Document:

Exhibit 10.23

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT is made this twelfth day of May, 2000, between ARE-TECHNOLOGY CENTER SSF, LLC, a Delaware
limited liability company (“Landlord”), and SUNESIS
PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”).

 

Address:                                               To
be determined on Oyster Point Boulevard, South San Francisco, California

 

Premises:                                        The
entire building containing approximately 53,980 rentable square feet, as
determined pursuant to Section 5 below, as shown on Exhibit A.

 

Project:                                                    The
real property on which the Building is located, together with all improvements
thereon and appurtenances thereto as described on Exhibit B.

 

Building:                                            The
specific building to be constructed in the Project in which the Premises are
located, as shown on Exhibit B.

 

	
  Base Rent:

  	
  $128,472.40 per month

  	
  Rentable Area of Premises:
  53,980 sq. ft.

  
	
  Rentable Area of Building:

  	
  53,980 sq. ft.

  	
  Building’s Share of
  Project:   50%

  
	
   

  	
   

  	
   

  
	
  Rentable Area of Project:

  	
  107,960 sq. ft.

  	
   

  
				

 

	
  Tenant’s Share of Operating Expenses of
  Building:

  	
  100%

  
	
   

  	
   

  
	
  Tenant’s Share of Operating Expenses of
  Project:

  	
  50%

  

 

	
  Security Deposit: $300,000

  	
  Target Commencement Date:
  September 4, 2001

  

 

Rent Adjustment Percentage:
3%

 

Base
Term:                                                                                144
months from the first day of the first full month of the Term (as defined in
Section 2) hereof

 

Permitted
Use:                                                               research
and development laboratory (including biotechnology and drug discovery and
development), related office and other related uses consistent with the
character of the Project

 

	
  Address for Rent Payment:

  	
  Landlord’s Notice Address:

  
	
  135 N. Los Robles Avenue, Suite 250

  	
  250 135 N. Los Robles Avenue, Suite 250

  
	
  Pasadena, CA 91101

  	
  Pasadena, CA 91101

  
	
  Attention: Accounts Receivable

  	
  Attention: General Counsel

  
	
   

  	
   

  
	
  Tenant’s Notice Address

  	
  Tenant’s Notice Address

  
	
  After the Commencement Date:

  	
  Prior to Commencement Date:

  
	
  the Premises

  	
  3696 Haven Avenue, Suite C

  
	
  South San Francisco, CA 94080

  	
  Redwood City, CA 94063

  
	
  Attention: General Counsel

  	
  Attention: General Counsel

  

 

The following Exhibits and Addenda are attached hereto and incorporated
herein by this reference:

 

	
  ý EXHIBIT A -PREMISES DESCRIPTION

  	
  ýEXHIBIT B -DESCRIPTION OF PROJECT

  
	
  ý EXHIBIT C -WORK LETTER

  	
  ý EXHIBIT D -COMMENCEMENT DATE

  

 

1

 

	
  ý EXHIBIT E -RULES AND REGULATIONS

  	
  ý EXHIBIT F -TENANT’S PERSONAL PROPERTY

  
	
  ý EXHIBIT G -ESTOPPEL CERTIFICATE

  	
  ý EXHIBIT H -NONDISTURBANCE AGREEMENT

  

 

1. Lease of Premises. Upon
and subject to all of the terms and conditions hereof Landlord hereby leases
the Premises to Tenant and Tenant hereby leases the Premises from
Landlord.  The portions of the project
which are for the non-exclusive use of tenants of the Project are collectively
referred to herein as the “Common Areas.”  Landlord reserves the right to modify Common
Areas, provided that such modifications do not materially adversely affect
Tenant’s use of the Premises for the Permitted Use.

 

2. Delivery;
Acceptance of Premises; Commencement Date. Subject to the provisions
of the Work Letter, immediately after the pouring of the concrete floor for the
second deck of the Building (the “Pour Date”),
Landlord shall permit Tenant and Tenant’s agents to enter the Premises for the
purpose of performing Tenant’s Work. Landlord shall use reasonable efforts to
deliver the Premises to Tenant on or before the Target Commencement Date, with
Landlord’s Work Substantially Completed (“Delivery”
or “Deliver”). If Landlord fails
to timely Deliver the Premises, Landlord shall not be liable to Tenant for any
loss or damage resulting therefrom, and this Lease shall not be void or
voidable except as provided herein. If the Pour Date does not occur by
August 20, 2001, as such date may be extended by reason of Force Majeure
Delays or Tenant Delays, this Lease shall be voidable by Tenant by written
notice to Landlord delivered within 5 business days after the Pour Date (as
extended) and, and if so voided by Tenant: (a) so long as Tenant is not in
default hereunder, the Security Deposit shall be returned to Tenant (if the
same has been paid to Landlord), and (b) neither Landlord nor Tenant shall have
any further rights, duties or obligations under this Lease, except with respect
to provisions which expressly survive termination of this Lease. If Tenant does
not elect to void this Lease within such 5 business day period, such right to
void this Lease shall be waived and this Lease shall remain in full force and
effect. As used herein, the terms “Landlord’s
Work,” “Tenants’ Work,” “Force Majeure Delays,” “Tenant Delays” and “Substantially Completed” shall have the
meanings set forth for such terms in the Work Letter.

 

The “Commencement
Date” shall be the earliest of: (i) the date that is 165 days after
the Pour Date, (ii) the date Tenant’s Work is substantially completed, and
(iii) the date Tenant conducts any business in the Premises or any part
thereof. Upon request of Landlord, Tenant shall execute and deliver a written
acknowledgment of the Commencement Date and the expiration date of the Term
when such are established in the form attached to this Lease as Exhibit D; provided, however
Tenant’s failure to execute and deliver such acknowledgment shall not affect
Landlord’s rights hereunder. The “Term”
of this Lease shall be the Base Term and any Extension Terms which Tenant may
elect pursuant to Section 39 hereof.

 

Landlord shall request its architect and
contractor to design, permit and perform Landlord’s Work in compliance with all
laws, rules, regulations, codes and ordinances applicable to the such work.
Except as set forth in the Work Letter, if applicable: (i) Tenant shall accept
the Premises in their condition as of the Commencement Date, subject to all
applicable laws, ordinances, regulations, covenants and restrictions; (ii)
Landlord shall have no obligation for any defects in the Premises; and (iii)
Tenant’s taking possession of the Premises shall be conclusive evidence that
Tenant accepts the Premises and that the Premises were in good condition at the
time possession was taken. Tenant’s right to enter the Premises before the
Commencement Date and any occupancy of the Premises by Tenant before the
Commencement Date shall be subject to all of the terms and conditions of this
Lease (except for the requirement to pay Base Rent and Operating Expenses).

 

Tenant agrees and acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty with respect to the condition
of any or all of the Premises or the

 

2

 

Project, and/or the suitability of the Premises or the Project for the
conduct of Tenant’s business and Tenant waives any implied warranty that the
Premises or the Project are suitable for the Permitted Use. This Lease
constitutes the complete agreement of Landlord and Tenant with respect to the
subject matter hereof and supersedes any and all prior representations,
Inducements, promises, agreements, understandings and negotiations which are
not contained herein.. Landlord in executing this Lease does so in reliance
upon Tenant’s representations, warranties, acknowledgments and agreements contained
herein.

 

3. Rent.

 

(a)                                  Base
Rent. The first month’s Base Rent, as adjusted pursuant to Section 4
hereof, and the Security Deposit shall be due and payable within three (3) days
after the Pour Date. Tenant shall pay to Landlord in advance, without demand,
abatement, deduction or set-off, monthly installments of Base Rent on or before
the first day of each calendar month during the Term hereof, in lawful money of
the United States of America, at the office of Landlord for payment of Rent set
forth above, or to such other person or at such other place as Landlord may
from time to time designate in writing. Payments of Base Rent for any
fractional calendar month shall be prorated. The obligation of Tenant to pay
Base Rent and other sums to Landlord and the obligations of Landlord under this
Lease are independent obligations. Tenant shall have no right at any time to
abate, reduce, or set-off any Rent (as defined in Section 5) due hereunder
except for any abatement as may be expressly provided in this Lease.

 

(b)                                 Additional
Rent.  In addition to Base Rent,
Tenant agrees to pay to Landlord as additional rent (“Additional Rent”): (i) Tenant’s Share of
“Operating Expenses” (as defined in Section 5), and (ii) any and all other
amounts 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 to comply with the agreements,
terms, covenants and conditions of this Lease to be performed by Tenant, after
any applicable notice and cure period.

 

4. Base
Rent Adjustments.

 

(a)
Adjustment for Tenant Improvements. For each of the following
incremental levels of the TI Allowance (as defined in the Work Letter)
disbursed to Tenant, Base Rent shall increase by the amount (per rentable
square foot per month) set forth for such increment of TI Allowance on the
schedule set forth below:

 

	
  TI
  Allowance Incremental

  	
   

  	
  Increase in Base Rent

  	
   

  
	
  (per
  rentable square foot)

  	
   

  	
  (per rentable square foot per month)

  	
   

  
	
  $0.00-$25.00

  	
   

  	
  $

  	
  0.00

  	
   

  
	
  $25.01-$50.00

  	
   

  	
  $

  	
  0.2917

  	
   

  
	
  $50.01-$75.00

  	
   

  	
  $

  	
  0.3125

  	
   

  
	
  $75.01-$100.00

  	
   

  	
  $

  	
  0.3334

  	
   

  
	
  $100.01-$125.00

  	
   

  	
  $

  	
  0.3542

  	
   

  

 

(b) Annual
Adjustments. Base Rent, as increased pursuant to
Section 4(a),.shall be increased on each anniversary of the first day of
the first full month during the Term of this Lease by multiplying the Base Rent
payable immediately before such adjustment by the Rent Adjustment Percentage
and adding the resulting amount to the Base Rent payable immediately before
such

 

3

 

adjustment. Base Rent, as so adjusted, shall thereafter be due as
provided herein. Base Rent adjustments for any fractional calendar month shall
be prorated.

 

5. Operating
Expense Payments. Landlord shall deliver to Tenant a written
estimate of Operating Expenses for each calendar year during the Term (the
“Annual Estimate”), which may be revised by Landlord from time to time during
such calendar year. During each month of the Term, on the same date that Base
Rent is due, Tenant shall pay Landlord an amount equal to 1/12 of Tenant’s
Share of the Annual Estimate. Payments for any fractional calendar month shall
be prorated.

 

The term “Operating
Expenses” means all costs and expenses of any kind or description
whatsoever incurred or accrued each calendar year by Landlord with respect to
the Building (including the Building’s Share of all costs and expenses of any
kind or description incurred or accrued by Landlord with respect to the Project
which are not specific to the Building or any other building located in the
Project) (including, without duplication, Taxes (as defined in Section 9),
reasonable reserves consistent with good business practice for future repairs
and replacements, capital repairs and improvements but only to the extent
amortized over the lesser of 12 years and the useful life of such capital items
(including, without limitation, capital costs to maintain the structural
integrity of the foundations, the load bearing walls and other load bearing
elements of the Project) and administrative rent in the amount of $3,200 per
month (which amount shall be increased on each anniversary of the first day of
the first full month during the Term of this Lease by multiplying the
administrative rent payable immediately before such adjustment by 2.5% and
adding the resulting amount to the administrative rent payable immediately
before such adjustment), excluding only:

 

(a) the original construction costs of the
Project and renovation prior to the Substantial Completion of Landlord’s Work
and costs of correcting defects in such original construction or renovation;

 

(b) capital expenditures for expansion of the
Project;

 

(c) interest, principal payments of Mortgage
(as defined in Section 27) debts of Landlord, financing costs and
amortization of funds borrowed by Landlord, whether secured or unsecured and
all payments of base rent (but not taxes or operating expenses) under any
ground lease or other underlying lease of all or any portion of the Project;

 

(d) depreciation of the Project (except for
capital improvements performed after the Commencement Date, the cost of which
are includable in Operating Expenses);

 

(e) advertising, legal and space planning
expenses and leasing commissions and other costs and expenses incurred in
procuring and leasing space to tenants for the Project, including any leasing
office maintained in the Project, free rent and construction allowances for
tenants;

 

(f) legal and other expenses incurred in the
negotiation or enforcement of leases;

 

(g) completing, fixturing, improving,
renovating, painting, redecorating or other work, which Landlord pays for or
performs for specific tenants within their premises, and costs of correcting
defects in such work;

 

(h) costs of utilities outside normal
business hours sold to tenants of the Project;

 

(i) costs to be reimbursed by other tenants
of the Project or Taxes to be paid directly by Tenant or other tenants of the
Project, whether or not actually paid;

 

4

 

j) salaries, wages, benefits and other
compensation paid to officers and employees of Landlord who are not assigned in
whole or in part to the operation, management, maintenance or repair of the
Project;

 

(k) general organizational, administrative
and overhead costs relating to maintaining Landlord’s existence, either as a
corporation, partnership, or other entity, including general corporate, legal
and accounting expenses;

 

(l) costs (including attorneys’ fees and
costs of settlement, judgments and payments in lieu thereof) incurred in
connection with disputes with tenants, other occupants, or prospective tenants,
and costs and expenses, including legal fees, incurred in connection with
negotiations or disputes with employees, consultants, management agents, leasing
agents, purchasers or mortgagees of the Building;

 

(m) costs incurred by Landlord due to the
violation by Landlord, its employees, agents or contractors or any tenant of
the terms and conditions of any lease of space in the Project or any Legal Requirement
(as defined in Section 7);

 

(n) tax penalties, fines or interest incurred
as a result of Landlord’s negligence, inability or unwillingness to make
payment and/or to file any tax or informational returns when due, or from
Landlord’s failure to make any payment required to be made by Landlord
hereunder before delinquency;

 

(o) overhead and profit increment paid to the
Landlord or to subsidiaries or affiliates of Landlord for goods and/or services
in or to the Project to the extent the same exceeds the costs of such goods
and/or services rendered by unaffiliated third parties on a competitive basis;

 

(p) costs arising from Landlord’s charitable
or political contributions or fine art maintained at the Project;

 

(q) costs in connection with services (including
electricity), items or other benefits of a type which are not standard for the
Project and which are not available to Tenant without specific charges
therefor, but which are provided to another tenant or occupant of the Project,
whether or not such other tenant or occupant is specifically charged therefore
by Landlord;

 

(r) costs incurred in the sale or refinancing
of the Project;

 

(s) net income taxes of Landlord or the owner
of any interest in the Project, franchise, capital stock, gift, estate or inheritance
taxes or any federal, state or local documentary taxes imposed against the
Project or any portion thereof or interest therein;

 

(t) any expenses otherwise includable within
Operating Expenses to the extent actually reimbursed by persons other than
tenants of the Project under leases for space in the Project;

 

(u) costs of utilities furnished to other
tenants of the Project of the type separately metered to the Premises;

 

(v) costs incurred in connection with the
investigation, removal, environmental clean up, response action, or remediation
on, in or under or about the Project, to the extent that Tenant is able to
prove that such costs arise solely from (1) contamination from Hazardous
Materials which migrated in, on or under the Premises from outside of the
Premises on or after the date hereof (“Off-site
Contamination”) and which contamination is not the result of any
actions and/or omissions of Tenant or its agents, employees, contractors or
invitees, or (2) conditions existing in, on or under the Project on or before
the date hereof (“Pre-existing Contamination”)
including those disclosed by the following: Phase I Environmental Site
Assessment, dated October 21, 1999,

 

5

 

prepared by Aquifer Sciences, Inc.; Phase II Environmental Site
Assessment, dated October 21, 1999, prepared by Aquifer Sciences, Inc.;
and Remedial Action Plan dated December 15 1999 and corresponding response
letters both dated December 17, 1999, from San Mateo County Department of
Health Services and the Regional Water Quality Control Board (collectively, the
“Baseline Reports”); and

 

(w) insurance deductibles and other costs of
casualty to the extent Tenant’s Share thereof exceeds (I) with respect to
earthquake insurance, $200,000, and (II) with respect to all other insurance,
$25,000.

