SUBLEASE AGREEMENT

EXHIBIT 10.24

SUBLEASE AGREEMENT

     This SUBLEASE AGREEMENT (“ Sublease ”) is made as of the 18 ^th day of June, 2009 (“ Effective Date ”), by and between PHENOMIX CORPORATION, a Delaware corporation (the “ Sublandlord ”) and ANADYS PHARMACEUTICALS, INC., a Delaware corporation (the “ Subtenant ”) with regard to the following facts.

R E C I T A L S :

     A. Sublandlord is the tenant under that certain Lease Agreement dated as of July 31, 2003 (the “ Master Lease ”), with VPI Oberlin I, L.P., a California limited partnership (the “ Landlord ”) (a copy of which Master Lease is attached hereto as Exhibit A and by this reference made a part hereof, subject to the exclusions in Section 7 below and elsewhere in this Sublease) concerning approximately 16,603 rentable square feet of space (the “ Premises ”) located in Suite 200 of the building located at 5871 Oberlin Drive, San Diego, California 92121 (the “ Building ”).

     B. Subtenant desires to sublease from Sublandlord a portion of the Premises consisting of approximately 13,893 rentable square feet of space (which portion shall be hereafter referred to as the “ Subleased Premises ”) more particularly set forth on Exhibit B , attached hereto, and Sublandlord has agreed to sublease the Subleased Premises to Subtenant upon the terms, covenants and conditions herein set forth.

     C. All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to those terms in the Master Lease.

A G R E E M E N T :

     In consideration of the mutual covenants contained herein, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

     1.  Sublease . Sublandlord hereby subleases and demises to Subtenant and Subtenant hereby hires and takes from Sublandlord the Subleased Premises. For the avoidance of doubt, the Subleased Premises do not include any portion of the vivarium within the Premises and Subtenant shall have no responsibility or liability whatsoever with respect to such vivarium, and any references in the Master Lease to the vivarium are not applicable to this Sublease. Sublandlord may elect to sublet the vivarium separately, in which case, Sublandlord will be responsible for securing the vivarium and all access to such vivarium separate from the Subleased Premises and in a manner so as to avoid interference with Subtenant’s use and occupancy of the Subleased Premises.

     2.  Term . The term of this Sublease shall commence on the date Sublandlord delivers the Subleased Premises to Subtenant; provided such date shall occur no later than ten (10) business days after Landlord provides its consent to this Sublease or July 15, 2009 (provided Landlord has provided its consent prior to such date), whichever is sooner (“ Commencement Date ”) and shall end, unless sooner terminated as provided in the Master Lease on January 31, 2011 (“ Expiration Date ”). Sublandlord will use good faith efforts and reasonable diligence to

cause Landlord to provide its consent to this Sublease as soon as possible after the date of full execution of this Sublease. In the event such consent is not obtained on or before July 15, 2009, Subtenant shall have the option, by written notice to Sublandlord, to terminate this Sublease.

     3.  Rent . From and after the Commencement Date, Subtenant shall pay base rent during the term of this Sublease in the amount of Two and 15/100 Dollars ($2.15) per rentable square foot of the Subleased Premises per month, payable in advance on the first day of each month in equal monthly installments of Twenty-Nine Thousand Eight Hundred Sixty-Nine and 95/100 Dollars ($29,869.95). Additionally, Subtenant shall pay eighty-three and sixty-seven one-hundredths percent (83.67%) of all Operating Expenses charged to Sublandlord under the terms of the Master Lease and Subtenant shall be responsible for all separately metered utilities, trash and janitorial services provided to the Subleased Premises. In the event Sublandlord finds a third party subtenant for the vivarium, Sublandlord and Subtenant will mutually agree to an equitable method for pro rating utilities and services between the Subleased Premises and the vivarium. In the event that the term of this Sublease shall begin or end on a date which is not the first day of a month, base rent shall be prorated as of such date. On the Commencement Date, Subtenant shall deliver to Sublandlord the first month’s rent, plus the amount of $29,869.95 as a Security Deposit to be held by Sublandlord pursuant to the terms of Section 18 of the Master Lease.

     4.  Use . Subtenant covenants and agrees to use the Premises in accordance with the provisions of the Master Lease and for no other purpose and otherwise in accordance with the terms and conditions of the Master Lease and this Sublease. Subtenant may require the use of areas outside the Subleased Premises for equipment used in connection with its business activities, and Subtenant will obtain Sublandlord’s consent prior to such use and, if such consent is provided by Sublandlord, Sublandlord agrees to use commercially reasonable efforts to obtain Landlord’s consent to such use.

     5.  Master Lease . As applied to this Sublease, the words “ Landlord ” and “ Tenant ” as used in the Master Lease shall be deemed to refer to Sublandlord and Subtenant hereunder, respectively. Subtenant and this Sublease shall be subject in all respects to the terms of, and the rights of the Landlord under, the Master Lease. Except as otherwise expressly provided in Section 7 hereof, the covenants, agreements, terms, provisions and conditions of the Master Lease insofar as they relate to the Subleased Premises and insofar as they are not inconsistent with the terms of this Sublease are made a part of and incorporated into this Sublease as if recited herein in full, and the rights and obligations of the Landlord and the Tenant under the Master Lease shall be deemed the rights and obligations of Sublandlord and Subtenant respectively hereunder and shall be binding upon and inure to the benefit of Sublandlord and Subtenant respectively. As between the parties hereto only, in the event of a conflict between the terms of the Master Lease and the terms of this Sublease, the terms of this Sublease shall control.

     6.  Landlord’s Performance Under Master Lease .

          6.1 Subtenant recognizes that Sublandlord is not in a position to render any of the services or to perform any of the obligations required of the Landlord by the terms of the Master Lease. Therefore, notwithstanding anything to the contrary contained in this Sublease, Subtenant agrees that performance by Sublandlord of its obligations hereunder to the extent such

obligations are dependent on performance by Landlord, are conditional upon due performance by the Landlord of its corresponding obligations under the Master Lease and Sublandlord shall not be liable to Subtenant for any default of the Landlord under the Master Lease. Subtenant shall not have any claim against Sublandlord by reason of the Landlord’s failure or refusal to comply with any of the provisions of the Master Lease unless such failure or refusal is a result of Sublandlord’s act or failure to act. Sublandlord hereby agrees to use commercially reasonable efforts to enforce the terms of the Master Lease against Landlord. This Sublease shall remain in full force and effect notwithstanding the Landlord’s failure or refusal to comply with any such provisions of the Master Lease and Subtenant shall pay the base rent and additional rent and all other charges provided for herein without any abatement, deduction or setoff whatsoever. Subtenant covenants and warrants that it fully understands and agrees to be subject to and bound by all of the covenants, agreements, terms, provisions and conditions of the Master Lease, except as modified herein. Furthermore, Subtenant and Sublandlord further covenant not to take any action or do or perform any act or fail to perform any act which would result in the failure or breach of any of the covenants, agreements, terms, provisions or conditions of the Master Lease on the part of the Tenant thereunder.

