Exhibit 10.56

 

 

 

 

 

 

 

 

 

 

 

 

 

CUPERTINO CITY CENTER

 

NET OFFICE LEASE

 

by and between

 

CUPERTINO CITY CENTER BUILDINGS,

 

a California limited partnership,

 

as Lessor

 

and

 

BORLAND SOFTWARE CORPORATION,

 

a Delaware corporation,

 

as Lessee

 

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TABLE OF CONTENTS

 

         

Page

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1.

  

SUMMARY OF LEASE PROVISIONS

  

1

2.

  

PREMISES DEMISED

  

2

3.

  

TERM: OPTION TO EXTEND

  

2

4.

  

POSSESSION

  

4

5.

  

RENT

  

4

6.

  

SECURITY DEPOSIT

  

4

7.

  

PROJECT TAXES AND OPERATING EXPENSE ADJUSTMENTS

  

5

8.

  

USE

  

10

9.

  

COMPLIANCE WITH LAWS

  

11

10.

  

ALTERATIONS AND ADDITIONS

  

12

11.

  

REPAIRS

  

13

12.

  

LIENS

  

14

13.

  

ASSIGNMENT AND SUBLETTING

  

14

14.

  

HOLD HARMLESS

  

16

15.

  

SUBROGATION

  

17

16.

  

LESSEE’S INSURANCE

  

17

17.

  

SERVICES AND UTILITIES

  

18

18.

  

RULES AND REGULATIONS

  

19

19.

  

HOLDING OVER

  

19

20.

  

ENTRY BY LESSOR

  

19

21.

  

RECONSTRUCTION

  

20

22.

  

DEFAULT

  

21

23.

  

REMEDIES UPON DEFAULT

  

22

24.

  

EMINENT DOMAIN

  

23

25.

  

OFFSET STATEMENT; MODIFICATIONS FOR LENDER

  

23

26.

  

PARKING

  

24

27.

  

AUTHORITY

  

24

28.

  

SURRENDER OF PREMISES

  

25

29.

  

LESSOR DEFAULT AND MORTGAGEE PROTECTION

  

25

30.

  

RIGHTS RESERVED BY LESSOR

  

25

31.

  

EXHIBITS

  

26

32.

  

WAIVER

  

26

33.

  

NOTICES

  

26

34.

  

JOINT OBLIGATIONS

  

26

 

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35.

  

MARGINAL HEADINGS

  

26

36.

  

TIME

  

26

37.

  

SUCCESSORS AND ASSIGNS

  

26

38.

  

RECORDATION

  

26

39.

  

QUIET POSSESSION

  

26

40.

  

LATE CHARGE & ADDITIONAL RENT AND INTEREST

  

27

41.

  

PRIOR AGREEMENTS

  

27

42.

  

INABILITY TO PERFORM

  

27

43.

  

ATTORNEYS’ FEES

  

27

44.

  

SALE OF PREMISES BY LESSOR

  

27

45.

  

SUBORDINATION/ATTORNMENT

  

28

46.

  

NAME

  

28

47.

  

SEVERABILITY

  

28

48.

  

CUMULATIVE REMEDIES

  

28

49.

  

CHOICE OF LAW

  

28

50.

  

SIGNS

  

28

51.

  

GENDER AND NUMBER

  

29

52.

  

CONSENTS

  

29

53.

  

BROKERS

  

29

54.

  

SUBSURFACE AND AIRSPACE

  

29

55.

  

COMMON AREA

  

29

56.

  

LABOR DISPUTES

  

30

57.

  

CONDITIONS

  

30

58.

  

LESSEE’S FINANCIAL STATEMENTS

  

30

59.

  

LESSOR NOT A TRUSTEE

  

30

60.

  

MERGER

  

30

61.

  

NO PARTNERSHIP OR JOINT VENTURE

  

30

62.

  

LESSOR’S RIGHT TO PERFORM LESSEE’S COVENANTS

  

30

63.

  

PLANS

  

30

64.

  

COMMUNICATIONS EQUIPMENT

  

30

65.

  

WAIVER OF JURY

  

31

66.

  

JOINT PARTICIPATION

  

32

67.

  

EXPEDITED DISPUTE RESOLUTION

  

32

68.

  

ONE TIME RIGHT OF FIRST REFUSAL FOR EXPANSION

  

32

69.

  

COUNTERPARTS

  

32

 

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CUPERTINO CITY CENTER

 

NET OFFICE LEASE

 

For and in consideration of rentals, covenants, and conditions hereinafter set
forth, Lessor hereby leases to Lessee, and Lessee hereby teases from Lessor, the
herein described Premises for the term, at the rental rate specified herein and
subject to and upon all of the terms, covenants and agreements set forth in this
lease (“Lease”):

 

1.   SUMMARY OF LEASE PROVISIONS.

 

  a.   Lessee: BORLAND SOFTWARE CORPORATION, a Delaware corporation (“Lessee”).

 

  b.   Lessor: CUPERTINO CITY CENTER BUILDINGS, a California limited partnership
(“Lessor”).

 

  c.   Date of Lease (for reference purposes only): December 18, 2002.

 

  d.   Premises: That certain office space commonly known as 20450 Stevens Creek
Boulevard, Suites 600, 700 and 800, Cupertino, California, and shown
cross-hatched on the reduced floor plans attached hereto as Exhibit “A,”
consisting of approximately sixty-one thousand two hundred ninety-one (61,291)
square feet of Rentable Area (the “Premises”). (ARTICLE 2)

 

  e.   Term: Two (2) years. (ARTICLE 3)

 

  f.   Commencement Date: December 1, 2005 (“Commencement Date”). (ARTICLE 3)

 

  g.   Lease Termination: November 30, 2007 (“Expiration Date”), unless sooner
terminated or extended pursuant to the terms of this Lease. (ARTICLE 3)

 

  h.   Base Rent: Base Rent shall initially equal the sum of $2.80 per square
foot of Rentable Area in the Premises and shall be increased on the first
anniversary of the Commencement Date during the Term to equal one hundred three
percent (103%) of the Base Rent in effect prior to such anniversary date. In the
event of the extension of the Term by the Extended Term (as hereinafter
provided), on the commencement of the Extended Term, Base Rent shall be adjusted
in accordance with the provisions of Article 3.b. below.

 

  i.   Security Deposit: See Article 6. (ARTICLE 6)

 

  j.   Lessee’s Percentage Share: A fraction, expressed as a percentage, the
numerator of which is the Rentable Area of the Premises and the denominator of
which is the Rentable Area of the Building. (ARTICLE 7)

 

  k.   Parking: Non-Exclusive right to use three (3) unreserved, uncovered
spaces per each one thousand (1,000) square feet of Rentable Area in the
Premises (rounded to the nearest whole number) without charge during the Term,
subject to the provisions of Article 26; provided, however, that Lessee shall
have the right to convert up to twenty-five percent (25%) of such parking spaces
to designated, reserved parking spaces, which right shall be personal to Lessee
and any “Permitted Transferee”, on the terms and subject to the conditions more
particularly provided in Article 26 below. (ARTICLE 26)

 

  l.   Addresses for Notices:

 

 

Lessor:

  

c/o Prometheus Real Estate Group, Inc.

    

350 Bridge Parkway

    

Redwood City, California 94065-1517

    

Attn: Ms. Vicki Mullins

    

Telephone No.: (650) 596-5300

    

Fax No.: (650) 596-5377

    

with a concurrent copy to:

    

c/o Prometheus Real Estate Group, Inc.

    

350 Bridge Parkway

    

Redwood City, California 94065-1517

    

Attn: Chief Financial Officer

    

Telephone No.: (650) 596-5300

    

Fax No.: (650) 596-5377

 

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and with a concurrent copy to the Project Management Office at:

    

20400 Stevens Creek Boulevard, Suite 245

    

Cupertino, California 95014

    

Telephone No.: (408) 873-0121

    

Fax No.: (408) 873-0122

Lessee:

  

Borland Software Corporation

    

100 Enterprise Way

    

Scotts Valley, CA 95066

    

Attn: Roger Barney

    

Telephone No.: 831-431-2006

    

Fax No.: 83l-431-20l6

    

with a concurrent copy to:

    

Borland Software Corporation

    

100 Enterprise Way

    

Scotts Valley, CA 95066

    

Attn: General Counsel

    

Telephone No.: 831-431-4643

    

Fax No.: 831-431-4171

 

m. Broker: Tory Corporate Real Estate Advisors, dba The Staubach Company.
(ARTICLE 53)

 

n. Summary Provisions in General. Parenthetical references in this Article 1 to
other articles in this Lease are for convenience of reference, and designate
some of the other Lease articles where applicable provisions are set forth. All
of the terms and conditions of each such referenced article shall be construed
to be incorporated within and made a part of each of the above referred to
Summary of Lease Provisions. If any conflict exists between any Summary of Lease
Provisions as set forth above and the balance of the Lease, then the latter
shall control.

 

2. PREMISES DEMISED. Lessor does hereby lease to Lessee and Lessee hereby leases
from Lessor the Premises described in Article 1.d., subject, nevertheless, to
all of the terms and conditions of this Lease. Prior to the Commencement Date,
Lessor shall cause the Rentable Area of the Premises to be measured by Reel
Grobman & Associates in accordance with BOMA standards (Building Owners and
Managers Association Method for Measuring Floor Area in Office Buildings, ANSI
Z65.1-1996), and if based upon such measurement, it is determined that the
actual Rentable Area differs from the amount specified in Article 1 above, then
an appropriate adjustment shall be made in all calculations under this Lease
based upon such actual Rentable Area retroactive to the date hereof, and the
parties shall make such adjustment payment and/or refund, as is applicable
within thirty (30) days thereafter. The Premises is approximately as shown as
cross-hatched on the floor plan attached hereto as Exhibit “A”. As used in this
Lease, the term “Building” shall mean the building at the address listed in
Article 1.d. above in which the Premises is located. The Building is situated
upon the parcel(s) of land shown on Exhibit “B” attached hereto (collectively,
the “Parcel”). The Building and the “Exterior Common Area” (as defined in
Article 55 below) and all other improvements as now or hereafter located on the
Parcel, if any, are herein sometimes referred to collectively as the “Project”.

 

3.   TERM: OPTION TO EXTEND.

 

a. Initial Term. The term of this Lease shall be for the period designated in
Article 1.f., commencing on the Commencement Date and ending on the Expiration
Date set forth in Article 1.g., unless sooner terminated or extended pursuant to
this Lease (“Term”). The expiration or sooner termination of the Lease is
hereinafter referred to as “Lease Termination”.

 

b. Option to Extend. Lessee shall have the option to extend the Term for a
period of five (5) years immediately following the expiration of the Term (the
“Extended Term”), on all provisions contained in this Lease (except for Base
Rent and such other terms and conditions as are specifically or by their
operation limited to the initial Term only and except that Lessee shall have no
further right or option to extend the term upon the expiration of the Extended
Term), by giving notice of exercise of the option (the “Option Notice”) to
Lessor at least nine (9) months but not more than fifteen (15) months before the
expiration of the Term; provided, however, that at Lessee’s option, exercisable
by written notice contained in the Option Notice, the option to extend for the
Extended Term pursuant hereto may be exercised either for the entire Premises or
for all of Suites 700 and 800 of the Premises (being all of the Premises
exclusive of the portion of the Premises located on the sixth (6th) floor of the
Building); provided that in the event Lessee so exercises the option to extend
by the Extended Term for only Suites 700 and 800, then on the commencement of
the Extended Term, Lessee shall vacate and surrender the portion of the Premises
located on the sixth (6th) floor of the Building in the condition required for
surrender under this Lease upon the expiration of the Lease Term and any
continued occupancy of any of the sixth (6th) floor portion of the Premises by
Lessee shall be deemed to constitute an unauthorized holding over thereof by
Lessee, subject to the provisions of this Lease governing an unauthorized
holding over by Lessee.

 

Lessor’s ability to plan for the orderly transaction of its rental business, to
accommodate the needs of other existing and potential tenants, and to enjoy the
benefits of increasing rentals at such times as Lessor is able to do so in its
sole and absolute discretion, are fundamental elements of Lessor’s willingness
to provide Lessee with the option to extend contained herein. Accordingly,
Lessee hereby acknowledges that strict compliance with the notification
provisions contained herein, and Lessee’s strict compliance with the time period
for such notification

 

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contained herein, are material elements of the bargained for exchange between
Lessor and Lessee and are material elements of Lessee’s consideration paid to
Lessor in exchange for the grant of the option. Therefore, Lessee’s failure to
adhere strictly and completely to the provisions and time frame contained in
this provision shall render the option automatically null, void and of no
further force or effect, without notice, acknowledgement, or any action of any
nature or sort, required of Lessor. Lessee acknowledges that no other act or
notice, other than the express written notice set forth hereinabove, shall act
to put Lessor on notice of Lessee’s intent to extend, and Lessee hereby waives
any claims to the contrary, notwithstanding any other actions of Lessee during
the Term of this Lease or any statements, written or oral, of Lessee to Lessor
to the contrary during the Term of this Lease. Notwithstanding the foregoing, if
Lessee is in material default (after the expiration of any applicable period for
cure pursuant to Article 22 below) on the date of giving the Option Notice, the
Option Notice shall be totally ineffective, or if Lessee is in material default
(after the expiration of any applicable period for cure pursuant to Article 22
below) on the date the Extended Term is to commence, in addition to any and all
other remedies available to Lessor under this Lease, at Lessor’s election, the
exercise of the option shall be deemed null and void, the Extended Term shall
not commence, and this Lease shall expire at the end of the Term.

 

The option to extend granted pursuant hereto is personal to original Lessee
signatory to this Lease and cannot be assigned, transferred or conveyed to, or
exercised for the benefit of, any other person or entity (voluntarily,
involuntarily, by operation of law or otherwise) including, without limitation,
to any assignee or subtenant permitted under Article 13, except to a Permitted
Transferee. All of Lessee’s rights under this Article 3.b. shall terminate upon
the expiration of the initial Term or sooner termination of this Lease.

 

The parties shall have thirty (30) days after Lessor receives the Option Notice
in which to agree upon the Base Rent to be payable during the Extended Term. The
Base Rent payable during the Extended Term shall be an amount equal to the then
current “Fair Market Rental Value” (defined below) of the Premises at the time
of commencement of the proposed Extended Term. The term “Fair Market Rental
Value” of the Premises as used in this Lease shall mean the then prevailing fair
market rent for the Premises at the expiration of the Term. In determining such
rate. the parties may consider “Class A” office space comparable in size and
quality to the Premises, if any, located in the West Valley marketplace (meaning
West San Jose, Campbell, Los Gatos/Saratoga and Cupertino) and located in the
Building and other buildings comparable in size and quality to the Building,
which is available on a direct lease basis from the owner of the building (and
not any sublease space offered for lease, regardless of location or quality) and
taking into consideration all other factors normally considered when determining
fair market rental value (including, without limitation, the duration of the
Extended Term, such rental increases as may be appropriate during such period,
the fact that the Premises comprise the top floors of the Building, and as such,
the premier space in the Project, and such concessions as are then available in
the marketplace including, but not limited to, free rent, customary improvement
allowances, moving allowances and landlord lease take-overs, provided that such
concessions shall not actually be given, but shall be factored in, if
applicable, when establishing a Fair Market Rental Value amount).

 

Upon determination of the Fair Market Rental Value for the Premises, the parties
shall immediately execute an amendment to this Lease stating the Base Rent to be
paid during the Extended Term.

 

If the parties are unable to agree, in their sole and absolute discretion, on
the Fair Market Rental Value for the Premises within such thirty (30) day
period, then the Fair Market Rental Value for the Extended Term shall be
determined as follows:

 

a. Following the expiration of such thirty (30) day period, Lessor and Lessee
shall meet and endeavor in good faith to agree upon a licensed commercial real
estate agent with at least seven (7) years full-time experience as a real estate
agent active in leasing of commercial office buildings in the area of the
Premises to appraise and set the Fair Market Rental Value for the Extended Term.
If Lessor and Lessee fail to reach agreement upon such agent within fifteen (15)
days following the expiration of such thirty (30) day period, then, within
fifteen (15) days thereafter, each party, at its own cost and by giving notice
to the other party, shall appoint a licensed commercial real estate agent with
at least seven (7) years full-time experience as a real estate agent active in
leasing of commercial office buildings in the area of the Premises to appraise
and set the Fair Market Rental Value for the Extended Term. If a party does not
appoint an agent within fifteen (15) days after the other party has given notice
of the name of its agent, the single agent appointed shall be the sole agent and
shall set the Fair Market Rental Value for the Extended Term. If there are two
(2) agents appointed by the parties as stated above, the agents shall meet
within ten (10) days after the second agent has been appointed and attempt to
set Fair Market Rental Value for the Extended Term. If the two (2) agents are
unable to agree on such Fair Market Rental Value within fifteen (15) days after
the second agent has been appointed, they shall, within fifteen (15) days after
the last day the two (2) agents were to have set such Fair Market Rental Value,
attempt to select a third agent who shall be a licensed commercial real estate
agent meeting the qualifications stated above. If the two (2) agents are unable
to agree on the third agent within such fifteen (15) day period, either Lessor
or Lessee may request the President of the local chapter of the Society of
Industrial and Office Realtors (SIOR) or a then equivalent organization if SIOR
is not then in existence to select a third agent meeting the qualifications
stated in this subsection. Each of the parties shall bear one-half (1/2) of the
cost of appointing the third agent and of paying the third agent’s fee. No agent
shall be employed by, or otherwise be engaged in business with or affiliated
with, Lessor or Lessee, except as an independent contractor.

 

b. Within fifteen (15) days after the selection of the third agent, a majority
of the agents shall set the Fair Market Rental Value for the Extended Term. If a
majority of the agents are unable to set such Fair Market Rental Value within
the stipulated period of time, each agent shall make a separate determination of
such Fair Market Rental Value and the three (3) appraisals shall be added
together and the total shall be divided by three (3). The resulting quotient
shall be the Fair Market Rental Value for the Premises for the Extended Term.
If, however, the low appraisal and/or high appraisal is/are more than twenty
percent (20%) lower and/or higher than the middle appraisal, the low appraisal
and/or the high appraisal shall be disregarded. If only one (1) appraisal is

 

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disregarded, the remaining two (2) appraisals shall be added together and their
total divided by two (2), and the resulting quotient shall be Fair Market Rental
Value for the Extended Term. If both the low appraisal and the high appraisal
are disregarded as stated in this subsection, the middle appraisal shall be the
Fair Market Rental Value for the Extended Term.

 

c. Each agent shall hear, receive and consider such information as Lessor and
Lessee each care to present regarding the determination of Fair Market Rental
Value for the Extended Term and each agent shall have access to the information
used by each other agent. Upon determination of the Fair Market Rental Value for
the Extended Term, the agents shall immediately notify the parties hereto in
writing of such determination by certified mail, return receipt requested.

 

4.   POSSESSION.

 

a. Delivery of Possession on Commencement Date; Contingency. Lessor and Lessee
acknowledge that Lessee shall be in possession of the Premises prior to the
Commencement Date of this Lease pursuant to a sublease (the “Existing Sublease”)
between Lessee, as sublessee, and Sun Microsystems, Inc., who is the lessee of
the Premises as of the date hereof (the “Existing Lessee”), which Existing
Sublease is subject and subordinate to the existing lease between Lessor and the
Existing Lessee (the “Existing Lease”). Accordingly, delivery of the Premises in
accordance herewith and Lessee’s acceptance of delivery thereof shall be deemed
to occur on the Commencement Date. However, notwithstanding anything to the
contrary contained in this Lease, at Lessor’s option (as hereinafter provided),
it shall be a condition to this Lease (the “Contingency”) that the Existing
Lease and the Existing Sublease remain in full force and effect as of the
expiration of the term of the Existing Lease on November 30, 2005, but such
Contingency shall be deemed satisfied if Lessee continues in occupancy of the
Premises through to the commencement of the Term of this Lease pursuant to the
terms of that certain Subordination, Non-Disturbance and Attornment Agreement
entered into concurrently herewith by and among Lessor, Lessee and Existing
Lessee (the “Existing Sublease SNDA”). In the event that such Contingency is not
satisfied or deemed satisfied in accordance with the foregoing as of the
expiration of the term of the Existing Lease on November 30, 2005, then, at
Lessor’s option, this Lease shall be null and void and neither party shall have
any liability or obligation hereunder; provided, however, that Lessor shall have
the right, exercisable in Lessor’s sole and absolute discretion, to waive the
Contingency, in the event of which waiver, this Lease shall continue in full
force and effect; provided, however, that Lessor shall only have the option to
waive the Contingency if the Contingency is not satisfied due to default by
Lessee under the Existing Sublease, including, without limitation, any default
by Lessee following Lessee continuing in occupancy of the Premises pursuant to
the terms of the Existing Sublease SNDA.

 

b. Possession Prior to the Commencement Date. Lessee’s occupancy of the Premises
prior to the Commencement Date shall be governed by the provisions of the
Existing Sublease and the Existing Lease and not by this Lease.

 

c. Certificates and Licenses. Prior to the Commencement Date, Lessee shall
provide to Lessor the certificate(s) of insurance required by Article 16 and a
copy of all licenses and authorizations that may be required for the lawful
operation of Lessee’s business upon the Premises, including any City business
licenses as may be required.

 

d. Condition of Premises on Delivery. Lessee acknowledges that except as
specifically otherwise provided in this Lease and subject to Lessor’s
representations, warranties and covenants set forth in this Lease, (i) the lease
of the Premises by Lessee pursuant hereto shall be in its then present “AS IS”
condition, in the broadest sense of that term, with all faults, if any, (ii)
neither Lessor nor any employee, representative or agent of Lessor has made any
representation or warranty, express or implied, with respect to the Premises or
any other portion of the Project, and (iii) Lessor shall have no obligation to
improve or alter the Premises or Project for the benefit of Lessee.

 

5. RENT. Lessee agrees to pay to Lessor as rental for the Premises, without
offset, deduction, prior notice or demand, the monthly Base Rent designated in
Article 1.h. Base Rent shall be payable monthly in advance on or before the
first day of each calendar month during the Term. Base Rent for any period
during the Term which is for less than one (1) month shall be prorated based
upon a thirty (30) day month. Base Rent and all other amounts owing to Lessor
pursuant to this shall be paid to Lessor in lawful money of the United States of
America which shall be legal tender at the time of payment, at the office of the
Project, or to such other person or at such other place as Lessor may from time
to time designate in writing.

 

6. SECURITY DEPOSIT. No security deposit shall be required from Lessee under
this Lease as of the execution of this Lease. However, in the event that
Lessee’s tangible net worth as of the Commencement Date is less than Lessee’s
tangible net worth as of the execution of this Lease, then Lessor reserves the
right to require that Lessee deposit with Lessor a security deposit in
reasonable form and amount, but in no event to exceed four (4) times the monthly
Base Rent under this Lease (the “Security Deposit”), considering then-current
market conditions and what is then customarily deemed to be a reasonable
security deposit given the creditworthiness of the Lessee, the obligations of
Lessee under this Lease and the Term of this Lease. If the parties are unable to
reach agreement upon the amount of such Security Deposit, then such dispute
shall be resolved as set forth below. Lessee hereby grants to Lessor a security
interest in any Security Deposit deposited with Lessor pursuant hereto in
accordance with applicable provisions of the California Commercial Code. The
Security Deposit shall be held by Lessor as security for the faithful
performance by Lessee of all the terms, covenants and conditions of this Lease
to be kept and performed by Lessee during the Term. If Lessee defaults with
respect to any provision of this Lease, including, but not limited to the
provisions relating to the payment of Rentals or relating to the condition of
the Premises at Lease Termination, Lessor may (but shall not be required to)
use, apply or retain all or any part of the Security Deposit for the payment of
any Rental or any other sum in default, or for the payment of any amount which
Lessor may spend or become obligated to spend by reason of Lessee’s default, or
to compensate Lessor for any other loss or damage

 

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which Lessor may suffer by reason of Lessee’s default. If any portion of the
Security Deposit is so used or applied, Lessee shall within five (5) days after
written demand therefor, deposit cash with Lessor in an amount sufficient to
restore the Security Deposit to its original amount and Lessee’s failure to do
so shall be a material breach of this Lease. Lessor shall not be required to
keep the Security Deposit separate from its general funds, and Lessee shall not
be entitled to interest on the Security Deposit. Lessor is not a trustee of the
Security Deposit and may use it in ordinary business, transfer it or assign it,
or use it in any combination of such ways. If Lessee fully and faithfully
performs every provision of this Lease to be performed by it, the remaining
portion of the Security Deposit shall be returned to Lessee (or, at Lessor’s
option, to the last assignee of Lessee’s interest hereunder) within two (2)
weeks after Lease Termination and vacation of the Premises by Lessee or its last
assignee; provided, however if any portion of the Security Deposit is to be
applied to repair damages to the Premises caused by Lessee or Lessee’s Agents or
to clean the Premises, then the balance of the Security Deposit shall be
returned to Lessee (or, at Lessor’s option to the last assignee of Lessee’s
interests hereunder) no later than thirty (30) days from the date Lessor
receives possession of the Premises. Lessee shall not transfer or encumber the
Security Deposit nor shall Lessor be bound by Lessee’s attempt to do so. If
Lessor’s interest in this Lease is terminated, Lessor may transfer the Security
Deposit to Lessor’s successor in interest, and upon such transfer, Lessor shall
be released from any liability to Lessee with respect to the Security Deposit
and Lessee shall look only to the transferee for any return of the Security
Deposit to which Lessee may be entitled.

 

If the parties are unable to agree on the amount of any required Security
Deposit in accordance with the foregoing, then such dispute shall be resolved as
follows:

 

a. Following the delivery by either party to the other of a written notice (the
“Security Deposit Dispute Notice”) of dispute pursuant hereto, Lessor and Lessee
shall meet and endeavor in good faith to agree upon a licensed commercial real
estate agent with at least seven (7) years full-time experience as a real estate
agent active in leasing of commercial office buildings in the area of the
Premises to determine the appropriate Security Deposit amount in accordance with
the provisions hereof. If within fifteen (15) days following the delivery of the
Security Deposit Dispute Notice, Lessor and Lessee fail to reach agreement upon
such agent, then, within fifteen (15) days thereafter, each party, at its own
cost and by giving notice to the other party, shall appoint a licensed
commercial real estate agent with at least seven (7) years full-time experience
as a real estate agent active in leasing of commercial office buildings in the
area of the Premises to determine the appropriate Security Deposit amount in
accordance with the provisions hereof. If a party does not appoint an agent
within fifteen (15) days after the other party has given notice of the name of
its agent, the single agent appointed shall be the sole agent and shall
determine the appropriate Security Deposit amount in accordance with the
provisions hereof. If there are two (2) agents appointed by the parties as
stated above, the agents shall meet within ten (10) days after the second agent
has been appointed and attempt to determine the appropriate Security Deposit
amount in accordance with the provisions hereof. If the two (2) agents are
unable to agree on such Security Deposit amount within fifteen (15) days after
the second agent has been appointed, they shall, within fifteen (15) days after
the last day the two (2) agents were to have set such Security Deposit amount,
attempt to select a third agent who shall be a licensed commercial real estate
agent meeting the qualifications stated above. If the two (2) agents are unable
to agree on the third agent within such fifteen (15) day period, either Lessor
or Lessee may request the President of the local chapter of the Society of
Industrial and Office Realtors (SIOR) or a then equivalent organization if SIOR
is not then in existence to select a third agent meeting the qualifications
stated in this subsection. Each of the parties shall bear one-half (1/2) of the
cost of appointing the third agent and of paying the third agent’s fee. No agent
shall be employed by, or otherwise be engaged in business with or affiliated
with, Lessor or Lessee, except as an independent contractor.

 

b. Within fifteen (15) days after the selection of the third agent, a majority
of the agents shall determine the appropriate Security Deposit amount in
accordance with the provisions hereof. If a majority of the agents are unable to
agree upon the appropriate Security Deposit amount within the stipulated period
of time, each agent shall make a separate determination of such appropriate
Security Deposit amount and the three (3) appraisals shall be added together and
the total shall be divided by three (3). The resulting quotient shall be the
appropriate Security Deposit amount pursuant hereto. If, however, the low
determination and/or high determination is/are more than twenty percent (20%)
lower and/or higher than the middle determination, the low determination and/or
the high determination shall be disregarded. If only one (1) determination is
disregarded, the remaining two (2) determinations shall be added together and
their total divided by two (2), and the resulting quotient shall be appropriate
Security Deposit amount pursuant hereto. If both the low determination and the
high determination are disregarded as stated in this subsection, the middle
determination shall be the appropriate Security Deposit amount pursuant hereto.

 

c. Each agent shall hear, receive and consider such information as Lessor and
Lessee each care to present regarding the determination of the appropriate
Security Deposit amount and each agent shall have access to the information used
by each other agent. Upon determination of the appropriate Security Deposit
amount pursuant hereto, the agents shall immediately notify the parties hereto
in writing of such determination by certified mail, return receipt requested.