 

Within 90 days after the end of each calendar
year (or such longer period as may be reasonably required), Landlord shall
furnish to Tenant a statement (an “Annual
Statement”) showing in reasonable detail: (a) the total and Tenant’s
Share of actual Operating Expenses for the previous calendar year, and (b) the
total of Tenant’s payments in respect of Operating Expenses for such year. If
Tenant’s Share of actual Operating Expenses for such year exceeds Tenant’s
payments of Operating Expenses for such year, the excess shall be due and
payable by Tenant as Rent within 30 days after delivery of such Annual
Statement to Tenant. If Tenant’s payments of Operating Expenses for such year
exceed Tenant’s Share of actual Operating Expenses for such year Landlord shall
pay the excess to Tenant within 30 days after delivery of such Annual
Statement, except that after expiration, or earlier termination of the Term,
Landlord shall pay the excess to Tenant after deducting all other amounts due
Landlord.

 

The Annual Statement shall be final and binding upon Tenant unless
Tenant, within 30 days after Tenant’s receipt thereof, shall contest any item
therein by giving written notice to Landlord, specifying each item contested
and the reason therefor. If, during such 30 day period, Tenant reasonably and
in good faith questions or contests the correctness of Landlord’s statement of
Tenant’s Share of Operating Expenses, Landlord will provide Tenant with access
to Landlord’s books and records relating to the operation of the Project and
such information as Landlord reasonably determines to be responsive to Tenant’s
questions. If after Tenant’s review of such information, Landlord and Tenant
cannot agree upon the amount of Tenant’s Share of Operating Expenses, then
Tenant shall have the right to have an independent public accounting firm
selected by Tenant from among the 5 largest in the United States, working
pursuant to a fee arrangement other than a contingent fee (at Tenant’s sole
cost and expense) and approved by Landlord (which approval shall not be
unreasonably withheld or delayed), audit and/or review Landlord’s books and
records relating to the operation of the Project and such other information
relating to the operation of the Project for the year in question (the
“Independent Review”). The results of any such Independent Review shall be
binding on Landlord and Tenant. If the Independent Review shows that Tenant’s
pro rata share of the Operating Expenses actually paid by Tenant for the
calendar year in question exceeded Tenant’s obligations for such calendar year,
Landlord shall at Landlord’s option either (i) credit the excess amount to the
next succeeding installments of estimated Operating Expenses or (ii) pay the
excess to Tenant within 30 days after delivery of such statement, except that
after expiration or earlier termination of the Term, Landlord shall pay the
excess to Tenant after deducting all other amounts due Landlord. If the
Independent Review shows that Tenant’s payments of Tenant’s Share of Operating
Expenses for such calendar year were less than Tenant’s obligation for the
calendar year, Tenant shall pay the deficiency to the Landlord within 30 days
after delivery of such statement. If the Independent Review shows that Tenant
has overpaid Tenant’s pro rata share of Operating Expenses by more than 5% then
Landlord shall reimburse Tenant for all costs incurred by Tenant for the
Independent Review. Operating Expenses for the calendar years in which Tenant’s
obligation to share therein begins and ends shall be prorated.

 

“Tenant’s
Share” shall be the percentage set forth on the first page of this
Lease as Tenant’s Share as reasonably adjusted by Landlord following a
measurement of the rentable square footage of the Building to be done by
Landlord within 90 days of the Commencement Date, or as soon as reasonably
possible thereafter, and shall be subject to further adjustment for changes

 

6

 

in the physical size of the Premises or the Project occurring
thereafter. Landlord’s architect shall certify to Landlord the rentable square
feet of the Premises, measured from the outside of exterior walls, but
including areas below the “dripline” in the exterior entrances and exits and
including all areas within the Building such as, but not limited to, utility
rooms and shafts for mechanical equipment. Landlord’s architect’s certification
of the rentable square feet of the Premises shall be binding on both Landlord
and Tenant. Landlord may equitably increase Tenant’s Share for any item of
expense or cost reimbursable by Tenant that relates to a repair, replacement,
or service that benefits only the Premises or only a portion of the Project
that includes the Premises or that varies with occupancy or use. Base Rent,
Additional Rent and all other amounts payable by Tenant to Landlord hereunder
are collectively referred to herein as “Rent.”

 

6. Security
Deposit. The Security Deposit shall be held by Landlord as security
for the performance of Tenant’s obligations under this Lease. The Security
Deposit is not an advance rental deposit or a measure of Landlord’s damages in
case of Tenant’s default. Upon each occurrence of a Default (as defined in
Section 20), Landlord may use all or part of the Security Deposit to pay
delinquent payments due under this Lease, and the cost of any damage, injury,
expense or liability caused by such Default, without prejudice to any other
remedy provided herein or provided by law. Upon any such use of all or any
portion of the Security Deposit, Tenant shall pay Landlord on demand the amount
that will restore the Security Deposit to its original amount. Upon bankruptcy
or other debtor-creditor proceedings against Tenant, the Security Deposit shall
be deemed to be applied first to the payment of Rent and other charges due
Landlord for periods prior to the filing of such proceedings. Landlord’s
obligation respecting the Security Deposit is that of a debtor, not a trustee;
no interest shall accrue thereon. The Security Deposit shall be the property of
Landlord, but shall be paid to Tenant when Tenant’s obligations under this
Lease have been completely fulfilled. Landlord shall be released from any
obligation with respect to the Security Deposit upon transfer of this Lease and
the Premises to a person or entity assuming Landlord’s obligations under this
Section 6. Tenant hereby waives the provisions of any law, now or
hereafter in force, which provide that Landlord may claim from a security
deposit only those sums reasonably necessary to remedy defaults in the payment
of Rent, to repair damage caused by Tenant or to clean the Premises, it being
agreed that Landlord may, in addition, claim those sums reasonably necessary to
compensate Landlord for any other loss or damage, foreseeable or unforeseeable,
caused by the act or omission of Tenant or any officer, employee, agent or
invitee of Tenant. After application of the Security Deposit in accordance with
this Lease, the Security Deposit, or any balance thereof, shall be returned to
Tenant (or, at Landlord’s option, to the last assignee of Tenant’s interest
hereunder) within 90 days after the expiration or earlier termination of this
Lease.

 

7. Use.
The Premises shall be used solely for the Permitted Use set forth in the Basic
Lease Provisions, in compliance with all laws, orders, judgments, ordinances,
regulations, codes, directives, permits, licenses, governmentally mandated
Transportation Demand Management programs, covenants and restrictions now or
hereafter applicable to the Premises, and the use and occupancy thereof
(collectively, “Legal Requirements”).
Tenant shall, upon 5 days’ written notice from Landlord, discontinue any use of
the Premises which is declared by any Governmental Authority (as defined in
Section 9) having jurisdiction to be a violation of any Legal Requirement.
Tenant will not use or permit the Premises to be used for any purpose or in any
manner that would void Tenant’s or Landlord’s insurance, increase the insurance
risk, or cause the disallowance of any sprinkler or other credits. Tenant shall
reimburse Landlord promptly upon demand for any additional premium charged for
any such insurance policy by reason of Tenant’s failure to comply with the
provisions of this Section or otherwise caused by Tenant’s use and/or
occupancy of the Premises. Tenant will use the Premises in a careful, safe and
proper manner and will not commit waste, overload the floor or structure of the
Premises, subject the Premises to use that would damage the Premises or
obstruct or interfere with the rights of Landlord or other tenants or occupants
of the Project, including conducting or giving notice of any auction,
liquidation, or going out of business sale on the Premises, or using or
allowing the Premises to be used for any unlawful purpose. Tenant shall cause
any equipment or machinery to be installed in the Premises so as to

 

7

 

reasonably prevent sounds or vibrations from the Premises from
extending into Common Areas, or other space in the Project. Tenant shall not
place any machinery or equipment weighing 1000 pounds or more in or upon the
Premises or transport or move such items through the Common Areas of the
Project or in the Project elevators without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Except as may be
provided under the Work Letter, Tenant shall not, without the prior written
consent of Landlord, use the Premises in any manner which will require
ventilation, air exchange, heating, gas, steam, electricity or water beyond the
existing capacity of the Project as proportionately allocated to the Premises
based upon Tenant’s Share as usually furnished for the Permitted Use.

 

In the event that during the term of the
Lease (after construction of the Tenant Improvements pursuant to Exhibit C)
Tenant desires, at its sole cost and expense, to install and maintain on the
roof of the Building supplemental HVAC, Tenant shall make a request to Landlord
in writing to install and maintain such supplemental HVAC. Tenant acknowledges
and agrees that such request shall be treated like a request for an Alteration
(as defined as Section 12) and shall be subject to the provisions of
Section 12 and any requirements imposed by Landlord relating to the roof
warranty.

 

Tenant, at its sole cost, shall be required
to implement and comply with any Transportation Demand Management (“TDM”) programs applicable to the Project.
Tenant acknowledges that implementation of and compliance with TDM programs
will require, among other things, employee showers, clothing lockers, and other
physical improvements, alterations or modifications to the interior and/or the
exterior of the Premises or the Project. Tenant further acknowledges that the
TI Allowance shall be used to pay for implementation of and compliance with the
TDM Program. Tenant’s implementation of and compliance with TDM programs shall
be subject to the satisfaction of Landlord and any applicable governmental
authorities.

 

Tenant, at its sole expense, shall make any
alterations or modifications to the interior or the exterior of the Premises or
the Project that are required by Legal Requirements (including, without
limitation, compliance of the Premises with the Americans With Disabilities
Act, 42 U.S.C. § 12101, et seq. (together with regulations promulgated
pursuant thereto, “ADA”)) related to Tenant’s use or occupancy of the Premises.
Notwithstanding any other provision herein to the contrary, except as provided
in Section 30(a) with respect to Pre-existing Contamination and Off- site
Contamination which contamination is not the result of any actions and/or
omissions of Tenant or its agents, employees, contractors or invitees, Tenant
shall be responsible for any and all demands, claims, liabilities, losses, costs,
expenses, actions, causes of action, damages or judgments, and all reasonable
expenses incurred in investigating or resisting the same (including, without
limitation, reasonable attorneys’ fees, charges and disbursements and costs of
suit) (collectively, “Claims”)
arising out of or in connection with Legal Requirements, and Tenant shall
indemnify, defend, hold and save Landlord harmless from and against any and all
Claims arising out of or in connection with any failure of the Premises to
comply with any Legal Requirement.

 

8. Holding
Over. If, with Landlord’s express written consent, Tenant retains
possession of the Premises after the termination of the Term, (i) unless
otherwise agreed in such written consent, such possession shall be subject to
immediate termination by Landlord at any time, (ii) all of the other terms and
provisions of this Lease (including, without limitation, the adjustment of Base
Rent pursuant to Section 4 hereof) shall remain in full force and effect
(excluding any expansion or renewal option or other similar right or option)
during such holdover period, (iii) Tenant shall continue to pay Base Rent in
the amount payable upon the date of the expiration or earlier termination of
this Lease or such other amount as Landlord may indicate, in Landlord’s sole
and absolute discretion, in such written consent, and (iv) all other payments
shall continue under the terms of this Lease. If Tenant remains in possession
of the Premises after the expiration or earlier termination of the Term without
the express written consent of Landlord, (A) Tenant shall become a tenant at
sufferance upon the terms of this Lease except that the monthly rental shall be
equal to 200% of the Rent in effect during the last 30 days of the Term, and
(B) Tenant shall be

 

8

 

responsible for all damages suffered by Landlord resulting from or
occasioned by Tenant’s holding over, including consequential damages. No
holding over by Tenant, whether with or without consent of Landlord, shall
operate to extend this Lease except as otherwise expressly provided, and this
Section 8 shall not be construed as consent for Tenant to retain
possession of the Premises. Acceptance by Landlord of Rent after the expiration
of the Term or earlier termination of this Lease shall not result in a renewal
or reinstatement of this Lease.

 

9. Taxes.
Landlord shall pay, as part of Operating Expenses, all taxes, levies,
assessments and governmental charges of any kind (collectively referred to as “Taxes”) imposed by any federal, state,
regional, municipal, local or other governmental authority or agency,
including, without limitation, quasi-public agencies (collectively, “Governmental Authority”) during the Term,
including, without limitation, all Taxes: (i) imposed on or measured by or
based, in whole or in part, on rent payable to Landlord under this Lease and/or
from the rental by Landlord of the Project or any portion thereof, or (ii)
based on the square footage, assessed value or other measure or evaluation of
any kind of the Premises or the Project, or (iii) assessed or imposed by or on
the operation or maintenance of any portion of the Premises or the Project,
including parking, or (iv) assessed or imposed by, or at the direction of, or
resulting from statutes or regulations, or interpretations thereof, promulgated
by, any Governmental Authority, or (v) imposed as a license or other fee on
Landlord’s business of leasing space in the Project. Landlord may contest, and
if requested by Tenant shall consider contesting, by appropriate legal
proceedings the amount, validity, or application of any Taxes or liens securing
Taxes. Notwithstanding Landlord’s agreement to consider contesting Taxes or
liens securing Taxes at the request of Tenant, Tenant acknowledges that
Landlord shall have the right to decide in its sole and absolute discretion
whether to contest Taxes or liens securing Taxes. Taxes shall not include any
net income taxes imposed on Landlord unless such net income taxes are in
substitution for any Taxes payable hereunder. If any such Tax is levied or
assessed directly against Tenant, then Tenant shall be responsible for and
shall pay the same at such times and in such manner as the taxing authority
shall require. Tenant shall pay, prior to delinquency, any and all Taxes levied
or assessed against any personal property or trade fixtures placed by Tenant in
the Premises, whether levied or assessed against Landlord or Tenant. If any
Taxes on Tenant’s personal property or trade fixtures are levied against
Landlord or Landlord’s property, or if the assessed valuation of the Project is
increased by a value attributable to improvements in or alterations to the
Premises, whether owned by Landlord or Tenant and whether or not affixed to the
real property so as to become a part thereof, higher than the base valuation on
which Landlord from time-to-time allocates Taxes to all tenants in the Project,
Landlord shall have the right, but not the obligation, to pay such Taxes.
Landlord’s determination of any excess assessed valuation shall be binding and
conclusive, absent manifest error. The amount of any such payment by Landlord
shall constitute Additional Rent due from Tenant to Landlord immediately upon
demand.

 

10. Parking.
Tenant shall have the right to park in common with other tenants of the Project
pro rata in accordance with the rentable area of the Premises and the rentable
areas of the Project occupied by such other tenants in those areas designated
for non-reserved parking, subject in each case to Landlord’s rules and
regulations. Landlord may allocate parking spaces among Tenant and other
tenants in the Project pro rata as described above if Landlord determines that
such parking facilities are becoming crowded. Landlord shall not be responsible
for enforcing Tenant’s parking rights against any third parties, including
other tenants of the Project.

 

11. Utilities,
Services. The Premises are separately metered for water,
electricity, telephone, sewer, and other utilities. Tenant shall pay directly
to the Utility provider, prior to delinquency, all costs for water,
electricity, telephone, sewer, gas and other utilities together with refuse and
trash collection and janitorial services (collectively, “Utilities”). Tenant
shall pay, as part of Operating Expenses, its share of all charges for jointly
metered Utilities based upon consumption, as reasonably

 

9

 

determined by Landlord. No interruption or failure of Utilities, from
any cause whatsoever other than Landlord’s willful misconduct, shall result in
eviction or constructive eviction of Tenant termination of this Lease or the
abatement of Rent.

