
Surviving Obligations provided for in this Agreement. Notwithstanding anything to the contrary
contained herein, Buyer shall not be in default under this Agreement unless Buyer shall receive
written notice thereof from Seller and shall fail to cure said default within ten (10) days after
Buyer’s receipt of said notice; provided that in the event any notice of default is delivered to
Buyer, the Closing Date shall be
extended to the extent necessary to accommodate the cure period set forth above. Notwithstanding
any provision in this Agreement to the contrary, Seller shall not be required to deliver to Buyer a
notice of default for Buyer’s failure to timely deliver any payment to Seller or Escrow Agent
pursuant to this Agreement, and Buyer shall not have any cure period for any such failure.

     10.2 LIQUIDATED DAMAGES. IF ESCROW FAILS TO CLOSE DUE TO A BUYER DEFAULT WHICH IS NOT CURED PRIOR
TO THE EXPIRATION OF ALL APPLICABLE NOTICE AND CURE PERIODS (SUCH BUYER DEFAULT TO INCLUDE, BUT NOT
LIMITED TO, BUYER’S FAILURE TO TIMELY FUND THE PURCHASE PRICE AND ACQUIRE THE PROPERTY SUBSEQUENT
TO BUYER PROVIDING A NOTICE OF APPROVAL), SELLER WILL BE DAMAGED AND WILL BE ENTITLED TO
COMPENSATION FOR THOSE DAMAGES. SUCH DAMAGES WILL, HOWEVER, BE EXTREMELY DIFFICULT AND IMPRACTICAL
TO ASCERTAIN FOR THE FOLLOWING REASONS: (A) THE DAMAGES TO WHICH SELLER WOULD BE ENTITLED IN A
COURT OF LAW WILL BE BASED IN PART ON THE DIFFERENCE BETWEEN THE ACTUAL VALUE OF THE PROPERTY AT
THE TIME SET FOR THE CLOSE OF ESCROW AND THE PURCHASE PRICE FOR THE PROPERTY AS SET FORTH IN THIS
AGREEMENT; (B) PROOF OF THE AMOUNT OF SUCH DAMAGES WILL BE BASED ON OPINIONS OF VALUE OF THE
PROPERTY, WHICH CAN VARY IN SIGNIFICANT AMOUNTS; AND (C) IT IS IMPOSSIBLE TO PREDICT AS OF THE DATE
ON WHICH THIS AGREEMENT IS MADE WHETHER THE VALUE OF THE PROPERTY WILL INCREASE OR DECREASE AS OF
THE DATE SET FOR THE CLOSE OF ESCROW. FURTHERMORE, BUYER ACKNOWLEDGES SELLER HAD OTHER
OPPORTUNITIES TO SELL THE PROPERTY AND RELIED UPON THE REPRESENTATIONS OF BUYER THAT IT WOULD
PERFORM AND PURCHASE THE PROPERTY FROM SELLER. BUYER DESIRES TO LIMIT THE AMOUNT OF DAMAGES FOR
WHICH BUYER MIGHT BE LIABLE SHOULD BUYER BREACH THIS AGREEMENT. BUYER AND SELLER WISH TO AVOID THE
COSTS AND LENGTHY DELAYS WHICH WOULD RESULT IF

21

 

SELLER FILED A LAWSUIT TO COLLECT ITS DAMAGES FOR A
BREACH OF THIS AGREEMENT.

     THEREFORE, THE SUM REPRESENTED BY THE BUYER’S DEPOSIT SHALL NOT BE DEEMED OR INTENDED TO BE A
FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTION 3275 OR 3369, BUT IS
INTENDED TO CONSTITUTE A REASONABLE ESTIMATE OF SELLER’S DAMAGES UNDER THE PROVISIONS OF SECTION
1671 OF THE CALIFORNIA CIVIL CODE AND, EXCEPT AS PROVIDED BELOW, SELLER’S SOLE AND EXCLUSIVE REMEDY
IN THE EVENT OF THE FAILURE TO CLOSE ESCROW RESULTING FROM ANY REASONS SHALL BE LIMITED TO SUCH
AMOUNT, PROVIDED, HOWEVER, THAT THE PARTIES AGREE THAT, IN NO EVENT, SHALL THIS LIQUIDATED DAMAGES
PROVISION APPLY TO ANY BREACH OF BUYER’S INDEMNIFICATION OBLIGATIONS UNDER THE ACCESS AGREEMENT AND
SECTION 2.5 OF THIS AGREEMENT; PROVIDED FURTHER THAT IN NO EVENT SHALL SELLER BE ENTITLED TO
RECEIVE OR RECOVER FROM BUYER ANY CONSEQUENTIAL, PUNITIVE, SPECIAL, EXEMPLARY OR INDIRECT
DAMAGES, OR LOST PROFITS. BUYER HAS REVIEWED THE EFFECT OF THIS PROVISION WITH LEGAL COUNSEL
AND HAS AGREED THAT SUCH DAMAGES ARE A REASONABLE AND FAIR ESTIMATE OF THE DAMAGES SELLER WILL
SUSTAIN. BY INITIALING THIS PROVISIONS IN THE SPACES BELOW, SELLER AND BUYER EACH SPECIFICALLY
AFFIRM THEIR RESPECTIVE AGREEMENTS CONTAINED IN THIS SECTION.

	 	 	 	 	 	 	 
	 

	 	/s/ PVM      /s/ WRB
	 	/s/ JMB      /s/ ML	 	 
	 

	 	 

SELLER’S INITIALS
	 	 

BUYER’S INITIALS
	 	 

     10.3 BREACH BY SELLER. IF SELLER DEFAULTS IN THE PERFORMANCE OF ANY OF ITS OBLIGATIONS PURSUANT TO
THIS AGREEMENT, AND THE CLOSING OF THE SALE OF THE PROPERTY FAILS TO OCCUR BY REASON THEREOF, AND
SELLER FAILS TO CURE THE DEFAULT WITHIN TEN (10) DAYS AFTER RECEIPT OF WRITTEN NOTICE THEREOF FROM
BUYER, BUYER’S SOLE REMEDY SHALL BE EITHER: (A) TO TERMINATE THIS AGREEMENT BY WRITTEN NOTICE
DELIVERED TO SELLER AND ESCROW AGENT AND TO RECOVER THE DEPOSIT AND BUYER’S ACTUAL OUT-OF-POCKET
EXPENSES INCURRED IN CONNECTION WITH ITS EVALUATION OF THE PROPERTY UP TO A MAXIMUM OF SEVENTY-FIVE
THOUSAND DOLLARS ($75,000); OR (B) TO ENFORCE SPECIFIC PERFORMANCE (INCLUDING A LIS PENDENS AGAINST
THE PROPERTY) OF SELLER’S OBLIGATIONS UNDER THIS AGREEMENT, SO LONG AS BUYER (I) IS READY, WILLING,
AND ABLE TO PERFORM; AND (II) IS NOT IN MATERIAL DEFAULT OF THIS AGREEMENT. BUYER ACKNOWLEDGES
THAT EACH OF THE FOREGOING CONDITIONS IS IN EVERY DETAIL MATERIAL TO SELLER, AND THEREFORE, IF
BUYER FAILS TO SATISFY ANY ONE OF SUCH CONDITIONS, SELLER SHALL BE ENTITLED TO AN IMMEDIATE
DISMISSAL OF ANY SUCH ACTION AND AN IMMEDIATE EXPUNGEMENT OF ANY LIS PENDENS. BUYER SHALL NOT HAVE
THE RIGHT TO RECOVER DAMAGES OF ANY KIND OR TO OBTAIN OTHER EQUITABLE RELIEF, INCLUDING, WITHOUT
LIMITATION, ANY

22

 

EQUITABLE ADJUSTMENT TO THE TERMS OF THE SALE OF THE PROPERTY, IN CONNECTION WITH
ANY SUCCESSFUL ACTION FOR SPECIFIC PERFORMANCE. EXCEPT TO THE EXTENT PERMITTED ABOVE, BUYER SHALL
NOT (X) PREPARE, FILE OR RECORD A LIS PENDENS AGAINST THE PROPERTY; OR (Y) BE ENTITLED TO THE AWARD
OF ANY DAMAGES. BUYER ACKNOWLEDGES THAT A MATERIAL INDUCEMENT TO SELLER’S DECISION TO SELL THE
PROPERTY TO BUYER IS THE AGREEMENT OF BUYER NOT TO IMPEDE OR INTERFERE WITH A SUBSEQUENT SALE OF
THE PROPERTY, AND THAT SELLER WILL BE DAMAGED IN THE EVENT BUYER FAILS TO COMPLY WITH THE
REQUIREMENTS OF THIS SECTION 10.3. BUYER SHALL NOT BE ENTITLED UNDER ANY CIRCUMSTANCES TO RECOVER
ANY OTHER DAMAGES, INCLUDING PUNITIVE, SPECIAL, EXEMPLARY, OR INDIRECT DAMAGES, LOST PROFITS
RELATING TO BUYER’S PROPOSED ACQUISITION OF THE PROPERTY OR ANY OTHER COMPENSATORY OR CONSEQUENTIAL
DAMAGES, AND BUYER HEREBY EXPRESSLY AND KNOWINGLY WAIVES ANY AND ALL RIGHTS TO RECOVER ANY SUCH
OTHER DAMAGES THAT
MIGHT OTHERWISE EXIST, INCLUDING ANY RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 3306. SUBJECT TO
SECTION 5.9 OF THIS AGREEMENT, NOTHING CONTAINED HEREIN SHALL LIMIT OR WAIVE BUYER’S RIGHTS AND
REMEDIES FOR SELLER’S BREACH OF ANY EXPRESS REPRESENTATION OR WARRANTY SET FORTH IN THIS AGREEMENT.

	 	 	 	 	 	 	 
	 

	 	/s/ PVM      /s/ WRB
	 	/s/ JMB      /s/ ML	 	 
	 

	 	 

SELLER’S INITIALS
	 	 

BUYER’S INITIALS
	 	 

ARTICLE 11

CONDEMNATION

     11.1 Eminent Domain. If, prior to the Close of Escrow, there is a partial taking of the Property
or the threatened partial taking of the Property pursuant to a resolution of intention to condemn
where the estimated value of the portion of the Property taken exceeds ten percent (10%) of
Purchase Price or require more than one hundred eighty (180) days to restore (“Material
Condemnation”), then Buyer can elect to either (a) terminate this Agreement, or (b) purchase the
Property without any reduction in the Purchase Price. In the event of a partial taking or the
threatened partial taking of the Property pursuant to a resolution of intention to condemn which is
not a Material Condemnation then Buyer shall purchase the Property. If this Agreement is not
terminated as provided above and Buyer purchases the Property, Buyer shall be entitled to retain
any condemnation proceeds as a result of such condemnation.

     11.2 Condemnation. As used herein, “condemnation”, or “condemned” or “taking” shall mean the
exercise of, or intent to exercise, the power of eminent domain, expressed in writing, as well as
the filing of any action or proceeding for such purpose, by any person, entity, body, agency or
authority having the right or power of eminent domain (the “condemning authority” herein), and
shall include a voluntary sale by Seller to any such condemning authority, either under the threat
of condemnation or while condemnation proceedings are pending, and the condemnation shall be deemed
to occur in point of time upon the actual physical taking of possession pursuant to the exercise of
said power of eminent domain.

23

 

ARTICLE 12

DAMAGE AND DESTRUCTION

     If, prior to the Close of Escrow, more than ten percent (10%) of the total rentable square
footage of the Improvements on the Property are damaged or destroyed by fire, casualty or the
elements (“Material Casualty”), then Buyer may elect to either (a) terminate this Agreement or (b)
purchase the Property without any reduction in the Purchase Price. In the event the damage or
destruction which is not a Material Casualty, then Buyer shall purchase the Property without any
reduction in the Purchase Price. If this Agreement is not terminated as provided above and Buyer
purchases the Property, Buyer shall be entitled to all of Seller’s insurance proceeds resulting
from the damage or destruction that are not used by Seller to repair the Improvements.

ARTICLE 13

GENERAL PROVISIONS

     13.1 Construction of Agreement. The agreement contained herein shall not be construed in favor of
or against either party, but shall be construed as if both parties prepared this Agreement.

     13.2 Captions. The captions used herein are for convenience only and are not a part of this
Agreement and do not in any way limit or amplify the terms and provisions hereof.

     13.3 Business Day. The term Business Day or business day as utilized in this Agreement shall mean
each calendar day, with the exception of a Saturday, Sunday, national holiday or any other day that
the San Diego County Recorder’s Office is not open for business. By way of example and not
limitation, the Friday after Thanksgiving is not a Business Day.

     13.4 Governing Law. This Agreement and the documents in the form attached as exhibits hereto shall
be governed by and construed under the laws of the State of California.

     13.5 Judicial Reference. The parties agree to promptly submit any dispute between them arising
from this Agreement to Judicial Arbitration and Mediation Services, Inc. (“JAMS”). In the event an
action is filed in any court by either party to this Agreement involving a dispute arising from
this Agreement (“Dispute”), within twenty (20) days after such filing, either party may, upon five
(5) days’ notice to the other party, apply ex parte to the Court for a reference of the entire
dispute to JAMS in accordance with Code of Civil Procedure §638. The application shall be deemed a
mutual request by both parties for the reference. For either voluntary submission of a dispute to
JAMS or reference by the Court in the event an action has been filed, the parties shall mutually
select a member from JAMS’ panel to hear the dispute. In the event the parties fail to mutually
select a member from the panel within ten (10) days after submission of the dispute to JAMS, then
JAMS shall select the hearing officer. The hearing shall take place on the first available date on
the calendar of the hearing officer, or on such other date as the parties may agree upon in
writing. The decision of the hearing officer shall be final, binding on the parties, and
enforceable in a California court having competent jurisdiction over the parties. Subject to the
limitations set forth in this Article 13, the judicial referee shall have the authority to try all
issues, whether of fact or law, and to report a statement of decision to the court. The

24

 

judicial
referee shall be the only trier of fact or law in the reference proceeding, and shall have no
authority to further refer any issues of fact or law to any other party, without the mutual consent
of all parties to the judicial reference proceeding. This agreement to seek voluntary reference to
resolve disputes shall not apply to any claim or action in which any of the causes of action
includes either
disputes involving third parties other than the parties to this Agreement, or disputes involving
allegations of defective construction or defective development of the Property which is the subject
of this Agreement.

          13.5.1 Participation by Parties. The parties to the Dispute shall cooperate in good faith to
ensure that all necessary and appropriate parties are included in the judicial reference
proceeding. The Seller or Buyer, as applicable in a particular judicial reference proceeding
(individually, “Party” or collectively, the “Parties”), shall not be required to participate in the
judicial reference proceeding if (i) all parties against whom the applicable Party would have
cross-claims or counterclaims necessary to afford complete relief to such Party cannot be joined in
the judicial reference proceeding, including, but not limited to, any Seller Party (collectively, a
“Necessary Party”), or (ii) the enforcement of the provisions of this Article 18 would impair the
insurance coverage of a Party or a Seller Party for any claim arising out of the Dispute that would
otherwise provide coverage for such claim that would otherwise provide coverage for such claim. If
a Party determines that it cannot join all Necessary Parties or that its insurance coverage would
be impaired with respect to the Dispute, or if Seller is advised by a Seller Party that it contends
its insurance coverage will be impaired by enforcement of this Article 13, such Party may elect not
to participate in the judicial reference proceeding. If a Party so elects not to participate in the
judicial reference proceeding, such Party will provide notice to the other Parties to the judicial
reference proceeding that the Dispute will not be resolved by judicial reference. In such
circumstances, the other Parties may seek determination of the Party’s right not to participate by
way of a motion under California Code of Civil Procedure Sections 638, 641 through 645.1, or any
successor statutes thereto. If a determination is made as a result of such a motion that a Party
is not required to participate in the judicial reference proceeding, unless the remaining Parties
agree otherwise, the Dispute shall not be resolved by judicial reference and the Parties may
commence an action with respect to the subject Dispute in an appropriate court of law.

          13.5.2 Venue. The proceedings shall be heard in San Diego County.

          13.5.3 Referee. The referee shall be an attorney or retired judge with experience in relevant real
estate matters. The referee shall not have any relationship to the parties to the Dispute or
interest in the Property. The parties to the Dispute participating in the judicial reference
proceeding shall meet to select the referee within ten (10) days after service of the initial
complaint on all defendants named therein. Any dispute regarding the selection of the referee
shall be promptly resolved by the judge to whom the matter is assigned, or if there is none, to the
presiding judge of the Superior Court of the County in which the Property is located, who shall
select the referee.

          13.5.4 Commencement and Timing of Proceeding. The referee shall promptly commence the proceeding
at the earliest convenient date in light of all of the facts and circumstances and shall conduct
the proceeding without undue delay.

25

 

          13.5.5 Pre-hearing Conferences. The referee may require one or more pre-hearing conferences.

          13.5.6 Motions. The referee shall have the power to hear and dispose of motions, including motions
relating to provisional remedies, demurrers, motions to dismiss, motions for judgment on the
pleadings and summary adjudication motions, in the same manner as a trial court judge, except the
referee shall also have the power to adjudicate summarily issues of fact or law including the
availability of remedies, whether or not the issue adjudicated could dispose of an entire cause of
action or defense. Notwithstanding the foregoing, if prior to the selection of the referee as
provided herein, any provisional remedies are sought by the parties to the Dispute, such relief may
be sought in the Superior Court of the County in which the Property is located.

          13.5.7 Rules of Law. The referee shall apply the laws of the State of California except as
expressly provided herein, including the rules of evidence, unless expressly waived by all parties
to the judicial reference proceeding.

          13.5.8 Record. A stenographic record of the hearing shall be made, provided that the record shall
remain confidential except as may be necessary for post-hearing motions and any appeals.

          13.5.9 Statement of Decision. The referee’s statement of decision shall contain findings of fact
and conclusions of law to the extent required by law if the case were tried to a judge. The
decision of the referee shall stand as the decision of the court, and upon filing of the statement
of decision with the clerk of the court, judgment may be entered thereon in the same manner as if
the Dispute had been tried by the court.

          13.5.10 Post-Hearing Motions. The referee shall have the authority to rule on all post-hearing
motions in the same manner as a trial judge.

          13.5.11 Appeals. The decision of the referee shall be subject to appeal in the same manner as if
the Dispute had been tried by the court.

          13.5.12 Expenses. Except as otherwise agreed by the parties or as required by applicable law, no
Party shall be required to pay any fee of the judicial reference proceeding or the referee except
to the extent of
the costs that would be imposed upon the disputant if the Dispute had been filed as a suit in
court. The referee may not award against either Party any expenses in excess of those that would
be recoverable as costs if the Dispute had been litigated to final judgment in court. Each party
to the judicial reference proceeding shall bear its own attorneys’ fees and costs in connection
with such proceeding.

          13.5.13 Severability. If the referee or any court determines that any provision of this Article is
unenforceable for any reason, that provision shall be severed, and judicial reference shall be
conducted under the remaining enforceable terms of this Section.

          13.5.14 Statutes of Limitation. Nothing in this Section shall be considered to toll, stay, reduce
or extend any applicable statutes of limitations; provided, however, that the

26

 

Seller Parties or any
Buyer shall be entitled to commence a legal action which in the good faith determination of such
Party(ies) is necessary to preserve their rights under any applicable statute of limitations,
provided that such Party shall take no further steps in prosecuting the action until it has
complied with the procedures described above.

     13.6 Time of the Essence. Time is of the essence of each and every provision of this Agreement and
Seller and Buyer, by execution of this Agreement, specifically acknowledges the importance of
observing each and every time period in this Agreement. In the event any date, or the final date
of any period, which is set out in any provision of this Agreement falls on other than a Business
Day, in such event such date or time period, as the case may be, shall be extended to the next
Business Day.

     13.7 Successors and Assigns. Subject to the restrictions and prohibitions on assignment set forth
in Article 9, each and all of the covenants and conditions of this Agreement shall inure to the
benefit of and shall be binding upon the successors in interest of Seller, and, subject to the
restrictions on transfers herein provided, the successors, heirs, representatives and assigns of
Buyer. As used in the foregoing, “successors” shall refer both to the parties’ interest in the
Property and to the successors to all or substantially all of their assets and to their successors
by merger or consolidation.

     13.8 Waiver. No waiver by Seller or Buyer of a breach of any of the terms, covenants or conditions
of this Agreement by Seller or Buyer shall be construed or held to be a waiver of any succeeding or
preceding breach of the same or any other term, covenant or condition herein contained. No waiver
of any default hereunder shall be implied from any omission by the other party to take any action
on account of such default if such default persists or is repeated, and no express waiver shall
affect default other than as specified in such waiver. The consent or approval by
Seller or Buyer to or of any act by the other party requiring consent or approval shall not be
deemed to waive or render unnecessary consent or approval to or of any subsequent similar acts.

     13.9 Attorney’s Fees. If any action or proceeding or judicial reference shall be instituted in
connection with this Agreement, the losing party shall pay to the prevailing party a reasonable sum
for attorneys’ fees and costs incurred in bringing or defending such action or proceeding and/or
enforcing any judgment granted therein, all of which shall be deemed to have accrued upon the
commencement of such action or proceeding and shall be paid whether or not such action or
proceeding is prosecuted to final judgment. Any judgment or order entered in such action or
proceeding shall contain a specific provision providing for the recovery of attorneys’ fees and
costs, separate from the judgment, incurred in enforcing such judgment. The prevailing party shall
be determined by the trier of fact based upon an assessment of which party’s major arguments or
positions taken in the proceedings could fairly be said to have prevailed over the other party’s
major arguments or positions on major disputed issues. All indemnity obligations under this
Agreement shall also include the costs of enforcing any indemnity. This Section is intended to be
expressly severable from the other provisions of this Agreement, is intended to survive any
judgment and is not to be deemed merged into the judgment.

27

 

     13.10 Severability. In the event that any phrase, clause, sentence, paragraph, section, article or
other portion of this Agreement shall become illegal, null or void or against public policy, for
any reason, or shall be held by any court of competent jurisdiction to be illegal, null or void or
against public policy, the remaining portions of this Agreement shall not be affected thereby and
shall remain in force and effect to the fullest extent permissible by law.

     13.11 Gender and Number. In this Agreement (unless the context requires otherwise), the masculine,
feminine and neuter genders and the singular and the plural include one another.

     13.12 No Real Estate Brokerage Commission. Seller shall not pay any real estate, brokerage,
finders or other commission or fee in connection with this Agreement except pursuant to a separate
agreement. Except for the Seller’s broker identified in Item 9 of the Basic Terms which shall be
paid by Seller and for the Buyer’s broker identified in Item 9 of the Basic Terms which shall be
paid by Buyer, each party represents and warrants to the other that it has not dealt with any
broker, finder or other party, whether or not licensed, who may be entitled to a commission,
finder’s fee or similar payment, and hereby indemnifies, protects, defends (with legal counsel
acceptable to the other party) and holds the other party free and harmless from and against any and
all costs and liabilities, including, without limitation, reasonable attorneys’ fees, for causes of
action or proceedings which may be instituted by any broker, agent or finder, licensed or
otherwise, claiming through, under or by reason of the conduct of such party in connection with
this transaction. This indemnification
shall survive the Close of Escrow. The broker, if any, shall not be entitled to any monies or
other recovery realized by Seller arising out of Buyer’s default.

     13.13 Entire Agreement. This Agreement and Exhibits constitutes the entire agreement between the
parties hereto pertaining to the subject matter hereof and all prior and contemporaneous
agreements, representations, negotiations and understandings of the parties hereto, oral or
written, are hereby superseded and merged herein. The foregoing sentence shall in no way affect
the validity of any instruments executed by the parties in the form of the exhibits attached to
this Agreement.

     13.14 Notice and Payment. Any notice to be given or other document to be delivered by any party to
the other or others hereunder, and any payments from Buyer to Seller, may be delivered in person to
an officer of any party, or may be deposited in the United States mail, duly certified or
registered, return receipt requested, with postage prepaid, or by Federal Express or other similar
overnight delivery service and addressed to the party for whom intended, as specified in the Basic
Terms or by facsimile. Any party hereto may from time to time, by written notice to the other,
designate a different address which shall be substituted for the one above specified. Unless
otherwise specifically provided for herein, all notices, payments, demands or other communications
given hereunder shall be in writing and shall be deemed to have been duly given and received upon
actual receipt (or refusal of delivery) if delivered by (i) personal delivery, (ii) mailing by
United States registered or certified mail, return receipt requested, postage prepaid, addressed as
set forth above, (iii) Federal Express or other equivalent overnight delivery system or (iv)
facsimile, provided a copy of the notice is sent on the same day by personal delivery or overnight
courier.

28

 

     13.15 No Partnership or Joint Venture. Seller and Buyer shall not, by virtue of this Agreement, in
any way or for any reason be deemed to have become a partner of the other in the conduct of its
business or otherwise, or a joint venturer. In addition, by virtue of this Agreement there shall
not be deemed to have occurred a merger of any joint enterprise between Buyer and Seller. Buyer
has made its own independent investigation regarding the Property and is not relying on any
statement or representation made by Seller, its employees or agents, except as set forth in this
Agreement.

     13.16 Modification. No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is in writing and signed by the party against which the enforcement
of such modification, waiver, amendment, discharge or change is or may be sought.

     13.17 Agreement Survives Close of Escrow. All of the Surviving Obligations shall survive the
termination of this Agreement or the Close of Escrow. All obligations referred to herein to be
performed at a time or times after the Close of
Escrow or contemplated herein to be performed after the Close of Escrow shall survive the Close of
Escrow.

     13.18 No Warranties. Except as otherwise specifically provided herein, neither Buyer nor Seller
has made any representations, warranties or agreement by or on behalf of either party to the other
party as to any matters concerning the Property. Each party expressly waives any rights of
rescission and all claims for damages or the right to bring a suit for specific performance by
reason of any statement, representation, warranty, promise or agreement, if any, not contained in
this Agreement.

     13.19 Counterparts. This Agreement may be executed in counterparts, each of which, when taken
together, shall constitute a fully executed original.

     13.20 Construction of Agreements. Each party has had this Agreement reviewed by legal counsel and
further agrees that any rule of construction to the effect that ambiguities are to be resolved
against the drafting party shall not apply in the interpretation of this Agreement or any
amendments or exhibits thereto.

     13.21 Duty of Confidentiality. Buyer and Seller represent and warrant that each shall keep all
information and/or reports obtained from the other, or related to or connected with the Property,
the other party, or this transaction, confidential and will not disclose any such information to
any person or entity without obtaining the prior written consent of the other party, which consent
shall not be unreasonably withheld, conditioned or delayed, except for (i) such disclosures to the
Escrow Agent, Title Company, and other third parties as may reasonably be necessary in order to
consummate the transactions contemplated by this Agreement or in connection with the enforcement of
or any dispute arising out of this Agreement; (ii) privileged communications by the respective
parties, including communications with the parties’ respective counsel; (iii) such disclosures as
may be necessary or required by those governmental agencies, authorities, or examiners having
jurisdiction over each of the parties; and (iv) such disclosures as may be required by subpoena or
any other similar court order or discovery request in any civil or criminal proceeding or
investigation.

29

 

     13.22 Exhibits. All exhibits attached hereto are incorporated herein by reference.

     13.23 Cooperation in Exchange. Buyer and Seller both agree to reasonably cooperate, at no cost or liability to such party, in
effectuating the purchase and sale of the Property as an IRC Section 1031 tax deferred exchange if
requested by either party.

     13.24 AGREEMENT WHEN SIGNED. THIS AGREEMENT SHALL BE OF NO FORCE OR EFFECT UNLESS AND UNTIL IT IS
EXECUTED BY EACH PARTY AND AN EXECUTED COUNTERPART IS DELIVERED BY EACH PARTY TO THE OTHER PARTY
AND TO THE ESCROW AGENT.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the Effective
Date.

	 	 	 	 	 	 	 	 	 
	SELLER:	 	BUYER:
	 
	 	 	 	 	 	 	 	 
	NEXUS EQUITY VI, a California limited liability company	 	SLOUGH ESTATES USA INC., a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	By:	 	LIGAND PHARMACEUTICALS	 	 	 	 
	 	 	INCORPORATED, a Delaware	 	By:	 	/s/ Marshall Lees
	 

	 	 	 	 	 	 	 	 
	 	 	corporation, its Sole Member	 	Name:	 	Marchall Lees
	 

	 	 	 	 	 	Title:
	 	President/CEO
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Paul V. Maier	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Its: Senior VP, CFO	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Jonathan M. Bergschneider
	 

	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Warner R. Broaddus
	 	Name:
	 	Jonathan M. Bergschneider
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Its: GC, VP & Secty
	 	Title:
	 	Senior Vice President
	 
	 	 	 	 	 	 	 	 
	LIGAND PHARMACEUTICALS	 	 	 	 
	INCORPORATED, a Delaware corporation	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:	 	/s/ Paul V. Maier	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Its: Senior VP, CFO	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:	 	/s/ Warner R. Broaddus	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Its: GC, VP & Secty	 	 	 	 

30

 

CONSENT OF ESCROW AGENT

     The undersigned Escrow Agent hereby agrees to (i) accept the foregoing Agreement, (ii) be
escrow agent under said Agreement and (iii) be bound by said Agreement in the performance of its
duties as escrow agent.

	 	 	 	 	 
	DATED:                                                            	 	CHICAGO TITLE COMPANY
	 	 	(“Escrow Agent”)
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

1

 

EXHIBIT A

Legal Description of the Land

PARCEL 1:

LOT 16 OF TORREY PINES SCIENCE CENTER, UNIT NO. 2, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO,
STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 12845, FILED IN THE OFFICE OF THE COUNTY RECORDER
OF SAN DIEGO COUNTY, JULY 23, 1991.

PARCEL 2:

AN EASEMENT FOR (A) ACCESS, INGRESS AND EGRESS FOR FIRE AND OTHER EMERGENCY PURPOSES AND (B)
ACCESS, INGRESS AND EGRESS FOR ALL OTHER NON-EMERGENCY PURPOSES OVER UNDER, ALONG UNDER THROUGH AND
ACROSS THE WESTERLY 178 FEET OF THE SOUTHERLY 15 FEET OF LOT 17 OF TORREY PINES SCIENCE CENTER UNIT
NO. 2 IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF
NO. 12845.

THE SIDELINES OF SAID 15-FOOT WIDE EASEMENT SHALL BE MEASURED PARALLEL AND PERPENDICULAR TO THE
SOUTHERLY AND WESTERLY LINES OF SAID LOT 17.

PARCEL 3:

PARCEL 1 OF PARCEL MAP 17826, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP THEREOF, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, FEBRUARY
18, 1997.

PARCEL 4:

A RECIPROCAL EASEMENT AND RIGHT-OF-WAY FOR THE BENEFIT OF PARCEL 1 AS SET FORTH IN THAT CERTAIN
GRANT OF RECIPROCAL ACCESS EASEMENTS EXECUTED AS OF SEPTEMBER 19, 1997 AND RECORDED OCTOBER 2,
1997 AS INSTRUMENT NO. 1997-490643 OF THE OFFICIAL RECORDS OF SAN DIEGO COUNTY, CALIFORNIA, WHICH
EASEMENT AND RIGHT-OF-WAY IS LOCATED OVER, UPON, ALONG, UNDER, THROUGH AND ACROSS A PORTION OF LOT
13 OF TORREY PINES SCIENCE CENTER, UNIT 2, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO MAP THEREOF NO. 12845.

PARCEL 5:

PARCEL 2 OF PARCEL MAP NO. 17826, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO MAP THEREOF FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, FEBRUARY 18, 1997.

 

 

EXHIBIT A-1

List of Property Documents

	A.	 	Current and Prior Year Tax Bills
	 
	B.	 	Prior year’s expense summary
	 
	C.	 	Vendor List and Contracts
	 
	D.	 	Property Insurance Policy

 

 

EXHIBIT B

BILL OF SALE

     NEXUS EQUITY VI, a California limited liability company, and LIGAND PHARMACEUTICALS
INCORPORATED, a Delaware corporation (“Seller”), for good and valuable consideration paid by SLOUGH
ESTATES USA INC., a Delaware corporation (“Buyer”), the receipt and sufficiency of which is hereby
acknowledged, hereby sells, transfers, grants, bargains, conveys, assigns, and delivers to Buyer,
its successors and assigns, all of the Fixtures and Personal Property (as defined in that certain
Purchase Agreement and Escrow Instructions by and between Seller and Buyer dated as of September
___, 2006 (the “Purchase Agreement”)) pertaining to the land more particularly described on
Schedule 1 attached hereto, including, without limiting the generality of the foregoing, those
items listed in Schedule 2 attached hereto (collectively, the “Property”). The Property is sold in
an “as-is” condition without warranty, except that Seller shall warrant and defend unto Buyer and
Buyer’s successors and assigns title to the Property against all persons except those claiming by,
through or under Buyer.

     Seller shall promptly execute and deliver to Buyer any additional instrument or other document
which Buyer reasonably requests to evidence or better effect the sale and transfer contained
herein. Nothing contained in this Bill of Sale shall be deemed to limit, waive or otherwise
derogate from any warranty, representation, covenant or indemnification made in the Purchase
Agreement by either Seller or Buyer and none of such provisions in the Purchase Agreement shall be
deemed to have merged into the sale and transfer made by this Bill of Sale. Each individual
executing and delivering this Bill of Sale on behalf of Seller hereby represents and warrants to
Buyer that such individual has been duly authorized and empowered to make such execution and
delivery. The provisions of this instrument shall be binding upon and inure to the benefit of
Seller and Buyer and their respective successors and assigns.

 

 

     IN WITNESS WHEREOF, Seller has executed this Bill of Sale this ___day of ___2006.

	 	 	 	 	 	 	 	 	 	 	 
	SELLER:	 	BUYER:
	 
	 	 	 	 	 	 	 	 	 	 
	NEXUS EQUITY VI, a California limited liability company	 	SLOUGH ESTATES USA INC., a Delaware corporation
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	LIGAND PHARMACEUTICALS	 	 	 	 
	 	 	INCORPORATED, a Delaware	 	By:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 	corporation, its Sole Member	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 	 	Name:	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:
	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	LIGAND PHARMACEUTICALS	 	 	 	 
	INCORPORATED, a Delaware corporation	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 

 

 

SCHEDULE 1 TO EXHIBIT B

LAND

PARCEL 1:

LOT 16 OF TORREY PINES SCIENCE CENTER, UNIT NO. 2, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO,
STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 12845, FILED IN THE OFFICE OF THE COUNTY RECORDER
OF SAN DIEGO COUNTY, JULY 23, 1991.

PARCEL 2:

AN EASEMENT FOR (A) ACCESS, INGRESS AND EGRESS FOR FIRE AND OTHER EMERGENCY PURPOSES AND (B)
ACCESS, INGRESS AND EGRESS FOR ALL OTHER NON-EMERGENCY PURPOSES OVER UNDER, ALONG UNDER THROUGH AND
ACROSS THE WESTERLY 178 FEET OF THE SOUTHERLY 15 FEET OF LOT 17 OF TORREY PINES SCIENCE CENTER UNIT
NO. 2 IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF
NO. 12845.

THE SIDELINES OF SAID 15-FOOT WIDE EASEMENT SHALL BE MEASURED PARALLEL AND PERPENDICULAR TO THE
SOUTHERLY AND WESTERLY LINES OF SAID LOT 17.

PARCEL 3:

PARCEL 1 OF PARCEL MAP 17826, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP THEREOF, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, FEBRUARY
18, 1997.

PARCEL 4:

A RECIPROCAL EASEMENT AND RIGHT-OF-WAY FOR THE BENEFIT OF PARCEL 1 AS SET FORTH IN THAT CERTAIN
GRANT OF RECIPROCAL ACCESS EASEMENTS EXECUTED AS OF SEPTEMBER 19, 1997 AND RECORDED OCTOBER 2,
1997 AS INSTRUMENT NO. 1997-490643 OF THE OFFICIAL RECORDS OF SAN DIEGO COUNTY, CALIFORNIA, WHICH
EASEMENT AND RIGHT-OF-WAY IS LOCATED OVER, UPON, ALONG, UNDER, THROUGH AND ACROSS A PORTION OF LOT
13 OF TORREY PINES SCIENCE CENTER, UNIT 2, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO MAP THEREOF NO. 12845.