 

7. PROJECT TAXES AND OPERATING EXPENSE ADJUSTMENTS.

 

a. Intentionally Omitted.

 

b. Building Taxes and Building Operating Expenses. Lessee shall pay to Lessor,
as additional rent and without deduction or offset, Lessee’s percentage share
set forth in Article 1.j. (“Lessee’s Percentage Share”) of the amount of annual
“Building Taxes” and “Building Operating Expenses” (as such terms are defined
below). Building Taxes and Building Operating Expenses are collectively referred
to herein as “Building Expenses”. Lessee’s Percentage Share shall be determined
by dividing the Rentable Area of the Premises by the total Rentable Area in the
Building. Lessee’s Percentage Share shall be subject to an equitable adjustment
upon a condemnation,

 

5

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sale by Lessor of part of the Building, reconstruction after damage or
destruction or expansion or reduction of the areas within the Building. Lessee’s
Percentage Share of Building Expenses shall be payable during the Term in equal
monthly installments on the first day of each month in advance, without
deduction, offset or prior demand.

 

At any time during the Term, Lessor may give Lessee notice of Lessor’s estimate
of the Building Expenses for the current calendar year. An amount equal to one
twelfth (1/12) of Lessee’s Percentage Share of the estimated Building Expenses
shall be payable monthly by Lessee as aforesaid, commencing on the first day of
the calendar month following thirty (30) days written notice and continuing
until receipt of any notice of adjustment from Lessor given pursuant to this
paragraph. Until notice of the estimated Building Expenses for a subsequent
calendar year is delivered to Lessee, Lessee shall continue to pay its
Percentage Share of Building Expenses on the basis of the prior year’s estimate.
Lessor may at any time during the Term adjust estimates of the Building Expenses
to reflect current expenditures and following Lessor’s written notice to Lessee
of such revised estimate, subsequent payments by Lessee shall be based upon such
revised estimate.

 

If the Commencement Date is on a date other than the first day of a calendar
year, the amount of the Building Expenses payable by Lessee in such calendar
year shall be prorated based upon a fraction, the numerator of which is the
number of days from the Commencement Date to the end of the calendar year in
which the Commencement Date falls, and the denominator of which is three hundred
sixty (360).

 

Within one hundred twenty (120) days after the end of each calendar year during
the Term or as soon thereafter as practicable, Lessor will furnish to Lessee a
statement (“Lessor’s Statement”) setting forth in reasonable detail the actual
Building Expenses paid or incurred by Lessor during the preceding year, and
thereupon within ten (10) days an adjustment will be made by Lessee’s payment to
Lessor or credit to Lessee by Lessor against the Building Expenses next becoming
due from Lessee, as the case may require, to the end that Lessor shall receive
the entire amount of Lessee’s Percentage Share of Building Expenses for such
calendar year and no more. If, based on Lessor’s Statement a payment from Lessee
is required, Lessee shall not have the right to withhold or defer such payment
pending a review of Lessor’s books and records pursuant to the following
paragraph or the resolution of any dispute relating to Building Expenses. If the
Expiration Date is on a day other than the last day of a calendar year, the
amount of Building Expenses payable by Lessee for the calendar year in which
Lease Termination falls shall be prorated on the basis which the number of days
from the commencement of such calendar year to and including such Expiration
Date bears to three hundred sixty (360). The termination of this Lease shall not
affect the obligations of Lessor and Lessee pursuant to this Article 7.

 

Within ninety (90) days after Lessee receives a statement of actual Building
Expenses paid or incurred for a calendar year, Lessee (and any of its agents,
employees, consultants, contractors or representatives) shall have the right,
upon written demand and reasonable notice, to inspect Lessor’s books and records
relating to such Building Expenses for the calendar year covered by Lessor’s
Statement for the purpose of verifying the amount set forth in such statement.
Such inspection shall be made during Lessor’s normal business hours, at the
place where such books and records are customarily maintained by Lessor. In no
event may any such inspection be performed by a person or entity being
compensated on a contingency fee basis or based upon a share of any refund
obtained by Lessee. Information obtained by such inspection shall be kept in the
strictest confidence by Lessee. Unless Lessee asserts in writing a specific
error within one hundred eighty (180) days following Lessee’s receipt of
Lessor’s Statement, the amounts set forth in Lessor’s Statement shall be
conclusively deemed correct and binding on Lessee. If it is determined that
Lessor has overstated the sum of actual Building Taxes and Building Operating
Expenses for a particular calendar year, then Lessee shall be entitled to a
credit against its rental obligations next thereafter coming due under this
Lease in the amount of any overpayment by Lessee (except that if such
overpayment is determined to have been made after the expiration of the Term and
satisfaction of Lessee’s remaining obligations under this Lease, then Lessor
shall promptly refund any such overpayment to Lessee), and, in addition, if it
is determined that Lessor has overstated the sum of actual Building Taxes and
Building Operating Expenses for a particular calendar year by more than five
percent (5%) and such overstatement results in Lessor owing a reimbursement to
Lessee of more than Five Hundred Dollars ($500.00), then Lessor shall reimburse
Lessee’s reasonable third-party out of pocket expenses incurred in conducting
such inspection, within thirty (30) days following Lessee’s submission to Lessor
of reasonable evidence of such expenses.

 

(i) Operating Expenses. As used in this Lease, “Building Operating Expenses”
means all of the Building Service Expenses and an allocable portion of the
Project Expenses as follows:

 

(A) Building Service Expenses. Building Operating Expenses shall include all
costs of operation, maintenance, repair and management of the Building and
Building Common Area (defined in Article 55), hereinafter collectively referred
to as “Building Service Expenses,” as determined by Lessor’s commercially
reasonable real estate accounting practices. Building Service Expenses as used
herein shall include, but not be limited to, all sums expended in connection
with all general maintenance, repairs, painting, cleaning, sweeping and
janitorial services; maintenance and repair of signs, indoor plants, and
atriums; trash removal; sewage; electricity, gas, water and any other utilities
(including any temporary or permanent utility surcharge or other exaction
whether now or hereafter imposed); maintenance and repair of any fire protection
systems, elevator systems, lighting systems, storm drainage systems, heating,
ventilation and air conditioning systems and other utility and/or mechanical
systems; any governmental imposition or surcharge imposed upon Lessor with
respect to the Building or assessed against the Building; all costs and expenses
pertaining to a security alarm system or other security services or measures for
the Building, if Lessor deems necessary in Lessor’s sole business judgment;
materials; supplies; tools; amortization (over the reasonably anticipated useful
life of the applicable item) on maintenance and operating machinery and
equipment (if owned) and rental paid for such machinery and equipment (if
rented) used in connection with the repair or maintenance of the Building;
service agreements on equipment; maintenance and repair of the roof (including
repair of leaks and resurfacing) and the exterior surfaces of all improvements
(including

 

6

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painting); non-structural maintenance and repair of structural parts (including
repair of leaks and resurfacing) and the exterior surfaces of all improvements
(including painting); window cleaning; elevator or escalator services; materials
handling; fees for licenses and permits relating to operation of the Building;
the cost of complying with rules, regulations and orders of governmental
authorities; Building office rent or rental value; accounting and legal fees;
the cost of contesting the validity or applicability of any governmental
enactment which may affect Building Service Expenses; personnel to implement
such services, including, if Lessor deems necessary, the cost of security guards
and valet attendants; public liability, environmental impairment, property
damage and fire and extended coverage insurance on the Building (in such amounts
and providing such coverage as determined in Lessor’s sole discretion and which
may include, without limitation, liability, all risk property, lessor’s risk
liability, war risk, vandalism, malicious mischief, boiler and machinery, rental
income, earthquake, flood and worker’s compensation insurance); compensation and
fringe benefits payable to all persons employed by Lessor in connection with the
operation, maintenance, repair and management of the Building; and a management
fee not to exceed four percent (4%) of gross receipts from the Building
(including, without limitation, all rentals and parking receipts from Building
tenants and/or visitors). Lessor may cause any or all of said services to be
provided by an independent contractor or contractors, or they may be rendered by
Lessor. It is the intent of the parties hereto that Building Service Expenses
shall include every cost paid or incurred by Lessor in connection with the
operation, maintenance, repair, and management of the Building, and the specific
examples of Building Service Expenses stated in this Article 7 are in no way
intended to, and shall not, limit the costs comprising Building Service
Expenses, nor shall such examples be deemed to obligate Lessor to incur such
costs or to provide such services or to take such actions, except as may be
expressly required of Lessor in other portions of this Lease, or except as
Lessor, in its sole discretion, may elect. The maintenance of the Building shall
be reasonably determined by Lessor so as to maintain the same in good condition
and repair, reasonable wear and tear excepted (subject to the express provisions
of this Lease governing maintenance, repair, replacement, casualty and
condemnation) and all costs incurred by Lessor in good faith shall be deemed
conclusively binding on Lessee. If less than one hundred percent (100%) of the
Rentable Area of the Building is occupied during any calendar year, then in
calculating Building Service Expenses for such year, the components of Building
Service Expenses which vary based upon occupancy level shall be adjusted to
equal Lessor’s reasonable estimate of the amount of such Building Service
Expenses had one hundred percent (100%) of the total Rentable Area of the
Building been occupied during such year. Notwithstanding anything to the
contrary contained in this Lease, in no event shall Building Service Expenses
include (1) any costs relating to the structural repairs to maintain the
structural integrity of the Building (including, without limitation, the
structural repairs to the structural elements of the exterior, walls, roof,
columns, footings and floor slab of the Building), (2) costs, including permit,
license and inspection costs, incurred with respect to the installation of
tenant improvements to other tenant’s leased premises within the Building or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant leasable space within the Building, (3) costs in order to
market space to potential tenants, leasing commissions, and attorneys’ fees in
connection with the negotiation and preparation of letters, deal memos, letters
of intent, leases, subleases and/or assignments or other costs in connection
with lease, sublease and/or assignment negotiations with present or prospective
tenants or other occupants of the Building, (4) costs incurred for restoration
following condemnation to the extent reimbursed by condemnation award or for
repair of damage to the Building to the extent resulting from a casualty event
not covered by Lessor’s insurance or to the extent reimbursed by insurance
proceeds or to the extent the same would have been reimbursed by insurance
proceeds had Lessor maintained the insurance required of Lessor under this Lease
(provided that insurance deductibles as may be then commercially reasonable for
comparable buildings in the Cupertino area shall be included in Building Service
Expenses), (5) reserves (except that nothing contained herein shall be deemed to
prevent Lessor’s collection of anticipated Building Service Expenses for the
current year), (6) ground lease rental on any underlying ground lease or
interest, principal, points and/or fees on debts or amortization on any mortgage
or mortgages or any other debt instrument encumbering the Building, (7) to the
extent any employee of Lessor spends only a portion of his or her time working
with respect to the Building (as opposed to full time work with respect to the
Building), a prorated amount of such employee’s wages, salaries and compensation
based upon the portion of time spent by such employee with respect to the
projects other than the Building, (8) costs of correcting any presently existing
non-compliance of the Building with applicable laws (as enforced upon the
execution of this Lease) other than any such existing non-compliance where
compliance work is not presently required to be performed (as opposed to
existing non-compliance where compliance work is legally mandated even in the
absence of subsequent improvements, alterations or change in use), (9) costs
resulting from the negligence or willful misconduct of Lessor or Lessor’s
agents, employees or contractors, (10) costs incurred due to violation by Lessor
or any other tenant in the Building of the terms and conditions of any lease for
space within the Building, (11) the cost of any service provided to Lessee or
other occupants of the Building or other cost includable in Building Service
Expenses pursuant hereto for which Lessor is entitled to be separately
reimbursed by insurance, third parties or otherwise (other than reimbursement by
lessees as a part of their respective payments of Building Service Expenses),
(12) charitable or political contributions, (13) interest, penalties or other
costs arising out of Lessor’s failure to make timely payment of its obligations,
(14) overhead and profit paid to Lessor or to subsidiaries or affiliates of
Lessor for goods and/or services in the Building to the extent the same exceeds
the costs of such goods and/or services rendered by qualified, unaffiliated
third parties on a competitive basis, (15) Lessor’s general corporate overhead
and general and administrative expenses not specifically incurred in the
management, maintenance and operation of the Building (including, without
limitation, compensation to officers and principals of Lessor above the level of
building manager), (16) costs to remediate Hazardous Materials located upon,
within or beneath the Building prior to the Commencement Date, (17) costs (other
than ordinary maintenance) for sculpture, paintings and other objects of art, or
(18) capital improvements to the extent the same are upgrades, as opposed to
repairs or replacements, and are not required to comply with applicable laws or
other governmental requirements or intended to result in cost savings. In
addition, any capital expenditure includable as a Building Service Expense shall
not be wholly included in Building Service Expenses in the year incurred and
instead shall be amortized over the useful life of the applicable item as
reasonably determined by Lessor, and Building Service Expenses shall include
annual amortization of such expenditure during each year of such useful life. In
no event shall there be any duplication of items included in Building Service
Expenses and items included in Project Expenses.

 

7

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(B) Project Expenses. Building Operating Expenses shall include the Building’s
equitable share of all direct costs of operation, maintenance, repair and
management of the Project (as opposed to expenses relating solely to the
Building or any other particular building within the Project) and/or the
Exterior Common Area, determined by Lessor’s commercially reasonable real estate
accounting practices (collectively, “Project Expenses”). Such costs shall be
allocated by Lessor between the Building containing the Premises and the other
buildings located within the Project from time to time, in such manner as Lessor
reasonably determines in good faith. Project Expenses as used herein shall
include, but not be limited to, all sums expended in connection with all general
maintenance, repairs, resurfacing, painting, restriping, cleaning, sweeping, and
janitorial services; maintenance and repair of sidewalks, curbs, signs and other
Exterior Common Areas; maintenance and repair of sprinkler systems, planting,
and landscaping; trash removal; sewage; electricity, gas, water and any other
utilities (including any temporary or permanent utility surcharge or other
exaction whether now or hereafter imposed); maintenance and repair of
directional signs and other markers and bumpers; maintenance and repair of any
fire protection systems, elevator systems, lighting systems, storm drainage
systems and other utility systems; any governmental imposition or surcharge
imposed upon Lessor or assessed against the Exterior Common Area or the Project;
materials; supplies, tools; amortization (over the reasonably anticipated useful
life of the applicable item) on maintenance and operating machinery and
equipment (if owned) and rental paid for such machinery and equipment (if
rented); service agreements on equipment; maintenance and repair of parking
areas and parking structures, if any; non-structural maintenance and repair of
structural parts (including foundation and floor slabs); elevator services, if
applicable; material handling; fees for licenses and permits relating to the
Exterior Common Area; the cost of complying with rules, regulation and orders of
governmental authorities; accounting and legal fees; the cost of contesting the
validity or applicability of any governmental enactment which may affect Project
Expenses; personnel to implement such services, including if Lessor deems
necessary, the cost of security guards and valet attendants; all annual
assessments and special assessments levied or charged against the Project and/or
Lessor pertaining to the Project by the Cupertino City Center Owner’s
Association pursuant to the “CC&R’s” (as hereinafter defined); public liability,
environmental impairments, property damage and fire and extended coverage
insurance on Exterior Common Area (in such amounts and providing such coverage
as determined in Lessor’s sole discretion and which may include, without
limitation, liability, all risk property, lessor’s risk liability, war risk,
vandalism, malicious mischief, sprinkler leakage, boiler and machinery, parking
income, earthquake, flood and worker’s compensation insurance); compensation and
fringe benefits payable to all persons employed by Lessor in connection with the
operation, maintenance, repair and management of the Exterior Common Area; and a
management fee not to exceed four percent (4%) of gross receipts from the
(exclusive of amounts collected from tenants of any building within the Project
under their respective leases). Lessor may cause any or all of said services to
be provided by an independent contractor or contractors, or they may be rendered
by Lessor. It is the intent of the parties hereto that Project Expenses shall
include every cost paid or incurred by Lessor in connection with the operation,
maintenance, repair and management of the Exterior Common Area, and the specific
examples of Project Expenses stated in this Article 7 are in no way intended to,
and shall not limit the costs comprising Project Expenses, nor shall such
examples be deemed to obligate Lessor to incur such costs or to provide such
services or to take such actions except as Lessor may be expressly required in
other portions of this Lease, or except as Lessor, in its sole discretion, may
elect. The maintenance of the Exterior Common Areas shall be reasonably
determined by Lessor so as to maintain the same in good condition and repair,
reasonable wear and tear excepted (subject to the express provisions of this
Lease governing maintenance, repair, replacement, casualty and condemnation) and
all costs incurred by Lessor in good faith shall be deemed conclusively binding
on Lessee. If less than one hundred percent (100%) of the Rentable Area of the
Project is occupied during any calendar year, then in calculating Project
Expenses for such year, the components of Project Expenses which vary based upon
occupancy level shall be adjusted to equal Lessor’s reasonable estimate of the
amount of such Project Expenses had one hundred percent (100%) of the total
Rentable Area of the Project been occupied during such year. Notwithstanding
anything to the contrary contained in this Lease, in no event shall Project
Expenses include (1) any costs relating to the structural repairs to maintain
the structural integrity of the Project (including, without limitation, the
structural repairs to the structural elements of the exterior, walls, roof,
columns, footings and floor slab of the Project), (2) costs, including permit,
license and inspection costs, incurred with respect to the installation of
tenant improvements to other tenant’s leased premises within the Project or
incurred in renovating or otherwise improving, decorating. painting or
redecorating vacant leasable space within the Project, (3) costs in order to
market space to potential tenants, leasing commissions, and attorneys’ fees in
connection with the negotiation and preparation of letters, deal memos, letters
of intent, leases, subleases and/or assignments or other costs in connection
with lease, sublease and/or assignment negotiations with present or prospective
tenants or other occupants of the Project, (4) costs incurred for restoration
following condemnation to the extent reimbursed by condemnation award or for
repair of damage to the Project to the extent resulting from a casualty event
not covered by Lessor’s insurance or to the extent reimbursed by insurance
proceeds or to the extent the same would have been reimbursed by insurance
proceeds had Lessor maintained the insurance required of Lessor under this Lease
(provided that insurance deductibles as may be then commercially reasonable as
an insurance deductible for comparable buildings in the Cupertino area shall be
included in Project Expenses), (5) reserves (except that nothing contained
herein shall be deemed to prevent Lessor’s collection of anticipated Project
Expenses for the current year). (6) ground lease rental on any underlying ground
lease or interest, principal, points and/or fees on debts or amortization on any
mortgage or mortgages or any other debt instrument encumbering the Project, (7)
to the extent any employee of Lessor spends only a portion of his or her time
working with respect to the Project (as opposed to full time work with respect
to the Project), a prorated amount of such employee’s wages, salaries and
compensation based upon the portion of time spent by such employee with respect
to the projects other than the Project, (8) costs of correcting any presently
existing non-compliance of the Project with applicable laws (as enforced upon
the execution of this Lease) other than any such existing non-compliance where
compliance work is not presently required to be performed (as opposed to
existing non-compliance where compliance work is legally mandated even in the
absence of subsequent improvements, alterations or change in use), (9) costs
resulting from the negligence or willful misconduct of Lessor or Lessor’s
agents, employees or contractors, (10) costs incurred due to violation by Lessor
or any other tenant in the Building of the terms and conditions of any lease for
space within the Project, (11) the cost of any service provided to Lessee or
other occupants of the Building for which Lessor is entitled to be separately
reimbursed (other than as a part of Project Expenses), (12) charitable or
political contributions, (13) interest, penalties or other costs arising our of
Lessor’s failure to make timely payment

 

8

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of its obligations, (14) overhead and profit paid to Lessor or to subsidiaries
or affiliates of Lessor for goods and/or services in the Project to the extent
the same exceeds the costs of such goods and/or services rendered by qualified,
unaffiliated third parties on a competitive basis, (15) Lessor’s general
corporate overhead and general and administrative expenses not specifically
incurred in the management, maintenance and operation of the Project (including,
without limitation, compensation to officers and principals of Lessor above the
level of building manager), (16) costs to remediate Hazardous Materials located
upon, within or beneath the Project prior to the Commencement Date, (17) costs
(other than ordinary maintenance) for sculpture, paintings and other objects of
art, or (18) capital improvements to the extent the same are upgrades, as
opposed to repairs or replacements, and are not required to comply with
applicable laws or other governmental requirements or intended to result in cost
savings. In addition, any capital expenditure includable in Project Expenses
shall not be wholly included in Project Expenses in the year incurred and
instead shall be amortized over the useful life of the applicable item as
reasonably determined by Lessor, and Project Expenses shall include annual
amortization of such expenditure during each year of such useful life. In no
event shall there be any duplication of items included in Project Expenses and
items included in Building Service Expenses.

 

(ii) Project Taxes. “Building Taxes” as used in this Lease, shall mean those
items of “Project Taxes” (as hereinafter defined) which relate solely to the
Building, plus an equitable share of Project Taxes which relate to the land
underlying the Project, to the Exterior Common Areas and/or to the Project as a
whole (as opposed to Project Taxes relating solely to the Building or any other
particular building within the Project), which equitable share shall be
allocated by Lessor between the Building and the other buildings located within
the Project from time to time, in such manner as Lessor reasonably determines in
good faith. For purposes of clarification, in no event shall Building Taxes
include any impositions or assessments imposed in connection with any future
development of one or more other buildings within the Project. The term “Project
Taxes” as used in this Lease shall collectively mean (to the extent any of the
following are not paid by Lessee pursuant to Article 7.c. below) all: real
estate taxes and general or assessments (including, but not limited to,
assessments for public improvements or benefits); personal property taxes; taxes
based on vehicles utilizing parking areas on the Parcel; taxes computed or based
on rental income (including without limitation any municipal business tax but
excluding federal, state and municipal net income taxes); Environmental
Surcharges; excise taxes; gross receipts taxes; sales and/or use taxes; employee
taxes; water and sewer taxes, levies, assessments and other charges in the
nature of taxes or assessments (including, but not limited to, assessments for
public improvements or benefit); and all other governmental, quasi-governmental
or special district impositions of any kind and nature whatsoever, regardless of
whether now customary or within the contemplation of the parties hereto and
regardless of whether resulting from increased rate and/or valuation, or whether
extraordinary or ordinary, general or special, unforeseen or foreseen, or
similar or dissimilar to any of the foregoing which during the Lease Term are
laid, levied, assessed or imposed upon Lessor and/or become a lien upon or
chargeable against the Project or the Premises, Building, Common Area and/or
Parcel under or by virtue of any present or future laws, statutes, ordinances,
regulations, or other requirements of any governmental authority or
quasi-governmental authority or special district having the direct or indirect
power to tax or levy assessments whatsoever. The term “Environmental Surcharges”
shall include any and all expenses, taxes, charges or penalties imposed by the
Federal Department of Energy, Federal Environmental Protection Agency, the
Federal Clean Air Act, or any regulations promulgated thereunder, or imposed by
any other local, state or federal governmental agency or entity now or hereafter
vested with the power to impose taxes, assessments or other types of surcharges
as a means of controlling or abating environmental pollution or the use of
energy in regard to the use, operation or occupancy of the Project including the
Premises, Building, Common Area and/or Parcel. The term “Project Taxes” shall
include (to the extent the same are not paid by Lessee pursuant to Article 7.c.
below), without limitation: the cost to Lessor of contesting the amount or
validity or applicability of any Project Taxes described above; and all taxes,
assessments, levies, fees, impositions or charges levied, imposed, assessed,
measured, or based in any manner whatsoever upon or with respect to the use,
possession, occupancy, leasing, operation or management of the Project
(including, without limitation, the Premises, Building, Common Area and/or
Parcel) or in lieu of or equivalent to any Project Taxes set forth in this
Article 7.b.(ii). In no event shall Project Taxes include Lessor’s net income,
succession, documentary transfer, gift, franchise, estate or inheritance taxes
or assessments attributable to above-standard improvements within the premises
leased by any lessee of the Project. In addition, Project Taxes shall be
calculated as if real property assessments were paid in the maximum number of
installments permitted (and Project Taxes shall therefore include, without
limitation, interest payable as a result of such payment in installments),
whether or not actually so paid.

 

c. Other Taxes. Lessee shall pay the following:

 

(i) Lessee shall pay (or reimburse Lessor as additional rent if Lessor is
assessed), before delinquency, any and all taxes levied or assessed, and which
become payable for or in connection with any period during the Term, upon all of
the following (collectively, “Leasehold Improvements and Personal Property”):
Lessee’s Leasehold Improvements, the Lessee Improvements, equipment, furniture,
furnishings, fixtures, merchandise, inventory, machinery, appliances and other
personal property located in the Premises; except only that which has been paid
for by Lessor and is the standard of the Building. Lessee hereby acknowledges
receipt of a copy of a schedule setting forth the improvements comprising the
standard of the Building. If any or all of the Leasehold Improvements and
Personal Property are assessed and taxed with the Project, Lessee shall pay to
Lessor such taxes within ten (10) days after delivery to Lessee by Lessor of a
statement in writing setting forth the amount applicable to the Leasehold
Improvements and Personal Property. If the Leasehold Improvements and Personal
Property are not separately assessed on the tax statement or bill, Lessor’s good
faith determination of the amount of such taxes applicable to the Leasehold
Improvements and Personal Property shall be a conclusive determination of
Lessee’s obligation to pay such amount as so determined by Lessor.

 

(ii) Lessee shall pay (or reimburse Lessor if Lessor is assessed, as additional
rent), prior to delinquency or within ten (10) days after receipt of a statement
thereof, any and all other taxes, levies, assessments, or surcharges payable by
Lessor or Lessee and relating to this Lease, the Premises or Lessee’s activities
in the Premises (other than Lessor’s net income, succession, transfer, gift,
franchise, estate, or inheritance taxes), whether

 

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or not now customary or within the contemplation of the parties hereto, now in
force or which may hereafter become effective, including but not limited to
taxes: (1) upon, allocable to, or measured by the area of the Premises or on the
Rentals payable hereunder, including without limitation any gross income, gross
receipts, excise, or other tax levied by the state, any political subdivision
thereof, city or federal government with respect to the receipt of such Rentals;
(2) upon or with respect to the use, possession, occupancy, leasing, operation
and management of the Premises or any portion thereof; (3) upon this transaction
or any document to which Lessee is a party creating or transferring an interest
or an estate in the Premises; or (4) imposed as a means of controlling or
abating environmental pollution or the use of energy, including, without
limitation, any parking taxes, levies or charges or vehicular regulations
imposed by any governmental agency. Lessee shall also pay, prior to delinquency,
all privilege, sales, excise, use, business, occupation, or other taxes,
assessments, license fees, or charges levied, assessed, or imposed upon Lessee’s
business operations conducted at the Premises. If any such taxes are payable by
Lessor and it shall not be lawful for Lessee to reimburse Lessor for such taxes,
then the Rentals payable hereunder shall be increased to net Lessor the net
Rental after imposition of any such tax upon Lessor as would have been payable
to Lessor prior to the imposition of any such tax.

 

(iii) Any payments made by Lessee directly to the applicable taxing authority
pursuant to this subsection 7.c. shall be made prior to the applicable
delinquency date for such payment, and Lessee shall deliver evidence of such
payment to Lessor within fifteen (15) days thereafter.