 

12. Alterations and Tenant’s Property.
Any alterations, additions, or improvements made to the Premises by or on
behalf of Tenant, including additional locks or bolts of any kind or nature
upon any doors or windows in the Premises, but excluding installation, removal
or realignment of furniture systems (other than removal of furniture systems
owned or paid for by Landlord) not involving any modifications to the structure
or connections (other then by ordinary plugs or jacks) to Building Systems (as
defined in Section 13) (“Alterations”)
shall be subject to Landlord’s prior written consent, which consent shall not
be unreasonably withheld except if such Alteration affects the structure or
Building Systems in which case Landlord’s consent may be given or withheld in
Landlord’s sole and absolute discretion. Tenant may construct nonstructural
Alterations in the Premises without Landlord’s prior approval if the aggregate
cost of all such work in any 12 month period does not exceed $50,000 (a “Notice-Only Alteration”), provided Tenant
notifies Landlord in writing of such intended Notice-Only Alteration, and such
notice shall be accompanied by plans, specifications, work contracts and such
other information concerning the nature and cost of the Notice-Only Alteration
as may be reasonably requested by Landlord, which notice and accompanying
materials shall be delivered to Landlord not less than 15 business days in
advance of any proposed construction. If Landlord approves any Alterations,
Landlord may impose such conditions on Tenant in connection with the
commencement, performance and completion of such Alterations as Landlord may deem
appropriate in Landlord’s sole and absolute discretion. Any request for
approval shall be in writing, delivered not less than 15 business days in
advance of any proposed construction, and accompanied by plans, specifications,
bid proposals, work contracts and such other information concerning the nature
and cost of the alterations as may be reasonably requested by Landlord,
including the identities and mailing addresses of all persons performing work
or supplying materials. Landlord’s right to review plans and specifications and
to monitor construction shall be solely for its own benefit, and Landlord shall
have no duty to ensure that such plans and specifications or construction
comply with applicable Legal Requirements. Tenant shall cause, at its sole cost
and expense, all Alterations to comply with insurance requirements and with
Legal Requirements and shall implement at its sole cost and expense any
alteration or modification required by Legal Requirements as a result of any
Alterations. Tenant shall pay to Landlord, as Additional Rent, on demand an
amount equal to 7.5% of all charges incurred by Tenant or its contractors or
agents in connection with any Alteration to cover Landlord’s overhead and
expenses for plan review, coordination, scheduling and supervision; provided,
however, that such amount shall not exceed $20,000 per Alteration. Before
Tenant begins any Alteration, Landlord may post on and about the Premises
notices of non-responsibility pursuant to applicable law. Tenant shall
reimburse Landlord for, and indemnify and hold Landlord harmless from, any
expense incurred by Landlord by reason of faulty work done by Tenant or its
contractors, delays caused by such work, or inadequate cleanup.

 

Tenant shall furnish security or make other
arrangements satisfactory to Landlord to assure payment for the completion of
all Alterations work free and clear of liens, and shall provide certificates of
insurance for workers’ compensation and other coverage in amounts and from an
insurance company reasonably satisfactory to Landlord protecting Landlord
against liability for personal injury or property damage during construction.
Upon completion of any Alterations, Tenant shall deliver to Landlord: (i) sworn
statements setting forth the names of all contractors and subcontractors who
did the work and final lien waivers from all such contractors and
subcontractors; and (ii) ‘‘as built” plans for any such Alteration.

 

Other than (i) the items, if any, listed on Exhibit F attached hereto, (ii) any items
agreed by Landlord in writing to be included on Exhibit F in the future, and (iii) any trade fixtures,
machinery, equipment and other personal property not paid for out of the TI
Fund (as defined in the Work Letter) which may be removed without material
damage to the Premises, which damage shall be

 

10

 

repaired (including capping or terminating utility hook-ups behind
walls) by Tenant during the Term (collectively, “Tenant’s Property”), all property of any kind paid for with
the TI Fund, all Alterations, real property fixtures, built-in machinery and
equipment, built-in casework and cabinets and other similar additions and
improvements built into the Premises so as to become an integral part of the
Premises such as fume hoods which penetrate the roof or plenum area, built-in
cold rooms, built-in warm rooms, walk-in cold rooms, walk-in warm rooms,
deionized water systems, glass washing equipment, autoclaves, chillers,
built-in plumbing, electrical and mechanical equipment and systems, and any
power generator and transfer switch (collectively, “Installations”) shall be and shall remain the property of
Landlord during the Term and following the expiration or earlier termination of
the Term, shall not be removed by Tenant at any time during the Term and shall
remain upon and be surrendered with the Premises as a part thereof following
the expiration or earlier termination of this Lease; provided, however, that
Landlord shall, at the time its approval of such Installation is requested or
at the time it receives notice of a Notice-Only Alteration notify Tenant if it
has elected to cause Tenant to remove such Installation upon the expiration or
earlier termination of this Lease. If Landlord so elects, Tenant shall remove
such Installation upon the expiration or earlier termination of this Lease and
restore any damage caused by or occasioned as a result of such removal,
including, when removing any of Tenant’s Property which was plumbed, wired or
otherwise connected to any of the Building Systems, capping off all such
connections behind the walls of the Premises and repairing any holes. During
any such restoration period, Tenant shall pay Rent to Landlord as provided
herein as if said space were otherwise occupied by Tenant.

 

13. Landlord’s
Repairs. Landlord, as an Operating Expense, shall maintain all of
the exterior, structural portions of the Building (including, without
limitation, the roof structure (but not the membrane), exterior walls,
load-bearing interior walls and floor slab), parking and other Common Areas of
the Project in good repair, reasonable wear and tear and uninsured losses and
damages caused by Tenant, its agents, servants, employees, invitees and
contractors excluded. Losses and damages caused by Tenant, its agents, servants,
employees, invitees and contractors shall be repaired by Landlord, to the
extent not covered by insurance, at Tenant’s sole cost and expense. Landlord
reserves the right to stop Building System services when necessary (i) by
reason of accident or emergency, or (ii) for planned repairs, alterations or
improvements, which are, in the judgment of Landlord, desirable or necessary to
be made, until said repairs, alterations or improvements shall have been
completed. Landlord shall have no responsibility or liability for failure to
supply Building System services during any such period of interruption;
provided, however, that Landlord shall give Tenant 24 hours advance notice of
any planned stoppage of Building System services for routine maintenance, repairs,
alterations or improvements. Tenant shall promptly give Landlord written notice
of any repair required by Landlord pursuant to this Section, after which
Landlord shall have a reasonable opportunity to effect such repair. Landlord
shall not be liable for any failure to make any repairs or to perform any
maintenance unless such failure shall persist for an unreasonable time after
Tenant’s written notice of the need for such repairs or maintenance. Tenant
waives its rights under any state or local law to terminate this Lease or to
make such repairs at Landlord’s expense and agrees that the parties’ respective
rights with respect to such matters shall be solely as set forth herein.
Repairs required as the result of fire, earthquake, flood, vandalism, war, or
similar cause of damage or destruction shall be controlled by Section 18.

 

14. Tenant’s
Repairs. Subject to Section 13 hereof, Tenant, at its expense,
shall repair, replace and maintain in good condition all portions of the
Premises, including, without limitation, HVAC, plumbing, fire sprinklers,
elevators and all other building systems serving the Premises (collectively,
the “Building Systems”), entries,
doors, ceilings, interior windows, interior walls, and the interior side of
demising walls. Such repair and replacements may include capital expenditures
and repairs whose benefit may extend beyond the Term. Should Tenant fail to
make any such repair or replacement or fail to maintain the Premises, Landlord
shall give Tenant notice of such failure. If Tenant fails to commence cure of
such default within 10 days of Landlord’s notice, and

 

11

 

thereafter diligently prosecute such cure to completion, Landlord may
perform such work and shall be reimbursed by Tenant within 10 days after demand
therefor; provided, however, that if such default by Tenant creates or could
create an emergency, Landlord may immediately commence cure of such default and
shall thereafter be entitled to recover the costs of such cure from Tenant.
Subject to Sections 17 and 18, Tenant shall bear the full uninsured cost of any
repair or replacement to any part of the Project that results from damage
caused by Tenant, its agents, contractors, or invitees and any repair that
benefits only the Premises. At all times during the Term, Tenant shall either
have in place a contract for the maintenance of the mechanical Building Systems
with a contractor and using maintenance schedules and procedures reasonably
acceptable to, and previously approved by, Landlord, or shall make other
arrangements for such maintenance work which arrangements shall be reasonably
acceptable to, and previously approved by, Landlord.

 

15. Mechanic’s
Liens. Tenant shall discharge, by bond or otherwise, any mechanic’s
lien filed against the Premises or against the Project for work claimed to have
been done for, or materials claimed to have been furnished to, Tenant within 10
days after the filing thereof, at Tenant’s sole cost and shall otherwise keep
the Premises and the Project free from any liens arising out of work performed,
materials furnished or obligations incurred by Tenant. Should Tenant fail to
discharge any lien described herein, Landlord shall have the right, but not the
obligation, to pay such claim or post a bond or otherwise provide security to
eliminate the lien as a claim against title to the Project and the cost thereof
shall be immediately due from Tenant as Additional Rent. If Tenant shall lease
or finance the acquisition of office equipment, furnishings, or other personal
property of a removable nature 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 removable personal property of Tenant
located within the Premises. In no event shall the address of the Project be
furnished on the statement without qualifying language as to applicability of
the lien only to removable personal property, located in an identified suite
held by Tenant.

 

16. Indemnification.
Tenant hereby indemnifies and agrees to defend, save and hold Landlord harmless
from and against any and all Claims for injury or death to persons or damage to
property occurring within or about the Premises, arising directly or indirectly
out of use or occupancy of the Premises or a breach or default by Tenant in the
performance of any of its obligations hereunder, except to the extent caused by
the willful misconduct or gross negligence of Landlord. Landlord shall not be
liable to Tenant for, and Tenant assumes all risk of damage to, personal
property (including, without limitation, loss of records kept within the
Premises). Tenant further waives any and all Claims for injury to Tenant’s
business or loss of income relating to any such damage or destruction of
personal property (including, without limitation, any loss of records).
Landlord shall not be liable for any damages arising from any act, omission or
neglect of any tenant in the Project or of any other third party.

 

17. Insurance.
Landlord shall maintain all insurance against any peril generally included
within the classification “Fire and Extended Coverage,” sprinkler damage (if
applicable), vandalism and malicious mischief covering the full replacement
cost of the Project. Landlord shall further carry commercial general liability
insurance with a single loss limit of not less than $2,000,000 for death or
bodily injury, or property damage with respect to the Project. Landlord may,
but is not obligated to, maintain such other insurance and additional coverages
as it may deem necessary, including, but not limited to, flood, environmental
hazard and earthquake, loss or failure of building equipment, errors and omissions,
rental loss during the period of repair or rebuilding, workers’ compensation
insurance and fidelity bonds for employees employed to perform services and
insurance for any improvements installed by Tenant or which are in addition to
the standard improvements customarily furnished by Landlord without regard to
whether or .not such are made a part of the Project. All such insurance shall
be included as part of the Operating Expenses. The Project may be included in a
blanket policy (in which case the cost of such Insurance allocable to

 

12

 

the Project will be determined by Landlord based upon the insurer’s
cost calculations). Tenant shall also reimburse Landlord for any increased
premiums or additional insurance which Landlord reasonably deems necessary as a
result of Tenant’s use of the Premises. Tenant, at its sole cost and expense,
shall maintain during the Term: all risk property insurance covering the full
replacement cost of all property and improvements installed or placed in the
Premises by Tenant at Tenant’s expense; workers’ compensation insurance with no
less than the minimum limits required by law; employer’s liability insurance
with such limits as required by law; and commercial general liability insurance,
with a minimum limit of not less than $2,000,000 per occurrence for death or
bodily injury and not less than $1,000,000 for property damage with respect to
the Premises. The commercial general liability insurance policies shall name
Landlord, its officers, directors, employees, managers, agents, invitees and
contractors (collectively, “Related Parties”), as additional insureds; insure
on an occurrence and not a claims-made basis; be issued by insurance companies
which have a rating of not less than policyholder rating of A and financial
category rating of at least Class XII in “Best’s Insurance Guide”; shall not be
cancelable unless 30 days prior written notice shall have been given to
Landlord from the insurer; contain a hostile fire endorsement and a contractual
liability endorsement; and provide primary coverage to Landlord (any policy
issued to Landlord providing duplicate or similar coverage shall be deemed
excess over Tenant’s policies). Such policies or certificates thereof shall be
delivered to Landlord by Tenant upon commencement of the Term and upon each
renewal of said insurance. Tenant’s policy may be a “blanket policy” which
specifically provides that the amount of insurance shall not be prejudiced by
other losses covered by the policy. Tenant shall, at least 20 days prior to the
expiration of such policies, furnish Landlord with renewals or binders. Tenant
agrees that if Tenant does not take out and maintain such insurance, Landlord
may (but shall not be required to) procure said insurance on Tenant’s behalf
and at its cost to be paid as Additional Rent. In each instance where insurance
is to name Landlord as an additional insured, Tenant shall upon written request
of Landlord also designate and furnish certificates so evidencing Landlord as
additional insured to: (i) any lender of Landlord holding a security interest
in the Project or any portion thereof, (ii) the landlord under any lease
wherein Landlord is tenant of the real property on which the Project is
located, if the interest of Landlord is or shall become that of a tenant under
a ground or other underlying lease rather than that of a fee owner, and/or
(iii) any management company retained by Landlord to manage the Project. The
property insurance obtained by Landlord and Tenant shall include a waiver of
subrogation by the insurers and all rights based upon an assignment from its
insured, against Landlord or Tenant, and their respective Related Parties, in
connection with any loss or damage thereby insured against. Neither party nor its
respective Related Parties shall be liable to the other for loss or damage
caused by any risk insured against under property insurance required to be
maintained hereunder, and each party waives any claims against the other party,
and its respective Related Parties, for such loss or damage. The failure of a
party to insure its property shall not void this waiver. Landlord and its
respective Related Parties shall not be liable for, and Tenant hereby waives
all claims against such parties for, business interruption and losses
occasioned thereby sustained by Tenant or any person claiming through Tenant
resulting from any accident or occurrence in or upon the Premises or the
Project from any cause whatsoever. If the foregoing waivers shall contravene
any law with respect to exculpatory agreements, the liability of Landlord or
Tenant shall be deemed not released but shall be secondary to the other’s
insurer. Landlord may require insurance policy limits to be raised to conform
with requirements of Landlord’s lender and/or to bring coverage limits to
levels then being generally required of new tenants within the Project.

 

18. Restoration. If at any time during the
Term the Premises is damaged by a fire or other insured casualty, Landlord
shall notify Tenant within 60 days after discovery of such damage as to the
amount of time Landlord reasonably estimates it will take to restore the
Premises. If the

 

13

 

restoration time is estimated to exceed 12 months, Landlord may, in
such notice, elect to terminate this Lease as of the date that is 75 days after
the date of discovery of such damage or destruction; provided. however, that
notwithstanding Landlord’s election to restore the Premises, Tenant may elect
to terminate this Lease by written notice to Landlord delivered within 5
business days of receipt of Landlord’s notice electing to restore the Premises
over a 12 month or longer period. Unless Landlord or Tenant elects to terminate
this Lease, Landlord shall, subject to receipt of sufficient insurance proceeds
(with any deductible to be treated as a current Operating Expense), promptly
restore the Premises (excluding the improvements installed by Tenant or by
Landlord and paid for by Tenant, subject to delays arising from the collection
of insurance proceeds, from Force Majeure events or as needed to obtain any
license, clearance or other authorization of any kind required to enter into
and restore the Premises issued by any governmental or quasi-governmental
agency having jurisdiction over the use, storage, release or removal of
Hazardous Materials (as defined in Section 30) in, on or about the
Premises (collectively referred to herein as “Hazardous
Materials Clearances”); provided, however, that if repair or
restoration of the Premises is not substantially complete as of the end of 12
months from the date of damage or destruction, Landlord may, in its sole and
absolute discretion, elect not to proceed with such repair and restoration, or
Tenant may, by written notice to Landlord delivered within 5 business days of
the expiration of such 12 month period, elect to terminate this Lease in which
event Landlord shall be relieved of its obligation to make such repairs or
restoration and this Lease shall terminate as of the date that is 5 days after
either party delivers written notice to the other party of its election to
terminate this Lease.

 

If Landlord does not receive sufficient
insurance proceeds to restore the Premises, Landlord shall be required to
promptly elect whether to terminate this Lease or, subject to the other
provisions of this Section 18, restore the Premises. In the event that
Landlord elects to terminate this Lease pursuant to the preceding sentence,
Landlord shall give notice (the “Termination
Notice”) to Tenant of such election which notice shall also state
the amount which is the difference between the amount of insurance proceeds
received by Landlord and the cost to restore the Premises (the “Shortfall”). If, within 10 days after the
date of the Termination Notice, Tenant unconditionally delivers the Shortfall
to Landlord in immediately available funds, this Lease shall not terminate and
Landlord shall, subject to the other provisions of this Section 18,
restore the Premises. Tenant acknowledges that (i) the payment by Tenant of the
Shortfall shall not give Tenant any ownership rights or any other rights with
respect to the Premises or the Project beyond those expressly provided for in
this Lease and (ii) Landlord shall be under no obligation to repay the Shortfall
to Tenant except the extent that any portion thereof is not used by Landlord.