          6.2 Whenever the consent of Landlord shall be required by, or Landlord shall fail to perform its obligations under, the Master Lease, Sublandlord agrees to use its best efforts to obtain, at Subtenant’s sole cost and expense, such consent and/or performance on behalf of Subtenant. Notwithstanding the foregoing, Sublandlord and Subtenant will each pay one half of the amount charged by Landlord for its consent to this Sublease.

          6.3 Sublandlord represents and warrants to Subtenant that (a) the Master Lease is in full force and effect and the attached Exhibit A is a true, correct and complete copy of the Master Lease; (b) all obligations of both Landlord and Sublandlord thereunder have been satisfied; (c) Sublandlord has neither given nor received a notice of default pursuant to the Master Lease and (d) the Premises as of the Commencement Date are and have been in compliance with Sections 5.2 and 24 of the Master Lease.

          6.4 Sublandlord covenants as follows: (i) not to voluntarily terminate the Master Lease, (ii) not to modify the Master Lease so as to adversely affect Subtenant’s rights hereunder, and (iii) to take all actions reasonably necessary to preserve the Master Lease.

     7.  Variations from Master Lease . The following covenants, agreements, terms, provisions and conditions of the Master Lease are hereby modified or not incorporated herein:

          7.1 Notwithstanding anything to the contrary set forth in Sections 3, 7 and 18 of the Master Lease, the term of this Sublease and base rent payable under this Sublease and the amount of the Security Deposit required of Subtenant shall be as set forth in Sections 2 and 3 above. In addition, the last three (3) sentences of Section 18 (security interest in trade fixtures) shall not apply to Subtenant or this Sublease.

          7.2 The parties hereto represent and warrant to each other that neither party dealt with any broker other than Irving Hughes and Jones Lang LaSalle Americas, Inc. (“ Broker ”) in connection with the consummation of this Sublease and each party agrees to indemnify, hold and save the other party harmless from and against any and all claims for

brokerage commissions arising out of either of their acts in connection with this Sublease, other than the fees payable to Broker, which such fees shall be paid by Sublandlord. In the event Sublandlord fails to pay the Subtenant’s Broker its leasing commission in an amount equal to four percent (4%) of the base rent, Subtenant may offset its rent by an amount equal to the unpaid commission due to the Subtenant’s Broker, plus interest at the rate of 10% of the amount due (or the highest rate permitted by law, whichever is less); provided, however, that in the event Subtenant offsets its rental obligation by an amount equal to the unpaid commission due to the Subtenant’s Broker, Subtenant hereby agrees and hereby does indemnify, hold and save Sublandlord harmless from and against any and all claims for brokerage commissions from the Subtenant’s Broker. The provisions of this Section 7.2 shall survive the expiration or earlier termination of this Sublease.

          7.3 Notwithstanding anything contained in the Master Lease to the contrary, as between Sublandlord and Subtenant only, all insurance proceeds or condemnation awards received by Sublandlord under the Master Lease shall be deemed to be the property of Sublandlord, and any proceeds received by Subtenant will be deemed to be the property of Subtenant.

          7.4 Any notice which may or shall be given by either party hereunder shall be either delivered personally or sent by certified mail, return receipt requested, addressed to Anadys Pharmaceuticals, Inc., 3115 Merryfield Row, San Diego, California 92121, Attn: Controller, Finance (if to Subtenant prior to the Commencement Date), or to Anadys Pharmaceuticals, Inc., 5871 Oberlin Drive, Suite 200, San Diego, California 92121, Attn: Controller, Finance (if to Subtenant after the Commencement Date), or c/o Phenomix Corporation, 5930 Cornerstone Court West, Suite 230, San Diego, California 92121, Attn: Corporate Counsel (if to the Sublandlord), or to such other address as may have been designated in a notice given in accordance with the provisions of this Section 7.4. Upon receipt of any notice from Landlord relating to the Premises, Sublandlord shall promptly deliver a copy of such notice to Subtenant in accordance with the terms and conditions of this Section 7.4.

          7.5 All amounts payable hereunder by Subtenant shall be payable directly to Sublandlord and sent to c/o Phenomix Corporation, 5930 Cornerstone Court West, Suite 230, San Diego, California 92121, Attn: Accounts Payable. The foregoing is subject to the assignment of rents set forth in Section 21 of the Master Lease.

          7.6 The provisions of Sections 2.1, 2.2, 2.3, 2.5, 2.6, 2.8 (as to payments only), 2.12, 2.13, 2.14, 2.15, 2.16, 4, 5.6, 30, 36.1, the last two sentences of Section 14, the last three sentences of Section 18, the first sentence of Section 24 (provided that all references in Section 24 to Landlord shall mean and refer to the Landlord and not Sublandlord and that the requirement to remediate, if necessary, will be determined by Landlord and not Sublandlord, but that all notices will be delivered to both Landlord and Sublandlord), and Exhibits A-2, D, E and F of the Master Lease shall not apply to this Sublease.

          7.7 Sublandlord shall deliver the Subleased Premises to Subtenant in its current “as is” condition, except that all HVAC, electrical, life safety, security system, generator and plumbing systems shall be in good working order on the Commencement Date hereof.

          7.8 Subtenant shall be permitted to use all existing FF&E in the Subleased Premises at no cost during the term of this Sublease. The title to the FF&E in the Subleased Premises shall remain with Sublandlord and a list of such FF&E is attached hereto as Exhibit C . Subtenant shall not be required to remove any alterations or improvements located in the Subleased Premises upon the expiration of the term hereof or to perform any other restoration requirements set forth in the Master Lease (including Section 14 of the Master Lease); provided however that Subtenant will surrender the Subleased Premises in as good condition and repair as received, reasonable wear and tear and casualty damage excepted (subject to Section 10 below) and shall remove its personal property from the Subleased Premises prior to the Expiration Date.

          7.9 Sublandlord agrees to indemnify, defend, protect and hold Subtenant harmless from and against any and all claims, actions, administrative proceedings, judgments, damages, punitive damages, penalties, fines, costs, liabilities, losses, including reasonable attorneys’ fees and expenses regarding the presence and/or remediation of any Hazardous Substances at, on or about the Subleased Premises existing prior to the term of this Sublease other than any Hazardous Substances brought onto the Subleased Premises by Subtenant and/or its assignees, agents, employees, contractors or licensees. The provisions of this Section 7.9 shall survive the expiration or earlier termination of the Master Lease and/or this Sublease.

          7.10 Sections 11.1, 11.2 and 11.3 of the Master Lease shall be applicable to Subtenant’s insurance obligations pursuant to this Sublease with the following changes:

               (a) Subtenant will not be required to obtain business interruption insurance and Subtenant’s property insurance will not cover any improvements or alterations within the Subleased Premises (which will be covered by Sublandlord’s insurance);

               (b) The liability policy carried by Subtenant is a general liability and not public liability policy;

               (c) Subtenant’s products and pollution liability insurance may be written on a claims made basis, but all other insurance will be written on an occurrence basis; and

               (d) The deductible amount of Tenant’s insurance may not exceed $25,000.