 

8. USE.

 

a. In no event shall Lessee use or permit the use of the Premises for any
purpose other than general office use (which may include, subject to compliance
with applicable laws and governmental requirements, use of the Premises for
administration, software design, incidental customer training, and
non-destructive, research and development purposes and for other incidental
lawful uses, all not involving Hazardous Materials, and all in a manner
consistent with operation within a first-class general office use building, so
as not to exceed the capacity of the mechanical and utility systems serving,
and/or the floor load capacity of, the Premises or interfere with the use or
occupancy of any other occupant of the Project). Lessor and Lessee hereby
acknowledge and agree that the foregoing use restriction is an absolute
prohibition against a change in use of the Premises as contemplated under
California Civil Code Section 1997.230. Lessee shall not do or permit to be done
in or about the Premises nor bring or keep anything therein which will in any
way increase the existing rate of or adversely affect any fire or other
insurance upon the Building or the Project or any of its contents, or cause
cancellation of any insurance policy covering the Building or the Project or any
part thereof or any of its contents. Lessee shall not, without prior consent of
Lessor, bring into the Building or the Premises or use or incorporate in the
Premises any apparatus, equipment or supplies that may cause substantial noise,
odor, or vibration or overload the Premises or the Building or any of its
utility or elevator systems or jeopardize the structural integrity of the
Building or any part thereof. Lessee and Lessee’s agents, officers, employees,
representatives, contractors, servants, invitees and/or guests (collectively
“Lessee’s Agents”) shall not use, store, or dispose of any “Hazardous Materials”
(defined below) on any portion of the Project. Without limiting the generality
of the foregoing, Lessee shall not (either with or without negligence) cause or
permit the escape, disposal or release of any Hazardous Materials in, on or
below the Premises or any other portion of the Project. If any lender or
governmental agency shall ever require testing to ascertain whether or not there
has been any release or other use of Hazardous Materials at the Premises during
the Term of this Lease, then, to the extent it is conclusively determined that
the same was caused by Lessee or any of its agents, employees, contractors,
invitees or licensees, the reasonable costs thereof shall be reimbursed by
Lessee to Lessor upon demand as additional rent. In addition, Lessee shall
execute such affidavits, representations and certifications as may be reasonably
required by Lessor from time to time concerning Lessee’s best knowledge and
belief regarding the presence of Hazardous Materials at the Premises. Lessee
shall indemnify, defend with counsel acceptable to Lessor, and hold Lessor and
Lessor’s employees, agents, partners, officers, directors and shareholders
harmless from and against any and all claims, actions, suits, proceedings,
orders, judgment, losses, costs, damages, liabilities, penalties, or expenses
(including, without limitation, attorneys’ fees) arising in connection with the
breach of the obligations described in any of the previous four sentences and
the obligations of Lessee pursuant hereto and under the previous four sentences
shall survive the Lease Termination. As used in this paragraph, “Hazardous
Materials” means any chemical, substance or material which has been determined
or is hereafter determined by any federal, state, or local governmental
authority to be capable of posing risk of injury to health or safety, including,
without limitation, petroleum, asbestos, polychlorinated biphenyls, radioactive
materials, radon gas, and/or biologically and/or chemically active materials.
Without limiting the generality of the foregoing, the definition of “Hazardous
Materials” shall include those definitions found in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§
9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §§
6901 et seq., the Hazardous Materials Transportation Authorization Act, 49
U.S.C. §§ 5101 et seq., the National Environmental Policy Act, 42 U.S.C. §§ 4321
et seq., the Clean Water Act. 33 U.S.C. §§ 1251 et seq., the Clean Air Act, 42
U.S.C. §§ 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et
seq., the Safe Drinking Water Act, 42 U.S.C. §§ 3001 et seq., the Occupational
Safety and Health Act, 29 U.S.C. §§ 651 et seq., Division 20 of the California
Health and Safety Code commencing at Section 24000. Division 7 of the California
Water Code commencing at Section 13000, each as amended from time to time, and
all similar federal, state and local statutes and ordinances and all rules,
regulations or policies promulgated thereunder. Lessee shall not do or permit
anything to be done in or about the Premises which will in any way unreasonably
obstruct or interfere with the rights of other tenants or occupants of the
Building or the Project or injure them or use or allow the Premises to be used
for any improper, immoral, or unlawful purpose, nor shall Lessee cause, maintain
or permit any nuisance in, on or about the Premises. Lessee shall not commit or
suffer to be committed any waste in or upon the Premises.

 

Lessor shall promptly notify Lessee of any Hazardous Materials actually known by
Lessor to exist in or about the Premises or other portions of the Project at
levels in violation of applicable laws or which otherwise pose a material risk
of having a material and adverse affect upon the operation of Lessee’s business
from the Premises (including, without limitation, access to and/or use of the
Premises and parking areas serving the Project). If requested by Lessee within
thirty (30) days following the execution of this Lease, Lessor shall provide to
Lessee

 

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copies of any Hazardous Materials reports or other environmental reports
respecting the Project then existing in Lessor’s possession, which reports shall
be maintained by Lessee in strict confidence. Notwithstanding anything to the
contrary contained herein, Lessee shall not be responsible for costs related to
the testing, remediation and/or presence of Hazardous Materials on or about the
Premises or Project except to the extent caused to be present thereon or
thereabout by Lessee, any subtenant of Lessee and/or any of their respective
employees, agents, representatives, contractors and/or invitees.

 

b. Effect of Use Restriction. Lessor and Lessee hereby acknowledge and agree
that the use restriction set forth in subsection 8.a. above shall be deemed
reasonable in all respects and under all circumstances. Lessor and Lessee
further acknowledge and agree that, notwithstanding any provision of this Lease
to the contrary, (i) in the event Lessee requests Lessor’s consent to a proposed
assignment of this Lease or subletting of the Premises, Lessor shall be deemed
reasonable in withholding its consent to such assignment or subletting if the
proposed assignee or subtenant desires to use the Premises for any purpose other
than as expressly provided in subsection 8.a. above, and (ii) in the event of a
default by Lessee under the Lease, the enforcement of the use restriction set
forth in subsection 8.a. above shall be deemed reasonable for purposes of
computing the rental loss that could be or could have been reasonably avoided by
Lessor pursuant to California Civil Code Section 1951.2 and in connection with
the exercise of Lessor’s remedies under California Civil Code Section 1951.4.

 

Notwithstanding the preceding to the contrary, if Lessor withholds its consent
to an assignment of the Lease or subletting of the Premises based upon the
desire of the proposed assignee or subtenant to use the Premises for any purpose
other than as expressly provided in subsection 8.a. above, or if Lessee is in
default under this Lease, then, prior to commencing or pursuing any claim or
defense against Lessor based upon the unreasonableness of the use restriction
set forth in subsection 8.a. above, Lessee shall provide Lessor with written
notice (by certified mail, postage prepaid and return receipt requested) setting
forth Lessee’s objections to the enforcement of the use restriction in such
instance, the basis upon which Lessee intends to demonstrate that the
enforcement of such use restriction would be unreasonable in such instance, and
the use(s) which Lessee believes Lessor should allow Lessee or its proposed
assignee or subtenant, as the case may be, to make of the Premises. Within
thirty (30) days of Lessor’s receipt of Lessee’s written notice of objection,
Lessor shall provide Lessee with written notice of Lessor’s election to either
(A) enforce the use restriction set forth in subsection 8.a. above, or (B)
permit a change in the use of the Premises, provided that such proposed use
shall in no event (1) require the use, storage or disposal of Hazardous
Materials on or about the Premises or the Project, (2) increase or affect any
fire or other insurance covering the Building or the Project, (3) interfere with
the rights of other tenants of the Building or Project, including, without
limitation, any exclusive use rights of such tenants, (4) be in violation of
applicable federal, state or local laws, rules, regulations, codes or
ordinances, or (5) require Lessor to construct or install, or to provide any
allowance for the construction or installation of, any tenant improvements in
the Premises. Notwithstanding the preceding to the contrary, in no event shall
Lessor have any obligation to allow a change in the use of the premises, it
being expressly understood by the parties that the use restriction set forth in
subsection 8.a. above is an absolute prohibition against a change in use of the
Premises. In the event Lessor fails to provide Lessee with written notice of its
election to either enforce the use restriction or allow a change in use of the
Premises within said thirty (30) day period, Lessor shall be deemed to have
elected to enforce the use restriction. In the event Lessor elects or is deemed
to have elected to enforce the use restriction as provided hereinabove, Lessee
shall have the right to pursue such valid claims or defenses against Lessor as
may be permitted under California Civil Code section 1997.040 and which Lessee
is able to prove.

 

9. COMPLIANCE WITH LAWS. Lessee shall not use the Premises or permit anything to
he done in or about the Premises which will in any way conflict with or violate
any law, statute, ordinance, order or governmental rule or regulation or
requirement of duly constituted public authorities or quasi-public authorities
now in force or which may hereafter be enacted or promulgated. Lessee shall, at
its sole cost and expense, promptly comply with all laws, statutes, ordinances,
orders and governmental or quasi-governmental rules, regulations or requirements
now in force or which may hereafter be in force and with all recorded documents
which relate to or affect the condition, use or occupancy of the Premises,
including, without limitation, that certain Declaration of Covenants, Conditions
and Restrictions and Grant of Easements for Cupertino City Center, recorded
October 9, 1985, Series No. 8554457 of the Official Records of Santa Clara
County, California, as amended by First Amendment to Declaration of Covenants,
Conditions and Restrictions and Grant of Easements for Cupertino City Center
recorded September 12, 1987, Series No. 9417820 of the Official Records of Santa
Clara County, California (as amended, the “CC&R’s”), and with the requirements
of any board of fire insurance underwriters or other similar bodies now or
hereafter constituted, relating to, or affecting the condition, use or occupancy
of the Premises, excluding structural changes not related to or affected by
Lessee’s improvements, particular manner of use of the Premises or particular
Alterations to the Premises. The judgment of any court of competent jurisdiction
or the admission of Lessee in any action against Lessee, whether Lessor be a
party thereto or not, that Lessee has violated any law, statute, ordinance, or
governmental or quasi-governmental rule, regulation or requirement, shall be
conclusive of that fact as between the Lessor and Lessee. Lessee shall obtain,
prior to taking possession of the Premises, all permits, licenses, or other
authorizations for the lawful operation of its business at the Premises. Lessee
shall indemnify, defend with counsel acceptable to Lessor and hold Lessor and
Lessor’s employees, agents, partners, officers, directors and shareholders
harmless from and against any claim, action, suit, proceeding, order, judgment,
liability, penalty or expense (including, without limitation, attorneys’ fees)
arising out of the failure of Lessee to comply with any applicable law, statute,
ordinance, order, rule, regulation, requirement or recorded document. Lessee
acknowledges that Lessee has independently investigated and is satisfied that
the Premises are suitable for Lessee’s intended use and that the Building and
Premises meet all governmental and quasi-governmental requirements for such
intended use.

 

Lessor and Lessee acknowledge that, in accordance with the provisions of the
Americans with Disabilities Act of 1990 (the “ADA”), responsibility for
compliance with the terms and conditions of Title Ill of the ADA may be
allocated as between Lessor and Lessee. In this regard and notwithstanding
anything to the contrary contained in the Lease, Lessor and Lessee agree that
the responsibility for compliance with the ADA (including, without

 

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limitation, the removal of architectural and communications barriers and the
provision of auxiliary aids and services to the extent required) shall he
allocated as follows: (i) Lessee shall be responsible for compliance with the
provisions of Title I of the ADA, and of Title II and Title III of the ADA as
Titles II and III relate to any construction, renovations, alterations and
repairs made within the Premises if such construction, renovations, alterations
and repairs are made by Lessee, at its expense without the assistance of Lessor;
(ii) Lessor shall be responsible for compliance with the provisions of Title II
and III of the ADA for all construction, renovations, alterations and repairs
which Lessor is required, under this Lease, to make within the Premises, whether
(pursuant to the relevant provisions of the Lease) at Lessor’s or Lessee’s
expense; and (iii) Lessor shall be responsible for compliance with the
provisions of Title III of the ADA for all exterior and interior areas of the
Building not included within the Premises except to the extent such compliance
is necessitated as a result of Lessee’s particular use of, or alterations to,
the Premises. Lessor agrees to indemnify, defend and hold Lessee harmless from
and against any claims, damages, costs and liabilities arising out of Lessor’s
failure, or alleged failure, as the case may be, to comply with the ADA, to the
extent such compliance has been allocated to Lessor herein, which
indemnification obligation shall survive the expiration or termination of this
Lease if the Lease has not been terminated by reason of a default by Lessee.
Lessee agrees to indemnify, defend and hold Lessor harmless from and against any
claims, damages, costs and liabilities arising out of Lessee’s failure, or
alleged failure, as the case may be, to comply with the ADA to the extent such
compliance has been allocated to Lessee herein, which indemnification obligation
shall survive the expiration or termination of this Lease. Lessor and Lessee
each agree that the allocation of responsibility for ADA compliance shall not
require Lessor or Lessee to supervise, monitor or otherwise review the
compliance activities of the other with respect to its assumed responsibilities
for ADA compliance as set forth in this Article 9. Lessor shall, in complying
with the ADA (to the extent such compliance has been allocated to Lessor
herein), be entitled to rely upon representations made to, or information given
to Lessor by Lessee in regard to Lessee’s use of the Premises, Lessee’s
employees, and other matters pertinent to compliance with the ADA. The indemnity
of Lessee set forth above shall apply as to any liability arising against Lessor
by reason of any misrepresentations or misinformation knowingly given by Lessee
to Lessor. The allocation of responsibility for ADA compliance between Lessor
and Lessee, and the obligations of Lessor and Lessee established by such
allocations, shall supersede any other provisions of the Lease that may
contradict or otherwise differ from the requirements of this Article 9; except,
however, that in the event of any conflict between the provisions of Article
4.d. above and the provisions of this Article 9, the provisions of Article 4.d.
above shall control.

 

10.   ALTERATIONS AND ADDITIONS.

 

a. Lessee’s Alterations. Lessee shall not make or suffer to be made any
alterations, additions, changes or improvements (collectively, “Alterations”) to
or of the Premises, or any part thereof without Lessor’s prior written consent,
which consent shall not, except as otherwise expressly provided in the Lease, be
unreasonably withheld; except, however, that without Lessor’s consent but upon
at least ten (10) business days prior written notice to Lessor, Lessee may make
interior, non-structural Alterations costing less than Twenty-Five Thousand
Dollars ($25,000.00) per work of Alterations and not (1) requiring the
demolition of any material existing improvements, or (2) affecting the
mechanical or utility systems serving the Premises or the exterior appearance of
the Building. Lessor may impose, as a condition to the aforesaid consent, such
reasonable requirements as Lessor may deem necessary in its reasonable
discretion, including without limitation: the manner in which the work is done;
a right of approval of the contractor by whom the work is to be performed; the
times during which such work is to be accomplished; the requirement that Lessee
reimburse Lessor, as additional rent, for Lessor’s reasonable out-of-pocket
costs incurred in reviewing any proposed Alterations, whether or not Lessor’s
consent is granted; and the requirement that at Lease Termination, either (i)
Lessee, at its expense, will remove any and all such Alterations installed by
Lessee and shall, at its cost, promptly repair all damages to the Project caused
by such removal, or (ii) the Alterations made by Lessee shall remain with the
Premises, be a part of the realty, and belong to Lessor. If Lessor consents to
any Alterations to the Premises by Lessee, the same shall be made by Lessee at
Lessee’s sole cost and expense in accordance with plans and specifications
approved by Lessor. Any such Alterations made by Lessee shall be performed in
accordance with all applicable laws, ordinances and codes and in a first class
workmanlike manner, and shall not weaken or impair the structural strength or
lessen the value of the Building, shall not invalidate, diminish, or adversely
affect any warranty applicable to the Building or any other improvements located
within the Project, including any equipment therein, and shall be performed in a
manner causing Lessor and Lessor’s agents and other tenants of the Building the
least interference and inconvenience practicable under the circumstances. In
making any such Alterations, Lessee shall, at Lessee’s sole cost and expense:

 

(i) File for and secure any necessary permits or approvals from all governmental
departments or authorities having jurisdiction, and any utility company having
an interest therein,

 

(ii) Notify Lessor in writing at least ten (10) days prior to the commencement
of work on any Alteration, so that Lessor can post and record appropriate
notices of non-responsibility, and

 

(iii) Provide Lessor with copies of all drawings and specifications prior to
commencement of construction of any Alterations, and provide Lessor with “as
built” plans and specifications (on CAD diskette if available) following
completion of such Alterations.

 

In no event shall Lessee make or suffer to be made any Alteration to the Common
Area or the structural portions of the Building or any part thereof without
Lessor’s prior written consent, which consent may be withheld in Lessor’s sole
discretion.

 

b. Removal. Upon Lease Termination, Lessee shall, upon written demand by Lessor
at Lessee’s sole cost and expense, forthwith and with all due diligence remove
any Alterations made by Lessee, which is then designated by Lessor to be removed
and Lessee shall, forthwith and with all due diligence at its sole cost and
expense, repair any damage to the Project caused by such removal; provided that
Lessor shall not be permitted to

 

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require removal of a particular Alteration made by Lessee if, prior to making
the applicable Alteration, Lessee requested of Lessor in writing whether such
Alteration was subject to such requirement for removal and Lessor at such time
specified that such Alteration was not so subject to such requirement for
removal (and Lessor hereby agrees to promptly respond to any Tenant request as
to whether a proposed Alteration shall be subject to such requirement for
removal). Lessee shall also, upon Lease Termination and provided that Lessee is
not then in default hereunder, remove Lessee’s movable equipment, furnishings,
trade fixtures and other personal property (excluding any Alterations made by
Lessee not specifically designated by Lessor to be removed), provided that
Lessee shall, forthwith and with all due diligence at its sole cost and expense,
repair any damages to the Project caused by such removal. Unless Lessor elects
to have Lessee remove any such Alterations, all such Alterations except for
movable furniture and trade fixtures of Lessee not affixed to the Premises,
shall become the property of Lessor upon Lease Termination (without any payment
therefor) and remain upon and be surrendered with the Premises.

 

c. Alterations Required by Law. Lessee shall pay to Lessor as additional rent,
the cost of any structural or non-structural alteration, addition or change to
the Building and/or at Lessor’s election, shall promptly make, at Lessee’s sole
expense and in accordance with the provisions of subsection 10.a. above, any
structural or non-structural alteration, addition or change to the Premises
required to comply with laws, regulations, ordinances or orders of any public
agencies, whether now existing or hereinafter promulgated, where such
alterations, additions or changes are required by reason of: Lessee’s or
Lessee’s Agents’ acts; Lessee’s particular use or change of use to the Premises;
alterations or improvements to the Premises made by or for Lessee; or Lessee’s
application for any permit or governmental approval.

 

d. Lessor’s Improvements. All fixtures, improvements or equipment which are
installed, constructed on or attached to the Premises, or any part of the
Project by Lessor at its expense shall be a part of the realty and belong to
Lessor.

 

11.   REPAIRS.

 

a. By Lessee. Subject to the express covenants, representations and warranties
of Lessor set forth in this Lease, by taking possession of the Premises, Lessee
shall be deemed to have accepted the Premises as being in good and sanitary
order, condition and repair and to have accepted the Premises in their condition
existing as of the date of such possession, subject to all applicable laws,
covenants, conditions, restrictions, easements, and other matters of public
record and the Rules and Regulations from time to time reasonably promulgated by
Lessor governing the use of any portion of the Project. Lessee shall at Lessee’s
sole cost and expense, keep every part of the Premises (excepting therefrom the
structural portions of the Building. Building systems, roof, foundation and
exterior walls) in good condition and repair, damage thereto from causes beyond
the control of Lessee (and not caused by any act or omission of Lessee or
Lessee’s Agents) and ordinary wear and tear excepted. If Lessee fails to
maintain the Premises as required by this Lease, Lessor may give Lessee notice
to do such acts as are reasonably required to so maintain the Premises and if
Lessee fails to commence such work immediately in an emergency or where
immediate action is required to protect the Premises or any portion of the
Project, or within ten (10) days after such notice is given under other
circumstances, and diligently prosecute it to completion, then Lessor or
Lessor’s agents, in addition to all of the rights and remedies available
hereunder or by law and without waiving any alternative remedies, shall have the
right to enter the Premises and to do such acts and expend such funds at the
expense of Lessee as are reasonably required to perform such work. Any amount so
expended by Lessor shall be paid by Lessee to Lessor as additional rent, upon
demand. With respect to any work performed by Lessor pursuant to this Article
11.a., Lessor shall be liable to Lessee only for physical damage caused to
Lessee’s personal property located within the Premises to the extent such damage
is caused by Lessor’s active negligence or willful misconduct and is not covered
by the insurance required to be maintained by Lessee pursuant to this Lease. In
no event shall Lessor have any liability to Lessee for any other damages, or for
any inconvenience or interference with the use of the Premises by Lessee, or for
any consequential damages, including lost profits, as a result of performing any
such work. Except as specifically provided in this Lease, Lessor shall have no
obligation whatsoever to alter, remodel, improve, repair, decorate or paint the
Premises or any part thereof and the parties hereto affirm that Lessor has made
no representations or warranties, express or implied, to Lessee respecting the
condition of the Premises or any part of the Project except as specifically set
forth in this Lease.

 

b. By Lessor. Except as expressly otherwise provided in this Lease, the costs of
repairs and maintenance which are the obligation of Lessor under this Lease or
which Lessor elects to perform under this Lease except such repairs and
maintenance which are the responsibility of Lessee hereunder, shall be an
Operating Expense. Lessor shall repair and maintain the structural portions of
the Building, including the basic plumbing, air conditioning, heating and
electrical systems installed or furnished by Lessor, unless such maintenance or
repairs are caused in part or in whole by the neglect, fault or omission of any
duty by Lessee or Lessee’s Agents, in which case Lessee shall pay to Lessor the
reasonable cost of such maintenance or repairs as additional rent. Lessor shall
not be liable for any failure to make any such repairs or to perform any
maintenance for which Lessor is responsible as provided above unless Lessor
fails to commence such work for a period of more than thirty (30) days after
written notice of the need of such repairs or maintenance is given to Lessor by
Lessee and the failure is due solely to causes within Lessor’s reasonable
control. Except as provided in Article 17 and/or 21 of this Lease, there shall
be no abatement of Rentals, and in any event there shall be no liability of
Lessor by reason of any injury to or interference with Lessee’s business arising
from the making of any repairs, alterations or improvements in or to any portion
of the Project or in or to fixtures, appurtenances and equipment therein (except
for damage to Lessee’s fixtures, appurtenances or equipment caused by the
negligence or willful misconduct of Lessor or any of its agents, employees or
contractors, subject to Article 15 of this Lease). Lessee waives the benefits of
any statute now or hereafter in effect (including, without limitation, the
provisions of subsection I of Section 1932, Section 1941 and Section 1942 of the
California Civil Code and any similar or dissimilar law, statute or ordinance
now or hereafter in effect) which would otherwise afford Lessee the right to
make repairs at Lessor’s expense (or to deduct the cost of such repairs from
Rentals due hereunder) or to terminate this Lease because of Lessor’s failure to
keep the Premises

 

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in good and sanitary order; except, however, that in the event of an emergency
situation which (i) materially and adversely affects the operation of Lessee’s
business from the Premises or which results an imminent risk of injury to
persons or material property damage, and (ii) is susceptible of cure by Lessee’s
performance of a Lessor maintenance and/or repair obligation under this Lease,
then if Lessor shall fail to promptly commence and diligently prosecute to
completion such cure following receipt of notice from Lessee of the existence of
such situation, Lessee shall have the right, but not the obligation, to promptly
take such measures as are necessary to cure such default (using the
Building-standard subcontractors for utility or mechanical system work or work
affecting the Building exterior, if such cure requires subcontractor work,
provided such subcontractors are available at commercially reasonable rates for
the work to be performed), and Lessor shall reimburse Lessee for the reasonable
costs of completing such cure within thirty (30) days following Lessee’s
submission to Lessor of reasonable evidence of the amount of such costs.

 

12. LIENS. Lessee shall keep the Premises and every portion of the Project free
from any and all mechanics’, materialmen’s and other liens, and claims thereof,
arising out of any work performed, materials furnished or obligations incurred
by or for Lessee. Lessee shall indemnify and defend with counsel acceptable to
Lessor and hold Lessor harmless from and against any liens, demands, claims,
actions, suits, proceedings, orders, losses, costs, damages, liabilities,
penalties, expenses, judgments or encumbrances (including without limitation,
attorneys’ fees) arising out of any work or services performed or materials
furnished by or at the direction of Lessee or Lessee’s Agents or any contractor
employed by Lessee with respect to the Premises. Should any claims of lien
relating to work performed, materials furnished or obligations incurred by
Lessee be filed against, or any action be commenced affecting the Premises, any
part of the Project, and/or Lessee’s interest therein, Lessee shall give Lessor
notice of such lien or action within three (3) days after Lessee receives notice
of the filing of the lien or the commencement of the action. If Lessee does not,
within twenty (20) days following the imposition of any such lien, cause such
lien to be released of record by payment or posting of a proper bond, Lessor
shall have, in addition to all other remedies provided herein and by law, the
right, but not the obligation, to cause the same to be released by such means as
it shall deem proper, including by payment of the claim giving rise to such lien
or by posting a proper bond, or by requiring Lessee to post for Lessor’s benefit
a bond, surety, or cash amount equal to one and one-half (1-1/2) times the
amount of lien and sufficient to release the Premises and Project from the lien.
All sums paid by Lessor pursuant to this Article 12 and all expenses incurred by
it in connection therewith including attorneys’ fees and costs shall be payable
to Lessor by Lessee as additional rent on demand.

 

13.   ASSIGNMENT AND SUBLETTING.

 

a. Prohibitions in General. Lessee shall not (whether voluntarily,
involuntarily, or by operation of law) assign this Lease or allow all or any
part of the Premises to be sublet, without Lessor’s prior written consent in
each instance, which consent shall not be unreasonably withheld, subject,
nevertheless, to the provisions of this Article 13. Notwithstanding anything to
the contrary contained herein, Lessee shall have the right without Lessor’s
prior consent and without being subject to Article 13.e. or 13g. below, but upon
not less than fifteen (15) days prior written notice to Lessor, to assign this
Lease or sublet the Premises to any entity (i) controlling, controlled by or
having fifty percent (50%) or more common control with Lessee, or (ii) resulting
from a merger or consolidation with Lessee or acquiring all or substantially all
of the assets and/or stock of Lessee; provided that any such entity shall have a
tangible net worth sufficient to satisfy all of Lessee’s lease obligations
hereunder, and shall assume the obligations and liabilities of Lessee under this
Lease accruing from and after the date of the assignment of Lessee’s interest in
this Lease (or such obligations and liabilities as are to be performed by the
sublessee under the terms of the applicable sublease in the event of a
sublease), and no such assignment or sublease shall in any manner release Lessee
from its primary liability under this Lease (any assignee or sublessee pursuant
to an assignment or subletting permitted without the prior consent of Lessor
pursuant to the provisions of this sentence is referred to in this Lease as a
“Permitted Transferee”). Except for an allowed assignment or subletting pursuant
to the foregoing provisions of this Article 13.a., Lessee shall not (whether
voluntarily, involuntarily, or by operation of law) (i) allow all or any part of
the Premises to be occupied or used by any person or entity other than Lessee,
(ii) transfer any right appurtenant to this Lease or the Premises, (iii)
mortgage, hypothecate or encumber the Lease or Lessee’s interest in the Lease or
Premises (or otherwise use the Lease as a security device) in any manner, or
(iv) permit any person to assume or succeed to any interest whatsoever in this
Lease, without Lessor’s prior written consent in each instance, which consent
may be withheld in Lessor’s sole and absolute discretion.

 

Any assignment, sublease, hypothecation, encumbrance, or transfer (collectively
“Transfer”) without Lessor’s consent shall constitute a default by Lessee and
shall be voidable. Lessor’s consent to any one Transfer shall not constitute a
waiver of the provisions of this Article 13 as to any subsequent Transfer nor a
consent to any subsequent Transfer. The provisions of this subsection 13.a.
expressly apply to all heirs, successors, sublessees, assigns and transferees of
Lessee. If Lessor consents to a proposed Transfer, such Transfer shall be valid
and the transferee shall have the right to take possession of the Premises only
if the Assumption Agreement described in subsection 13.c. below is executed and
delivered to Lessor, Lessee has paid the costs and fees described in subsection
13.i. below, and an executed counterpart of the assignment, sublease or other
document evidencing the Transfer is delivered to Lessor and such transfer
document contains the same terms and conditions as stated in Lessee’s notice
given to Lessor pursuant to subsection 13.d. below, except for any such
modifications Lessor has consented to in writing. The acceptance of Rentals by
Lessor from any person or entity other than Lessee shall not be deemed to be a
waiver by Lessor of any provision of this Lease or to be a consent to any
Transfer.

 

b. Collection of Rent. Lessee irrevocably assigns to Lessor, as security for
Lessee’s obligations under this Lease, all rent not otherwise payable to Lessor
by reason of any Transfer of all or any part of the Premises or this Lease.
Lessor, as assignee of Lessee, or a receiver for Lessee appointed on Lessor’s
application, may collect such rent and apply it toward Lessee’s obligations
under this Lease; provided, however, that until the occurrence of any default by
Lessee or except as provided by the provisions of subsection 13.f. below, Lessee
shall have the right to collect such rent.

 

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c. Assumption Agreement. As a condition to Lessor’s consent to any Transfer of
Lessee’s interest in this Lease or the Premises, Lessee and Lessee’s assignee,
sublessee, encumbrancer, hypothecate, or transferee (collectively “Transferee”),
shall execute a written Assumption Agreement or Sublease Agreement, as
applicable, in a form reasonably approved by Lessor, which Agreement shall
include a provision that Lessee’s Transferee shall expressly assume all
obligations of Lessee under this Lease accruing from and after the effective
date of the Transfer, and shall be and remain jointly and severally liable with
Lessee for the performance of all conditions, covenants, and obligations under
this Lease from the effective date of the Transfer of Lessee’s interest in this
Lease (except that as to a subletting, such agreement to assume Lessee’s
obligations shall relate only to performance of such of Lessee’s obligations
under this Lease as are the responsibility of such subtenant under the
applicable sublease). In no event shall Lessor have any obligation to materially
amend or modify this Lease in connection with any proposed Transfer, including,
without limitation, amending or modifying the use restriction set forth in
subsection 8.a. above.