 

Tenant, at its expense, shall promptly
perform, subject to delays arising from the collection of insurance proceeds,
from Force Majeure (as defined in Section 34) events or to obtain
Hazardous Material Clearances, all repairs or restoration not required to be
done by Landlord and shall promptly re-enter the Premises and commence doing
business in accordance with this Lease. Notwithstanding the foregoing, Landlord
may terminate this Lease if the Premises are damaged during the last year of
the Term and Landlord reasonably estimates that it will take more than one
month to repair such damage, or if insurance proceeds are not available for
such restoration. Rent shall be abated from the date all required Hazardous
Material Clearances are obtained until the Premises are repaired and restored,
in the proportion which the area of the Premises, if any, which is not usable
by Tenant bears to the total area of the Premises, unless Landlord provides
Tenant with other space during the period of repair that is suitable for the
temporary conduct of Tenant’s business. Such abatement shall be the sole remedy
of Tenant, and except as provided herein, Tenant waives any right to terminate
the Lease by reason of damage or casualty loss. The provisions of this Lease,
including this Section 18, constitute an express agreement between
Landlord and Tenant with respect to any and all damage to, or destruction of,
all or any part of the Premises, or any other portion of the Project, and any
statute or regulation which is now or may hereafter be in effect shall have no
application to this Lease or any damage or destruction

 

14

 

to all or any part of the Premises or any other portion of the Project,
the parties hereto expressly agreeing that this Section 18 sets forth
their entire understanding and agreement with respect to such matters.

 

19. Condemnation.
If the whole or any material part of the Premises or the Project is taken for
any public or quasi-public use under governmental law, ordinance, or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof (a “Taking” or “Taken”), and the Taking would in Landlord’s
reasonable judgment either prevent or materially interfere with Tenant’s use of
the Premises or materially interfere with or impair Landlord’s ownership or
operation of the Project, then upon written notice by Landlord this Lease shall
terminate and Rent shall be apportioned as of said date. If part of the
Premises shall be Taken, and this Lease is not terminated as provided above,
Landlord shall promptly restore the Premises and the Project as nearly as is
commercially reasonable under the circumstances to their condition prior to
such partial Taking and the rentable square footage of the Building, the
rentable square footage of the Premises, Tenant’s Share of Operating Expenses
and the Rent payable hereunder during the unexpired Term shall be reduced to
such extent as may be fair and reasonable under the circumstances. Upon any
such Taking, Landlord shall be entitled to receive the entire price or award
from any such Taking without any payment to Tenant, and Tenant hereby assigns
to Landlord Tenant’s interest, if any, in such award. Tenant shall have the
right, to the extent that same shall not diminish Landlord’s award, to make a
separate claim against the condemning authority (but not Landlord) for such
compensation as may be separately awarded or recoverable by Tenant for moving
expenses and damage to Tenant’s trade fixtures, if a separate award for such
items is made to Tenant. Tenant hereby waives any and all rights it might
otherwise have pursuant to any provision of state law to terminate this Lease
upon a partial Taking of the Premises or the Project.

 

20. Events
of Default. Each of the following events shall be a default (“Default”) by Tenant under this Lease:

 

(a) Payment
Defaults. Tenant shall fail to pay any installment of Rent or any
other payment hereunder when due; provided, however, that Landlord will give
Tenant notice and an opportunity to cure any failure to pay Rent within 5 days
of any such notice not more than once in any 12 month period and Tenant agrees
that such notice shall be in lieu of and not in addition to, or shall be deemed
to be, any notice required by law.

 

(b) Insurance.
Any insurance required to be maintained by Tenant pursuant to this Lease shall
be canceled or terminated or shall expire or shall be reduced or materially
changed, or Landlord shall receive a notice of nonrenewal of any such insurance
and Tenant shall fail to obtain replacement insurance at least 20 days before
the expiration of the current coverage.

 

(c) Abandonment.
Tenant shall abandon the Premises.

 

(d) Improper
Transfer. Tenant shall assign, sublease or otherwise transfer or
attempt to transfer all or any portion of Tenant’s interest in this Lease or
the Premises except as expressly permitted herein, or Tenant’s interest in this
Lease shall be attached, executed upon, or otherwise judicially seized and such
action is not released within 90 days of the action.

 

(e) Liens.
Tenant shall fail to discharge or otherwise obtain the release of any lien
placed upon the Premises in violation of this Lease within 10 business days
after any such lien IS filed against the Premises.

 

(f) Insolvency
Events. Tenant or any guarantor or surety of Tenant’s obligations
case, proceeding or other action seeking to have an order for relief entered on
its behalf as a debtor

 

15

 

or to adjudicate a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts or seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or of any substantial part of its property
(collectively a “Proceeding for Relief’);
(C) become the subject of any Proceeding for Relief which is not dismissed
within 90 days of its filing or entry; or (D) die or suffer a legal disability
(if Tenant, guarantor, or surety is an individual) or be dissolved or otherwise
fail to maintain its legal existence (if Tenant, guarantor or surety is a
corporation, partnership or other entity).

 

(g) Estoppel
Certificate or Subordination Agreement. Tenant fails to execute any
document required from Tenant under Sections 23 or 27 within 5 days after a
second notice requesting such document.

 

(h) Other
Defaults. Tenant shall fail to comply with any provision of this
Lease other than those specifically referred to in this Section 20, and,
except as otherwise expressly provided herein, such failure shall continue for
a period of 30 business days after written notice thereof from Landlord to
Tenant. Any notice given under Section 20 (h) hereof shall: (i) specify
the alleged default, (ii) demand that Tenant cure such default, (iii) be in
lieu of, and not in addition to, or shall be deemed to be, any notice required
under any provision of applicable law, and (iv) not be deemed a forfeiture or a
termination of this Lease unless Landlord elects otherwise in such notice;
provided that if the nature of Tenant’s default pursuant to Section 20(h)
is such that it cannot be cured by the payment of money and reasonably requires
more than 30 days to cure, then Tenant shall not be deemed to be in default if
Tenant commences such cure within said 30 day period and thereafter diligently
prosecutes the same to completion; provided, however, that such cure shall be
completed no later than 90 days from the date of Landlord’s notice.

 

21. Landlord’s
Remedies.

 

(a) Payment
By Landlord; Interest. Upon a Default by Tenant hereunder, Landlord
may, without waiving or releasing any obligation of Tenant hereunder, make such
payment or perform such act. All sums so paid or incurred by Landlord, together
with interest thereon, from the date such sums were paid or incurred, at the
annual rate equal to 12% per annum or the highest rate permitted by law (the
“Default Rate”), whichever is less, shall be payable to Landlord on demand as
Additional Rent. Nothing herein shall be construed to create or impose a duty
on Landlord to mitigate any damages resulting from Tenant’s Default hereunder.

 

(b) Late
Payment Rent. 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 under any
Mortgage covering the Premises. Therefore, if any installment of Rent due from
Tenant is not received by Landlord within 5 days after the date such payment is
due, Tenant shall pay to Landlord an additional sum equal to 6% of the overdue
Rent as a late charge. The parties agree that this late charge represents a
fair and reasonable estimate of the costs Landlord will incur by reason of late
payment by Tenant. In addition to the late charge, Rent not paid when due shall
bear interest at the Default Rate from the 5th day after the date due until
paid. Notwithstanding the foregoing, no such late charge or interest on overdue
Rent shall be payable on the first such failure to pay Rent in any 12 month
period unless Landlord shall have given Tenant notice of such failure to pay
Rent and Tenant fails to pay such Rent within 5 days of such notice.

 

(c) Remedies.
Upon the occurrence of a Default, Landlord, at its option, without further
notice or demand to Tenant, shall have in addition to all other rights and
remedies provided in this

 

16

 

Lease, at law or in equity, the option to pursue anyone or more of the
following remedies, each and all of which shall be cumulative and nonexclusive,
without any notice or demand whatsoever.

 

(i) Terminate this Lease, or at Landlord’s
option, Tenant’s right to possession only, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the
Premises and expel or remove Tenant and any other person who may be occupying
the Premises or any part thereof, without being liable for prosecution or any
claim or damages therefor;

 

(ii) Upon any termination of this Lease,
whether pursuant to the foregoing Section 21 (c)(i) or otherwise, Landlord
may recover from Tenant the following:

 

(A) The worth
at the time of award of any unpaid rent which has 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 that 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 that
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 obligations under this Lease or which
in the ordinary course of things would be likely to result therefrom,
specifically including, but not limited to, brokerage commissions and
advertising expenses incurred, expenses of remodeling the Premises or any
portion thereof for a new tenant, whether for the same or a different use, and
any special concessions made to obtain a new tenant; and

 

(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.

 

The term “rent” as used in this
Section 21 shall be deemed to be and to mean all sums of every nature
required to be paid by Tenant pursuant to the terms of this Lease, whether to
Landlord or to others. As used in Sections 21 (c)(ii) (A) and (B), above, the
“worth at the time of award” shall be computed by allowing interest at the
Default Rate. As used in Section 21 (c)(ii)(C) above, the “worth at the
time of award” shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus 1
%.

 

(iii) Landlord may continue this Lease in effect
after Tenant’s Default and recover rent as it becomes due (Landlord and Tenant
hereby agreeing that Tenant has the right to sublet or assign hereunder,
subject only to reasonable limitations). Accordingly, if Landlord does not
elect to terminate this Lease following a Default by Tenant, Landlord may, from
time to time, without terminating this Lease, enforce all of its rights and
remedies hereunder, including the right to recover all Rent as it becomes due.

 

(iv) If Landlord elects to terminate this Lease
following a Default by Tenant, Landlord shall have the right to terminate any
and all subleases, licenses, concessions or other consensual arrangements for
possession entered into by Tenant and affecting the Premises or may, in
Landlord’s sole discretion, succeed to Tenant’s interest in such

 

17

 

subleases, licenses, concessions or arrangements. Upon Landlord’s
election to succeed to Tenant’s interest in any such subleases, licenses,
concessions or arrangements, Tenant shall, as of the date of notice by Landlord
of such election, have no further right to or interest in the rent or other
consideration receivable thereunder.

 

(v) Independent of the exercise of any other
remedy of Landlord hereunder or under applicable law, Landlord may conduct an
environmental test of the Premises as generally described in Section 30(d)
hereof, at Tenant’s expense.

 

(d) Effect
of Exercise. Exercise by Landlord of any remedies hereunder or
otherwise available shall not be deemed to be an acceptance of surrender of the
Premises and/or a termination of this Lease by Landlord, it being understood
that such surrender and/or termination can be effected only by the express
written agreement of Landlord and Tenant. Any law, usage, or custom to the
contrary notwithstanding, Landlord shall have the right at all times to enforce
the provisions of this Lease in strict accordance with the terms hereof; and
the failure of Landlord at any time to enforce its rights under this Lease
strictly in accordance with same shall not be construed as having created a
custom in any way or manner contrary to the specific terms, provisions, and
covenants of this Lease or as having modified the same and shall not be deemed
a waiver of Landlord’s right to enforce one or more of its rights in connection
with any subsequent default. A receipt by Landlord of Rent or other payment
with knowledge of the breach of any covenant hereof shall not be deemed a
waiver of such breach, and no waiver by Landlord of any provision of this Lease
shall be deemed to have been made unless expressed in writing and signed by
Landlord. To the greatest extent permitted by law, Tenant waives the service of
notice of Landlord’s intention to re-enter, re-take or otherwise obtain possession
of the Premises as provided in any statute, or to institute legal proceedings
to that end, and also waives all right of redemption in case Tenant shall be
dispossessed by a judgment or by warrant of any court or judge. Any reletting
of the Premises or any portion thereof shall be on such terms and conditions as
Landlord in its sole discretion may determine. Landlord shall not be liable
for, nor shall Tenant’s obligations hereunder be diminished because of,
Landlord’s failure to relet the Premises or collect rent due in respect of such
reletting or otherwise to mitigate any damages arising by reason of Tenant’s
Default.

 

22. Assignment
and Subletting.

 

(a) General Prohibition. Without Landlord’s
prior written consent subject to and on the conditions described in this
Section 22, Tenant shall not, directly or indirectly, voluntarily or by
operation of law, assign this Lease or sublease the Premises or any part
thereof or mortgage, pledge, or hypothecate its leasehold interest or grant any
concession or license within the Premises, and any attempt to do any of the
foregoing shall be void and of no effect. If Tenant is a corporation,
partnership or limited liability company, the shares or other ownership
interests thereof which are not actively traded upon a stock exchange or in the
over-the-counter market, a transfer or series of transfers whereby 80% or more
of the issued and outstanding shares or other ownership interests of such
corporation are, or voting control is, transferred (but excepting (i) transfers
upon deaths of individual owners, or (ii) transfers to a biotechnology or
pharmaceutical company having an equity market capitalization of at least One
Billion Dollars as of the last day of such company’s most recent fiscal year)
from a person or persons or entity or entities which were owners thereof at
time of execution of this Lease to persons or entities who were not owners of
shares or other ownership interests of the corporation, partnership or limited
liability company at time of execution of this Lease, shall be deemed an
assignment of this Lease requiring the consent of Landlord as provided in this
Section 22. Notwithstanding the foregoing, Tenant may, without Landlord’s
prior written consent and without being subject to the provisions of Section 22(d)
regarding the sharing of any excess rents or the provisions of
Section 22(b)(ii) regarding termination of this Lease, assign this Lease
to a successor corporation as a result of a bona fide merger with Tenant or to
a purchaser of substantially all of Tenant’s assets; provided, however that
such successor is a biotechnology or pharmaceutical company having an equity
market

 

18

 

capitalization of at least $1,000,000,000 as of the last day of such
company’s most recent fiscal year.

 

(b) Permitted
Transfers. If Tenant desires to assign, sublease, hypothecate or
otherwise transfer this Lease or sublet the Premises, then at least 15 business
days, but not more than 45 business days, before the date Tenant desires the
assignment or sublease to be effective (the “Assignment
Date”), Tenant shall give Landlord a notice (the “Assignment Notice”) containing such
information about the proposed assignee or sublessee, including the proposed
use of the Premises and any Hazardous Materials proposed to be used or stored
in the Premises, the Assignment Date, any relationship between Tenant and the
proposed assignee or sublessee, and all material terms and conditions of the
proposed assignment or sublease, including a copy of any proposed assignment or
sublease in its final form, and such other information as Landlord may deem
reasonably necessary or appropriate to its consideration whether to grant its
consent. Landlord may, by giving written notice to Tenant within 15 business days
after receipt of the Assignment Notice: (i) grant or refuse such consent, in
its sole discretion with respect to a proposed assignment, hypothecation or
other transfer or subletting of more than (together with all other then
effective subleases) 50% of the Premises, or grant or refuse such consent, in
its reasonable discretion with respect to a proposed subletting of up to
(together with all other then effective subleases) 50% of the Premises
(provided that Landlord shall further have the right to review and approve or
disapprove the proposed form of assignment or sublease prior to the effective
date of any such assignment or subletting), or (ii) terminate this Lease with
respect to the space described in the Assignment Notice as of the Assignment
Date (an “Assignment Termination”).
If Landlord elects an Assignment Termination, Tenant shall have the right to
withdraw such Assignment Notice by written notice to Landlord of such election
within 5 days after Landlord’s notice electing to exercise the Assignment
Termination. If Tenant withdraws such Assignment Notice, this Lease shall
continue in full force and effect. If Tenant does not withdraw such Assignment
Notice, this Lease, and the term and estate herein granted, shall terminate as
of the Assignment Date with respect to the space described in such Assignment
Notice. No failure of Landlord to exercise any such option to terminate this
Lease shall be deemed to be Landlord’s consent to the proposed assignment,
sublease or other transfer. Tenant shall reimburse Landlord for all of
Landlord’s reasonable out-of-pocket expenses in connection with its
consideration of any Assignment Notice; provided, however, that such amount
shall not exceed $5,000 per Assignment Notice.