PARCEL 5:

PARCEL 2 OF PARCEL MAP NO. 17826, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO MAP THEREOF FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, FEBRUARY 18, 1997.

 

 

SCHEDULE 2 TO EXHIBIT B

LIST OF PERSONAL PROPERTY

[To Be Attached]

 

 

					
	October 13, 2006
	 	LIGAND PHARMACEUTICALS
	 	Page: 1

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	System #	 	Asset TAG#	 	Description	 	Location	 	Acq date
	 	 	 	 	 	3345	 	 	N/A
	 	FUME HOOD, FLOORING

	 	SC2	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	1990	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	849	 	 	 	 	MISC.

	 	SC2
	 	11/30/1990
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	1992	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	844	 	 	 	 	LEASEHOLD LABOR

	 	SC2
	 	10/16/1992
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	1995	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	1523	 	 	 	 	PAGING SPEAKERS

	 	SC2
	 	1/16/1995
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	1998	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	2888	 	 	N/A
	 	FREEZER ALARM SYSTEM

	 	SC2
	 	2/19/1998
	 	 	 	 	 	3026	 	 	N/A
	 	COMMONS LANDSCAPING

	 	SC2
	 	5/31/1998
	 	 	 	 	 	3030	 	 	N/A
	 	COMMONS CONSTRUCTION

	 	SC2
	 	4/30/1998
	 	 	 	 	 	3113	 	 	N/A
	 	CAFETERIA, ANTI FATIGUE MATS

	 	SC2
	 	7/31/1998
	 	 	 	 	 	3117	 	 	N/A
	 	PAINTING, “TRESTLES AT TORREY PINES”

	 	SC2
	 	6/30/1998
	 	 	 	 	 	3173	 	 	N/A
	 	INTERIOR DESIGN, PAINTINGS/FRAMES

	 	SC2
	 	9/30/1998
	 	 	 	 	 	3197	 	 	N/A
	 	DOCUTECH ROOM — CABINETRY

	 	SC2
	 	10/30/1998
	 	 	 	 	 	3198	 	 	N/A
	 	DOCUTECH ROOM — CONTROLS/WIRING FO

	 	SC2
	 	12/31/1998
	 	 	 	 	 	3199	 	 	N/A
	 	DOCUTECH ROOM — FAN COIL

	 	SC2
	 	11/30/1998
	 	 	 	 	 	3212	 	 	N/A
	 	INTERIOR DESIGN

	 	SC2
	 	11/30/1998
	 	 	 	 	 	3215	 	 	N/A
	 	BOILER RETROFIT, CONSULTING SERVICES

	 	SC2
	 	12/31/1998
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	1999	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	3583	 	 	N/A
	 	Construction

	 	SC2
	 	12/20/1999
	 	 	 	 	 	3584	 	 	N/A
	 	Construction

	 	SC2
	 	12/20/1999
	 	 	 	 	 	3318	 	 	N/A
	 	CORE ROBOTICS SYSTEM, ELECTRICAL SE

	 	SC2
	 	3/31/1999
	 	 	 	 	 	3319	 	 	N/A
	 	CORE ROBOTICS SYSTEM, MECHANICAL S

	 	SC2
	 	3/31/1999
	 	 	 	 	 	3320	 	 	N/A
	 	CORE ROBOTICS SYSTEM, SERVICES

	 	SC2
	 	1/31/1999
	 	 	 	 	 	3347	 	 	CAR268
	 	BOILER HEAT RECLAIM SYSTEM, MODEL T

	 	SC2
	 	8/30/1999
	 	 	 	 	 	3350	 	 	N/A
	 	BOILER RETROFIT, CONSULTING SERVICES

	 	SC2
	 	2/28/1999
	 	 	 	 	 	3384	 	 	N/A
	 	SCI AND SC2 WIRING MODIFICATIONS AND

	 	SC2
	 	3/31/1999
	 	 	 	 	 	3392	 	 	N/A
	 	MED CHEM 6’ FUME HOOD MODIFICATIONS

	 	SC2
	 	6/30/1999
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	2000	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	3608	 	 	CAR 31
	 	Sink Relocation & HVAC

	 	SC2
	 	3/15/2000
	 	 	 	 	 	3834	 	 	CAR 30
	 	CONSTRUCTION

	 	SC2
	 	9/7/2000
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	2001	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	4033	 	 	N/A
	 	REMODEL

	 	SC2
	 	7/28/2001
	 	 	 	 	 	4064	 	 	N/A
	 	LABOR

	 	SC2
	 	5/16/2001
	 	 	 	 	 	4065	 	 	N/A
	 	LABOR

	 	SC2
	 	6/19/2001
	 	 	 	 	 	4094	 	 	N/A
	 	RELOCATION OF SV TO SC2

	 	SC2
	 	8/23/2001
	 	 	 	 	 	4095	 	 	N/A
	 	LEASEHOLD IMPROVEMENTS

	 	SC2
	 	8/23/2001
	 	 	 	 	 	4148	 	 	N/A
	 	REMODEL

	 	SC2
	 	10/31/2001
	 	 	 	 	 	4189	 	 	N/A
	 	CONSTRUCTION

	 	SC2
	 	10/18/2001
	 	 	 	 	 	4190	 	 	N/A
	 	RELOCATE

	 	SC2
	 	11/13/2001
	 	 	 	 	 	4220	 	 	N/A
	 	LABOR

	 	SC2
	 	11/30/2001
	 	 	 	 	 	4244	 	 	N/A
	 	RETROFIT MED CHEM LABS

	 	SC2
	 	12/4/2001
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	2002	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	4251	 	 	N/A
	 	REMODEL KILOLAB & ROOF WELL

	 	SC2
	 	1/15/2002
	 	 	 	 	 	4252	 	 	N/A
	 	CONSTRUCTION

	 	SC2
	 	2/7/2002
	 	 	 	 	 	4372	 	 	N/A
	 	INSTALLATION

	 	SC2
	 	4/18/2002
	 	 	 	 	 	4441	 	 	N/A
	 	REMODEL

	 	SC2
	 	7/24/2002
	 	 	 	 	 	4564	 	 	N/A
	 	CUBICLES

	 	SC2
	 	12/23/2002

 

 

					
	October 13, 2006
	 	LIGAND PHARMACEUTICALS
	 	Page: 2

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	System #	 	Asset TAG#	 	Description	 	Location	 	Acq date
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	2003	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	4804	 	 	N/A
	 	SERVICE ON BOILER

	 	SC2
	 	9/15/2003
	 	 	 	 	 	4815	 	 	N/A
	 	SERVICE ON BOILER

	 	SC2
	 	10/15/2003
	 	 	 	 	 	4859	 	 	N/A
	 	LEASEHOLD IMPROVEMENTS

	 	SC2
	 	10/31/2003
	 	 	 	 	 	4860	 	 	N/A
	 	LEASEHOLD IMPROVEMENTS

	 	SC2
	 	10/21/2003
	 	 	 	 	 	4866	 	 	N/A
	 	LEASEHOLD IMPROVEMENTS

	 	SC2
	 	11/8/2003
	 	 	 	 	 	4867	 	 	N/A
	 	LEASEHOLD IMPROVEMENTS

	 	SC2
	 	10/21/2003
	 	 	 	 	 	4910	 	 	N/A
	 	DECOMMISSIONING PROJECT

	 	SC2
	 	11/17/2003
	 	 	 	 	 	4911	 	 	N/A
	 	LABORATORY CLEANING

	 	SC2
	 	11/1/2003
	 	 	 	 	 	4973	 	 	N/A
	 	WALL MOUNT

	 	SC2
	 	12/12/2003
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	2004	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	4880	 	 	N/A
	 	CONSTRUCTION

	 	SC2
	 	3/25/2004
	 	 	 	 	 	4974	 	 	N/A
	 	MATERIALS

	 	SC2
	 	1/5/2004
	 	 	 	 	 	4995	 	 	N/A
	 	INSTALLATION OF UPS

	 	SC2
	 	2/24/2004
	 	 	 	 	 	5218	 	 	N/A
	 	LIGAND RM 160 EXPENASION

	 	SC2
	 	6/30/2004
	 	 	 	 	 	5268	 	 	N/A
	 	CARD PRINTER

	 	SC2
	 	6/29/2004
	 	 	 	 	 	5269	 	 	N/A
	 	WATER TANK

	 	SC2
	 	7/28/2004
	 	 	 	 	 	5270	 	 	N/A
	 	LEASEHOLD IMPROVMENT

	 	SC2
	 	7/30/2004
	 	 	 	 	 	5299	 	 	N/A
	 	LEASEHOLD IMPROVEMENTS

	 	SC2
	 	12/31/2004
	 	 	 	 	 	5310	 	 	n/a
	 	INSTALLATION AND FURNISHING MATERIA

	 	SC2
	 	9/8/2004
	 	 	 	 	 	3	 	 	N/A
	 	TENANT IMPROVEMENTS

	 	SC2
	 	5/1/2004
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	2005	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	5506	 	 	4152
	 	AMAG SOFTWARE

	 	SC2
	 	1/24/2005
	 	 	 	 	 	5557	 	 	NA
	 	LIGAND HAZMAT DOOR EXPANSION

	 	SC2
	 	4/30/2005
	 	 	 	 	 	5618	 	 	N/A
	 	MODIFY RECEPTIONIST DESK

	 	SC2
	 	4/8/2005
	 	 	 	 	 	5677	 	 	4382-438
	 	CCTV SECURITY SYSTEM

	 	SC2
	 	5/25/2005
	 	 	 	 	 	5678	 	 	N/A
	 	SECURITY SYSTEM CAMERA ADDITIONS

	 	SC2
	 	10/11/2005
	 	 	 	 	 	5870	 	 	N/A
	 	VARIABLE SPEED DRIVES FOR AIR HANDLE

	 	SC2
	 	11/16/2005
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	2006	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	5874	 	 	N/A
	 	VARIABLE SPEED DRIVES FOR AIR HANDLE

	 	SC2
	 	2/21/2006
	 	 	 	 	 	5885	 	 	N/A
	 	HAZ MAT SHEET METAL COVERS

	 	SC2
	 	4/30/2006

 

 

EXHIBIT C

[INTENTIONALLY DELETED]

 

 

EXHIBIT D

ASSIGNMENT OF WARRANTIES AND GENERAL INTANGIBLES

     This Assignment of Warranties and General Intangibles (“Assignment”) is made as of
___, 2006, by NEXUS EQUITY VI, LLC, a California limited liability company, and LIGAND
PHARMACEUTICALS INCORPORATED, a Delaware corporation (“Assignor”), to SLOUGH ESTATES USA INC., a
Delaware corporation (“Assignee”).

     FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged, Assignor
hereby assigns and transfers unto Assignee all of its right, title, claim and interest in and under
(i) all warranties, indemnities and guaranties (including all statutory, express and implied
warranties) made by or received from any third party with respect to any site development,
building, building component, structure, improvement, fixture, machinery, equipment, or material
(collectively, “Warranties”) situated on, contained in any building or other improvement situated
on, or comprising a part of any building or other improvement situated on, or as part of, any part
of that certain real property described in Schedule 1 attached hereto (the “Property”), (ii) any
and all architectural drawings, plans, specifications, soils tests, engineering reports or’ similar
materials relating to all or any of the Property; (iii) all governmental entitlements, permits,
approvals, permissions, environmental clearances, rights and licenses which relate to all or any
part of the Property; and (iv) all general intangibles benefiting or relating to the development,
use or operation of the Property (collectively, the “General Intangibles”). Except for the express
representations and warranties set forth in that certain Purchase Agreement by and between Assignor
and Assignee dated as of ___, 2006, Assignor makes no warranties as to the existence, nature,
extent, assignability, or effectiveness of the General Intangibles. This Assignment only applies
to the General Intangibles insofar us they affect the Property and does not assign any General
Intangibles to the extent they apply to other property. In the event of any litigation between
Assignor and Assignee arising out of this Assignment, the losing party shall pay the prevailing
party’s costs and expenses of such litigation, including, without limitation, attorneys’ fees.
This Assignment shall be binding on and inure to the benefit of the parties hereto, their heirs,
executors, administrators, successors in interest and assigns. This Assignment shall be governed
by and construed in accordance with the laws of the State of California. This Assignment may be
executed in any number of counterparts, each of which shall be deemed to be an original and all of
which shall constitute one and the same agreement.

     Assignee shall indemnify, defend and hold Assignor harmless from and against any and all
claims, costs, liabilities, losses, damages or expenses, including, without limitation, reasonable
attorneys’ fees, arising or accruing under or in connection with the General Intangibles on or
after the date hereof. Assignor shall indemnify, defend and hold Assignee harmless from and
against any and all claims, costs, liabilities, losses, damages or expenses, including, without
limitation, reasonable attorneys’ fees, arising or accruing under or in connection with the General
Intangibles prior to the date hereof.

 

 

     IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment effective as of the
date first above written.

ASSIGNOR:

NEXUS EQUITY VI, a California limited liability company

	 	 	 	 	 	 	 
	By:	 	LIGAND PHARMACEUTICALS INCORPORATED, a

Delaware corporation, its Sole Member
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Its:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Its:	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 
	LIGAND PHARMACEUTICALS INCORPORATED, a 

Delaware corporation
	 
	 	 	 	 
	By:
	 	 	 	 
	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 

ASSIGNEE:

SLOUGH ESTATES USA INC., a Delaware corporation

	 	 	 
	By:
	 	 
	 

	 	 
	Its:
	 	 
	 

	 	 
	Title:
	 	 
	 

	 	 
	 
	 	 
	By:
	 	 
	 

	 	 
	Its:
	 	 
	 

	 	 
	Title:
	 	 
	 

	 	 

 

 

SCHEDULE 1 TO EXHIBIT D

LAND

PARCEL 1:

LOT 16 OF TORREY PINES SCIENCE CENTER, UNIT NO. 2, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO,
STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 12845, FILED IN THE OFFICE OF THE COUNTY RECORDER
OF SAN DIEGO COUNTY, JULY 23, 1991.

PARCEL 2:

AN EASEMENT FOR (A) ACCESS, INGRESS AND EGRESS FOR FIRE AND OTHER EMERGENCY PURPOSES AND (B)
ACCESS, INGRESS AND EGRESS FOR ALL OTHER NON-EMERGENCY PURPOSES OVER UNDER, ALONG UNDER THROUGH AND
ACROSS THE WESTERLY 178 FEET OF THE SOUTHERLY 15 FEET OF LOT 17 OF TORREY PINES SCIENCE CENTER UNIT
NO. 2 IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF
NO. 12845.

THE SIDELINES OF SAID 15-FOOT WIDE EASEMENT SHALL BE MEASURED PARALLEL AND PERPENDICULAR TO THE
SOUTHERLY AND WESTERLY LINES OF SAID LOT 17.

PARCEL 3:

PARCEL 1 OF PARCEL MAP 17826, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP THEREOF, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, FEBRUARY
18, 1997.

PARCEL 4:

A RECIPROCAL EASEMENT AND RIGHT-OF-WAY FOR THE BENEFIT OF PARCEL 1 AS SET FORTH IN THAT CERTAIN
GRANT OF RECIPROCAL ACCESS EASEMENTS EXECUTED AS OF SEPTEMBER 19, 1997 AND RECORDED OCTOBER 2,
1997 AS INSTRUMENT NO. 1997-490643 OF THE OFFICIAL RECORDS OF SAN DIEGO COUNTY, CALIFORNIA, WHICH
EASEMENT AND RIGHT-OF-WAY IS LOCATED OVER, UPON, ALONG, UNDER, THROUGH AND ACROSS A PORTION OF LOT
13 OF TORREY PINES SCIENCE CENTER, UNIT 2, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO MAP THEREOF NO. 12845.

PARCEL 5:

PARCEL 2 OF PARCEL MAP NO. 17826, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO MAP THEREOF FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, FEBRUARY 18, 1997.

 

 

EXHIBIT E

ACCESS AGREEMENT

[To Be Attached]

 

 

ACCESS AGREEMENT

     THIS ACCESS AGREEMENT (“Access Agreement”) is made as of September 21, 2006 by and
between NEXUS EQUITY VI, LLC, a California limited liability company, LIGAND
PHARMACEUTICALS INCORPORATED, a Delaware corporation (collectively, “Owner”), and SLOUGH
ESTATES USA INC., a Delaware corporation (“Prospective Buyer”).

RECITAL

     A. Owner owns the real property located at 10275, 10265, and 10285 Science Center
Drive, San Diego, California (“Property”).

     B. Owner and Prospective Buyer have executed (or are about to execute) a non-
binding letter of intent (“Letter of Intent”) and may execute a binding Purchase
Agreement
(“Purchase Agreement”) for Prospective Buyer to purchase the Property from Owner.

     C. Prospective Buyer desires to receive copies of the Documents (as hereinafter
defined) and enter onto the Property for the purpose of conducting the Studies (as
hereinafter
defined) as more particularly described herein (the receipt of Documents and the
conduct of the
Studies are collectively referred to herein as “Due Diligence”).

     NOW, THEREFORE, in consideration of the premises, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties do hereby covenant, declare and agree as set forth
below.

     1. Documents: Permission to Enter Upon Property. Within two (2) days after
the execution of this Access Agreement, Owner will deliver to Prospective Buyer copies
of all documents in Owner’s possession that relate to the Property and are not
privileged or confidential (“Documents”). Such delivery shall be without any
representation or warranty of any kind, including, but not limited to, accuracy of
information or completeness of copies. In addition, subject to the terms and conditions
hereof, from the date hereof until this Access Agreement terminates or expires,
Prospective Buyer and its agents, employees, representatives, contractors and
consultants (“Agents”) may enter the Property for the purpose of conducting inspections
of the physical condition, roof, and other aspects of the Property deemed reasonably
necessary by Prospective Buyer (“Studies”). Prospective Buyer shall deliver notice to
Owner at least two (2) business days prior to any desired entry upon the Property. Owner
may designate one or more representatives to accompany Prospective Buyer and/or its
Agents at any and all times of such entry. Any entry by Prospective Buyer and any of its
Agents shall be at times and days selected by and convenient for Owner, and shall not
interfere with or intrude upon any operations or business in, on or around the Property.
Prospective Buyer shall not gather any samples or conduct any intrusive test on the
Property without Owner’s prior written approval, which approval may be given or withheld
in Owner’s sole and absolute discretion. The right given to Prospective Buyer by this
Access Agreement is a license only, is not an interest of any kind in the Property, and
is not coupled with any interest or other right.

1

 

     2. Government Regulations and Other Obligations. Prospective Buyer
shall obtain,
at its sole cost and expense, all governmental permits and authorizations of whatever
nature
required for the Due Diligence. While on the Property, Prospective Buyer will comply,
and will
cause its Agents to comply, with all applicable governmental laws, ordinances, rules
and
regulations.

     3. Hazardous Materials: Property Condition. Prospective Buyer shall not
store
testing materials on the Property and in no event shall Prospective Buyer bring any
hazardous,
toxic or contaminated materials or substances on the Property, including, without
limitation, any
Hazardous Materials (as defined below). Prospective Buyer will be responsible for
any damage
done to the Property or Owner during the term of this Access Agreement and
Prospective Buyer
will pay the costs of repairing and restoring the Property to a condition
substantially similar to
the condition of the Property as of the execution date of this Access Agreement.
The term
“Hazardous Materials” shall mean any toxic or hazardous substance, material or waste
or any
pollutant or contaminant or infectious or radioactive material regulated now or in
the future
under any federal, state or local laws, ordinances, codes, statutes, regulations,
administrative
rules, policies and orders.

     4. Liens. Prospective Buyer shall not suffer or permit to be enforced
against the
Property, or any part thereof, any mechanics’, materialmen’s, contractors’ or
subcontractors’
liens arising from or any claim for damage growing out of the Due Diligence.

     5. Owner Not Liable. Owner shall not be liable for any loss, damage or
injury of
any kind or character to any person, property or the Property arising from any visit
to or on, or
any use of, the Property, or any act or omission by Prospective Buyer or its Agents
under this
Access Agreement. Prospective Buyer shall indemnify, protect, defend (with legal
counsel
selected by Owner) and hold Owner and Owner’s members, managers, officers, directors,
agents,
attorneys, employees, affiliates, successors and assigns harmless from any and all
claims,
actions, costs, expenses, damages and liabilities relating in any way to the Due
Diligence or
arising from the activities of Prospective Buyer or its Agents on or related to the
Property
pursuant to this Access Agreement.

     6. Insurance. Prospective Buyer shall, at all times after the date hereof,
maintain at
its expense, and cause its Agents to maintain, with companies acceptable to Owner,
commercial
general liability insurance on an occurrence form with limits of not less than Two
Million
Dollars ($2,000,000) combined single limit bodily injury, death and property damage
per
occurrence and business automobile coverage with limits of at least Two Million
Dollars
($2,000,000) per occurrence (“Insurance”). Any policies of Insurance required by
provisions of
this Section shall name Owner as an additional insured, and may be made a part of a
blanket
policy of insurance so long as such blanket policy contains all of the provisions
required herein
and does not reduce the coverage, impair the rights of the other party to this Access
Agreement
or negate the requirements of this Access Agreement, and includes a “per project, per
location”
endorsement. Prior to entry by Prospective Buyer or any of its Agents onto the
Property, copies
of all Insurance policies shall be delivered to Owner.

2

 

     7. Termination. The right of entry granted by this Access Agreement
shall terminate
on the earlier of (a) Owner delivering notice to Prospective Buyer of Owner’s
decision to
terminate this Access Agreement, (b) the parties entering into a Purchase Agreement,
or
(c) October 11, 2006. Notwithstanding any such termination, the obligations of
Prospective
Buyer under this Access Agreement shall survive, including, but not limited to the
obligation to
indemnify Owner set forth in Section 5 above.

     8. Confidentiality. Unless otherwise agreed to in writing by Owner,
Prospective
Buyer will keep confidential the terms and conditions of this Access Agreement, any
Purchase
Agreement, the Documents, and all other documents, contracts, prices, plans,
strategies, financial
statements, reports or other information provided to or generated by Prospective
Buyer relating
to the Property, and will not disclose any such information to any person other than
(i) those
employees, consultants and agents of Prospective Buyer who are actively and
directly
participating in the evaluation of the Property, or the appraisal, investigation or
financing of the
purchase or construction of improvements to the Property, and (ii) governmental,
administrative,
regulatory or judicial authorities in the investigation of the compliance of the
Property with
applicable legal requirements. However, Prospective Buyer expressly covenants and
agrees that
it will not disclose any code compliance, environmental or other regulatory
matters to
governmental or other authorities without the express prior written approval by Owner
unless
required by law, in which case Prospective Buyer shall immediately notify Owner
thereof. Upon
any termination of negotiations regarding the Purchase Agreement for any reason,
Prospective
Buyer will promptly deliver to Owner copies of all documents or other information
pertaining to
the Property provided to or obtained by Prospective Buyer.

     9. General Provisions.

          9.1 Entire Agreement. This Access Agreement constitutes the
entire
agreement between the parties hereto pertaining to the subject matter hereof, and all
prior and
contemporaneous agreements, representations and understandings of the parties hereto,
oral or
written, are hereby superseded and merged herein. No supplement, modification or
amendment
of this Access Agreement shall be binding unless in writing and executed by the
parties hereto.
However, the foregoing shall in no way affect the validity of the Purchase Agreement
or any
document or instrument executed by Prospective Buyer and Owner pursuant thereto.

          9.2 Governing Law. This Access Agreement shall be construed in accordance
with, and governed by, the laws of the State of California. This Access Agreement
shall be
deemed made and entered into in San Diego County.

          9.3 Counterparts. This Access Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which shall constitute
one and the
same instrument.

          9.4 Successors and Assigns. Prospective Buyer may not assign any of its
rights under this Access Agreement. Subject to the foregoing, each and all of the
covenants and
conditions of this Access Agreement shall inure to the benefit of and shall be
binding upon the

3

 

successors in interest of Owner, and the successors, heirs, representatives and
assigns of Prospective Buyer.

          9.5 Attorneys’ Fees. If any action, arbitration, or other proceeding
is
instituted between Owner and Prospective Buyer in connection with this Access
Agreement, the
losing party shall pay to the prevailing party a reasonable sum for attorneys’ fees
and costs
incurred in bringing or defending such action or proceeding and/or enforcing any
judgment
granted therein.

          9.6 Severability. If any phrase, clause, sentence, paragraph, section,
article or
other portion of this Access Agreement shall become or is held to be illegal, null or
void or
against public policy, the remaining portions of this Access Agreement shall not be
affected
thereby and shall remain in force and effect to the fullest extent permissible by
law.

          9.7 Construction of Agreement. The agreements contained herein shall not be
construed in favor of or against either party, but shall be construed as if both
parties prepared this
Access Agreement. Prospective Buyer and Owner acknowledge that they have been
represented,
or have had the opportunity to be represented, by counsel of their own choice.
Neither
Prospective Buyer nor Owner is relying upon any legal advice from the other party’s
counsel
regarding the subject matter thereof. Both parties acknowledge that they understand
the terms
and conditions of this Access Agreement and the terms and conditions of all other
documents
and agreements executed in connection herewith and that they sign the same freely.
Neither
Prospective Buyer nor Owner shall deny the enforceability of any provision of this
Access
Agreement or any of the other documents or agreements executed in connection herewith
on the
basis that it did not have legal counsel or that it did not understand any such term
or condition.

          9.8 Waiver. No waiver by a party of a breach of any of the terms, covenants
or conditions of this Access Agreement will be construed or held to be a waiver of
any
succeeding or preceding breach of the same or any other term, covenant or condition
herein
contained. No waiver of any default by a party under this Access Agreement will be
implied
from any omission by the other party to take any action on account of the default if
the default
persists or is repeated, and no express waiver will affect any default other than as
specified in the
waiver. The consent or approval by a party to or of any act by the other requiring
consent or
approval does not waive or render unnecessary the consent or approval to or of any
subsequent
similar acts.

          9.9 Notice and Payments. Any notice to be given or other document to be
delivered by any party to the other or others under this Access Agreement may be
delivered as
follows:

4

 

	 	 	 	 	 
	 

	 	To Owner:
	 	Nexus Equity VI, LLC
	 

	 	 	 	c/o Ligand Pharmaceuticals Incorporated
	 

	 	 	 	10275 Science Center Drive
	 

	 	 	 	San Diego, CA 92122
	 

	 	 	 	Attn: Mr. Paul V. Maier
	 

	 	 	 	Telephone No.: (858)550-7500
	 

	 	 	 	Facsimile No.: (858)550-7506
	 
	 	 	 	 
	 

	 	 	 	Ligand Pharmaceuticals Incorporated
	 

	 	 	 	10275 Science Center Drive
	 

	 	 	 	San Diego, CA 92122
	 

	 	 	 	Attn: Mr. Paul V. Maier
	 

	 	 	 	Telephone No.: (858)550-7500
	 

	 	 	 	Facsimile No.: (858)550-7506
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Luce, Forward, Hamilton & Scripps LLP
	 

	 	 	 	600 West Broadway, Suite 2600
	 

	 	 	 	San Diego, CA 92101
	 

	 	 	 	Attn: Robert D. Buell, Esq.
	 

	 	 	 	Telephone No.: (619) 699-2539
	 

	 	 	 	Facsimile No.: (619)645-5337
	 
	 	 	 	 
	 

	 	To Prospective Buyer:
	 	Slough Estates USA Inc.
	 

	 	 	 	400 Oyster Point Blvd., Suite 409
	 

	 	 	 	South San Francisco, CA 94080
	 

	 	 	 	Attn: Jonathan Bergschneider
	 

	 	 	 	Telephone No.: (650)875-1002
	 

	 	 	 	Facsimile No.: (650)875-1003

Any party may from time to time, by written notice to the other, designate a different
address, which shall be substituted for the one above specified. Unless otherwise
specifically provided for in this Access Agreement, all notices, demands or other
communications shall be in writing and shall be deemed to have been duly given and
received (i) upon personal delivery to an officer of any party or (ii) as of the third
Business Day after mailing by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as set forth above, or (iii) the Business Day of
confirmed delivery if delivered by Federal Express or other equivalent overnight delivery
system. Facsimile numbers are provided solely as an accommodation and shall not be
effective for delivery of notices under this Access Agreement.

5

 

     IN WITNESS WHEREOF, the undersigned have executed this Access Agreement as of
the date set forth above.

	 	 	 	 	 
	OWNER:
	 
	 	 	 	 
	NEXUS EQUITY VI, LLC, a California limited liability company
	 
	 	 	 	 
	By:	 	/s/ Paul V. Maier
	 	 	 
	 

	 	Its:
	 	SENIOR VP, CFO
	 
	 	 	 	 
	LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation
	 
	 	 	 	 
	By:	 	/s/ Paul V. Maier
	 	 	 
	 

	 	Its:
	 	SENIOR VP, CFO
	By:
	 	 	 	 
	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	PROSPECTIVE BUYER:
	 
	 	 	 	 
	SLOUGH ESTATES USA INC.,
	a Delaware corporation
	 
	 	 	 	 
	By:	 	/s/ Jonathan M.
Bergschneider
	 	 	 
	 

	 	Its:
	 	SENIOR VICE PRESIDENT
	By:
	 	 	 	 
	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 

6

 

EXHIBIT F

FORM OF DEED

	 	 	 	 
	RECORDING REQUESTED BY:
	 	 	 
	 
	 	 	 
	MAIL TAX STATEMENTS TO AND
	 	 	 
	WHEN RECORDED MAIL TO:
	 	 	 
	 
	 	 	 
	 

	 	 	 
	 
	 	 	 
	 

	 	 	 
	 
	 	 	 
	 

	 	 	 
	 
	 	 	 
	 	 	 	 

	 	 	 	 	 	 	 
	A.P.N.

	 	 	 	 
	 	SPACE ABOVE THIS LINE FOR RECORDER’S USE
	 

	 	 	 	 	 	 
	Order No.
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Escrow No.
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

DOCUMENTARY TRANSFER TAX TO BE BY SEPARATE STATEMENT PURSUANT TO CALIFORNIA REVENUE AND TAXATION
CODE SECTION 11932

GRANT DEED

FOR A VALUABLE CONSIDERATION, the receipt and adequacy of which are hereby acknowledged, NEXUS
EQUITY VI, LLC, a California limited liability company (“Grantor”), hereby GRANT(S) to SLOUGH
ESTATES USA INC., a Delaware corporation (“Grantee”), the real property in the County of San Diego,
State of California, described as:

     See Exhibit “A” attached hereto and incorporated herein by this reference.

THE REAL PROPERTY CONVEYED HEREIN BY GRANTOR TO GRANTEE IS CONVEYED AND ACCEPTED SUBJECT TO:

1. CURRENT REAL PROPERTY TAXES AND ALL UNPAID NONDELINQUENT GENERAL AND SPECIAL TAXES, BONDS AND
ASSESSMENTS;

2. ALL COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, RIGHTS, RIGHTS OF WAY AND OTHER MATTERS
OF RECORD AND/OR APPARENT BY INSPECTION; and

3. ZONING ORDINANCES AND REGULATIONS AND ANY OTHER LAWS, ORDINANCES OR GOVERNMENTAL REGULATIONS
REGULATING THE USE, OCCUPANCY OR ENJOYMENT OF THE PROPERTY.

[Signatures continued on next page]

7

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	GRANTOR:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	NEXUS EQUITY VI, a California limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	LIGAND PHARMACEUTICALS INCORPORATED,
a Delaware corporation, its Sole Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	Its:
	 	 

	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	Its:
	 	 

	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	LIGAND PHARMACEUTICALS 
INCORPORATED, a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	Its:
	 	 

	 	 
	 

	 	 	 	By:
	 	 	 	 

	 	 
	 

	 	 	 	 	 	Its:
	 	 

	 	 
	 

	 	 	 	 	 	 	 	 

	 	 

	 	 	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	COUNTY OF

	 	 	)	 	 	 

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

Signature                                          (Seal)

 

 

	 	 	 	 
	RECORDING REQUESTED BY:
	 	 	 
	
MAIL TAX STATEMENTS TO AND 

WHEN RECORDED MAIL TO:
	 	 	 
	 

	 	 	 
	 

	 	 	 
	 

	 	 	 
	 	 	 	 

A.P.N.                     

Order No.                     

Escrow No.                     

DOCUMENTARY TRANSFER TAX TO BE BY SEPARATE STATEMENT PURSUANT TO CALIFORNIA REVENUE AND TAXATION
CODE SECTION 11932

GRANT DEED

     FOR A VALUABLE CONSIDERATION, the receipt and adequacy of which are hereby acknowledged,
LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation (“Grantor”), hereby GRANT(S) to SLOUGH
ESTATES USA INC., a Delaware corporation (“Grantee”), the real property in the County of San Diego,
State of California, described as:

     See Exhibit “A” attached hereto and incorporated herein by this reference.

THE REAL PROPERTY CONVEYED HEREIN BY GRANTOR TO GRANTEE IS CONVEYED AND ACCEPTED SUBJECT TO:

	1.	 	CURRENT REAL PROPERTY TAXES AND ALL UNPAID NONDELINQUENT GENERAL AND SPECIAL TAXES, BONDS AND
ASSESSMENTS;

	2.	 	ALL COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, RIGHTS, RIGHTS OF WAY AND OTHER
MATTERS OF RECORD AND/OR APPARENT BY INSPECTION; and

	3.	 	ZONING ORDINANCES AND REGULATIONS AND ANY OTHER LAWS, ORDINANCES OR GOVERNMENTAL REGULATIONS
REGULATING THE USE, OCCUPANCY OR ENJOYMENT OF THE PROPERTY.

[Signatures continued on next page]

 

 

	 	 	 	 	 	 	 
	 	 	GRANTOR:	 	 
	 
	 	 	LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	COUNTY OF

	 	 	)	 	 	 

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

WITNESS my hand and official seal.

                                           

Signature                                          (Seal)

 

 

EXHIBIT G

LEASE

 

 

LEASE

SLOUGH ESTATES USA INC.

“Landlord”

AND

LIGAND PHARMACEUTICALS, INCORPORATED

“Tenant”

LOT 15

TORREY PINES SCIENCE CENTER

SAN DIEGO, CALIFORNIA

 

 

LEASE

     THIS
LEASE (“Lease”) is made as of the ___ day of                     , 2006, by and between SLOUGH
ESTATES USA INC., a Delaware corporation (“Landlord”), and LIGAND PHARMACEUTICALS INCORPORATED, a
Delaware corporation (“Tenant”).

     1. Lease Premises. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, those certain premises (“Premises”) consisting of (i) that certain real property (“Land”)
legally described as Parcel 2 of Parcel Map 17826, in the City of San Diego, County of San Diego,
State of California, according to Map thereof, filed in the Office of the County Recorder of San
Diego County, February 18, 1997, (ii) the building located on the Land (the “Building”) and (iii)
all landscaping, drainage, irrigation, lighting, parking facilities, walkways, driveways and other
improvements and appurtenances related thereto, including, but not limited to, ingress and egress
to the public right-of-way (the “Improvements”). The Premises are a part of a development known as
Torrey Pines Science Center.

     2. Basic Lease Provisions.

          2.1 For convenience of the parties, certain basic provisions of this Lease are set forth
herein. The provisions set forth herein are subject to the remaining terms and conditions of this
Lease and are to be interpreted in light of such remaining terms and conditions.

          2.1.1 Rentable Area of Premises: Approximately 82,500 square feet

          2.1.2 Basic Annual Rent: $2,970,000.00

          2.1.3 Monthly Installment of Basic Annual Rent: $247,500.00, subject to three percent (3%)
annual increases in accordance with Section 6

          2.1.4 Term Commencement Date:                     , 2006

          2.1.5 Term Expiration Date: Fifteen (15) years from the Term Commencement Date

          2.1.6 Permitted Use: Uses permitted in Section 10.1

          2.1.7 Address for Rent Payment and Notices to Landlord:

Slough Estates USA Inc.

444 N. Michigan Ave., Suite 3230

Chicago, IL 60611

Attn: Marshall Lees

 

 

Address for Notices to Tenant:

Ligand Pharmaceuticals Incorporated

10275 Science Center Drive

San Diego, California 92121

Attn: Chief Financial Officer

          2.1.8 Security Deposit: None.

     3. Term.

          3.1 This Lease shall take effect upon the date of execution hereof by each of the parties
hereto, and each of the provisions hereof shall be binding upon and inure to the benefit of
Landlord and Tenant from the date of execution hereof by each of the parties hereto.