 

d. Request for Transfer. Lessee shall give Lessor at least thirty (30) days
prior written notice of any desired Transfer and of the proposed terms of such
Transfer, including but not limited to: the name and legal composition of the
proposed Transferee; an audited financial statement of the proposed Transferee
prepared in accordance with generally accepted accounting principles within one
year prior to the proposed effective date of the Transfer; the nature of the
proposed Transferee’s business to be carried on in the Premises; the payment to
be made or other consideration to be given on account of the Transfer; and other
such pertinent information as may be reasonably requested by Lessor, all in
sufficient detail to enable Lessor to evaluate the proposed Transfer and the
prospective Transferee. Lessee’s notice shall not be deemed to have been served
or given until such time as Lessee has provided Lessor with all information
specified above and all additional information requested by Lessor pursuant to
this subsection 13.d. Lessee shall immediately notify Lessor of any modification
to the proposed terms of such Transfer.

 

e. Excess Consideration. In the event of any Transfer, Lessor shall receive as
additional rent hereunder, fifty percent (50%) of Lessee’s “Excess
Consideration” derived from such Transfer. As used herein, “Excess
Consideration” shall mean all rent, additional rent, key money, bonus money
and/or other consideration (including, without limitation, any payment in excess
of fair market value for services rendered by Lessee to the Transferee for
assets, fixtures, inventory, equipment, or furniture transferred by Lessee to
the Transferee in connection with the Transfer) received by Lessee from a
Transferee and/or paid by a Transferee on behalf of Lessee in connection with
the Transfer in excess of the rent, additional rent and other sums payable by
Lessee under this Lease (on a per square foot basis if less than all of the
Premises is subject to such Transfer), less the sum of Lessee’s reasonable
out-of-pocket costs incurred for brokerage commissions, attorneys’ fees and any
Alterations to the Premises in connection with such Transfer. If part of the
Excess Consideration shall be payable by the Transferee other than in cash, then
Lessor’s share of such non-cash consideration shall be in such form as is
reasonably satisfactory to Lessor.

 

f. Standards for Consent. Without otherwise limiting the criteria upon which
Lessor may withhold its consent to any proposed Transfer, the parties hereby
agree that it shall be deemed presumptively reasonable for Lessor to withhold
its consent to a proposed Transfer if:

 

(i) The proposed Transferee’s net worth (according to generally accepted
accounting principles) is not sufficient in Lessor’s business judgment given the
obligations to be performed by the proposed Transferee pursuant to the proposed
Transfer;

 

(ii) The proposed Transferee’s use of the Premises is inconsistent with the
permitted use of the Premises set forth in this Lease or the proposed Transferee
is of a character or reputation which is not consistent with the quality of the
Building or Project;

 

(iii) As to a Transfer of less than all of the Premises, the space to be
Transferred is not regular in shape with appropriate means of ingress and egress
suitable for normal leasing purposes;

 

(iv) The proposed Transferee is a governmental agency or instrumentality thereof
or a person or entity (or an affiliate thereof) currently leasing or occupying
space within the Project or with whom Lessor is then negotiating for the lease
or occupancy of space within the Project, so long as sufficient space remains
available within the Project for lease to such proposed Transferee;

 

(v) Lessee is in default under this Lease beyond any applicable cure period at
the time Lessee requests consent to the proposed Transfer; or

 

(vi) The proposed Transfer will result in more than a reasonable and safe number
of occupants per floor within the space proposed to be Transferred or will
result in insufficient parking for the Building.

 

g. Right of Recapture. In addition to and without limitation upon, the other
rights of Lessor in the event of a proposed Transfer by Lessee pursuant to this
Article 13, in the event of a proposed Transfer by Lessee of two-thirds (2/3rds)
or more of the Premises, Lessor may elect (by written notice delivered to Lessee
within thirty (30) days following Lessee’s submission to Lessor of all
information required pursuant to subsection 13.d. above) to terminate this Lease
effective as of the date Lessee proposes to enter into such Transfer (or in the
case of a proposed Transfer of less than all of the Premises, terminate this
Lease as to the portion of the Premises proposed to be Transferred as of the
date of such proposed Transfer). Nothing contained in this Article shall be
deemed to nullify Lessor’s right to elect to terminate this Lease in accordance
with this subsection 13.g. including, but not limited to, Lessor’s failure to
exercise the right to terminate this Lease with respect to any previous
Transfer. Further, Lessee

 

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understands and acknowledges that Lessor’s option to terminate this Lease rather
than approve a proposed Transfer of two-thirds (2/3rds) or more of the Premises
is a material inducement for Lessor’s agreeing to lease the Premises to Lessee
upon the terms and conditions herein set forth and is deemed a reasonable
limitation upon Lessee’s right to enter into such a Transfer.

 

h. Corporations and Partnerships. If Lessee is a partnership, a withdrawal or
substitution (whether voluntary, involuntary, or by operation of law and whether
occurring at one time or over a period of time) of any partner(s) owning
twenty-five percent (25%) or more of the partnership, any assignment(s) of
twenty-five percent (25%) or more (cumulatively) of any interest in the capital
or profits of the partnership, or the dissolution of the partnership shall be
deemed a Transfer of this Lease. If Lessee is a corporation, limited liability
company or other entity, subject to the provisions of Article 14.a above, any
dissolution, merger, consolidation or other reorganization of Lessee, any sale
or transfer (or cumulative sales or transfers) of the capital stock of or equity
interests in Lessee in excess of twenty-five percent (25%) or any sale (or
cumulative sales) of more than fifty percent (50%) of the value of the assets of
Lessee shall be deemed a Transfer of this Lease. This subsection 13.h. shall not
apply to corporations the capital stock of which is publicly traded.

 

i. Attorneys’ Fees and Costs. Lessee shall pay, as additional rent, Lessor’s
reasonable costs and attorneys’ fees (not to exceed $1,500 per Transfer request)
incurred for reviewing, investigating, processing and/or documenting any
requested Transfer, whether or not Lessor’s consent is granted.

 

j. Miscellaneous. Regardless of Lessor’s consent, no Transfer shall release
Lessee of Lessee’s obligations under this Lease or alter the primary liability
of Lessee to pay the Rentals and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of Rentals by Lessor from any
other person shall not be deemed to be a waiver by Lessor of any provision
hereof. Upon default by any assignee of Lessee or any successor of Lessee in the
performance of any of the terms hereof. Lessor may proceed directly against
Lessee without the necessity of exhausting remedies against said assignee or
successor. Lessor may consent to subsequent assignments or subletting of this
Lease or amendments or modifications to this Lease with any assignee of Lessee,
without notifying Lessee, or any successor of Lessee and without obtaining its
or their consent thereto and such action shall not relieve Lessee of liability
under this Lease.

 

k. Reasonable Provisions. Lessee acknowledges that, but for Lessee’s identity,
financial condition and ability to perform the obligations of Lessee under the
Lease, Lessor would not have entered into this Lease nor demised the Premises in
the manner set forth in this Lease, and that in entering into this Lease, Lessor
has relied specifically on Lessee’s identity, financial condition,
responsibility and capability of performing the obligations of Lessee under the
Lease. Lessee acknowledges that Lessor’s rights under this Article 13, including
the right to terminate this Lease or withhold consent to certain Transfers in
Lessor’s sole and absolute discretion, are reasonable, agreed upon and bargained
for rights of Lessor and that the Rentals set forth in the Lease have taken into
consideration such rights. Lessee expressly agrees that the provisions of this
Article 13 are not unreasonable standards or conditions for purposes of Section
1951.4(b)(2) of the California Civil Code, as amended from time to time, under
the Federal Bankruptcy Code or for any other purpose.

 

14. HOLD HARMLESS. Lessee shall to the fullest extent permitted by law,
indemnify, defend with counsel acceptable to Lessor, and hold Lessor and
Lessor’s employees, agents, partners, officers, directors and shareholders
harmless from and against any and all claims, damages, losses, liabilities,
penalties, judgments, and costs and expenses (including, without limitation,
attorneys’ fees) and any suit, action or proceeding brought pursuant thereto
(collectively, “Claims”), including, without limitation, Claims for property
damage, or personal injury including death, arising out of (i) Lessee’s use of
the Premises or any part thereof, or any activity, work or other thing done in
or about the Premises, (ii) any breach or default in the performance of any
obligation on Lessee’s part to be performed under the terms of this Lease,
(including, without limitation, a failure to maintain insurance as provided in
Article 16), or (iii) any negligence or willful misconduct of the Lessee or
Lessee’s Agents; provided, however, that Lessee shall not be required to
indemnify Lessor pursuant hereto for Claims to the extent (1) arising as a
result of Lessor’s default under this Lease, or the negligence or willful
misconduct of Lessor or any of Lessor’s employees, agents or contractors, and
(2) not covered by the insurance required to be maintained by Lessee pursuant to
this Lease.

 

The indemnity herein shall extend to the costs and expenses incurred by Lessor
for administrative expenses, consultant fees, expert costs, investigation
expenses and costs incurred in settling indemnified claims, whether such costs
occurred before or after any litigation is commenced, provided that any such
settlement shall be subject to Lessee’s prior written approval, which approval
shall not be unreasonably withheld, conditioned or delayed. The obligations of
Lessee pursuant to this Article 14 and elsewhere in this Lease with respect to
indemnification of Lessor shall survive the Lease Termination and shall continue
in effect until any and all claims, actions or causes of action with respect to
any of the matters indemnified against are fully and finally barred by the
applicable statute of limitations. In no event shall any of insurance provisions
set forth in Article 16 of this Lease be construed as any limitation on the
scope of indemnification set forth herein.

 

As a material part of the consideration to Lessor, as between Lessee and Lessor,
Lessee hereby assumes all risk of damage or loss to property or injury or death
to person in, upon or about all portions of the Project from any cause except as
hereinafter stated. Lessor or its agents shall not be liable for any damage or
loss to property entrusted to Lessor’s employees nor for loss or damage to any
property of Lessee or Lessee’s Agents by theft or otherwise, nor for any injury
or death to Lessee or any of Lessee’s Agents or for damage or loss to persons or
property of Lessee or any of Lessee’s Agents resulting from any accident,
casualty or condition occurring in or about any portion of the Project, or to
any equipment, appliances or fixtures of Lessee or any of Lessee’s Agents
therein. Lessee’s assumption of risk and the exculpation of Lessor pursuant
hereto is unqualified with the single exception that it shall not apply to the
portion of any claim, damage or loss to the extent arising out of Lessor’s

 

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negligence or willful misconduct of Lessor or any of Lessor’s agents, employees
or contractors, and which is not covered by the insurance required to be
maintained by Lessee pursuant to this Lease. Lessor or its agents shall not be
liable for interference with the light reaching or view from the Premises, nor
shall Lessor be liable for any latent defect in the Premises or in the Building
(provided that nothing contained herein shall be deemed to limit the obligations
of Lessor for maintenance and repairs as expressly provided in this Lease).
Notwithstanding any other provision of this Lease, in no event shall Lessor have
any liability for loss of business (including, without limitation, lost profits)
by Lessee. Lessee shall give prompt written notice to Lessor in case of fire or
accidents in the Premises or in the Building or of defects therein or in the
fixtures or equipment.

 

If, by reason of any negligent or willful act or omission of Lessee or Lessee’s
Agents, Lessor is made a party defendant to any litigation concerning this Lease
or any part of the Project or otherwise, Lessee shall indemnify, defend with
counsel acceptable to Lessor, and hold Lessor harmless from any liability and
damages incurred by (or threatened against) Lessor as a party defendant,
including without limitation all damages, costs and expenses, including
attorneys’ fees.

 

15. SUBROGATION. Lessor releases Lessee and Lessee’s officers, directors,
agents, employees, partners and shareholders from any and all claims or demands
for damages, loss, expense or injury arising out of any perils to the extent
covered by insurance carried by Lessor, or that are due to the negligence of
Lessee or Lessee’s officers, directors. agents, employees, partners and
shareholders and regardless of cost or origin, to the extent such waiver is
permitted by Lessor’s insurers and does not prejudice the insurance required to
be carried by Lessor under this Lease. Lessee releases Lessor and Lessor’s
officers, directors, agents, employees, partners and shareholders from any and
all claims or demands for damages, loss, expense or injury arising out of any
perils which are insured against under any insurance carried by Lessee, whether
due to the negligence of Lessor or its officers, directors, agents, employees,
partners and shareholders and regardless of cost or origin, to the extent such
waiver is permitted by Lessee’s insurers and does not prejudice the insurance
required to be carried by Lessee under this Lease.

 

16. LESSEE’S INSURANCE.

 

a. Lessee shall, at Lessee’s expense, obtain and keep in force during the Term a
policy of commercial general liability insurance, including the broad form
endorsement, insuring Lessor and Lessee against any liability arising out of the
use, occupancy, maintenance, repair or improvement of the Premises and out of
the use of the Common Areas by Lessee, any subtenant of Lessee and any of
Lessee’s or such subtenant’s employees, agents, contractors or invitees. Such
insurance shall provide single limit liability coverage of not less than Five
Million Dollars ($5,000,000.00) per occurrence for bodily injury or death and
property damage. Such insurance shall name Lessor and at Lessor’s request,
Lessor’s mortgagee, each as an additional insured, and shall provide that Lessor
and any such mortgagee, although an additional insured, may recover for any loss
suffered by Lessor or Lessor’s agents by reason of Lessee’s or Lessee’s Agent’s
negligence. All such insurance shall be primary and non-contributing with
respect to any insurance maintained by Lessor and shall specifically insure
Lessee’s performance of the indemnity and hold harmless agreements contained in
Article 14 above although Lessee’s obligations pursuant to Article 14 shall not
be limited to the amount of any insurance required of or carried by Lessee under
this Article 16 and Lessee is responsible for ensuring that the amount of
liability insurance carried by Lessee is sufficient for Lessee’s purposes.
Lessee may carry said insurance under a blanket policy provided that such policy
conforms with the requirements specified in this Article and the coverage
afforded Lessor is not diminished thereby.

 

b. Lessee acknowledges and agrees that insurance coverage carried by Lessor will
not cover Lessee’s property within the Premises or within the Building. Lessee
shall, at Lessee’s expense, obtain and keep in force during the Term a policy of
“All Risk” property insurance, including without limitation, coverage for
earthquake and flood (provided that Lessee may elect to self-insure for
earthquake and flood); boiler and machinery (if applicable); sprinkler damage;
vandalism; malicious mischief; and demolition, increased cost of construction
and contingent liability from changes in building laws on all leasehold
improvements installed in the Premises by Lessee at its expense (if any), and on
all equipment, trade fixtures, inventory, fixtures and personal property located
on or in the Premises including improvements or fixtures hereinafter constructed
or installed on the Premises. Such insurance shall be in an amount equal to the
full replacement cost of the aggregate of the foregoing and shall provide
coverage comparable to the coverage in the Standard ISO All Risk form, when such
form is supplemented with the coverage required above.

 

c. If Lessee fails to procure and maintain any insurance required to be procured
and maintained by Lessee pursuant to this Lease. Lessor may, but shall not be
required to, procure and maintain all or any portion of the same, at the expense
of Lessee. Lessor’s election pursuant to this subsection 16.c to procure and
maintain all or any portion of the insurance which Lessee fails to procure and
maintain is acknowledged by Lessee to be for Lessor’s sole benefit. Lessee
acknowledges that any insurance procured and maintained by Lessor pursuant to
this subsection 16.c, may not be sufficient to adequately protect Lessee. Any
personal property insurance procured and maintained by Lessor for Lessee’s
equipment, trade fixtures, inventory, fixtures and personal property located on
or in the Premises, including improvements or fixtures hereinafter constructed
or installed on the Premises, may not sufficiently cover the replacement cost
thereof. Any insurance procured and maintained by Lessor pursuant to this
subsection 16.c. may provide for less coverage than is required to be maintained
by Lessee pursuant to this Lease. Lessee acknowledges and agrees that Lessee is
and shall remain solely responsible for procuring insurance sufficient for
Lessee’s purposes, notwithstanding the fact that Lessor has procured or
maintained any insurance pursuant to this subsection 16.c. Any insurance
required to be maintained by Lessee hereunder shall be in companies with a
security rating of A or better, and a financial size category rating of X or
better, in the then most recently published “Best’s Insurance Guide”. Prior to
occupancy of the Premises (and thereafter annually with respect to renewals, not
later than thirty (30) days prior to expiration of then existing policies),
Lessee shall deliver to Lessor certificates evidencing the existence and amount
of the policies of insurance required to be kept by Lessee hereunder and

 

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current payment of premiums. No policy shall be cancelable or subject to
reduction of coverage except after thirty (30) days prior written notice to
Lessor.

 

d. Not more frequently than once every year, Lessee shall increase the amounts
of insurance as recommended by Lessor’s insurance broker provided that the
amount of insurance recommended by such broker shall not exceed the amount
customarily required of tenants in comparable projects located within Cupertino,
California. Any limits set forth in this Lease on the amount or type of coverage
required by Lessee’s insurance shall not limit the liability of Lessee under
this Lease.

 

17. SERVICES AND UTILITIES. Provided that Lessee is not in default hereunder,
Lessor agrees to furnish to the Premises during the hours of 7:00 a.m. to 6:00
p.m., Monday through Friday, other than recognized Building holidays
(collectively, “Building Hours”), and subject to the rules and regulations of
the Building of which the Premises are a part, electricity for normal lighting,
water, heat, air-conditioning and elevator service which are required in
Lessor’s good faith judgment for the comfortable use and occupation of the
Premises. During recognized business days for the Building, and subject to the
reasonable rules and regulations of the Building and Project, Lessor shall
furnish to the Premises and the Common Areas, janitorial service, window
washing, fluorescent tube replacement and toilet supplies; provided, however,
Lessor shall not be required to provide janitorial services for any portion of
the Premises to the extent required as a result of the preparation or
consumption of food or beverages (provided that nothing in this paragraph shall
be construed as a consent by Lessor to the preparation or consumption of such
food or beverages unless otherwise expressly provided elsewhere in this Lease).
Lessor shall also maintain and keep lighted during such hours the common stairs,
common entries and toilet rooms in the Building. Lessor shall not be liable for,
and Lessee shall not be entitled to any reduction of Rentals by reason of
Lessor’s failure to furnish any of the foregoing when such failure is caused by
casualty, Act of God, accident, breakage, repairs, strikes, lockouts or other
labor disturbances or labor disputes of any character, or by any other cause,
similar or dissimilar, beyond the reasonable control of Lessor. Lessor shall not
be liable under any circumstances for injury to or death of or loss or damage to
persons or property or damage to Lessee’s business, however occurring, through
or in connection with or incidental to failure to furnish any of the foregoing.
Wherever heat generating machines or equipment are used in the Premises which
affect the temperature otherwise maintained by the air conditioning system,
Lessor reserves the right to install supplementary air conditioning units in the
Premises and the cost thereof, including the cost of installation and the cost
of operation and maintenance thereof, shall be paid by Lessee to Lessor upon
demand by Lessor as additional rent. The costs of all utilities and services
furnished by Lessor to Lessee pursuant to this Article 17 which are not
specified as being reimbursed or paid directly by Lessee shall be included as
items of Building Operating Expenses.

 

Lessee will not, without the prior written consent of Lessor, use or permit the
use of any apparatus or device in or upon the Premises (including, but without
limitation thereto, machines using in excess of such electrical capacity as is
customary for general office use), which will in any way increase the amount of
gas, electricity or water usually furnished or supplied for the use of the
Premises as customary general office space (which, as to electricity
consumption, the parties hereby agree to mean not more than three (3) watts per
square foot of usable area on a demand load basis); nor will Lessee connect or
permit connection of any apparatus or device for the purpose of using gas,
electric current or water with electric current, gas or water supply lines,
except for electricity through existing electrical outlets in the Premises. If
Lessee requires water or electric current in excess of that usually furnished or
supplied for the use of the Premises as general office space, Lessee shall first
procure the written consent of Lessor (which consent shall not be unreasonably
withheld or delayed), to any required Alterations in connection therewith (which
Alterations shall be performed at Lessee’s sole cost and shall be governed by
the provisions of this Lease regarding the making of Alterations by Lessee), and
Lessor may cause a water or gas meter or electric current meter to be installed
in the Premises so as to measure the amount of water, gas and electric current
consumed for any such use. The cost of any such meters and of installation,
maintenance and repair thereof shall be paid for by the Lessee and Lessee agrees
to pay to Lessor, as additional rent, promptly upon demand thereby by Lessor for
all such water, gas and electric current consumed as shown by said meters, at
the rates charged for such services by the local public utility furnishing the
same, plus any additional expense incurred in keeping account of the water, gas
and electric current so consumed. If a separate meter is not installed, such
excess cost for such water, gas and electric current will be conclusively
established by an estimate made by a utility company or electrical engineer
selected by Lessor. In addition, if such Alterations to allow such excess
electrical consumption result in increased heating loads in the Premises, Lessee
shall be solely responsible for installing such supplemental HVAC systems as are
reasonably required to address such additional heating loads, at Lessee’s sole
cost, subject to the provisions of this Lease.

 

If requested by Lessee upon reasonable prior notice to Lessor, heating,
ventilation and air conditioning (“HVAC”) service shall be provided to the
Premises other than during Building Hours, provided that Lessee shall pay to
Lessor for each such hour of HVAC service during non-Building Hours, the then
prevailing charge by Lessor for such service on such floor (which shall equal
Lessor’s determination, in Lessor’s reasonable business judgment of the actual
cost of providing such non-Building Hours HVAC service, including, without
limitation, a reasonable administrative charge). Amounts payable by Lessee
hereunder shall be paid as additional rent within thirty (30) days following
Lessee’s receipt of Lessor’s billing therefor. However, Lessor shall train
security personnel of Lessee on the use of the controls for providing HVAC
service to the Premises during times other than Building Hours so as to allow
Lessee to directly access such non-Building Hours service without the
requirement of providing reasonable prior notice to Lessor. At Lessee’s
election, but subject to the prior, written consent of Lessor (which shall not
be unreasonably withheld or delayed), Lessee shall have the right to install, at
Lessee’s sole cost, a meter or submeter within the Premises to measure Lessee’s
after-hours HVAC use.

 

The parties shall reasonably cooperate to endeavor to coordinate Lessee’s
security systems with Lessor’s existing security system to achieve acceptable
levels of security for both parties. To the extent Lessee desires additional
security beyond that which is provided by Lessor, Lessee may provide such
additional security at

 

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Lessee’s expense, so long as such additional security does not interfere with
the security provided by Lessor (which additional security may include
installation of access control system at any Premises entrances located on the
Building exterior, subject to the provisions of this Lease governing Lessee’s
making of Alterations). Lessee shall be permitted access to the Building on a
twenty-four (24) hours per day, seven (7) days per week basis.

 

Notwithstanding anything to the contrary contained in this Lease, during the
Term of the Lease, if Lessee is actually prevented from using all or a material
portion of the Premises as a result of an interruption in essential utility
services to the Premises which is solely the fault of Lessor or Lessor’s
employees, agents or contractors, which prevention from use is not cured within
three (3) consecutive days following Lessor’s receipt of written notice thereof
from Lessee stating Lessee’s intent to receive an abatement, then monthly Base
Rent and Lessee’s obligation for payment of Building Taxes and Building
Operating Expenses shall, retroactive to the first day of such prevention from
use, be equitably abated based upon the portion of the Premises which Lessee is
so prevented from using, until and to the extent that Lessee is no longer so
prevented from using such portion of the Premises as a result of the applicable
interruption in essential utility services. Notwithstanding the foregoing, the
provisions of Article 21 below and not the provisions of this paragraph shall
govern in the event of casualty damage to the Premises or Project and the
provisions of Article 24 below and not the provisions of this paragraph shall
govern in the event of condemnation of all or a part of the Premises or Project.

 

18. RULES AND REGULATIONS. Lessee shall faithfully observe and comply with the
rules and regulations that Lessor shall from time to time promulgate for the
Building and the Project. Lessor reserves the right from time to time to make
all reasonable modifications to said rules and regulations. The additions and
modifications to these rules and regulations shall be binding upon Lessee upon
delivery of a copy of them to Lessee. Lessor shall not be responsible to Lessee
for the non-performance of any said rules by any other tenants or occupants. The
current “Rules and Regulations” are attached hereto as Exhibit “D”.

 

19. HOLDING OVER. If Lessee remains in possession of the Premises or any part
thereof after Lease Termination, with the express written consent of Lessor,
such occupancy shall be a tenancy from month to month at a Base Rent in the
amount of one hundred twenty-five percent (125%) of the Base Rent in effect
immediately preceding such Lease Termination, plus all other rental charges
payable hereunder, and upon all the terms hereof applicable to a month to month
tenancy. In such case, either party may thereafter terminate this Lease at any
time upon giving not less than thirty (30) days written notice to the other
party. For any possession of the Premises after the Lease Termination without
Lessor’s consent, Lessee shall be liable for all detriment proximately caused by
Lessee’s possession. including without limitation, attorneys’ fees, costs and
expenses, claims of any succeeding tenant founded on Lessee’s failure to vacate
and for payment to Lessor of Base Rent in an amount equal to the greater of (a)
one hundred fifty percent (150%) of the Base Rent in effect immediately
preceding such Lease Termination, or (b) the fair market rental value for the
Base Rent for the Premises, together with such other Rentals provided in this
Lease to the date Lessee actually vacates the Premises, and such other remedies
as are provided by law, in equity or under this Lease, including without
limitation punitive damages recoverable under California Code of Civil Procedure
Section 1174.

 

20. ENTRY BY LESSOR. Lessor reserves and shall at any and all reasonable times
upon reasonable advance notice (except in the event of an emergency when no
advance notice shall be required) have the right to enter the Premises, inspect
the same, supply janitorial service and any other service to be provided by
Lessor to Lessee hereunder, to submit said Premises to prospective purchasers
mortgagees, lenders or tenants, to post notices of non-responsibility, and to
alter, improve or repair the Premises and any portion of the Building that
Lessor may deem necessary or desirable, without any abatement of Rentals, and
may for such purposes erect scaffolding and other necessary structures where
reasonably required by the character of the work to be performed, provided that
the entrance to the Premises shall not be unreasonably blocked thereby, and
further provided that the business of the Lessee shall not be interfered with
unreasonably. In no event shall Lessor have any liability to Lessee for, and
Lessee hereby waives any claim for, any injury or inconvenience to or
interference with Lessee’s business, and Lessee further waives any claims of
loss of occupancy or quiet enjoyment of the Premises, and any other damage or
loss occasioned thereby (other than damage to the personal property of Lessee
caused by the negligence and willful misconduct of Lessor or Lessor’s employees,
agents or contractors and which is not covered by the insurance maintained by
Lessee, or would not have been so covered if Lessee had maintained the insurance
required to be maintained by Lessee under this Lease). Any such entry by persons
not having prior approval from Lessee shall require reasonable prior oral or
written notice to Lessee (except that no such prior notice shall be required in
the event of an emergency). Lessee may accompany the persons conducting any such
entry during the course of such entry (provided that such accompaniment by
Lessee shall not be a condition to any such entry in the case of an emergency or
so long as Lessee has received prior notice of such entry and such entry is
conducted in the presence of a person having prior approval from Lessee). For
each of the aforesaid purposes, Lessor shall at all times have and retain a key
with which to unlock all of the doors in, upon and about the Premises, excluding
Lessee’s vaults, safes, files, laboratories and/or server rooms (if any, as
designated by Lessee), and Lessor shall have the right to use any and all means
which Lessor may deem proper to open said doors in an emergency in order to
obtain entry to the Premises, without liability to Lessee except for any failure
to exercise due care for Lessee’s property under the circumstances of each
entry. Any entry to the Premises obtained by Lessor by any of said means or
otherwise shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into, or a detainer of, the Premises, or an eviction
of Lessee from the Premises or any portion thereof. With respect to any entry by
Lessor into the Premises, Lessor shall be liable to Lessee solely for physical
damage caused to Lessee’s personal property located within the Premises to the
extent such damage is caused by Lessor’s active negligence or willful misconduct
and which is not covered by the insurance required to be maintained by Lessee
pursuant to this Lease.

 

21.  RECONSTRUCTION. If the Premises are damaged and rendered substantially
untenantable, or if the Building is damaged (regardless of damage to the
Premises) or destroyed, Lessor may, within ninety (90) days after the casualty,
notify Lessee of Lessor’s election not to repair, in which event this Lease
shall terminate at the

 

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expiration of the ninetieth (90th) day. If Lessor elects to repair the damage or
destruction, this Lease shall remain in effect and the then current Base Rent
and Lessee’s Percentage Share of Building Expenses shall be proportionately
reduced from the date of the damage or destruction until the same is
substantially restored or repaired to the extent that Lessee is able to resume
business operations in the Premises. The reduction shall be based upon the
extent to which Lessee is unable to conduct business from the Premises due to
the damage or destruction or the making of repairs to the Premises. All other
Rentals due hereunder shall continue unaffected, and Lessee shall have no claim
against Lessor for compensation for inconvenience or loss of business during any
period of repair or reconstruction. Lessee shall continue the operation of its
business on the Premises during any period of reconstruction or repair to the
extent reasonably practicable from the standpoint of prudent business
management. Upon Lessor’s election to repair, Lessor shall diligently repair the
damage to the extent of insurance proceeds available to Lessor. Lessor shall not
be required to repair or replace, whether injured or damaged by fire or other
cause, any items required to be insured by Lessee under this Lease including
Lessee’s fixtures, equipment, merchandise, personal property, inventory, panels,
decoration, furniture, railings, floor covering, partitions or any other
improvements, alterations, additions, or property made or installed by Lessee to
the Premises, and Lessee shall be obligated to promptly rebuild or restore the
same to the same condition as they were in immediately before the casualty.
Lessee hereby waives all claims for loss or damage to the foregoing unless such
loss or damage was caused by the negligence or willful misconduct of Lessor or
any of its agents, employees or contractors and is not covered by insurance
required to be maintained by Lessee hereunder. Except as otherwise expressly
provided in this Article 21, Lessee waives any rights to terminate this Lease if
the Premises are damaged or destroyed, including without limitation any rights
pursuant to the provisions of Subdivision 2 of Section 1932 and Subdivision 4 of
Section 1933 of the Civil Code of California, as amended from time to time, and
the provisions of any similar law hereinafter enacted. If the Lease is
terminated by Lessor pursuant to this Article 21, any Rentals unearned as of the
effective date of termination shall be refunded to Lessee. Lessee shall pay to
Lessor any Rentals or other charges due Lessor under the Lease, prorated as of
the effective date of termination. Notwithstanding anything to the contrary in
the foregoing, if the damage is due to the negligence or willful misconduct or
Lessee, or Lessee’s Agents, then there shall be no abatement of Base Rent or any
other Rentals to the extent that such rental abatement is not covered by the
rental loss insurance maintained by Lessor.