 

Notwithstanding the foregoing to the contrary,
if Tenant has delivered to Landlord an Assignment Notice for a sublease which,
with all other subleases, is greater than 50% of the Premises and Landlord does
not exercise its right to terminate the Lease with respect to the space
described in such Assignment Notice pursuant to Section 22(b)(ii) above,
Landlord shall not unreasonably withhold its consent if such sublease is to a
biotechnology or pharmaceutical company having an equity market capitalization
of at least $100,000,000 as of the last day of such company’s most recent
fiscal year; provided, however, that (X) the Security Deposit shall be
increased to $500,000 prior to the Assignment Date, (Y) Landlord shall further
have the right to review and approve or disapprove the proposed form of sublease
prior to the Assignment Date, and (Z) Tenant shall reimburse Landlord up to
$5,000 per Assignment Notice for all of Landlord’s reasonable out-of-pocket
expenses in connection with its consideration of such Assignment Notice.
Notwithstanding the foregoing to the contrary, Landlord shall not exercise its
right to terminate the Lease pursuant to Section 22(b)(ii) above with
respect to a sublease of up to a maximum of 10,800 square feet of the Premises;
provided, however, that (A) such space shall be subleased to a single tenant,
(8) the rent and other consideration paid by such subtenant shall be at market
rates for similar space in South San Francisco, (C) the term of such sublease
shall expire on or before the expiration of the 3rd anniversary of the Commencement
Date of this Lease, (D) Landlord shall further have the right to review and
approve or disapprove the proposed form of sublease prior to the Assignment
Date, and (E) Tenant shall reimburse Landlord up to $5,000 per

 

19

 

Assignment Notice for all of Landlord’s reasonable out-of-pocket
expenses in connection with its consideration of such Assignment Notice.

 

(c) Additional
Conditions. As a condition to any such assignment or subletting,
whether or not Landlord’s consent is required, Landlord may require:

 

(i) that any
assignee or subtenant agree, in writing at the time of such assignment or
subletting, that if Landlord gives such party notice that Tenant is in default
under this Lease, such party shall thereafter make all payments otherwise due
Tenant directly to Landlord, which payments will be received by Landlord
without any liability except to credit such payment against those due under the
Lease, and any such third party shall agree to attorn to Landlord or its
successors and assigns should this Lease be terminated for any reason;
provided, however, in no event shall Landlord or its successors or assigns be
obligated to accept such attornment; and

 

(ii) A list of
Hazardous Materials, certified by the proposed assignee or sublessee to be true
and correct, which the proposed assignee or sublessee intends to use or store
in the Premises together with copies of all documents relating to the handling,
storage, disposal and emission of Hazardous Materials by the proposed assignee
or subtenant in the Premises or on the Project, prior to the proposed
assignment or subletting, including, without limitation: permits; approvals;
reports and correspondence; storage and management plans; plans relating to the
installation of any storage tanks to be installed in or under the Project
(provided, said installation of tanks shall only be permitted after Landlord
has given its written consent to do so, which consent may be withheld in
Landlord’s sole and absolute discretion); and all closure plans or any other
documents required by any and all federal, state and local governmental
agencies and authorities for any storage tanks installed in, on or under the
Project for the closure of any such tanks. Neither Tenant nor any such proposed
assignee or subtenant is required, however, to provide Landlord with any
portion(s) of the such documents containing information of a proprietary nature
which, in and of themselves, do not contain a reference to any Hazardous
Materials or hazardous activities.

 

(d) No
Release of Tenant, Sharing of Excess Rents. Notwithstanding any
assignment or subletting, Tenant and any guarantor or surety of Tenant’s
obligations under this Lease shall at all times remain fully and primarily
responsible and liable for the payment of Rent and for compliance with all of
Tenant’s other obligations under this Lease. If the Rent due and payable by a
sublessee or assignee (or a combination of the rental payable under such
sublease or assignment plus any bonus or other consideration therefor or
incident thereto) exceeds the rental payable under this Lease, (excluding
however, any Rent payable under this Section), then Tenant shall be bound and
obligated to pay Landlord as Additional Rent hereunder within 10 days following
receipt by Tenant (i) 50% of such excess rental and other excess consideration
for subleases or assignments of more than 50% of the Premises, and (ii) 100% of
such rental and other consideration over and above $3.67 per square foot per
month (after deducting any reasonable commissions payable by Tenant amortized
on a straight line basis at 10% interest per annum over the term of any such
sublease) for subleases or assignments of 50% or less of the Premises. If
Tenant shall sublet the Premises or any part thereof, Tenant hereby immediately
and irrevocably assigns to Landlord, as security for Tenant’s obligations under
this Lease, all rent from any such subletting, and Landlord as assignee and as
attorney-in-fact for Tenant, or a receiver for Tenant appointed on Landlord’s
application, may collect such rent and apply it toward Tenant’s obligations
under this Lease; except that, until the occurrence of a Default, Tenant shall
have the right to collect such rent.

 

(e) No
Waiver. The consent by Landlord to an assignment or subletting shall
not relieve Tenant or any assignees of this Lease or any sublessees of the
Premises from obtaining the

 

20

 

consent of Landlord to any further assignment or subletting nor shall
it release Tenant or any assignee or sublessee of Tenant from full and primary
liability under the Lease. The acceptance of Rent hereunder, or the acceptance
of performance of any other term, covenant, or condition thereof, from any
other person or entity shall not be deemed to be a waiver of any of the
provisions of this Lease or a consent to any subletting, assignment or other
transfer of the Premises.

 

(f) Prior
Conduct of Proposed Transferee. Notwithstanding any other provision
of this Section 22, if (i) the proposed assignee or sublessee of Tenant
has been required by any prior landlord, lender or Governmental Authority to
take remedial action in connection with Hazardous Materials contaminating a
property, where the contamination resulted from such party’s action or use of
the property in question, or (ii) the proposed assignee or sublessee is subject
to an enforcement order issued by any governmental authority in connection with
the use, disposal or storage of Hazardous Materials, Landlord shall have the
absolute right to refuse to consent to any assignment or subletting to any such
party.

 

23. Estoppel
Certificate. Tenant shall, within 10 business days of written notice
from Landlord, execute, acknowledge and deliver a statement in writing
substantially in the form attached to this Lease as Exhibit G with the blanks
filled in, or on any other form reasonably requested by a proposed lender or
purchaser, (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 any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed, and (iii) setting
forth such further information with respect to the status of this Lease or the
Premises as may be requested thereon. Any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the real
property of which the Premises are a part. Tenant’s failure to deliver such
statement within such time shall, at the option of Landlord, constitute a
Default under this Lease, and, in any event, shall be conclusive upon Tenant
that the Lease is in full force and effect and without modification except as
may be represented by Landlord in any certificate prepared by Landlord and
delivered to Tenant for execution.

 

24. Quiet
Enjoyment. So long as Tenant shall perform all of the covenants and
agreements herein required to be performed by Tenant, Tenant shall, subject to
the terms of this Lease, at all times during the Term, have peaceful and quiet
enjoyment of the Premises against any person claiming by, through or under
Landlord.

 

25. Prorations.
All prorations required or permitted to be made hereunder shall be made on the
basis of a 360 day year and 30 day months.

 

26. Rules
and Regulations. Tenant shall, at all times during the Term and any
extension thereof, comply with all reasonable rules and regulations at any time
or from time to time established by Landlord covering use of the Premises and
the Project. The current rules and regulations are attached hereto as Exhibit
E. If there is any conflict between said rules and regulations and other
provisions of this Lease, the terms and provisions of this Lease shall control.
Landlord shall not have any liability or obligation for the breach of any rules
or regulations by other tenants in the Project and shall not enforce such rules
and regulations in a discriminatory manner.

 

27. Subordination.
This Lease and Tenant’s interest and rights hereunder are and shall be subject
and subordinate at all times to the lien of any Mortgage now existing or hereafter
created on or against the Project or the Premises, and all amendments,
restatements, renewals, modifications, consolidations, refinancing, assignments
and extensions thereof, without the necessity of any further instrument or act
on the part of Tenant; provide~, however that so. long as there is no Default
hereunder, Tenant’s right to possession of the Premises shall not be disturbed
by the Holder of any such Mortgage. Tenant agrees, at the election of the
Holder of any such

 

21

 

Mortgage, to attorn to any such Holder. Tenant agrees upon demand to
execute, acknowledge and deliver a Subordination, Non-disturbance and
Attornment Agreement in substantially the form attached hereto as Exhibit H, or such other instruments,
confirming such subordination, and such instruments of attornment as shall be
reasonably requested by any such Holder, provided any such instruments contain
appropriate non-disturbance provisions assuring Tenant’s quiet enjoyment of the
Premises as set forth in Section 24 hereof. Tenant hereby appoints
Landlord attorney in fact for Tenant irrevocably (such power of attorney being
coupled with an interest) to execute, acknowledge and deliver any such
instrument and instruments for and in the name of Tenant and to cause any such
instrument to be recorded. Notwithstanding the foregoing, any such Holder may
at any time subordinate its Mortgage to this Lease, without Tenant’s consent,
by notice in writing to Tenant, and thereupon this Lease shall be deemed prior
to such Mortgage without regard to their respective dates of execution,
delivery or recording and in that event such Holder shall have the same rights
with respect to this Lease as though this Lease had been executed prior to the
execution, delivery and recording of such Mortgage and had been assigned to
such Holder. The term “Mortgage”
whenever used in this Lease shall be deemed to include deeds of trust, security
assignments and any other encumbrances, and any reference to the “Holder” of a Mortgage shall be deemed to
include the beneficiary under a deed of trust.

 

28. Surrender.
Upon expiration of the Term or earlier termination of Tenant’s right of
possession, Tenant shall surrender the Premises to Landlord in the same
condition as received, subject to any Alterations permitted by Landlord to
remain in the Premises, free of Hazardous Materials brought upon, kept or used
in or about the Premises by any person other than Landlord, its agents,
employees, contractors or invitees (or Hazardous Materials brought upon, kept
or used in or about the Project by Tenant or any of its agents, employees,
contractors or invitees) and released of all Hazardous Materials Clearances,
broom clean, ordinary wear and tear and casualty loss and condemnation covered
by Sections 18 and 19 excepted. Tenant shall immediately return to Landlord all
keys and/or access cards to parking, the Project, restrooms or all or any
portion of the Premises furnished to or otherwise procured by Tenant. If any
such access card or key is lost, Tenant shall pay to Landlord, at Landlord’s
election, either the cost of replacing such lost access card or key or the cost
of reprogramming the access security system in which such access card was used
or changing the lock or locks opened by such lost key. Any Tenant’s Property,
Alterations and property not so removed by Tenant as permitted or required
herein shall be deemed abandoned and may be stored, removed, and disposed of by
Landlord at Tenant’s expense, and Tenant waives all claims against Landlord for
any damages resulting from Landlord’s retention and/or disposition of such
property. All obligations of Tenant hereunder not fully performed as of the
termination of the Term, including the obligations of Tenant under
Section 30 hereof, shall survive the expiration or earlier termination of
the Term, including, without limitation, indemnity obligations, payment
obligations with respect to Rent and obligations concerning the condition and
repair of the Premises.

 

29. Waiver
of Jury Trial. TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY JURY
OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS
LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.

 

30. Environmental
Requirements.

 

(a) Prohibition/Compliance/Indemnity.
Tenant shall not cause or permit any Hazardous Materials (as hereinafter
defined) to be brought upon, kept or used in or about the Premises or the
Project in violation of applicable law by Tenant, its agents, employees,
contractors or invitees. If Tenant breaches the obligation stated in the
preceding sentence, or if the presence of Hazardous Materials in the Premises
during the Term or any holding over results in

 

22

 

contamination of the Premises, the Project or any adjacent property or
if contamination of the Premises, the Project or any adjacent property by
Hazardous Materials brought into the Premises by anyone other than Landlord and
Landlord’s employees, agents and contractors otherwise occurs during the Term
or any holding over, except to the extent that Tenant is able to prove that it
is Pre- existing Contamination or Off-site Contamination which contamination is
not the result of any actions and/or omissions of Tenant or its agents,
employees, contractors or invitees, Tenant hereby indemnifies and shall defend
and hold Landlord, its officers, directors, employees, agents and contractors
harmless from any and all claims, judgments, damages, penalties, fines, costs,
liabilities, or losses (including, without limitation, diminution in value of
the Premises or any portion of the Project, damages for the loss or restriction
on use of rentable or usable space or of any amenity of the Premises or the
Project, damages arising from any adverse impact on marketing of space in the
Premises or the Project, and sums paid in settlement of claims, reasonable
attorneys’ fees, consultant fees and expert fees) which arise during or after
the Term as a result of such contamination. This indemnification of Landlord by
Tenant includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal, or
restoration work required by any federal, state or local governmental agency or
political subdivision because of Hazardous Materials present in the air, soil
or ground water above, on, or under the Premises. Without limiting the
foregoing, if the presence of any Hazardous Materials on the Premises, the
Building, the Project or any adjacent property caused or permitted by Tenant
results in any contamination of the Premises, the Building, the Project or any
adjacent property, Tenant shall promptly take all actions at its sole expense
and in accordance with applicable law as are necessary to return the Premises,
the Building, the Project or any adjacent property to the condition existing
prior to the time of such contamination, provided that Landlord’s approval of
such action shall first be obtained, which approval shall not unreasonably be
withheld so long as such actions would not potentially have any material
adverse long-term or short-term effect on the Premises, the Building or the
Project.

 

(b) Business.
Landlord acknowledges that it is not the intent of this Section 30 to
prohibit Tenant from using the Premises for the Permitted Use. Tenant may
operate its business according to the custom of the industry so long as the use
or presence of Hazardous Materials is strictly and properly monitored according
to all then applicable governmental requirements. As a material inducement to
Landlord to allow Tenant to use Hazardous Materials in connection with its
business, Tenant agrees to deliver to Landlord prior to the Commencement Date a
list identifying each type of Hazardous Materials to be present on the Premises
and setting forth any and all governmental approvals or permits required in
connection with the presence of such Hazardous Materials on the Premises
(“Hazardous Materials List”). Tenant shall deliver to Landlord an updated
Hazardous Materials List at least once a year and shall also deliver an updated
list before any new Hazardous Material is brought onto the Premises. Tenant
shall deliver to Landlord true and correct copies of the following documents
(the “Haz Mat Documents”) relating to the handling, use, storage, disposal and
emission of Hazardous Materials prior to the Commencement Date, or if
unavailable at that time, concurrent with the receipt from or submission to a
governmental agency: permits; approvals; reports and correspondence; storage
and management plans, notice of violations of any laws; plans relating to the
installation of any storage tanks to be installed in or under the Project
(provided, said installation of tanks shall only be permitted after Landlord
has given Tenant its written consent to do so, which consent may be withheld in
Landlord’s sole and absolute discretion); and all closure plans or any other
documents required by any and all federal, state and local governmental
agencies and authorities for any storage tanks installed in, on or under the
Project for the closure of any such tanks. Tenant is not required, however, to
provide Landlord with any portion(s) of the Haz Mat Documents containing
information of a proprietary nature which, in and of themselves, do not contain
a reference to any Hazardous Materials or hazardous activities. It is not the
intent of this Section to provide Landlord with information which could be
detrimental to Tenant’s business should such information become possessed by
Tenant’s competitors.

 

23

 

(c) Tenant
Representation and Warranty. Tenant hereby represents and warrants
to Landlord that (i) neither Tenant nor any of its legal predecessors has been
required by any prior landlord, lender or governmental authority at any time to
take remedial action in connection with Hazardous Materials contaminating a
property which contamination was permitted by Tenant of such predecessor or
resulted from Tenant’s or such predecessor’s action or use of the property in
question, and (ii) Tenant is not subject to any enforcement order issued by any
governmental authority in connection with the use, disposal or storage of a
Hazardous Materials. If Landlord determines that this representation and
warranty was not true as of the date of this lease, Landlord shall have the
right to terminate this Lease in Landlord’s sole and absolute discretion.

 

(d) Testing.
At any time, and from time to time, prior to the expiration or earlier
termination of the Term, Landlord shall have the right to conduct appropriate
tests of the Premises and the Project to determine if contamination has
occurred as a result of Tenant’s use of the Premises. If contamination has
occurred for which Tenant is liable under this Section 30, Tenant shall
pay all costs to conduct such tests. If no such contamination is found,
Landlord shall pay the costs of such tests (which shall not constitute an
Operating Expense). Landlord shall provide Tenant with a copy of all third
party, non-confidential reports and tests of the Premises made by or on behalf
of Landlord during the Term without representation or warranty and subject to a
confidentiality agreement. Landlord’s receipt of or satisfaction with any
environmental assessment in no way waives any rights which Landlord may have
against Tenant.