          3.2 The approximate term of this Lease is as set forth in Section 2.1.4. The actual term of
this Lease will be that period from the Term Commencement Date through the Term Expiration Date,
subject to earlier termination of this Lease or extension of the term of this Lease as provided
herein.

     4. Possession and Commencement Date.

          4.1 Tenant acknowledges that it is currently in possession of the Premises and that Landlord’s
obligation to tender possession of the Premises to Tenant has been satisfied.

          4.2 Landlord and Tenant shall execute a written acknowledgment of the Term Commencement Date
and the Term Expiration Date when such is established, in substantially the form attached hereto as
Exhibit “A”.

     5. Rent.

          5.1 Tenant agrees to pay Landlord as Basic Annual Rent for the Premises the sum set forth in
Section 2.1.2, subject to the rental adjustments provided in Article 6. Basic Annual Rent shall be
paid in the equal monthly installments set forth in Section 2.1.3, subject to the rental
adjustments provided in Article 6 hereof, each in advance on the first day of each and every
calendar month during the term of this Lease.

          5.2 In addition to Basic Annual Rent, Tenant agrees to pay to Landlord as additional rent
(“Additional Rent”), at the times hereinafter specified in this Lease, Operating Expenses as
provided in Article 7, Taxes and Assessments, reimbursement and expenses of Landlord’s performance
of any obligations of Tenant under this Lease, and all other amounts that
Tenant assumes or agrees to pay under the provisions of this Lease, including without
limitation any and all other sums that may become due by reason of any default of Tenant or failure
on Tenant’s part to comply with the agreements, terms, covenants and conditions of this Lease to be
performed by Tenant.

 

 

          5.3 Basic Annual Rent and Additional Rent shall together be denominated “Rent.” Except as
expressly set forth in this Lease, Rent shall be paid to Landlord, without notice, demand,
abatement, suspension, deduction, setoff, counterclaim, or defense except as set forth in this
Lease or pursuant to law (unless otherwise set forth in this Lease), at the office of Landlord as
set forth in Section 2.1.7 or to such other person or at such other place as Landlord may from time
to time designate in writing.

          5.4 In the event the term of this Lease commences or ends on a day other than the first day of
a calendar month, then the Rent for such fraction of a month shall be prorated for such period on
the basis of a thirty (30) day month and shall be paid at the then current rate for such fractional
month prior to the commencement of the partial month.

          5.5 This is an absolutely triple net lease to Landlord. It is the intent of the parties that
the Basic Annual Rent payable under this Lease shall be a net return to Landlord and that Tenant
shall pay all costs and expenses relating to the Premises unless otherwise expressly provided in
this Lease.

     6. Rental Adjustments. The initial Basic Annual Rent set forth in Section 2.1.2 shall be
increased each year by three percent (3%). The first such increase shall become effective
commencing with that monthly rental installment which is first due on or after the first (1st)
annual anniversary of the Term Commencement Date and subsequent increases shall become effective on
the same day of each calendar year thereafter for so long as this Lease continues in effect.

     7. Additional Rent and Expenses.

          7.1 Within fifteen (15) days after receipt of a statement or invoice from Landlord, Tenant
shall pay to Landlord as Additional Rent, (i) reimbursement and expenses of Landlord’s performance
of any obligations of Tenant under this Lease, including but not limited to the provisions of
Section 7.2, Article 13 (Taxes and Assessments subject to Section 13.3), Article 16 (Utilities and
Services), Article 18 (Repairs and Maintenance), Article 22 (Damage or Destruction), and Section
24.3, and (ii) costs of management services in an amount not to exceed one percent (1%) of the then
current Basic Annual Rent, per annum (“Management Fee”). Tenant shall not be obligated to pay any
property management fees, personnel or similar costs, except for the Management Fee.

          7.2 Tenant shall pay directly to the provider of the services all costs of any kind incurred
in connection with the operation, maintenance, repairs, replacements and management of the Premises
(“Operating Expenses”), including, by way of examples and not as
a limitation upon the generality of the foregoing, (i) costs of maintenance, repairs and
replacements fixtures and personal property within the Premises as appropriate to maintain the
Premises in commercially reasonable condition (allowing wear and tear consistent with commercially
reasonable maintenance and repair standards applicable to comparable buildings), including capital
and structural improvements (as amortized over their useful life), equipment utilized for operation
and maintenance of the Premises, and all other fixtures and personal property; (ii) costs of new
fixtures added to the Premises by Tenant; (iii) costs of utilities furnished to the Premises; (iv)
sewer fees; (v) costs of trash collection; (vi) costs of cleaning;

 

 

(vii) costs of maintenance and
repairs of heating, ventilation, air conditioning, plumbing, electrical and other systems; (viii)
costs of maintenance of landscape, grounds, drives and parking areas, including periodic
resurfacing; (ix) assessments and other expenses payable pursuant to the Project Documents
(described in Section 10.2 subject to Section 13.3); (x) costs of security services and devices;
(xi) insurance premiums and portions of insured losses deductible by reason of insurance policy
terms; (xii) costs of service contracts and services of independent contractors retained by Tenant
to do work of a nature before referenced; (xiii) costs of compensation (including employment taxes
and fringe benefits) of persons who perform regular and recurring duties connected with the
day-to-day operation and maintenance exclusively of the Premises, including without limitation,
janitors, floorwaxers, window-washers, watchmen, gardeners, sweepers, and handymen and (xiv) costs
of compliance with new governmental laws, ordinances, regulations and requirements enacted after
the Term Commencement Date.

          7.3 The responsibility of Tenant for Operating Expenses attributable to the Premises shall
continue until the date of termination of the Lease. Notwithstanding the foregoing, Tenant’s
obligations to pay Operating Expenses which accrue through the date of termination of the Lease,
shall survive the termination of the Lease.

          7.4 Operating Expenses for the calendar year in which Tenant’s obligation to pay them
commences and in the calendar year in which such obligation ceases shall be prorated. Within ten
(10) days after written notice from Landlord (which, unless written notice of nonpayment is
received from the provider of an Operating Expense, may be given no more than four (4) times per
calendar year), Tenant shall deliver to Landlord evidence of the Tenant’s payment of routine and/or
monthly Operating Expenses.

          7.5 In fulfilling its obligations set forth in Section 7.2 and Article 18, Tenant shall
maintain the roof, HVAC system, elevator and other systems in accordance with no less than the
minimum standards established by the manufacturer and the minimum standards necessary to maintain
any warranties in effect, and in a commercially reasonable manner, and Tenant may enter into such
maintenance contracts as Tenant determines is reasonably necessary maintain the Premises in a first
class condition. Landlord shall have the right, upon reasonable notice, to inspect and copy any
such maintenance contracts, as well as records of maintenance conducted by Tenant or any such
service provider. Within ten (10) days after written notice from Landlord to be given no more than
one (1) time per calendar year, Tenant shall deliver to Landlord evidence of the current
maintenance contracts, inspections, and services performed.

     8. Tenant’s Right to Inspect. Tenant shall have the right, upon reasonable notice, to inspect and copy documents showing in
reasonable detail the actual expense paid by Landlord pursuant to Section 7.1 of this Lease, if
any. Landlord shall maintain such documents as are reasonably necessary for such purpose for a
period of not less than one (1) year. If, after such inspection, Tenant disputes the amount of
Additional Rent payable by Tenant, Tenant shall be entitled to retain an independent nationally or
regionally recognized certified public accountant to audit or review Landlord’s records to
determine the proper amount of Additional Rent. If such audit or review reveals that Landlord has
overcharged Tenant, then within ten (10) business days after the results of such audit are made
available to Landlord, Landlord shall reimburse Tenant the amount of such overcharge. If the audit
reveals that Tenant was undercharged, then within ten (10) business days after the results of the
audit are made available to Tenant, Tenant shall reimburse

 

 

Landlord the amount of such undercharge.
Tenant agrees to pay the cost of such audit if Tenant the Additional Rent is within 5% of the
landlord’s actual costs, and Landlord shall pay the cost of such audit if its actual costs are less
than 95% or more than 105% of the Additional Rent charged to Tenant.

     9. Security Deposit. There is no security deposit.

     10. Use.

          10.1 Tenant may use the Premises for any of those purposes, and only those purposes, allowed
by (i) the City of San Diego Scientific Research Zone Ordinance in effect from time to time and as
applicable to the Premises, (ii) any other applicable laws, regulations, ordinances, requirements,
permits and approvals applicable to the Premises, and (iii) all covenants, conditions and
restrictions in the Project Documents (defined in the following Section 10.2) or otherwise recorded
against the Land, and shall not use the Premises, or permit or suffer the Premises to be used, for
any other purpose without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Landlord acknowledges that Tenant’s activities may include scientific
research and development pertaining to pharmaceuticals (including radio-active materials and other
regulated substances), corporate and other office space, ancillary manufacturing capabilities, and
a vivarium, subject to the terms, conditions and restrictions set forth in Article 33. Tenant may
change the use of the Premises from time to time as long as such changed use is authorized by this
Section 10.1, such use is legally permissible, and Tenant first obtains the written consent of
Landlord, which consent shall not be unreasonably withheld.

          10.2 Tenant shall conduct its business operations and use the Premises in compliance with all
federal, state, and local laws, regulations, ordinances, regulations, requirements, permits and
approvals applicable to the Premises, and the Project Documents described below. Tenant shall not
use or occupy the Premises in violation of any law or regulation. Tenant shall immediately deliver
to Landlord copies of all written notices pertaining to any alleged violation of federal, state or
local laws, regulations, ordinances, requirements, permits, approvals or any alleged violation of
any of the Project Documents.

     Tenant shall comply with any direction of any governmental authority having jurisdiction which
shall, by reason of the nature of Tenant’s use or occupancy of the Premises, impose any duty upon
Tenant or Landlord with respect to the Premises or with respect to the use or occupation thereof,
including any duty to make structural or capital improvements, alterations, repairs and
replacements to the Premises.

     This Lease, and any sublease or assignment entered into by Tenant under the provisions of this
Lease, shall be subject and subordinate to any of the Project Documents affecting the Property
which may be amended or modified from time to time in a manner consistent with the terms and intent
of such Project Documents.

 

 

     The “Project Documents” include the following documents, as they may be amended from time to
time:

               (a) Hazardous Material Documents, as such are defined in Section 33.4;

               (b) Declaration of Covenants, Conditions and Restrictions for Torrey Pines Science Center
(Unit 2) dated June 22, 1994, and recorded on June 27, 1994 as File No. 1994-0405385 of the
Official Records of San Diego County, California (“CC&Rs”);

               (c) Articles of Incorporation and Bylaws of Torrey Pines Science Center Association for Unit
2;

               (d) Planned Industrial Development Permit No. 86-0884 and Planning Director Resolution No.
7658, dated September 26, 1988, as amended to incorporate the conditions of approval of Coastal
Development Permit No. 6-88-504, and including a copy of the City regulations for the SR Zone, and
amended PID 96-0738;

               (e) Coastal Development Permit No. 6-88-504, approved February 5, 1991, and all conditions of
approval thereof;

               (f) Final Map No. 12845;

               (g) Parcel Map No. 17826;

               (h) Provisions of the SR Zone and other applicable zoning as such may be adopted or amended by
the City of San Diego from time to time; and

               (i) All easements, agreements, declarations, covenants, conditions and restrictions of record
as of the Term Commencement Date.

          10.3 Tenant shall not do or permit to be done anything which will invalidate or increase the
cost of any fire, extended coverage or any other insurance policy covering the Premises, or which
will make such insurance coverage unavailable on commercially reasonable terms and conditions, and
shall comply with all rules, orders, regulations and requirements of the insurers of the Premises.

          10.4 Tenant shall comply with the Americans with Disabilities Act of 1990 (“ADA”), and the
regulations promulgated thereunder, as amended from time to time. All responsibility for
compliance with the ADA relating to the Premises and the activities conducted by Tenant within the
Premises shall be exclusively that of Tenant and not of Landlord, including any duty to make
structural or capital improvements (as set forth in Section 7.2 above), alterations, repairs and
replacements to the Premises. Any alterations to the Premises made by Tenant for the purpose of
complying with the ADA or which otherwise require compliance with the ADA shall be done in
accordance with Article 17 of this Lease; provided, that Landlord’s consent to such alterations
shall not constitute either Landlord’s assumption, in whole or in part, of Tenant’s responsibility
for compliance with the ADA, or representation or confirmation by

 

 

Landlord that such alterations
comply with the provisions of the ADA. However, nothing in this Lease shall be construed to
require Tenant to make structural or capital improvements, alterations, repairs or replacements to
comply with ADA unless and until Landlord or Tenant has received written notice of the need for
such capital improvements, alterations, repairs or replacements from a court of law exercising
proper jurisdiction with regard thereto, or from any government entity. Notwithstanding the
foregoing, Tenant shall have the right to object to and defend against any such notice from a
governmental entity, provided that (a) Tenant has good faith belief that such improvements,
alterations, repairs or replacements are unnecessary and not required to comply with ADA and (b)
Tenant agrees to indemnify and defend Landlord against and save Landlord harmless from all demands,
claims, causes of action and judgments, and all reasonable expenses incurred in investigating or
resisting the same (including reasonable attorneys’ fees), relating to Tenant’s objection or
defense against any such notice from a governmental entity.

          10.5 Tenant may maintain current signage and, subject to Landlord’s reasonable approval,
install additional signage on and about the Premises, to the extent permitted by, and in conformity
with, applicable provisions of the Project Documents and the City of San Diego Sign Ordinance.
Tenant acknowledges it is familiar with the restrictions of the Project Documents and the City of
San Diego Sign Ordinance, and is not relying on any representations or warranty of Landlord
regarding the number, size or location of any signage. No other sign, advertisement, or notice
shall be exhibited, painted or affixed by Tenant on any part of the Premises which is visible from
outside the Building, or any part of the exterior of the Building or elsewhere in the Premises,
without the prior written consent of Landlord, which consent shall not be unreasonably withheld.
The expense of design, permits, purchase and installation of any signs shall be the responsibility
of Tenant and the cost thereof shall be borne by Tenant. At the termination of the Lease, all
signs shall be the property of Tenant and may be removed from the Premises by Tenant, subject to
the provisions of Article 28.

          10.6 No equipment shall be placed at a location within the Building other than a location
designed to carry the load of the equipment. Equipment weighing in excess of floor loading
capacity shall not be placed in the Building.

     11. Brokers. Other than Burnham Real Estate (Lynn LaChapelle, Robert Prendergast, Brent
Jacobs, Greg Bisconti and Brian Cooper) on behalf of Tenant and Burnham Real Estate (Jed Stirnkorb)
on
behalf of Landlord, the parties represent and warrant one to the other that there have been no
dealings with any real estate broker or agent in connection with the negotiation of this Lease.
Tenant and Landlord shall each be responsible for any commission or other amount claimed by or due
as set forth above. Each shall indemnify, defend, protect, and hold harmless the other from any
claim of any broker as a result of any act or agreement of the indemnitor.

     12. Holding Over.

          12.1 If, with Landlord’s written consent, Tenant holds possession of all or any part of the
Premises after the expiration or earlier termination of this Lease, Tenant shall become a tenant
from month to month upon the date of such expiration or earlier termination, and in such

 

 

case
Tenant shall continue to pay in accordance with Article 5 the Basic Annual Rent as adjusted from
the Term Commencement Date in accordance with Article 6, together with Operating Expenses in
accordance with Article 7 and other Additional Rent as may be payable by Tenant, and such
month-to-month tenancy shall be subject to every other term, covenant and condition contained
herein. Such continued occupancy with Landlord’s consent shall include up to three (3) months so
long as Tenant has given written notice to Landlord at least nine (9) months prior to such
expiration or termination of the term.

          12.2 If Tenant remains in possession of all or any portion of the Premises after the
expiration or earlier termination of the term hereof without the express written consent of
Landlord, Tenant shall become a tenant at sufferance upon the terms of this Lease as may be
applicable to a tenant at sufferance and any such holdover shall not constitute an extension of
this Lease; except that Tenant shall pay monthly rental for the first three (3) months shall be
equal to one hundred twenty percent (120%) of the Basic Annual Rent in effect during the last
twelve (12) months of the Lease term, and thereafter shall be equal to one hundred fifty percent
(150%) of the Basic Annual Rent in effect during the last twelve (12) months of the regular Lease
term. In addition, if Landlord delivers ninety (90) days prior written notice to Tenant that a
specifically identified successor occupant is ready, willing and able to move in and occupy the
Premises upon the expiration or termination of the term hereof, then Landlord may pursue any and
all legal remedies available to Landlord under applicable law with respect to such unconsented
holding over by Tenant, may recover all damages, direct or consequential resulting therefrom, and
Tenant shall indemnify, defend, and hold Landlord harmless from and against any losses, damages, or
claims related thereto.

          12.3 Acceptance by Landlord of Rent after such expiration or earlier termination shall not
result in a renewal or reinstatement of this Lease.

          12.4 The foregoing provisions of this Article 12 are in addition to and do not affect
Landlord’s right to re-entry or any other rights of Landlord under Article 24 or elsewhere in this
Lease or as otherwise provided by law.

     13. Taxes and Assessments.

          13.1 Landlord shall direct the applicable tax authority to submit the appropriate bill/invoice
directly to Tenant at the address identified herein. Upon receipt of such bill or invoice, Tenant
shall pay and discharge as they become due, before delinquency, all taxes, assessments, rates,
charges, license fees, municipal liens, levies, excises or imposts, whether general or special, or
ordinary or extraordinary, of every name, nature, and kind whatsoever, including all governmental
charges of whatsoever name, nature, or kind, which may be levied, assessed, charged, or imposed, or
may become a lien or charge on the Premises, or any part thereof, or any improvements now or
hereafter thereon, or on Landlord by reason of its ownership, leasing, renting or operating of the
Premises or any part thereof, during the entire term hereof, saving and excepting only those taxes
hereinafter in this Article 13 specifically excepted (the “Taxes”). Taxes include, without
limitation, real estate taxes, Mello-Roos, supplemental taxes, personal property taxes, sewer
rents, water rents, assessments (special or otherwise), transit taxes, any tax or charge for fire
protection, streets, sidewalks, road

 

 

maintenance, refuse or other service, any tax imposed upon
this transaction, any tax or excise or rent or any other tax or fee (however described) on account
of rental received for use and occupancy of any or all of the Project, whether any such taxes are
imposed by the United States, the state, any local governmental municipality, county or authority
or agency, or any other political subdivision of any thereof, saving and excepting only those taxes
hereinafter in this Article 13 specifically excepted. Taxes shall also include all reasonable
costs and expenses (including, without limitation, legal fees and court costs) charged for the
protest or the reduction of any of the aforesaid taxes by Tenant, whether such protest or reduction
is ultimately successful or not.

          13.2 Specifically and without in any way limiting the generality of the foregoing, Tenant
shall pay any and all special assessments or levies or charges made by any municipal or political
subdivision for local improvements, and shall pay the same in cash as they shall fall due and
before they shall become delinquent and as required by the act and proceedings under which any such
assessments or levies or charges are made by any municipal or political subdivision. If the right
is given to pay either in one sum or in installments, Tenant may elect either mode of payment and
its election shall be binding on Landlord. If by making an election to pay in installments, any of
the installments shall be payable after the termination of this Lease or any extended term thereof,
the unpaid installments shall be prorated as of the date of termination, and amounts payable after
said date shall be paid by Landlord. All other taxes and charges payable under this Article 13
shall be prorated as of and payable at the commencement and expiration of the term of this Lease,
as the case may be. Landlord shall not during the term of this Lease undertake any action to place
any special assessments, levies or charges on the Premises without first obtaining the prior
written approval of Tenant, other than those payable under any of the Project Documents, and those
imposed by the City of San Diego or other government entity over which Landlord has no control. If
Landlord does undertake such action without Tenant’s approval, Landlord, and not Tenant, shall pay
any special assessments, levies or charges sought by such action.

          13.3 Anything in this Article 13 to the contrary notwithstanding, Tenant shall not be required
to pay (i) any estate, gift, inheritance, succession, franchise, income, or excess profits taxes
that may be payable by Landlord or Landlord’s legal representative, successors, or assigns, or (ii)
any increases in Real Property Taxes and Assessments caused by any sale,
transfer or other “Change in Ownership” (as such term is used in California Revenue & Taxation
Code Sections 60 et seq.,) of the Building or Premises occurring more than five (5) years after the
Term Commencement Date, except for the sale of the Premises by Nexus Equity VI, LLC, a California
limited liability company (“Nexus”), to Landlord.

          13.4 Any and all rebates on account of the Taxes paid by Tenant under the provisions of this
Lease shall belong to Tenant, and Landlord will, on the request of Tenant, execute any receipts,
assignments, or other acquaintances that may be necessary in order to secure the recovery of the
rebates, and will pay over to Tenant any rebates that may be received by Landlord.

          13.5 Upon written notice from Landlord to Tenant, within ninety (90) days following the
conclusion of each calendar year during the term of this Lease, and at such more

 

 

frequent times as
Landlord may reasonably request, Tenant shall obtain and deliver to Landlord receipts or duplicate
receipts or copies thereof evidencing payment of the Taxes and other items required hereunder to be
paid by Tenant, together with an accounting showing in reasonable detail the Taxes and other items
paid.

          13.6 If Tenant shall in good faith desire to contest the validity or amount of any of the
Taxes, or other governmental charge herein agreed to be paid by Tenant, Tenant shall be permitted
to do so, and to defer the payment of said tax or charge, the validity or amount of which Tenant is
so contesting, until final determination of the contest, by giving to Landlord written notice
thereof prior to the commencement of any contest, which shall be at least fifteen (15) days prior
to delinquency, and by protecting Landlord on demand by a good and sufficient surety bond against
any tax, levy, assessment, rate or governmental charge, and from any costs, penalties, interest,
liability, or damage arising out of a contest. Landlord shall not be required to join in any
proceeding or contest brought by Tenant unless the provisions of any law require that the
proceeding or contest be brought by or in the name of Landlord. In that case, Landlord shall join
in the contest or permit it to be brought in Landlord’s name, provided that Tenant pay Landlord’s
reasonable costs and expenses associated with the proceeding or contest and that Tenant indemnifies
Landlord against any liability associated with such proceeding or contest. Tenant, on final
determination of the contest, shall immediately pay or discharge any decision or judgment rendered,
together with all costs, charges, interest and penalties incidental to the decision or judgment.
If Landlord shall in good faith decide to contest the validity or amount of any of the Taxes,
Tenant shall only be liable for the reasonable expenses incurred by Landlord for such contest to
the extent of any resulting savings in a revised, lower Tax amount for the first year of such lower
amount. All other expenses of such Landlord contest shall be borne by Landlord.

          13.7 To the extent Tenant fails to make any payment required by this Article 13 and Landlord
does so on Tenant’s behalf, Tenant shall reimburse Landlord for the cost thereof pursuant to the
provisions of Sections 7.1 and 24.3 of this Lease.

          13.8 Tenant shall pay prior to delinquency, all taxes charged against trade fixtures,
furnishings, equipment and all other personal property belonging to Tenant. Tenant shall attempt
to have such personal property taxed separately from the Premises. If any such
taxes on Tenant’s personal property are levied against and previously paid by Landlord or the
Premises, then Tenant shall, upon demand, repay to Landlord the taxes levied against Landlord
within fifteen (15) days after Tenant receives a written statement from Landlord for such personal
property taxes.

     14. Condition of Premises.

          14.1 Tenant acknowledges and agrees that Tenant is taking possession of the Premises in their
“as-is” condition and that neither Landlord nor any agent of Landlord has made any representation
or warranty, express or implied, with respect to the condition of the Premises, or with respect to
their suitability for the conduct of Tenant’s business.

          14.2 Tenant’s taking possession of the Premises shall constitute acceptance of the Premises in
the condition in which they then exist, and shall waive any right or claim Tenant

 

 

may have against
Landlord for any cause directly or indirectly arising out of the condition of the Premises,
appurtenances thereto, the improvements thereon and the equipment thereof.

          14.3 Landlord hereby assigns to Tenant, and Tenant shall have the benefit of, on a
non-exclusive basis, any and all warranties with respect to the design, materials and construction
of the Premises which are assignable to Tenant. Landlord and Tenant agree to cooperate with regard
to the enforcement of all such warranties, rights and claims. All such warranties, rights and
claims shall revert to Landlord exclusively upon the expiration or earlier termination of this
Lease. Tenant shall comply with whatever maintenance and similar standards are required to
maintain any applicable warranties in affect.

          14.4 Landlord shall not be sued or named as a party in any suit or action to enforce any such
warranty except as may be necessary to secure jurisdiction of Landlord or to the extent necessary
to enforce any such warranty. Landlord shall not be required to answer or otherwise plead to any
complaint and no judgment will be taken or writ of execution levied against Landlord with respect
thereto. Without limited the foregoing, Tenant shall (i) not name Landlord as a party or
participant in any suit or action to such warranty except as may be necessary to secure
jurisdiction of Landlord or to the extent necessary to enforce any such warranty, (ii) Tenant shall
indemnify, defend and hold harmless Landlord against any claims, suits or actions related to the
enforcement of any such warranties.

          14.5 At the expiration, or earlier termination of this Lease, or upon the exercise of any
right of Landlord to dispossess Tenant from the Premises, Tenant shall surrender the Premises in
good and clean condition and repair, ordinary wear and tear, casualty and condemnation excepted,
and in accord with the requirements of this Lease, including Article 33 hereof.

     15. Parking Facilities. Parking on the existing surface parking area of the Premises shall
be provided to Tenant and Tenant shall not place any equipment, storage containers or any other
property on the surface
parking area except as allowed by the Project Documents or approved by Landlord, which approval
shall not be unreasonably withheld.

     16. Utilities and Services.

          16.1 Whenever possible, Tenant shall pay directly to the provider for all water, gas,
electricity, telephone, sewer, and other utilities which may be furnished to the Premises during
the term of this Lease, together with any taxes thereon. In the event that for any reason Tenant
cannot be billed directly, Landlord shall forward each bill with respect to the Premises to Tenant
and Tenant shall pay it promptly in accordance with its terms.

          16.2 Landlord shall not be liable for, nor shall any eviction of Tenant result from, any
failure of any such utility or service, and in the event of such failure Tenant shall not be
entitled to any abatement or reduction of Rent, nor be relieved from the operation of any covenant
or agreement of this Lease, and Tenant waives any right to terminate this Lease on account thereof,
provided, however, if any such failure is due to the gross negligence or willful misconduct of
Landlord, and such failure continues beyond three (3) consecutive calendar days, then Rent shall be
equitably abated until uninterrupted service is restored. Tenant acknowledges

 

 

and agrees that it
shall insure against any risks it determines are necessary to be insured against pursuant to this
Section 16.2.

     17. Alterations.

          17.1 Tenant shall make no alterations, additions or improvements (hereinafter in this section,
“improvements”) in or to the Premises, other than interior non-structural alterations, additions or
improvements costing less than Fifty Thousand Dollars ($50,000) (“Permitted Alterations”), without
notice to Landlord. For any alteration not a Permitted Alteration, Tenant shall deliver notice to
Landlord, with plans and specifications and working drawings for the improvements.

          17.2 The improvements shall be constructed only by licensed contractors. Tenant shall cause
any such contractor must have in force a general liability insurance policy of not less than
$3,000,000, property damage insurance, and other insurance or at such higher limits as Landlord may
reasonably require, which policy of insurance shall name Landlord, Landlord’s property manager and
lender, as an additional insured. Except for the negligence or willful misconduct of Landlord’s
Agents (as hereinafter defined), each contractor, and Tenant with respect to any activity of each
contractor, shall indemnify defend and hold Landlord and Landlord’s Agents harmless from and
against any and all claims, demands, liabilities, damages, actions, losses, costs and expenses
(including, but not limited to, reasonable attorneys’ fees), to the extent arising out of or in
connection with the presence on the Premises of, and the actions or failures to act of, such
contractors or subcontractors. Tenant shall provide Landlord with the name of all contractors
prior to the commencement of construction. Tenant shall maintain, and shall provide copies to
Landlord of, all plans, specifications, drawings (including, particularly, “as-builts”) of any and
all improvements, alterations, additions, renovations, repairs, installations of fixtures or other
equipment and the like for which as-built drawings are typically provided.
Landlord shall be permitted to observe any and all such work by Tenant on the Premises so long
as Landlord does not interfere with or hinder any of Tenant’s use or occupancy of the Premises, or
the work of construction.

          17.3 Tenant agrees that any work by Tenant shall be accomplished in such a manner as to permit
any fire sprinkler system and fire water supply lines to remain fully operable at all times except
when minimally necessary for building reconfiguration work.

          17.4 Tenant covenants and agrees that all work done by Tenant shall be performed and completed
in substantial compliance with the plans and specifications and in compliance with all laws, rules,
orders, ordinances, directions, regulations, permits, approvals, and requirements of all
governmental agencies, offices, departments, bureaus and boards having jurisdiction, and in
substantial compliance with the rules, orders, directions, regulations, and requirements of any
applicable fire rating bureau.

          17.5 Before commencing any work (other than Permitted Alterations), Tenant shall give Landlord
at least five (5) days’ prior written notice of the proposed commencement of such work.

 

 

          17.6 All alterations, additions and improvements installed in, on or about the Premises, shall
be part of the Building and shall be the property of Landlord.

          17.7 Notwithstanding anything herein to the contrary, upon the expiration or termination of
the Lease term, Tenant shall surrender the Premises containing at least as much laboratory space as
existed on the Premises on the Term Commencement Date, and the laboratory space will be of
substantially the same character, quality, and utility as existed on the Term Commencement Date,
ordinary wear and tear excepted.

     18. Repairs and Maintenance.

          18.1 Tenant shall, throughout the term of this Lease, at its own cost and expense (subject to
recovery under any warranties assigned to Tenant under Section 14.3), and without any cost or
expense to Landlord, keep and maintain in good, sanitary and neat order, and repair, the Premises
and every part thereof (subject to wear and tear consistent with commercially reasonable
maintenance and repair standards applicable to comparable buildings), including structural and
capital improvements, all improvements, fixtures, equipment and personal property built or
installed in the Premises, and all appurtenances thereto, including but not limited to sidewalks,
parking areas, curbs, roads, driveways, lighting standards, landscaping, sewers, water, gas and
electrical distribution systems and facilities, drainage facilities, and all signs, both
illuminated and non-illuminated that are now or hereafter on the Premises. Without in any way
limiting the foregoing, Tenant shall maintain the lines designating the parking spaces in good
condition and paint the same as often as may be necessary, so that they are easily discernable at
all times; resurface the parking areas as necessary to maintain it in good condition; paint any
exterior portions of the Building as necessary to maintain them in good condition;
maintain the roof in good condition; and to take all reasonable precautions to insure that the
drainage facilities of the roof are not clogged and are in good operable condition at all times.

          18.2 Tenant shall at all times during the term of this Lease, and at Tenant’s expense,
maintain the exterior of the Building, the parking areas, landscaping and all other portions of the
Premises visible from the surrounding streets in a commercially reasonable condition, and shall
maintain sightly screens, barricades or enclosures around any waste or storage areas.

          18.3 There shall be no liability of Landlord by reason of any injury to or interference with
Tenant’s business arising from the making of any repairs, alterations or improvements in or to any
portion of the Premises, or in or to improvements, fixtures, equipment and personal property
therein, unless and to the extent of Landlord’s negligent or intentional misconduct. If repairs or
replacements become necessary which by the terms of this Lease are the responsibility of Tenant and
Tenant fails to make the repairs or replacements, Landlord may do so pursuant to the provisions of
Section 24.3 of this Lease, and Landlord’s performance of the same shall in no event waive any
default by Tenant or release Tenant from any of its obligations hereunder.

 

 

     19. Liens.

          19.1 Tenant shall keep the Premises and every part thereof free from any encumbrances or any
liens arising out of work performed, materials furnished or obligations incurred by Tenant. Tenant
further covenants and agrees that any encumbrance or lien filed against the Premises (except to the
extent caused by Landlord) will be discharged by Tenant, by bond or otherwise, within thirty (30)
days after the filing thereof (or within ten (10) days after the filing thereof if requested by
Landlord as necessary to facilitate a pending sale or refinancing), at the cost and expense of
Tenant.

          19.2 In the event Tenant shall lease or finance the acquisition of office equipment,
furnishings, or other personal property utilized by Tenant in the operation of Tenant’s business,
Tenant warrants that any Uniform Commercial Code financing statement executed by Tenant will upon
its face or by exhibit thereto indicate that such financing statement is applicable only to
personal property of Tenant specifically described in the financing statement. Should any holder
of a security agreement executed by Tenant record or place of record a financing statement which
appears to constitute a lien against any interest of Landlord, Tenant shall within thirty (30) days
after Landlord delivers notice thereof to Tenant, cause (1) copy of the security agreement or other
documents to which the financing statement pertains to be furnished to Landlord to facilitate
Landlord’s being in a position to show such lien is not applicable to any interest of Landlord.
Notwithstanding the foregoing, no such financing or grant of security interest shall attach to any
such item which must remain on the Premises at the expiration or the earlier termination of this
Lease (including, but not limited to, lab benches, fume hoods, cold rooms (including all equipment
and ancillary items necessary to the proper functioning thereof) and wet laboratories (including
all equipment and ancillary items necessary
to the proper functioning thereof)), and Tenant shall execute such documents, in recordable
form if necessary, to establish and provide notice of Landlord’s prior and superior rights in this
regard.

     20. Indemnification and Exculpation.

          20.1 Tenant agrees to indemnify Landlord, and its partners and affiliates, and their
respective shareholders, directors, officers, agents, contractors and employees (collectively,
“Landlord’s Agents”), against, and to protect, defend, and save them harmless from, all demands,
claims, causes of action, liabilities, losses and judgments, and all reasonable expenses incurred
in investigating or resisting the same (including reasonable attorneys’ fees), for death of or
injury to person or damage to property arising out of (i) Tenant’s use, occupancy, repairs,
maintenance, and improvements of the Premises and all improvements, fixtures, equipment and
personal property thereon, and (ii) any act or omission of Tenant, its shareholders, directors,
officers, agents, employees, servants, contractors, invitees and subtenants. Tenant’s obligation
under this Section 20.1 shall survive the expiration or earlier termination of the term of this
Lease.

          20.2 Landlord agrees to indemnify Tenant and Tenant’s shareholders, directors, officers,
agents, and employees (collectively “Tenant’s Agents”) against and save them harmless from all
demands, claims, causes of action and judgments, and all reasonable expenses incurred in
investigating or resisting the same (including reasonable attorneys’ fees), for death of, or

 

 

injury
to, any person or damage to property arising from or out of any occurrence in, upon, or about the
Premises during the term of this Lease if caused by the willful misconduct or gross negligence of
Landlord or Landlord’s directors, officers, agents, employees, servants, contractors, invitees and
subtenants, unless caused in part by the willful misconduct or gross negligence of Tenant or
Tenant’s Agents. Landlord’s obligations under this Section 20.2 shall survive the expiration or
earlier termination of the term of this Lease.

          20.3 Notwithstanding any provision of Sections 20.1 and 20.2 to the contrary, Landlord shall
not be liable to Tenant and Tenant assumes all risk of damage to any fixtures, goods, inventory,
merchandise, equipment, records, research, experiments, animals and other living organisms,
computer hardware and software, leasehold improvements, and other personal property of any nature
whatsoever, and Landlord shall not be liable for injury to Tenant’s business or any loss of income
therefrom relative to such damage, unless caused by Landlord’s or Landlord’s Agents’ willful
misconduct or gross negligence.