 

Notwithstanding the foregoing, if less than thirty-three percent (33%) of the
Rentable Area of the Building is damaged from an insured casualty and the
insurance proceeds actually available to Lessor for reconstruction (net of costs
to recover such proceeds and after all claimants thereto including lienholders
have been satisfied or waive their respective claims) (“Net Insurance
Proceeds”), together with the amount of Lessor’s deductible under its property
or casualty insurance policy(ies), are sufficient to completely restore the
Building, Lessor agrees to make such reparations and continue this Lease in
effect. If, upon damage of less than thirty-three percent (33%) of the Rentable
Area of the Building there are not sufficient insurance proceeds actually
available to allow Lessor to completely restore the Building, Lessor shall not
be obligated to repair the Building and the provisions of the first paragraph of
this Article shall control. Notwithstanding anything to the contrary contained
in this Article, Lessor shall not be permitted to terminate this Lease following
casualty damage to portions of the Project other than the Premises unless Lessor
also concurrently terminates the leases of all similarly situated Building
tenants.

 

Lessee shall not be entitled to any compensation or damages from Lessor for loss
of the use of the whole or any part of the Premises, or for any damage to
Lessee’s business, or any inconvenience or annoyance occasioned by such damage,
or by any repair, reconstruction or restoration by Lessor, or by any failure of
Lessor to make any repairs, reconstruction or restoration under this Article or
any other provision of this Lease However, notwithstanding anything to the
contrary contained in this Lease, in the event of material casualty damage to
the Premises not resulting in termination of this Lease, Lessor shall deliver
written notice to Lessee within ninety (90) days following such casualty damage
or occurrence setting forth Lessor’s good faith estimate of the time required
for completion of repair and/or restoration of the Premises, and if such
estimated time exceeds two hundred forty (240) days from the occurrence of the
casualty, Lessee may elect to terminate this Lease by written notice to Lessor
within fifteen (15) days following Lessee’s receipt of such notice. In addition,
if such repair is not substantially completed so as to permit Lessee’s
resumption of business from the Premises without material interference from any
uncompleted repair work within two hundred ten (210) days from the occurrence of
the casualty (or such longer period as may have been estimated in Lessor’s
written notice to Lessee pursuant hereto), then Lessee shall thereafter have the
right to terminate this Lease upon thirty (30) days prior written notice to
Lessor (provided that if such repair work is so substantially completed prior to
the expiration of such thirty (30) day period, then Lessee’s election to
terminate shall be nullified and this Lease shall continue in full force and
effect).

 

Lessee shall have the right to terminate this Lease in the event that a casualty
to the Premises and/or the Building materially adversely affects the operation
of Lessee’s business or parking therefor and Lessor’s good faith time estimate
for completion of the repair and/or restoration necessitated by such casualty
exceeds two hundred forty (240) days following the occurrence of such casualty.
Lessor shall provide Lessee written notice of its time estimate within ninety
(90) days following such casualty in which event Lessee shall have the right to
terminate this Lease by written notice delivered to Lessor within fifteen (15)
days following Lessee’s receipt of such estimate notice,.

 

In the event of a casualty to the Premises and/or the Building that materially
adversely affects the operation of Lessee’s business from the Premises or access
thereto or parking therefor occurring during the last six months of Term, as the
same may be extended, then Lessee or Lessor shall have the right terminate this
Lease by delivery of written notice to the other given within thirty (30) days
following the occurrence of the casualty.

 

22. DEFAULT.  The occurrence of any one or more of the following events shall
constitute a material default and breach of this Lease by Lessee:

 

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a. Lessee’s failure to pay when due Base Rent or any other Rentals or other sums
payable hereunder where such failure is not cured within three (3) days
following Lessor’s delivery of written notice thereof (which notice shall be in
lieu of, and not in addition to, any notice required under applicable laws,
including, without limitation, notices required under California Code of Civil
Procedure Section 1161 or any similar or successor statute);

 

b. Lessee’s failure to occupy and use the Premises for thirty (30) consecutive
days while Base Rent or any other Rentals are past due, which failure shall deem
an abandonment of the Premises by Lessee;

 

c. Commencement, and continuation for at least thirty (30) days, of any case,
action, or proceeding by, against, or concerning Lessee, or any guarantor of
Lessee’s obligations under this Lease (“Guarantor”), under any federal or state
bankruptcy, insolvency, or other debtor’s relief law, including without
limitation, (i) a ease under Title 11 of the United States Code concerning
Lessee, or a Guarantor, whether under Chapter 7, 11, or 13 of such Title or
under any other Chapter, or (ii) a case, action, or proceeding seeking Lessee’s
or a Guarantor’s financial reorganization or an arrangement with any of Lessee’s
or a Guarantor’s creditors;

 

d. Voluntary or involuntary appointment of a receiver, trustee, keeper, or other
person who takes possession for more than thirty (30) days of substantially all
of Lessee’s or a Guarantor’s assets, or of any asset used in Lessee’s business
on the Premises, regardless of whether such appointment is as a result of
insolvency or any other cause;

 

e. Execution of an assignment for the benefit of creditors of substantially all
assets of Lessee or a Guarantor available by law for the satisfaction of
judgment creditors;

 

f. Commencement of proceedings for winding up or dissolving (whether voluntary
or involuntary) the entity of Lessee or a Guarantor, if Lessee or such Guarantor
is a corporation, partnership, limited liability company or other entity;

 

g. Levy of a writ of attachment or execution on Lessee’s interest under this
Lease, if such writ continues for a period of ten (10) days;

 

h. Any Transfer or attempted Transfer of this Lease by Lessee contrary to the
provisions of Article 13 above which is not nullified or rescinded within ten
(10) days following Lessor’s delivery of written notice thereof;

 

i. With respect to any report that Lessee is required to submit hereunder, the
wilful submission by Lessee of a report which Lessee knows to be materially
inaccurate;

 

j. The use or occupancy of the Premises for any use or purpose not specifically
allowed by the terms of this Lease which is not cured within ten (10) days
following Lessor’s delivery of written notice thereof; or

 

k. Breach by Lessee of any term, covenant, condition, warranty, or provision
contained in this Lease or of any other obligation owing or due to Lessor other
than as described in subsections 22.a., b., c., d., e., f, g., h., i. or j. of
this Article 22, where such failure shall continue for the period specified in
this Lease or if no such period is specified, for a period of thirty (30) days
after written notice thereof by Lessor to Lessee; provided, however, that if the
nature of Lessee’s default is such that more than thirty (30) days are
reasonably required for its cure, Lessee shall not be deemed to be in default if
Lessee commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion, and if Lessee provides Lessor
with such security as Lessor may reasonably require to fully compensate Lessor
for any loss or liability to which Lessor might be exposed; provided that any
such notice from Lessor shall be in lieu of, and not in addition to, any notice
required under applicable laws, including, without limitation, notices required
under California Code of Civil Procedure Section 1161 or any similar or
successor statute.

 

23. REMEDIES UPON DEFAULT.   Upon any default or breach by Lessee which is not
cured within any applicable period for cure pursuant to Article 22 above, at any
time thereafter, with or without notice or demand, and without limiting Lessor
in the exercise of any right or remedy which Lessor may have hereunder or
otherwise at law or in equity by reason of such default or breach Lessor may do
the following:

 

a. Termination of Lease. Lessor may terminate this Lease or Lessee’s right to
possession of the Premises by notice to Lessee or any other lawful means, in
which case this Lease shall terminate and Lessee shall immediately surrender
possession of the Premises to Lessor. In such event Lessor shall be entitled to
recover from Lessee:

 

(i) The worth at the time of award of the unpaid Rentals which had been earned
at the time of termination;

 

(ii) The worth at the time of award of the amount by which the unpaid Rentals
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that Lessee proves could have been reasonably
avoided;

 

(iii) The worth at the time of award (computed by discounting at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent) of the amount by which the unpaid Rentals for the balance of the Term
after the time of award exceeds the amount of such rental loss that Lessee
proves could be reasonably avoided; and

 

(iv) Any other amounts necessary to compensate Lessor for detriment proximately
caused by the default by Lessee or which in the ordinary course of events would
likely result, including without limitation the reasonable costs and expenses
incurred by Lessor for:

 

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(A) Retaking possession of the Premises;

 

(B) Cleaning and making repairs and alterations (including installation of
leasehold improvements, whether or not the same shall be funded by a reduction
of rent, direct payment or otherwise) necessary to return the Premises to good
condition and preparing the Premises for reletting;

 

(C) Removing, transporting, and storing any of Lessee’s property left at the
Premises (although Lessor shall have no obligation to remove, transport, or
store any of the property);

 

(D) Reletting the Premises, including without limitation, brokerage commissions,
advertising costs, and attorneys’ fees;

 

(E) Attorneys’ fees, expert witness fees and court costs;

 

(F) Any unamortized real estate brokerage commissions paid in connection with
this Lease; and

 

(G) Costs of carrying the Premises, such as repairs, maintenance, taxes and
insurance premiums, utilities and security precautions, if any.

 

The “worth at the time of award” of the amounts referred to in Articles 23.a.(i)
and 23.a.(ii) is computed by allowing interest at an annual rate equal to the
greater of: ten percent (10%); or five percent (5%) plus the rate established by
the Federal Reserve Bank of San Francisco, as of the 25th day of the month
immediately preceding the default by Lessee, on advances to member banks under
Section 13 and 13(a) of the Federal Reserve Act, as not in effect or hereafter
from time to time amended (the “Stipulated Rate”). The computation of the amount
of rental loss that could be or could have been reasonably avoided by Lessor
pursuant to California Civil Code section 1951.2 shall take into account the use
restrictions set forth in Article 8.a. above except to the extent that Lessee
proves that under all circumstances the enforcement of the use restriction would
be unreasonable.

 

b. Continuation of Lease. Lessor may continue this Lease in full force and
effect, and the Lease shall continue in effect as long as Lessor does not
terminate Lessee’s right to possession, and Lessor shall have the right to
enforce all rights and remedies under this Lease including the right to collect
all Rentals when due. During the period Lessee is in default, Lessor can enter
the Premises and relet them, or any part of them, to third parties for Lessee’s
account. Lessee shall pay to Lessor all Rentals due under this Lease on the date
the Rentals are due, less the rent Lessor receives from any reletting. The use
restriction provided in Article 8.a. above shall apply to Lessor’s remedies
under California Civil Code section 1951.4 except to the extent that Lessee
proves that under all circumstances enforcement of the use restriction would be
unreasonable.

 

c. Other Remedies. Lessor may pursue any other remedy now or hereafter available
to Lessor under the laws or judicial decisions of the State in which the
Premises are located.

 

d. General. The following shall apply to Lessor’s remedies:

 

(i) No entry upon or taking of possession of the Premises or any part thereof by
Lessor, nor any letting or subletting thereof by Lessor for Lessee, nor any
appointment of a receiver, nor any other act of Lessor, whether acceptance of
keys to the Premises or otherwise, shall constitute or be construed as an
election by Lessor to terminate this Lease or Lessee’s right to possession of
the Premises unless a written notice of such election be given to Lessee by
Lessor.

 

(ii) If Lessor elects to terminate this Lease or Lessee’s right to possession
hereunder, Lessee shall surrender and vacate the Premises in broom-clean
condition, and Lessor may re-enter and take possession of the Premises and may
eject all parties in possession or eject some and not others or eject none. Any
personal property of or under the control of Lessee remaining on the Premises at
the time of such re-entry may be considered and treated by Lessor as abandoned.

 

24. EMINENT DOMAIN. If more than twenty-five percent (25%) of the area of the
Premises is taken or appropriated for any public or quasi-public use under the
power of eminent domain, or conveyed in lieu thereof, either party hereto shall
have the right, at its option, to terminate this Lease by written notice to the
other party given within ten (10) days of the date of such taking, appropriation
or conveyance, and Lessor shall be entitled to any and all income, rent, award,
or any interest therein whatsoever which may be paid or made (the “Award”) in
connection with such public or quasi-public use or purpose, (except that Lessee
shall be entitled to independently seek an award for funds attributable to
Lessee’s Alterations, trade fixtures, personal property, inventory and
equipment, and Lessee’s moving costs in accordance with the terms of this
Article 24), and Lessee shall have no claim against Lessor for (and hereby
assigns to Lessor any claim which Lessee may have for) the value of any
unexpired Term of this Lease. If a substantial portion of the Building (other
than the Premises) or the Exterior Common Areas may be so taken, appropriated or
conveyed, Lessor shall have the right at its option to terminate this Lease, and
in any such event Lessor shall be entitled to the entire Award whether or not
this Lease is terminated. If this Lease is terminated as provided above: (i) the
termination shall be effective as of the date upon which title to the Premises,
the Building, the Project, or a portion thereof, passes to and vests in the
condemnor or the effective date of any order for possession if issued prior to
the date title vests in the condemnor; (ii) Lessor shall refund to Lessee any
prepaid but unearned Rentals and the Security Deposit to the extent required by
the express provisions of this Lease; and (iii) Lessee shall pay to Lessor any
Rentals or other charges due Lessor under the Lease, prorated as of the date of
taking.

 

If less than twenty-five percent (25%) of the Premises is so taken, appropriated
or conveyed, or more than twenty-five percent (25%) thereof is so taken,
appropriated or conveyed and neither party elects to terminate as herein
provided, (i) Lessor shall be entitled to the entirety of the Award, and Lessee
shall be entitled to make a claim for any separate award attributable to any
taking of Lessee’s Alterations, trade fixtures, inventory, equipment, personal
property and moving expenses, so long as any such award to Lessee does not
reduce the amount of the Award available to Lessor; and (ii) the Rental
thereafter to be paid hereunder for the Premises shall be reduced in the same
ratio that the percentage of the area of the Premises so taken, appropriated or
conveyed bears to the total area of the Premises immediately prior to the
taking, appropriation or conveyance. In addition, if any Rentable Area

 

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in the Building containing the Premises is so taken, appropriated or conveyed
and this Lease is not terminated by Lessor, Lessee’s Percentage Share of
Building Expenses shall be adjusted pursuant to Article 7.

 

Notwithstanding this Article 24 above, upon a temporary taking of all or any
portion of the Premises, the Lease shall remain in effect and Lessee shall
continue to pay and be liable for all Rentals under this Lease. Upon such
temporary taking, Lessee shall be entitled to any Award for the temporary use of
the portion of the Premises taken which is attributable to the period prior to
the date of Lease Termination, and Lessor shall be entitled to any portion of
the Award for such use attributable to the period after Lease Termination. As
used in this paragraph, a temporary taking shall mean a taking for a period of
one year or less and does not include a taking which is to last for an
indefinite period and/or which will terminate only upon the happening of a
specified event unless it can be determined at the time of the taking when such
event will occur.

 

25. OFFSET STATEMENT; MODIFICATIONS FOR LENDER. Lessee shall at any time and
from time to time within twenty (20) days following request from Lessor execute,
acknowledge and deliver to Lessor a statement in writing, (i) certifying that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease as so modified is
in full force and effect), (ii) acknowledging that there are not, to Lessee’s
knowledge, any uncured defaults on the part of the Lessor hereunder, or
specifying such defaults if any are claimed, (iii) certifying the date Lessee
entered into occupancy of the Premises and that Lessee is open and conducting
business at the Premises, (iv) certifying the date to which Rentals and other
charges are paid in advance, if any, (v) evidencing the status of this Lease as
may be required either by a lender making a loan affecting or a purchaser of the
Premises, or part of the Project from Lessor, (vi) certifying that all
improvements to be constructed on the Premises by Lessor are substantially
completed (if applicable), except for any punch list items which do not prevent
Lessee from using the Premises for its intended use, and (vii) certifying such
other matters relating to this Lease and/or the Premises as may be requested by
Lessor or a lender making a loan to Lessor or a purchaser of the Premises, or
any part of the Project from Lessor. Any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the Project,
or any interest therein. Lessee shall, within twenty (20) days following request
of Lessor, deliver such other documents including Lessee’s financial statements
as are reasonably requested in connection with the sale of, or loan to be
secured by, any portion of the Project, or any interest therein.

 

If in connection with obtaining non-disturbance protection for Lessee (which
shall be deemed to include an election by a senior lienholder to subordinate its
lien to this Lease) with respect to any existing or future lender providing
financing for all or any portion of the Project, such lender shall request
modifications of this Lease as a condition issuing such non-disturbance
protection, Lessee will not unreasonably withhold, delay or condition its
consent thereto, provided that such modifications do not increase the financial
obligations of Lessee hereunder or otherwise materially decrease the rights or
materially increase the obligations of Lessee under this Lease.

 

26. PARKING. Lessee shall have the right to use the number of non-exclusive
parking spaces located within the Project as designated in Article 1.k. without
charge during the Term; except, however, notwithstanding anything to the
contrary contained in this Lease, if a charge, fee, tax or other imposition is
assessed against Lessor or the Project by applicable governmental authorities
based upon use of parking spaces at the Project or is required by applicable
governmental authorities to be assessed by Lessor upon users of parking spaces
at the Project, then Lessee shall pay its equitable share of such charge, fee,
tax or other imposition to Lessor monthly in advance as additional rent. Use of
all parking spaces shall be subject to rules and regulations established by
Lessor which may be altered at any time and from time to time during the Term.
The location of all parking spaces may he designated from time to time by
Lessor. Lessor shall designate a portion of the parking spaces within the
Project as “visitor parking”. Neither Lessee nor Lessee’s Agents shall at any
time use more parking spaces than the number so allocated to Lessee or park or
permit the parking of their vehicles in any portion of the Parcel not designated
by Lessor as a non-exclusive parking area. Lessee and Lessee’s Agents shall not
have the exclusive right to use any specific parking space, except as expressly
stated in this Article 26.

 

Notwithstanding anything to the contrary contained herein, Lessee shall be
entitled to convert up to twenty-five percent (25%) of its monthly parking
allotment from unreserved, non-exclusive parking spaces to reserved, designated
parking spaces within the Project parking areas for the exclusive use of Lessee
and Lessee’s agents, employees, licensees, guests and invitees (which spaces
shall be included as a part of the total parking allotment which Lessor is
required to provide to Lessee pursuant hereto). The location of such reserved
parking spaces shall be designated by Lessor so as to be proportionately
distributed within those parking facilities available to lessees of the
Building. Lessor shall cause each reserved parking space to be designated as
“reserved” or otherwise designated for Lessee’s use. If Lessee desires any
additional signage identifying such reserved parking spaces, such signage shall
be subject to Lessor’s prior written approval (which approval shall not be
unreasonably withheld, conditioned or delayed) as to design and manner of
installation and shall be installed by Lessor at Lessee’s sole but reasonable
cost. Lessor shall not be required to police or otherwise monitor Lessee’s
“reserved” parking rights granted pursuant hereto. Lessee’s right to convert up
to twenty-five percent (25%) of its parking allotment from non-exclusive to
reserved parking spaces is personal to original Lessee signatory to this Lease
and cannot be assigned, transferred or conveyed to, or exercised for the benefit
of, any other person or entity (voluntarily, involuntarily, by operation of law
or otherwise) including, without limitation, to any assignee or subtenant
permitted under Article 13, except to a Permitted Transferee, and, accordingly,
in the event of any sublease or other transfer of rights to use of all or a part
of the Premises by Lessee (other than to a Permitted Transferee), Lessee’s right
to convert to reserved parking spaces shall be reduced based on the portion of
the Premises so subleased or otherwise subject to such transfer. As an
illustrative example of the foregoing, if Lessee subleases ten percent (10%) of
the Premises (other than to a Permitted Transferee), then the percentage of
unreserved parking spaces that Lessee may convert to reserved spaces shall be
reduced from twenty-five percent (25%) of Lessee’s monthly parking allotment to
twenty-two and one half percent (22.5%) of Lessee’s monthly allotment.

 

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Notwithstanding the number of parking spaces designated for Lessee’s
non-exclusive use, in the event by reason of any rule, regulation, order, law,
statute or ordinance of any governmental or quasi-governmental authority
relating to or affecting parking on the Parcel, or any cause beyond Lessor’s
reasonable control, Lessor is required to reduce the number of parking spaces on
the Parcel, Lessor shall have the right to proportionately reduce the number of
Lessee’s non-exclusive parking spaces and the non-exclusive parking spaces of
other tenants of the Building. Lessor reserves the right in its reasonable
discretion: to determine whether parking facilities are becoming overcrowded and
in such event to re-allocate parking spaces among Lessee and other tenants of
the Project; to have any vehicles owned by Lessee or Lessee’s Agents which are
parked in violation of the provisions of this Article 26 or Lessor’s rules and
regulations relating to parking, towed away at Lessee’s cost, after having given
Lessee reasonable notice. In the event Lessor elects or is required by any law
to limit or control parking on the Parcel, by validation of parking tickets or
any other method, Lessee agrees to participate in such validation or other
program under such reasonable rules and regulations as are from time to time
established by Lessor. Lessor shall have the right to close all or any portion
of the parking areas at reasonable times for any purpose, including, without
limitation, the prevention of a dedication thereof, or the accrual of rights in
any person or the public therein. Employees of Lessee shall be required to park
in areas designated for employee parking, if any. The parking areas shall not be
used by Lessee or Lessee’s Agents for any purpose other than the parking of
motor vehicles and the ingress and egress of pedestrians and motor vehicles.

 

27. AUTHORITY. If Lessee is a corporation, partnership, limited liability
company or other entity, Lessee represents and warrants that each individual
executing this Lease on behalf of said entity is duly authorized to execute and
deliver this Lease on behalf of said entity in accordance with a duly adopted
resolution of the Board of Directors of said corporation or in accordance with
the by-laws of said corporation or on behalf of said partnership in accordance
with the partnership agreement of such partnership or otherwise on behalf of
said entity in accordance with the organizational documents governing such
entity, and that this Lease is binding upon said entity in accordance with its
terms. if Lessee is a corporation or other entity, Lessee shall, at Lessor’s
request, promptly deliver to Lessor a certified copy of a resolution of the
Board of Directors of said corporation or other evidence of organizational
approval authorizing or ratifying the execution of this Lease, If Lessee is a
corporation or other entity, Lessee hereby represents, warrants, and covenants
that (i) Lessee is a valid and existing corporation or other entity; (ii) Lessee
is qualified to do business in California; (iii) all fees and all franchise and
corporate taxes of Lessee are paid to date, and will be paid when due; (iv) all
required forms and reports will be filed when due; and (v) the signers of this
Lease are properly authorized to execute this Lease on behalf of Lessee and to
bind Lessee hereto.

 

28. SURRENDER OF PREMISES.

 

a. Condition of Premises. Lessee shall, upon Lease Termination, surrender the
Premises in the condition that Lessee (as Sublessee) is required to surrender
the same as provided in subsection 6(c) of the Consent to Sublease and Amendment
to Lease executed by and among Lessor, Lessee and Existing Lessee in connection
with the Existing Sublease, and otherwise in broom clean, trash free, and in
good condition, reasonable wear and tear and damage or destruction not required
to be repaired by Lessee excepted. By written notice to Lessee, Lessor may elect
to cause Lessee to remove from the Premises or cause to be removed, at Lessee’s
expense, any logos, signs, notices, advertisements or displays placed on the
Premises by Lessee. If the Premises is not so surrendered as required by this
Article 28, Lessee shall indemnify, defend and hold harmless Lessor from and
against any loss or liability resulting from Lessee’s failure to comply with the
provisions of this Article 28, including, without limitation, any claims made by
any succeeding tenant or losses to Lessor due to lost opportunities to lease to
succeeding tenants, and the obligations of Lessee pursuant hereto shall survive
the Lease Termination.

 

b. Removal of Personal Property. Lessee shall remove all its personal property
from the Premises upon Lease Termination, and shall immediately repair all
damage to the Premises, Building and Common Area caused by such removal. Any
personal property remaining on the Premises after Lease expiration or sooner
termination may be packed, transported, and stored at a public warehouse at
Lessee’s expense. If after Lease Termination and, within ten (10) days after
written demand by Lessor, Lessee fails to remove Lessee’s personal property or,
if removed by Lessor, fails to pay the removal expenses, the personal property
may be deemed abandoned property by Lessor and may be disposed of as Lessor
deems appropriate. Lessee shall repair any damage to the Premises caused by or
in connection with the removal of any personal property, including without
limitation, the floor and patch and paint the walls, when required by Lessor, to
Lessor’s reasonable satisfaction, all at Lessee’s sole cost and expense. The
provisions of this Article 28 shall survive Lease Termination.

 

29. LESSOR DEFAULT AND MORTGAGEE PROTECTION. Lessor shall not be in default
under this Lease unless Lessee shall have given Lessor written notice of the
breach, and, within thirty (30) days after notice, Lessor has not cured the
breach or, if the breach is such that it cannot reasonably be cured under the
circumstances within thirty (30) days, has not commenced such cure within such
thirty (30) day period or diligently prosecuted such cure to completion. The
liability of Lessor pursuant to this Lease shall be limited to Lessor’s interest
in the Project and any money judgment obtained by Lessee based upon Lessor’s
breach of this Lease or otherwise relating to this Lease or the Premises, shall
be satisfied only out of Lessor’s interest in the Project, including without
limitation, insurance proceeds and rents to which Lessor is entitled, Lessee
agrees that the obligations of Lessor under this Lease do not constitute
personal obligations of the individual partners, whether general or limited,
members, directors, officers or shareholders of Lessor, and Lessee shall not
seek recourse against the individual partners, members. directors, officers or
shareholders of Lessor or any of their personal assets for satisfaction of any
liability with respect to this Lease. Upon any default by Lessor under this
Lease, Lessee shall give notice by registered mail to any beneficiary or
mortgagee of a deed of trust or mortgage encumbering the Premises, and/or any
portion of the Project, whose address shall have been furnished to it, and shall
offer such beneficiary or mortgagee a reasonable opportunity to cure the
default, including time to obtain possession of the Premises, and/or Project, or
any portion thereof, by power of sale or judicial foreclosure, if such should
prove necessary to effect a cure.

 

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30. RIGHTS RESERVED BY LESSOR. Lessor reserves the right from time to time,
without abatement of Rentals and without limiting Lessor’s other rights under
this Lease: (i) to install, use, maintain, repair and replace pipes, ducts,
conduits, wires and appurtenant meters and equipment for service to other parts
of the Project above the ceiling surfaces, below the floor surfaces, within the
walls and in the central core areas, and to relocate any pipes, ducts, conduits,
wires and appurtenant meters and equipment included in the Premises which are
located in the Premises or located elsewhere outside the Premises, and to expand
any building within the Project; (ii) to designate other land outside the
current boundaries of the Project be a part of the Project, in which event the
Parcel shall be deemed to include such additional land, and the Common Areas
shall be deemed to include Common Areas upon such additional land; (iii) to add
additional buildings and/or other improvements (including, without limitation,
additional parking structures or extension of existing parking structures) to
the Project, which may be located on land added to the Project pursuant to
clause (ii) above; (iv) to make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscape areas and walkways; (v) to close
temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available; (vi) to use the Common
Areas while engaged in making additional improvements, repairs or alterations to
the Building or the Project, or any portion thereof; (vii) to grant the right to
the use of the Exterior Common Area to the occupants of other improvements
located on the Parcel; (viii) to designate the name, address, or other
designation of the Building and/or Project, without notice or liability to
Lessee; (ix) to close entrances, doors, corridors, elevators, escalators or
other Building facilities or temporarily abate their operation so long as Lessee
has alternative access to the Premises; (x) to change or revise the business
hours of the Building; and (xi) to do and perform such other acts and make such
other changes in, to or with respect to the Common Areas, the Building or any
other portion of the Project as Lessor deems to be appropriate in the exercise
of its reasonable business judgment. Notwithstanding the rights reserved above,
in no event shall Lessee’s access to the Premises be prohibited entirely or
Lessee’s parking rights be materially impaired by Lessor’s exercise of any of
Lessor’s rights under this Article 30. In the exercise of its rights under this
Article, Lessor shall use reasonable efforts to minimize any unreasonable
interference with the operation of Lessee’s business from the Premises and/or
Lessee’s access to the Premises.