 

(e) Underground
Tanks. If underground or other storage tanks storing Hazardous
Materials located on the Premises or the Project are used by Tenant or are
hereafter placed on the Premises or the Project by Tenant, Tenant shall monitor
such storage tanks, maintain appropriate records, implement reporting
procedures, properly close any underground storage tanks, and take or cause to
be taken all other actions necessary or required under applicable state and
federal law, as such now exists or may hereafter be adopted or amended in
connection with the use, maintenance, operation and closure of such storage
tanks.

 

(f) Tenant’s
Obligations. Tenant’s obligations under this Section 30 shall
survive the expiration or earlier termination of the Lease. During any period
of time after the expiration or earlier termination of this Lease required by
Tenant or Landlord to complete the removal from the Premises of any Hazardous
Materials for which Tenant is responsible under this Lease and the release and
termination of any licenses or permits restricting the use of the Premises,
Tenant shall continue to pay the full Rent in accordance with this Lease for
any portion of the Premises not relet by Landlord in Landlord’s sole
discretion, which Rent shall be prorated daily.

 

(g) Definitions.
As used herein, the term “Environmental
Requirements” means all applicable present and future statutes,
regulations, ordinances, rules, codes, judgments, orders or other similar
enactments of any governmental authority or agency regulating or relating to
health, safety, or environmental conditions on, under, or about the Premises or
the Project, or the environment, including without limitation, the following:
the Comprehensive Environmental Response, Compensation and Liability Act; the
Resource Conservation and Recovery Act; and all state and local counterparts
thereto, and any regulations or policies promulgated or issued thereunder. As
used herein, the term “Hazardous Materials”
means and includes any substance, material, waste, pollutant, or contaminant
listed or defined as hazardous or toxic, or regulated by reason of its impact
or potential impact on humans, animals and/or the environment under any
Environmental Requirements, asbestos and petroleum, including crude oil or any
fraction thereof, natural gas liquids, liquefied natural gas, or synthetic gas
usable for fuel (or mixtures of natural gas and such synthetic gas). As defined
in Environmental Requirements, Tenant is and shall. Be deemed to be the
“operator” of Tenant’s “facility” and the “owner” of all Hazardous Materials
brought on the Premises by Tenant, its agents, employees, contractors or
invitees, and the wastes, by-products, or residues generated, resulting, or
produced therefrom.

 

24

 

(h) Environmental
Insurance. Landlord shall cause Tenant to be named as an additional
insured on Landlord’s Pollution Legal Liability Select Policy PLS 4762664 (the
“Environmental Policy”) issued by
American International Specialty Lines Insurance Company with a policy
expiration date of February 25, 2003; provided, however, that (A) Tenant
notifies Landlord in writing of its election to be named as an additional
insured prior the Pour Date and prior to Landlord’s submittal of any claim
under such Environmental Policy or Landlord’s discovery of any matters which
may cause Landlord to submit a claim under such Environmental Policy, and (8)
Tenant pays to Landlord $30,013.35 concurrently with Tenant’s delivery of
notice to Landlord of its election to be named as an additional insured. If,
during the term of this Lease, Landlord obtains a new environmental insurance
policy or renews the Environmental Policy (collectively, the “New Policy”) relating to the Project and
Tenant was named as an additional insured on such Environmental Policy,
Landlord shall cause Tenant to be named as an additional insured on such New
Policy; provided, however, that (X) Tenant acknowledges that Landlord shall not
be obligated to obtain the New Policy unless such New Policy is commercially
available and reasonably priced, both as determined by Landlord, (Y) Tenant, if
Landlord elects to obtain a New Policy, elects in writing to be named as an
additional insured on such New Policy within 5 days after receipt of notice
from Landlord of Landlord’s election to purchase such New Policy, and (2)
Tenant, in addition to the insurance premiums for the New Policy payable by
Tenant to Landlord as part of Operating Expenses, pays to Landlord a fee equal
to 1 times Tenant’s Share of the annual premium for such New Policy prior to
the inception of the term of such New Policy.

 

31. Tenant’s
Remedies/Limitation of Liability. Landlord shall not be in default
hereunder unless Landlord fails to perform any of its obligations hereunder
within 30 days after written notice from Tenant specifying such failure (unless
such performance will, due to the nature of the obligation, require a period of
time in excess of 30 days, then after such period of time as is reasonably
necessary). Upon any default by Landlord, Tenant shall give notice by
registered or certified mail to any Holder of a Mortgage covering the Premises
and to any landlord of any lease of property in or on which the Premises are
located and Tenant shall offer such Holder and/or landlord a reasonable
opportunity to cure the default, including time to obtain possession of the
Project by power of sale or a judicial action if such should prove necessary to
effect a cure; provided Landlord shall have furnished to Tenant in writing the
names and addresses of all such persons who are to receive such notices. All
obligations of Landlord hereunder shall be construed as covenants, not
conditions; and, except as may be otherwise expressly provided in this Lease,
Tenant may not terminate this Lease for breach of Landlord’s obligations
hereunder.

 

All obligations of Landlord under this Lease
will be binding upon Landlord only during the period of its ownership of the
Premises and not thereafter. The term “Landlord”
in this Lease shall mean only the owner for the time being of the Premises.
Upon the transfer by such owner of its interest in the Premises, such owner
shall thereupon be released and discharged from all obligations of Landlord
thereafter accruing, but such obligations shall be binding during the Term upon
each new owner for the duration of such owner’s ownership.

 

32. Inspection
and Access. Landlord and its agents, representatives, and
contractors may enter the Premises at any reasonable time to inspect the
Premises and to make such repairs as may be required or permitted pursuant to
this Lease and for any other business purpose. Landlord and Landlord’s
representatives may enter the Premises during business hours on not less than
48 hours advance written notice (except in the case of emergencies in which
case no such notice shall be required and such entry may be at any time) for
the purpose of effecting any such repairs, inspecting the Premises, showing the
Premises to prospective purchasers and, during the last year of the Term, to
prospective tenants or for any other business purpose. Landlord may erect a
suitable sign on the Premises stating the Premises are available to let or that
the Project is available for sale. Landlord may grant easements, make public
dedications, designate Common Areas and create restrictions on or about the
Premises, provided that no such easement,

 

25

 

dedication, designation, or restriction materially, adversely affects
Tenant’s use or occupancy of the Premises for the Permitted use. At Landlord’s
request, Tenant shall execute such instruments as may be necessary for such
easements, dedications or restrictions. Tenant shall at all times, except in
the case of emergencies, have the right to escort Landlord or its agents,
representatives, contractors or guests while the same are in the Premises,
provided such escort does not materially and adversely affect Landlord’s access
rights hereunder.

 

33. Security.
Tenant acknowledges and agrees that security devices and services if any, while
intended to deter crime may not in given instances prevent theft or other
criminal acts and that Landlord is not providing any security services with
respect to the Premises. Tenant agrees that Landlord shall not be liable to
Tenant for, and Tenant waives any claim against Landlord with respect to, any
loss by theft or any other damage suffered or incurred by Tenant in connection
with any unauthorized entry into the Premises or any other breach of security
with respect to the Premises. Tenant shall be solely responsible for the
personal safety of Tenant’s officers, employees, agents, contractors, guests
and invitees while any such person is in, on or about the Premises and/or the
Project. Tenant shall at Tenant’s cost obtain insurance coverage to the extent
Tenant desires protection against such criminal acts.

 

34. Force
Majeure. Landlord shall not be held responsible for delays in the
performance of its obligations hereunder when caused by strikes, lockouts,
labor disputes, weather, natural disasters, inability to obtain labor or
materials or reasonable substitutes therefor, governmental restrictions,
governmental regulations, governmental controls, delay in issuance of permits,
enemy or hostile governmental action, civil commotion, fire or other casualty,
and other causes beyond the reasonable control of Landlord (“Force Majeure”).

 

35. Brokers,
Entire Agreement, Amendment. Landlord and Tenant each represents and
warrants that it has not dealt with any broker, agent or other person
(collectively, “Broker) in connection with this transaction and that no Broker
brought about this transaction other than (i) Mark Pearson and Catalyst Real
Estate Group (collectively doing business as Cooper/Brady Partnership and CRESA
Partners) and (ii) Cornish & Carey Commercial. Landlord and Tenant each
hereby agree to indemnify and hold the other harmless from and against any
claims by any Broker, other than the broker, if any named in this
Section 35, claiming a commission or other form of compensation by virtue
of having dealt with Tenant or Landlord, as applicable, with regard to this
leasing transaction. This Lease may not be amended except by an instrument in
writing signed by both parties hereto.

 

36. Limitation
on Landlord’s Liability. NOTWITHSTANDING ANYTHING SET FORTH HEREIN
OR IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE CONTRARY: (A) LANDLORD
SHALL NOT BE LIABLE TO TENANT OR ANY OTHER PERSON FOR (AND TENANT AND EACH SUCH
OTHER PERSON ASSUME ALL RISK OF) LOSS, DAMAGE OR INJURY, WHETHER ACTUAL OR
CONSEQUENTIAL TO: TENANT’S PERSONAL PROPERTY OF EVERY KIND AND DESCRIPTION,
INCLUDING, WITHOUT LIMITATION TRADE FIXTURES, EQUIPMENT, INVENTORY, SCIENTIFIC
RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS, PRODUCT, SPECIMENS,
SAMPLES, AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER RECORDS OF EVERY
KIND AND DESCRIPTION KEPT AT THE PREMISES AND ANY AND ALL INCOME DERIVED OR
DERIVABLE THEREFROM; (B) THERE SHALL BE NO PERSONAL RECOURSE TO LANDLORD FOR
ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR ARISING IN ANY WAY UNDER
THIS LEASE OR ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND ANY LIABILITY OF LANDLORD HEREUNDER SHALL BE
STRICTLY LIMITED SOLELY TO LANDLORD’S INTEREST IN THE PROJECT AND NET PROCEEDS
FROM THE SALE THEREOF; AND (C) IN NO EVENT SHALL ANY PERSONAL LIABILITY BE
ASSERTED AGAINST LANDLORD IN CONNECTION WITH THIS LEASE NOR SHALL ANY RECOURSE
BE HAD TO ANY OTHER PROPERTY OR ASSETS OF

 

26

 

LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
CONTRACTORS. UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY OF LANDLORD’S
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE FOR INJURY TO
TENANT’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.

 

37. Severability.
If any clause or provision of this Lease is illegal, invalid or unenforceable
under present or future laws, then and in that event, it is the intention of
the parties hereto that the remainder of this Lease shall not be affected
thereby. It is also the intention of the parties to this Lease that in lieu of
each clause or provision of this Lease that is illegal, invalid or
unenforceable, there be added, as a part of this Lease, a clause or provision
as similar in effect to such illegal, invalid or unenforceable clause or
provision as shall be legal, valid and enforceable.

 

38. Signs;
Exterior Appearance. Tenant shall not, without the prior written
consent of Landlord, which may be granted or withheld in Landlord’s sole
discretion: (i) attach any awnings, exterior lights, decorations, balloons,
flags, pennants, banners, painting or other projection to any outside wall of
the Project, (ii) use any curtains, blinds, shades or screens other than
Landlord’s standard window coverings, (iii) coat or otherwise sunscreen the
interior or exterior of any windows, (iv) place any bottles, parcels, or other
articles on the window sills, (v) place any equipment, furniture or other items
of personal property on any exterior balcony, or (vi) paint, affix or exhibit
on any part of the Premises or the Project any, signs, notices, window or door
lettering, placards, decorations, or advertising media of any type which can be
viewed from the exterior of the Premises. Interior signs on doors and the
directory tablet shall be inscribed, painted or affixed for Tenant by Landlord
at the sole cost and expense of Tenant, and shall be of a size, color and type
acceptable to Landlord. Nothing may be placed on the exterior of corridor walls
or corridor doors other than Landlord’s standard lettering. The directory
tablet shall be provided exclusively for the display of the name and location
of tenants. Notwithstanding the foregoing, Tenant shall be entitled, at
Tenant’s sole cost and expense, to building exterior signage and to share
monument signage reflecting Tenant’s name with graphics and lettering on the
monument provided by Tenant; provided, however, that all such signage shall be
subject to all Legal Requirements and Landlord’s reasonable approval including,
without limitation, any signage program which Landlord may implement in
connection with the Building or the Project.

 

39. Right
to Extend Term. Tenant shall have the right to extend the Term of
the Lease upon the following terms and conditions:

 

(a) Extension
Rights. Tenant shall have the right (the “Extension Right”) to
extend the term of this Lease for 5 years (the “Extension Term”) on the same
terms and conditions as this Lease (other than Base Rent) by giving Landlord
written notice of its election to exercise such Extension Right at least 12
months prior to the expiration of the Base Term of the Lease. Upon the
commencement of the Extension Term, Base Rent shall be payable at the Market
Rate (as defined below). Base Rent shall thereafter be adjusted on each
anniversary of the commencement of the Extension Term by multiplying the Base
Rent payable immediately before such adjustment by the Rent Adjustment
Percentage and adding the resulting amount to the Base Rent payable immediately
before such adjustment. As used herein, “Market Rate” shall mean the then
market rental rate as determined by Landlord and agreed to by Tenant, which
shall in no event be less than the Base Rent payable as of the date immediately
preceding the commencement of the ExtensionTerm increased by the Rent
Adjustment Percentage multiplied by such Base Rent. In addition, Landlord may
impose a market rent for the parking rights provided hereunder.

 

If, on or before the date which is 270 days prior to the expiration of
the Base Term of this Lease, Tenant has not agreed with Landlord’s
determination of the Market Rate after negotiating in good faith, Tenant may by
written notice to Landlord not later than 270 days prior to the expiration of
the Base Term of this Lease, elect arbitration as described in
Section 39(b) below. If Tenant does not

 

27

 

elect such arbitration, Tenant shall be deemed to have waived any right
to extend the Term of the Lease and the Extension Right shall terminate.

 

(b) Arbitration.

 

(i) Within 10
days of Tenant’s notice to Landlord of its election to arbitrate Market Rate,
each party shall deliver to the other a proposal containing the Market Rate
that the submitting party believes to be correct (“Extension Proposal”). If
either party fails to timely submit an Extension Proposal, the other party’s submitted
proposal shall determine the Base Rent for the Extension Term. If both parties
submit Extension Proposals, then Landlord and Tenant shall meet within 7 days
after delivery of the last Extension Proposal and make a good faith attempt to
mutually appoint a single Arbitrator (and defined below) to determine the
Market Rate. If Landlord and Tenant are unable to agree upon a single
Arbitrator, then each shall, by written notice delivered to the other within 10
days after the meeting, select an Arbitrator. If either party fails to timely
give notice of its selection for an Arbitrator, the other party’s submitted
proposal shall determine the Base Rent for the Extension Term. The 2
Arbitrators so appointed shall, within 5 business days after their appointment,
appoint a third Arbitrator. If the 2 Arbitrators so selected cannot agree on
the selection of the third Arbitrator within the time above specified, then
either party, on behalf of both parties, may request such appointment of such
third Arbitrator by application to any state court of general jurisdiction in
the jurisdiction in which the Premises are located, upon 10 days prior written
notice to the other party of such intent.

 

(ii) The
decision of the Arbitrator(s) shall be made within 30 days after the appointment
of a single Arbitrator or the third Arbitrator, as applicable. The decision of
the single Arbitrator shall be final and binding upon the parties. The average
of the two closest Arbitrators in a three Arbitrator panel shall be final and
binding upon the parties. Each party shall pay the fees and expenses of the
Arbitrator appointed by or on behalf of such party and the fees and expenses of
the third Arbitrator shall be borne equally by both parties. If the Market Rate
are not determined by the first day of the Extension Term, then Tenant shall
pay Landlord Base Rent in an amount equal to the Base Rent in effect
immediately prior to the Extension Term and increased by the Rent Adjustment
Percentage until such determination is made. After the determination of the
Market Rate, the parties shall make any necessary adjustments to such payments
made by Tenant. Landlord and Tenant shall then execute an amendment recognizing
the Market Rate for the Extension Term.