     21. Insurance — Waiver of Subrogation.

          21.1 Commencing on the Term Commencement Date, and continuing at all times during the term of
this Lease, Tenant shall maintain, at Tenant’s expense, commercial general liability insurance, on
an occurrence basis, insuring Tenant and Tenant’s agents, employees and independent contractors
against all bodily injury, property damage, personal injury and other covered loss arising out of
the use, occupancy, improvement and maintenance of
the Premises and the business operated by Tenant on the Premises. Such insurance shall have a
minimum combined single limit of liability per occurrence of not less than $5,000,000.00 and a
general aggregate limit of $5,000,000.00. Such insurance shall: (i) name Landlord, and Landlord’s
lenders if required by such lenders, and any management company retained to manage the Premises if
requested by Landlord, as additional insureds; (ii) include a broad form contractual liability
endorsement insuring Tenant’s indemnity obligations under Section 20.1; (iii) provide that it is
primary coverage and noncontributing with any insurance maintained by Landlord or Landlord’s
lenders; and (iv) provide for severability of interests or include a cross-liability endorsement,
such that an act or omission of an insured shall not reduce or avoid coverage of other insureds.

          21.2 At all times during the term of this Lease, Tenant shall maintain, at Tenant’s expense,
“all risk” insurance, including, but not limited to, coverage against loss or damage by fire,
vandalism, and malicious mischief covering the Building (exclusive of excavations, foundations and
footings), Tenant’s Improvements (whether owned by Landlord or Tenant), and all other improvements
and fixtures that may be constructed or installed on the Premises, in an amount equal to the full
replacement value thereof. The aforementioned “all risk” insurance policy shall include an agreed
amount endorsement, and an inflation endorsement (if available for a commercially reasonable cost)
and shall cover all acts of terrorism. At all times during the term of this Lease, Tenant shall
maintain, at Tenant’s expense, boiler and machinery coverage of not less than $10,000,000. At all
times during the course of any major demolition or construction permitted hereunder, or any
restoration pursuant to Articles 22 or 23, Tenant shall maintain, at Tenant’s expense, “all risk”
builder’s risk insurance, including, but not limited to, coverage against loss of damage by fire,
vandalism and malicious mischief, covering

 

 

improvements in place and all material and equipment at
the job site furnished under contract, in an amount equal to the full replacement value thereof.
The insurance described in this Section 21.2 shall: (i) insure Landlord, and Landlord’s lenders if
required by such lenders, as their interests may appear; (ii) contain a Lender’s Loss Payable Form
(Form 438 BFU or equivalent) in favor of Landlord’s lenders and (in the event there is no lender
such Form shall be modified to insure Landlord interest in the same manner) name Landlord, or
Landlord’s lender if required by such lender, as the loss payee; (iii) provide for severability of
interests or include a cross-liability endorsement, such that an act or omission of an insured
shall not reduce or avoid coverage of other insureds; and (iv) provide that it is primary coverage
and noncontributing with any insurance maintained by Landlord or Landlord’s lenders, which shall be
excess insurance. The proceeds of the insurance described in this Section shall be used for the
repair, replacement and restoration of the Premises and Tenant’s Improvements and other
improvements and fixtures insured thereunder, as further provided in Article 22.

          21.3 At all times during the term of this Lease, Tenant shall maintain, at Tenant’s expense,
business interruption insurance in order to insure that the Basic Annual Rent and Operating
Expenses provided for hereunder will be paid for a period of not less than one (1) year after any
casualty insured against by all risk policy of insurance described in Section 21.2 above or any
restriction of access to the Premises as a result of such casualty and shall also insure the 365
days extended period of indemnity. The insurance described in this Section 21.3 shall: (i) insure
Landlord, and Landlord’s lenders if required by such lenders, as their interests may appear; (ii)
contain a Lender’s Loss Payable Form (Form 438 BFU or
equivalent) in favor of Landlord’s lenders and name Landlord, or Landlord’s lender if required
by such lender, as the loss payee; (iii) provide for severability of interests or include a
cross-liability endorsement, such that an act or omission of an insured shall not reduce or avoid
coverage of other insureds; and (iv) provide that it is primary coverage and noncontributing with
any insurance maintained by Landlord or Landlord’s lenders, which shall be excess insurance.

          21.4 At all times during the term of this Lease, Tenant shall maintain, at Tenant’s expense,
“all risk” insurance against all other personal property, including trade fixtures, equipment and
merchandise of Tenant in an amount equal to the full replacement value thereof.

          21.5 At all times during the term of this Lease, Tenant shall maintain workers’ compensation
insurance in accordance with California law.

          21.6 At all times during the term of this Lease, Tenant shall maintain seismic insurance, with
coverage and in amounts as reasonably determined by Landlord and commercially reasonable. In
addition, Landlord agrees to make available to Tenant information on inclusion of the Premises in
Landlord’s portfolio seismic insurance program, including expected cost.

          21.7 All of the policies of insurance referred to in this Article 21 shall be written by
companies authorized to do business in California and rated A – (minus), VII, or better in Best’s
Insurance Guide. Each insurer referred to in this Article 21 shall agree, by endorsement on the
applicable policy or by independent instrument furnished to Landlord, that it

 

 

will endeavor to give
Landlord, and Landlord’s lenders if required by such lenders, at least ten (10) days’ prior written
notice before the applicable policy shall be cancelled for non-payment of premium, and thirty (30)
days’ prior written notice before the applicable policy shall be cancelled or altered in coverage,
scope, amount or other material term for any other reason (although any failure of an insurer to
give notice as provided herein shall not be a breach of this Lease by Tenant). Tenant shall pay
all of the premiums for such insurance and all deductible amounts provided for thereunder. Tenant
shall deliver to Landlord, and to Landlord’s lenders if required by such lenders, copies of the
insurance policies, certified by the insurer, or certificates of liability and evidence of property
(Form 27 or 28) evidencing such insurance policies, issued by the broker, together with evidence of
payment of the required premiums, prior to the required date for commencement of such coverage. At
least fifteen (15) days prior to expiration of any such policy, Tenant shall deliver to Landlord,
and Landlord’s lenders if required by such lenders, a certificate evidencing renewal, or a
certified copy of a new policy or certificate of liability and evidence of property (Form 27 or 28)
evidencing the same, together with evidence of payment of the required premiums. If Tenant fails
to provide to Landlord any such policy or certificate by the required date for commencement of
coverage, or within five (5) days prior to expiration of any policy, or to pay the premiums
therefor when required, Landlord shall have the right, but not the obligation, to procure said
insurance and pay the premiums therefor. Any premiums paid by Landlord shall be repaid by Tenant
to Landlord with the next due installment of rent, and failure to repay the same shall have the
same consequences as failure to pay any installment of Rent. Landlord reserves the right to change
the coverages or increase the minimum limits required hereunder from time to time in a commercially
reasonable manner, consistent with market and
region where the Premises are located, and Tenant agrees to comply with any reasonable notice
from Landlord to change the coverages or increase its policy limits within sixty (60) days of the
date of Landlord’s notice.

          21.8 Tenant may provide the property insurance required under this Article 21 pursuant to a
so-called blanket policy or policies of property insurance maintained by Tenant; provided, however,
that the amount and type of coverage afforded to the Landlord shall not be reduced or adversely
affected from that which would exist under a separate policy or policies meeting all of the
requirements of this Lease by reason of the use of a blanket policy of property insurance, and
provided further that the requirements of this Article 21 are otherwise satisfied.

          21.9 Landlord and Tenant each hereby waive any and all rights of recovery against the other or
against the officers, directors, partners, employees, agents, and representatives of the other, on
account of loss or damage (including any claims for bodily injury to persons and/or damage to
property) occasioned to such waiving party or its property or the property of others under its
control, to the extent that such loss or damage is caused by or results from risks insured against
under any insurance policy which insures such waiving party at the time of such loss or damage,
which waiver shall continue in effect as long as the parties’ respective insurers permit such
waiver under the terms of their respective insurance policies or otherwise in writing. Any
termination of such waiver shall be by written notice as hereinafter set forth. Prior to obtaining
policies of insurance required or permitted under this Lease, Landlord and Tenant shall give notice
to the insurers that the foregoing mutual waiver is contained in this Lease, and each party shall
use its best efforts to cause such insurer to approve such waiver in writing and to cause each
insurance policy obtained by it to provide that the insurer waives all

 

 

right of recovery by way of
subrogation against the other party. If such written approval of such waiver of subrogation cannot
be obtained from any insurer or is obtainable only upon payment of an additional premium which the
party seeking to obtain the policy reasonably determines to be commercially unreasonable, the party
seeking to obtain such policy shall notify the other thereof, and the latter shall have twenty (20)
days thereafter to either: (i) identify other insurance companies reasonably satisfactory to the
other party that will provide the written approval and waiver of subrogation; or (ii) agree to pay
such additional premium. If neither (i) nor (ii) are done, the mutual waiver set forth above shall
not be operative, and the party seeking to obtain the policy shall be relieved of the obligation to
obtain the insurer’s written approval and waiver of subrogation with respect to such policy during
such time as such policy is not obtainable or is obtainable only upon payment of a commercially
unreasonable additional premium as described above. If such policies shall at any subsequent time
be obtainable or obtainable upon payment of a commercially reasonable additional premium, neither
party shall be subsequently liable for failure to obtain such insurance until a reasonable time
after notification thereof by the other party. If the release of either Landlord or Tenant, as set
forth in the first sentence of this Section 21.8, shall contravene any law with respect to
exculpatory agreements, the liability of the party in question shall be deemed not released but
shall be secondary to the other’s insurer.

     22. Damage or Destruction.

          22.1 Tenant shall give written notice to Landlord immediately upon any damages to or
destruction of the Premises if the loss sustained exceeds One Hundred Thousand Dollars ($100,000).
Except with regard to Material Damage as defined in Section 22.2 below, in the event of damage to
or destruction of all or any portion of the Premises or the improvements and fixtures thereon
(collectively, “improvements”), Tenant shall within a reasonable time (not to exceed 365 days from
the date of the casualty) commence and proceed in a commercially reasonable manner to repair,
reconstruct and restore (collectively, “restore”) such improvements to substantially the same
condition and utility as they were in immediately prior to the casualty so long as the insurance
proceeds plus the deductible for which Tenant is responsible are sufficient to cover the actual
cost of restoration. Tenant acknowledges and agrees that it is required to maintain business
interruption insurance and that Tenant shall not be entitled to any abatement of the Basic Annual
Rent or Additional Rent as a result of (a) any insured casualty or (b) any uninsured casualty
caused by Tenant’s and Tenant’s Agents’ gross negligence or willful misconduct. In the event
Tenant fails to restore the improvements within three hundred sixty five (365) days for the date of
casualty, Landlord, without limiting any of its rights due to Tenant’s default, may elect to
complete the construction said improvements and Tenant shall assign all of the insurance proceeds
to Landlord and Tenant shall pay to Landlord an amount equal to the deductible amount. Except as
expressly set forth below, this Lease shall continue in full force and effect, notwithstanding such
damage or destruction.

          22.2 In the event of damage, destruction and/or restoration (i) renders unusable more than ten
percent (10%) of the usable square feet of the Building, or (ii) the Premises cannot be fully
repaired or restored within two hundred seventy (270) days after the occurrence of such damage
(“Material Damage”), then Tenant shall have the right to terminate this Lease by giving written
notice to Landlord of termination within ninety (90) days after the occurrence of such Material
Damage (“Notice of Termination”). Termination of this Lease pursuant to this

 

 

subsection shall be
effective upon the termination date as set forth in Notice of Termination. In addition, in the
event of Material Damage within the three (3) years just prior to the scheduled expiration of the
term, Landlord may elect to terminate this Lease by written notice to Tenant within thirty (30)
days after the occurrence of such Material Damage; provided, however, Tenant may negate such
Landlord termination by, within thirty (30) days after receipt of such Landlord’s notice, electing
to extend the term of this Lease pursuant to Article 34 below. In the event this Lease is
terminated pursuant to this Section 22, Tenant shall assign all insurance proceeds to Landlord and
shall pay to Landlord an amount equal to the deductible amount of the “all risk” insurance
described in Section 21.2 above.

          22.3 In the event of any uninsured casualty, without limiting any of Landlord’s rights hereof,
Landlord shall have right to terminate this Lease upon written notice to Tenant; provided, however,
Tenant may, at its option, elect to continue the Lease and negate such Landlord’s decision to
terminate by delivering written notice to Landlord within thirty (30) days of receipt of Landlord’s
notice and agreeing to pay unabated Rent from the date of receipt of Landlord’s notice and all
costs of repair of such uninsured casualty.

     23. Eminent Domain.

          23.1 In the event the whole of the Premises shall be taken for any public or quasi-public
purpose by any lawful power or authority by exercise of the right of appropriation, condemnation or
eminent domain, or sold to prevent such taking, Tenant or Landlord may terminate this Lease
effective as of the date possession is required to be surrendered to said authority.

          23.2 In the event of a partial taking of the Premises for any public or quasi-public purpose
by any lawful power or authority by exercise of right of appropriation, condemnation, or eminent
domain, or sold to prevent such taking, then Tenant may elect to terminate this Lease upon written
notice of termination to Tenant. Termination pursuant to this section shall be effective as of the
date possession is required to be surrendered to said authority.

          23.3 In the event of a partial taking of the Premises for any public or quasi-public purpose
by any lawful power or authority by exercise of right of appropriation, condemnation, or eminent
domain, or sold to prevent such taking, that renders the Premises unsuitable for Tenant’s business
operations in Tenant’s reasonable discretion, then Tenant may elect to terminate this Lease upon
written notice of termination to Landlord. Termination pursuant to this Section shall be effective
as of the date possession is required to be surrendered to said authority.

          23.4 If upon any taking of the nature described in this Article 23 this Lease continues in
effect, then Tenant shall restore the Building to a complete architectural whole and a functional
condition and as nearly as reasonably possible to the condition existing before the taking (but
only to the extent that sufficient condemnation proceeds are made available to Tenant), and Tenant
shall restore the Tenant improvements which Tenant either constructed or paid for 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. Each
party waives the provisions of Code of Civil Procedure

 

 

Section 1265.130, allowing either party to
petition the Superior Court to terminate this Lease in the event of a partial condemnation of the
Premises except in accordance with Article 23.

          23.5 Landlord reserves all rights to any award or compensation for damage to the Improvements,
the Premises, and the leasehold estate created by this Lease, 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. Tenant
shall have the right to make a separate claim in any condemnation proceeding for the unamortized or
undepreciated value of the Tenant improvements and alterations paid for and owned by Tenant which
Tenant may remove at the expiration or earlier termination of this Lease, and reasonable removal
and relocation costs.

          23.6 After any taking where this Lease continues in effect, Basic Annual Rent shall be abated
proportionately on the basis of rental value of the Premises including improvements and features,
as restored after the taking compared to the rental value of the Premises prior to such taking.

     24. Defaults and Remedies.

          24.1 Late payment by Tenant to Landlord of Rent and other sums due will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult
and impracticable to ascertain. Such costs include, but are not limited to, processing and
accounting charges and late charges which may be imposed on Landlord by the terms of any mortgage
or trust deed covering the Premises. Therefore, if any installment of Rent due from Tenant is not
received by Landlord within ten (10) days of the date such payment is due, Tenant shall pay to
Landlord interest at the rate of six percent (6%) per annum of the overdue Rent. In the event the
Tenant’s failure to pay Rent continues for sixty (60) days, the interest rate shall be increased to
the lesser of (i) eighteen percent (18%) per annum or (ii) the maximum interest rate permitted by
law, (the “Default Rate”). In the event Tenant fails to timely pay Rent on two or more occasions
in any twelve month period, Tenant shall pay the Default Rate on all overdue Rent. The parties
agree that this interest represents a fair and reasonable estimate of the costs that Landlord will
incur by reason of late payment by Tenant.

          24.2 No payment by Tenant or receipt by Landlord of a lesser amount than the rent payment
herein stipulated shall be deemed to be other than on account of the rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or payment as rent be
deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice
to Landlord’s right to recover the balance of such rent or pursue any other remedy provided. If at
any time a dispute shall arise as to any amount or sum of money to be paid by Tenant to Landlord,
Tenant shall have the right to make payment “under protest’ and such payment shall not be regarded
as a voluntary payment, and there shall survive the right on the part of Tenant to institute suit
for recovery of the payment paid under protest.

          24.3 If Tenant fails to pay any sum of money (other than Basic Annual Rent) required to be
paid by it hereunder, or shall fail to perform any other act on its part to he performed hereunder,
Landlord may, without waiving or releasing Tenant from any obligations of Tenant, but shall not be
obligated to, make such payment or perform such act, provided, that

 

 

such failure by Tenant
continued for ten (10) days after written notice from Landlord demanding performance by Tenant was
delivered to Tenant, or that such failure by Tenant unreasonably interfered with the use or
efficient operation of the Premises, or resulted or could have resulted in a violation of law or
the cancellation of an insurance policy maintained by Landlord.

          24.4 The occurrence of any one or more of the following events shall constitute a “Default”
hereunder by Tenant:

               (a) The failure by Tenant to make any payment of Rent, as and when due, where such failure
shall continue for a period of ten (10) days after written notice thereof from Landlord to Tenant.
Such notice shall be in lieu of, and not in addition to, any notice required under California Code
of Civil Procedure Section 1161;

               (b) The failure by Tenant to observe or perform any obligation other than described in Section
24.4(a) to be performed by Tenant, where such failure shall continue for a period of thirty (30)
days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of
Tenant’s default is such that more than thirty (30) days are
reasonably required to cure the default, then Tenant shall not be deemed to be in default if
Tenant shall commence such cure within said thirty (30) day period and thereafter diligently
prosecute the same to completion. Such notice shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure Section 1161;

               (c) Tenant makes an assignment for the benefit of creditors;

               (d) A receiver, trustee or custodian is appointed to, or does, take title, possession or
control of all, or substantially all, of Tenant’s assets;

               (e) An order for relief is entered against Tenant pursuant to a voluntary or involuntary
proceeding commenced under any chapter of the Bankruptcy Code;

               (f) Any involuntary petition is filed against the Tenant under any chapter of the Bankruptcy
Code and is not dismissed within sixty (60) days; or

               (g) Tenant’s interest in this Lease is attached, executed upon, or otherwise judicially seized
and such action is not released within sixty (60) days of the action.

     Notices given under this Section shall specify the alleged default and shall demand that
Tenant perform the provisions of this Lease or pay the Rent that is in arrears, as the case may be,
within the applicable period of time, or quit the Premises. No such notice shall be deemed a
forfeiture or a termination of this Lease unless Landlord elects otherwise in such notice, and in
no event shall a forfeiture or termination occur without such written notice.

          24.5 In the event of a Default by Tenant, and at any time thereafter, and without limiting
Landlord in the exercise of any right or remedy which Landlord may have, Landlord shall be entitled
to terminate Tenant’s right to possession of the Premises by any lawful means, in which case this
Lease shall terminate and Tenant shall immediately surrender possession of the Premises to
Landlord. In such event Landlord shall have the immediate right to re-enter and

 

 

remove all persons
and property, and such property may be removed and stored in a public warehouse or elsewhere at the
cost of, and for the account of Tenant, all without service of notice and without being deemed
guilty of trespass, or becoming liable for any loss or damage which may be occasioned thereby. In
the event that Landlord shall elect to so terminate this Lease, then Landlord shall be entitled to
recover from Tenant all damages incurred by Landlord by reason of Tenant’s default, including:

               (a) The worth at the time of award of any unpaid Rent which had been earned at the time of
such termination; plus

               (b) The worth at the time of award of the amount by which the unpaid Rent which would have
been earned after termination until the time of award exceeds the amount of such rental loss which
Tenant proves could have been reasonably avoided; plus

               (c) The worth at the time of award of the amount by which the unpaid Rent for the balance of
the term after the time of award exceeds the amount of such rental loss which Tenant proves could
have been reasonably avoided; plus

               (d) Any other amount necessary to compensate Landlord for all the detriment proximately caused
by Tenant’s failure to perform its obligation 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 restoring
the Premises to the condition required under the terms of this Lease; plus

               (e) At Landlord’s election, such other amounts in addition to or in lieu of the foregoing as
may be permitted from time to time by applicable law.

     As used in Subsections (a), (b) and (c), the “time of award” shall mean the date upon which
the judgment in any action brought by Landlord against Tenant by reason of such default is entered
or such earlier date as the court may determined. As used in Subsections (a) and (b), the “worth
at the time of award” shall be computed by allowing interest at the Default Rate. As used in
Subsection (c) above, the “worth at the time of award” shall be computed by taking the present
value of such amount using the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percentage point.

          24.6 If Landlord does not elect to terminate this Lease as provided in Section 24.5, then
Landlord may, from time to time, recover all Rent as it becomes due under this Lease.

          24.7 In the event Landlord elects to terminate this Lease and relet the Premises, it may
execute any new lease in its own name. Tenant hereunder shall have no right or authority
whatsoever to collect any rent from such tenant. The proceeds of any such reletting shall be
applied as follows:

     First, to the payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord, including, but not limited to, storage charges or brokerage commissions owing from Tenant
to Landlord as the result of such reletting;

 

 

     Second, to the payment of reasonable costs and expenses of reletting the Premises, including
reasonable attorneys’ fees incurred by Landlord in connection with the retaking of the Premises and
such reletting;

     Third, to the payment of Rent and other charges due and unpaid hereunder; and

     Fourth, to the payment of future Rent and other damages payable by Tenant under this Lease.

          24.8 No waiver of any default of Tenant hereunder shall be implied from any acceptance by
Landlord of any rent or other payments due hereunder or by any omission by Landlord to take any
action on account of such default if such default persists or is repeated, and no express waiver
shall affect defaults other than as specified in said waiver.

          24.9 Termination of this Lease or Tenant’s right to possession by Landlord shall not relieve
Tenant from any liability to Landlord which has theretofore accrued.

          24.10 Landlord shall not be in default unless Landlord fails to perform obligations required
of Landlord within a reasonable time, but in no event later than thirty (30) days after written
notice by Tenant specifying wherein Landlord has failed to perform such obligation; provided,
however, that if the nature of Landlord’s obligation is such that more than thirty (30) days are
required for performance, then Landlord shall not be in default if Landlord commences performance
within such thirty (30) day period and thereafter diligently prosecutes the same to completion.

          24.11 In the event of any default on the part of Landlord, Tenant will give notice by
registered or certified mail to any beneficiary of a deed of trust or mortgagee of a mortgage
covering the Premises whose address shall have been furnished and shall offer such beneficiary
and/or mortgagee a reasonable opportunity to cure the default, including time to obtain possession
of the Premises by power of sale or a judicial action if such should prove necessary to effect a
cure.

          24.12 In the event of Landlord default, Tenant may pursue all rights and remedies available at
law, or in equity.

     25. Assignment or Subletting.

          25.1 Except as hereinafter provided, Tenant shall not, either voluntarily or by operation of
law, assign, sell, hypothecate or transfer this Lease, or sublet the Premises or any part thereof,
or permit or suffer the Premises or any part thereof to be used or occupied as work space, storage
space, concession or otherwise by anyone other than Tenant or Tenant’s employees, without the prior
written consent of Landlord in each instance, which consent shall not be unreasonably withheld,
delayed or conditioned. Landlord agrees not to unreasonably withhold consent to any such
assignment of this Lease or subletting of all or any portion of the Premises provided that Tenant
requests the same in writing and provided that (i) at the time thereof, Tenant is not in default
under this Lease, (ii) Landlord, in its reasonable discretion, determines that the reputation,
business, proposed use of the Premises and financial

 

 

responsibility of the proposed assignee or
sublessee, are commercially reasonable, (iii) any assignee or sublessee shall expressly assume all
the obligations of this Lease on Tenant’s part to be performed, or in the case of a sublease of
less than all of the Premises, assume such obligations with respect to the relevant portion of the
Premises, (iv) such consent, if given, shall not release Tenant or any guarantor of Tenant’s
obligation hereunder of any of its obligations under this Lease, including without limitation, its
obligation to pay Rent, and (v) Tenant shall indemnify and hold Landlord harmless from any
brokerage commissions due in connection with such assignment or subletting by virtue of Tenant’s
actions. Whether or not such conditions to assignment or subletting are met, Landlord, at its sole
option, may elect to (x) terminate this Lease in the case of an assignment, or, (y) in the event of
a sublease, the term of which ends during the last year of the Term, terminate this Lease with
respect to the portion of the Premises subject to the proposed sublease, on the first day of the
second calendar month next succeeding receipt of Tenant’s written request for consent to assignment
or subletting, to be effective unless Tenant elects to withdraw its request to sublease or assign,
which election, if exercised by
Landlord, shall be by written notice to Tenant given within twenty (20) days of receipt by
Landlord of Tenant’s request for such consent to assign or sublet. If Landlord elects to terminate
this Lease in accordance with the foregoing sentence, then Landlord may lease the relevant portion
of the Premises to the sublessee or assignee proposed by Tenant or any other person or entity.

          25.2 Notwithstanding any provision in this Lease, Tenant may, without the consent of Landlord,
assign, transfer or sublet this Lease or all or any part of the Premises to any entity
substantially owned or controlled by Tenant, is under common control or ownership with Tenant, or
owns or controls, directly or indirectly, the stock and assets of Tenant or into which Tenant is
merged, with which Tenant is consolidated, or which acquires all or substantially all of the assets
of Tenant, provided that (i) the assignee first executes, acknowledges and delivers to Landlord an
agreement whereby the assignee agrees to be bound by all of the covenants and agreements in this
Lease, and (ii) Tenant, as assignor or transferor, shall remain liable for performance of all
obligations under the Lease (“Permitted Transfer”).

          25.3 In the event Tenant desires to assign, sublease, hypothecate or otherwise transfer this
Lease or sublet the Premises to an assignee or subtenant other than a Permitted Transfer, then at
least twenty (20) days prior to the date when Tenant desires the assignment or sublease to be
effective (the “Assignment Date”), Tenant shall give Landlord a notice (the “Assignment Notice”)
which shall set forth the name, address and business of the proposed assignee or sublessee,
information (including references and financial statements) concerning the reputation and financial
ability of the proposed assignee or sublessee, the Assignment Date, and any ownership or commercial
relationship between Tenant and the proposed assignee or sublessee.

          25.4 Landlord in making its determination as to whether consent should be given to a proposed
assignment or sublease, may give consideration to the reputation of a proposed successor, the
financial strength of such successor (notwithstanding the assignor remaining liable for Tenant’s
performance), and any use which such successor proposes to make of the Premises. If Landlord fails
to deliver written notice of its determination to Tenant within

 

 

twenty (20) days of the Landlord’s
receipt of the Assignment Notice (with the required information), Landlord shall be deemed to have
approved the request.

          25.5 The consent by Landlord to an assignment or subletting shall not relieve Tenant or any
assignee of this Lease or sublessee of the Premises from obtaining the consent of Landlord to any
further assignment or subletting or as releasing Tenant or any assignee or sublessee of Tenant from
full and primary liability.

          25.6 Any sublease of the Premises shall be subject and subordinate to the provisions of this
Lease, shall not extend beyond the term of this Lease, and shall provide that the sublessee shall
attorn to Landlord, at Landlord’s sole option, in the event of the termination of this Lease.
Landlord and any lender shall upon Tenant’s request provide any subtenant of the entirety of the
Premises with a recognition and nondisturbance agreement in the form as acceptable to Landlord in
its reasonably discretion, on the condition that the sublessee agrees to attorn to Landlord on
subtantially the same terms and conditions as this Lease. Under no
circumstance shall Landlord be required to remedy any of Tenant’s defaults or otherwise assume
any of Tenant’s liability as sublandlord under any such sublease.

     26. Attorney’s Fees.

          26.1 If either party becomes a party to any action or proceeding concerning this Lease or the
Premises, or any part thereof, by reason of any act or omission of the other party or its
authorized representatives, and not by any act or omission of the party that becomes a party to
that litigation or any act or omission of its authorized representatives, as determined by the
final decision of a court of competent jurisdiction, the party that is determined to have caused
the other party to become involved in the litigation shall be liable to that party for reasonable
attorneys’ fees, expert witness fees, and court costs incurred by it in the litigation.

          26.2 If either party commences an action or proceeding against the other party arising out of
or in connection with this Lease, the prevailing party shall be entitled to have and recover from
the other party reasonable attorneys’ fees, expert witness fees and costs of suit.

     27. Estoppel Certificate. Each party shall, within fifteen (15) days of written notice
from the other party, execute, acknowledge and deliver to the other party a statement in writing on
a form reasonably requested by a proposed lender, purchaser, assignee or subtenant (i) certifying
that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease as so modified is in full force and effect) and
the dates to which the rental and other charges are paid in advance, if any, (ii) acknowledging
that there are not, to each party’s knowledge, any uncured defaults on the part of Landlord or
Tenant hereunder (or specifying such defaults if any are claimed) and (iii) setting forth such
further information with respect to this Lease or the Premises as may be reasonably requested
thereon. Any such statement may be relied upon by any prospective lender, purchaser, assignee or
subtenant of all or any portion of the Premises.

 

 

     28. Removal of Property.

          28.1 Upon the expiration of this Lease, Tenant shall remove all goods and effects of Tenant
and all fixtures and items required to be removed pursuant to this Lease (including, but not
limited to, any such removal required as a result of an election by Landlord to require such
removal as contemplated in Section 17.6), and Tenant shall repair any damage caused by such removal
(but Tenant shall not be required to repair, renovate or otherwise improve any other portion of the
Premises except as required by the provisions of this Lease). Except as provided below and in
Section 14.4, all trade fixtures and personal property owned by Tenant shall be and remain the
property of Tenant, and may be removed by Tenant at the expiration of the term of this Lease, or at
such earlier time as Tenant is not in default hereunder.

          28.2 The Building and Improvements, and all fixtures and personal property owned by Landlord,
shall be and remain the property of Landlord, and upon the expiration or earlier termination of
this Lease, Tenant shall surrender the Premises, the Building and the Improvements, including any
additions, alterations and improvements thereto, and all items attached thereto (including, but not
limited to, sinks, lab benches, fume hoods, wet laboratories and cold rooms), in good, working and
sanitary order, condition and repair, and as required by Section 14.4 hereof, ordinary wear and
tear, casualty and condemnation excepted.

          28.3 Notwithstanding Sections 28.1 and 28.2 hereof, Tenant may not remove any personal
property if such removal would cause material damage to the Premises, unless such damages can be
and is repaired by Tenant. Furthermore, Tenant shall repair any damage to the Premises caused by
Tenant’s removal of any such property, and shall, prior to the expiration or earlier termination of
this Lease, restore and return the Premises to the condition they were in when first occupied by
Tenant, reasonable wear and tear excepted. At a minimum, even if they are determined to be
fixtures or personal property owned by Tenant, Tenant shall leave in place and repair any damage to
the interior floors, walls and ceilings of the Premises. The provisions of Article 17 shall apply
to any restoration work under this Article as if the restoration was an alteration, addition or
improvement thereunder.

          28.4 Tenant expressly waives any and all interest in any personal property and trade fixtures
not removed from the Premises 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 and Tenant waives all claims against Landlord for any damages resulting from any such
removal, storage, retention or disposal.

     29. Quiet Enjoyment. So long as Tenant is not in default, Landlord covenants that Landlord
or anyone acting through or under Landlord will not disturb Tenant’s occupancy of the Premises,
subject to all the terms and conditions of this Lease.

     30. Subordination and Attornment.

          30.1 Unless the mortgagee or beneficiary elects otherwise at any time prior to or following a
default by Tenant, this Lease shall be subject to and subordinate to the lien of any

 

 

mortgage or
deed of trust now or hereafter in force against the Premises or any portion thereof, and to all
advances made or hereafter to be made upon the security thereof without the necessity of the
execution and delivery of any further instruments on the part of Tenant to effectuate such
subordination, provided that the lienholder, beneficiary, or mortgagee has previously executed and
delivered to Tenant a non-disturbance, attornment, and subordination agreement in such form as the
lienholder, beneficiary, or mortgagee may reasonably request and is approved by Tenant, which
approval will not be unreasonably withheld, setting forth that so long as Tenant is
not in default hereunder, Landlord’s and Tenant’s rights and obligations hereunder shall
remain in force and Tenant’s right to possession shall be upheld.

          30.2 Notwithstanding the foregoing, Tenant shall execute and deliver within ten (10) days
after demand such further instrument or instruments evidencing such subordination of this Lease to
the lien of any such mortgage or deed of trust as may be required by Landlord, provided that the
lienholder, beneficiary, or mortgagee has previously executed and delivered to Tenant a
non-disturbance agreement in recordable form. However, if any such mortgagee or beneficiary so
elects at any time prior to or following a default by Tenant, this Lease shall be deemed prior in
lien to any such mortgage or deed of trust regardless of date and Tenant will execute a statement
in writing to such effect at Landlord’s request.

          30.3 In the event any proceedings are brought for foreclosure, or in the event of the exercise
of the power of sale under any mortgage or deed of trust made by the Landlord covering the
Premises, the Tenant shall at the election of the purchaser at such foreclosure or sale attorn to
the purchaser upon any such foreclosure or sale and recognize such purchaser as the Landlord under
this Lease in accordance with the previously executed non-disturbance agreement described in
Section 30.1 above.

     31. Surrender.

          31.1 No surrender of possession of any part of the Premises shall release Tenant from any of
its obligations hereunder unless accepted by Landlord.

          31.2 The voluntary or other surrender of this Lease by Tenant shall not work a merger, unless
Landlord consents, and shall, at the option of Landlord, operate as an assignment to it of any or
all subleases or subtenancies.

     32. Waiver and Modification. No provision of this Lease may be modified, amended or added
to except by an agreement in writing. The waiver by either party of any breach of any term,
covenant or condition herein contained shall not be deemed to be a waiver of any subsequent breach
of the same or any other term, covenant or condition herein contained.

     33. Hazardous Material.

          33.1 Tenant, at its sole cost, shall comply with all federal, state and local laws, statutes,
ordinances, codes, regulations and orders relating to the receiving, handling, use, storage,
accumulation, transportation, generation, spillage, migration, discharge, release and disposal of
Hazardous Material (as hereinafter defined) in or about the Premises. Tenant shall not cause or
permit any Hazardous Material to be brought upon, kept or used in or about the

 

 

Premises by Tenant, its agents, employees, contractors, invitees or subtenants, in a manner or
for a purpose prohibited by any federal, state or local agency law.

          33.2 Tenant shall immediately provide Landlord with telephonic notice, which shall promptly be
confirmed by written notice, of any and all spillage, discharge, release and disposal of Hazardous
Material onto or within the Premises, including the soils and subsurface waters thereof, which by
law must be reported to any federal, state or local agency, and any injuries or damages resulting
directly or indirectly therefrom. Further, Tenant shall deliver to Landlord, within ten (10)
business days following Tenant’s receipt, each and every notice or order, when said order or notice
identifies a violation which may have the potential to adversely affect the Premises, received from
any federal, state or local agency concerning Hazardous Material and the possession, use and/or
accumulation thereof promptly upon receipt of each such notice or order by Tenant.

          33.3 Tenant shall be responsible for and shall indemnify, protect, defend and hold harmless
Landlord and Landlord’s Agents from any and all liability, damages, injuries, causes of action,
claims, judgments, costs, penalties, fines, losses, and expenses which arise during or after the
term of this Lease and which result from Tenant’s (or from Tenant’s Agents, assignees, subtenants,
employees, agents, contractors, licensees, or invitees) (i) receiving, handling, use, storage,
accumulation, transportation, generation, spillage, migration, discharge, release or disposal of
Hazardous Material in, upon or about the Premises in violation of the covenant set forth in Section
33.1 above and (ii) failure to comply with any of the provisions of this Article 33. Landlord
shall be responsible for and shall indemnify, protect, defend and hold harmless Tenant on the same
basis as above for any claims which result from Landlord’s or from Landlord’s Agents receiving,
handling, use, storage, accumulation, transportation, generation, spillage, migration, discharge,
release or disposal of Hazardous Material in, upon or about the Premises.