 

31. EXHIBITS. Exhibits and riders, if any, signed by the Lessor and the Lessee
and endorsed on or affixed to this Lease are a part hereof.

 

32. WAIVER. No covenant, term or condition in this Lease or the breach thereof
shall be deemed waived, except by written consent of the party against whom the
waiver is claimed. Any waiver of the breach of any covenant, term or condition
herein shall not be deemed to be a waiver of any preceding or succeeding breach
of the same or any other covenant, term or condition. Acceptance by Lessor of
any performance by Lessee after the time the same shall have become due shall
not constitute a waiver by Lessor of the breach or default of any covenant, term
or condition unless otherwise expressly agreed to by Lessor in writing. The
acceptance by Lessor of any sum less than that which is required to be paid by
Lessee shall be deemed to have been received only on account of the obligation
for which it is paid (or for which it is allocated by Lessor, in Lessor’s
absolute discretion, if Lessee does not designate the obligation as to which the
payment should be credited), and shall not be deemed an accord and satisfaction
notwithstanding any provisions to the contrary written on any check or contained
in a letter of transmittal. Lessor’s efforts to mitigate damages caused by any
default by Lessee shall not constitute a waiver of Lessor’s right to recover
damages for any default by Lessee. No custom or practice which may arise between
the parties hereto in the administration of the terms hereof shall be construed
as a waiver or diminution of Lessor’s right to demand performance by Lessee in
strict accordance with the terms of this Lease.

 

33. NOTICES. All notices, consents and demands which may or are to be required
or permitted to be given by either party to the other hereunder shall be in
writing. All notices, consents and demands by Lessor to Lessee shall be
personally delivered, sent by overnight courier providing receipt of delivery
(such as Federal Express), or sent by United States Certified Mail, postage
prepaid return receipt requested, addressed to Lessee as designated in Article
1.1., or to such other place as Lessee may from time to time designate in a
notice to Lessor pursuant to this Article 33. All notices and demands by Lessee
to Lessor shall be personally delivered, sent by overnight courier providing
receipt of delivery (such as Federal Express) or sent by United States Certified
Mail, postage prepaid return receipt requested (provided that a copy of any such
notice or demand so sent by United States Certified Mail shall be concurrently
sent by Lessee to Lessor by facsimile transmission), addressed to Lessor as
designated in Article 1.1., or to such other person or place as Lessor may from
time to time designate in a notice to Lessee pursuant to this Article 33.
Notices sent by overnight courier shall be deemed delivered upon the next
business day following deposit with such overnight courier for next business day
delivery. Mailed notices shall be deemed delivered two (2) business days after
deposit in the United States mail as required by this Article 33.

 

34. JOINT OBLIGATIONS. If Lessee consists of more than one person or entity, the
obligations of each Lessee under this Lease shall be joint and several.

 

35. MARGINAL HEADINGS. The captions of paragraphs and articles of this Lease are
not a part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.

 

36. TIME. Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor except as to the delivery of
possession of the Premises to Lessee.

 

37. SUCCESSORS AND ASSIGNS. The covenants and conditions herein contained,
subject to the provisions of Article 13, apply to and bind the heirs,
successors, executors, administrators, legal representatives and assigns of the
parties hereto.

 

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38. RECORDATION. Upon request by Lessor, Lessee shall execute and acknowledge a
short form of this Lease in form for recording which may be recorded at Lessor’s
election. Lessee shall not record this Lease or a short form or memorandum
hereof without the prior written consent of Lessor.

 

39. QUIET POSSESSION. Upon Lessee paying the Rentals reserved hereunder and
observing and performing all of the covenants, conditions and provisions on
Lessee’s part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire Term, subject to all the provisions of
this Lease.

 

40. LATE CHARGES; ADDITIONAL RENT AND INTEREST.

 

a. Late Charges. Lessee acknowledges that late payment by Lessee to Lessor of
Rentals or other sums due hereunder will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which are impracticable or
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any mortgage or trust deed covering the Premises or any
part of the Project. Accordingly, if any installment of Rentals or any other sum
due from Lessee is not received by Lessor or Lessor’s designee within three (3)
business days after the due date, then Lessee shall pay to Lessor, in each case,
a late charge equal to six percent (6%) of such overdue amount; provided,
however, that with respect to the first such late payment in any twelve (12)
consecutive month period during the Term, such late charge shall not be due and
payable unless such late payment by Lessee shall not be cured within ten (10)
days following Lessee’s receipt of written notice from Lessor of Lessee’s
failure to make such payment when due. The parties agree that such late charge
represents a fair and reasonable estimate of the cost that Lessor will incur by
reason of late payment by Lessee. Acceptance of any late charges by Lessor shall
in no event constitute a waiver of Lessee’s default with respect to such overdue
amount, nor prevent Lessor from exercising any of its other rights and remedies
under this Lease.

 

b. Rentals, Additional Rent and Interest. All taxes, charges, costs, expenses,
and other amounts which Lessee is required to pay hereunder, including without
limitation Lessee’s Percentage Share of Building Expenses, and all interest and
charges (including late charges) that may accrue thereon upon Lessee’s failure
to pay the same and all damages, costs and expenses which Lessor may incur by
reason of any default by Lessee shall be deemed to be additional rent hereunder.
Upon nonpayment by Lessee of any additional rent, Lessor shall have all the
rights and remedies with respect thereto as Lessor has for the nonpayment of
Base Rent. The term “Rentals” as used in this Lease is Base Rent and all
additional rent. Any payment due from Lessee to Lessor (including but not
limited to Base Rent and all additional rent) which is not paid within three (3)
business days of when due shall bear interest from the date when due until paid,
at an annual rate equal to the maximum rate that Lessor is allowed to contract
for by law. Payment of such interest shall not excuse or cure any default by
Lessee. In addition, Lessee shall pay all costs and attorneys’ fees incurred by
Lessor in collection of such amounts. All Rentals and other moneys due under
this Lease shall survive the Lease Termination. Interest on Rentals past due as
provided herein shall be in addition to the late charges levied pursuant to
40.a. above. All Rentals shall be paid to Lessor, in lawful money of the United
States of America which shall be legal tender at the time of payment, at the
address of Lessor a provided herein, or to such other person or at such other
place as Lessor may from time to time designate in writing. If at any time
during the Term Lessee pays any Rentals by check which is returned for
insufficient funds, Lessor shall have the right, in addition to any other rights
or remedies Lessor may have hereunder, to require that Rentals thereafter be
paid in cash or by cashier’s or certified check.

 

41. PRIOR AGREEMENTS. This Lease contains all of the agreements of the parties
hereto with respect to the Premises, this Lease or any matter covered or
mentioned in this Lease, and no prior agreements or understanding pertaining to
any such matters shall be effective for any purpose. No provision of this Lease
may be amended or added to except by an agreement in writing signed by the
parties hereto or their respective successors in interest. This Lease shall not
be effective or binding on Lessor until fully executed by Lessor.

 

42. INABILITY TO PERFORM. This Lease and the obligations of each party hereunder
shall not be affected or impaired because the other party is unable to fulfill
any of its obligations hereunder or is delayed in doing so, if such inability or
delay is caused by reason of strike, labor troubles, Acts of God, or any other
cause, similar or dissimilar, beyond the reasonable control of the party
obligated for such performance (financial inability excepted), provided that
nothing contained herein shall be deemed to excuse or permit delay in
performance of obligations with respect to the payment of rent or any other
monetary amounts owing under this Lease.

 

43. ATTORNEYS’ FEES. If either party to this agreement shall bring an action to
interpret or enforce this agreement or for any relief against the other,
including, but not limited to, declaratory relief or a proceeding in
arbitration, the losing party shall pay to the prevailing party a reasonable sum
for attorney’s fees, expert witness fees and other costs incurred in such action
or proceeding. Additionally, the prevailing party shall be entitled to all
additional attorney’s fees and costs incurred in enforcing and collecting any
such judgment or award. Any judgment or order entered in such action shall
contain a specific provision providing for the recovery of attorney’s fees and
costs incurred in enforcing such award or judgment.

 

44. SALE OF PREMISES BY LESSOR. Upon a sale or conveyance by the Lessor herein
named (and in case of any subsequent transfers or conveyances, the then grantor)
of Lessor’s interest in the Building, other than a transfer for security
purposes only, the Lessor herein named (and in case of any subsequent transfers
or conveyances, the then grantor) shall be relieved, from and after the date of
such transfer, of all obligations and liabilities accruing thereafter on the
part of Lessor, provided that any funds in the hands of Lessor or the then
grantor at the time of transfer and in which Lessee has an interest, less any
deductions permitted by law or this Lease, shall be delivered to Lessor’s
successor. Following such sale or conveyance by Lessor or the then grantor,
Lessee agrees to look solely to the responsibility of the successor-in-interest
of Lessor in and to this Lease. This Lease shall not be

 

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affected by any such sale or conveyance and Lessee agrees to attorn to the
purchaser or assignee provided such purchaser or assignee acquires its interest
subject to this Lease.

 

45. SUBORDINATION/ATTORNMENT. This Lease shall automatically be subject and
subordinate to all ground or underlying leases which now exist or may hereafter
be executed affecting any portion of the Project and to the lien of any
mortgages or deeds of trust (including all advances thereunder, renewals,
replacements, modifications, supplements, consolidations, and extensions
thereof) in any amount or amounts whatsoever now or hereafter placed on or
against any portion of the Project, or on or against Lessor’s interest or estate
therein, or on or against any ground or underlying lease, without the necessity
of the execution and delivery of any further instruments on the part of Lessee
to effectuate such subordination. Lessee covenants and agrees to execute and
deliver within fifteen (15) days following demand and without charge therefor,
such further instruments evidencing the subordination of this Lease to such
ground or underlying leases and/or to the lien of any such mortgages or deeds of
trusts as may be reasonably required by Lessor or a lender making a loan
affecting the Project; provided that such mortgagee or beneficiary under such
mortgage or deed of trust or lessor under such ground or underlying lease agrees
in writing that so long as Lessee is not in default under this Lease, this Lease
shall not be terminated (nor shall any of Lessee’s rights hereunder be
materially, adversely affected) in the event of any foreclosure, deed in lieu of
foreclosure, assignment of Lessor’s interest in this Lease or termination of any
ground or underlying lease. Failure of Lessee to execute such instruments
evidencing subordination of this Lease shall constitute a default by Lessee
under this Lease. If any mortgagee, beneficiary or lessor elects to have this
Lease prior to the lien of its mortgage, deed of trust or lease, and shall give
written notice thereof to Lessee, this Lease shall be deemed prior to such
mortgage, deed of trust or lease, whether this Lease is dated prior or
subsequent to the date of said mortgage, deed of trust, or lease or the date of
the recording thereof. Notwithstanding anything to the contrary contained in
this Lease, so long as a mortgage or deed of trust encumbering the Project or
Building remains outstanding with respect to which Lessee has previously entered
into a non-disturbance agreement with the applicable mortgagee or trust deed
beneficiary providing that Lessee will not subordinate this Lease to any other
lien against the Project or Building without the consent of such mortgagee or
trust deed beneficiary, then Lessee shall not be required to subordinate this
Lease to any other lien against the Project or Building without the consent of
such mortgagee or trust deed beneficiary.

 

If any proceedings are brought to terminate any ground or underlying leases or
for foreclosure, or upon the exercise of the power of sale, under any mortgage
or deed of trust covering any portion of the Project, Lessee shall attorn to the
lessor or purchaser upon any such termination, foreclosure or sale and recognize
such lessor or purchaser as the Lessor under this Lease. So long as Lessee is
not in default hereunder beyond any applicable cure period (and attorns as
required above, if applicable), this Lease shall remain in full force and effect
for the full term hereof after any such termination, foreclosure or sale.

 

Notwithstanding anything to the contrary contained in the foregoing, Lessor
shall use commercially reasonable efforts (i) to obtain from any future
mortgagee or trust deed beneficiary under a mortgage or deed of trust hereafter
encumbering the Project or Building to which this Lease is subordinated,
non-disturbance protection for Lessee (which shall be deemed to include an
election by such mortgagee or beneficiary allow its lien to be subordinate to
this Lease) on commercially reasonable terms, and (ii) to obtain from any
existing mortgagee or trust deed beneficiary under a mortgage or deed of trust
encumbering the Project or Building as of the execution of this Lease,
non-disturbance protection for Lessee (which shall be deemed to include an
election by such mortgagee or beneficiary to subordinate its lien to this Lease)
on commercially reasonable terms within thirty (30) days following the execution
of this Lease.

 

46. NAME. Lessee shall not use any name, picture or representation of the
Building or Project for any purpose other than as an address of the business to
be conducted by the Lessee in the Premises.

 

47. SEVERABILITY. Any provision of this Lease which proves to be invalid, void
or illegal shall in no way affect, impair or invalidate any other provision of
this Lease and all such other provisions shall remain in full force and effect;
however, if Lessee’s obligation to pay the Rentals is determined to be invalid
or unenforceable, this Lease shall terminate at the option of Lessor.

 

48. CUMULATIVE REMEDIES. Except has otherwise expressly provided in this Lease,
no remedy or election hereunder shall be deemed exclusive but shall, wherever
possible, be cumulative with all other remedies at law or in equity.

 

49. CHOICE OF LAW. This Lease shall be governed by the laws of the State of
California.

 

50. SIGNS. Lessee shall not inscribe, paint, affix or place any sign, awning,
canopy, advertising matter, decoration or lettering upon any portion of the
Premises, including, without limitation, any exterior door, window or wall,
without Lessor’s prior written consent. Subject in all events to the
requirements of the City of Cupertino and other applicable governmental
requirements and any other restrictions of record or to which the Project is
subject, (a) Lessee shall be entitled to Building standard identification of
Lessee upon the common Building lobby directory board sign to be installed by
Lessor in the Building lobby, and (b) in the event that Lessee occupies at least
two (2) full floors of the Building, Lessee shall be entitled to display an
exterior sign identifying Lessee by name located at the rooftop tower, subject
to Lessor’s reasonable approval as to all elements of such exterior signage
(including, without limitation, design, materials used, colors, and manner of
installation). Lessee’s exterior signage rights pursuant to the foregoing clause
(b) are personal to original Lessee signatory to this Lease and cannot be
assigned, transferred or conveyed to, or exercised for the benefit of, any other
person or entity (voluntarily, involuntarily, by operation of law or otherwise)
including, without limitation, to any assignee or subtenant permitted under
Article 13, except to a Permitted Transferee. In the event Lessor obtains
approval from the City of Cupertino for one or more monument signs within the
Project and such monument sign is erected therein, Lessor shall submit Lessee as
a

 

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candidate for consideration by the appropriate parties for the right to place
Lessee’s name on such monument sign (without inference of any additional
obligation on the part of Lessor or representation as to the likelihood that
Lessee will be chosen).

 

51. GENDER AND NUMBER. Wherever the context so requires, each gender shall
include any other gender, and the singular number shall include the plural and
vice-versa.

 

52. CONSENTS. Whenever the consent of Lessor is required herein, the giving or
withholding of such consent in any one or any number of instances shall not
limit or waive the need for such consent in any other or future instances. Any
consent given by Lessor shall not be binding upon Lessor unless in writing and
signed by Lessor or Lessor’s agents. Notwithstanding any other provision of this
Lease, where Lessee is required to obtain the consent of Lessor to do any act,
or to refrain from the performance of any act, Lessee agrees that if Lessee is
in default beyond any applicable cure period with respect to any term,
condition, covenant or provision of this Lease, then Lessor shall be deemed to
have acted reasonably in withholding its consent if said consent is, in fact,
withheld.

 

53. BROKERS. Lessee and Lessor each warrant to the other that it has had no
dealing with any real estate broker or agents in connection with the negotiation
of this Lease excepting only the broker or agent designated in Article 1.m., and
that it knows of no other real estate broker or agent who is entitled to or can
claim a commission in connection with this Lease. Lessor agrees to pay the
broker or agent designated in Article 1.m above a leasing commission in
accordance with a separate agreement. Lessee and Lessor each agree to indemnify,
defend and hold the other harmless from and against any and all claims, demands,
losses, liabilities, lawsuits, judgments, and costs and expenses (including,
without limitation, reasonable attorneys’ fees and expenses) with respect to any
alleged leasing commission or equivalent compensation alleged to be owing on
account of such party’s dealings with any real estate broker or agent (other
than the broker or agent designated in Article 1.m). The obligations of Lessor
and Lessee under this Article 53 shall survive the expiration or earlier
termination of this Lease.

 

54. SUBSURFACE AND AIRSPACE. This Lease confers on Lessee no rights either with
respect to the subsurface of the Parcel or with regard to airspace above the top
of the Building or above any paved or landscaped areas on the Parcel or Common
Area and Lessor expressly reserves the right to use such subsurface and airspace
areas, including without limitation the right to perform construction work
thereon and in regard thereto. Any diminution or shutting off of light, air or
view by any structure which may be erected by Lessor on those portions of the
Parcel, Common Area and/or Building reserved by Lessor shall in no way affect
this Lease or impose any liability on Lessor. Lessor shall have the exclusive
right to use all or any portion of the roof, side and rear walls of the Premises
and Building for any purpose. Lessee shall have no right whatsoever to the
exterior of the exterior walls or the roof of the Premises or any portion of the
Project outside the Premises except as provided in Article 26 and Article 55 of
this Lease (and except for Lessee’s non-exclusive right to the Common Area as
expressly described elsewhere in this Lease).

 

55. COMMON AREA. For purposes of the Lease, “Common Area” shall collectively
mean the following:

 

a. Exterior Common Area. That portion of the Parcel other than the land
comprising the property, and all facilities and improvements on such portion for
the non-exclusive use of Lessee in common with other authorized users,
including, but not limited to, vehicle parking areas, driveways, sidewalks,
landscaped areas, and the facilities and improvements necessary for the
operation thereof (the “Exterior Common Area”); and

 

b. Building Common Area. That portion of the Building in which the Premises are
located, and all of the facilities therein, set aside by Lessor for the
non-exclusive use of Lessee in common with other authorized users, including,
but not limited to, entrances, lobbies, halls, atriums, corridors, toilets and
lavatories, passenger elevators and service areas (the “Building Common Area”).

 

Subject to the limitations and restrictions contained in this Lease, and the
Rules and Regulations, Lessor grants to Lessee and Lessee’s Agents the
nonexclusive right to use the Common Area (including, without limitation, the
Building loading dock) in common with Lessor, Lessor’s agent, other occupants of
the Building and Project, other authorized users and their agents, subject to
the provisions of this Lease, including the exclusive right to use such number
of reserved, designated parking spaces as described in Article 26 above. The
right to use the Common Area (including, without limitation, all parking spaces
referred to in Article 26 above) shall terminate upon Lease Termination.

 

56. LABOR DISPUTES. If Lessee becomes involved in or is the object of a labor
dispute which subjects the Premises or any part of the Project to any picketing,
work stoppage, or other concerted activity which in the reasonable opinion of
Lessor is in any manner detrimental to the operation of any part of the Project,
or its tenants, Lessor shall have the right to require Lessee, at Lessee’s own
expense and within a reasonable period of time specified by Lessor, to use
Lessee’s commercially reasonable efforts to either resolve such labor dispute or
to terminate or control any such picketing, work stoppage or other concerted
activity to the extent necessary to eliminate any interference with the
operation of the Projector its tenants, To the extent such labor dispute
interferes with the performance of Lessor’s duties hereunder, Lessor shall be
excused from the performance of such duties and Lessee hereby waives any and all
claims against Lessor for damages or losses in regard to such duties. Nothing
contained in this Article 56 shall be construed as placing Lessor in an
employer-employee relationship with any of Lessee’s employees or with any other
employees who may be involved in such labor dispute. Lessee shall indemnify,
defend and hold harmless Lessor from and against any and all liability
(including, without limitation, attorneys’ fees and expenses) arising from any
labor dispute in which Lessee is involved and which affects any part of the
Project.

 

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57. CONDITIONS. All agreements by Lessee contained in this Lease, whether
expressed as covenants or conditions, shall be construed to be both covenants
and conditions.

 

58. LESSEE’S FINANCIAL STATEMENTS. Lessee hereby warrants that all financial
statements delivered by Lessee to Lessor prior to the execution of this Lease by
Lessee, or that shall be delivered in accordance with the terms hereof, are or
shall be at the time delivered true, correct, and complete to Lessee’s actual
knowledge, and prepared in accordance with generally accepted accounting
principles. Lessee acknowledges and agrees that Lessor is relying on such
financial statements in accepting this Lease, and that a breach of Lessee’s
warranty as to such financial statements shall constitute a default by Lessee.

 

59. LESSOR NOT A TRUSTEE. Lessor shall not be deemed to be a trustee of any
funds paid to Lessor by Lessee (or held by Lessor for Lessee) pursuant to this
Lease. Lessor shall not be required to keep any such funds separate from
Lessor’s general funds or segregated from any funds paid to Lessor by (or held
by Lessor for) other tenants of the Building. Any funds held by Lessor pursuant
to this Lease shall not bear interest.

 

60. MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, shall not work a merger, and shall, at the option
of the Lessor, terminate all or any existing subleases or subtenancies, or may,
at the option of Lessor, operate as an assignment to it of any or all such
subleases or subtenancies.

 

61. NO PARTNERSHIP OR JOINT VENTURE. Nothing in this Lease shall be construed as
creating a partnership or joint venture between Lessor, Lessee, or any other
party, or cause Lessor to be responsible for the debts or obligations of Lessee
or any other party.

 

62. LESSOR’S RIGHT TO PERFORM LESSEE’S COVENANTS. Except as otherwise expressly
provided herein, if Lessee fails at any time to make any payment or perform any
other act on its part to be made or performed under this Lease, then upon ten
(10) days written notice to Lessee (provided that no such notice shall be
required in the event of an emergency), Lessor may, but shall not be obligated
to, and without waiving or releasing Lessee from any obligation under this
Lease, make such payment or perform such other act to the extent that Lessor may
deem desirable, and in connection therewith, pay expenses and employ counsel.
All reasonable sums so paid by Lessor and all penalties, interest and costs in
connection therewith shall be due and payable by Lessee to Lessor as additional
rent upon demand.

 

63. PLANS. Lessee acknowledges that any plan of the Project which may have been
displayed or furnished to Lessee or which may be a part of Exhibit “A” or
Exhibit “B” is tentative; Lessor may from time to time change the shape, size,
location, number, and extent of the improvements shown on any such plan and
eliminate or add any improvements to the Project, in Lessor’s sole discretion,
provided such change does not materially, adversely impair Lessee’s access to or
use of the Premises or reduce the number of exclusive parking spaces allocated
to Lessee.

 

64. COMMUNICATIONS EQUIPMENT.

 

a. Subject to the provisions of this Article 64 and the other provisions of this
Lease respecting Alterations, Lessee shall have the right during the Term, at
Lessee’s sole cost and expense, to install upon a portion of the roof of the
Building designated by Lessor (which portion shall be a pro rata share of the
Building roof based upon the Rentable Area of the Premises within the Building
leased by Lessee) for Lessee’s own use such microwave, satellite or DSS dishes
and other antenna equipment (collectively, the “Communications Equipment”),
which Communications Equipment shall include, without limitation, the related
vertical and horizontal utility and telecommunication lines (“Communication
Lines”) throughout the Premises which are compatible with the Building structure
and/or mechanical and utility systems, which Communications Equipment shall be
of such size, weight and quantity, and at such location as is reasonably
approved by Lessor and Lessor’s structural engineer. Lessee shall reimburse
Lessor for the reasonable fees of Lessor’s structural engineer incurred in
evaluating Lessee’s plans for installation of the Communications Equipment and
any modifications thereto, within thirty (30) days following submission by
Lessor to Lessee of invoices therefor.

 

b. The installation, maintenance, repair, operation and removal (as hereinafter
provided) of such Communications Equipment shall be completed in a good and
workmanlike manner and in conformity with (i) plans and specifications therefor
(the “Communications Equipment Plans”) showing matters including, without
limitation, equipment size, location, weight and composition, and Lessee’s plan
for assembly, installation, maintenance and removal of such equipment, which
Communications Equipment Plans shall be subject to Lessor’s prior written
approval, which approval shall not be unreasonably withheld or delayed, and (ii)
all applicable laws, including, without limitation, Lessee’s obtaining and
keeping in force any necessary governmental permits or approvals for the
operation of such Communications Equipment. Notwithstanding anything to the
contrary contained herein, the supporting structures for such Communications
Equipment shall not penetrate the Building roof without Lessor’s prior written
approval, which approval shall not be unreasonably withheld or delayed. At
Lessor’s option, all work of installation, maintenance, repair and other work
affecting the roof in connection with the Communications Equipment shall be
performed, at Lessee’s sole cost and expense, by Lessor or Lessor’s designated
roof contractor. Lessee shall, at its sole cost and expense, install screening
of such Communications Equipment to prevent visibility from the street level, as
Lessor may reasonably require, and any other screening of such Communications
Equipment as may be required by applicable laws. Lessee shall not be permitted
to access the roof except in the event of an emergency, or except when
previously scheduled with Lessor or upon receipt of prior written approval from
Lessor (which approval shall not be unreasonably withheld or delayed).

 

c. Lessee shall be solely responsible for any liability, cost, claim, expense
(including, without limitation, attorneys’ fees) and/or damage to the Building
and/or the Project resulting from Lessee’s installation,

 

29

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maintenance, operation, use, presence or removal of such Communications
Equipment. Lessee shall, at all times during the Term, pay to Lessor within
thirty (30) days following demand therefor accompanied by reasonable evidence of
such charges, all increased real estate taxes, insurance premiums or other
charges which may be incurred by or charged to Lessor as a result of the
installation, operation, maintenance and/or removal of the Communications
Equipment. Lessee shall pay all costs and expenses of operation of the
Communications Equipment, including, without limitation, any necessary utility
services therefor. Lessee shall be entirely responsible for all maintenance of
and repairs to the Communications Equipment so that at all times the
Communications Equipment is in good condition and repair. Lessee shall maintain
such insurance upon the Communications Equipment as Lessee is obligated to
maintain with respect to the Premises pursuant to this Lease.

 

d. Upon the expiration of the Term or earlier termination of this Lease, Lessee
shall remove the Communications Equipment and restore that portion of the
Building and Project, including, without limitation, the Building roof, affected
by the Communications Equipment, to the same condition as existed prior to such
installation, subject to reasonable wear and tear, all at Lessee’s sole cost and
expense. In the event Lessee fails to so remove the Communications Equipment and
restore the affected portions of the Building by such expiration or earlier
termination, Lessor may, at its option and at Lessee’s sole cost and expense,
remove and store and/or dispose of the Communications Equipment and restore the
affected portions of the Building and Project, in which event all amounts paid
or incurred by Lessor in connection therewith shall be paid by Lessee to Lessor
within thirty (30) days following Lessor’s submission to Lessee of reasonable
evidence of the amount of such costs.

 

e. Subject to the provisions of this Article 64 and the provisions of this Lease
respecting Alterations, Lessee shall have the right to install, maintain,
modify, replace and remove the Communications Equipment and Communications Lines
during the Term of the Lease.

 

f. Lessor makes no representation or warranty regarding the availability,
feasibility or legality of the installation, operation, maintenance or removal
of the Communications Equipment. Lessee acknowledges and agrees that Lessee’s
inability to install, maintain, operate and/or remove the Communications
Equipment, either pursuant to the terms hereof or for any other reason, shall
not affect the remainder of this Lease and shall not entitle Lessee to any
reduction in the rent.

 

g. Lessor shall exercise commercially reasonable efforts to avoid unreasonable
interference with Lessee’s Communication Equipment or Communication Lines, or
the frequencies associated with the same.

 

65. WAIVER OF JURY. LESSOR AND LESSEE HEREBY WAIVE THEIR RESPECTIVE RIGHT TO
TRIAL BY JURY ON ANY CAUSE OF ACTION, CLAIM, COUNTER-CLAIM OR CROSS-COMPLAINT IN
ANY ACTION, PROCEEDING AND/OR HEARING BROUGHT BY EITHER LESSOR AGAINST LESSEE OR
LESSEE AGAINST LESSOR ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE.

 

66. JOINT PARTICIPATION. Lessor and Lessee hereby acknowledge that both parties
have been represented by counsel in connection with this Lease and that both
parties have participated in the negotiation and drafting of all of the terms
and provisions hereof. By reason of this joint participation, no term or
provision of this Lease will be construed against either party as the “drafter”
thereof, which terms and provisions shall include, without limitation, Article
14 hereof.