 

(iii) An “Arbitrator” shall be any person appointed
by or on behalf of either party or appointed pursuant to the provisions hereof
and: (i) shall be (A) a member of the American Institute of Real Estate
Appraisers with not less than 10 years of experience in the appraisal of
improved office and high tech industrial real estate in the greater San
Francisco metropolitan area, or (B) a licensed commercial real estate broker
with not less than 15 years experience representing landlords and/or tenants in
the leasing of high tech or life sciences space in the greater San Francisco
metropolitan area, (ii) devoting substantially all of their time to
professional appraisal or brokerage work, as applicable, at the time of
appointment and (iii) be in all respects impartial and disinterested.

 

(c) Rights
Personal. The Extension Right is personal to Tenant and is not
assignable without Landlord’s consent, which may be granted or withheld in
Landlord’s sole discretion separate and apart from any consent by Landlord to
an assignment of Tenant’s interest in the Lease

 

(d) Exceptions.
Notwithstanding anything set forth above to the contrary, the Extension Right
shall not be in effect and Tenant may not exercise the Extension Rights:

 

28

 

(i) during any
period of time that Tenant is in Default under any provision of this Lease; or

 

(ii) if Tenant
has been in Default under any provision of this Lease 3 or more times, whether
or not the Defaults are cured, during the 12 month period immediately prior to
the date that Tenant intends to exercise the Extension Right, whether or not
the Defaults are cured.

 

(e) No
Extensions. The period of time within which the Extension Right may
be exercised shall not be extended or enlarged by reason of the Tenant’s
inability to exercise the Extension Right.

 

(f) Termination.
The Extension Right shall terminate and be of no further force or effect even
after Tenant’s due and timely exercise of the Extension Right, if, after such
exercise, but prior to the commencement date of the Extension Term, (i) Tenant
fails to timely cure any default by Tenant under this Lease; or (ii) Tenant has
Defaulted 3 or more times during the period from the date of the exercise of
the Extension Right to the date of the commencement of the Extension Term,
whether or not such Defaults are cured.

 

40. Miscellaneous.

 

(a) Notices.
All notices or other communications between the parties shall be in writing and
shall be deemed duly given upon delivery or refusal to accept delivery by the
addressee thereof if delivered in person, or upon actual receipt if delivered
by reputable overnight guaranty courier, addressed and sent to the parties at
their addresses set forth above. Landlord and Tenant may from time to time by
written notice to the other designate another address for receipt of future
notices.

 

(b) Joint
and Several Liability. If and when included within the term
“Tenant,” as used in this instrument, there is more than one person or entity,
each shall be jointly and severally liable for the obligations of Tenant.

 

(c) Financial
Information. Tenant shall furnish Landlord with true and complete
copies of (i) Tenant’s most recent audited annual financial statements within
90 days of the end of each of Tenant’s fiscal years during the Term, (ii)
Tenant’s most recent unaudited quarterly financial statements within 60 days of
the end of each of Tenant’s first three fiscal quarters of each of Tenant’s
fiscal years during the Term, (iii) at Landlord’s request from time to time,
any other financial information and/or business or operating plans, to the
extent Tenant has prepared the same for its board of directors, any internal
use or delivery to any third party, all of which shall be treated by Landlord
as confidential information belonging to Tenant, (iv) corporate brochures and/or
profiles prepared by Tenant for prospective investors, and (v) any other
financial information or summaries that Tenant typically provides to its
lenders or shareholders. All non-public information delivered to Landlord
pursuant to this subsection shall be treated by Landlord as confidential
information.

 

(d) Recordation.
Neither this Lease nor a memorandum of lease shall be filed by or on behalf of
Tenant in any public record. Landlord may prepare and file, and upon request by
Landlord Tenant will execute, a memorandum of lease.

 

(e) Interpretation.
The normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Lease or any exhibits or amendments hereto. Words of any gender used in
this Lease shall be held and construed to include any other gender, and words
in the singular number shall be held to include the plural, unless the context
otherwise requires. The captions inserted in this Lease are for

 

29

 

convenience only and in no way define, limit or otherwise describe the
scope or intent of this Lease, or any provision hereof, or in any way affect
the interpretation of this Lease.

 

(f) Not
Binding Until Executed. The submission by Landlord to Tenant of this
Lease shall have no binding force or effect, shall not constitute an option for
the leasing of the Premises, nor confer any right or impose any obligations
upon either party until execution of this Lease by both parties.

 

(g) Limitations
on Interest. It is expressly the intent of Landlord and Tenant at
all times to comply with applicable law governing the maximum rate or amount of
any interest payable on or in connection with this Lease. If applicable law is
ever judicially interpreted so as to render usurious any interest called for
under this Lease, or contracted for, charged, taken, reserved, or received with
respect to this Lease, then it is Landlord’s and Tenant’s express intent that
all excess amounts theretofore collected by Landlord be credited on the
applicable obligation (or, if the obligation has been or would thereby be paid
in full, refunded to Tenant), and the provisions of this Lease immediately
shall be deemed reformed and the amounts thereafter collectible hereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder.

 

(h) Choice
of Law. Construction and interpretation of this Lease shall be
governed by the internal laws of the state in which the Premises are located,
excluding any principles of conflicts of laws.

 

(i) Time.
Time is of the essence as to the performance of Landlord’s and Tenant’s obligations
under this Lease.

 

j) Incorporation
by Reference. All exhibits and addenda attached hereto are hereby
incorporated into this Lease and made a part hereof. If there is any conflict
between such exhibits or addenda and the terms of this Lease, such exhibits or
addenda shall control.

 

30

 

IN WITNESS WHEREOF, landlord and Tenant have
executed this lease as of the day and year first above written.

 

 

	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  SUNESIS PHARMACEUTICALS, INC.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daryl B. Winter

  	
   

  
	
   

  	
  Its: 

  	
  General Counsel

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARE-TECHNOLOGY CENTER SSF, llC,

  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By: Alexandria Real Estate Equities, l.P.,

  a Delaware limited partnership,

  managing member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: ARE-QRS CORP.,

  
	
   

  	
   

  	
  a Maryland corporation,

  
	
   

  	
   

  	
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Lynn Anne Shapiro

  	
   

  
	
   

  	
   

  	
   

  	
  Lynn Anne Shapiro

  
	
   

  	
   

  	
   

  	
  General Counsel

  
							

 

[Notary seal]

 

31

 

EXHIBIT A TO LEASE

 

DESCRIPTION OF PREMISES

 

A to be built
two-story building for research and development use containing approximately
53,890 rentable square feet as shown on the attached preliminary site plan.

 

1

 

EXHIBIT B TO LEASE

 

DESCRIPTION OF PROJECT

 

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

 

Parcel A as shown on that certain Parcel Map
No. 98-033 filed for record on December 30,1998 in Book 71 of Parcel Maps
at Pages 13 and 14, Series No. 98222035, San Mateo County Records,

 

1

 

EXHIBIT C TO LEASE

 

WORK LETTER

 

THIS WORK LETTER dated May
    , 2000 (this “Work
Letter”) is made and entered into by and between ARE-TECHNOLOGY
CENTER SSF, LLC, a Delaware limited liability company (“Landlord”), and SUNESIS
PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”), and is attached to
and made a part of the Lease dated May     , 2000 (the
“Lease”), by and between Landlord and Tenant. Any initially capitalized terms
used but not defined herein shall have the meanings given them in the Lease.

 

1.                                       General Requirements

 

(a) Tenant’s
Authorized Representative. Tenant designates Dan Lazare and Andrew
Braisted (either such individual acting alone, “Tenant’s Representative”) as
the only persons authorized to act for Tenant pursuant to this Work Letter.
Landlord shall not be obligated to respond to or act upon any request,
approval, inquiry or other communication (“Communication”) from or on behalf of
Tenant in connection with this Work Letter unless such Communication is in
writing from Tenant’s Representative. Tenant may change either Tenant’s
Representative at any time upon not less than 5 business days advance written
notice to Landlord. No period set forth herein for any approval of any matter
by Tenant’s Representative shall be extended by reason of any change in
Tenant’s Representative. Neither Tenant nor Tenant’s Representative shall be
authorized to direct Landlord’s contractors in the performance of Landlord’s
Work (as hereinafter defined).

 

(b) Landlord’s
Authorized Representative. Landlord designates David Herron and
Vincent Ciruzzi (either such individual acting alone, “Landlord’s
Representative”) as the only persons authorized to act for Landlord pursuant to
this Work Letter. Tenant shall not be obligated to respond to or act upon any
request, approval, inquiry or other Communication from or on behalf of Landlord
in connection with this Work Letter unless such Communication is in writing
from Landlord’s Representative. Landlord may change either Landlord’s
Representative at any time upon not less than 5 business days advance written
notice to Tenant. No period set forth herein for any approval of any matter by
Landlord’s Representative shall be extended by reason of any change in
Landlord’s Representative. Landlord’s Representative shall be the sole persons
authorized to direct Landlord’s contractors in the performance of Landlord’s
Work.

 

(c) Architects,
Consultants and Contractors. Landlord and Tenant hereby acknowledge
and agree that the architect (the “TI
Architect”) and general contractor for the Tenant Improvements and
any subcontractors for the Tenant Improvements shall be selected by Tenant, subject
to Landlord’s approval, which approval shall not be unreasonably withheld,
conditioned or delayed. Tenant shall use South Bay Construction as the general
contractor for the Tenant Improvements.

 

(d) Development
Schedule. The schedule for design and development of Tenant
Improvements (as defined below), including without limitation the time periods
for delivery of construction documents and performance, shall be in accordance
with the Development Schedule attached hereto as Schedule A, subject
to adjustment as mutually agreed by the parties in writing or as provided in
this Work Letter (the “Development Schedule”).

 

(e) Landlord’s
Work. Landlord shall, at its sole cost and expense, construct the
Building shell, parking lot, exterior common areas, and landscaping described
on Schedule A attached hereto (collectively, the “Initial Project Specifications”). As used
herein, “Landlord’s Work” shall
mean construction of the Initial Project Specifications. The Initial Project
Specifications shall include the Building shell, roof, all exterior windows and
doors, fire sprinklers below the roof

 

1

 

line and below the second deck line, and utilities and services to the
Building exterior, an elevator, three sets of interior stairs (consisting of
stair assemblies and metal handrails) and landscaping. Proof loading of the
roof structure, extending columns for a future mechanical roof platform and
penetrations in the second deck for future mechanical shafts shall be completed
by Landlord during construction of the Building shell and the costs of such
items shall be paid for by Tenant as part of the TI Allowance (as defined
below). Notwithstanding their depiction in the Initial Project Specifications,
the roof screens shall be provided by Tenant at Tenant’s sole cost and expense.
Landlord shall substantially complete or cause to be substantially completed
Landlord’s Work in a good and workmanlike manner and the issuance of a
temporary certificate of occupancy, subject, to Minor Variations and normal
“punch list” items of a non-material nature which do not interfere with the use
of the Premises (“Substantial Completion”).
For purposes of this Work Letter, “Minor
Variations” shall mean any modifications reasonably required: (i) to
comply with all applicable Legal Requirements and/or to obtain or to comply
with any required permit; (ii) to comply with any request by the Tenant for
modifications to Landlord’s Work; (iii) to comport with good design,
engineering, and construction practices which are not material; or (iv) to make
reasonable adjustments for field deviations or conditions encountered during
the construction of Landlord’s Work.

 

2.                                       Tenant Improvements.

 

(a) Tenant
Improvements Defined. As used herein, “Tenant Improvements” shall
mean all improvements to the Premises desired by Tenant of a fixed and
permanent nature. Other than funding the TI Allowance as provided herein,
Landlord shall not have any obligation whatsoever with respect to the finishing
of the Premises for Tenant’s use and occupancy.

 

(b) Tenant’s
Space Plans. Tenant shall deliver to Landlord schematic drawings and
outline specifications (the “TI Design
Drawings”) detailing Tenant’s requirements for the Tenant
Improvements on or before July 15, 2000. Not more than ten 10 business
days thereafter, Landlord shall deliver to Tenant the written objections,
questions or comments of Landlord and the TI Architect with regard to the TI
Design Drawings. Tenant shall cause the TI Design Drawings to be revised to address
such written comments and shall resubmit said drawings to Landlord for approval
within 10 business days thereafter. Such process shall continue until Landlord
has approved the TI Design Drawings.

 

(c) Working
Drawings. Not later than 45 days following the approval of the TI
Design Drawings by Landlord, Tenant shall cause the TI Architect to prepare and
deliver to Landlord for review and comment construction plans, specifications
and drawings for the Tenant Improvements (“TI
Construction Drawings”), which TI Construction Drawings shall be
prepared substantially in accordance with the TI Design Drawings. Tenant shall
be solely responsible for ensuring that the TI Construction Drawings reflect
Tenant’s requirements for the Tenant Improvements. Landlord shall deliver its
written comments on the TI Construction Drawings to Tenant not later than10
business days after Landlord’s receipt of the same; provided, however, that
Landlord may not disapprove any matter that is consistent with the TI Design
Drawings. Tenant and the TI Architect shall consider all such comments in good
faith and shall, within 10 business days after receipt, notify Landlord how
Tenant proposes to respond to such comments. Any disputes in connection with
such comments shall be resolved in accordance with Section 2(d) hereof.
Provided that the design reflected in the TI Construction Drawings is
consistent with the TI Design Drawings, Landlord shall approve the TI
Construction Drawings submitted by Tenant. Once approved by Landlord, subject
to the provisions of Section 2(d) below, Tenant shall not materially
modify the TI Construction Drawings except as may be reasonably required in
connection with the issuance of the TI Permit (as defined in Section 3(b)
below) or except as set forth in Paragraph 4 of this Work Letter.

 

2

 

(d) Approval
and Completion. Upon any dispute regarding the design of the Tenant
Improvements, which is not settled within 10 business days after notice of such
dispute is delivered by one party to the other, Tenant shall make the final
decision regarding the design of the Tenant Improvements, provided Tenant acts
reasonably and such final decision is either consistent with or a compromise
between Landlord’s and Tenant’s positions with respect to such dispute,
provided further that all costs and expenses resulting from any such decision
by Tenant shall be payable out of the TI Fund, as, defined in Section 5(d)
below. Any changes to the TI Construction Drawings following Landlord s and
Tenant’s approval of same requested by Tenant shall be processed as provided in
Section 4 hereof. Notwithstanding anything to the contrary contained
herein, in the event that Tenant’s Work adversely affects the Building shell or
Landlord’s Work, Landlord shall make the final decision regarding matters
relating to the Building shell and/or Landlord’s Work.

 

3.                                       Performance of Tenant’s Work

 

(a) Definition
of Tenant’s Work. As used herein, “Tenant’s
Work” shall mean the work of constructing the Tenant Improvements.

 

(b) Commencement
and Permitting of Tenant’s Work. Tenant shall commence construction
of the Tenant Improvements upon obtaining a building permit (the “TI Permit”) authorizing the construction of
the Tenant Improvements consistent with the TI Construction Drawings approved
by Landlord. The cost of obtaining the TI Permit shall be payable from the TI
Fund. Landlord shall assist Tenant in obtaining the TI Permit.

 

(c) Selection
of Materials, Etc. Where more than one type of material or structure
is indicated on the TI Construction Drawings approved by Tenant and Landlord,
the option will be within Tenant’s reasonable discretion.

 

4.                                       Changes. Any changes requested by Tenant to
the Tenant Improvements after the delivery and approval by Landlord of the TI
Design Drawings, shall be requested and instituted in accordance with the
provisions of this Section 4 and shall be subject to the written approval
of Landlord, such approval not to be unreasonably withheld, conditioned or
delayed.

 

(a) Tenant’s
Right to Request Changes. If Tenant shall request changes (“Changes”), Tenant shall request such
Changes by notifying Landlord in writing in substantially the same form as the
AIA standard change order form (a “Change
Request”), which Change Request shall detail the nature and extent
of any such Change. Such Change Request must be signed by Tenant’s
Representative. Landlord shall review and approve or disapprove such Change
Request within 10 business days thereafter, provided that Landlord’s approval
shall not be unreasonably withheld, conditioned or delayed.

 

(b) Implementation
of Changes. If Landlord approves such Change and Tenant deposits
with Landlord any Excess TI Costs (as defined in Section 5(d) below)
required in connection with such Change, Tenant may cause the approved Change
to be instituted.