          33.4 Tenant shall operate its business in compliance with all laws, rules, regulations,
orders, and permits relating to with respect to any Hazardous Materials or Tenant’s operations and
Tenant’s use or presence of Hazardous Material shall be properly monitored in accordance to all
applicable governmental requirements. Tenant agrees to make available to Landlord at the Premises
upon reasonable request a list identifying each type of Hazardous Material to be present in or upon
the Premises and setting forth any and all governmental approvals or permits required in connection
with the presence of Hazardous Material on the Premises (“Hazardous Material Summary”) and make
available for review at the Premises the Hazardous Material business plan prepared pursuant to
Health and Safety Code Section 25500 et seq. At Landlord’s request, and at reasonable times,
Tenant shall make available for review at the Premises to Landlord the latest available Hazardous
Materials Summary and the following documents (hereinafter referred to as the “Hazardous Material
Documents”) relating to the handling, storage, disposal and emission of Hazardous Material:
permits; approvals; written notice of violations of any laws; plans relating to the installation of
any storage tanks to be installed in or under the Premises (provided said installation of tanks
shall be permitted only after Landlord has given Tenant its written consent to do so, which consent
shall not be unreasonably withheld). Tenant shall not be required to show Landlord any portion of
such documents which contain proprietary information. Landlord shall treat all information
disclosed

 

 

by Tenant as confidential and shall not disclose such information to any person or entity
except as required by law. Tenant shall make available at the Premises for Landlord to review the
following information and/or documentation within thirty (30) days after Landlord’s reasonable
request:

               (a) A list of 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 Premises.

               (b) Material Safety Data Sheets, if any, required to be completed with respect to operations
of Tenant at the Premises 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 Material Safety Data Sheets.

               (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 Premises.

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

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

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

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

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

               (i) Copies of any updates, amendments, modifications or proposed modifications to the State of
California, Department of Health Services, Decommissioning Funding Plan, License No. 5067-37.

          33.5 Tenant shall secure all necessary licenses for the 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. Tenant, in connection with any such
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;

               (b) Maintain, to such extent and for such periods as may be required by applicable law, and
permit Landlord or its representatives to inspect during normal business hours at any time and from
time to time upon reasonable notice to Tenant, a list of all radioactive materials or radiation
received, stored, possessed, used, transferred or disposed of from time to time, to the extent not
already disclosed through delivery of a copy of a State of California Health and Human Services
Agency approval with respect thereto;

               (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 from time to time; and.

               (d) Comply with all of the terms of the State of California, Department of Health Services,
Decommissioning Funding Plan, License No. 5067-37.

     As used herein, the term “Hazardous Material” means any hazardous or toxic substance, material
or waste which is or becomes regulated by any local governmental authority, the State of California
or the United States Government. The term “Hazardous Material” includes, without limitation, any
material or substance which is (i) defined as a ‘hazardous waste,” “extremely hazardous waste” or
“restricted hazardous waste” under Sections 25515, 25117 or 25122.7, or listed pursuant to Section
25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control
Law) and the regulations promulgated thereunder, as amended, (ii) defined as a “hazardous
substance” under Section 25316 of the California Health and Safety Code, Division 2, Chapter 6.8
(Carpenter-Presly-Tanner Hazardous Substance Account Act) and the regulations promulgated
thereunder, as amended, (iii) defined as a “hazardous material,” hazardous substance” or “hazardous
waste” under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95
(Hazardous Substances), and the regulations promulgated thereunder, as amended (v) petroleum, (vi)
asbestos, (vii) listed under Article 9 and defined as hazardous or extremely hazardous pursuant to
Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, and the
regulations promulgated thereunder, as amended (viii) designated as a “hazardous substance”
pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C. Section 1317), and
the regulations promulgated thereunder, as amended (ix) defined as a “hazardous waste” pursuant to
Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et.
seq. (42 U.S.C. Section 6903), and the regulations promulgated thereunder, as amended (x) defined
as a “hazardous substance” pursuant to Section 101 of the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. Section 9601 et. seq. (42

 

 

U.S.C. Section 9601), and the regulations promulgated thereunder, as amended or (xi) any waste
meeting the identified characteristics of “medical waste” under California Health & Safety Code
Sections 25015-25027.8, and regulations promulgated thereunder, as amended.

          33.6 Within thirty (30) days after termination or expiration of this Lease, Tenant at its sole
cost and expense shall obtain and deliver to Landlord an environmental study, of the scope and
performed by an expert or company reasonably satisfactory to Landlord, evaluating the presence or
absence of hazardous substances and wastes, radiation and radioactive materials on and about the
Premises. Such study shall be based on a reasonable and prudent level of tests and investigations
of the Premises which tests shall be conducted no earlier than three (3) months prior to 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 immediately effected by Tenant. In addition to the
foregoing, Tenant shall obtain all certificates, clearances and approvals, if any, required by any
governmental agency verifying compliance by Tenant with any laws, rules or regulations governing
Tenant’s use and vacancy of the Premises.

          33.7 Tenant shall surrender possession of the Premises in compliance with all laws, rules,
regulations, orders, and permits regarding Hazardous Materials, and shall deliver to Landlord
clearances and/or certificates of compliance from all applicable governmental agencies, including
the State of California in accordance with the terms of the Decommissioning Funding Plan. Tenant
shall cause to be removed from the Premises any and all hazardous substances (except for those
hazardous substances located in building systems necessary or appropriate for proper operation,
such as oil in mechanical systems, cooling towers, and elevator hydraulics) wherever located so
that the Premises can be sold, or delivered to a new tenant, in an environmentally sound condition.
Tenant shall indemnify, defend and hold Landlord 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 Tenant’s failure to effect the clean up, and assessments, and to obtain the clearances and
certifications required by this Lease. If Tenant shall vacate the Premises without having effected
such clean up and obtained such clearances and certifications, then Landlord may obtain same at
Tenant’s cost; Landlord’s action in such regard shall not eliminate Tenant’s liability to pay for
same or to pay Rent as a holdover hereunder.

          33.8 In the event of any third-party claims, losses, damages, liabilities, costs, legal fees
and expenses of any sort (including, but not limited to, costs incurred with respect to any
government-mandated remediation) (“Claims”), against either Landlord or Tenant or both, arising out
of or relating to (i) the presence on the Premises of any Hazardous Material or wastes or radiation
or radioactive materials (except to the extent the presence thereof is already covered by an
express indemnification obligation under Section 33.3), and/or (ii) any unauthorized release into
the environment of any hazardous substances or wastes or radiation or radioactive materials (except
to the extent such release is already covered by an express indemnification obligation under
Section 33.3), then (x) Landlord and Tenant shall cooperate reasonably and in good faith in the
defense of such third-party claims, liabilities and related matters and (y) Tenant shall bear one
hundred percent (100%) of the total claims, losses, damages, liabilities, costs, legal fees and
expenses incurred by Landlord and/or Tenant in connection with matters covered by this Section
33.3. Notwithstanding any provision in this Lease to the contrary, Tenant shall be liable for
Claims only to the extent any such Claim (a) reasonably relates to any time prior to

 

 

the Term Commencement Date and were caused by the actions of Tenant or Nexus, or (b)
reasonably relates only to any time after the Term Commencement Date and was not caused by the
negligence or intentional misconduct of Landlord or Landlord’s Agents.

          33.9 Tenant’s obligations under this Article 33 shall survive the termination of the Lease.

     34. Option to Extend.

          34.1 Tenant has the right to extend the term of this Lease for two (2) five (5) year periods
under the same terms and conditions existing in the original Lease (except for Basic Annual Rent)
by Tenant giving written notice to Landlord (“Notice of Exercise”) no later than twelve (12) months
prior to the end of the then current term (“Extension Periods”). The Basic Annual Rent for the
Extension Periods shall be equal to ninety-five percent (95%) of the fair market value for rental
of the Premises (“Market Rent”) measured nine (9) months prior to the commencement of any Extension
Period. Within ten (10) days after a Notice of Exercise, Landlord shall propose a Market Rent from
which the Basic Annual Rent for an Extension Period will be calculated. If Tenant does not approve
of Landlord’s proposed Market Rent, Tenant shall provide Landlord a counter-proposal of Market Rent
within ten (10) days after receipt of Landlord’s initial proposal. If the parties cannot agree on
a Market Rent within ten (10) days after Tenant’s initial counter-proposal, then Market Rent shall
be determined by the procedure set forth in Section 34.2.

          34.2 If the parties cannot agree on Market Rent pursuant to Section 34.1, then the Market Rent
of the Premises shall be established promptly thereafter by the following appraisal method: Within
ten (10) days after failure of the parties to agree on the Market Rent, Landlord and Tenant shall
each appoint an appraiser to appraise the rental value of the Premises based on the terms set forth
in this Lease (“Appraisal”) by delivering the appraiser’s name to the other party. Each appraiser
shall be an MAI appraiser with at least ten (10) years experience appraising rental values of
similar properties in San Diego County, California (“Qualified Appraiser”). Failure by either
party to timely appoint a Qualified Appraiser shall be deemed an acceptance of the other party’s
most recently delivered proposed Market Rent, but only after written notice to such party of such
party’s failure to appoint a Qualified Appraiser and ten (10) days have elapsed after the date of
such written notice with such failure to appoint continuing. Each party’s Qualified Appraiser
shall perform an Appraisal of the Premises and each party’s Qualified Appraiser shall deliver such
appraisal to the other Qualified Appraiser and the other party on the fifteenth (15th) calendar day
after the last Qualified Appraiser was appointed. If each Appraisal is timely provided and the
Market Rent set forth in the lower of the two Appraisals is at least ninety-five percent (95%) of
the higher appraisal, then the Market Rent of the Premises shall be the average of the two (2)
Appraisals. Each Party shall be responsible for the cost of their respective Qualified Appraiser.
Otherwise, the two (2) Qualified Appraisers shall select a third Qualified Appraiser who shall
within ten (10) calendar days after the timely delivery of the first two Appraisals select one of
the two (2) Appraisals as the Market Rent. The Parties shall split the costs of the third
Qualified Appraiser.

 

 

          34.3 Within fifteen (15) days after the determination of Market Rent and hence the 95% of
Market Rent to be paid as Basic Annual Rent during an Extension Period, Tenant may, in its sole and
absolute discretion, elect to withdraw and terminate its Notice of Exercise by delivering written
notice thereof to Landlord.

     35. Agreement for Right to Lease. Concurrently herewith, Landlord and Tenant are entering
into an Agreement for Right to Lease the vacant property adjacent to the Premises known as Lot 14
(“Lot 14”).

     36. Right to Use Lot 14. Subject to the further terms of this Section 36, Landlord hereby
grants to Tenant (and its employees, invitees, guests, assignees, and subtenants) a license to
enter upon Lot 14, use any facility improvement or amenity located thereon, and transport research
material and equipment (“Access Right”). All terms and conditions of this Lease and obligations of
Tenant (including without limitation, repair, maintenance, insurance and indemnification
obligations) shall apply to the Access Right, except that Tenant shall not be required to pay any
additional Rent or any Taxes assessed on Lot 14. One of the improvements on Lot 14 as of the Term
Commencement Date is a gravel pathway. Landlord will use commercially reasonable efforts to keep
such pathway open and usable during the Lease term. The Access Right shall continue unobstructed
by Landlord until the earlier of (i) the expiration or earlier termination of this Lease, or (ii)
the commencement of any construction of any improvements. Except for the Access Right, Tenant
hereby waives and releases as interest in real property or other interest it may have in Lot 14.
Tenant acknowledges that the Access Right is not an interest in real property, and will, at
Landlord’s request, execute commercially reasonable documents confirming the matter and the
expiration or termination of the Access Right as set forth herein.

     37. Miscellaneous.

          37.1 Terms and Headings. Where applicable in this Lease, the singular includes the
plural and the masculine or neuter includes the masculine, feminine and neuter. The section
headings of this Lease are not a part of this Lease and shall have no effect upon the construction
or interpretation of any part hereof.

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

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

          37.4 Covenants and Conditions. Each provision of this Lease performable by Tenant
shall be deemed both a covenant and a condition.

          37.5 Consents. Whenever consent or approval of either party is required, that party
shall not unreasonably withhold or delay such consent or approval, except as may be expressly set
forth to the contrary.

 

 

          37.6 Entire Agreement. The terms of this Lease are intended by the parties as a final
expression of their agreement with respect to the terms as are included herein, and may not be
contradicted by evidence of any prior or contemporaneous agreement.

          37.7 Severability. Any provision of this Lease which shall prove to be invalid, void,
or illegal in no way affects, impairs or invalidates any other provision hereof, and such other
provisions shall remain in full force and effect.

          37.8 Recording. On the Term Commencement Date, Landlord and Tenant shall record a
Memorandum of Lease in the form of Exhibit “B” attached hereto (“Memorandum”).

          37.9 Impartial Construction. The language in all parts of this Lease shall be in all
cases construed as a whole according to its fair meaning and not strictly for or against either
Landlord or Tenant.

          37.10 Inurement. Each of the covenants, conditions, and agreements herein contained
shall inure to the benefit of and shall apply to and be binding upon the parties hereto and their
respective heirs, legatees, devisees, executors, administrators, successors, assigns, sublessees,
or any person who may come into possession of said Premises or any part thereof in any manner
whatsoever. Nothing in this Section 37.10 contained shall in any way alter the provisions against
assignment or subletting in this Lease provided.

          37.11 Force Majeure. If either party cannot perform any of its non-monetary
obligations, or is delayed in such performance, due to events beyond such party’s control, the time
provided for performing such obligations shall be extended by a period of time equal to the delay
attributable to such events, provided that such party shall use reasonable efforts to remove the
cause of such delay and to resume the performance of any such obligations. Events beyond a party’s
control include, but are not limited to, acts of God (including earthquake), war, civil commotion,
labor disputes, strikes, fire, flood or other casualty, shortage of labor or material, inability to
obtain government permits or approvals within customary time frames, government regulation or
restriction, and weather conditions.

          37.12 Notices. Any notice, consent, demand, bill, statement, or other communication
required or permitted to be given hereunder must be in writing and may be given by personal
delivery, by facsimile transmission, or by mail, and if given by personal delivery or facsimile
transmission shall be deemed given on the date of delivery or transmission, and if given by mail
shall be deemed sufficiently given three (3) days after time when deposited in United States Mail
if sent by registered or certified mail, addressed to Tenant at the Premises, or to Tenant or
Landlord at the addresses shown in Section 2.1.6 hereof. Either party may, by notice to the other
given pursuant to this Section, specify additional or different addresses for notice purposes.

          37.13 Authority to Execute Lease. Landlord and Tenant each acknowledge that it has
all necessary right, title and authority to enter into and perform its obligations under this
Lease, that this Lease is a binding obligation of such party and has been authorized by all
requisite action under the party’s governing instruments, that the individuals executing this Lease

 

 

          37.14 Right of Entry. Landlord and its authorized representatives shall have the
right to enter the Premises with two (2) business days prior notice (except in an emergency which
threatens imminent damage to property or personal injury, in which event no such notice shall be
required) during the Term of this Lease during normal business hours for the purpose of inspecting
and determining the condition of the Premises or for any other proper purpose including, without
limitation, to make repairs, replacements or improvements which Landlord may deem necessary, to
show the Premises to prospective purchasers, to show the Premises to prospective tenants (but only
during the final year of the Term of this Lease), and to post notices of nonresponsibility; if
requested by Tenant, any such non-emergency entry shall be conducted with a representative of
Tenant as long as Tenant is able to provide such representative at the time which Landlord wishes
to effect its entry and inspection. Landlord shall use commercially reasonable efforts to not
interfere with or hinder any of Tenant’s normal business operations or employees, and shall not be
liable for inconvenience, annoyance, disturbance, loss of business, quiet enjoyment or other damage
or loss to Tenant by reason of such entry and inspection; provided, however, to the extent
Landlord’s entry or inspection materially interrupts Tenant’s business operations, Rent shall be
equitably abated (taking into consideration, among other things, the cause of such entry by
Landlord) until such material interruption ceases.

          37.15 Financial Information. Unless Tenant is a publicly traded entity, (a) from time
to time Tenant shall provide directly to prospective lenders and purchasers of the Premises
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, and (b) 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.

          37.16 Costs. If Tenant requests the consent of the Landlord under any provision of
this Lease for any act that Tenant proposes to do hereunder, including, without limitation,
assignment or subletting of the Lease or Premises or construction of an alteration, Tenant shall,
as a condition to doing any such act and the receipt of such consent, reimburse Landlord for
reasonable costs and expenses incurred by Landlord in connection therewith, including, without
limitation, reasonable attorneys’ fees but not to exceed Five Thousand Dollars ($5,000).

          37.17 Confidentiality. Except if Tenant is a publicly traded entity, Landlord and
Tenant each shall, and each shall cause its officers, directors, employees, agents, consultants,
advisors, members, managers and representatives to, maintain the financial and business terms of
this Lease, and all exhibits hereto, in strict confidence, not disclosing any of such information,
nor providing copies of this Lease or any exhibits hereto, to any person or entity without the
written permission of the other; provided, however, that either may make disclosure of such
information to its existing and prospective lenders, financial partners, owners, members, managers,
consultants, advisors, attorneys, accountants, underwriters and similar parties, to an entity
involved in discussions concerning a merger, consolidation, acquisition or similar

 

 

transaction (in
which case such party shall secure a confidentiality undertaking from the party with which it is
involved) or as required by law.

          37.18 Transfer of Landlord’s Interest. Upon sale, transfer or assignment of
Landlord’s interest in the Premises, Landlord shall be relieved of its obligations hereunder with
respect to liabilities accruing from and after the date of such sale, transfer or assignment and
Tenant shall attorn to the purchaser, transferee or assignee on behalf of such party are duly
authorized and designated to do so, and that no other signatories are required to bind such party.

     IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first above
written.

	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 
	SLOUGH ESTATES USA INC., a Delaware
corporation	 	LIGAND PHARMACEUTICALS INCORPORATED,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 

 

 

EXHIBIT “A”

FORM OF ACKNOWLEDGEMENT OF TERM

AND COMMENCEMENT DATE

     Pursuant to Section 4.2 of that certain Lease dated                      ___, 2006, by and between
SLOUGH ESTATES USA INC., a Delaware corporation (“Landlord”), and LIGAND PHARMACEUTICALS
INCORPORATED, a Delaware corporation (“Tenant”), for the Premises described in the Lease located at
Parcel 2 of Parcel Map 17826, in the City of San Diego, County of San Diego, State of California,
according to Map thereof, filed in the Office of the County Recorder of San Diego County, February
18, 1997, we hereby acknowledge that the Term Commencement Date of the Lease, as defined therein,
is                     , 2006, and the Term Expiration Date of the Lease, as defined therein, is
                    , 20___.

     IN WITNESS WHEREOF, the parties hereto have executed this Acknowledgment of Term and
Commencement Date as of                     , 2006.

	 	 	 	 	 
	 	 	LANDLORD:
	 
	 	 	 	 
	 	 	SLOUGH ESTATES USA INC., a Delaware corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	TENANT:
	 
	 	 	 	 
	 	 	LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

EXHIBIT “A”

 

 

EXHIBIT “B”

FORM OF MEMORANDUM OF LEASE

RECORDING REQUESTED BY:

WHEN RECORDED MAIL TO:

Luce, Forward, Hamilton & Scripps LLP

600 West Broadway, Suite 2600

San Diego, CA 92101-3372

Attn: Robert D. Buell, Esq.

ABOVE SPACE FOR RECORDER’S USE

MEMORANDUM OF LEASE

     THIS MEMORANDUM OF LEASE (“Memorandum”) is made and effective as of                     , 2006, by
and between SLOUGH ESTATES USA INC., a Delaware corporation (“Slough”), and LIGAND PHARMACEUTICALS
INCORPORATED, a Delaware corporation (“Ligand”), with reference to the facts set forth below.

RECITALS

     A. Concurrently herewith, Ligand is conveying to Slough title to certain real property
consisting of (a) one (1) building containing approximately 82,500 square feet (the “Building”)
and the land on which the Building is situated, located at 10275 Science Center Drive, San Diego,
California (“Improved Lot”) as described on Schedule “1” attached hereto, and (b) two (2) adjacent
parcels of land, one located at 10265 Science Center Drive, San Diego, California (“Lot 14”) as
described on Schedule “2” attached hereto, and one located at 10285 Science Center Drive, San
Diego, California (“Lot 16”).

     B. Also concurrently herewith, Slough and Ligand have entered into that certain Lease (the
“Lease”) dated                     , 2006, with respect to the lease of all of the Building and the
Improved Lot and the right to use Lot 14, on the terms and conditions set forth therein.

     NOW THEREFORE in consideration of the recitals set forth above and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as
set forth herein.

     1. Lease and License. Slough hereby leases to Ligand and Ligand leases from Slough
the Improved Lot and the Building upon the terms, conditions and provisions of the Lease, all of
which provisions are hereby incorporated into this Memorandum of Lease. Slough also grants to
Ligand a license to enter upon and use Lot 14, which license is terminable as set forth in the
Lease, upon the terms, conditions and provisions of the Lease.

EXHIBIT “B”

1

 

     2. Term. The Lease is for a term commencing on                     , 2006, and ending on
                     ___, 2021, unless such term is terminated as provided therein. Ligand has two (2)
successive options to extend the term of the Lease for five (5) years each.

     3. Purpose. The purpose of this Memorandum is to provide notice to any and all
subsequent interests in the Improved Lot, the Building, and Lot 14 of the rights and obligations of
the parties to the Lease and is not intended to modify or change the provisions of the Lease. To
the extent of any inconsistency between the Lease and this Memorandum, the Lease shall control.

     IN WITNESS WHEREOF, the parties hereto have executed this Memorandum on the date first above
written.

	 	 	 	 	 	 	 	 	 
	SLOUGH:	 	LIGAND:	 	 
	 
	 	 	 	 	 	 	 	 
	SLOUGH ESTATES USA INC., a Delaware
corporation	 	LIGAND PHARMACEUTICALS INCORPORATED,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 

EXHIBIT “B”

2

 

	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 
	 

	 	 	)	 
	COUNTY OF

	 	 	)	 

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

WITNESS my hand and official seal.

	 	 	 
	 

          Signature

	 	 
(Seal)

	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 
	 

	 	 	)	 
	COUNTY OF

	 	 	)	 

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

WITNESS my hand and official seal.

	 	 	 
	 

          Signature

	 	 
(Seal)

 

 

	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 
	 

	 	 	)	 
	COUNTY OF

	 	 	)	 

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

WITNESS my hand and official seal.

	 	 	 
	 

          Signature

	 	 
(Seal)

	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 
	 

	 	 	)	 
	COUNTY OF

	 	 	)	 

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

WITNESS my hand and official seal.

	 	 	 
	 

          Signature

	 	 
(Seal)

 

 

SCHEDULE “1”

to

Memorandum of Lease

Legal Description of Improved Lot

PARCEL 2 OF PARCEL MAP NO. 17826, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO MAP THEREOF FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, FEBRUARY 18, 1997.

SCHEDULE “1”

 

 

Schedule “2”

to

Memorandum of Lease

Legal Description of Lot 14

PARCEL 1 OF PARCEL MAP 17826, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO MAP THEREOF, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, FEBRUARY 18, 1997.

SCHEDULE “2”

 

 

EXHIBIT H

AGREEMENT FOR RIGHT TO LEASE

     THIS AGREEMENT FOR RIGHT TO LEASE (this “Agreement”) is made as of October ___, 2006, by and
between Slough Estates USA Inc., a Delaware corporation (hereinafter “Slough”), and Ligand
Pharmaceuticals Incorporated, a Delaware corporation (hereinafter “Ligand”), with reference to the
facts set forth below.

R E C I T A L S:

     A. Pursuant to that certain Purchase Agreement and Escrow Instructions between Nexus Equity
VI, LLC, a California limited liability company (“Nexus”), Ligand, and Slough dated October ___,
2006 (the “Purchase Agreement”), concurrently herewith Ligand is conveying to Slough certain real
property (the “Property”) located in the City of San Diego, State of California, more particularly
described on Exhibit ”A” attached hereto and incorporated herein by this reference.

     B. Concurrently with the conveyance of the Property from Ligand to Slough and also pursuant to
the Purchase Agreement, Nexus is conveying to Slough certain real property (“Lot 15”) located in
the City of San Diego, State of California, more particularly described in Exhibit B attached
hereto and incorporated herein. Lot 15 is adjacent to the Property.

     C. Concurrently with the conveyance of Lot 15 from Nexus to Slough, Slough and Ligand are
entering into that certain Lease (“Lot 15 Lease”) for the lease of all of the improvements and land
consisting of Lot 15.

     D. As a material consideration to induce Ligand to convey the Property to Slough, Slough
agreed that it would grant to Ligand the rights set forth herein in connection with any development
on the Property of one or more commercial office buildings (“Buildings”).

     E. Slough acknowledges that Ligand occupies the office building on Lot 15 and will continue to
do so pursuant to the Lot 15 Lease, and that Ligand agreed to sell the Property to Slough in part
in reliance on Slough’s agreement to grant the rights set forth herein.

     NOW, THEREFORE, in consideration of the foregoing and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, including, without limitation, the sale
of the Property to Slough, Slough hereby grants to Ligand a right of first offer to lease all or
any portion of the Buildings (“Right of First Offer”) and a right of first refusal to lease all or
any portion of the Buildings which become available for lease at any time (“Right of First
Refusal”) on the terms and conditions set forth below.

ARTICLE 1

DEFINED TERMS

     1.1 Defined Terms. Except as the context otherwise requires, all terms used herein shall have the same meanings as
set forth herein.

 

 

     1.2 Transfer. The term “transfer” shall mean any lease, license, or permission to use all
or any material portion of the Buildings for a term in excess of one (1) year; provided that the
term “transfer” specifically excludes any sale or other conveyance of fee title to the Property.

     1.3 Building Lease. The term “Building Lease” shall mean a lease for the portion of
the Building subject to the Right of First Offer or the Right of First Refusal, as the case may be,
which lease shall be similar in form and content to the Lot 15 Lease, except (x) to the extent set
forth in Slough’s Notice or Slough’s Availability Notice, as the case may be, and (y) in the event
Ligand exercises the Right of First Offer, the rent shall be the fair market rent for such space at
the time of Slough’s Notice.

ARTICLE 2

GRANT OF RIGHT OF FIRST OFFER AND RIGHT OF FIRST REFUSAL

     2.1 Grant of Right of First Offer. Commencing on the date hereof, and continuing until
term of the Lot 15 Lease expires or is earlier terminated, Ligand shall have a continuous Right of
First Offer on any speculative Building constructed on the Property, it being understood that
Ligand shall not have the Right of First Offer with respect to any building for which construction
is commenced after a particular tenant or group of tenants has communicated to Slough its desire to
occupy all or a portion of such building (a “Build-to-Suit Building”). At least one (1) year prior
to estimated completion of any such speculative Building, Slough shall provide Ligand with written
notice of Slough’s decision to construct one or more speculative Buildings and the economic terms
(including without limitation Slough’s proposed fair market rent) on which it is willing to lease
the Building(s) (“Slough’s Notice”). Ligand shall have the right to exercise its Right of First
Offer by delivering written notice thereof to Slough within thirty (30) days after receipt of
Slough’s Notice. If Ligand exercises its Right of First Offer, Slough and Ligand will attempt for
a period of thirty (30) days (“Negotiation Period”) to agree on the fair market rent for that
portion of area in the Buildings described in Slough’s Notice. If Slough and Ligand are able to
agree on the fair market rent within the Negotiation Period, the parties will execute and deliver
the Building Lease no later than the end of the Negotiation Period. If Slough and Ligand cannot
agree upon the fair market rent prior to the end of the Negotiation Period, the same shall be
extended for a period of thirty (30) days for the purposes of (i) determining fair market rent
pursuant to Section 2.5 of this Agreement, and (ii) executing a Building Lease. If Ligand does not
timely exercise its Right of First Offer, then the Right of First Offer shall no longer be
applicable for the Building described in Slough’s Notice; provided, however, that if Slough intends
to transfer all or any part of the Building for a rental amount or fee that is less than
ninety-five percent (95%) of the rental rate set forth in Slough’s Notice, then such space shall be
subject to the Right of First Refusal in accordance with Section 2.2 hereof.

     2.2 Grant of Right of First Refusal. In addition to the Right of First Offer, commencing on the date hereof and continuing until the
term of Lot 15 Lease expires or is earlier terminated, Ligand shall have a continuous Right of
First Refusal on the Property. Slough shall provide to Ligand written notice of (1) the terms upon
which Slough intends to lease any Build-to-Suit Building, or (2) any space that becomes available
within the Buildings and a copy of the letter of intent with a third-party which Slough intends to
accept (or has accepted conditionally, subject to this Right of First Refusal) (“Slough’s
Availability Notice”); provided that if Slough initially leases all or any portion of the Buildings
for a rental amount or fee that is not less than

 

 

ninety-five percent (95%) of the rental rate set
forth in Slough’s Notice pursuant to Section 2.2 above, Slough shall not be obligated to deliver
Slough’s Availability Notice, and Ligand shall have no Right of First Refusal, with respect to such
space. Ligand shall have a period of fourteen (14) days following receipt of Slough’s Availability
Notice to advise Slough of Ligand’s desire to lease the space as described in Slough’s Availability
Notice on the terms and conditions as set forth therein, except that a Building Lease shall be
utilized incorporating the rental rate and other economic matters (tenant improvement allowance,
refurbishment allowance, rent abatement, etc.) described in Slough’s Availability Notice. If
Ligand fails to reply to Slough’s Availability Notice within the fourteen (14) day period, Ligand
shall be deemed to have elected not to lease such space. If Ligand responds within the fourteen
(14) day period and indicates a desire to lease the space described in Slough’s Availability
Notice, Slough and Ligand shall enter into a Building Lease incorporating the terms and conditions
as set forth in Slough’s Availability Notice. If Ligand elects not to lease the space as set forth
in Slough’s Availability Notice, Slough shall have the right to lease such space for a rental
amount or fee that is not less than ninety-five percent (95%) of the rental rate set forth in
Slough’s Availability Notice. If Slough fails to so lease the space within one hundred eighty
(180) days after Ligand’s election not to lease the space, Slough shall again, prior to leasing
such space, have the obligation to provide a revised Slough’s Availability Notice to Ligand,
indicating the revised terms upon which such space is available. Slough further agrees and
acknowledges that for the benefit of Ligand retaining some right and option to expand and lease
additional space within the Buildings, Slough will not grant to any other person or entity any
right of first offer, right of first refusal, or any similar rights to lease space in the Buildings
unless it is subject and subordinate to the rights of Ligand as set forth herein. Notwithstanding
anything to the contrary contained in this Agreement, the commencement and pursuit of design
activities for a Building shall not trigger Ligand’s Right of First Offer or Right of First Refusal
as provided in this Agreement.

     2.3 Quitclaim Deed. Upon the expiration or earlier termination of the Lot 15 Lease, this
Agreement shall automatically be terminated and released from the Property. Ligand agrees that, at
any time after the expiration or earlier termination of this Agreement, it shall execute and
deliver to Slough, within ten (10) days after receipt of a written request therefor, a quitclaim
deed, in form and substance reasonably acceptable to Slough and Ligand, in recordable form
conveying to Slough all of Ligand’s interests under this Agreement in the Property. In addition,
Ligand shall promptly execute and deliver to Slough such documents as Slough may reasonably require
evidencing Ligand’s waiver, or failure or refusal to exercise, either the Right of First Offer or
the Right of First Refusal, as the case may be.

     2.4 Subordination. Slough shall have the right to encumber the Property, or any portion thereof, by loan(s) secured
by deeds of trust in order to finance the acquisition of, or construction of improvements on, the
Property or any portion thereof. Ligand agrees that it shall, within ten (10) days after receipt
thereof from Slough, execute and return to Slough an agreement subordinating Ligand’s interest in
this Agreement to the lien of any such deed of trust, provided that such subordination agreement is
mutually reasonably acceptable to Slough and Ligand.

     2.5 Appraisal. If Slough and Ligand cannot, despite their good faith efforts, agree on a
fair market rent for the Right of First Offer as set forth in Section 2.1 hereof prior to the end
of the Negotiation Period, the fair market rent shall be established by an

 

 

appraisal conducted by
an appraiser reasonably mutually agreed upon by Slough and Ligand, who shall be a member of the
American Institute of Real Estate Appraisers. The thirty (30) day Negotiation Period provided
above shall be extended for an additional thirty (30) days to complete such appraisal. The cost of
the appraisal shall be split equally between Slough and Ligand.

ARTICLE 3

MEMORANDUM OF AGREEMENT FOR RIGHT TO LEASE

     Concurrently herewith, Ligand and Slough shall execute a Memorandum of Agreement for Right to
Lease in the form attached hereto as Exhibit C, and Slough shall cause said Memorandum to be
recorded as an encumbrance on Slough’s title to the Property, subject to no monetary liens (other
than the lien for nondelinquent taxes, bonds and assessments) or deeds of trusts.

ARTICLE 4

GENERAL PROVISIONS

     4.1 Notice and Payments. Any notice to be given or other document to be delivered by any
party to the other or others under this Agreement may be delivered by facsimile, or in person to an
officer of any party, or may be deposited in the United States, duly certified or registered,
return receipt requested, with postage prepaid, or by Federal Express or other similar overnight
delivery service and addressed to the party for whom intended, at the addresses set forth in the
Purchase Agreement. Any party may from time to time, by written notice to the other, designate a
different address, which shall be substituted for the one above specified. Unless otherwise
specifically provided for in this Agreement, all notices, payments, demands or other communications
shall be in writing and shall be deemed to have been duly given and received as provided in the
Purchase Agreement.

     4.2 Captions. The captions used herein are for convenience only and are not a part of this
Agreement and do not in any way limit or amplify the terms and provisions hereof.

     4.3 Governing Law. This Agreement shall be governed by and construed under the internal laws of the State of
California without regard to choice of law rules. This Agreement shall be deemed made and entered
into in San Diego County.

     4.4 Time of the Essence. Time is of the essence of each and every provision of this
Agreement. In the event any date, or the final date of any period, which is set out in any
provision of this Agreement, falls on other than a Business Day, such date or time period, as the
case may be, shall be extended to the next Business Day (as that term is defined in the Purchase
Agreement).

     4.5 Successors and Assigns. All of the covenants and conditions of this Agreement shall
inure to the benefit of and shall be binding upon the successors-in-interest of Ligand and the
successors, heirs, representatives and assigns of Slough. As used in the foregoing, “successors”
includes successors to the parties’ interest in the Property and successors to all or substantially
all of their assets and successors by merger or consolidation.

 

 

     4.6 Construction of Agreement. The Agreement contained herein shall not be construed in
favor of or against either party, but shall be construed as if both parties prepared this
Agreement. Slough and Ligand acknowledge that they have been represented, or have had the
opportunity to be represented, by counsel of their own choice. Neither Slough nor Ligand is
relying upon any legal advice from the other party’s counsel regarding the subject matter thereof.
Both parties acknowledge that they understand the terms and conditions of this Agreement and the
terms and conditions of all other documents and agreements executed in connection herewith and that
they sign the same freely. Neither Slough nor Ligand shall deny the enforceability of any
provision of this Agreement or any of the other documents or agreements executed in connection
herewith on the basis that it did not have legal counsel or that it did not understand any such
term or condition. This Agreement and any ambiguities or uncertainties contained in this Agreement
shall be equally and fairly interpreted for the benefit of and against all parties to this
Agreement and shall further be construed and interpreted without reference to the identity of the
party or parties preparing this document, it being expressly understood and agreed that the parties
hereto participated equally in the negotiation and preparation of this Agreement or have had equal
opportunity to do so. Accordingly, the parties hereby waive the legal effect of California Civil
Code Section 1654 or any successor and/or amended statute which in part states that in cases of
uncertainty, the language of the contract should be interpreted most strongly against the party who
caused the uncertainty to exist.

     4.7 Attorney’s Fees. If any action, arbitration, judicial reference or other proceeding is
instituted between Ligand and Slough in connection with this Agreement, the losing party shall pay
to the prevailing party a reasonable sum for attorneys’ and experts’ fees and costs incurred in
bringing or defending such action or proceeding and/or enforcing any judgment granted therein, all
of which shall be deemed to have accrued upon the commencement of such action or proceeding and
shall be paid
whether or not such action or proceeding is prosecuted to final judgment. Any judgment or order
entered in such action or proceeding shall contain a specific provision providing for the recovery
of attorneys’ fees and costs, separate from the judgment, incurred in enforcing such judgment. The
prevailing party shall be determined by the trier of fact based upon an assessment of which party’s
major arguments or positions taken in the proceedings could fairly be said to have prevailed over
the other party’s major arguments or positions on major disputed issues. For the purposes of this
section, attorneys’ fees shall include, without limitation, fees incurred in the following: (1)
post-judgment motions; (2) contempt proceedings; (3) garnishment, levy, and debtor and third party
examinations; (4) discovery; (5) any appeals; and (6) bankruptcy proceedings. This Section is
intended to be expressly severable from the other provisions of this Agreement, is intended to
survive any judgment and is not to be deemed merged into the judgment.

