Build-to-suit Lease

BUILD-TO-SUIT LEASE


Landlord: Britannia Pointe Grand Limited Partnership


Tenant: Rigel, Inc.


Date: June 2, 1998


TABLE OF CONTENTS


1. PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Lease of Property . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Landlord's Reserved Rights . . . . . . . . . . . . . . . . . . . 1


2. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Early Possession . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Delay In Possession . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Acknowledgement Of Rent Commencement . . . . . . . . . . . . . . 3
2.5 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Option To Extend Term . . . . . . . . . . . . . . . . . . . . . 4


3. RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Minimum Rental . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Rental Amounts . . . . . . . . . . . . . . . . . . . . . . 4
(b) Rental Amounts During First Extended Term . . . . . . . . . 5
(c) Rental Amounts During Second Extended Term . . . . . . . . 5
(d) Rental Adjustment Due to Change in Square Footage . . . . . 6
3.2 Late Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . 6


4. STOCK WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Stock Warrants . . . . . . . . . . . . . . . . . . . . . . . . . 6


5. CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Construction of Improvements . . . . . . . . . . . . . . . . . . 6
5.2 Condition of Property . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . 7


6. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.1 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . 7
6.2 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 8


7. OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.1 Payment of Operating Expenses . . . . . . . . . . . . . . . . . . 8
7.2 Definition Of Operating Expenses . . . . . . . . . . . . . . . . 8
7.3 Determination Of Operating Expenses . . . . . . . . . . . . . . .10
7.4 Final Accounting For Lease Year . . . . . . . . . . . . . . . . .11
7.5 Proration . . . . . . . . . . . . . . . . . . . . . . . . . . . .11


8. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8.1 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8.2 Interruption . . . . . . . . . . . . . . . . . . . . . . . . . .12


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9. ALTERATIONS; SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . .12
9.1 Right To Make Alterations . . . . . . . . . . . . . . . . . . . .12
9.2 Title To Alterations . . . . . . . . . . . . . . . . . . . . . .12
9.3 Tenant Fixtures . . . . . . . . . . . . . . . . . . . . . . . . .13
9.4 No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
9.5 Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13


10. MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . . . . . . . . . . .14
10.1 Landlord's Work . . . . . . . . . . . . . . . . . . . . . . . . .14
10.2 Tenant's Obligation For Maintenance . . . . . . . . . . . . . . .14
(a) Good Order, Condition And Repair . . . . . . . . . . . . .14
(b) Landlord's Remedy . . . . . . . . . . . . . . . . . . . . .14
(c) Condition Upon Surrender . . . . . . . . . . . . . . . . .14


11. USE OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.2 [Omitted.] . . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.3 No Nuisance . . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.4 Compliance With Laws. - . . . . . . . . . . . . . . . . . . . . .15
11.5 Liquidation Sales . . . . . . . . . . . . . . . . . . . . . . . .16
11.6 Environmental Matters . . . . . . . . . . . . . . . . . . . . . .16


12. INSURANCE AND INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . .19
12.1 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
12.2 Quality Of Policies And Certificates . . . . . . . . . . . . . .20
I2.3 Workers' Compensation . . . . . . . . . . . . . . . . . . . . . .21
12.4 Waiver Of Subrogation . . . . . . . . . . . . . . . . . . . . . .21
12.5 Increase In Premiums . . . . . . . . . . . . . . . . . . . . . .21
12.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . .21
12.7 Blanket Policy . . . . . . . . . . . . . . . . . . . . . . . . .22


13. SUBLEASE AND ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . .22
13.1 Assignment And Sublease Of Building . . . . . . . . . . . . . . .22
13.2 Rights Of Landlord . . . . . . . . . . . . . . . . . . . . . . .22


14. RIGHT OF ENTRY AND QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . .23
14.1 Right Of Entry . . . . . . . . . . . . . . . . . . . . . . . . .23
14.2 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . .23


15. CASUALTY AND TAKING . . . . . . . . . . . . . . . . . . . . . . . . . .23
15.1 Damage or Destruction . . . . . . . . . . . . . . . . . . . . . .23
15.2 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . .24
15.3 Reservation Of Compensation . . . . . . . . . . . . . . . . . . .25
15.4 Restoration Of Improvements . . . . . . . . . . . . . . . . . . .26


16. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
16.1 Events Of Default . . . . . . . . . . . . . . . . . . . . . . . .26
(a) [Omitted.] . . . . . . . . . . . . . . . . . . . . . . . .26
(b) Nonpayment . . . . . . . . . . . . . . . . . . . . . . . .26
(c) Other Obligations . . . . . . . . . . . . . . . . . . . . .26
(d) General Assignment . . . . . . . . . . . . . . . . . . . .26
(e) Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . .26
(f) Receivership . . . . . . . . . . . . . . . . . . . . . . .27
(g) Attachment . . . . . . . . . . . . . . . . . . . . . . . .27
(h) Insolvency . . . . . . . . . . . . . . . . . . . . . . . .27
16.2 Remedies Upon Tenant's Default . . . . . . . . . . . . . . . . .27
16.3 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . .28


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17. SUBORDINATION, ATTORNMENT AND SALE . . . . . . . . . . . . . . . . . . .28
17.1 Subordination To Mortgage . . . . . . . . . . . . . . . . . . . .28
17.2 Sale Of Landlord's Interest . . . . . . . . . . . . . . . . . . .29
17.3 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . .29
17.4 Subordination to CC&R's . . . . . . . . . . . . . . . . . . . . .29
17.5 Mortgagee Protection . . . . . . . . . . . . . . . . . . . . . .29


18. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
18.1 Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30


19. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
19.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
19.2 Successors And Assigns . . . . . . . . . . . . . . . . . . . . .31
19.3 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
19.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . .32
19.5 Litigation Between Parties . . . . . . . . . . . . . . . . . . .32
19.6 Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
19.7 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . .32
19.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . .32
19.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . .32
19.10 No Partnership . . . . . . . . . . . . . . . . . . . . . . . . .32
19.11 Financial Information . . . . . . . . . . . . . . . . . . . . .32
19.12 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
19.13 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
19.14 Rules And Regulations . . . . . . . . . . . . . . . . . . . . .33
19.15 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
19.16 Memorandum Of Lease . . . . . . . . . . . . . . . . . . . . . .33
19.17 Corporate Authority . . . . . . . . . . . . . . . . . . . . . .33
19.18 Execution and Delivery . . . . . . . . . . . . . . . . . . . . .34
19.19 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
EXHIBITS

EXHIBIT A Real Property Description


EXHIBIT B Site Plan


EXHIBIT C Workletter


EXHIBIT D Estimated Construction Schedule


EXHIBIT E Acknowledgement of Rent Commencement Date


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BUILD-TO-SUIT LEASE


THIS BUILD-TO-SUIT LEASE ("LEASE") is made and entered into as of June 2, 1998, by and between BRITANNIA POINTE GRAND LIMITED PARTNERSHIP, a Delaware limited partnership ("LANDLORD"), and RIGEL, INC., a Delaware corporation ("TENANT").


THE PARTIES AGREE AS FOLLOWS:


1. PROPERTY


1.1 LEASE OF PROPERTY.


(a) Landlord leases to Tenant and Tenant hires and leases from Landlord, on the terms, covenants and conditions hereinafter set forth, the building (the "BUILDING") to be constructed pursuant to Article 5 hereof and EXHIBIT C attached hereto on a portion of the real property described in EXHIBIT A attached hereto (the "PROPERTY"), to consist of a two-story office and laboratory building containing approximately 60,964 square feet. The location of the Building on the Property is intended to be substantially as shown on the site plan attached hereto as EXHIBIT B (the "SITE PLAN"). The Property is part of the Britannia Pointe Grand Business Park (the "CENTER") on East Grand Avenue in the City of South San Francisco, County of San Mateo, State of California, which presently consists of the Property and certain adjacent undeveloped land and presently includes the existing buildings designated as Buildings D, E, F and G on the Site Plan (containing, in the aggregate, approximately 177,253 square feet of office and research and development space), as well as one additional building of approximately 47,000 square feet presently under construction in the area designated "MetaXen Building" on the Site Plan. The Building and the other improvements to be constructed on the Property pursuant to Article 5 hereof and EXHIBIT C attached hereto are sometimes referred to collectively herein as the "IMPROVEMENTS." The parking areas, driveways, sidewalks, landscaped areas and other portions of the Center that lie outside the exterior walls of the buildings now existing or to be constructed in the Center, as depicted in the Site Plan and as hereafter modified by Landlord from time to time in accordance with the provisions of this Lease, are sometimes referred to herein as the "COMMON AREAS."