          7.11 Subtenant shall have the right to install the phone system which is currently in the Subleased Premises but not installed. Subtenant shall pay for any installation and maintenance of such phone system. At no cost to Subtenant, Sublandlord shall leave the existing network cabling, patch panel, and rack, with all wires labeled, for Subtenant’s use. The title of such phone system shall remain with Sublandlord.

          7.12 Sublandlord agrees to allow Subtenant access to the roof top for the maintenance of equipment, subject to receipt of approval from the Landlord.

     8.  Indemnity . Except to the extent any such claims, losses and damages are caused by, or are the result of, the negligence of Sublandlord and/or its assignees, agents, employees, contractors or licensees, Subtenant hereby agrees to indemnify and hold Sublandlord harmless

from and against any and all claims, losses and damages, including, without limitation, reasonable attorneys’ fees and disbursements, which may at any time be asserted against Sublandlord by (a) the Landlord for failure of Subtenant to perform any of the covenants, agreements, terms, provisions or conditions contained in the Master Lease which by reason of the provisions of this Sublease Subtenant is obligated to perform, or (b) any person by reason of Subtenant’s use and/or occupancy of the Subleased Premises. Sublandlord hereby agrees to defend, indemnify and hold harmless Subtenant from and against any and all claims, actions, liabilities, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and disbursements) arising from Sublandlord’s breach of any provisions of this Sublease. The provisions of this Section 8 shall survive the expiration or earlier termination of the Master Lease and/or this Sublease.

     9.  Cancellation of Master Lease . In the event of the cancellation or termination of the Master Lease for any reason whatsoever or of the involuntary surrender of the Master Lease by operation of law prior to the expiration date of this Sublease, Subtenant agrees to make full and complete attornment to the Landlord under the Master Lease for the balance of the term of this Sublease and upon the then executory terms hereof at the option of the Landlord at any time during Subtenant’s occupancy of the Premises, which attornment shall be evidenced by an agreement in form and substance reasonably satisfactory to the Landlord and Subtenant. Subtenant agrees to execute and deliver such an agreement at any time within ten (10) business days after request of the Landlord, and Subtenant waives the provisions of any law now or hereafter in effect which may give Subtenant any right of election to terminate this Sublease or to surrender possession of the Subleased Premises in the event any proceeding is brought by the Landlord under the Master Lease to terminate the Master Lease.

     10.  Hazardous Substances . On or before the Commencement Date, Sublandlord shall deliver to Subtenant a Phase I Environmental Site Assessment with respect to the Subleased Premises in accordance with the standards set forth in Exhibit G to the Master Lease; provided, however, that Sublandlord makes no representation or warranty regarding such report, except that in the event any contamination is evidenced in such report, such contamination will not be the responsibility of Subtenant and Sublandlord will indemnify, defend and hold Subtenant harmless from and against any claims made against Subtenant as a result of such contamination. Within three (3) business days of the Expiration Date, Subtenant shall deliver to Sublandlord a Phase I Environmental Site Assessment dated through the Expiration Date in accordance with the standards set forth in Exhibit G to the Master Lease; provided, however, that Subtenant makes no representation or warranty regarding such report.

     11.  Certificates . Each party hereto shall at any time and from time to time as requested by the other party upon not less than ten (10) days prior written notice, execute, acknowledge and deliver to the other party, a statement in writing certifying that this Sublease is unmodified and in full force and effect (or if there have been modifications that the same is in full force and effect as modified and stating the modifications, if any), certifying the dates to which rent and any other charges have been paid and stating whether or not, to the knowledge of the person signing the certificate, the other party is in default beyond any applicable grace period provided herein in performance of any of its obligations under this Sublease, and if so, specifying each such default of which the signer may have knowledge, it being intended that any

such statement delivered pursuant hereto may be relied upon by others with whom the party requesting such certificate may be dealing.

     12.  Assignment or Subletting . Subject to all of the rights of the Landlord under the Master Lease and the restrictions contained in the Master Lease, Subtenant shall not be entitled to assign this Sublease or to sublet all or any portion of the Premises without the prior written consent of Sublandlord, which consent may be withheld by Sublandlord in its sole discretion. Notwithstanding the foregoing, Subtenant may enter into a “Permitted Transfer” as defined in the Master Lease without obtaining Landlord’s or Sublandlord’s consent.

     13.  Severability . If any term or provision of this Sublease or the application thereof to any person or circumstances shall, to any extent, be invalid and unenforceable, the remainder of this Sublease or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term or provision of this Sublease shall be valid and be enforced to the fullest extent permitted by law.

     14.  Entire Agreement; Waiver . This Sublease contains the entire agreement between the parties hereto and shall be binding upon and inure to the benefit of their respective heirs, representatives, successors and permitted assigns. Any agreement hereinafter made shall be ineffective to change, modify, waive, release, discharge, terminate or effect an abandonment hereof, in whole or in part, unless such agreement is in writing and signed by the parties hereto.

     15.  Captions and Definitions . Captions to the Sections in this Sublease are included for convenience only and are not intended and shall not be deemed to modify or explain any of the terms of this Sublease.

     16.  Further Assurances . The parties hereto agree that each of them, upon the request of the other party, shall execute and deliver, in recordable form if necessary, such further documents, instruments or agreements and shall take such further action that may be necessary or appropriate to effectuate the purposes of this Sublease.

     17.  Governing Law . This Sublease shall be governed by and in all respects construed in accordance with the internal laws of the State of California.

     18.  Attorneys’ Fees . If either party commences legal action against the other party in connection with this Sublease, the prevailing party will be entitled to recover costs of suit and reasonable attorneys’ fees.

     19.  Consent of Landlord . The validity of this Sublease shall be subject to the Landlord’s prior written consent hereto pursuant to the terms of the Master Lease, and if Landlord’s consent shall not be obtained and a copy thereof delivered to Subtenant within thirty (30) days of the date hereof, Subtenant shall have the option to cancel this Sublease by notice to Sublandlord within forty (40) days from the date hereof.

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     IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be executed as of the day and year first above written.

EXHIBIT A

THE MASTER LEASE

LEASE AGREEMENT

     This Lease Agreement (this “Lease”) is entered into as of July 31, 2003, between VPI OBERLIN I, L.P., a California limited partnership (“Landlord”), and PHENOMIX CORPORATION, a Delaware corporation (“Tenant”), who agree as follows with respect to the real property located at 5871 Oberlin Drive, San Diego, California, described on the attached Exhibit A-1 (the “Project”) on which is located a building consisting of approximately 33,728 square feet (the “Building”) as depicted on the Building Floor Plan attached to this Lease as Exhibit B (the “Building Floor Plan”):

      1.  Agreement to Let . Landlord leases to Tenant, and Tenant leases from Landlord, the premises defined below, along with the non-exclusive right to use those portions of the Project owned by Landlord and intended for common use by tenants and invitees of the Project, including the Building lobby, landscaped areas, common passageways, walkways, hallways, parking areas, and driveways (the “Common Area”). Except as specifically set forth herein, this Lease confers no rights, however, to the roof, exterior walls, or utility raceways of the Building, nor with regard to either the subsurface of the land below the ground level of the Project or with regard to the air space above the ceiling of the Building, or to parking spaces not assigned to Tenant. Tenant’s rental obligations and rights to possession do not begin until the Commencement Date as defined below.