     4.8 Severability. If any phrase, clause, sentence, paragraph, section, article or other
portion of this Agreement becomes or is held to be illegal, null or void or against public policy,
for any reason, the remaining portions of this Agreement shall not be affected thereby and shall
remain in full force and effect.

     4.9 Gender and Number. In this Agreement (unless the content requires otherwise), the
masculine, feminine and neuter genders and the singular and the plural include one another.

 

 

     4.10 No Partnership or Joint Venture. Slough or Ligand shall not, by virtue of this
Agreement, in any way or for any reason be deemed to have become a partner of the other in the
conduct of its business or otherwise, or a joint venturer. In addition, by virtue of this
Agreement there shall not be deemed to have occurred a merger of any joint enterprise between
Slough and Ligand.

     4.11 Remedies Cumulative. All rights, options and remedies of Ligand contained in this
Agreement shall be construed and held to be cumulative, and no one of them shall be exclusive of
the other. Ligand shall have the right to pursue any one of the remedies specified in this
Agreement or to seek damages or specific performance in the event of any breach of the terms of
this Agreement by Slough or to pursue any other remedy or relief that may be provided by law or
equity, whether or not stated in this Agreement.

     4.12 Entire Agreement. This Agreement constitutes the entire agreement between the parties
hereto pertaining to the subject matter hereof, and all prior and contemporaneous agreements,
representations, negotiations and understandings of the parties hereto, oral or written, are hereby
superseded and merged herein.

     4.13 Authority. If Slough is a corporation, each individual executing this Agreement on
behalf of Slough represents and warrants that he is duly authorized to execute and deliver, and has
the power to execute and deliver, this Agreement on behalf of the corporation in accordance with a
duly adopted resolution of the Board of Directors of the corporation or in accordance with the
bylaws of the corporation. If Slough is a partnership, each person signing this Agreement for
Slough represents and warrants that he is a general partner of the partnership, that he has full
authority to sign for the partnership and that this Agreement binds the partnership and all general
partners of the partnership. Slough shall give written notice to Ligand of any general partner’s
withdrawal or addition. If Slough is a limited liability company, each individual executing this
Agreement on behalf of Slough represents and warrants that he is an officer of the limited
liability company, that he has full authority to sign for the limited liability company, and that
this Agreement binds the limited liability company.

     4.14 Counterparts. This Agreement may be executed in counterparts, each of which, taken
together, will constitute one fully executed original.

     4.15 Judicial Reference. The parties agree to promptly submit any dispute between them
arising from this Agreement to JAMS. In the event an action is filed in any court by either party
to this Agreement involving a dispute arising from this Agreement (“Dispute”), within twenty (20)
days after such filing, either party may, upon five (5) days’ notice to the other party, apply ex
parte to the Court for a reference of the entire dispute to JAMS in accordance with Code of Civil
Procedure §638. The application shall be deemed a mutual request by both parties for the reference.
For either voluntary submission of a dispute to JAMS or reference by the Court in the event an
action has been filed, the parties shall mutually select a member from JAMS’s panel to hear the
dispute. In the event the parties fail to mutually select a member from the panel within ten (10)
days after submission of the dispute to JAMS, then JAMS shall select the hearing officer. The
hearing shall take place on the first available date on the calendar of the hearing officer, or on
such other date as the parties may agree upon in writing. The decision of the hearing officer shall
be final, binding on the parties, and enforceable in a California court having

 

 

competent
jurisdiction over the parties. Subject to the limitations set forth in this Section, the judicial
referee shall have the authority to try all issues, whether of fact or law, and to report a
statement of decision to the court. The judicial referee shall be the only trier of fact or law in
the reference proceeding, and shall have no authority to further refer any issues of fact or law to
any other party, without the mutual consent of all parties to the judicial reference proceeding.
This agreement to seek voluntary reference to resolve disputes shall not apply to any claim or
action in which any of the causes of action includes either disputes involving third parties other
than the parties to this Agreement, or disputes involving allegations of defective construction or
defective development of the Property which is the subject of this Agreement.

          (a) Participation by Parties. The parties to the Dispute shall cooperate in good
faith to ensure that all necessary and appropriate parties are included in the judicial reference
proceeding. Ligand or Slough, as applicable in a particular judicial reference proceeding
(individually, “Party” or collectively, the “Parties”), shall not be required to participate in the
judicial reference proceeding if all parties against whom the applicable Party would have
cross-claims or counterclaims necessary to afford complete relief to such Party cannot be joined in
the judicial reference proceeding, including, but not limited to, any Ligand Party (collectively, a
“Necessary Party”). If a Party determines that it cannot join all Necessary Parties such Party may
elect not to participate in the judicial reference proceeding. If a Party so elects not to
participate in the judicial reference proceeding, such Party will provide notice to the other
Parties to the judicial reference proceeding that the Dispute will not be resolved by judicial
reference. In such circumstances, the other Parties may seek determination of the Party’s right
not to participate by way of a motion under California Code of Civil Procedure Sections 638, 641
through 645.1, or any successor statutes thereto. If a determination is made as a result of such a
motion that a Party is not required to participate in the judicial reference proceeding, unless the
remaining Parties agree otherwise, the Dispute shall not be resolved by judicial reference and the
Parties may commence an action with respect to the subject Dispute in an appropriate court of law.

          (b) Venue. The proceedings shall be heard in San Diego County.

          (c) Referee. The referee shall be an attorney or retired judge with experience in
relevant real estate matters. The referee shall not have any relationship to the parties to the
Dispute or interest in the Property. The parties to the Dispute participating in the judicial
reference proceeding shall meet to select the referee within ten (10) days after service of the
initial complaint on all defendants named therein. Any dispute regarding the selection of the
referee shall be promptly resolved by the judge to whom the matter is assigned, or if there is
none, to the presiding judge of the Superior Court of the County in which the Property is located,
who shall select the referee.

          (d) Commencement and Timing of Proceeding. The referee shall promptly commence the
proceeding at the earliest convenient date in light of all of the facts and circumstances and shall
conduct the proceeding without undue delay.

          (e) Pre-hearing Conferences. The referee may require one or more pre-hearing
conferences.

 

 

          (f) Motions. The referee shall have the power to hear and dispose of motions,
including motions relating to provisional remedies, demurrers, motions to dismiss, motions for
judgment on the pleadings and summary adjudication motions, in the same manner as a trial court
judge, except the referee shall also have the power to adjudicate summarily issues of fact or law
including the availability of remedies, whether or not the issue adjudicated could dispose of an
entire cause of action or defense. Notwithstanding the foregoing, if prior to the selection of the
referee as provided herein, any provisional remedies are sought by the parties to the Dispute, such
relief may be sought in the Superior Court of the County in which the Property is located.

          (g) Rules of Law. The referee shall apply the laws of the State of California except
as expressly provided herein, including the rules of evidence, unless expressly waived by all
parties to the judicial reference proceeding.

          (h) Record. A stenographic record of the hearing shall be made, provided that the
record shall remain confidential except as may be necessary for post-hearing motions and any
appeals.

          (i) Statement of Decision. The referee’s statement of decision shall contain findings
of fact and conclusions of law to the extent required by law if the case were tried to a judge.
The decision of the referee shall stand as the decision of the court, and upon filing of the
statement of decision with the clerk of the court , judgment may be entered thereon in the same
manner as if the Dispute had been tried by the court.

          (j) Post-Hearing Motions. The referee shall have the authority to rule on all
post-hearing motions in the same manner as a trial judge.

          (k) Appeals. The decision of the referee shall be subject to appeal in the same
manner as if the Dispute had been tried by the court.

          (l) Expenses. Except as otherwise agreed by the parties or as required by applicable
law, no Party shall be required to pay any fee of the judicial reference proceeding or the referee
except to the extent of the costs that would be imposed upon the disputant if the Dispute had been
filed as a suit in court. The referee may not award against either Party any expenses in excess of
those that would be recoverable as costs if the Dispute had been litigated to final judgment in
court. Each party to the judicial reference proceeding shall bear its own attorneys’ fees and
costs in connection with such proceeding.

          (m) Severability. If the referee or any court determines that any provision of this
Section is unenforceable for any reason, that provision shall be severed, and judicial reference
shall be conducted under the remaining enforceable terms of this Section.

          (n) Statutes of Limitation. Nothing in this Section shall be considered to toll,
stay, reduce or extend any applicable statutes of limitations; provided, however, that the Ligand
Parties or Slough shall be entitled to commence a legal action which in the good faith
determination of such Party(ies) is necessary to preserve their rights under any applicable statute
of limitations, provided that such Party shall take no further steps in prosecuting the action
until it has complied with the procedures described above.

 

 

          (o) Acknowledgement. LIGAND AND SLOUGH ACKNOWLEDGE THAT BY AGREEING TO RESOLVE
DISPUTES AS PROVIDED IN THIS SECTION THEY ARE GIVING UP THEIR RESPECTIVE RIGHTS TO HAVE SUCH
DISPUTES TRIED BEFORE A JURY.

	 	 	 	 	 
	 

Ligand’s Initials

	 	 

Slough’s Initials
	 	 

[Remainder of Page Intentionally Left Blank]

 

 

     4.16Waiver. No waiver by Ligand or Slough of a breach of any of the terms, covenants or
conditions of this Agreement by the other party shall be construed or held to be a waiver of any
succeeding or preceding breach of the same or any other term, covenant or condition herein
contained. No waiver of any default by Slough or Ligand hereunder shall be implied from any
omissions by the other party to take any actions on account of the default if the default persists
or is repeated, and no express waiver shall affect the default other than as specified in the
waiver.

     IN WITNESS WHEREOF, the undersigned have executed this instrument as of the date first above
written.

	 	 	 	 	 
	 	 	LIGAND:
	 
	 	 	 	 
	 	 	LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	SLOUGH:
	 
	 	 	 	 
	 	 	SLOUGH ESTATES USA INC., a Delaware corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

 

 

EXHIBIT “A”

to

Agreement for Right to Lease

Legal Description of Property

[Lot 14 – 10265 Science Center Drive, San Diego, CA 92122]

 

 

EXHIBIT “B”

to

Agreement for Right to Lease

Legal Description of Lot 15

[Lot 15 – 10275 Science Center Drive, San Diego, CA 92122]

 

 

EXHIBIT “C”

to

Agreement for Right to Lease

RECORDING REQUESTED BY AND

WHEN RECORDED MAIL TO:

LUCE, FORWARD, HAMILTON & SCRIPPS LLP

600 West Broadway, Suite 2600

San Diego, CA 92101

Attn: Robert D. Buell, Esq.

Above Space for Recorder’s Use     

MEMORANDUM OF AGREEMENT FOR RIGHT TO LEASE

     THIS MEMORANDUM OF AGREEMENT FOR RIGHT TO LEASE (“Memorandum”) is made and effective as of
                    , 2006, by and between SLOUGH ESTATES USA INC., a Delaware corporation (“Slough”),
and LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation (“Ligand”), with reference to the
facts set forth below.

RECITALS

     A. Concurrently herewith, Ligand is conveying to Slough title to certain real property located
in the City of San Diego, County of San Diego, State of California (“Property”). The Property is
described on Schedule “1” attached hereto and incorporated herein.

     B. Also concurrently herewith, Slough and Ligand have entered into that certain Agreement for
Right to Lease (the “Agreement”) dated                     , 2006, with respect to the lease of all or
any improvements or buildings constructed on the Property, on the terms and conditions set forth
therein. The Agreement is incorporated herein by this reference.

     NOW THEREFORE in consideration of the recitals set forth above and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as
set forth herein.

GRANT

     1. Slough hereby grants to Ligand certain rights to lease the Property on the terms and
conditions set forth in the Agreement, as amended from time to time. The rights granted by Slough
to Ligand are a Right of First Offer and a Right of First Refusal, both as more particularly
defined and described in the Agreement. The right to lease the Property pursuant to the Agreement
shall continue until the termination of Ligand’s lease of the real property legally described on
Schedule “2” hereto.

 

 

     2. This Memorandum is being recorded to provide notice to any and all subsequent interests in
the Property of the rights and obligations of the parties to the Agreement and is not intended to
modify or change the provisions of the Agreement.

     3. Pursuant to Section 2.3 of the Agreement, upon termination of the rights set forth in the
Agreement, Ligand shall promptly execute and deliver to Slough a quitclaim deed releasing this
Memorandum and all of the rights and obligations under the Agreement.

     4. To the extent of any inconsistency between the Agreement and this Memorandum, the Agreement
shall control.

     IN WITNESS WHEREOF, the parties hereto have executed this Memorandum on the date first above
written.

	 	 	 	 	 	 	 	 	 
	SLOUGH:	 	LIGAND:	 	 
	 
	 	 	 	 	 	 	 	 
	SLOUGH ESTATES USA INC., a Delaware
corporation	 	LIGAND PHARMACEUTICALS INCORPORATED,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 

 

 

SCHEDULE “2”

	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	) ss	 
	 

	 	 	)	 
	COUNTY OF                                         

	 	 	)	 

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

WITNESS my hand and official seal.

	 	 	 
	Signature                                                             

	 	(SEAL)

	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	) ss	 
	 

	 	 	)	 
	COUNTY OF                                         

	 	 	)	 

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

WITNESS my hand and official seal.

	 	 	 
	Signature                                                             

	 	(SEAL)

 

 

	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	) ss	 
	 

	 	 	)	 
	COUNTY OF                                         

	 	 	)	 

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

WITNESS my hand and official seal.

	 	 	 
	Signature                                                             

	 	(SEAL)

	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	) ss	 
	 

	 	 	)	 
	COUNTY OF                                         

	 	 	)	 

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

WITNESS my hand and official seal.

	 	 	 
	Signature                                                             

	 	(SEAL)

 

 

SCHEDULE “1”

Legal Description of Property

[Lot 14 – 10265 Science Center Drive, San Diego, CA 92122]

 

 

SCHEDULE “2”

Legal Description of Lot 15EX-10.6

 

Exhibit 10.6

PORTIONS
OF THIS EXHIBIT DENOTED WITH THREE ASTERISKS (***) HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

AMENDED
AND RESTATED

ON-SITE PRODUCT SUPPLY AGREEMENT

BETWEEN

THE BOC GROUP, INC.

AND

COFFEYVILLE RESOURCES NITROGEN FERTILIZERS, LLC

DATED AS OF June 1, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 

	 	 
	 	Page
	SECTION 1

	 	DEFINITIONS
	 	 	1	 
	SECTION 2

	 	THE BOC FACILITY AND THE PIPELINES
	 	 	4	 
	SECTION 3

	 	PURCHASE AND SALE OF PRODUCT
	 	 	8	 
	SECTION 4

	 	PRICING AND PAYMENT
	 	 	12	 
	SECTION 5

	 	ARGON, CO2 BYPRODUCT AND OTHER BYPRODUCTS
	 	 	13	 
	SECTION 6

	 	TAXES
	 	 	14	 
	SECTION 7

	 	PRODUCT SPECIFICATIONS
	 	 	14	 
	SECTION 8

	 	CLAIMS
	 	 	15	 
	SECTION 9

	 	ALLOCATIONS OF RESPONSIBILITY
	 	 	15	 
	SECTION 10

	 	METERS
	 	 	17	 
	SECTION 11

	 	EXCUSED NON-PERFORMANCE
	 	 	17	 
	SECTION 12

	 	PRICE ADJUSTMENTS
	 	 	18	 
	SECTION 13

	 	TERM
	 	 	18	 
	SECTION 14

	 	ASSIGNMENT
	 	 	19	 
	SECTION 15

	 	NOTICES
	 	 	19	 
	SECTION 16

	 	GENERAL REPRESENTATIONS AND WARRANTIES
	 	 	20	 
	SECTION 17

	 	CONFIDENTIALITY
	 	 	21	 
	SECTION 18

	 	RESOLUTION OF DISPUTES
	 	 	22	 
	SECTION 19

	 	INDEMNIFICATION
	 	 	22	 

 

 

	 	 	 	 	 	 	 
	 

	 	 
	 	Page
	SECTION 20

	 	INSURANCE
	 	 	24	 
	SECTION 21

	 	TAKING & CASUALTY
	 	 	25	 
	SECTION 22

	 	LIAISONS
	 	 	27	 
	SECTION 23

	 	GENERAL PROVISIONS
	 	 	27	 
	 
	EXHIBITS
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	EXHIBIT A

	 	CERTAIN SPECIFICATIONS, CAPABILITIES AND CAPACITIES	 	 	 	 
	EXHIBIT B

	 	PRICE ADJUSTMENTS	 	 	 	 
	EXHIBIT C

	 	ACCEPTABLE AIR CONTAMINANT LEVELS	 	 	 	 
	EXHIBIT D

	 	THE COFFEYVILLE PLANT SITE	 	 	 	 
	EXHIBIT E

	 	THE BOC PLANT SITE	 	 	 	 
	EXHIBIT F

	 	ITEMS TO BE PROVIDED BY COFFEYVILLE RESOURCES	 	 	 	 
	EXHIBIT F-l

	 	COOLING WATER SPECIFICATIONS	 	 	 	 
	EXHIBIT F-2

	 	HYDROGEN SPECIFICATIONS	 	 	 	 
	EXHIBIT F-3

	 	EXCESS POWER CALCULATION METHODOLOGY	 	 	 	 
	EXHIBIT G

	 	PRICING SCHEDULE	 	 	 	 
	EXHIBIT H

	 	PURCHASE PRICE	 	 	 	 
	EXHIBIT I

	 	TERMINATION FEE	 	 	 	 
	EXHIBIT J

	 	MEMORANDUM OF LICENSE	 	 	 	 
	EXHIBIT K

	 	CALCULATION OF LOST LIQUID ADJUSTMENT FACTOR, JULY 2005	 	 	 	 

iii

 

AMENDED AND RESTATED ON-SITE PRODUCT SUPPLY AGREEMENT

     THIS AMENDED AND RESTATED ON-SITE PRODUCT SUPPLY AGREEMENT (“Agreement”), made and
effective as of the 1st day of June, 2005, by and between THE BOC GROUP, INC., a Delaware
corporation, acting by and through its BOC Gases Division (“BOC”), COFFEYVILLE RESOURCES NITROGEN
FERTILIZERS, LLC, a Delaware limited liability company (“Coffeyville Resources”).

WITNESSETH:

WHEREAS, Farmland Industries, Inc. (“Farmland”) and BOC originally entered into the On-Site
Product Supply Agreement (“Original Agreement”) dated December 3, 1997; and

WHEREAS, Farmland and BOC entered into Amendment No. 1 to the Original Agreement dated December
31, 1999; and

WHEREAS, Farmland assigned the Original Agreement, as amended, to Coffeyville Resources effective
March 4, 2004; and

WHEREAS, Coffeyville Resources and BOC desire to further amend the Original Agreement to
incorporate Amendment No. 1 and to incorporate such further amendments into this Amended and
Restated On-Site Product Supply Agreement, which replaces and supersedes the Original Agreement, as
amended by Amendment No. 1.

IN CONSIDERATION OF THE PROMISES HEREINAFTER CONTAINED, BOC AND COFFEYVILLE RESOURCES HEREBY AGREE
WITH EACH OTHER AS FOLLOWS:

SECTION 1 DEFINITIONS

     For purposes of this Agreement, the following terms shall have the meanings indicated
below:

     (a) “Argon” — a by-product liquid product produced by the BOC Facility.

     (b) “BOC
Entities” shall have the meaning given such term in Section 19(c) hereof.

     (c) “BOC Facility” — a plant for the production of Product and Argon (the “BOC Plant”),
including metering and related facilities, together with interconnected liquid Oxygen Product and
liquid Nitrogen Product storage vessels and vaporization equipment (the “Liquid Product Storage
Facility”), all connected to the BOC Pipelines and having the production, delivery, liquid storage
and vaporization capabilities or capacities stated in Paragraphs II and III of Exhibit A
hereto, which shall be owned or leased, maintained and operated by BOC on the BOC Plant Site.

 

 

     (d) “BOC Pipelines” — pipelines suitable for use in connection with the delivery of Product
hereunder, that shall be owned or leased and maintained by BOC, connecting the BOC Facility with
the respective Coffeyville Resources Pipelines.

     (e) “BOC Plant” shall have the meaning given such term in Section l(c) hereof.

     (f) “BOC Plant Site” — a parcel of land located on the Coffeyville Plant Site on which the BOC
Facility is located, which parcel is more particularly identified on
Exhibit E hereto.

     (g) “Bona Fide Offer” — a written offer, made in good faith and setting forth commercially
reasonable terms for the purchase of CO2 Byproduct produced at the
Coffeyville Facilities, which offer shall set forth, in reasonable detail, all information which is
reasonably required to evaluate the economics of the deal, including, at a minimum, if applicable,
information relating to the: (i) distribution or percentage of ownership and/or entitlement to
profits, losses, tax credits, carbon sequestration credits earned in connection with the sale of
CO2 Byproduct, as between BOC, Coffeyville Resources and any third party or parties; (ii) project
costs; (iii) project capacity; (iv) project schedule;
(v) raw
CO2 gas pricing; (vi) finished
product pricing; (vii) marketing rights; and
(viii) operating and maintenance responsibility.

     (h) “CDA Product” — clean, dry air product conforming to the product specifications set forth
in Paragraph I of Exhibit A hereto.

     (i) “CO2 Byproduct” — the gaseous carbon dioxide produced by the Coffeyville
Facilities as a byproduct and made available as contemplated by
Section 5 hereof.

     (j) “Coffeyville Entities” shall have the meaning given such term in Section 19(a) hereof.

     (k) “Coffeyville Facilities” — those facilities and plants (including the gasification plant,
ammonia synthesis loop and UAN plant) located at the Coffeyville Plant Site, but not including the
Facilities.

     (1) “Coffeyville Pipelines” — pipelines suitable for use in connection with the delivery of
Product hereunder, that shall be owned or leased by Coffeyville Resources and operated and
maintained by or for the benefit of Coffeyville Resources, connecting the Coffeyville Facilities
with the BOC Pipelines at respective points on the boundary of the BOC Plant Site, as agreed upon
by Coffeyville Resources and BOC.

     (m) “Coffeyville Plant Site” — the parcel of land near Coffeyville, Kansas on which
Coffeyville Resources’ fertilizer complex (including the Facilities) is located, which parcel is
more particularly identified on Exhibit D hereto.

     (n) “Environmental Laws” — any now-existing or hereafter enacted or promulgated federal,
state, local, or other law, statute, ordinance, rule, regulation or court order pertaining to (i)
environmental protection, regulation, contamination or clean-up, (ii) toxic waste, (iii)

2

 

underground storage tanks, (iv) asbestos or asbestos-containing materials, or (v) the handling,
treatment, storage, use or disposal of Hazardous Substances, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation
and Recovery Act, or state lien or state superlien or environmental protection, regulation,
contamination or clean-up statutes, all as exist from time to time.

     (o) “Environmental Loss” — all (i) claims, demands, judgments, liabilities, losses, damages,
civil penalties and civil fines, (ii) attorneys’, experts’, consultants’, contractors’, or
accountants’ fees, expenses, court costs and other out-of-pocket expenses, and (iii) costs of
investigation, characterization, remediation, clean-up and disposal, which arise as a result of a
violation of any Environmental Law or the presence, use, handling, storage, disposal, release,
treatment, processing or utilization of any Hazardous Substances.

     (p) “Facilities” — together, the BOC Facility and the BOC Pipelines.

     (q) “Force Majeure” — “Force Majeure” shall have the meaning given such term in Section 11(a) hereof.

     (r) “Gasification Project” — the gasification to ammonia project at the Coffeyville Plant
Site including, but not limited to, a gasification plant, an ammonia synthesis loop and related
storage facilities, a UAN plant and related storage facilities, coke handling and storage
facilities, and interconnecting piping and related off-site support facilities, including
utilities.

     (s) “Hazardous Substance” — any of the substances that are defined or listed in, or otherwise
classified, or which may come to be so defined, listed or classified pursuant to, any applicable
statutes, laws, rules or regulations, as “hazardous substances,” “hazardous materials,” “hazardous
wastes” or “toxic substances,” or any other formulation intended to define, list or classify
substances by reason of deleterious properties, including but not limited to any chemical,
material or substance, exposure to which is prohibited, limited or regulated by any governmental
authority or which may or could pose a hazard to the health and safety of any person in the
vicinity of the Coffeyville Plant Site.

     (t) “High Pressure Air Product” — clean, dry air product conforming to the product
specifications set forth in Paragraph I of Exhibit A hereto.

     (u) “Liquid Product Storage Facility” shall have the meaning given such term in Section l(c)
hereof.

     (v) “Minimum Product Charge” — the minimum monthly charge payable by Coffeyville Resources to
BOC hereunder with respect to Product as more specifically described on Exhibit G hereto,
subject to adjustment as provided herein.

     (w) “Nitrogen Product” — nitrogen gas (including vaporized liquid) and liquid conforming to
the product specifications set forth in Paragraph I of
Exhibit A hereto.

3

 

     (x) “Oxygen Product” — oxygen gas (including vaporized liquid) and liquid conforming to the
product specifications set forth in Paragraph I of
Exhibit A hereto.

     (y) “Permits” — licenses, permits and approvals of third parties, governmental agencies or
authorities, including licenses, permits and approvals of governmental agencies or authorities
respecting health, safety and the environment.

     (z) “Product” — collectively CDA product, Oxygen Product and Nitrogen Product.

     (aa) “Standard Cubic Foot” — the quantity of Product which would occupy a cubic foot of space
at a pressure of 14.7 pounds per square inch absolute and a temperature of 70°F (the phrases
“Standard Cubic Foot” and “Standard Cubic Feet” are sometimes hereinafter abbreviated “scf”).

     (bb) “Supply Period” — that period of time commencing on June 1, 2005 and ending on April 30,
2020 (subject to extension or earlier termination pursuant to the provisions hereof).

SECTION 2 THE BOC FACILITY AND THE PIPELINES

     (a) BOC shall indemnify and hold Coffeyville Resources and the other Coffeyville
Entities harmless from and against any and all claims, damages, liabilities, losses, costs and
expenses (including reasonable attorneys’ fees), arising from (i) noncompliance by BOC or BOC
Entities with any Environmental Laws or (ii) conditions on, at or under the BOC Plant Site, in
each case, caused by BOC’s construction of the Facilities or other operations from and after the
date that BOC occupies the BOC Plant Site. Coffeyville Resources shall indemnify and hold BOC and
the other BOC Entities harmless from and against any and all claims, damages, liabilities, losses,
costs and expenses (including reasonable attorneys’ fees), arising from (i) noncompliance by
Coffeyville Resources or Coffeyville Entities with any Environmental Laws caused by Coffeyville
Resource’s occupation, use or operation of the Coffeyville Facilities or the Coffeyville Plant
Site (whether prior to, on, or following the date that BOC occupies the BOC Plant Site) or (ii)
conditions on, at or under the BOC Plant Site prior to the date that BOC occupies the BOC Plant
Site. All indemnification obligations pursuant to this Section 2(a) shall be subject to the
provisions of Section 19(e) and 19(f) hereof.

     (b) Subject to section 2(d), the BOC Plant Site shall be occupied exclusively by BOC solely
for the construction, use, operation and maintenance of the Facilities for the supply of Products
as contemplated hereunder and the retention and sale of certain other industrial gases as set forth
in Sections 3 and 5 hereof, without cost for such occupancy, until the Facilities are removed in
accordance with the terms hereinafter provided.

     (c) Commencing on the date of execution and delivery of this Agreement, Coffeyville Resources
grants to BOC and its directors, officers, employees, agents, contractors and subcontractors,
with or without vehicles, equipment, materials and machinery, the following easements,
rights-of-way and licenses over the Coffeyville Plant Site (provided that any such use shall not
unreasonably interfere with the use or occupancy by or on behalf of Coffeyville

4

 

Resources of the Coffeyville Plant Site and that BOC will cooperate with Coffeyville Resources and
any and all third parties at the Coffeyville Plant Site to coordinate such use):

     (i) at all times by day or by night to enter upon and use all or any of the Coffeyville
Plant Site for the purpose of installing, maintaining, repairing, reconstructing,
renovating, replacing, modifying, operating or removing all or any portion of the BOC
Facilities located thereon;

     (ii) in locations reasonably satisfactory to BOC and Coffeyville Resources and subject
to Coffeyville Resource’s reasonable direction at all times by day or by night for road
purposes, to enter upon, cross, pass and repass over and exit from all or any of the
Coffeyville Plant Site to the extent reasonably necessary for access and egress to and from
the BOC Plant Site; and

     (iii) in locations reasonably satisfactory to BOC and Coffeyville Resources and
subject to Coffeyville Resource’s reasonable direction, at all times by day or by night, to
enter upon and use all or any of the Coffeyville Plant Site for other purposes to the
extent reasonably necessary to enable BOC to perform its obligations under this Agreement;

all of which easements, rights-of-way and licenses are granted subject to BOC’s compliance with the
reasonable security and safety requirements and rules of Coffeyville Resources, and shall remain in
full force and effect until the earlier of: (i) 360 days after the expiration or other termination
of this Agreement; or (ii) the date the Facilities are removed from the BOC Plant Site. Farmland
previously delivered to BOC a Memorandum of License in the form attached hereto as Exhibit J, which
remains in effect.

     (d) Coffeyville Resources hereby reserves for itself and for its agents, contractors, tenants,
licensees and employees: (i) the non-exclusive right to use the BOC Plant Site for such ingress,
egress, utility facilities and other connections and uses as may be reasonably necessary in
connection with the ownership, use, enjoyment, repair, maintenance and expansion of the Coffeyville
Facilities; (ii) the non-exclusive right to use a 12-feet-wide portion of the BOC east-west pipe
rack within the BOC Plant Site with a loading capacity up to 30 pounds per square foot for the
installation, operation and maintenance by Coffeyville Resources of its cable tray and cables;
provided, however, that Coffeyville Resources shall not exercise its rights with respect to any
such reserved rights in any manner that unreasonably interferes with the use of the BOC Plant Site
by BOC in accordance with the terms of this Agreement (except that Coffeyville Resources may
interfere with BOC’s use of the BOC Plant Site to the extent necessary to comply with any
Environmental Laws or that certain Resource Conservation and Recovery Act (RCRA) Facility
Investigation Order dated October 24, 1995, issued to Farmland Industries, Inc., Coffeyville
Resources’ predecessor, by the United States Environmental Protection Agency, which interference
shall not be deemed a Force Majeure for purposes of this Agreement).

     (e) The BOC Facilities are not intended to be or to become a fixture or otherwise part of the
BOC Plant Site, or of any other property owned by Coffeyville Resources or its assigns
notwithstanding the manner in which it, or any part of it, is installed or affixed, but said
Facilities are intended to remain the personal property of BOC (or its lessor) at all times.
Coffeyville

5

 

Resources shall indemnify and hold BOC harmless from and against any and all losses, costs,
damages, claims and liabilities arising out of any inability (including any delay) on the part of
BOC to remove all or any part of the Facilities from the BOC Plant Site, pursuant to Section 2(j)
or otherwise, because of any right on the part of Coffeyville Resources or its assigns to the
effect that the same is a fixture or otherwise part of the BOC Plant Site and may not be removed
from the BOC Plant Site (including any assertion of any such right), together with all costs and
expenses (including reasonable legal fees) incurred by BOC in resisting any such right or
assertion, whether or not such resistance was successful, such indemnification to be subject to the
provisions of Sections 19(e) and 19(f) hereof.

     (f) Coffeyville Resources shall provide, at the BOC Facility, sufficient quantities of the
items listed on Exhibit F as may, from time to time, be reasonably required for the construction,
operation and maintenance of the BOC Facility, all of which shall be, except as set forth in
Exhibit F or otherwise specified herein, without cost to BOC. Coffeyville Resources acknowledges
that BOC intends to operate the BOC Plant at all times during the Supply Period, including those
times when Coffeyville Resources does not desire to take delivery of any Product, and Coffeyville
Resources shall provide sufficient quantities of the items listed on Exhibit F as may be reasonably
required to operate the BOC Plant at all such times during the Supply Period.

     (g) BOC shall not do or permit others under its control to do any work in or about the BOC
Plant Site, or related to any repair, rebuilding, restoration, replacement, alteration of or
addition to the BOC Plant Site, unless BOC shall have first procured and paid for all necessary
Permits in accordance with the provisions of Section 9(d) hereof.

     (h) In the event that any of the contaminant levels of the atmosphere at the BOC Plant Site
exceed the applicable amount set forth on Exhibit C hereto after the date hereof and, in
the reasonable opinion of BOC, operation of the BOC Facility may be hazardous or the BOC Facility
may be damaged, or BOC’s ability to meet the product specifications set forth in Paragraph I of
Exhibit A hereto may be impaired as a result of such condition (a “Hazardous Condition”),
Coffeyville Resources and BOC shall proceed as set forth in this Section 2(h). BOC shall promptly
notify Coffeyville Resources thereof, specifying the particular contaminant levels and the effect
thereof. Upon receipt of such notice, Coffeyville Resources shall, at its election within sixty
(60) days thereafter proceed to do one of the following: (i) correct such condition by removal or
modification of the contaminant source; (ii) request BOC to make such additions or modifications
to the BOC Facility as BOC deems reasonably necessary to compensate for such Hazardous Condition,
whereupon BOC shall undertake to do the same; or (iii) terminate this Agreement by providing
written notice to BOC and paying to BOC the applicable termination fee listed on Exhibit I
hereto. The cost of any action taken pursuant to the preceding sentence other than the payment of
a termination fee by Coffeyville Resources pursuant to clause (iii) of such sentence shall be (x)
borne by Coffeyville Resources if Coffeyville Resources was the cause of the Hazardous Condition,
(y) borne by BOC if BOC was the cause of the Hazardous Condition, and (z) in all other cases borne
equally by BOC and Coffeyville Resources.

6

 

     (i) Neither Coffeyville Resources nor BOC shall do or suffer anything to be done whereby the
BOC Plant Site or the Facilities or any part thereof may be encumbered by any mechanics’ lien or
other similar lien and if whenever and as often as any mechanics’ lien, or other similar lien is
filed against the BOC Plant Site or the Facilities or any part thereof purporting to be for or on
account of any labor, materials or services furnished in connection with any work in or about the
BOC Plant Site or the Facilities done by, for or under the authority of either party hereto or
anyone claiming by, through or under such party, such party shall discharge the same of record
within sixty (60) days after the date of filing. Notwithstanding the above, each party hereto shall
have the right to contest any such mechanics’ lien or other similar lien if within said sixty (60)
day period stated above it notifies the other party in writing of its intention so to do and, if
requested by the other party, deposits with such party a bond in favor of such party, with a surety
company acceptable to such party as surety, in the total sum of at least one hundred twenty-five
percent (125%) of the amount of the lien claim so contested, indemnifying and protecting such party
from and against any liability, loss, damage, cost and expense of whatever kind or nature growing
out of or in any way connected with said lien and the contest thereof, and if, and provided
further, such party diligently prosecutes such contest, at all times effectively stays or prevents
any official or judicial sale of the BOC Plant Site or the Facilities, or any part thereof or
interest therein, under execution or otherwise, and pays or otherwise satisfies any final judgment
adjudging or enforcing such contested lien claim and thereafter promptly procures record release or
satisfaction thereof.

     (j) BOC shall have 360 days from and after any expiration or termination of this Agreement to
remove the Facilities from the BOC Plant Site. BOC shall restore the BOC Plant Site to the
condition it was in immediately prior to the time it was made available to BOC by Coffeyville
Resources’ predecessor, Farmland Industries, Inc., but not including removing any foundations or
other underground installations, and upon said removal of the Facilities, such foundation and
underground installations shall become the property of Coffeyville Resources.