(b) As an appurtenance to Tenant's leasing of the Building pursuant to Section 1. l(a), Landlord hereby grants to Tenant, for the benefit of Tenant and its employees, suppliers, shippers, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, (i) those portions of the Common Areas improved from time to time for use as parking areas, driveways, sidewalks, landscaped areas, or for other common purposes, and (ii) all access easements and similar rights and privileges relating to or appurtenant to the Center and created or existing from time to time under any access easement agreements, declarations of covenants, conditions and restrictions, or other written agreements now or hereafter of record with respect to the Center, subject however to any limitations applicable to such rights and privileges under applicable law, under this Lease and/or under the written agreements creating such rights and privileges.


1.2 LANDLORD'S RESERVED RIGHTS. To the extent reasonably necessary to permit Landlord to exercise any rights of Landlord and discharge any obligations of Landlord under this Lease, Landlord shall have, in addition to the right of entry set forth in Section 16.1 hereof, the following rights: (i) to make changes to the Common Areas, including, without limitation, changes in the location, size or shape of any portion of the Common Areas, and to relocate parking spaces in the Center (but not materially decrease the number of such parking spaces in areas of the Center generally adjacent to the Building); (ii) to close temporarily any of the Common Areas for maintenance or other reasonable purposes, provided that reasonable parking and reasonable access to the Building remain available;


(iii) to construct, alter or add to other buildings and Common Area improvements in the center (including, but not limited to, construction of site improvements, buildings and Common Area improvements in adjacent portions of the Center as it may exist from time to time); (iv) to build in areas adjacent to the Center and to add such areas to the Center; (v) to use the Common Areas while engaged in making additional improvements, repairs or alterations to the Center Or any portion thereof; and (vi) to do and perform such other acts with respect to the Common Areas and the Center as may be necessary or appropriate; PROVIDED, however, that notwithstanding anything to the contrary in this Section 1.2, Landlord's exercise of its rights hereunder shall not cause any material diminution of Tenant's rights, nor any material increase of Tenant's obligations, under this Lease or with respect to the Improvements.


2. TERM


2.1 TERM. The term of this Lease shall commence upon mutual execution of this Lease by Landlord and Tenant. Tenant's minimum rental and Operating Expense obligations shall commence on the earlier of (i) the date which is six (6) months after the date Landlord delivers to Tenant a Structural Completion Certificate pursuant to the Workletter attached hereto as EXHIBIT C (subject to any adjustments authorized or required under the provisions of such EXHIBIT C), correctly notifying Tenant that Landlord's construction of the shell of the Building pursuant to Article V and EXHIBIT C is substantially complete, or (ii) the date Tenant takes occupancy of and commences operation of its business in the Building, the earlier of such dates being herein called the "RENT COMMENCEMENT DATE," and shall end on the day (the "TERMINATION DATE") immediately preceding the date seventeen (17) years thereafter, unless sooner terminated or extended (if applicable) as hereinafter provided.