      2.  Principal Lease Provisions and Definitions . The following are the “Principal Lease Provisions” of and definitions applicable to this Lease. Other portions of this Lease explain and define the Principal Lease Provisions in more detail and should be read in conjunction with this Article.

          2.1 “Basic Monthly Rent” means the sum of the following, on a fully net basis: (a) the product of $2.65 multiplied by the number of Rentable Square Feet of the Premises, plus (b) the product of 0.01559 multiplied by the Additional Allowance, if any. Basic Monthly Rent is increased by 3.5% on the first day of the calendar month that is one year after the Commencement Date, and again on each anniversary of such date of rent increase.

          2.2 “Broker” means Steve Bollert of Burnham Real Estate. The parties acknowledge and agree that the Broker is acting as a dual agent, and the parties consent to such dual agency, but neither broker nor any of its agents may bind Landlord or Tenant or make any representations on behalf of Landlord or Tenant (and neither Landlord nor Tenant may rely on any representations, warranties, or commitments made by Broker).

          2.3 “Commencement Date,” as to all portions of the Premises other than the vivarium, means the earliest of the following: (a) the date on which Phase 1 of Landlord’s Work is Substantially Completed (as defined below); (b) the date on which Phase 1 of Landlord’s Work would have been substantially completed if not for Tenant Delay; and (c) the date on which Tenant first conducts business on the Premises. “Commencement Date,” as to the vivarium, means the earliest of the following: (a) the date on which construction of

the vivarium is Substantially Completed (as defined below); (b) the date on which construction of the vivarium would have been substantially completed if not for Tenant Delay; and (c) the date on which Tenant first conducts operations in the vivarium. For purposes of this Lease, “Substantially Completed” means the date on which all of the following have occurred: (i) the City of San Diego Building Inspector gives its final sign-off on any building inspection record card for the applicable Phase of Landlord’s Work or a temporary certificate of occupancy is issued for the applicable Phase of Landlord’s Work, and (ii) the applicable Phase of Landlord’s Work is in a condition that Tenant can begin operations from the applicable portion of the Premises, subject only to minor punch-list items. Within 30 days after substantial completion of the applicable Phase of Landlord’s work, Landlord and Tenant shall: (a) participate in a joint walk through of the Premises for the purpose of preparing a punch-list of items of required repair or other deficiencies in construction (and Landlord shall use commercially reasonable efforts to cause the punch-list items to be corrected as soon as possible); and (b) acknowledge, in a mutually executed instrument, the Commencement Date as to such phase, Tenant’s acceptance of the Premises including the applicable Phase of Landlord’s Work, the Expiration Date, the Rentable Square Feet of Premises, and the Basic Monthly Rent. Notwithstanding anything to the contrary contained in the paragraph, if the vivarium is not completed in accordance with this Lease within 20 weeks after issuance of the Vivarium Permit, as defined in Section 2.5 (the “Vivarium Deadline”) for any reason other than Tenant Delay or force majeure delay, then Basic Monthly Rent will be abated as follows (prorated for the number of days within the applicable delay period):

          2.4 “Expiration Date” means the date that is the seventh anniversary of the last day of the calendar month in which the Commencement Date occurs.

          2.5 Landlord’sWork. Landlord’s Work is defined and addressed in the attached Exhibit A-2 .

          2.6 “Landlord’s Warranty Obligations” means Landlord’s obligations to Tenant to correct any defects in Landlord’s Work that are specifically identified in writing by Tenant to Landlord during the first year after the Commencement Date, and to complete Landlord’s Work in compliance with all Applicable Regulations. Landlord shall to fulfill Landlord’s Warranty Obligations.

          2.7 Notice Addresses for Tenant: At the Premises.

          2.8 Notice and Payment Address for Landlord: VPI Oberlin I, L.P., ATTN: Daniel Ryan, 4350 La Jolla Village Drive, Suite 960, San Diego, California, 92122; with a copy of notices to: Vanguard Law Group, LLP, ATTN: Jeffrey A. Schneider, Esq., 8910 University Center Lane, Suite 500, San Diego, California 92122.

          2.9 “Operations Plan” means a detailed lists of chemicals (including all codes and classifications) to be used or located in the Premises or used or transported by Tenant or its Invitees on the Project. Tenant shall deliver the Operations Plan to Landlord concurrent with the execution of this Lease and an updated Operations Plan on each anniversary of this Lease. If, at any time during the Term, Tenant desires to use material amounts of chemicals not identified in the Operations Plan on a regular basis, Tenant shall provide Landlord with an updated Operations Plan before integrating the use of the new chemicals into Tenant’s operations.

          2.10 “Permitted Use” means Tenant’s use of the Premises for general office, laboratory, and support areas for biomedical research and development in accordance with the Operations Plan (as amended from time to time) and all Applicable Regulations (subject to Section 5.6 below).

          2.11 “Premises” means the portion of the Building depicted on the site plan attached as Exhibit “C” to this Lease.

          2.12 Rent Holiday: Tenant is not obligated to pay Basic Monthly Rent or Tenant’s Pro Rata Share of Operating Expenses for the Premises (other than the vivarium) on account of the first 120 days after the Commencement Date of the Premises unless and until Tenant commits a default under this Lease (that is not cured within the applicable cure period). Similarly, Tenant is not obligated to pay Basic Monthly Rent or Tenant’s Pro Rata Share of Operating Expenses for the vivarium space on account of the first 120 days after the Commencement Date for the vivarium as determined in accordance with Section 2.3 unless and until Tenant commits a default under this Lease (that is not cured within the applicable cure period).

          2.13 “Rentable Square Feet” of the Building means 33,728 square feet (based on drip line). Rentable Square Feet of the Premises means the number of square feet of the Premises plus Tenant’s Pro Rata Share of the number of square feet of Common Area in the Building based on the customary industrial drip-line” measurement standard, as reasonably determined by the TI Architect. Within 30 days after Landlord’s Work is Substantially Completed, Landlord shall cause the TI Architect to measure the Premises and the Common Area and to certify the Rentable Square Feet of the Premises. Landlord and Tenant agree that such figures are deemed accurate and, therefore, not subject to re-measurement or adjustment by Landlord or Tenant. Landlord and Tenant estimate that the Rentable Square Feet of the Premises will be approximately 16,603 square feet.

          2.14 “Security Deposit” means cash or letter of credit in an amount equal to four months of Basic Monthly Rent, as that amount may change from time to time. If, at any time during the Term, after Landlord’s request, Tenant cannot reasonably establish to Landlord that Tenant’s unencumbered cash holdings equal or exceed $3.5 million, then Tenant shall increase the Security Deposit to an amount equal to six months of the then current Basic Monthly Rent.