 

67. EXPEDITED DISPUTE RESOLUTION. Except as to any unlawful detainer dispute,
controversy, or claim, in the case of any dispute, controversy, or claim arising
from, out of, or in connection with, or relating to, this Lease, the negotiation
or creation of this Lease, and/or any term, provision and/or condition of this
Lease, including. without limitation, any breach or alleged breach of this
Lease, the parties shall meet and confer in an attempt to resolve their
differences. At any time after fifteen (15) days following notice in writing by
any party that it desires to so meet and confer (the “Meet and Confer Notice”),
any party may require mediation and then, if the mediation is unsuccessful,
within fifteen (15) days from the end of such mediation, binding arbitration
through J.A.M.S./Endispute (“JAMS”) in San Francisco, California. Also, if no
party commences mediation within forty-five (45) days of the Meet and Confer
Notice, then thereafter any party may require binding arbitration as and where
above-described. If for any reason JAMS in San Francisco cannot administer the
matter, then such JAMS as is selected by Lessor in any county within a fifty
(50) mile radius of San Francisco County shall be utilized. The costs of
mediation shall be borne equally by the parties thereto. Reimbursement for the
costs and attorneys’ fees for binding arbitration shall be as determined by the
arbitrator.

 

Any arbitration shall be conducted under JAMS streamlined arbitration rules and
procedures whether or not JAMS is used. Hearings shall be held in San Francisco,
California. All notices shall be given as provided in this Lease. By executing
this Lease, each party agrees to have any dispute, controversy, or claim arising
from the matters contemplated by this Article (but specifically excluding any
unlawful detainer dispute, controversy, or claim) decided by neutral and binding
arbitration as provided by California law, and each party waives any rights
which it may possess to have the dispute litigated in a court or by jury trial
and any rights of appeal. Any court of competent jurisdiction shall, upon the
petition of any party, confirm the award of the arbitrator and enter judgment in
conformity therewith. Any decision of the arbitrator and any such judgment shall
be final, binding, and non-appealable. By executing this Lease, each party
waives its judicial rights to discovery and appeal in any matter to be resolved
by arbitration pursuant hereto. If either party refuses to submit to arbitration
with respect to any matter to be resolved by arbitration pursuant hereto after
agreeing to this provision, then such party may be compelled to arbitrate under
the authority of the California Code of Civil Procedure. This arbitration clause
shall self-executing, and arbitration may proceed in the absence of any party or
any party’s representative who, after due notice, fails to be present or fails
to obtain a postponement. An award shall not be made solely on the default of a
party: the

 

30

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arbitrator shall require the party who is present to submit such evidence as the
arbitrator may require for the making of an award. Each party’s agreement to
this arbitration provision is voluntary.

 

Notwithstanding anything to the contrary contained in this Article, the
provisions concerning meeting and conferring to resolve differences, mediation
and arbitration shall not be applicable whatsoever to any unlawful detainer
dispute, controversy, claim or action, and all rights of any party to pursue any
unlawful detainer dispute, controversy, claim or action shall remain in full
force and effect.

 

By initialing in the space provided below, each of the parties hereto
specifically agrees that it has read and understands the foregoing and agrees to
submit any dispute, controversy, or claim arising from the matters described
above (but specifically excluding any unlawful detainer dispute, controversy, or
claim) to neutral and binding arbitration in accordance herewith.

 

 

   

/s/    VM    RJL    

--------------------------------------------------------------------------------

         

/s/   RAB    

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Lessor’s Initials

         

Lessee’s Initials

 

68. ONE TIME RIGHT OF FIRST REFUSAL FOR EXPANSION.

 

a. During the Term of this Lease (including, without limitation, the Extended
Term, if applicable), Lessor shall notify Lessee (“Lessor’s Notice”) if Lessor
has received an offer from a third party for the lease of any portion of the
fifth (5th) floor of the Building (other than the Premises) which Lessor desires
to accept, or Lessor is prepared to make an offer to a third party for the lease
of any portion of the fifth (5th) floor of the Building (other than pursuant to
an “Exempted Transaction” (as hereinafter defined). As used herein, an “Exempted
Transaction” means a lease of all or a part of the fifth (5th) floor of the
Building pursuant to any rights under the Existing Lease and any rights which
any then existing tenants of the fifth (5th) floor of the Building may have to
lease such space pursuant to lease transactions hereafter entered for portions
of the fifth (5th) floor of the Building into in accordance with this Article
68. Such Lessor’s Notice shall provide the basic business terms on which Lessor
is willing to rent such space (including, without limitation, Base Rent,
improvement allowances and other economic concessions, Term, options to extend,
rights of first refusal, payment of operating expenses) and shall be given to
Lessee prior to Lessor accepting such third party offer or making such offer to
a third party (other than pursuant to an Exempted Transaction). Lessee is hereby
granted the right of first refusal to lease such space on the terms as outlined
in Lessor’s Notice to Lessee. No court arbitrator or third party shall have the
right to challenge the terms and conditions set forth in Lessor’s Notice to
Lessee. Lessee shall have seven (7) days following receipt of such Lessor’s
Notice within which to indicate in writing its desire to lease the space under
the terms and conditions stated in such Lessor’s Notice. If Lessee rejects or
fails to accept Lessor’s offer within such seven (7) day period, Lessor shall
have the right at any time within six (6) months thereafter to enter into a
lease for such available space which was the subject of the offer made to Lessee
in Lessor’s Notice to any one or more third parties on terms and conditions not
materially more favorable to the lessee than as specified in Lessor’s Notice,
and Lessee shall have no further right to lease such space, provided that such
lease is entered into within six (6) months following Lessee’s receipt of the
applicable Lessor’s Notice and the lease is on terms and conditions not
materially more favorable to the lessee than as specified in Lessor’s Notice. If
Lessee rejects or fails to accept Lessor’s offer as set forth in Lessor’s Notice
within such seven (7) day period, but Lessor thereafter desires to lease such
space which was the subject of such Lessor’s Notice to one or more third parties
more than six (6) months following Lessee’s receipt of the applicable Lessor’s
Notice or on terms and conditions which are materially more favorable to the
lessee than as specified in the Lessor’s Notice, then Lessor shall first deliver
a new Lessor’s Notice with respect to such space to Lessee and Lessee shall
again have its right of first refusal with respect thereto in the manner set
forth above.

 

b. Lessor’s ability to plan for the orderly transaction of its rental business,
to accommodate the needs of other existing and potential tenants, and to enjoy
the benefits of increasing rentals at such times as Lessor is able to do so in
its sole and absolute discretion, are fundamental elements of Lessor’s
willingness to provide Lessee with the right of first refusal contained herein.
Accordingly, Lessee hereby acknowledges that strict compliance with the
notification provisions contained herein, and Lessee’s strict compliance with
the time period for such notification contained herein, are material elements of
the bargained for exchange between Lessor and Lessee and are material elements
of Lessee’s consideration paid to Lessor in exchange for the grant of the right
of first refusal. Therefore, Lessee’s failure to adhere strictly and completely
to the provisions and time frame contained in this provision shall render the
right of first refusal automatically null, void and of no further force or
effect as to the applicable Lessor’s Notice, without notice, acknowledgement, or
any action of any nature or sort, required of Lessor. Lessee acknowledges that
no other act or notice, other than the express written notice set forth
hereinabove, shall act to put Lessor on notice of Lessee’s acceptance of
Lessor’s offer as set forth in Lessor’s Notice, and Lessee hereby waives any
claims to the contrary, notwithstanding any other actions of Lessee during the
Term of this Lease or any statements, written or oral, of Lessee to Lessor to
the contrary during the Term of this Lease. In addition, the right of first
refusal granted pursuant hereto shall not be applicable (and Lessor shall not be
required to deliver any Lessor’s Notice), when Lessee is in default under this
Lease (after the expiration of any applicable period for cure provided in
Article 22 above). The right of first refusal granted pursuant hereto is
personal to original Lessee signatory to this Lease and cannot be assigned,
transferred or conveyed to, or exercised for the benefit of, any other person or
entity (voluntarily, involuntarily, by operation of law or otherwise) including,
without limitation, any assignee or subtenant permitted under Article 13 other
than a Permitted Transferee.

 

69. COUNTERPARTS. This Lease may be executed in any number of counterparts, each
of which shall be deemed to be an original, but any number of which, taken
together, shall be deemed to constitute one and the same instrument.

 

31

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IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE LESSOR
BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTIONS
RELATING THERETO.

 

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

 

LESSOR:

     

LESSEE:

CUPERTINO CITY CENTER BUILDINGS,

a California limited partnership

     

BORLAND SOFTWARE CORPORATION,

a Delaware corporation

By:

 

PROM XX, INC.,

a California corporation, its general partner

     

By: /s/    ROGER A. BARNEY        

               

Print Name: Roger A. Barney  

               

Its: SVP CORPORATE SERVICES & CAO

   

By:

 

PROMETHEUS REAL ESTATE GROUP,

INC., a California corporation,

agent for owner

 

     

Date: December 18, 2002

       

By:   /s/     VICKI R. MULLINS      

     

By:                                                                 

       

Print Name: Vicki R. Mullins

     

Print Name:                                                   

       

Its: Vice President

     

Its:                                                                  

       

Date:  December 19, 2002

     

Date:                                                    , 2002

       

By: /s/    ROBERT J. LAMPHER        

               

Print Name:   Robert J. Lampher

               

Its: Vice President

               

Date:   December 19, 2002

       

 

32

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EXHIBIT “A”

 

FLOOR PLAN OF THE PREMISES

 

 

[GRAPHIC APPEARS HERE]

 

 

 

[GRAPHIC APPEARS HERE]

 

 

 

[GRAPHIC APPEARS HERE]

 

 

 

Exhibit “A” - Page 1

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EXHIBIT “B”

 

DEPICTION OF THE PROJECT

 

 

 

 

[GRAPHIC APPEARS HERE]

 

 

 

 

Exhibit “B” - Page 1

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EXHIBIT “C”

 

RULES AND REGULATIONS

 

1. No sign, placard, picture, advertisement, name or notice shall be inscribed,
displayed or printed or affixed on or to any part of the outside or inside of
the Building without prior written consent of Lessor. Lessor shall have the
right to remove any such sign, placard, picture, advertisement, name or notice
without notice to and at the expense of Lessee. All approved signs or lettering
on doors shall be printed, painted, affixed or inscribed at the expense of
Lessee, by a person approved of by Lessor. Lessee shall not place anything or
allow anything to be placed near the glass of any exterior window, door,
partition or wall which may appear unsightly from outside the Premises. Lessee
shall not, without prior written consent of Lessor cover or otherwise sunscreen
any window.

 

2. The sidewalks, halls, passages, exits, entrances, elevators and stairways
shall not be obstructed by Lessee or used by Lessee for any purpose other than
for ingress or egress from its Premises.

 

3. Lessor will furnish Lessee, free of charge, with two keys to each door lock
in the Premises. Lessor may make a reasonable charge for any additional keys.
Lessee shall return all keys issued for the Premises at the expiration or
earlier termination of the Lease Term. Lessee shall pay to Lessor the costs of
re-keying the Premises if all keys are not timely returned. Without Lessor’s
prior approval and otherwise complying with the provisions of this Lease
governing the making of Alterations, Lessee shall not alter any lock or install
any new or additional locks or any bolts on any doors or windows of the
Premises.

 

4. The Common Area toilet rooms, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed and
no foreign substance of any kind whatsoever shall be thrown therein and the
expense of any breakage, stoppage or damage resulting from the violation of this
rule shall be borne by the Lessee who, or whose agents, officers, employees,
contractors, servants, invitees or guests shall have caused it.

 

5. Lessee shall not overload the floor of the Premises or in any way deface the
Premises or any part thereof. Lessor shall have the right to prescribe the
weight, size and position of all safes and other heavy equipment brought into
the Building and also the time and manner of moving the same in and out of the
Building. Safes and other heavy objects shall, if considered necessary by
Lessor, stand on supports of such thickness as is necessary to properly
distribute the weight. Lessor will not be responsible for loss of or damage to
any such safe or property from any cause and all damage done to the Building by
moving or maintaining any such safe or other property shall be repaired at the
expense of Lessee.

 

6. No furniture, freight or equipment of any kind shall be brought into the
Building without prior notice to Lessor and all moving of the same into or out
of the Building shall be done at such time and in such manner as Lessor shall
designate. Unless otherwise agreed to in writing by Lessor, any such movement of
furniture, freight, or equipment shall be made during non-business hours for the
Building.

 

7. Lessee shall have the right to use the loading facilities provided at the
Building, if any, in common with the other tenants. All Lessee deliveries of
bulk items shall be through the Building loading facilities, if any. Freight
elevator(s) will be available for use by all tenants in the Building, subject to
such reasonable scheduling as Lessor, in its discretion, deems appropriate.
Lessor shall have the right at its sole discretion to prohibit Lessee’s delivery
through the main lobbies.

 

8. Lessee shall not use, keep or permit to be used or kept, any foul or noxious
gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to Lessor or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds be in or kept in or about the Premises or Building
(other than “seeing-eye” dogs or other animals providing assistance to disabled
persons).

 

9. The Premises will not be used for lodging, storage of merchandise, washing
clothes, or manufacturing of any kind, nor shall the Premises be used for any
improper, immoral or objectionable purpose. No cooking will be done or permitted
on the Premises without Lessor’s consent, except the use by Lessee of
Underwriters Laboratory approved equipment for brewing coffee, tea, hot
chocolate and similar beverages shall be permitted, and the use of a microwave
oven for employees use will be permitted, provided that such equipment and use
is in accordance with all applicable federal, state, county and city laws,
codes, ordinances, rules and regulations.

 

10. Lessee shall not use or keep in the Premises or the Building any kerosene,
gasoline or inflammable or combustible fluid or material, or any method of
heating or air conditioning other than supplied by Lessor.

 

11. Lessor shall approve in writing the method of attachment of any objects
affixed to walls, ceilings or doors. Lessor will direct electricians as to where
and how telephone and telegraph wires are to be introduced. No boring or cutting
for the wires will be allowed without the consent of Lessor (which shall not be
unreasonably withheld). The location of telephones, call boxes and other office
equipment affixed to the Premises shall be subject to the approval of Lessor
(which shall not be unreasonably withheld). Lessee shall not install any wiring
above the ceiling tiles that does not comply with the fire codes. Any such
wiring not in compliance herewith shall be removed immediately at the expense of
Lessee. Lessee will not affix any floor covering to the floor of the Premises in
any manner except as approved by Lessor (which shall not be unreasonably
withheld).

 

Exhibit “C” - Page 1

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12. All cleaning and janitorial services for the Building and the Premises will
be provided exclusively through Lessor, and except with the written consent of
Lessor, no person or persons other than those approved by Lessor will be
employed by Lessee or permitted to enter the Building for the purpose of
cleaning the same.

 

13. Lessee will store all its trash and garbage within its Premises or in other
facilities provided by Lessor. Lessee will not place in any trash box or
receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse disposal
is to be made in accordance with directions issued from time to time by Lessor.

 

14. On Saturdays, Sundays and legal holidays, and on other days between the
hours of 6:00 p.m. and 7:00 a.m. the following day, access to the Building, or
to the halls, corridors, elevators or stairways in the Building, or to the
Premises may be refused unless the person seeking access is known to the person
or employee of the Building in charge and has a pass or is properly identified.
Lessor shall in no case be liable for damages for any error with regard to the
admission to or exclusion from the Building of any person. In case of invasion,
mob, riot, public excitement or other commotion, Lessor reserves the right to
prevent access to the Building during the continuance of the same by closing the
doors or otherwise, for the safety of the tenants and protection of the Building
and of property in the Building.

 

15. Lessee will not waste electricity, water or air conditioning and agrees to
reasonably cooperate with Lessor to assure the most effective operation of the
Building’s heating and air conditioning and to comply with any governmental
energy-saving rules, laws or regulations of which Lessee has actual notice, and
will refrain from attempting to adjust controls (except for Lessee’s adjustment
of controls with approval of and training by Lessor as provided in this Lease).
Lessee will keep corridor doors closed, and shall keep all window coverings
pulled down.

 

16. Lessor reserves the right to exclude or expel from the Building any person
who, in the judgment of Lessor, is intoxicated or under the influence of liquor
or drugs, or who shall in any manner do any act in violation of any of the rules
and regulations of the Building.

 

17. No vending machine or machines or any description shall be installed,
maintained or operated upon the Premises without the written consent of Lessor,
which approval shall not be unreasonably withheld, conditioned or delayed.

 

18. Lessor shall have the right, exercisable without notice and without
liability to Lessee to change the name and street address of the Building or the
Project.

 

19. Lessee shall not disturb, solicit or canvass any occupant of the Building or
Project and shall cooperate to prevent the same.

 

20. Lessor shall have the right to control and operate the public portions of
the Buildings and the public facilities, and hearing and air conditioning, as
well as facilities furnished for the common use of the tenants, in such manner
as it deems best for the benefit of the tenants generally.

 

21. All entrance doors in the Premises shall be left locked when the Premises
are not in use and all doors opening to public corridors shall be kept closed
except for normal ingress or egress from the Premises.

 

22. Without the written consent of Lessor, Lessee shall not use the name of the
Building or Project in connection with or in promoting or advertising the
business of Lessee except as Lessee’s address.

 

23. Lessee shall place pads under all desk chairs, or have carpet coasters to
protect chairs.

 

24. Except as specifically otherwise provided in this Lease, Lessee will not
install any radio or television antenna, loudspeaker, satellite dishes or other
devices on the roof(s) or exterior walls of the Building or the Project. Lessee
will not interfere with radio or television broadcasting or reception from or in
the Project or elsewhere.

 

25. Lessee agrees to comply with all safety, fire protection and evacuation
procedures and regulations established by Lessor or any governmental agency.

 

26. Lessee assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.

 

27. Lessor may prohibit smoking in the Building and/or any other portion of the
Project and may require Lessee and any of its employees, agents, clients,
customers, invitees and guests who desire to smoke, to smoke within designated
smoking areas within the Project, if any such smoking areas are provided.

 

28. Lessee’s requirements will be attended to by Lessor only upon appropriate
application to Lessor’s management offices for the Project by an authorized
individual of Lessee. Employees of Lessor will not perform any work or do
anything outside of their duties unless under special instructions from Lessor,
and no employee of Lessor will admit any person (Lessee or otherwise) to any
office without specific instructions from Lessor.

 

29. In the event of any conflict between these Rules and Regulations and the
Lease of which they are a part, the other provisions of the Lease shall prevail.
Lessor may waive any one or more of these Rules and Regulations for the benefit
of Lessee or any other tenant, but no such waiver by Lessor will be construed as
a waiver of such Rules and Regulations in favor of Lessee or any other tenant,
nor prevent Lessor from thereafter enforcing

 

Exhibit “C” - Page 2

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any such Rules and Regulations against any or all of the tenants of the Project
Lessor shall use commercially reasonable efforts to enforce the Rules and
Regulations in a non-discriminatory manner, subject to Lessor’s reasonable
discretion.

 

 

 

Exhibit “C” - Page 3

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SUBLEASE

20450 Stevens Creek Boulevard

Cupertino, California

(CUPO3)

 

This Sublease (“Sublease”), dated December 16, 2002 (the “Execution Date”), is
entered into by and between Sun Microsystems, Inc., a Delaware corporation
(“Sublandlord”), and Borland Software Corporation, a Delaware corporation
(“Subtenant”).

 

1. BASIC SUBLEASE PROVISIONS

 

1.1 Premises: The Premises under this Sublease, consisting of approximately
61,200 rentable square feet in the aggregate, is comprised of all of the space
on the sixth, seventh and eighth floors of the building located at 20450 Stevens
Creek Boulevard, in Cupertino, California (the “Building”), which is a portion
of the Master Landlord’s project as shown on Exhibit B of the Master Lease (the
“Project”). The Premises demised hereunder is a portion of those certain
premises (“Master Premises”) containing approximately 183,074 square feet of
space, which is demised pursuant to the Master Lease. The Premises are depicted
on Exhibit A to this Sublease.

 

1.2 Master Landlord: Cupertino City Center Buildings, a California limited
partnership, or any successors thereto under the Master Lease.

 

1.3 Master Lease: Lease Agreement dated November 20. 1997, entered into by
Sublandlord, as tenant, and Master Landlord, as landlord, a copy of which is
attached hereto as Exhibit B.

 

1.4 Term: Approximately two (2) years and eleven (11) months beginning on the
Commencement Date and ending on the Expiration Date unless terminated earlier in
accordance with the terms and conditions of this Sublease.

 

1.5 Commencement Date: January 1, 2003

 

1.6 Rent Commencement Date: April 1 ,2003

 

1.7 Expiration Date: November 30, 2005

 

1.8 Base Rent:

  

$85,680.00 per month ($16.80 per square foot of rentable space of the Premises
per annum) from the Rent Commencement Date to November 30, 2003.

    

$88,740 per month ($17.40 per square foot of rentable space of the Premises per
annum) from December 1, 2003, to November 30, 2004.

    

$91,800 per month ($18.00 per square foot of rentable space of the Premises per
annum) from December 1, 2004 to the Expiration Date.

 

1.9 Subtenant’s Share: 33.4 percent

 

1.10 Subtenant’s Use: Any use permitted under Section 8 of the Master Lease.

 

1.11 Subtenant Improvement Allowance: $1,530,000 ($25.00 per rentable square
foot of the Premises).

 

          

          1.12 Address for Payment of Rent:

  

Sun Microsystems, Inc.

        

7777 Gateway Blvd.

        

MS NWK15-103

        

Newark, CA 94560

        

Attn: Lease Administration

 

1

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          1.13 Sublandlord’s Notice Address:

  

Sun Microsystems, Inc.

         

7777 Gateway Blvd.

         

MS NWK15-103

         

Newark, CA 94560

         

Attn: Lease Administration

         

Sun Microsystems, Inc.

         

4120 Network Circle

         

MS SCA12-202

         

Santa Clara, CA 95054

         

Attn: Real Estate Counsel

          1.14 Subtenant’s Notice Address:

  

Borland Software Corporation

         

100 Enterprise Way

         

Scotts Valley, CA 95066

         

Ann: Roger Barney

         

Borland Software Corporation

         

100 Enterprise Way

         

Scotts Valley, CA 95066

         

Attn: General Counsel

          1.15 Brokers:    For Sublandlord:

  

Jones Lang LaSalle

         

Comish & Carey Commercial

                                         For Subtenant:

  

Tory Corporate Real Estate Advisors dba The

         

Staubach Company

 

1.16 Definitions: The terms in the Basic Sublease Provisions are used in this
Sublease as defined terms and have the meanings given above. Other capitalized
words and phrases have the meanings given in the Sublease. Unless otherwise
indicated, all section references are to the sections of this Sublease.

 

2.   DEMISE OF PREMISES

 

2.1 Sublandlord hereby subleases the Premises to Subtenant, and Subtenant hereby
subleases the Premises from Sublandlord, for the Term, on and subject to the
terms and conditions of this Sublease.

 

2.2 During the Term, Subtenant shall have the right to make reasonable and
appropriate non-exclusive use of those areas of the Building that Sublandlord
has designated for common use by all subtenants, including the shipping and
receiving area, the first floor lobby, driveways, stairways and elevators.
Without limiting the terms of the immediately preceding sentence, Sublandlord
acknowledges and agrees that, during the Term, Subtenant shall have the right to
make reasonable and appropriate non-exclusive use of the first floor lobby, the
driveways, accessways, stairways and elevators and the shipping and receiving
areas within the Exterior Common Area appurtenant to the Building in which the
Premises are a part. During the Term, Subtenant shall have reasonable access to
the common area telecommunications closet and the risers throughout and in the
Building so that Subtenant may install, subject to the provisions of Paragraph
10 of the Master Lease, telecommunications, data and/or telephone lines in such
risers, if necessary.

 

2.3 Sublandlord hereby grants to Subtenant the right to use without charge
(except as otherwise expressly provided in the Master Lease) during the Term 3
parking spaces per 1,000 rentable square feet of the Premises pursuant to the
terms and conditions of the Master Lease. Subject to the Master Landlord’s
consent, fifty (50) of the parking spaces granted under this Section 2.3 shall
be on the lower level of the underground parking structure and shall be
designated exclusively for Subtenant.

 

2

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2.4 Sublandlord reserves the right, on reasonable prior notice, at reasonable
times, during the Term, to inspect, repair or maintain the Premises, or to
exhibit the Premises to persons having a legitimate interest. In connection with
the exercise of such right of entry, Sublandlord shall use reasonable efforts
not to interfere with Subtenant’s use or occupancy of the Premises and to comply
with all reasonable security requirements imposed by Subtenant. Subtenant shall
have a right to have a representative of Subtenant accompany Sublandlord in
connection with any entry into the Premises, or any portion thereof, by
Sublandlord.

 

3. TERM

 

3.1 The Term will commence on the Commencement Date. If for any reason
Sublandlord cannot deliver possession of the Premises to Subtenant by
Commencement Date, Sublandlord will not be liable therefore, nor will such
failure affect the validity of this Sublease or the obligations of Subtenant
hereunder, or extend the Expiration Date, but in such case the Commencement Date
will not occur until possession of the Premises is tendered to Subtenant and the
Rent Commencement Date shall be delayed by the same number of days as the
Commencement Date is so delayed. The preceding to the contrary notwithstanding,
if Sublandlord has not delivered possession of the Premises to Subtenant in the
condition required by this Sublease by January 7, 2003, then Subtenant shall
have a right to terminate this Sublease by written notice to Sublandlord given
at any time prior to the date Sublandlord delivers possession of the Premises to
Subtenant. In the event of such termination, all rights and obligations
hereunder shall cease and Sublandlord shall promptly return to Subtenant all
prepaid rent paid by Subtenant to Sublandlord.

 

3.2 The Term will end on the Expiration Date. However, unless the Master
Landlord has entered into a non disturbance agreement with Subtenant, the
Sublease may be terminated prior to the Expiration Date if the Master Lease is
terminated for any cause whatsoever (and Master Landlord does not require
Subtenant to attorn), or as provided elsewhere in this Sublease, and the Term
will end on such earlier termination.

 

3.3 Sublandlord shall have the right to terminate the Master Lease under any
circumstance specifically provided in the Master Lease without the prior consent
of Subtenant. Sublandlord shall not terminate the Master Lease by mutual
agreement with Master Landlord without Subtenant’s prior written consent (which
written consent may be given or withheld by Subtenant in its sole and absolute
discretion).

 

4. RENT

 

4.1 The consideration payable by Subtenant for the Premises consists of the Base
Rent specified in the Basic Sublease Provisions, the Additional Rent set forth
in Section 4.3, and the Utility Charges set forth in Section 4.5. Base Rent,
Additional Rent and Utility Charges are collectively referred to as “Rent.”
Subtenant’s covenant to pay Rent will be independent of every other covenant in
this Sublease.

 

4.2 Beginning on the Rent Commencement Date and continuing thereafter on the
first day of each month during the Term, Subtenant must pay to Sublandlord in
advance, and without notice, demand, deduction or offset, the monthly Base Rent.
Base Rent for any partial month will be prorated. Subtenant must pay the first
full month’s Rent on the Execution Date, and if the Commencement Date is not the
first day of the month, then Subtenant must pay the prorated Rent for the first
partial month on the Commencement Date.

 

4.3 Beginning on the Commencement Date and continuing throughout the Term,
Subtenant also must pay as “Additional Rent,” an amount equal to Subtenant’s
Share of all additional rent, fees, charges or other sums due and payable by
Sublandlord under the Master Lease, insofar as applicable to the Premises
described herein and the period encompassed by the Term (but not inclusive of
any additional rent payable by Sublandlord under the Master Lease due to a
breach or default by Sublandlord under the Master Lease that is not caused by a
breach of any of Subtenant’s obligations under this

 

3

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Sublease), to reimburse Master Landlord for taxes, insurance, operating
expenses, common area maintenance charges, cost of security guards, management
fees, capital expenditures for required repairs or improvements, and/or other
expenses incurred by Master Landlord in connection with the Building, and any
other charges, except those charges which constitute Utility Charges payable
under Section 4.5 (collectively, “Master Lease Pass Through Costs”). To the
extent the Master Lease Pass Through Costs are payable on a monthly estimated
basis, the Additional Rent in respect thereto must be paid as and when Base Rent
is due based on Master Landlord’s estimates; and upon any reconciliation of
estimated and actual Master Lease Pass Through Costs, the corresponding
Additional Rent must be adjusted between Sublandlord and Subtenant (with
appropriate reimbursements or additional payments) within thirty (30) days after
delivery to Subtenant of any reconciliation statement under the Master Lease.
For purposes of calculating Additional Rent, Sublandlord will be entitled to
rely conclusively on Master Landlord’s determination of estimated and actual
Master Lease Pass Through Costs. Sublandlord hereby agrees to provide or furnish
Subtenant, within three (3) business days following receipt of the same by
Sublandlord, with estimates of Master Lease Pass-Through Costs and
reconciliation statements received by Sublandlord from Master Landlord. In the
event that Subtenant believes that an audit of Master Landlord’s books and
records related to the Master Lease Pass-Through Costs is warranted, then,
Sublandlord shall use commercially reasonable efforts to conduct such an audit
or to assign its right to conduct such an audit to Subtenant, provided that such
audit is not, in Sublandlord’s reasonable business judgment, unwarranted.