2.2 EARLY POSSESSION. Tenant shall have the nonexclusive right to occupy and take possession of the Building from and after the date of Landlord's delivery of the Structural Completion Certificate described in clause (i) of Section 2.1, even though Landlord will be continuing to construct the balance of Landlord's Work as contemplated in EXHIBIT C, for the purpose of constructing Tenant's Work as contemplated in EXHIBIT C and for the purpose of installing fixtures and furniture, laboratory equipment, computer equipment, telephone equipment, low voltage data wiring and personal property and other similar work related to the construction of Tenant's Work and/or preparatory to the commencement of Tenant's business on the Property. Such occupancy and possession, and any early access under the next sentence of this Section 2.2, shall be subject to and upon all of the terms and conditions of this Lease and of the Workletter attached hereto as EXHIBIT C including, but not limited to, conditions relating to the maintenance of required insurance), except that Tenant shall have no obligation to pay minimum rental or Operating Expenses for any period prior to the Rent Commencement Date as determined under Section 2.1; such early possession shall not advance or otherwise affect the Rent Commencement Date or Termination Date determined under Section 2.1. Tenant shall also be entitled to have early access to the Property at all appropriate times prior to Landlord's delivery of the Structural Completion Certificate, subject to the approval of Landlord and its general contractor (which approval shall not be unreasonably withheld or delayed) and to all other provisions of this Section 2.2, solely for the purpose of performing work preparatory to the construction of Tenant's Work or necessary for the orderly sequencing of such work, and Tenant shall not be required to pay minimum rental or Operating Expenses by reason of such early access until the Rent Commencement Date otherwise occurs; without limiting the generality of the preceding portion of this sentence, Tenant shall be entitled to have early access to the Property and the Building as soon as the roof metal decking is in place to begin hanging electrical, mechanical and plumbing services from the overhead structure, subject to all of the provisions of this Section 2.2. Tenant shall not interfere with or delay Landlord's contractors by any early access, occupancy or possession under this Section 2.2, shall coordinate and cooperate with Landlord and its contractors (who shall similarly coordinate and cooperate with Tenant and its contractors) to minimize any interference or delay by either party with respect to the other party's work following Landlord's delivery of the Structural Completion Certificate, and shall indemnify, defend and hold harmless Landlord and its agents and employees from and against any and all claims, demands, liabilities, actions, losses, costs and expenses, including


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(but not limited to) reasonable attorneys' fees, arising out of or in connection with Tenant's early entry upon the Property hereunder.


2.3 DELAY IN POSSESSION. Landlord agrees to use its best reasonable efforts to complete its portion of the work described in Section 5.1 and EXHIBIT C promptly, diligently and within the respective time periods set forth in the Estimated Construction Schedule attached hereto as EXHIBIT D and incorporated herein by this reference, as such schedule may be modified from time to time by mutual written agreement of Landlord and Tenant, and subject to the effects of any delays caused by or attributable to Tenant or any other circumstances beyond Landlord's reasonable control (excluding financial inability); PROVIDED, however, that except to the extent caused by a material default by Landlord of its obligations set forth in this Lease (including, but not- limited to, its obligations set forth in this Section 2.3 and in Section 5.1 and EXHIBIT C), Landlord shall not be liable for any damages caused by any delay in the completion of such work, nor shall any such delay affect the validity of this Lease or the obligations of Tenant hereunder. Notwithstanding any other provision of this Section 2.3, however, if Landlord fails to deliver the Structural Completion Certificate and tender possession of the completed structural portions of the Building Shell (I.E., those portions required to be completed as a condition of delivery of the Structural Completion Certificate) to Tenant by the date which is twenty-one (21) months after the date of this Lease, then Tenant shall have the right to terminate this Lease without further liability hereunder by written notice delivered to Landlord at any time prior to Landlord's delivery of the Structural Completion Certificate and tender of possession of the completed structural portions of the Building Shell to Tenant; PROVIDED, however, that the 21-month period set forth in this sentence shall be extended, day for day, for a period equal to the length of any delays in Landlord's design and construction of the Building Shell that are caused by any material default by Tenant in the performance of its obligations under this Lease, including (but not limited to) any failure of Tenant to make prompt and timely delivery to Landlord of all information reasonably necessary for Landlord to complete the preparation of all drawings, designs and specifications for the Building Shell and/or any failure of Tenant to respond in a prompt and timely manner to any requests by Landlord or its architect for approval of drawings, designs, specifications, changes or other matters requiring Tenant's review or approval under the provisions of EXHIBIT C.


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


2.5 HOLDING OVER. If Tenant holds possession of the Property or any portion thereof after the term of this Lease WITH Landlord's written consent, then except as otherwise specified in such consent, Tenant shall become a tenant from month to month at one hundred ten percent (110%) of the rental and otherwise upon the terms herein specified for the period immediately prior to such holding over and shall continue in such status until the tenancy is terminated by either party upon not less than thirty (30) days prior written notice. If Tenant holds possession of the Property or any portion thereof after the term of this Lease WITHOUT Landlord's written consent, then Landlord in its sole discretion may elect (by written notice to Tenant) to have Tenant become a tenant either from month to month or at will at one hundred fifty percent (150%) of the rental (prorated on a daily basis for an at-will tenancy, if applicable) and otherwise upon the terms herein specified for the period immediately prior to such holding over, or may elect to pursue any and all legal remedies available to Landlord under applicable law with respect to such unconsented holding over by Tenant. Tenant shall indemnify and hold Landlord harmless from any loss, damage, claim, liability, cost or expense (including reasonable attorneys' fees) resulting from any delay by Tenant in surrendering the Property or any portion thereof (except to the extent such delay is with Landlord's prior written consent), including but not limited to any claims made by a