          2.15 “Tenant Delay” means delay to any portion of Landlord’s Work caused by Tenant or its agents, such as delays for long lead-time items requested by Tenant, delays resulting from Tenant or its agents interference with the construction process, delays resulting

from requests by Tenant to make changes to Landlord’s Work, and delays resulting from Tenant’s failure to appropriately respond within five business days after Landlord’s written request for information relating to construction of Landlord’s Work or otherwise within any time period prescribed in this Lease. Tenant shall cause its authorized representative to attend each weekly construction meeting relating to Landlord’s Work (and information requested from Tenant in any such meeting and included in the minutes for the meeting constitutes written request for information contemplated by the preceding sentence).

          2.16 “Tenant’s Pro Rata Share” means the ratio of Rentable Square Feet of the Premises to the Rentable Square Feet of the Building. Landlord and Tenant estimate that Tenant’s Pro Rata Share will be approximately 49.23%.

      3.  Term . The term of this Lease (the “Term”) commences on the date of this Lease and expires on the Expiration Date, subject to earlier termination in accordance with this Lease.

      4.  Possession . Tenant is entitled to possession of the Premises on substantial completion of Landlord’s Work. When taking possession of the Premises, Tenant will be deemed to have thoroughly inspected the Premises and accepted the Premises in its as-is condition with no right to require Landlord to perform any work to the Premises or the Project (except any minor items set forth on a “punch-list” of excepted items with respect to Landlord’s Work delivered to and accepted by Landlord within 30 days after Tenant takes possession of the Premises), subject to Landlord’s Warranty Obligations set forth above. Except as Landlord’s Warranty Obligations, Tenant waives all warranties, whether express or implied (including any warranties of merchantability or fitness for a particular purpose), with respect to the Premises.

      5.  Use of Premises .

          5.1 Permitted Use . Tenant may use the Premises for the Permitted Use and for no other use. Any change in the Permitted Use requires Landlord’s prior written consent, which consent may be granted or withheld in Landlord’s reasonable discretion.

          5.2 Compliance with Laws . Subject to Landlord’s Warranty Obligations, Tenant shall comply with all laws concerning the Premises or Tenant’s use of the Premises, including the obligation at Tenant’s sole cost to alter, maintain, and restore the Premises in compliance with all applicable laws, even if the laws are enacted after the date of this Lease, even if compliance entails costs to Tenant of a substantial nature, and even if compliance requires structural alterations. Such obligation to comply with laws includes compliance with the Americans With Disabilities Act of 1990 (42 U.S.C. 12181 et seq .) (the “ADA”). If because of changes in the law, including changes to the ADA, modifications to the Common Area are required, Landlord shall cause the Common Area to conform with such new laws or regulations (the costs of which are to be paid by Landlord and amortized in Operating Expenses to the extent described in Section 8.1 below); provided, however, if Tenant’s particular use of the Premises results in the need for modifications or alterations to the Project (beyond Landlord’s Work), then Tenant shall promptly cause the completion of such modifications and alterations, at Tenant’s sole cost, in accordance with Article 13 below.

          5.3 General Covenants and Limitations on Use . Tenant may not do, bring, or keep anything in or about the Premises that will cause a cancellation of any insurance covering the premises or the Project, provided Landlord has notified Tenant and given Tenant a reasonable opportunity to bring its use into compliance to avoid cancellation of insurance or to procure alternative insurance reasonably acceptable to Landlord. If the rate of any insurance carried by Landlord is increased as a result of Tenant’s particular use of the Premises, Tenant shall pay to Landlord, within 10 days after Landlord delivers to Tenant a notice of such increase, the amount of such increase. Furthermore, Tenant shall take all reasonable precautions to prevent any noxious activity from being carried on, in, on, or around the Premises, and to prevent anything from being done or kept in, on, or around the Premises that may be or become a public nuisance or that may cause disturbance, or annoyance to others in the Project, or on adjacent or nearby property. For example, Tenant shall take all reasonable measures to eliminate or minimize any noxious odors emanating from the Premises; provided, however, if in Landlord’s reasonable opinion, the vivarium is producing offensive or noxious odors, Tenant shall install and maintain carbon filters (at its sole costs), but the filter-housing will be provided by Landlord at its costs. Without limiting the generality of the foregoing, all unsightly equipment, objects, and conditions shall be kept enclosed within the Premises; no refuse, scraps, debris, garbage, trash, bulk materials, or waste shall be kept, stored, or allowed to accumulate except as may be properly enclosed within the Premises or in any trash areas in the Project designated by Landlord (provided that Landlord has provided adequate trash areas for the Project); and all pipes, wires, poles, antennas, and other facilities for utilities or the transmission or reception of audio or visual signals shall be kept and maintained enclosed within the Premises. Tenant may not keep or permit to be kept any motorcycle, or other vehicle, nor any animal (excluding certified service dogs), bird, reptile, or other exotic creature in, on or around the Premises, except for any research rodents (i.e., mice, hamsters, gerbils, and rats) residing in enclosed cages within the vivarium area in accordance with all Applicable Regulations subject to Section 5.6 below. Neither Tenant nor Tenant’s Invitees may do anything that will cause damage or waste to the Project. No machinery, apparatus, or other appliance may be used or operated in or on the Premises that will in any manner injure, vibrate, or shake all or any part of the Project. Tenant shall ensure that none of its employees, agents or Tenant’s Invitees prop open any doors or window or circumvent any security for the Project.

          5.4 Use of Common Area . Tenant shall, and shall cause its guests, invitees, customers, service-providers, and licensees (collectively, “Tenant’s Invitees”) to, comply with all rules and regulations regarding the Common Area as Landlord may from time to rime reasonably adopt. Landlord need not enforce the rules and regulations against other tenants of the Project, but if Landlord enforces such rules, it must do so in a non-discriminatory manner. Tenant may not store any property in the Common Area, whether temporarily or permanently (except that Tenant may locate its generator on the generator pad to be located in the Common Area and designated by Landlord for Tenant’s use and, subject to reasonable approval of Landlord and the other tenant(s) of the Project, establish a reception desk in the lobby area of the Building). Any property stored in the Common Area in violation of the foregoing may be removed by Landlord and disposed of, and the cost of such removal, storage, and disposal is payable by Tenant on demand. Additionally, in no event may Tenant use any portion of the Common Area for loading, unloading, or parking, except in those areas specifically designated by Landlord for such purposes, nor for any sidewalk sale, advertising, or other commercial purpose. Tenant acknowledges the unique nature of the Common Area lobby. Although Tenant’s use of such

special Common Area is subject to Landlord’s rules and regulations, Tenant recognizes that it may suffer conflicts with other tenant(s) within the Project. The intent of parties is that the lobby will allow for each tenant of the Project to locate its own employee for reception purposes or to make its own arrangements (of which Landlord will have no involvement) with the other tenant(s) of the Project for shared reception personnel. Tenant acknowledges that it specifically negotiated for the opportunity to have such special Common Area for its own economic purposes; and Tenant assumes all liabilities and obligations and claims arising out of the shared use of the Common Area (and Tenant waives any rights or claims or actions it may have against Landlord on account of any losses, liabilities, or damages suffered by Tenant in connection with the shared use of the Common Area) other than as caused by Landlord’s gross negligence or willful conduct. The preceding sentence is not to be interpreted as creating any indemnity obligation by Tenant.