     (k) Coffeyville Resources, for itself and its duly authorized representatives and agents,
reserves the right, upon reasonable notice to BOC, to enter the BOC Plant Site during the term of
this Agreement for the purpose of (i) examining and inspecting the same as permitted hereunder and
for the purpose of exercising any and all of Coffeyville Resource’s other rights under this
Agreement, (ii) performing, at Coffeyville Resources’ option, such work in and about the BOC Plant
Site as may be made necessary by reason of BOC’s default under any of the provisions of this
Agreement, (iii) conducting environmental assessment, monitoring or compliance activities, and
(iv) for such other purposes as Coffeyville Resources may reasonably determine to be necessary or
appropriate. Coffeyville Resources may, during the progress of said work and activities mentioned
in (ii) and (iii) above, keep and store on the BOC Plant Site all necessary materials, supplies
and equipment, and Coffeyville Resources shall not be liable for any inconvenience, annoyances,
disturbance, loss of business or other damage suffered by reason of the performance of any such
work or by the storage of materials, supplies and equipment or by Coffeyville Resources’ exercise
of any of its rights under this Agreement, except to the extent caused by the negligence of
Coffeyville Resources or its representatives or agents.

7

 

     (1) BOC
will consult with Coffeyville Resources and use all reasonable efforts to coordinate
scheduled maintenance and other temporary scheduled interruptions in the operations of the
Facilities during periods of scheduled down time for the Coffeyville Facilities.

     (m) BOC shall cooperate with Coffeyville Resources and any and all third parties at the
Coffeyville Plant Site to coordinate the activities of all parties working at the Coffeyville Plant
Site. Coffeyville Resources shall have the right, from time to time, to designate a contractor,
agent or other representative of Coffeyville Resources’ choice to coordinate the activities of all
contractors working on or near the BOC Plant Site or in connection with the Gasification Project.
BOC shall cooperate with all such coordination efforts and shall take such steps as may be
reasonably required for the orderly progress of the Gasification Project without interruption or
disruption attributable to the acts or omissions of BOC. Coffeyville Resources and BOC shall, in
general, and to the best of their ability, conduct their respective operations on or near the BOC
Plant Site in such a manner as to cause no interference or disruption with the other’s operations.
BOC acknowledges that Coffeyville Resources intends to operate the Coffeyville Facilities
twenty-four (24) hours a day, seven days a week, during the time that BOC is performing its
obligations hereunder, and BOC shall undertake its obligations hereunder in a manner that does not
interrupt or disrupt the operations of the Coffeyville Facilities.

SECTION 3 PURCHASE AND SALE OF PRODUCT

     (a) It is anticipated that the BOC Plant will be operated on a continuous basis during the
Supply Period and will produce a uniform volume of Product. From time to time Coffeyville Resources
will advise BOC of the volume of Product it will purchase from BOC, such advice to be effective
until new advice is given by Coffeyville Resources. Coffeyville Resources shall pay BOC for such
Product in accordance with the provisions of Section 4 hereof. In the event Coffeyville Resources
desires to take delivery of less Product than that amount described
in Paragraph II of Exhibit A
hereto, then Coffeyville Resources will continue to pay BOC for such Product in accordance with the
provisions of Section 4 hereof, provided, however, that in the event that Coffeyville Resources
desires to purchase less Product than that amount described in Paragraph II of Exhibit A for a
period of more than twenty-four (24) hours, then the Supply Period shall be extended by that number
of hours that is equal to the number of hours for which Coffeyville Resources desires to take
delivery of less Product than that amount described in
Paragraph II of Exhibit A, but not to exceed
180 days, and there shall be no Minimum Product Charge during such extension period.

     (b) (i) During the Supply Period, BOC shall sell and deliver to Coffeyville Resources, and
Coffeyville Resources shall purchase and accept from BOC, Coffeyville Resources’ requirements of
Product for its Gasification Project located at the Coffeyville Plant Site; provided, however, that
BOC shall not be obligated to supply gaseous Oxygen Product or gaseous Nitrogen Product from the
BOC Plant to Coffeyville Resources at an instantaneous flow rate in excess of the applicable rate
that is stated in Paragraph II of Exhibit A or vaporized liquid Oxygen Product or vaporized liquid
Nitrogen Product from the Liquid Product Storage Facility at a rate in excess of the applicable
vaporization capacity set forth in Paragraph III of Exhibit A.

8

 

Delivery and transfer of title to all Product shall be made at the point where each of the
Coffeyville Pipelines are connected to the corresponding BOC Pipelines.

          (ii) BOC’s
delivery commitments to Coffeyville Resources, as stated in Paragraph 3(b) (i)
above, shall be satisfied, primarily, by the delivery of gaseous Product produced at the BOC Plant;
however, if the BOC Plant is not operating, or Coffeyville Resources’ requirements exceed the
capacity of the BOC Plant, BOC will then supply Coffeyville Resources with vaporized liquid Product
delivered from the inventory of the Liquid Product Storage Facility. If requested by Coffeyville
Resources, BOC will replenish the inventory of the Liquid Product Storage Facility with hauled-in
liquid product to the extent available from outside sources (“Supplemental Product”). Supplemental
Product shall be billed to Coffeyville Resources as set forth in Paragraphs IV and V of Exhibit G.

          (iii) During the Supply Period, Coffeyville Resources shall not purchase any Oxygen Products
or Nitrogen Products for any other use at the Coffeyville Plant Site from any third party except
as set forth in section 3(d) below.

     (c) In the event that during the Supply Period BOC elects to produce Product in excess of the
amount of Product to be purchased by Coffeyville Resources hereunder for the purpose of retaining,
marketing and selling such Product for its own account pursuant to Section 5 hereof, BOC shall pay
Coffeyville Resources any incremental cost Coffeyville Resources incurs in order to provide
sufficient quantities of those items provided by Coffeyville Resources pursuant to Section 2(f)
hereof to allow BOC to produce such excess Product.

          For the purposes of this Section 3(c), Coffeyville Resources’ incremental costs for liquid
Oxygen Product and liquid Nitrogen Product retained by BOC for its own account and sold to third
parties shall be deemed paid in full upon the credit to Coffeyville Resources by BOC of the
following amounts:

(***) per ton of such liquid Oxygen Product 

(***) per ton of such liquid Nitrogen Product

BOC shall meter all quantities of such liquid Product on BOC’s truck scales and shall calculate and
provide to Coffeyville Resources all credits due to Coffeyville Resources therefor on a monthly
basis. Coffeyville Resources will apply those credits against BOC’s invoices for the Minimum
Product Charge.

(***)

9

 

(***)

10

 

(***)

11

 

SECTION 4 PRICING AND PAYMENT

     (a) Except as otherwise provided herein, Coffeyville Resources shall pay BOC in
accordance with the pricing schedule set forth on Exhibit G hereto.

     (b) On or before the 10th day of each month, BOC shall submit an invoice (each, a “Minimum
Product Charge Invoice”) to Coffeyville Resources covering the Minimum Product Charge applicable to
such month. All Minimum Product Charge Invoices shall be on a net cash basis, payable by
Coffeyviile Resources within twenty (20) days after receipt thereof. In the event BOC has not
received payment within forty (40) days of the date of a Minimum Product Charge Invoice, BOC at its
sole option may assess interest thereon at an annual rate equal to the prime rate then in effect at
Chase Manhattan Bank, N.A., plus two percent (2%) from and after the date such payment was due to
the date when paid.

     (c) On or before the 10th of each month, BOC shall submit an invoice (each, an “Other Charges
Invoice”) to Coffeyville Resources covering all charges and other sums other than the Minimum
Product Charge, if any, applicable to the immediately preceding month as well as all Product
delivered prior to such month that was not covered by a prior invoice. All Other Charges Invoices
shall be on a net cash basis, payable by Coffeyville Resources within ten (10) days after receipt
thereof. In the event BOC has not received payment within thirty (30) days of the date of an Other
Charges Invoice, BOC at its sole option may assess interest thereon at an annual rate equal to the
prime rate then in effect at Chase Manhattan Bank, NA, plus two percent (2%) from and after the
date such payment was due to the date when paid.

     (d) From time to time during the term of this Agreement, BOC shall have the right to increase
the applicable unit prices for liquid Products in the pricing schedule set forth on Exhibit G
hereto pursuant to this Section 4(d) by giving Coffeyville Resources written notice thereof. Said
increased prices shall become effective thirty (30) days after the date of said notice; provided,
however, that if (***).

     (e) During the Supply Period, Coffeyville Resources will provide a monthly credit to BOC for
Lost Liquid Production (as “Lost Liquid Production” is defined below). The credit shall be
calculated on a monthly basis using the following formula:

     ((***)/ton)[(Operating Days in Month)(120) — (Actual Tons Liquid Production)] = Credit

and will
be capped at (***) in any single month. The (***)/ton price and (***)/month cap will
adjust (up or down) on a monthly basis based upon the actual total power cost as billed to
Coffeyville Resources by the City of Coffeyville, Kansas (expressed as $/KWH) compared to the
actual total power cost in June 2005 (expressed as $/KWH). The actual total power cost in June

12

 

2005 was $.03965/KWH. As an example, attached as Exhibit K is the adjustment calculation per this
paragraph for July 2005. For purposes of this Section 4(e), the following terms shall have the
meanings set forth below:

          (i) “Operating Day” shall mean hours of operation in any calendar day during which BOC is
providing all Products at the purity volumes and pressures provided for herein divided by 24.

          (ii) “Liquid Production” shall mean the sum of liquid Nitrogen Product and liquid Oxygen
Product as determined by BOC scale tickets.

          (iii) “Lost Liquid Production” shall mean Liquid Production which is not realized by BOC
solely due to the supply of High Pressure Air Product by BOC to Coffeyville Resources pursuant to
this Agreement.

SECTION 5 ARGON, CO2 BYPRODUCT AND OTHER BYPRODUCTS

     (a) During the Supply Period, BOC shall be entitled to retain, market and sell for its
own account: (i) all Argon produced by the BOC Plant; (ii) all CO2 Byproduct, except to
the extent retained by Coffeyville Resources or its affiliates and except to the extent otherwise
provided in or pursuant to Section 5(b) herein; and (iii) all other byproducts and other industrial
gases, in liquid or gaseous form, produced by the BOC Plant, including Product in excess of BOC’s
obligations to supply same to Coffeyville Resources hereunder. BOC shall be solely responsible
for the proper disposal, in accordance with all applicable Environmental Laws and Permits of any
and all byproducts and other emissions and wastes generated by the BOC Plant (including from CO2
Byproduct delivered to BOC) other than Products delivered to Coffeyville Resources hereunder.
Except as permitted by Section 5(b) herein, Coffeyville Resources agrees that it will not sell or
deliver CO2 Byproduct to anyone other than BOC, its affiliates and affiliates of Coffeyville
Resources.

     (b) Subject to Paragraph 5(a) above, BOC and Coffeyville Resources hereby agree as follows:

(***)

13

 

(***)

SECTION 6 TAXES

     (a) Coffeyville Resources shall pay the amount of all Federal, state and local taxes, however
denominated (except taxes on BOC’s net income or for its general privilege to conduct business in
any state), arising in connection with the production, sale or delivery of any Product hereunder,
including, without limitation, all real and personal property taxes (and any payments associated
with such taxes) applicable to the Facilities, or any part thereof. BOC agrees to use its
commercially reasonable best efforts to secure such exemptions from real and personal property
taxes as may be available now and from time to time with respect to the BOC Facilities. BOC will
cooperate with Coffeyville Resources should Coffeyville Resources desire to contest any sales or
other tax assessed by any governmental unit, all at Coffeyville Resources’ expense.

     (b) In the event that any tax covered by this Section 6 should be assessed against and paid by
a party other than the party required hereunder to pay such tax, such other party shall promptly
reimburse such party for such payment

     (c) Upon request, a properly completed exemption certificate (where appropriate) for any tax
from which a party claims exemption shall be provided to the other party.

SECTION 7 PRODUCT SPECIFICATIONS

     BOC warrants that all Products and gas sold and delivered to Coffeyville Resources under this
Agreement shall conform to the product specifications set forth in
Paragraph I of Exhibit A
hereto. THE WARRANTY SET FORTH IN THIS PARAGRAPH 7 IS IN LIEU OF ALL OTHER WARRANTIES,
REPRESENTATIONS OR CONDITIONS OF ANY KIND OR

14

 

NATURE, EXPRESS OR IMPLIED, IN FACT OR BY LAW, RESPECTING THE PRODUCTS AND GAS
SOLD TO COFFEYVILLE RESOURCES.

SECTION 8 CLAIMS

     Written notice of all claims having anything to do with any Products delivered by BOC
to the Coffeyville Pipelines or for failure to make timely delivery, shall be made within
forty-five (45) days of such delivery, or of the date on which such delivery was to have been
made, as the case may be. Written notice of all claims with respect
to billing matters shall be
made within one (1) year of the date of the relevant invoice. Failure by Coffeyville Resources to
give such written notice within such time shall constitute a complete defense for BOC against such
claims by Coffeyville Resources, except as otherwise specifically provided in Section 9 hereof.

SECTION 9 ALLOCATIONS OF RESPONSIBILITY

     (a) BOC shall bear the risk of loss with respect to all Product until Product is
delivered by BOC to Coffeyville Resources under Section 3(b) hereof, at which time risk of loss
shall pass to Coffeyville Resources.

     (b) Coffeyville Resources acknowledges that there are hazards associated with the use of
Product. BOC will provide Coffeyville Resources with Material Safety Data Sheets setting forth the
general hazards and safety information relating to Product. Coffeyville Resources hereby assumes
all responsibility for warning its employees and its independent contractors exposed to Product of
all such hazards and shall hold harmless and indemnify BOC from and against all liability arising
from any failure to make such warnings, such indemnification to be subject to the provisions of
Sections 19(e) and 19(f) hereof. BOC shall promptly notify Coffeyville Resources of any
additional hazards of which BOC may, from time to time, become aware.

     (c) Final determination of the suitability of the Product (assuming such Product conforms to
the specifications and other requirements of this Agreement) for any use contemplated by
Coffeyville Resources is the sole responsibility of Coffeyville Resources, and BOC shall have no
responsibility in connection therewith. Coffeyville Resources shall avail itself of testing
devices to determine the purity of Product before Coffeyville Resources uses it at Coffeyville
Resources’ discretion, but no error in, or failure to make, any such test shall impair any right on
the part of Coffeyville Resources to pursue its remedies for breach of warranty hereunder.

     (d) BOC shall obtain, comply with and preserve in full force and effect all Permits necessary
for the maintenance and operation of the BOC Facility. BOC shall cause all such Permits to be
made available for inspection by Coffeyville Resources. Coffeyville Resources shall cooperate with
BOC in obtaining and preserving all Permits necessary for the maintenance and operation of the BOC
Facility and shall reimburse BOC for the actual cost of such Permits. BOC shall cooperate with
Coffeyville Resources in obtaining and preserving any Permits necessary for the maintenance and
operation of the Coffeyville Facilities. Prior to obtaining any Permit necessary for the
maintenance or operation of the BOC Facility, BOC shall give

15

 

Coffeyville Resources notice thereof. If obtaining any Permit necessary for the maintenance
or operation of the BOC Facility would have the direct or indirect effect of impairing Coffeyville
Resources’ ownership, maintenance, operation and/or reasonably contemplated expansion of the
Coffeyville Facilities, Coffeyville Resources shall give BOC notice thereof; and the parties shall
cooperate to arrive at a fair and equitable resolution of such impairment.

     (e) BOC agrees to make such modifications to the BOC Facility as are required by governmental
agencies or authorities, by the modification or change in interpretation of any applicable laws or
Permits, or by the enactment or adoption of any new laws, so as to ensure that BOC’s maintenance
and operation of the BOC Facility and Coffeyville Resources’ ownership, maintenance and operation
of the Coffeyville Facilities, are in compliance therewith.

     (f) Other than any termination right Coffeyville Resources may have pursuant to the provisions
of Section 13 hereof, Coffeyville Resources’ exclusive remedy for each unexcused failure on the
part of BOC to deliver gaseous Product produced at the BOC Plant to Coffeyville Resources when
required hereunder (including the delivery of gas that does not conform to the product
specifications set forth in Paragraph I of Exhibit A hereto), whether or not such failure was
caused, in whole or in part by any negligence, shall be to receive an abatement of the fees
(together with any then applicable price adjustment) which Coffeyville Resources would otherwise
have been obligated to pay to BOC pursuant to Section 4(a) of this Agreement from the date such
failure occurs until such time as BOC resumes delivery of gaseous Product as required hereunder and
all Products so delivered conform to the product specifications set
forth in Paragraph I of Exhibit A hereto.

     (g) Other than any termination right Coffeyville Resources may have pursuant to the provisions
of Section 13 hereof, Coffeyville Resources’ exclusive remedy for each unexcused failure on the
part of BOC to deliver liquid Product from the Liquid Product Storage Facility or vaporized liquid
product to Coffeyville Resources when required hereunder, whether or not such failure was caused,
in whole or in part by any negligence, shall be to recover from BOC the difference between the cost
to Coffeyville Resources of any reasonable purchase of Product in substitution for the Product that
BOC so failed to deliver and the price of such quantity of Product hereunder, increased by any
expenses incurred by Coffeyville Resources in connection with the procurement of the substitute
Product and reduced by any expenses saved by Coffeyville Resources due to procurement of the
substitute Product.

     (h) Other than any termination right Coffeyville Resources may have pursuant to the
provisions of Section 13 hereof, Coffeyville Resources’ exclusive remedy for each unexcused
failure or act on the part of BOC whereby liquid product or vaporized liquid product that does not
conform to the product specifications set forth in Paragraph I
of Exhibit A hereto is delivered
from the Liquid Product Storage Facility to Coffeyville Resources, whether or not such failure or
act was, in whole or in part, negligent, shall be to receive a refund of the price of such
quantity of non-conforming product, or the replacement thereof with Product that does conform to
said product specifications at no additional charge to Coffeyville Resources.

     (i) Except to the extent that BOC’s rights and obligations are materially adversely affected
thereby, BOC shall provide all documents, reports, acknowledgments, consents to

16

 

assignments, certifications and other information reasonably requested by any person or entity, or
group of persons or entities, extending credit or making any financial accommodations directly or
indirectly to Coffeyville Resources, or for Coffeyville Resources’ benefit, for purposes of
financing or refinancing in any manner any costs or expenses related to the construction,
commissioning or operation of all or any part of the Gasification Project (each, a “Finance
Party”). BOC shall cooperate with all Finance Parties to the fullest extent possible. BOC shall
also enter into such amendments to this Agreement as Coffeyville Resources may reasonably request
in order to comply with any requirements imposed by any Finance Party to the extent that BOC’s
rights and obligations are not materially adversely affected thereby.

SECTION 10 METERS

     BOC shall install and maintain such metering as may be necessary hereunder. Such metering
shall be inspected by BOC for accuracy at least once per year. In addition, such metering shall
also be inspected and tested for accuracy at such other times as either party may reasonably elect.
Coffeyville Resources shall be notified of the times such tests are to be made and may observe such
tests. BOC shall bear the cost of all such tests, except those requested by Coffeyville Resources
that show that the meter tested was accurate within two percent (2%). If any meter is found to be
inaccurate by more than two percent (2%), any billings based on such meter shall be adjusted to
offset such inaccuracy with respect to only those deliveries made during the thirty (30) day period
prior to such test or during the latter half of the period of time since the said meter was last
previously tested, whichever period of time is shorter.

SECTION 11 EXCUSED NON-PERFORMANCE

     (a) Any failure, in whole or in part, by either party timely to perform any obligation on
its part to be performed under this Agreement (except the obligation to pay monies when due) shall
be excused to the extent that such failure is caused by any circumstance which is not within the
reasonable control of the party whose performance is prevented, restricted or otherwise interfered
with, including without limitation, by any act of God, flood, storm, earthquake, fire, explosion,
strikes, lockouts, industrial disputes or disturbances or other labor difficulty (regardless of
the reasonableness of the demands of labor or the power of the party concerned to concede), riot,
war, blockades, civil disorder, equipment breakdown or malfunction that was unavoidable through
proper maintenance, failure of product machinery or transportation facilities that was unavoidable
through proper maintenance, failure of or interference with utilities or other sources of supply,
accident or by any order, request or decree of any governmental body or agency (each, a “Force
Majeure”). Upon the occurrence of a Force Majeure, the party affected thereby shall give prompt
written notice thereof to the other party.

     (b) Each time that, due to any Force Majeure, BOC delivers less Product than is required by
Coffeyville Resources under Section 3(a) or Coffeyville Resources is unable to take any Product for
five (5) or more consecutive full days, that portion of the Minimum Product Charge (together with
any then applicable price adjustment) which Coffeyville Resources would otherwise have been
obligated to pay to BOC pursuant to this Agreement that is
apportionable to such full days shall be
abated. (Said number of full days shall be determined by dividing twenty-four into the number of
hours during which any such failure to deliver continued and

17

 

disregarding any fractional remainder). If either BOC or Coffeyville Resources so elects in
writing, the Supply Period shall be extended for two times the number of full days with respect to
which such Minimum Product Charge was so abated.

     (c) Subject to BOC’s obligations pursuant to Paragraph 2(1) hereof, BOC shall perform routine
maintenance (scheduled and unscheduled) on the BOC Facility in accordance with generally accepted
industry practices, and any such maintenance shall not be deemed a breach under this Agreement.

SECTION 12 PRICE ADJUSTMENTS

     Annually during the Supply Period, the Minimum Product Charge and the unit prices for gaseous
Product purchased by Coffeyville Resources hereunder shall be subject to price adjustment by BOC
as set forth in Exhibit B hereto.

SECTION 13 TERM

     (a) This Agreement shall be in effect from the date first set forth above to the expiration or
termination of the Supply Period.

     (b) Either party shall have the right to terminate this Agreement in accordance with this
Section 13(b) at any time in the event the other party fails to perform any material obligation
hereunder for reasons other than a Force Majeure or as a direct result of a breach by the other
party (a “Material Breach”). If either party (the “Other Party”) considers the other party (a
“Breaching Party”) to have committed a Material Breach, the Other Party may give to the Breaching
Party a notice of Material Breach stating the act or circumstances contended to be a Material
Breach and the section of the Agreement alleged to have been breached, and demanding that the
Material Breach be cured. If the Breaching Party fails to cure the Material Breach within thirty
(30) days after receipt of the notice of Material Breach, the Other Party may terminate this
Agreement upon thirty (30) days’ notice to the Breaching Party. If the nature of the Material
Breach is such that it cannot be cured in thirty (30) days but a cure is commenced during such
thirty (30) day period and diligently pursued thereafter, then such cure must be completed within
180 days from the date of notice of Material Breach, or the Other Party may terminate this
Agreement on notice at any time after the expiration of such 180-day period unless such breach is
then cured.

     (c) Either party shall have the right to terminate this Agreement upon written notice to the
other party upon (i) any failure by the other party to satisfy any final judgment, decree or order
against the other party which has not been stayed or appealed within thirty (30) days after the
entry thereof and which would materially adversely affect the other party’s ability to perform its
obligations under this Agreement if not so satisfied, stayed or appealed, or (ii) the other party
shall (A) be or become insolvent or generally fail to pay its debts as they become due, or (B)
voluntarily file a petition in bankruptcy or for reorganization under the United States Bankruptcy
Code, or (C) have filed involuntarily against it a petition in bankruptcy or for reorganization
under the United States Bankruptcy Code, which petition has not been stayed or dismissed within
sixty (60) days after the filing thereof, or (D) voluntarily initiate any act, process or

18

 

proceeding under any insolvency law or other statute or law providing for the modification or
adjustment of the rights of creditors, or (E) have initiated involuntarily against it any act,
process or proceeding under any insolvency law or other statute or law providing for the
modification or adjustment of the rights of creditors; which act, process or proceeding has not
been stayed or dismissed within sixty (60) days after the initiation thereof, or (iii) the other
party is a party to any merger or consolidation in which it is not the surviving entity or is
dissolved or liquidated.

     (d) In the event that this Agreement is terminated by Coffeyville Resources pursuant to
Section 13(b) or 13(c) hereof, Coffeyville Resources shall have the right and option to purchase
the Facilities on an “as is” and “where is” basis from BOC at the applicable purchase price listed
on Exhibit H hereto (such option shall be referred to herein as the “Option”). The term of
the Option shall commence on the date of such termination and shall expire 180 days thereafter.
Coffeyville Resources may exercise the Option by providing written notice to BOC of its election to
exercise the Option. In the event that Coffeyville Resources elects to exercise the Option, BOC
shall sell and convey to Coffeyville Resources, and Coffeyville Resources shall purchase from BOC,
the Facilities. The closing of the purchase of the Facilities shall take place on a mutually
agreeable business day within sixty (60) days following the date BOC receives Coffeyville
Resources’ notice of its election to exercise the Option. At the closing, Coffeyville Resources
shall pay BOC the purchase price (as calculated above), and BOC shall transfer and assign the
Facilities to Coffeyville Resources and shall deliver to Coffeyville a bill of sale and such other
appropriate instruments of transfer and physical possession as shall, in the reasonable opinion of
counsel for Coffeyville Resources, be effective to vest in Coffeyville Resources good and
marketable title to the Facilities.

SECTION 14 ASSIGNMENT

     This Agreement is not assignable by either BOC or Coffeyville Resources except upon the
written consent of the other party; provided, however, that such consent shall not be unreasonably
withheld. Notwithstanding the foregoing sentence, Coffeyville Resources may assign this Agreement
as contemplated or required by its financing scheme or to an affiliate without the consent of BOC
so long as BOC’s rights and obligations are not materially adversely affected thereby. The Parties
agree that for purposes of this Section 14, BOC’s rights and obligations shall not be deemed to be
materially adversely affected by an assignment so long as Coffeyville Resources remains
secondarily liable under this Agreement following such assignment.

SECTION 15 NOTICES

     Any notice or other communication required or permitted to be given pursuant to this
Agreement shall be deemed to have been duly given if delivered personally or sent by telex,
telecopy, facsimile transmission or certified mail (postage prepaid, return receipt requested),
addressed as provided below. Until another address or addresses shall
be furnished in writing by
either party, notices to BOC shall be given in duplicate, addressed
as follows:

19

 

The BOC Group, Inc.
 575
Mountain Avenue 

Murray Hill, NJ
07974 
Attention: General Counsel

And a copy also sent to:

BOC Gases

575 Mountain Avenue

Murray Hill, NJ 07974

Attention: Vice President — Product Management

and notices to Coffeyville Resources shall be addressed as follows:

Coffeyville Resources Nitrogen Fertilizers, LLC

10 East Cambridge Circle Drive

Suite 250

Kansas City, Kansas 66103

Attention: Chief Operating Officer

And a copy also sent to:

Coffeyville Resources Nitrogen Fertilizers, LLC

P.O. Box 5000

701 E. Martin Street

Coffeyville, Kansas 67337

Attention: Plant Manager

SECTION 16 GENERAL REPRESENTATIONS AND WARRANTIES

     (a) Each of the parties hereto make the following representations and warranties
to the other party hereto, each of which is true and correct on the date hereof:

     (i) Such party is a corporation or limited liability company duly organized, validly
existing and in good standing under the laws of the state of its organization, and is duly
qualified to transact business in the State of Kansas.

     (ii) Such party has the corporate power to execute and deliver this Agreement and to
carry out the transactions contemplated hereby, and perform its obligations hereunder. The
execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not violate, nor constitute a breach or default under,
the constituent documents of such party or any provision of any

20

 

mortgage, lien, lease, agreement, instrument, order, judgment, decree, law, Permit or
other restriction of any kind or character to which such party is subject.

     (iii) There is no claim, litigation or proceeding pending or, to the best knowledge of
such party, threatened against such party which, if decided adversely to such party, would
preclude it from consummating the transactions contemplated hereby or performing the
obligations hereunder or would subject the other party to any liability.

     (iv) This Agreement has been duly authorized, executed and delivered by such party and
is valid, binding and enforceable against it in accordance with its terms.

     (b) EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, NEITHER PARTY HAS MADE ANY WARRANTIES,
EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.

SECTION 17 CONFIDENTIALITY

     The parties acknowledge and agree that to the extent either party receives any proprietary or
confidential information regarding operations of the other (“Confidential Information”), such
Confidential Information represents valuable information to the party disclosing such Confidential
Information (the “Disclosing Party’), and the party receiving such Confidential Information (the
“Receiving Party’) agrees (a) not to disclose any Confidential Information of the Disclosing Party
to any third party without the written consent of the Disclosing Party, (b) not to use any
Confidential Information of the Disclosing Party for any purpose, other than to accomplish the
transactions contemplated under this Agreement, without the prior written consent of the Disclosing
Party, (c) to limit access to the Disclosing Party’s Confidential Information to the Receiving
Party’s employees who are directly involved with the transactions described in this Agreement, (d)
to inform each employee to whom the Disclosing Party’s Confidential Information is disclosed of the
restrictions as to the use and disclosure of such confidential Information and to ensure that each
such employee shall observe such restrictions, and (e) to return all of the Disclosing Party’s
Confidential Information upon termination of this Agreement. The restrictions on use and disclosure
described above shall not apply to information that (i) was known to either party prior to
disclosure by the other party, (ii) is or becomes part of the public knowledge or literature,
through no fault of the party to which it was disclosed, (iii) is subsequently received as a matter
of right without restriction or disclosure from a third party lawfully having possession thereof,
or (iv) in the reasonable opinion of counsel to the Disclosing Party, is required to be disclosed
by applicable law or regulation, by order of court or other governmental authority, or pursuant to
any listing agreement with, or the rules or regulations of any national securities exchange on
which securities of such party are listed or traded; provided, however, that prior to any such
disclosure, the Receiving Party shall provide the Disclosing Party with reasonable notice and an
opportunity to dispute or otherwise object to the required disclosure.

21

 

SECTION 18 RESOLUTION OF DISPUTES

     Except as otherwise specifically provided herein, the parties will in good faith attempt
to resolve promptly and amicably any dispute (which term includes the failure to reach any
agreement or grant any approval contemplated hereunder) between the parties arising out of or
relating to this Agreement pursuant to this Section 18. In the event that a party to this Agreement
has reasonable grounds to believe that the other party hereto has failed to fulfill any obligation
hereunder, that its expectation of receiving due performance under this Agreement may be impaired,
or that any other type of dispute between the parties arising out of or relating to this Agreement
exists, such party will promptly notify the other in writing of the substance of its belief. The
party receiving such notice must respond in writing within thirty (30) of receipt of such notice,
which response must (i) provide evidence of cure of the condition specified or provide an
explanation of why it believes that its performance is in accordance with the terms and conditions
of this Agreement, and (ii) specify three (3) proposed dates, all of which must be within thirty
(30) days from the date of the response, for a meeting to resolve the dispute. The claiming party
will then select one (1) of the three (3) dates, and a dispute resolution meeting will be held on
that date, which meeting shall be attended by a representative of each party with the power to
settle the dispute and at which time the representatives shall engage in good faith discussions in
an effort to resolve the dispute. If such representatives fail to resolve the dispute at such
meeting, they will work together to resolve the dispute for a fifteen (15) day period following the
meeting. If the dispute is not resolved within such fifteen (15) day period, the representatives
shall refer the matter to the two individuals with primary operational responsibility for the
respective parties at the level immediately subordinate to the respective chief executive officers
of the parties. If such individuals fail to resolve the dispute within thirty (30) days, despite
good faith attempts to do so, the parties will be free to pursue the remedies allowed under
applicable law without prejudice. Regardless of the nature of the dispute that exists between the
parties, both parties must continue to perform their obligations under this Agreement during any
dispute resolution efforts.

SECTION 19 INDEMNIFICATION

     (a) BOC agrees to indemnify and hold Coffeyville Resources, its directors, officers,
agents, employees, subsidiaries and affiliates (collectively, “Coffeyville Entities”) harmless
from and against any and all claims, demands, judgments, liabilities or expenses for injury,
sickness, disease or death to employees or other persons, or damage to property (subject to the
limitations of Section 19(f) hereof) arising out of or in any way connected with BOC’s design,
engineering, construction, installation, operation or maintenance of the BOC Facility or failure
to comply with applicable laws or Permits related thereto or breach of any of the provisions of
this Agreement. BOC agrees to defend, on behalf of the Coffeyville Entities, any suits, actions or
proceedings arising out of or in any manner connected with any of the aforesaid causes and to
reimburse the Coffeyville Entities for reasonable attorneys’ fees, settlements, losses, damages,
satisfactions, costs or other expenses incurred by the Coffeyville Entities arising out of or in
any manner connected with such suits, actions or proceedings. BOC’s obligation to indemnify,
defend, reimburse and hold the Coffeyville Entities harmless shall extend to and include, but not
be limited to, claims, demands, judgments, liabilities and expenses resulting from the personal
injury, sickness, disease or death of any persons, regardless of whether BOC has paid the person

22

 

under the provisions of any workers’ compensation statute or law, or other similar federal or
state legislation for the protection of employees. BOC’s indemnification obligations hereunder
shall exclude any liabilities (i) arising from any breach for which exclusive remedies are
otherwise provided hereunder or (ii) to the extent caused by the negligence of Coffeyville
Resources, its employees, agents or subcontractors.

     (b) BOC shall, at its sole expense, defend any claims, suits, actions or proceedings brought
against the Coffeyville Entities based on a claim that the design, engineering, construction,
installation, operation or maintenance of the Facilities or the use of any equipment, process or
technology, or any part thereof, furnished or manufactured by BOC or any of BOC’s agents or
subcontractors under this Agreement constitutes any infringement of U.S. patents or copyrights or
constitutes an improper use of any other proprietary rights (except where such infringement or
improper use is caused by the use of the Facilities in combination with any other equipment or
process not supplied by, on behalf, or at the request of BOC or any of BOC’s agents or
subcontractors or previously agreed in writing by BOC) (an “Alleged Infringement”), and BOC shall
pay all damages and costs awarded by a court of competent jurisdiction unappealed or unappealable
against Coffeyville Resources, provided that BOC is notified promptly in writing of any such claim
(except that the failure to promptly provide such notice shall not release BOC from such
obligations except to the extent BOC is materially prejudiced thereby), shall be given adequate
authority, information and assistance for the defense of same and shall have the full control of
the defense of any such suit, action or proceeding. BOC’s obligation to pay damages and costs
under the foregoing sentence shall only apply to the extent the Alleged Infringement is caused by
BOC. Coffeyville Resources shall have the right to participate at its own expense. BOC agrees to
reimburse the Coffeyville Entities for any claims, settlements, losses, damages, satisfactions,
costs or other expenses incurred by the Coffeyville Entities arising out of or in any manner
connected with such claims, suits, actions or proceedings, to the extent the Alleged Infringement
is caused by BOC. At BOC’s option, and at its expense, BOC may: (a) procure the right to continue
using the Facilities as contemplated under this Agreement; or (b) replace the Facilities with
non-infringing equipment (or modify the Facilities), provided that such replaced or modified
Facilities shall not differ functionally from the original Facilities in any material way.

     (c) Coffeyville Resources agrees to indemnify and hold BOC, its directors, officers, agents,
employees, subsidiaries and affiliates (collectively, “BOC Entities”) harmless from and against any
and all claims, demands, judgments, liabilities and expenses for injury, sickness, disease or death
to employees or other persons, or damage to property owned by parties other than BOC Entities,
arising out of or in any way connected with Coffeyville Resources’ design, engineering,
construction, installation, operation or maintenance of the Coffeyville Facilities or failure to
comply with applicable laws or Permits related thereto or breach of any of the provisions of this
Agreement. Coffeyville Resources agrees to defend, on behalf of the BOC Entities, any suits,
actions or proceedings arising out of or in any manner connected with any of the aforesaid causes
and to reimburse the BOC Entities for reasonable attorneys’ fees, settlements, losses, damages,
satisfactions, costs or other expenses incurred by the BOC Entities arising out of or in any manner
connected with such suits, actions or proceedings. Coffeyville Resources’ obligation to indemnify,
defend, reimburse and hold the BOC Entities harmless shall extend to and include, but not be
limited to, claims, demands, judgments, liabilities and expenses

23

 

resulting from the personal injury, sickness, disease or death of any persons, regardless of
whether Coffeyville Resources has paid the person under the provisions of any workers’ compensation
statute or law, or other similar federal or state legislation for the protection of employees.
Purchaser’s indemnification obligations hereunder shall exclude any liabilities (i) arising from
any breach for which exclusive remedies are otherwise provided hereunder or (ii) to the extent
caused by the negligence of BOC, its employees, agents or subcontractors.