 

(c) Changes
to Landlord’s Work. During Landlord’s construction of Landlord’s
Work Tenant shall request in writing (“Proposal”)
any modifications to the Initial Project Specifications (“Modifications”) which Tenant desires.
Landlord shall have the right to approve or to disapprove each Proposal in
Landlord’s sole and absolute discretion. In the event Landlord approves some or
all of the proposed Modifications, Landlord shall have Landlord’s contractor
estimate the cost of such Modifications, which cost shall be presented in
writing to Tenant for Tenant’s review and written approval. Tenant’s failure to
approve or disapprove the estimated cost of the approved Modifications within 5
days after receipt of the estimate shall be conclusively deemed a disapproval.
Tenant shall be solely responsible for and pay to Landlord: (i) all costs
reasonably incurred by

 

3

 

Landlord for Landlord’s review of a Tenant Proposal, including, but not
limited to, any architectural, engineering and consulting costs incurred by
Landlord or Landlord’s contractor to define the scope and/or estimate the costs
of any Modifications proposed by Tenant (such costs shall be paid by Tenant
whether the Proposal is approved or disapproved by Landlord and regardless of
whether Tenant approves or disapproves the estimated costs of the proposed
Modifications); (ii) the actual increase in cost as a result of constructing
the approved Modifications; (iii) a fee for Landlord’s contractor’s overhead
and profit per Landlord’s construction contract with Landlord’s contractor;
(iv) all other costs and expenses reasonably incurred by Landlord in connection
with the review, approval, and construction of the Modifications, including,
but not limited to, permit fees and change order costs; and (v) any and all
costs and expenses resulting from delays caused by weather as a result of
Modifications and/or Tenant Delays (collectively, the “Modifications Costs”). Tenant shall pay the
Modifications Costs within 10 days after Landlord submits to Tenant an invoice
therefor. Landlord may invoice the Modifications Costs for any Proposal in one
or more separate invoices in Landlord’s discretion. Tenant’s failure to pay the
invoiced Modifications Costs in full within the time prescribed above shall
constitute an Event of Default by Tenant under the Lease.

 

5.                                       Costs

 

(a) Budget
For Tenant Improvements. Before the commencement of construction of
the Tenant Improvements, Tenant shall obtain a detailed breakdown, by trade, of
the costs incurred or which will be incurred, in connection with the design and
construction of Tenant’s Work (the “Budget”).
The Budget shall be based upon the TI Construction Drawings approved by
Landlord and shall include a payment to Landlord of administrative rent (“Administrative Rent”) equal to 1 % of the
TI Costs (as hereinafter defined) for monitoring and inspecting the
construction of Tenant’s Work, which sum shall be payable from the TI Fund.
Such Administrative Rent shall include, without limitation, all out-of-pocket
costs, expenses and fees incurred by or on behalf of Landlord arising from, out
of, or in connection with, such monitoring of the construction of the Tenant’s
Improvements, and shall be payable out of the TI Fund. If the Budget is greater
than the TI Allowance, Tenant shall deposit with Landlord the difference, in
cash, prior to the commencement of construction of the Tenant Improvements, for
disbursement by Landlord as described in Section 5(d).

 

(b) TI
Allowance. Landlord shall provide to Tenant a tenant improvement
allowance (“TI Allowance”) in
increments of $25.00 per rentable square foot with a maximum of $125.00 per
rentable square foot of the Premises. Within 5 business days after delivery of
the Budget to Landlord, Tenant shall notify Landlord how much TI Allowance
Tenant has elected to receive from Landlord. Such election shall be final and
binding on Tenant, and may not thereafter be modified without Landlord’s
consent, which may be granted or withheld in Landlord’s sole and absolute
discretion. The TI Allowance shall be disbursed in accordance with this Work
Letter.

 

(c) Costs
Includable in TI Fund. The TI Fund shall be used solely for the
payment of design and construction costs in connection with the construction of
the Tenant Improvements, including, without limitation, the cost of preparing
the TI Design Drawings and the TI Construction Drawings, all costs set forth in
the Budget, including Landlord’s Administrative Rent, and the cost of Changes
(collectively, “TI Costs”). Notwithstanding anything to the contrary contained
herein, the TI Fund shall not be used to purchase any furniture, personal
property or other non-Building System materials or equipment, including, but
not be limited to, biological safety cabinets and other scientific equipment
not incorporated into the Improvements.

 

(d) Excess
TI Costs. It is understood and agreed that Landlord is under no
obligation to bear any portion of the cost of any of the Tenant Improvements
except to the extent of the TI Allowance. If at any time and from time-to-time,
the remaining TI Costs under the Budget exceed the remaining unexpended TI
Allowance, Tenant shall deposit with Landlord, as a condition precedent to
Landlord’s obligation to fund the unexpended TI Allowance, 100% of the then
current

 

4

 

TI Cost in excess of the remaining TI Allowance (“Excess TI Costs”). Landlord shall deposit
the Excess TI Costs into an interest bearing account with interest accruing for
the benefit of Tenant. If Tenant fails to deposit, or is late in depositing,
any Excess TI Costs amount with Landlord, Landlord shall have all of the rights
and remedies set forth in the Lease for nonpayment of Rent (including, but not
limited to, the right to interest at the Default Rate and the right to assess a
late charge), and for purposes of any litigation instituted with regard to such
amounts the same will be considered Rent. Such deposit of Excess TI Costs,
together with the remaining TI Allowance, is herein referred to as the “TI Fund”. Funds so deposited by Tenant
shall be the first thereafter disbursed to pay TI Costs. Notwithstanding
anything to the contrary set forth in this Section 5(d), Tenant shall be
fully and solely liable for TI Costs and the cost of Minor Variations in excess
of the TI Allowance. If upon Substantial Completion of the Tenant Improvements
and the payment of all sums due in connection therewith there remains any
undisbursed TI Fund, Tenant shall be entitled to such undisbursed TI Fund to
the extent of any Excess TI Costs deposit Tenant has actually made with
Landlord and Tenant shall have the right, for up to 12 months after the
Commencement Date, to use the balance of the TI Fund used for Alterations which
are approved by Landlord and comply with Section 12 of the Lease.
Thereafter, Tenant shall have no right to any undisbursed portion of the TI
Fund.

 

(e) Payment for TI Costs. Landlord shall pay
TI Costs once a month against a draw request in Landlord’s standard form,
containing such certifications, lien waivers, inspection reports and other
matters as Landlord customarily obtains, to the extent of Landlord’s approval
thereof for payment, no later than 30 days following receipt of such draw
request.

 

6.                                       Tenant Access.

 

(a) Tenant’s
Access Rights. Tenant’s access to the Premises after the Pour Date
to perform Tenant’s Work shall be at Tenant’s sole risk and expense. Tenant
shall coordinate Tenant’s Work with Landlord and comply with the Lease, this
Work Letter and all other reasonable restrictions and conditions Landlord may
impose. Tenant shall have no right to enter the Premises or the Project unless
and until Tenant shall deliver to Landlord evidence reasonably satisfactory to
Landlord demonstrating that any insurance reasonably required by Landlord in
connection with such pre-commencement access (including, but not limited to,
any insurance which Landlord may require pursuant to the Lease) is in full
force and effect. Any entry by Tenant shall comply with all established safety
practices of Landlord’s contractor and Landlord until completion of Landlord’s
Work.

 

(b) Precedence
of Landlord’s Work. Tenant acknowledges and agrees that (i) the
performance of Tenant’s Work may be severely and adversely impacted by the
performance of Landlord’s Work, (ii) Landlord’s Work shall take precedence over
Tenant’s Work and Tenant shall comply with any and all requests of Landlord
giving effect to the precedence of Landlord’s Work over Tenant’s Work
including, without limitation, any requests which may result in increased costs
and/or delays to Tenant’s Work, and (iii) Tenant shall not be entitled and
fully and completely waives any claim to any abatement of rent or any other
concession as a result of any such adverse impact.

 

(c) No
Interference. Neither Tenant nor its employees, consultants, agents,
contractors, and suppliers shall interfere with the performance of Landlord’s
Work, nor with any inspections or issuance of final approvals by San Mateo
County or the City of South San Francisco, and upon any such interference,
Landlord shall have the right to exclude Tenant and Tenant’s employees,
consultants, contractors and agents from the Premises and the Project until
Substantial Completion of Landlord’s Work.

 

5

 

7.                                       Tenant Delay

 

For purposes of Section 2 of the Lease,
“Tenant Delay” shall mean (i)
Tenant’s Representative was not available to give or receive any Communication
or to take any other action required to be taken by Tenant hereunder; (ii)
Tenant’s Proposals whether or not Landlord agrees, in its sole discretion, to
any of such change requests and whether or not they are actually performed;
(iii) construction of any such change requests; (iv) Tenant’s delay in reviewing,
revising or approving plans and specifications beyond the periods set forth
herein; (v) Tenant’s delay in providing information critical to the normal
progression of the Project. Tenant shall provide such information as soon as
reasonably possible, but in no event longer than one week after receipt of any
request for such information from Landlord; (vi) Tenant’s delay in making
payments to Landlord for Excess TI Costs; (vii) any other act or omission by
Tenant, its agents, contractors or persons employed by any of such persons;
(viii) any default by Tenant under the Lease, or (ix) any construction delay
caused by interference with the performance of Landlord’s Work caused by Tenant
or Tenant’s employees, consultants, agents, contractors, and suppliers.

 

8.                                       Miscellaneous

 

(a) Consents.
Whenever consent or approval of either party is required under this Work
Letter, that party shall not unreasonably withhold, condition or delay such
consent or approval, except as may be expressly set forth herein to the contrary.

 

(b) Modification.
No modification, waiver or amendment of this Work Letter or of any of its
conditions or provisions shall be binding upon Landlord or Tenant unless in
writing signed by Landlord and Tenant.

 

(c) Counterparts.
This Work Letter may be executed in any number of counterparts but all
counterparts taken together shall constitute a single document.

 

(d) Governing
Law. This Work Letter shall be governed by, construed and enforced
in accordance with the internal laws of the state in which the Premises are
located, without regard to choice of law principles of such State.

 

(e) Time of
the Essence. Time is of the essence of this Work Letter and of each
and all provisions thereof.

 

(f) Default.
Notwithstanding anything set forth herein or in the Lease to the contrary,
Landlord shall not have any obligation to perform any work hereunder or to fund
any portion of the TI Fund during any period Tenant is in Default under the
Lease.

 

(g) Severability.
If any term or provision of this Work Letter is declared invalid or
unenforceable, the remainder of this Work Letter shall not be affected by such
determination and shall continue to be valid and enforceable.

 

(h) Merger.
All understandings and agreements, oral or written, heretofore made between the
parties hereto and relating to Tenant’s Work are merged in this Work Letter,
which alone (but inclusive of provisions of the Lease incorporated herein and
the final approved constructions drawings and specifications prepared pursuant
hereto) fully and completely expresses the agreement between Landlord and
Tenant with regard to the matters set forth in this Work Letter.

 

(i) Entire
Agreement. This Work Letter is made as a part of and. pursuant to
the Lease and, together with the Lease, constitutes the entire agreement of the
parties with respect to the

 

6

 

subject matter hereof. This Work Letter is subject to all of the terms
and limitation set forth in the Lease, and neither party shall have any rights
or remedies under this Work Letter separate and apart from their respective
remedies pursuant to the Lease.

 

7

 

IN WITNESS WHEREOF, landlord and Tenant have
executed this Work letter to be effective on the date first above written.

 

	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  SUNESIS PHARMACEUTICALS, INC.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LANDLORD:

  
	
   

  	
  ARE-TECHNOLOGY CENTER SSF, LLC,

  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Alexandria Real Estate Equities, L.P.,

  a Delaware limited partnership,

  managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: ARE-QRS CORP.,

  
	
   

  	
   

  	
  a Maryland corporation,

  
	
   

  	
   

  	
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Lynn Anne Shapiro

  	
   

  
	
   

  	
   

  	
   

  	
  General Counsel

  	
   

  
						

 

 

EXHIBIT D TO
LEASE

 

ACKNOWLEDGEMENT
OF COMMENCEMENT DATE

 

This ACKNOWLEDGEMENT OF COMMENCEMENT
DATE is made this 31st day of July, 2001, between ARE-Technology Center SSF. LLC, a Delaware
limited liability company (“Landlord”), and Sunesis
Pharmaceuticals. Inc., a Delaware corporation (“Tenant”), and is
attached to and made a part of the Lease dated May 12th, 2000 (the “Lease”), by
and between Landlord and Tenant. Any initially capitalized terms used but not
defined herein shall have the meanings given them in the Lease.

 

Landlord and Tenant hereby acknowledge and agree, for all purposes of
the Lease, that the Commencement Date of the Base Term of the Lease is
July 1, 2001 and the termination date of the Base Term of the Lease shall
be midnight on June 30, 2013.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this
ACKNOWLEDGEMENT OF COMMENCEMENT DATE to be effective on the date first above
written.

 

	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  SUNESIS PHARMACEUTICALS, INC.,

  A Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  ARE-TECHNOLOGY CENTERS, SSF, LLC,

  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  	
  By: Alexandria Real Estate Equities, L.P.,

  a Delaware limited partnership,

  managing member

  
	
   

  	
   

  
	
   

  	
   

  	
  By: ARE-QRS CORP.,

  a Maryland corporation,

  general partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Michael Kelcy

  
	
   

  	
   

  	
  Senior Vice President

  
							

 

1Exhibit
10.24

Real Estate Legal Affairs

.

FIRST AMENDMENT TO LEASE AGREEMENT

 

This First Amendment to Lease Agreement (the “First Amendment”) is made as of
December 20, 2000, by and between ARE-Technology Center SSF, LLC, a
Delaware limited liability company, having an address at 135 North Los Robles
Avenue, Suite 250, Pasadena, California 91101 (“Landlord”), and Sunesis
Pharmaceuticals, Inc., a Delaware corporation, having an address at 3696 Haven
Avenue, Suite C, Redwood City, California 94063 (“Tenant”).

 

RECITALS

 

A.            Landlord
and Tenant have entered into that certain Lease Agreement (the “Lease”) dated as of May 12, 2000 (the “Lease”).

 

B.            Landlord
and Tenant desire to amend the Lease to more clearly describe the Premises.

 

AGREEMENT

 

Now, therefore, the parties hereto agree that the
Lease is amended as follows:

 

1.             Premises. Exhibit “A” to the Lease is
hereby deleted in its entirety and Exhibit “A” attached to this
Amendment is hereby substituted in lieu thereof.

 

2.             Miscellaneous.

 

(a)           This
First Amendment is the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous oral and
written agreements and discussions. This First Amendment may be amended only by
an agreement in writing, signed by the parties hereto.

 

(b)           This
First Amendment is binding upon and shall inure to the benefit of the parties
hereto, their respective agents, employees, representatives, officers,
directors, divisions, subsidiaries, affiliates, assigns, heirs, successors in
interest and shareholders.

 

(c)           This
First Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which when taken together shall
constitute one and the same instrument. The signature page of any counterpart
may be detached therefrom without impairing the legal effect of the
signature(s) thereon provided such signature page is attached to any other
counterpart identical thereto except having additional signature pages executed
by other parties to this First Amendment attached thereto.

 

(d)           Except
as amended and/or modified by this First Amendment, the Lease is hereby
ratified and confirmed and all other terms of the Lease shall remain in full
force and effect, unaltered and unchanged by this First Amendment. In the event
of any conflict between

 

 

.

the
provisions of this First Amendment and the provisions of the Lease, the
provisions of this First Amendment shall prevail. Whether or not specifically
amended by this First Amendment, all of the terms and provisions of the Lease
are hereby amended to the extent necessary to give effect to the purpose and
intent of this First Amendment..

 

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

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  ARE-TECHNOLOGY CENTER SSF, LLC, a

  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  	
  By: Alexandria Real Estate Equities, L.P., a

  Delaware limited partnership, its managing

  member

  
	
   

  	
   

  
	
   

  	
   

  	
  By: ARE-QRS Corp., a Maryland

  corporation, its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  B y:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Its: SENIOR VICE PRESIDENT &

  CHIEF FINANCIAL OFFICER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  SUNESIS PHARMACEUTICALS, INC.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
									

 

 

EXHIBIT A

 

DESCRIPTION OF PREMISES

 

A to be built two-story building for research and
development use containing approximately 53,890 rentable square feet to be
located in the cross-hatched area shown on the attached preliminary site plan.

 

 

PRELIMINARY
SITE PLAN

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