          5.5 Parking . Neither Tenant nor Tenant’s invitees may use the parking area within the Project (the “Parking Area”) except for Tenant’s Pro Rata Share of parking spaces designated in the Parking Area for parking and the driveways leading to them. Tenant shall comply with Landlord’s request, from time to time, to remove all vehicles from the Parking Area for purposes of maintenance and repair provided such maintenance and repair is conducted outside of normal business hours or Landlord provides alternative reasonable arrangements for Tenant’s employees to park. No personal property of any type may be stored or located in the Parking Area, and parking spaces may only be occupied by appropriately sized vehicles.

          5.6 Vivarium Use . The parties acknowledge that restrictions in the covenants, conditions, and restrictions governing the Project (the “CC&R’s”) may be interpreted to prohibit the use of the vivarium contemplated by this Lease. If Landlord or Tenant receive a notice from the association responsible for enforcing the CC&R’s or any “Owner” as defined in the CC&R’s (collectively referred to as the “Association”) requesting termination of the use of the vivarium, it shall notify the other, and Tenant and Landlord shall work together (at Landlord’s cost and direction) to obtain the Association’s consent (whether voluntary or involuntary) to the continued use of the vivarium. Landlord shall reimburse Tenant for all out-of-pocket costs incurred in connection with such defense and appeal (including attorneys fees and costs) and Landlord shall indemnify and defend Tenant from any claims and liabilities arising out of the CC&R’s or the Association on account of the use of the vivarium in accordance with this Lease. If, after exhausting all appeals and remedies, Landlord and Tenant mutually and reasonably determine that legal termination of Tenant’s use of the vivarium is imminent on account of violation of the CC&R’s, then: (a) Tenant shall relocate its vivarium use to another facility; (b) Basic Monthly Rent will be reduced by the product of the Basic Monthly Rent multiplied by the fraction, the numerator of which is the Rentable Square Feet of the vivarium area and the denominator of which is the Rentable Square Feet of the Premises; and (c) Landlord shall reimburse Tenant for the following costs reasonably incurred by Tenant: (i) the costs of relocating the animals (and, if necessary, any equipment) from the vivarium within the Premises to another local vivarium facility; (ii) the positive difference, if any, between the per-square-foot cost of the new vivarium facility (to the extent of its comparable facilities) minus the per-square-foot cost of the rent abatement described above, multiplied by the number of square feet of the vivarium depicted on the Floor Plan; and (iii) any actual losses incurred by Tenant from any existing contracts between Tenant and its clients resulting directly from the delays caused by the vivarium relocation.

      6.  Signs . Tenant is entitled to Tenant’s Pro Rata Share of signage rights on the Premises in accordance with all applicable laws, regulations, and covenants, conditions and restrictions governing the Premises. Such signage rights include the right to install a monument sign and lobby directory subject to Landlord’s prior written consent (which may not unreasonably be withheld). Nevertheless, Tenant may not place, construct, or maintain any sign, advertisement, awning, banner, or other exterior decoration in the Premises which is visible from the exterior of the Premises (including inside the windows of the Premises), without Landlord’s prior written consent, which consent may not be unreasonably withheld. Tenant shall, at Tenant’s sole cost, make any changes to any of Tenant’s signage on the Project as required by any new or revised Applicable Regulation. Tenant shall install, maintain, repair, and replace all of Tenant’s signs at its sole cost and in first class condition.

      7.  Monthly Rent . Tenant shall pay to Landlord as minimum monthly rent, without deduction, setoff, prior notice, or demand, the Basic Monthly Rent in advance, on or before the first day of each calendar month throughout the Term commencing on the Commencement Date. Concurrent with execution of this Lease, Tenant shall deposit with Landlord $43,997.95 as estimated first month’s Basic Monthly Rent. THIS LEASE IS INTENDED TO BE AN ABSOLUTE “NET LEASE” AND TENANT IS SOLELY RESPONSIBLE FOR THE CARE, MAINTENANCE, TAXES, INSURANCE, UTILITIES, REPAIR AND OPERATING EXPENSES OF THE PREMISES, INCLUDING ALL COSTS THEREOF, AS THOUGH TENANT WERE THE OWNER OF THE PREMISES, AND TENANT’S PRO RATA SHARE OF OPERATING EXPENSES EXCEPT AS SPECIFICALLY SET FORTH HEREIN. All monetary obligations of Tenant under this Lease constitute “rent” under this Lease.

      8.  Operating Expenses

          8.1 Definition of Operating Expenses . Tenant is responsible for payment of Tenant’s Pro Rata Share of all Operating Expenses of the Project. As used in this Lease, the term “Operating Expenses” means all costs and expenses paid or incurred by Landlord relative to the operation, repair, restoration, replacement, maintenance, and management of the Project, including: (i) water, sewage disposal, drainage, refuse collection and disposal, gas, electricity, and other utility services, and the maintenance of all components, systems, and apparatus by which such utilities and services are provided, (ii) general maintenance and repair of the landscaping, and structural (subject to the limitations below) and non-structural components of the improvements located on the Project and any janitorial, and security services (if any), (iii) expenses payable by Landlord pursuant to the provisions of any recorded covenants, conditions, and restrictions, reciprocal easement agreements, and any other recorded documents affecting the Project (other than Landlord’s loan(s) secured by the Premises), (iv) all real property or real estate taxes, assessments, association dues, and other impositions, whether general, special, ordinary, or extraordinary, and of every kind and nature, which may be levied, assessed, imposed on the Project (“Real Estate Taxes”), (v) any personal property taxes, assessments, or other impositions levied, assessed, or imposed upon any personal property of Landlord used in connection with the Project, (vi) Insurance Expenses (as defined below), (vii) property management fees to Landlord or its agent in the amount of 3.5% of base rent payable by all tenants of the Project (including Tenant), and legal, accounting, inspection, and consultation fees, and (viii) capital improvements required by any change in Applicable Regulations, or other capital improvements, repairs, or replacements deemed reasonably necessary by Landlord or

appropriate to reduce Operating Expenses for the Project or Premises (but excluding any initial improvements to the Project, such as Landlord’s Work); provided, however, any costs of such capital improvements shall be amortized (including a commercially reasonable interest factor reasonably determined by Landlord) over the anticipated useful life of such capital improvements.

          Notwithstanding the foregoing, Operating Expenses shall not include any of the following,: (a) legal fees, brokerage commissions, and advertising costs incurred in connection with the sale of any portion of the Project or the leasing of other premises within the Project; (b) costs incurred in connection with damage or repairs to the extent reimbursed from any insurance policy carried by Landlord in connection with the Project; (c) expenses for repair or replacement paid by condemnation awards; (d) executive or management salaries; (e) the cost of offsite service personnel to the extent that such personnel are not engaged in the management, operation, repair or maintenance of the Project; (f) Landlord’s general overhead; (g) ground lease payments and all principal, interest, loan fees, and other carrying costs related to any mortgage or deed of trust encumbering the Project, unless such costs are directly attributable to Tenant’s, its agents’ or employees’ activities in, on or about the Project, or as a result of a Tenant’s breach or default under this Lease; (h) legal fees, accountant fees and other expenses incurred in disputes regarding or associated with the enforcement or defense of Landlord’s title to or interest in the Project or any part thereof; (i) capital costs incurred for the repair or replacement of the structural aspects of the Building’s foundation, footings, structural support columns, exterior walls, and roof structure (which does not include the roof membrane); and (j) any costs, expenses, or liability incurred by Landlord on account of its obligations under Section 5.6 above.