     (d) Each
Party agrees to defend, indemnify, and hold harmless the other Party from any loss,
expense, claim, liability, demand or judgment arising out of or resulting from bodily injury to its
employees while on property controlled by, and with the permission of, the other Party, except to
the extent caused by the negligence of the other Party, its employees, agents or subcontractors.

     (e) A party entitled to indemnification under any provision of this Agreement is referred to
herein as an “Indemnified Party,” and a party required to provide such indemnification is
referred to herein as an “Indemnifying Party.” Promptly after receipt by an Indemnified Party of
notice of the commencement of any action or the making of any claim, such Indemnified Party will,
if a claim in respect thereof is to be made against the Indemnifying Party, notify the Indemnifying
Party in writing thereof. In case any such action or claim is brought against any Indemnified
Party, and it notifies the Indemnifying Party of the commencement or making thereof, the
Indemnifying Party will be entitled to participate therein and, to the extent that the Indemnifying
Party may elect by written notice to the Indemnified Party promptly after receiving the aforesaid
notice from such Indemnified Party, to assume the defense thereof. Upon receipt of notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the defense of such
action or claim, the Indemnifying Party will not be liable to such Indemnified Party under such
indemnification for any legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof.

     (f) NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES UNDER ANY CIRCUMSTANCES, INCLUDING, WITHOUT LIMITATION,
LOST PROFITS OR DAMAGES DUE TO LOSS OF USE OF A FACILITY OR INDIRECT OR
CONSEQUENTIAL DAMAGES CAUSED BY OR ARISING OUT OF, IN WHOLE OR IN PART, ANY NEGLIGENT ACT OR
OMISSION.

SECTION 20 INSURANCE

     BOC, at its sole cost and expense, shall secure and maintain during the term of this
Agreement, the following minimum insurance coverage with respect to the BOC Plant and its
operations:

	 	(1)	 	Workers’ compensation insurance which fully complies with applicable workers’
compensation and occupational disease laws and which shall cover all of BOC’s
employees performing services in connection with matters contemplated by this
Agreement. BOC shall obtain and provide to Coffeyville Resources a valid waiver of any
right of subrogation against Coffeyville Resources or its employees

24

 

	 	 	 	for any injury or death to a person covered by or compensated under BOC’s workers’
compensation insurance, which waiver shall be executed by each of BOC’s workers’
compensation insurance carriers.
	 
	 	(2)	 	Employer’s liability insurance with limits of not less than $1,000,000 per
occurrence.
	 
	 	(3)	 	Comprehensive commercial general liability insurance including products and
completed operations, broad form property damage and broad form contractual liability,
with a limit for bodily injury or death of not less than $10,000,000 per occurrence
and a limit for property damage of not less than $10,000,000 per occurrence, or a
combined single limit for bodily injury, death and property damage of not less $10,000,000
per occurrence. The annual aggregate limit shall not be less than
$20,000,000. Coffeyville Resources shall be listed as an additional insured on such
policies.
	 
	 	(4)	 	Automobile liability insurance with a combined single limit for bodily
injury, death and property damage of not less than $2,000,000 per occurrence.
	 
	 	(5)	 	Property insurance for loss or damage to any property of BOC located within
the Facilities, with limits of not less than $20,000,000.
	 
	 	(6)	 	Such other insurance as required by law.

BOC shall obtain and provide to Coffeyville Resources a valid waiver of any right of subrogation
against Coffeyville Resources for damage to any property of BOC covered by BOC’s property
insurance, which waiver shall be executed by each of BOC’s property insurance carriers. Similarly,
Coffeyville Resources shall obtain and provide to BOC a valid waiver of any right of subrogation
against BOC for damage to the property of Coffeyville Resources covered by Coffeyville Resources’
property insurance, which waiver shall be executed by each of Coffeyville Resources’ property
insurance carriers. The insurance requirements listed above are the minimum requirements that are
acceptable to Coffeyville Resources as of the date hereof and shall not be considered indicative
of the ultimate amounts and types of insurance needed by BOC. Neither failure to comply nor full
compliance with the insurance provisions of this Agreement shall limit or relieve BOC from its
obligations under this Agreement. Upon request of Coffeyville Resources, BOC shall promptly
furnish Coffeyville Resources certificates of insurance on forms reasonably approved by
Coffeyville Resources listing all policies required of BOC above. Such certificates must provide
for not less than 30 days’ prior written notice to Coffeyville Resources in the event of
cancellation, nonrenewal or material change of any of such policies.

SECTION 21 TAKING & CASUALTY

     (a) In the event that the Facilities, or any material part thereof, shall be taken by
any public authority or for any public use, or by the action of any public authority, then this
Agreement may be terminated at the election of either BOC or Coffeyville Resources. Such

25

 

election shall be made by the giving of notice by one party to the other within thirty (30) days
after the right of election accrues. For purposes of this subsection (a), what constitutes a
“material part” of the Facilities shall be reasonably determined by BOC.

     In the event of such a taking, Coffeyville Resources shall be entitled to the entire award,
except that BOC shall be entitled to receive any portion of the award made specifically for
damages sustained to BOC’s equipment, trade fixtures, moving expenses, the unamortized cost of its
leasehold improvements, or loss of any portion of its business.

     If neither BOC nor Coffeyville Resources exercises any right of election provided in this
subsection (a), this Agreement shall continue in full force and effect and BOC shall proceed to
diligently and expeditiously repair or rebuild the Facilities to as nearly as possible the same
condition as prior to the taking; provided, however, that the Minimum Product Charge (together with
any then applicable price adjustment) which Coffeyville Resources would otherwise have been
obligated to pay to BOC pursuant to this Agreement shall be abated from the date of the taking
until such time as the Facilities are so repaired or rebuilt. To the extent that the awards or
payments are insufficient to repair or rebuild the Facilities, BOC shall bear all excess costs of
repairing and rebuilding the Facilities.

     (b) In the event that the Facilities, or any material part thereof, shall be destroyed or
damaged by fire or casualty, and such destruction or damage is so severe that, based on any
reasonable estimates (which BOC shall deliver to Coffeyville Resources within thirty (30) days of
such destruction or damage), the Facilities cannot be placed in proper condition for use within
sixteen (16) months of the date of the fire or casualty, then this Agreement may be terminated at
the election of BOC or Coffeyville Resources. Such election shall be made by the giving of notice
by one party to the other within sixty (60) days after the right of election accrues. For purposes
of this subsection (b), what constitutes a “material part” of the Facilities shall be reasonably
determined by BOC.

     In the event of termination pursuant to this subsection (b), BOC shall be entitled to the
entire sum of insurance proceeds attributable to the buildings, fixtures and other property which
is not owned by Coffeyville Resources, which proceeds are received by either BOC or Coffeyville
Resources in connection with the fire or other casualty. BOC shall be entitled to receive the
proceeds of any insurance purchased by BOC to cover its personal property, equipment and business
operations.

     If neither BOC nor Coffeyville Resources exercises any right of election provided in this
subsection (b), this Agreement shall continue in full force and effect and BOC shall proceed to
diligently and expeditiously repair or rebuild the Facilities to as nearly as possible the same
condition as prior to the taking, damage or destruction, provided, however, that the Minimum
Product Charge (together with any then applicable price adjustment) which Coffeyville Resources
would otherwise have been obligated to pay to BOC pursuant to this Agreement shall be abated from
the date of the fire or casualty until such time as the Facilities are so repaired or rebuilt. To
the extent that the proceeds of insurance are insufficient to repair or rebuild the Facilities,
BOC shall bear all excess costs of repairing and rebuilding the Facilities.

26

 

SECTION 22 LIAISONS

     BOC and Coffeyville Resources shall each appoint and notify the other of a representative who
shall be responsible for coordination and liaison between the parties. Either party may change its
representative upon written notice to the other party.

SECTION 23 GENERAL PROVISIONS

     (a) The section headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or of any provision hereof.

     (b) All of the Exhibits attached hereto are incorporated herein and made a part of this
Agreement by reference thereto.

     (c) This Agreement, and the Settlement Agreement and Mutual Release which the parties have
entered into contemporaneously herewith, set forth the entire agreement between BOC and Coffeyville
Resources with respect to the production, purchase and sale of Product for use at the Coffeyville
Facilities. This Agreement supersedes and cancels all prior and contemporaneous agreements and
understandings between the parties, whether oral or written, relating to the subject matter hereof,
including, without limitation, (a) that certain letter agreement between BOC and Farmland
Industries, Inc., dated May 14, 1997; (b) the December 3, 1997 On-Site Product Supply Agreement
between The BOC Group, Inc. and Farmland Industries, Inc.; (c) Amendment No. 1 to the On-Site
Product Supply Agreement between The BOC Group, Inc. and Farmland Industries, Inc., dated December
31, 1999 and (d) that certain letter agreement between BOC and Coffeyville Resources dated August
31, 2005.

     (d) No amendment, modification, change, waiver or discharge of, or addition to, any provision
of this Agreement shall be effective unless the same is in writing and is signed or otherwise
assented to in writing by an authorized individual on behalf of each party, and unless such writing
specifically states that the same constitutes such an amendment, modification, change, waiver or
discharge of, or addition to, one or more provisions of this Agreement.

     (e) The parties may, from time to time, use purchase orders, acknowledgments or other
instruments to order, acknowledge or specify delivery times, suspensions, quantities or other
similar specific matters concerning the Product or relating to performance hereunder, but the same
are intended for convenience and record purposes only and any provisions which may be contained
therein are not intended to (nor shall they serve to) add to or otherwise amend or modify any
provision of this Agreement, even if signed or accepted on behalf of either party with or without
qualification.

     (f) If any provision of this Agreement shall be declared void or unenforceable by any judicial
or administrative authority, the validity of any other provision and of the entire Agreement shall
not be affected thereby and it is the intention of the parties that any such provision be reformed
so as to make it enforceable to the maximum extent permissible under applicable law.

27

 

     (g) This Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

     (h) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF KANSAS WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SAID STATE. Any legal action or
proceeding with respect to this Agreement or any document related hereto shall be brought
exclusively in the courts of the State of Kansas or of the United States of America for the
District of Kansas, and, by execution and delivery of this Agreement, the parties hereto hereby
accept, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts. The
parties hereto hereby irrevocably waive any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum non
conveniens, which any of them may now
or hereafter have to the bringing of any such action or proceeding in such respective
jurisdictions.

     (i) The parties will comply with all applicable law and regulations in the performance of
this Amended and Restated On-Site Product Supply Agreement.

IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT AS OF THE
DAY AND YEAR FIRST ABOVE WRITTEN.

	 	 	 	 	 
	THE BOC GROUP, INC.	 	 
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Trevor Burt
 

Trevor Burt
	 	 
	Title:

	 	PRESIDENT	 	 
	Date:

	 	13 JUNE 06	 	 

	 	 	 	 	 
	COFFEYVILLE RESOURCES NITROGEN FERTILIZERS, LLC
	 
	 	 	 	 
	By:

	 	/s/ Stanley A. Riemann
 

	 	 
	Name:

	 	 	 	 
	Title:

	 	C.O.O.	 	 
	Date:

	 	6/9/06	 	 

28

 

EXHIBIT A

CERTAIN SPECIFICATIONS, CAPABILITIES AND CAPACITIES

The product specifications set forth below specify normal operating specifications and,
accordingly, the parties agree that delivery of Product not meeting the indicated specifications
shall not be deemed a breach by BOC and BOC shall not be required to shut down the BOC Plant unless
Coffeyville Resources expressly instructs BOC to do so in writing.* From time to time Coffeyville
Resources may instruct BOC to decrease the normal operating specifications for Product by written
notice, accepted by BOC.

			
	*except as otherwise set forth below for Nitrogen Product

	I.	 	Product Specifications

	 	A.	 	Purity:
	 
	 	 	 	Oxygen Product: 99.60 mol.% (normal operating)
	 
	 	 	 	Nitrogen Product, with inerts:

99.99 mol.%

not more than 5 ppm of oxygen (normal operating, 10 ppm trip point)

CDA Product: Dew point -40°F (normal operating)

High Pressure Air Product: Dew Point -40°F (normal operating)

	 	B.	 	Pressure at BOC Plant Battery Limits:
	 
	 	 	 	To the Gasification Project:

gaseous Oxygen Product:  850 psig ± 10 psi

gaseous Nitrogen Product: 500 psig ± 10 psi

CDA Product: 135 psig ± 10 psi

High Pressure Air Product: 900 psig ± 10 psi

To the adjacent refinery facility owned by Coffeyville Resources Refining &
Marketing LLC or its successors or assigns (the “Refinery”):

gaseous Nitrogen Product: 200 psig ± 10 psi

gaseous Oxygen Product:   70 psig ± 10 psi

29

 

Notwithstanding that the above referenced Products may ultimately be used by
the Refinery, it is strictly understood that BOC’s delivery hereunder is
fulfilled by delivery to Coffeyville Resources at the point where each of
the Coffeyville Pipelines are connected to the corresponding BOC Pipelines.

II. Production and Delivery Capabilities:

	 	A.	 	High-Pressure (850 +/-10 psig) gaseous Oxygen Product:
	 
	 	 	 	(***) scf per hour (maximum instantaneous flow rate at 14.3 psia and
105°F dry bulb and 78°F wet bulb and cooling water at 85°F).

	 	B.	 	Low Pressure (70 +/- 5 psig) gaseous Oxygen Product to Refinery:
	 
	 	 	 	(***) scf per hour (maximum instantaneous flow rate at 14.3 psia and 105°F dry bulb
and 78°F wet bulb and cooling water at 85°F

	 	C.	 	High-Pressure Air Product (900 +/-10 psig) for use in Urea Process #1
Decomposer Exchanger:
	 
	 	 	 	(***) scf per hour (maximum instantaneous flow rate at 14.3 psia and 105°F dry bulb
and 78°F wet bulb and cooling water at 85°F).
	 
	 	D.	 	gaseous Nitrogen Product (both 500 +/- 10 psig and 200 +/-10 psig, but
excluding 1300 and 120 psig referred to in Section III A immediately below):
	 
	 	 	 	(***) total scf per hour (maximum instantaneous flow rate at 14.3 psia and 105°F
dry bulb and 78°F wet bulb and cooling water at 85°F).
	 
	 	E.	 	CDA Product:
	 
	 	 	 	(***) scf per hour (maximum instantaneous flow rate at 14.3 psia and 105°F dry
bulb and 78°F wet bulb and cooling water at 85°F)

	III.	 	Liquid Product Capacity

	 	A.	 	liquid Nitrogen Product

	 	 	 	 	 
	 

	 	Storage:
	 	11,000 gallons (allocated)
	 
	 	 	 	 
	 

	 	Vaporization:
	 	(***) scf per hour at 120 psig
	 
	 	 	 	 
	 

	 	 	 	(***) scf per hour at 1300 psig
for up to 8 hours of continuous
service

	 	B.	 	liquid Oxygen Product

	 	 	 	 	 
	 

	 	Storage:
	 	11,000 gallons (allocated)

30

 

	 	 	 	 	 
	 

	 	Vaporization:
	 	(***) scf per hour at 850 psig for up to 8 hours of continuous service

31

 

EXHIBIT B

PRICE ADJUSTMENTS

	I.	 	PROCEDURES

	 	A.	 	Price adjustments shall be determined annually by BOC preparing a statement
setting forth the change in the relevant index referred to below which may have
occurred during the preceding calendar year and the price adjustment resulting
therefrom, together with supporting computations prepared in the manner set forth in
Paragraph II of this Exhibit B. Each such price adjustment shall be effective
for the entire calendar year during which such statement is so prepared, upon notice to
Coffeyville Resources by BOC.
	 
	 	B.	 	If the index referred to below is modified in any significant way or is no
longer published, a new, substantially equivalent index shall be selected by mutual
agreement of the parties.

	II.	 	COMPUTATIONS
	 
	 	 	The following computations determine whether the monthly Minimum Product Charge and the
unit prices for gaseous Product sold hereunder shall be increased or decreased:
	 
	 	 	The monthly Minimum Product Charge and the unit prices for gaseous Product will increase or
decrease based upon the change in the annual average hourly earnings for the Series ID -
ceu3232500006 (as reported by the U.S. Department of Labor, Bureau of Labor Statistics and
hereafter referred to as “CAPI”) above a base level, which shall be the 2005 Annual Average
CAPI. The applicable monthly Minimum Product Charge for a given year will be calculated in
accordance with the formula below:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	CMPC
	 	=
	 	BMPC
	 	X
	 	(
	 	 	1	 	 	+
	 	CAPI2
	 	-
	 	CAPI1
	 	 	)	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	CAPI1	 	 	 	 	 	 

     where:

	 	 	 	 	 	 	 
	 

	 	CMPC
	 	=
	 	Current monthly Minimum Product Charge, and each
gaseous Product price, individually
	 
	 

	 	BMPC
	 	=
	 	Base monthly Minimum Product Charge, and each gaseous
Product price, individually, as follows:
	 
	 

	 	 	 	 	 	(***) — Base Monthly Minimum Product Charge 
(***)
— Base Gaseous Oxygen
	 

	 	 	 	 	 	(***) — Base Gaseous Nitrogen
	 

	 	 	 	 	 	(***) — Base CDA Product

32

 

	 	 	 	 	 	 	 
	 

	 	CAPI1
	 	=
	 	2005 Annual Average CAPI

	 
	 

	 	CAPI2
	 	=
	 	Most recent Annual Average CAPI

33

 

EXHIBIT C

ACCEPTABLE AIR CONTAMINANT LEVELS

	 	 	 	 	 
	 	 	MAXIMUM CONTINUOUS	 
	COMPONENT	 	CONCENTRATION (VPM)	 
	Carbon Dioxide
	 	 	500.00	 
	 
	 	 	 	 
	Methane
	 	 	20.00	 
	 
	 	 	 	 
	Ethane
	 	 	0.20	 
	 
	 	 	 	 
	Acetylene
	 	 	5.00	 
	 
	 	 	 	 
	Ethylene
	 	 	0.10	 
	 
	 	 	 	 
	Propane
	 	 	0.03	 
	 
	 	 	 	 
	Propylene
	 	 	1.00	 
	 
	 	 	 	 
	Butane
	 	 	1.00	 
	 
	 	 	 	 
	>C4 (non-aromatic)
	 	 	1.00	 
	 
	 	 	 	 
	Sulfur Compounds
	 	Nil	 
	 
	 	 	 	 
	Chlorides
	 	Nil	 
	 
	 	 	 	 
	NO and NO2 
	 	 	1.00	 
	 
	 	 	 	 
	N2O
	 	 	0.50	 

34

 

EXHIBIT D

THE COFFEYVILLE PLANT SITE

35

 

	EXHIBIT D
AMENDED AND
RESTATED ON-SITE
PRODUCT SUPPLY
AGREEMENT BETWEEN
THE BOC GROUP. INC.
AND COFFEYVILLE
RESOURCES NITROGEN
FERTILIZERS,
LLC
PARKING
Coffeyvllie Plant Site

 

 

EXHIBIT E

THE BOC PLANT SITE

 

 

 

 

EXHIBIT F

ITEMS
TO BE PROVIDED BY COFFEYVILLE RESOURCES

	Except as otherwise provided in this Agreement, the following items shall be provided by
Coffeyville Resources:

Permanent Utilities

Power,
13.8 kv*

Steam

ASU 5,480 LB/hr average,

15,330 LB/hr peak;

primary 600 psig minimum,

490°F; secondary 550 psig

minimum, 550°F

Reactor 6,200 LB/hr when

Vaporizing

100 psig minimum, 330°F

Hydrogen,
1875 scfh average

(within
specifications

listed on Exhibit F-2)

Telephone Line

Cooling water supply (within specifications listed on Exhibit F-1)

      and return (15,175 gpm)

Steam and condensate drain

Sewer services, oil/water, storm and sanitary

Potable water 

Fire water

Instrument air

All Tie-Ins (including final Pipeline and utility pipeline tie-ins)

Permanent security and site access

 

			
	*	 	While permanent power is intended to be provided at Coffeyville Resources’ cost, the
following shall apply:

BOC and Coffeyville Resources shall split the cost of power above 29.092 MW and below 35.00 MW
(“Excess Power”) on a 50/50 basis. The Excess Power will be calculated on a monthly basis in
accordance with the methodology set forth in Exhibit F-3, using actual demand, coincident peak,
MWH usage, and energy and PCA charges set forth on the invoices issued by the City of
Coffeyville to Coffeyville Resources.

37

 

EXHIBIT F-1

COOLING WATER SPECIFICATIONS

The following are the requirements for the cooling water being provided by Coffeyville Resources:

	 	 	 	 	 	 	 
	 

	 	•
	 	Pressure at battery limits
	 	55 psig
	 
	 	 	 	 	 	 
	 

	 	•
	 	Allowable pressure drop at battery levels
	 	25 psi
	 
	 	 	 	 	 	 
	 

	 	•
	 	Maximum temperature rise at battery levels
	 	20°F
	 
	 	 	 	 	 	 
	 

	 	•
	 	Specifications:	 	 

	 	 	 	 	 
	 	 	Circulating
Water	 
	Total Alkalinity (methyl orange)
	 	250 ppm
	 
	 	 	 	 
	Total Suspended Solids
	 	5 ppm
	 
	 	 	 	 
	Total Dissolved Solids
	 	3500 ppm
	 
	 	 	 	 
	Iron
	 	3 ppm
	 
	 	 	 	 
	Calcium Hardness (as CaCO3)
	 	1000 ppm
	 
	 	 	 	 
	Silica (SiO2)
	 	200 ppm
	 
	 	 	 	 
	Sulfates (SO4)
	 	500 ppm
	 
	 	 	 	 
	Chlorides (CI)
	 	350 ppm
	 
	 	 	 	 
	Chlorine (free)
	 	0.5 ppm
	 
	 	 	 	 
	Total Phosphates (as P)
	 	10 ppm
	 
	 	 	 	 
	pH
	 	 	7.0-8.5	*
	 
	 	 	 	 
	Corrosives (H2S, organic acids, etc.)
	 	Nil
	 
	 	 	 	 
	Organic matter
	 	Nil
	 
	 	 	 	 
	Copper
	 	1 ppm	 
	 
	 	 	 	 
	Zinc
	 	1 ppm	 

 

			
	*	 	Infrequent and short-interval excursions up to 8.9 are possible, and Coffeyville Resources
will alarm at 8.5.

38

 

EXHIBIT F-2

HYDROGEN SPECIFICATIONS

     The hydrogen being provided by Coffeyville Resources shall have a minimum purity of 99.3%
hydrogen and shall conform to the following additional purity requirements:

	 	 	 	 	 
	Component	 	Maximum
Amount	 
	Oxygen
	 	 	0.1%	 
	Nitrogen
	 	 	0.6%	 
	Carbon Monoxide
	 	 	2 ppm
	Carbon Dioxide
	 	 	2 ppm
	Water
	 	 	0.1%	 
	Methane
	 	 	2 ppm
	Total Hydrocarbons
	 	 	2 ppm
	Argon
	 	 	0.2%	 

39

 

EXHIBIT F-3

Excess Power Calculation Methodology, June 2005

	 	 	 
	Demand Allocation

	 	29.092 MW per Contract
	Coincident Demand

	 	34.620 MW City of Coffeyville Invoice
	Excess Demand

	 	5.528 MW
	 
	 	 
	Actual Usage

	 	23.818 MW City of Coffeyville Invoice

Excess Usage

     Actual Usage — (Demand Allocation x Operating Days in Month x 24 Hrs.)

23,818,000 — (29,092 x 30 x 24)

						
	 

	 	23,818,000—20,946,240
	= 	2,871,760 KWH	 

Demand Charge

											
	 	 	Excess Demand	 	x $8670 per MW	 	 
	 

	 	 	 	 	5.528	 	 	x $8670
	=	 $48,425.28
	 	 
	 	 	Schedule 5	 	5.528 x $73.12	=	 $404.21
	 	 	Schedule 6	 	5.528 x $72.80	= 	 $402.44

Usage Charge

							
	 

	Base Energy
	 	2,871,760 x .01870
	= 	$53,701.91	 
	 

	PCA
	 	2,871,760 x .00271
	= 	$7,782.47	 
	 

	Wheeling
	 	2,871,760 x .00200
	= 	$5,743.52	 
	 
	 	 	 	 	 	 
	 

	 	 	TOTAL
	 	$116,459.83	 
	 	 
	 

	 	 	50/50 Split
	 	$58,229.92	 

Excess Power Charge to be reimbursed by BOC to Coffeyville Resources

40

 

EXHIBIT G

PRICING SCHEDULE

	I.	 	During the Supply Period, Coffeyville Resources shall pay BOC
(***) per month as a
monthly Minimum Product Charge for the commitment of the Facilities and the availability
during each calendar month of high pressure gaseous Oxygen Product from the output of the BOC
Plant at instantaneous flow rates not exceeding
(***) scf per hour, low pressure gaseous
Oxygen Product at instaneous flow rates not exceeding
(***) scf per hour, gaseous Nitrogen
Product (both 500 psi and 200 psi) from the output of the BOC Plant at instantaneous flow
rates not exceeding a total of (***) scf per hour, and High Pressure Air Product at
instantaneous flow rates not exceeding (***) scf per hour and CDA Product at instantaneous
flow rates not exceeding (***) scf per hour.
	 
	II.	 	During the Supply Period, Coffeyville Resources shall pay BOC
(***) per 100 scf for all quantities of gaseous Oxygen Product delivered to
Coffeyville Resources during a calendar month from the output of the
BOC Plant, at total instantaneous flow rates exceeding (***) scf
per hour.
	 
	III.	 	During the Supply Period, Coffeyville Resources shall pay BOC (***)
per 100 scf for all quantities of gaseous Nitrogen Product delivered
to Coffeyville Resources during a calendar month from the output of
the BOC Plant, at instantaneous flow rates exceeding a total of
(***) scf per hour.
	 
	IV.	 	During the Supply Period, Coffeyville Resources shall pay BOC (***)
per 100 scf for the gaseous equivalent of all liquid Oxygen Product
delivered from the inventory of the Liquid Product Storage Facility.
Supplemental Product delivered to Coffeyville Resources at
Coffeyville Resources’ request in accordance with Paragraph 3b(ii)
shall be billed to Coffeyville Resources FOB point of origin.
	 
	V.	 	During the Supply Period, Coffeyville Resources shall pay BOC (***) per 100 scf for the
gaseous equivalent of all liquid Nitrogen Product delivered from the inventory of the Liquid
Product Storage Facility. Supplemental Product delivered to Coffeyville Resources
at Coffeyville Resources’ request in accordance with Paragraph 3b(ii) shall be billed to
Coffeyville Resources FOB point of origin.
	 
	VI.	 	During the Supply Period, Coffeyville Resources shall pay BOC (***) per 100 scf for all
quantities of CDA Product delivered to Coffeyville Resources during a calendar month at
instantaneous flow rates exceeding (***) scf per hour.

The Minimum Product Charge and the unit prices for gaseous Product set forth above in Paragraphs
I, II, III and VI of this Exhibit G shall be subject to adjustment as more specifically
set forth in Section 12 of the Agreement and on Exhibit B to the Agreement.

41

 

EXHIBIT H

PURCHASE PRICE

Paragraph 13(d)

	 	 	 	 	 
	Year
of Supply Period During Which Purchase Occurs	 	Purchase Price	 
	1. June 1, 2005 - May 31, 2006
	 	 	(***)	 
	2. June 1, 2006-May 31, 2007
	 	 	(***)	 
	3. June 1, 2007-May 31, 2008
	 	 	(***)	 
	4, June 1, 2008-May 31, 2009
	 	 	(***)	 
	5. June l, 2009-May 31, 2010
	 	 	(***)	 
	6. June 1, 2010-May 31, 2011
	 	 	(***)	 
	7. June l, 2011-May 31, 2012
	 	 	(***)	 
	8. June 1, 2012-May 31, 2013
	 	 	(***)	 
	9. June 1, 2013-May 31, 2014
	 	 	(***)	 
	10. June 1, 2014-May 31, 2015
	 	 	(***)	 
	11. June 1, 2015-May 31, 2016
	 	 	(***)	 
	12. June 1, 2016-May 31, 2017
	 	 	(***)	 
	13. June 1, 2017-May 31, 2018
	 	 	(***)	 
	14. June 1, 2018-May 31, 2019
	 	 	(***)	 
	15. June 1, 2019-April 30, 2020
	 	 	(***)	 

BOC retains ownership of the liquid oxygen and liquid nitrogen storage tanks.

42

 

EXHIBIT I

TERMINATION FEE

Paragraph 2(h)

	 	 	 	 	 	 
	Year of Supply Period During Which Termination Occurs	 	 	Termination Fee
	1. June 1, 2005-May 31, 2006

	 	 	 	(***)	 
	2. June 1, 2006-May 31, 2007

	 	 	 	(***)	 
	3. June 1, 2007-May 31, 2008

	 	 	 	(***)	 
	4. June 1, 2008-May 31, 2009

	 	 	 	(***)	 
	5. June 1, 2009-May 31, 2010

	 	 	 	(***)	 
	6. June 1, 2010-May 31, 2011

	 	 	 	(***)	 
	7. June 1, 2011-May 31, 2012

	 	 	 	(***)	 
	8. June l, 2012-May 31, 2013

	 	 	 	(***)	 
	9. June 1, 2013-May 31, 2014

	 	 	 	(***)	 
	10. June 1, 2014-May 31, 2015

	 	 	 	(***)	 
	11. June 1, 2015-May 31, 2016

	 	 	 	(***)	 
	12. June l, 2016-May 31, 2017

	 	 	 	(***)	 
	13. June 1, 2017-May 31, 2018

	 	 	 	(***)	 
	14. June 1, 2018-May 31, 2019

	 	 	 	(***)	 
	15. June 1, 2019-April 30, 2020

	 	 	 	(***)	 

43

 

EXHIBIT J

FARMLAND MEMORANDUM OF LICENSE

44

 

EXHIBIT K

Calculation of Lost Liquid Adjustment Factor, July 2005

	 	 	 
	June 2005 Total Power Bill

	 	                    $1,675,534.28
	June 2005 Total Usage (KWH)

	 	                    42,263,000.00
	 
	 	 
	June 2005 Total Power Cost ($/KWH)

	 	                    $1,675,534.28 /42,263,000 =$.03965/KWH
	 
	 	 
	July 2005 Total Power Bill

	 	                    $1,674,041.22
	July 2005 Total Usage (KWH)

	 	                    44,069,000.00
	 
	 	 
	July 2005 Total Power Cost ($/KWH)

	 	                    $1,674,041.22 /44,069,000 = $.03799/KWH
	 
	 	 
	July 2005 Adjustment Factor

	 	July Total Cost / June Total Cost =
$.03799 / $.03965 = .9581
	 
	 	 
	July 2005 Liquid Margin/Ton

	 	(***)
	July Cap

	 	(***)

45

 

 

MEMORANDUM OF LICENSE

          THIS
MEMORANDUM, made and entered into as of this 23rd day of December,
1997, by and between Farmland Industries, Inc., a Kansas cooperative corporation, hereinafter
called “Farmland,” and The BOC Group, Inc., a Delaware corporation, hereinafter called “BOC”.

          WITNESSETH:

          1. Farmland hereby grants to BOC and its directors, officers, employees, agents,
contractors and subcontractors, (a) a non-exclusive license, in common with Farmland, its
employees, agents, contractors and licensees, for ingress, egress and access, with or without
vehicles, equipment, materials and machinery over and across the lands and property owned by
Farmland in Montgomery County, Kansas, to and from the parcel of land which is more
particularly described on Exhibit A attached hereto and by this reference made a part hereof
(the “BOC Site”), and (b) an exclusive license to occupy, use and construct on the BOC Site
(subject to the reservation by Farmland for itself and its employees, agents, contractors,
tenants and licensees of the right to use the BOC Site for certain designated purposes), and
to install, modify, improve, operate and remove any and all equipment, machinery and other
facilities installed thereon during the term of such license, all of which equipment,
machinery and facilities shall be deemed to be, and shall remain, the personal property of
BOC, all as more fully set forth in and subject to the provisions of that certain On-Site
Product Supply Agreement (the “Agreement”), dated as of December 3, 1997 and effective as of
December 12, 1997, by and between Farmland and BOC. The Agreement is hereby incorporated by
reference and made a part hereof as if fully set forth herein.

          2. The term of the Agreement commences on December 12, 1997, and ends as provided in
Section 13(a) of the Agreement.

          3. In the event of any conflict or inconsistency between the terms of this Memorandum and
the terms of the Agreement, the terms of the Agreement shall control.

          IN
WITNESS WHEREOF, Farmland and BOC have executed this Memorandum as of the
date first above written,

	 	 	 	 	 	 	 	 	 	 	 
	The BOC Group, Inc.

	 	 	Farmland Industries, Inc.

	 
	 	 	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Glenn Fischer
 

Glenn Fischer
	 	 
	 	By:

Name:
	 	/s/Allan D. Holiday
 

ALLAN D. HOLIDAY
	 	 
	Title:

	 	Pres. – BOC Gases Americas
	 	 	 	Title:
	 	PROJECT MANAGER	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date: 1/19/98

	 	 	 	Date:
	 	12-23-97	 	 

	 	 	 	 	 
	Harriette Mitchem

The Bcc Group

575 Mountain ave

Murray Hill, NJ 07974-2082

	 	
	 	$12.00 MISCELLANEOUS
DOCUMENT 11 MAR 98 2:08 P.M.
RECEIPT 21 STATE OF KANSAS
MONTGOMERY COUNTY RECORDED BOOK 468 PAGE 93
JEANNE BURTON  — REGISTER OF DEEDS

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF

	 	MISSOURI
	 	 	)	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	)	 	 	SS.
	COUNTY OF

	 	CLAY
	 	 	)	 	 	 
	 

	 	 	 	 	 	 	 	 

     This
instrument was acknowledged before me this
23rd day
of December, 1997,
by Allan D. Holiday, as Project Manager of Farmland
Industries, Inc., a Kansas corporation.

     IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year
last above written.

	 	 	 	 	 
	

	 	/s/ Mary E. Mockridge
 

Printed Name: Mary E. Mockridge

Notary Public in and for said
County and State
	 	 
	 

	 	 	 	 
	 

	 	 	 	 

	 	 	 
	My Commission Expires:
	 	 
	 
	 	 
	MARY E. MOCKRIDGE
	 	 
	 

	 	 
	Notary Public — State of Missouri
	 	 
	Commissioned In Clay County
	 	 
	My Commission Expires June 2, 2001
	 	 

	 	 	 	 	 	 	 	 	 
	STATE OF

	 	New Jersey
	 	 	)	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	)	 	 	SS.
	COUNTY OF

	 	Union
	 	 	)	 	 	 
	 

	 	 	 	 	 	 	 	 

     This
instrument was acknowledged before me this
19th day
of January,
1998, by Glenn Fischer as Vice President of The BOC Group, Inc., a Delaware corporation.

     IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year
last above written.

	 	 	 
	

	 	/s/ Dolores M. Forziati
 

Printed Name: DOLORES M. FORZIATI

Notary Public in and for said County and State
	 

	 	 
	 

	 	 

	 	 
	My Commission Expires:
	 
	DOLORES M. FORZIATI
	 
	Notary
Public of New Jersey
	 
	My
Commission Expires August 24, 19[ILLEGIBLE]
	 

-2-

 

Exhibit A

A PART OF BLOCK 9 OF MONTGOMERY’S ADDITION TO THE CITY OF COFFEYVILLE, MONTGOMERY COUNTY, KANSAS,
DESCRIBED AS FOLLOWS: COMMENCING AT THE SE CORNER OF SAID BLOCK 9; THENCE ON AN ASSUMED BEARING OF
N89°18’05”W ALONG THE SOUTH LINE OF SAID BLOCK 9 A DISTANCE OF 63.00 FEET TO THE TRUE POINT OF
BEGINNING; THENCE CONTINUING N89°18’05”W ALONG SAID SOUTH LINE A DISTANCE OF 300.03 FEET; THENCE
N°00’00”E A DISTANCE OF 290.64 FEET; THENCE
N90°00’00”E A DISTANCE OF 300.00 FEET; THENCE
S00°00’00”E A DISTANCE OF 294.30 FEET TO THE POINT OF BEGINNING.

 

Record and return to:

Harriette Mitchem

The Boc Group

575 Mountain Avenue

Murray Hill, NJ 07974-2082

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