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succeeding tenant by reason of such delay. Acceptance of rent by Landlord following expiration or termination of this Lease shall not constitute a renewal of this Lease.


2.6 OPTION TO EXTEND TERM. Tenant shall have the option to extend the term of this Lease, at the minimum rental set forth in Section 3. l(b) and (c) and otherwise upon all the terms and provisions set forth herein with respect to the initial term of this Lease, for up to two (2) additional periods of five (5) years each, the first commencing upon the expiration of the initial term hereof and the second commencing upon the expiration of the first extended term, if any. Exercise of such option with respect to the first such extended term shall be by written notice to Landlord at least nine (9) months prior to the expiration of the initial term hereof; exercise of such option with respect to the second extended term, if the first extension option has been duly exercised, shall be by like written notice to Landlord at least nine (9) months prior to the expiration of the first extended term hereof. If Tenant is in default hereunder, beyond any applicable notice and cure periods, on the date of such notice or on the date any extended term is to commence, then the exercise of the option shall be of no force or effect, the extended term shall not commence and this Lease shall expire at the end of the then current term hereof (or at such earlier time as Landlord may elect pursuant to the default provisions of this Lease). If Tenant properly exercises one or more extension options under this Section, then all references in this Lease (other than in this Section 2.6) to the "term" of this Lease shall be construed to include the extension term(s) thus elected by Tenant. Except as expressly set forth in this Section 2.6, Tenant shall have no right to extend the term of this Lease beyond its prescribed-term.


3. RENTAL


3.1 MINIMUM RENTAL.


(a) RENTAL AMOUNTS. Tenant shall pay to Landlord as minimum rental for the Building, in advance, without deduction, offset, notice or demand, on or before the Rent Commencement Date and on or before the first day of each subsequent calendar month of the term of this Lease, the following amounts per month, subject to adjustment in accordance with the terms of this Section 3.1:


MONTHS MONTHLY MINIMUM RENTAL
------ -------------------------

001 - 012 $ 121,928 ($2.00/sq ft)
013 - 024 121,928 ($2.00/sq ft)
025 - 036 177,405 ($2.91/sq ft)
037 - 048 190,817 ($3.13/sq ft)
049 - 060 195,085 ($3.20/sq ft)
061 - 072 196,304 ($3.22/sq ft)
073 - 084 200,572 ($3.29/sq It)
085 - 096 165,822 ($2.72/sq ft)
097 - 108 170,699 ($2.80/sq ft)
109 - 120 175,576 ($2.88/sq ft)
121 - 132 158,506 ($2.60/sq ft)
133 - 144 163,993 ($2.69/sq ft)
145 - 156 170,090 ($2.79/sq ft)
157 - 168 176,186 ($2.89/sq ft)
169 - 180 162,164 ($2.66/sq ft)
181 - 192 168,261 ($2.76/sq ft)
193 - 204 174,967 ($2.87/sq ft)


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


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than the first day of a calendar month, the minimum rental for that month shall be the sum of the two applicable rates, each prorated for the portion of the month during which such rate is in effect.


(b) RENTAL AMOUNTS DURING FIRST EXTENDED TERM. If Tenant properly exercises its right to extend the term of this Lease pursuant to Section 2.6 hereof, the minimum rental during the first extended term shall be equal to ninety-five percent (95 %) of the fair market rental value of the Building (as defined below), including any rental increase provisions then customary in the City of South San Francisco for comparable commercial leases for office, laboratory and research and development projects, determined as of the commencement of such extended term in accordance with this paragraph. Upon Landlord's receipt of a proper notice of Tenant's exercise of its option to extend the term of this Lease, the partie ...