          8.2 Payment of Operating Expenses . Landlord shall deliver to Tenant an annual statement setting forth the estimated Operating Expenses Landlord expects to incur for the applicable year (“Expense Statement”), Tenant shall pay one-twelfth of Tenant’s Pro Rata Share of the amount set forth in the Expense Statement with each payment of Basic Monthly Rent. Tenant’s payment obligations under this paragraph constitute additional rent under this Lease. If the sum of Tenant’s payments on account of Operating Expenses during any calendar year exceeds the actual Operating Expenses for the calendar year, then the excess will be credited against future Operating Expenses due from Tenant, or paid directly to Tenant. If the sum of Tenant’s Operating Expense payments for any calendar year is less than the actual Operating Expenses for the calendar year, then Tenant shall pay Landlord the amount of the deficiency within 30 days after delivery of Landlord’s statement reconciling the year’s Operating Expenses. Landlord’s delay in delivering any Expense Statement or reconciliation statement will not release Tenant of its obligation to pay any portion of the Operating Expenses.

      9.  Utilities and Services . Landlord shall cause the Premises, the neighboring Premises within the Project, and the Common Areas (the Common Areas include any cooling towers, chillers and boilers, and any other equipment of Landlord for the common use of the Building) to be separately metered for electricity and Tenant shall pay the cost of all separately-metered utilities furnished to the Premises directly to the applicable utility provider. Tenant shall pay the Cost of all utilities and services (including any connection charges and taxes thereon) furnished to the Premises or used by Tenant, including electricity, water, heating, ventilating, air-conditioning, oil, sewer, gas, telephone, communication services, trash collection, and janitorial services. Landlord may furnish to the Premises any of the utilities and services set forth in the

preceding sentence, in which case Tenant shall reimburse Landlord for Landlord’s cost of furnishing such utilities and services. Landlord may not be held liable for failure to furnish any utilities or services to the Premises when such failure results from causes beyond Landlord’s reasonable control. If Landlord constructs new or additional utility facilities not included in Landlord’s Work, including wiring, plumbing, conduits, or mains, resulting from Tenant’s changed or increased utility requirements, Tenant shall promptly pay to Landlord the total cost of such items. The discontinuance of any utilities or services, including Landlord’s discontinuance or failure to provide any of the utilities or services furnished by Landlord to the Premises, shall neither be deemed an actual or constructive eviction, nor release Tenant from its obligations under this Lease including Tenant’s obligation to pay rent. Notwithstanding the foregoing, Landlord will be liable to Tenant, as Tenant’s sole remedy, for 110% of the Basic Monthly Rent on account of any periods of interruption of utility services to the Premises during normal business days suffered by Tenant as the result of Landlord’s or its contractors’, agents’, employees’ or invitees’ gross negligence or willful misconduct.

      10.  Maintenance .

          10.1 Tenant’s Maintenance Obligations . Tenant shall at its sole cost (i) maintain, repair, replace, and repaint, all in first class condition, all aspects and portions of the Premises other than those for which Landlord is responsible under Section 10.2, (ii) arrange for the removal of trash from the Premises, (iii) maintain service agreements reasonably satisfactory to Landlord relative to maintenance, repair, and replacement of the laboratory gas equipment and security systems within the Premises, (iv) maintain janitorial contracts (which contracts must at least include semi-annual floor waxing, grill cleaning and, when needed, carpet cleaning) and pest and termite control service agreements with respect to the Premises, reasonably acceptable to Landlord. Tenant shall provide Landlord with current copies of all maintenance, service and cleaning contracts throughout the Term. Tenant is additionally liable for any damage to the Premises or the Project resulting from the acts or omissions of Tenant, Tenant’s Invitees or, with respect to the Premises only, any other person not controlled by Landlord. If Tenant fails to maintain, repair, replace, or repaint any portion of the Premises as provided above (after notice from Landlord and a reasonable opportunity to complete the repair, maintenance, or replacement), then Landlord may maintain, repair, replace, or repaint any such portion of the Premises or Project and Tenant shall promptly reimburse Landlord for Landlord’s actual cost thereof, plus a supervisory fee in the amount of five percent of such actual cost, which sum constitutes additional rent under this Lease. Landlord, at Landlord’s sole discretion, may require Tenant to use specific contractors or construction techniques for the purpose of maintaining warranties or the integrity of the Premises provided such contractors or techniques are commercially reasonable. Tenant waives the provisions of California Civil Code Section 1942 (or any successor statute), and any similar principals of law with respect to Landlord’s obligations for tenantability of the Premises and Tenant’s right to make repairs and deduct the expense of such repairs from rent.

          10.2 Landlord’s Maintenance Obligations . Landlord shall, subject to reimbursement in accordance with Article 8 above, use its best efforts to maintain, repair, and replace the Common Area and the structural and building systems of the Project, which are the foundations, exterior walls, roof, and central HVAC, mechanical, electrical, and plumbing systems outside the Premises in first class condition and good working order. Landlord’s failure

to perform its obligations set forth in the preceding sentence will not release Tenant of its obligations under this Lease, including Tenant’s obligation to pay rent, but Tenant may bring a claim against Landlord for damages. Tenant waives the provisions of California Civil Code Section 1942 (or any successor statute), and any similar principals of law with respect to Landlord’s obligations for tenantability of the Premises and Tenant’s right to make repairs and deduct the expense of such repairs from rent. If Landlord fails, within 30 days after receipt of written notice of such failure or within such longer period of time if such failure is not reasonably susceptible to cure within a 30-day period, to perform any of its material obligations hereunder to Tenant and such failure is material and adverse to Tenant, then, Tenant may, as its sole remedy, by process of law, compel Landlord to perform its obligations. Should Tenant be the prevailing party in such process to compel, then Landlord will pay Tenant upon demand all reasonable out-of-pocket costs incurred by Tenant pursuing such preceding remedy, including but not limited to reasonable attorneys’ fees.

      11.  Insurance .

          11.1 Public Liability and Property Damage Insurance . Tenant shall maintain throughout the Term public liability and property damage insurance (i) with a single combined liability limit and property damage limit of not less than $2,000,000.00 per occurrence, (ii) insuring (a) against all liability of Tenant and Tenant’s Invitees arising out of or in connection with Tenant’s use or occupancy of the Premises, including products liability and pollution coverage, and (b) performance by Tenant of the indemnity provisions set forth in this Lease, and (iii) naming Landlord, its agents, and any ground lessor or lender holding a security interest in the Premises (“Lender”) as additional named insured, and (c) with umbrella coverage of $5 million. Not more frequently than once every year, if, in the reasonable opinion of Landlord or at the request of any Lender, the amount of such insurance at that time is not adequate, then Tenant shall increase such insurance as reasonably required by Landlord (provided such increase is commercially reasonable in comparison to the amounts and types of insurance required by landlords of similar properties in San Diego).

          11.2 Fire and Extended Coverage Insurance . Tenant shall maintain throughout the Term on Tenant’s Alterations and Tenant’s Personal Property (as defined below) a policy of standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements, coverage with respect to increased costs due to building ordinances, demolition coverage, boiler and machinery insurance, and sprinkler leakage coverage, in each case to the extent of at least 100 percent of full replacement value, and business interruption insurance (covering at least a one-year interruption). Such “full replacement value” shall be determined by the company issuing such policy at the time the policy is initially obtained. Not more frequently than once every two years, either Landlord or Tenant may notify the other that it elects to have the replacement value re-determined by an insurance company. Such re-determination shall be made promptly and in accordance with the rules and practices of the Board of Fire Underwriters, or a like board recognized and generally accepted by the insurance company, and Landlord and Tenant shall be promptly notified of the results by the company. Such policy shall be promptly adjusted according to such re-determination. Tenant shall additionally maintain full coverage plate-glass insurance on the Premises, in which Landlord and any Lender be named as additional insureds.

          11.3 Tenant’s Insurance Generally . Insurance required to be maintained by Tenant under this Lease: (i) shall be issued as a primary policy (not contributed with, and in excess of coverage Landlord may carry) by insurance companies authorized to do business in California with a Best’s Rating of at least “A” and a Best’s Financial Size Category rating of at least “XIV,” as set forth in the most current edition of “Best’s Insurance Reports” (unless otherwise approved by Landlord); (ii) shall name Landlord and any Lender as additional named insureds, but the policy must provide that notwithstanding the fact that Landlord is an additional insured, it is entitled to recover under the policy for any loss suffered by Landlord by reason of Tenant’s negligence; (iii) shall consist of “occurrence” based coverage, without provision for subsequent conversion to “claims” based coverage; (iv) may not be cancelable or subject to reduction of coverage or other modification except after 30-days’ prior written notice to Landlord and any Lender; and (v) may not provide for a deductible or co-insurance provision in excess of $5,000.00. Tenant shall, at least 60 days before the expiration of each such policy, furnish Landlord with a renewal of or “binder” extending the policy. Tenant shall promptly upon request deliver to Landlord copies of such policy or policies or certificates evidencing the existence and amounts of such insurance together with evidence of payment of premiums.

          11.4 Landlord’s Insurance . Landlord shall maintain throughout the Term policies of insurance written by good and solvent insurance companies, worker’s compensation insurance as required by law and shall maintain a standard special purpose all-risk property insurance policy in an amount equal to the full replacement cost of the Building (including, without limitation, the Landlord’s Work) with reasonable deductibles. Additionally, Landlord may maintain any of the following insurance, in such amounts and with such limits as Landlord determines in its reasonable discretion: (i) public liability and products liability insurance; (ii) fire and extended coverage insurance, with vandalism and malicious mischief endorsements, coverage with respect to increased costs due to building ordinances, demolition coverage, and sprinkler leakage coverage; (iii) boiler and machinery insurance; (iv) fidelity insurance to the extent required by a Lender; (v) earthquake insurance to the extent either required by a Lender or commonly maintained by owners or tenants of similarly situated research/development properties in the general vicinity of the Building; (vi) plate-glass insurance to the extent either required by a Lender or commonly maintained by owners or tenants of properties similar to the Premises; (vii) pollution liability insurance; and (viii) rental value insurance not to exceed 12 months rent. The premiums, costs, expenses, and deductibles (or similar costs or charges) of or with respect to any such insurance (all of the preceding, collectively, “Insurance Expenses”) are included in Operating Expenses.

          11.5 Waiver of Subrogation . Landlord and Tenant release each other, Tenant’s Invitees, and Landlord’s guests, invitees, customers and licensees (collectively, “Landlord’s Invitees”) from all claims for damage, loss, or injury to the Premises, to Tenant’s Personal Property, and to the fixtures and Alterations of either Landlord or Tenant in or on the Premises to the extent the damage, loss or injury is covered by any insurance policies carried by Landlord and Tenant and in force at the time of such damage. Landlord and Tenant shall each use its best efforts to cause all insurance policies obtained by it pursuant to this Lease to provide that the insurance company waives all right of recovery by way of subrogation against Landlord and Tenant in connection with any damage, loss, or injury covered by such policy.

      12.  Taxes . Tenant shall pay before delinquency all taxes, assessments, license fees, and other charges that are levied or assessed against, or based on the value of, Tenant’s personal property installed or located in or on the Premises including trade fixtures, furnishings, equipment, and inventory (collectively, “Tenant’s Personal Property”) and any real property or real estate taxes, assessments, and other impositions, whether general, special, ordinary, or extraordinary, and of every kind and nature, which may be separately levied, assessed, imposed upon or with respect to the Premises (to the extent separately assessed from the remainder of the Building). On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of such payments. If any such taxes, assessments, license fees, or other charges are levied against Landlord or Landlord’s property, or if the assessed value of the Premises is increased by the inclusion of a value placed on Tenant’s Personal Property, then Tenant, on demand, shall immediately reimburse Landlord for the sum of such taxes, assessments, license fees, and other charges so levied against Landlord which amounts constitute additional rent under this Lease. Landlord may pay such taxes, assessments, license fees, or other charges or such proportion, and receive such reimbursement, regardless of the validity of the levy.

      13.  Alterations . Tenant may make alterations, improvements, additions, installations, or changes to the Premises (any of the preceding, “Alterations”) only if: (i) Tenant first obtains Landlord’s written consent (which consent may not unreasonably be withheld, conditioned, or delayed), (ii) Tenant complies with all conditions, which may be imposed by Landlord, including but not limited to Landlord’s selection of specific contractors or construction techniques (but Landlord may not unreasonably impose such restrictions), and (iii) Tenant pays to Landlord the reasonable costs and expenses of Landlord for architectural, engineering, or other consultants which reasonably may be incurred by Landlord in determining whether to approve any such Alterations. At least 30 days before making any Alterations, Tenant shall submit to Landlord, in written form, proposed detailed plans of such Alterations. Tenant shall, before commencing any Alterations, at Tenant’s sole cost, (i) acquire (and deliver to Landlord a copy of) a permit from appropriate governmental agencies to make such Alterations (any conditions of which permit Tenant shall comply with, at Tenant’s sole cost, in a prompt and expeditious manner), (ii) provide Landlord with 10 days’ prior written notice of the date the installation of the Alterations is to commence, which notice must explicitly remind Landlord to post and record an appropriate notice of non-responsibility, and (iii) obtain (and deliver to Landlord proof of) reasonably adequate workers compensation insurance with respect to any of Tenant’s employees installing or involved with such Alterations (which insurance Tenant shall maintain in force until completion of the Alterations). All Alterations shall upon installation become the property of Landlord and shall remain on and be surrendered with the Premises on termination of this Lease, except that Landlord may, at its election, require Tenant to remove any or all of the Alterations, by so notifying Tenant in writing at the time Landlord consents to the Alteration, in which event, Tenant shall, at its sole cost, on or bef