 

4.4 [Intentionally omitted]

 

4.5 Beginning on the Commencement Date and continuing throughout the Term,
Subtenant also must pay within thirty (30) days after receipt of written notice
from Sublandlord any other fees, charges or other sums due on account of utility
consumption in the Premises during the Term, including without limitation,
water, electric and other charges incurred in connection with lighting, and
providing electrical power and heating, ventilating and air conditioning service
(collectively, “Utility Charges”). To the extent that utility consumption at the
Premises are separately metered and billed directly to Subtenant, Subtenant must
be responsible for paying all such costs before delinquency as Utility Charges.
To the extent such utilities are not separately metered to the Premises,
Subtenant must pay such costs in an amount equal to Sublandlord’s reasonable
determination of Subtenant’s equitable allocation of such charges based upon
actual usage. Utility Charges also include: (a) excess or after hours electrical
service or heating, ventilating or air conditioning service supplied to the
Premises; (b) services or benefits supplied to the Premises at Subtenant’s
request (or with Subtenant’s acquiescence) for which Master Landlord reserves
any right under the Master Lease to impose a fee or charge separate from the
Master Lease Pass Through Costs. Sublandlord covenants and agrees that excess or
after-hours electrical service or HVAC service supplied to the Premises during
the Term of the Sublease shall be charged to Subtenant at Master Landlord’s cost
to provide or furnish the same and without any markup from Master Landlord
(unless the Master Lease expressly allows Master Landlord thereunder to charge a
premium for excess or after-hours electrical or HVAC service) or Sublandlord. If
Subtenant disputes Sublandlord’s allocation of Utility Charges to Subtenant
pursuant to the terms above, then either party may notify the other in writing
of the basis of the dispute and the parties shall make diligent efforts to
resolve the dispute. If no resolution of the dispute has been achieved within 15
days of delivery of the notice of such dispute, then either party may thereafter
submit such dispute to arbitration in accordance with the following terms:

 

4.5.1 Subtenant and Sublandlord agree that any dispute or claim in law or equity
arising between Subtenant and Sublandlord concerning the allocation of Utility
Charges to Subtenant pursuant to the terms of Section 4.5 above shall be decided
by neutral, binding arbitration and not by court action, except as provided by
California law for judicial review of arbitration proceedings.

 

4.5.2 The arbitration shall be conducted in accordance with the rules of the
American Arbitration Association (AAA). The parties may agree in writing to use
different rules and/or arbitrator(s). In all other respects, the arbitration
shall be conducted in accordance with Part III, Title 9 of the California

 

4

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Code of Civil Procedure. Judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof. The parties shall have
the right to discovery in accordance with Code of Civil Procedure Section
1283.05.

 

The arbitrator(s) shall award to the prevailing party in such arbitration, if
any, as determined by the arbitrator(s), all of its costs and fees. “Costs and
fees” shall mean, as used in the immediately preceding sentence, all reasonable
pre-award expenses of the arbitration, including the arbitrators’ fees,
administrative fees, travel expenses, out-of-pocket expenses such as copying and
telephone, court costs, witness fees and attorneys’ fees.

 

“NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT THE MATTERS INCLUDED IN THE ‘ARBITRATION OF DISPUTES’ PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY
TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS
TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE
‘ARBITRATION OF DISPUTES’ PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION
AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY.”

 

“WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE ‘ARBITRATION OF DISPUTES’ PROVISION TO
NEUTRAL ARBITRATION.”

 

SUBTENANTS INITIALS:    /s/    RAB                     

 

SUBLANDLORD’S INITIALS:                         

 

4.6 All Rent must be paid to Sublandlord at the Address for Payment of Rent
specified in the Basic Sublease provisions, or to such other person or such
other place as Sublandlord may from time to time designate by giving notice in
writing.

 

4.7 If any Rent is not paid within three days of when due, Subtenant must pay a
late charge to Sublandlord equal to ten percent (10%) of the delinquent amount;
provided, however, that with respect to the first such later payment in any
twelve (12) consecutive month period during the Term of the Sublease, such late
charge shall not be due and payable unless such late payment by Subtenant shall
not be cured within five business days following Subtenant’s receipt of written
notice from Sublandlord of Subtenant’s failure to make such payment when due.
Neither demand for, nor receipt of, any late charge called for under this
Sublease will (i) operate to waive any default by Subtenant or provide a
substitute for Subtenant’s full and timely performance of the obligation to pay
Rent, or (ii) limit the exercise of any other right or remedy Sublandlord may
have under this Sublease in case of Subtenant’s Default.

 

5. CONDITION AND USE OF PREMISES

 

5.1 Sublandlord subleases the Premises to Subtenant strictly in their present
“as-is” and “with all faults” condition. Sublandlord represents, but does not
warrant, that to Sublandlord’s best knowledge, which shall mean the actual
knowledge (without duty of inquiry) of Charles Barry, Sublandlord’s Director,
Workplace Resources, West Geo, and Andrew Smith, Program Manger (who are the
persons within Sublandlord’s organization or affiliated with Sublandlord’s
organization who are most familiar with the physical condition of the Master
Premises), all building systems and equipment serving the Premises are in good
working order and condition as of the Execution Date, although Sublandlord does
not represent that any particular capacity is available at the Premises.
Sublandlord covenants and agrees to use its best efforts to ensure that the
Master Landlord maintains all building systems in good working order as required
under the Master Lease. Subtenant, by acceptance of possession of the Premises,
conclusively acknowledges that it has satisfied itself as to the condition of
the Premises and

 

5

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that, subject to Sublandlord’s representation above and reservation of claims of
latent defects, the building systems servicing the Premises are in order and
repair and in tenantable condition satisfactory to Subtenant.

 

5.2 The Premises may be used and occupied solely for Subtenant’s Use as
specified in the Basic Sublease Provisions. Subtenant must not use or suffer or
permit the Premises to be used for any other purpose except with Master
Landlord’s and Sublandlord’s discretionary consent. During the Term, Subtenant
shall have access to the Premises 24 hours a day, 365 days per year.

 

5.3 Subject to the provisions of Section 10 of the Master Lease, including any
requirement to obtain the consent of the Master Landlord, and pursuant to the
terms and conditions of Exhibit C attached hereto (the “Work Letter”), Subtenant
may construct certain improvements reasonably necessary for Subtenant to occupy
and use the Premises (the “Subtenant Improvements”). In accordance with the
terms of the Work Letter, Sublandlord shall reimburse Subtenant for the costs
relating to the initial design and construction of the Subtenant Improvements
that are constructed or installed, or caused to be constructed or installed, in
the Premises and/or that are caused to be constructed or installed by Subtenant
to fulfill Sublandlord’s restoration obligations for the Premises as required by
Master Landlord, up to, but in no event more than the Subtenant Improvement
Allowance. The costs to which the Subtenant Improvement Allowance may be applied
are the Subtenant Improvement Allowance Items described in Exhibit C attached to
this Sublease.

 

5.4 Subtenant must not permit the Premises or the Building to become subject to
any mechanics’, laborers’ or materialmen’s lien on account of labor or material
furnished to Subtenant or claimed to have been furnished to Subtenant in
connection with work of any character performed or claimed to have been
performed on the Premises by, or at the direction or sufferance of, Subtenant,
and must not do or fail to do any other act which in any way encumbers the title
of Master Landlord in and to the Building, whether by operation of law or by
virtue of any express or implied contract by Subtenant. Any claim to, or lien
upon, the Premises or the Building, arising from any act or omission of
Subtenant will accrue only against the subleasehold estate of Subtenant and will
be subject and subordinate to the paramount title and rights of Master Landlord
in and to the Building and the interest of Sublandlord in the Master Lease
Premises.

 

5.5 To the best knowledge of Sublandlord, which shall mean the actual knowledge
(without duty of inquiry) of Charles Barry, Sublandlord’s Director, Workplace
Resources, West Geo, and Andrew Smith, Program Manger (who are the persons
within Sublandlord’s organization or affiliated with Sublandlord’s organization
who are most familiar with the physical condition of the Master Premises), no
Hazardous Substances are or have been located, stored, or disposed on or
released or discharged from, onto or under the Master Premises, or any portion
thereof (including, without limitation, soil or groundwater contamination). For
purposes of this Sublease, the term “Hazardous Substances” shall mean and
include all hazardous and toxic substances, waste or materials, any pollutant or
contaminant, including, but without limitation, PCBs, asbestos,
asbestos-containing material, petroleum products, and raw materials that are
included under or regulated by any Environmental Law or that would pose a
health, safety or environmental hazard, except that Hazardous Substances shall
not include amounts of materials which are ordinarily and reasonably required to
be used in the normal course of Sublandlord’s business, so long as such use
complies with all Environmental Laws. The term “Environmental Law” shall mean
and include all federal, state and local statues, ordinances, regulations and
rules presently in force or hereafter enacted relating to environmental quality,
contamination, and clean-up of Hazardous Substances, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. § 6091 et seq., as amended by the Superfund Amendments
and Reauthorization Act of 1986, the Resource Conservation and Recovery Act of
1976,42 U.S.C. § 6091, et seq., as amended by the Hazardous and Solid Waste
Amendments of 1984, and state superlien and environmental clean-up statutes and
all rules and regulations presently or hereafter promulgated under said statutes
as amended.

 

6

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5.6 Sublandlord shall indemnify, defend and hold harmless Subtenant and its
agents, employees, officers, directors, shareholders, sub-subtenants, successors
and assigns from and against any and all damages, claims, losses, liabilities,
actions, causes of action, remediation or clean up expenses, costs or other
expenses (including, without limitation, reasonable attorney’s fees and court
costs) (collectively, “Claims”) arising out of, or related to, the presence of
Hazardous Substances on, in or under the Master Premises on or prior to the
Commencement Date or to the extent that the existence of such Hazardous
Substance at the Premises, the Building, the Master Premises or the Project is
caused by Sublandlord. Subtenant shall indemnify, defend and hold harmless
Sublandlord from all Claims arising out of, or related to, the presence of
Hazardous Substances at the Premises, the Building or the Project caused by
Subtenant. The obligations of Sublandlord and Subtenant under this Section 5.6
shall survive the expiration or earlier termination of this Sublease.

 

5.7 Sublandlord agrees to cause the first floor lobby of the Building to be
manned by a security guard 24 hours per day, 365 days per year.

 

6. SUBTENANT’S INSURANCE AND INDEMNITY

 

6.1 Throughout the Term, Subtenant must procure and maintain, at its own cost
and expense, such commercial general liability insurance as is required to be
carried by Sublandlord under the Master Lease (to the extent applicable to
Subtenant’s use, occupancy, maintenance, repair or improvements of the Premises
and the Project by Subtenant or any subtenant of Subtenant and any of
Subtenant’s or its subtenant’s employees, agents, contractors or invitees),
naming Sublandlord and all other parties as may be required to be named under
the Master Lease as “additional insureds,” and such property insurance as is
required to be carried by Sublandlord under the Master Lease to the extent such
property insurance pertains to leasehold improvements installed in the Premises,
alterations constructed by Subtenant and all equipment, trade fixtures,
inventory, fixtures and personal property located on or in the Premises.
Subtenant shall have no obligation to maintain insurance on any of Sublandlord’s
equipment, trade fixtures, inventory, fixtures or personal property located on
or in the Premises. Subtenant must furnish to Sublandlord a certificate of
Subtenant’s insurance required under this Section at least ten (10) days before
the Commencement Date. Such certificate shall provide that Sublandlord shall be
given not less than thirty (30) days notice of cancellation, intent to non-renew
and adverse material changes in the insurance evidenced thereby.

 

6.2 Subtenant waives claims against Sublandlord for damage to property owned by
Subtenant where such damage is covered under any policy of property damage
insurance maintained by Subtenant, to the extent such waiver is permitted by
Subtenant’s insurers and does not prejudice the insurance required to be carried
by Subtenant under this Sublease. Sublandlord waives claims against Subtenant
for damage to property owned by Sublandlord where such damage is covered under
any policy of property damage insurance maintained by Sublandlord, to the extent
such waiver is permitted by Sublandlord’s insurers and does not prejudice the
insurance carried by Sublandlord or required to be carried by Sublandlord under
this Sublease. Subtenant hereby waives claims against Master Landlord and
Sublandlord for death, injury, loss or damage of every kind and nature, to the
same extent that Sublandlord waives or releases such claims against Master
Landlord under Section 14 the Master Lease, except such claims arising out of
Sublandlord’s or Master Landlord’s negligence or willful misconduct and which is
not covered by insurance required to be maintained by Subtenant pursuant to this
Sublease.

 

6.3 Subtenant agrees to obtain, for the benefit of Master Landlord and
Sublandlord, such waivers of subrogation rights from its insurer as are
required, if applicable, of Sublandlord, as the tenant, under the Master Lease.
Sublandlord agrees to obtain, for the benefit of Subtenant, a waiver of
subrogation rights from its insurers.

 

6.4 Subtenant hereby agrees to indemnify, defend and hold harmless Sublandlord
and Master Landlord on the terms and conditions provided in and pursuant to the
provision of Section 14 of the Master Lease, as if each of Master Landlord and
Sublandlord were “Lessor thereunder, except such

 

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claims, damages or loss arising out of Sublandlord’s negligence or willful
misconduct and which is not covered by insurance required to be maintained by
Subtenant pursuant to this Sublease

 

7. ASSIGNMENT OR SUBLETTING

 

7.1 If Subtenant desires to (a) assign, convey or mortgage this Sublease or any
interest under it; (b) allow any transfer thereof or any lien upon Subtenant’s
interest by operation of law; (c) further sublet the Premises or any part
thereof; or (d) permit the occupancy of the Premises or any part thereof by
anyone other than Subtenant, then Subtenant shall seek Sublandlord’s consent in
the same manner and to the same extent that Sublandlord would be required under
Section 13 of the Master Lease to seek Master Landlord’s consent to such a
transfer, assignment or sublease. And Sublandlord shall not unreasonably
withhold its consent thereto to the same extent Master Landlord is so required
to reasonably consider such a request from Sublandlord under Section 13 of the
Master Lease. If Sublandlord consents to any such transfer, assignment or
sub-subletting, Sublandlord will use commercially reasonable efforts to obtain
the consent of Master Landlord, provided that it will not be required to file
any lawsuit against the Master Landlord to enforce the provision of the Master
Lease and Sublandlord shall not be liable in the event of a failure to obtain
such consent after use of commercially reasonable efforts. Sublandlord’s
reasonable costs incurred in connection with any proposed assignment or
subletting by Subtenant, including all reasonable costs incurred by Sublandlord
in obtaining Master Landlord’s consent must be paid by Subtenant within thirty
(30) days of receipt of an invoice from Sublandlord.

 

7.2 Fifty percent (50%) of any Bonus Rent received by Subtenant under any
sub-sublease or assignment shall be paid to Sublandlord. “Bonus Rent” shall mean
the excess of (i) all consideration received by Subtenant from an assignment of
this Sublease or a sub-sublease of all or any portion of the Premises over
(ii) the sum of the Rent and other charges payable by Subtenant to Sublandlord
under this Sublease (prorated, in the case of a sub-sublease of less than all of
the Premises, to reflect obligations allocable to only the portion of the
Premises so sublet), the reasonable leasing commissions and advertising costs
paid by Subtenant to any unaffiliated third party, the Subtenant’s actual cost
of improvements made to the Premises to ready the Premises for the assignee or
sub-subtenant, and reasonable outside attorneys’ fees incurred by Subtenant in
connection with such assignment or sub-sublease.

 

7.3 No permitted assignment will be effective and no permitted sublease will
commence unless and until any Default by Subtenant hereunder has been cured. No
permitted assignment or subletting will relieve Subtenant from Subtenant’s
obligations and agreements under this Sublease and Subtenant will continue to be
liable as a principal and not as a guarantor or surety, to the same extent as
though no assignment or subletting had been made.

 

8. ALTERATIONS

 

8.1 Subtenant must not make any alterations in or additions to the Premises
(“Subtenant Alterations”) without the Sublandlord’s prior written consent, which
shall not be unreasonably withheld, provided that it shall be reasonable for the
Sublandlord to withhold consent to any Subtenant Alteration if it is unable to
obtain the Master Landlord’s consent thereto. Notwithstanding the foregoing, if
Master Landlord has released Sublandlord from all restoration obligations
related to the proposed Subtenant Alterations, then Sublandlord shall not
withhold its consent thereto, except if the proposed Subtenant Alterations would
unreasonably interfere with use of the balance of the Master Premises by
Sublandlord or its other subtenants. If Sublandlord consents to the Subtenant
Alterations, Sublandlord will use commercially reasonable efforts to obtain the
consent of Master Landlord, provided that it will not be required to file any
lawsuit against the Master Landlord to enforce the provision of the Master Lease
and Sublandlord shall not be liable in the event of a failure to obtain such
consent after use of commercially reasonable efforts.

 

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8.2 If the Subtenant Alterations are permitted or consented to, Subtenant must
comply with all of the covenants of Sublandlord contained in the Master Lease
pertaining to the performance of such Subtenant Alterations. Any permitted
Subtenant Alterations must be made at Subtenant’s sole cost and expense,
including any cost to comply with applicable laws and regulations and any
management or supervision fee charged by Master Landlord pursuant to the terms
of the Master Lease.

 

9. CASUALTY OR EMINENT DOMAIN

 

9.1 In the event of a fire or other casualty affecting the Building or the
Premises, or of a taking of all or a part of the Building or the Premises under
the power of eminent domain, Sublandlord will be entitled to exercise any right
it expressly has under the Master Lease to terminate the Master Lease without
first obtaining the consent or approval of Subtenant.

 

9.2 To the extent any portion of the Premises is taken or appropriated under the
power of eminent domain, or conveyed in lieu thereof, and this Sublease is not
terminated as a result thereof, then the Rent thereafter to be paid under this
Sublease for the Premises shall be abated in the same ratio that the percentage
of the area of the Premises so taken, appropriated or conveyed bears to the
total area of the Premises immediately prior to the taking, appropriation or
conveyance. In addition, if any rentable area of the Building containing the
Premises is so taken, appropriated or conveyed and this Sublease is not
terminated as may be permitted under the Master Lease, Subtenant’s Share of
Master Lease Pass Through Costs shall be adjusted pursuant to Article 7 of the
Master Lease. To the extent any portion of the Premises is damaged or destroyed
by fire or other casualty and this Sublease is not terminated as a result
thereof, then the Base Rent and Subtenant’s Share of Master Lease Pass Through
Costs shall be proportionately reduced during the period of repair. The
reduction shall be based upon the extent to which the making of repairs
interferes with Subtenant’s business conducted in the Premises, as reasonably
determined by Sublandlord.

 

9.3 If, in the event of a casualty or loss, the Master Lease imposes on
Sublandlord the obligation to repair or restore leasehold improvements or
alterations within the Master Premises, Subtenant must be responsible for repair
or restoration of leasehold improvements within the Premises, including, but not
limited to, the Subtenant Alterations and any alterations constructed by
Sublandlord prior to the Commencement Date. Sublandlord shall not in any event
be responsible for reconstruction of any portion of the Premises that is the
responsibility of Master Landlord under the Master Lease, provided that if
Sublandlord does not terminate the Master Lease Sublandlord will use
commercially reasonable efforts to enforce any provision of the Master Lease
that shall require Master Landlord to reconstruct the Building or Premises.

 

10. SURRENDER

 

10.1 On the Expiration Date, or upon the earlier termination of the Sublease or
of Subtenant’s right to possession of the Premises, Subtenant must at once
surrender and deliver up the Premises, together with all improvements thereon,
to Sublandlord in good condition and repair, reasonable wear and tear excepted;
conditions existing because of Subtenant’s failure to perform maintenance,
repairs or replacements as required of Subtenant under this Sublease will not be
deemed “reasonable wear and tear.”

 

10.2 Subtenant shall remove at the expiration or earlier termination of the Term
any Subtenant Alterations that Master Landlord requires be removed from the
Premises and restore the Premises to the condition existing on the Commencement
Date, or such earlier date that the Premises were delivered to Subtenant, and
shall repair any and all damage to the Premises resulting from the removal of
Subtenant’s Property therefrom and shall remove Subtenant’s articles of personal
property and fixtures incident to Subtenant’s business (“Subtenant’s Property”)
therefrom. All other Subtenant Alterations in or upon the Premises made by
Subtenant will become a part of and will remain upon the Premises upon such
termination without compensation, allowance or credit to Subtenant. Subtenant
shall repair any damage occasioned by such removal of the Subtenant Alterations
or Subtenant’s Property, which obligation will

 

9

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survive termination of this Sublease. If Master Landlord requires removal of any
Subtenant Alterations, or a portion thereof, and Subtenant does not remove such,
or Subtenant does not remove Subtenant’s Property from the Premises on or before
the Expiration Date or the earlier termination of this Sublease, Sublandlord may
remove the same (and repair any damage occasioned thereby), and dispose thereof,
or at its election, remove and/or store the same. Subtenant shall pay the
reasonable costs of such removal, repair and/or storage on demand, and/or
Sublandlord may treat any Subtenant’s Property as having been conveyed to
Sublandlord with this Sublease acting as a bill of sale therefor, without
further payment or credit by Sublandlord to Subtenant.

 

10.3 Subtenant will not be required to remove any alterations or improvements
made by Sublandlord. If Sublandlord is required under the Master Lease to remove
any such alterations or improvements, Subtenant must permit Sublandlord to enter
the Premises for a reasonable period of time, subject to such conditions as
Subtenant may reasonably impose, for the purpose of removing such alterations
and improvements and restoring the Premises as required by the Master Lease.

 

10.4 At the end of the Term of this Sublease, unless Subtenant has entered into
a direct lease with Master Landlord covering the Premises to commence
immediately following the expiration or earlier termination of the Sublease,
Subtenant must surrender to Sublandlord all keys to the Premises and make known
to Sublandlord the combination of all combination locks that Subtenant is
permitted to leave on the Premises.

 

11. HOLDING OVER

 

11.1 Subtenant has no right under this Sublease to occupy the Premises or any
portion thereof after the Expiration Date or after the termination of this
Sublease or of Subtenant’s right to possession hereunder. In the event Subtenant
or any party claiming by, through or under Subtenant holds over, Sublandlord may
exercise any and all remedies available to it at law or in equity to recover
possession of the Premises, and to recover damages, including without
limitation, all damages payable by Sublandlord to Master Landlord by reason of
such holdover.

 

11.2 Without limiting Sublandlord’s rights under Section 11.1, for each and
every month or partial month that Subtenant or any party claiming by, through or
under Subtenant remains in occupancy of all or any portion of the Premises after
the Expiration Date or after the earlier termination of this Sublease or of
Subtenant’s right to possession, Subtenant must pay, as minimum damages and not
as a penalty, monthly rental at a rate equal to double the rate of Rent payable
by Subtenant hereunder immediately prior to the Expiration Date or the earlier
termination of this Sublease or of Subtenant’s right to possession. The
acceptance by Sublandlord of any lesser sum will be construed as payment on
account and not in satisfaction of damages for such holding over.

 

12. SUBTENANT’S DEFAULT

 

12.1 Any one or more of following events will be considered a “Default” by
Subtenant:

 

12.1.1 Subtenant fails to make any payment of Rent within three days of when the
same is due; or

 

12.1.2 Subtenant, by its act or omission, causes an event or condition that is a
default under Section 22 of the Master Lease;

 

12.1.3 Subtenant, by its act or omission, causes an event or condition that,
subject only to the delivery of any required notice or passage of any cure or
grace period, would constitute a default under any provision of the Master
Lease, and such event or condition is not cured on or before the date three (3)
days prior to the expiration of the applicable cure or grace period given in the
Master Lease;

 

12.1.4 Subtenant fails to fulfill, keep, observe or perform any of the other
covenants and obligations herein contained to be fulfilled, kept, observed and
performed by Subtenant, and such failure continues for more than fifteen (15)
days after notice thereof in writing to Subtenant, provided however, if

 

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such failure cannot be cured within fifteen (15) days, then provided that
Subtenant has commenced to cure such failure and diligently pursues a cure of
such failure, Subtenant shall have such reasonable time to cure such failure.

 

12.2 Upon the occurrence of any one or more Default(s), Sublandlord may exercise
any remedy against Subtenant that Master Landlord may exercise for default by
Sublandlord under the Master Lease, including, without limitation, any right to
terminate this Sublease and recover certain sums and any right to continue this
Sublease in effect and recover Rent and other charges as they become due.

 

12.3 Any notice delivered by Sublandlord in connection with, or as a
precondition to, a Default by Subtenant will be in lieu of and not in addition
to any notice to pay rent or notice to perform covenant required under law.

 

13. PROVISIONS REGARDING MASTER LEASE

 

13.1 The terms and provisions of the Master Lease are incorporated in this
Sublease. Except as is specified in this Sublease, the within subletting is upon
and subject to all of the terms of the Master Lease so incorporated in this
Sublease; provided, however, that: (i) each reference in such incorporated
sections to “Lease” shall be deemed a reference to “Sublease”; (ii) each
reference to the “Premises” in the Master Lease shall be deemed a reference to
the Premises described in this Sublease; (iii) each reference to “Lessor and
“Lessee” shall be deemed a reference to “Sublandlord” and “Subtenant”,
respectively; (iv) with respect to work, services, repairs, restoration,
insurance, capital improvements or the performance of any other obligation of
Master Landlord under the Master Lease, the sole obligations of Sublandlord
shall be as set forth in the last sentence of Section 13.2 below; (v)
Sublandlord shall have no liability to Subtenant with respect to (a)
representations and warranties made by Master Landlord under the Master Lease,
(b) any indemnification obligations of Master Landlord under the Master Lease or
other obligations or liabilities of Master Landlord with respect to compliance
with laws or condition of the Premises; and (c) Master Landlord’s repair,
maintenance, restoration, upkeep, insurance and similar obligations under the
Master Lease, regardless of whether the incorporation of one or more provisions
of the Master Lease into this Sublease might otherwise operate to make
Sublandlord liable therefor other than to use reasonable efforts to obtain
Master Landlord’s compliance with the same as set forth in Section 13.2 below;
and provided further that nothing in the foregoing shall abrogate, modify,
detract from or diminish any obligation of Master Landlord under the Master
Lease or any obligation of Sublandlord to Master Landlord; (vi) with respect to
any approval or consent required to be obtained from the “Lessor” under the
Master Lease, Subtenant shall be required to obtain such approval or consent
from Master Landlord and Sublandlord (unless otherwise expressly provided in
this Sublease), and the approval or consent of Sublandlord may be withheld if
Master Landlord’s approval or consent is not obtained, provided however
Sublandlord’s consent may not be unreasonably withheld if Master Landlord
provides its consent; and (vii) the following provisions of the Master Lease are
expressly not incorporated herein by reference: Sections 1.a-m, 3, 4, 22.1, 39,
53 and 64 and Exhibit A. In addition, for the purposes of this Sublease and the
incorporation of Master Lease terms, the references to “Exhibit A” attached to
the Master Lease shall be deemed to refer to Exhibit A attached hereto. Further
the following modifications are made to the following incorporated provisions of
the Master Lease, such modifications are not intended to and do not after the
terms and conditions of the Master Lease as it pertains to the relationship
between Sublandlord and Master Landlord:

 

Incorporated Section of Master Lease

--------------------------------------------------------------------------------

  

Modification

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9

  

With respect to the second sentence of Section 9 of the Master Lease, Subtenant
shall not be obligated to make (or contribute to the cost of making) any
alteration or addition required to bring the Premises into compliance with legal
requirements in effect as of the Commencement Date of the Master

 

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Lease. Notwithstanding the provisions of Section 9 and 10.c of the Master Lease,
Subtenant shall have no obligation under the Sublease to cure or remedy any
violations of law that exist with respect to the Premises, the Building or the
Parcel, or any portion thereof, as of the Commencement Date of the Sublease.

10.b

  

In the first sentence of Section 10.b. of the Master Lease, the words “which is
then designated by Lessor to be removed” are hereby deleted and the words “which
were required to be removed by Sublandlord at the time Sublandlord consented to
such Alterations” shall be deemed substituted in place thereof. Nothing in this
Section shall alter the master Landlord’s rights to designate alterations for
removal at the end of the term of the Master Lease.

13.a

  

In addition, in the second sentence of Section 13.a, the words “in the event of
an assignment of the Premises,” shall be deemed inserted immediately after the
words “shall assume the obligations and liabilities of Lessee under this Lease.”

22.b

  

In Section 22.b. of the Master Lease, the words “(except if unable to occupy or
use the Premises due to damage or destruction or condemnation)” shall be deeded
inserted immediately after the words “consecutive days.”

29

  

The second sentence of Section 29 shall be deleted and the following sentence
shall be inserted in its place: “The liability of Sublandlord pursuant to this
Sublease shall be limited to an amount equal to the lesser of (i) five million
dollars ($5,000,000) or (ii) the amount of Master Landlord’s equity interest in
the Building.

 

13.2 Subtenant shall assume and perform for the benefit of Sublandlord and
Master Landlord each and all of the conditions, covenants and obligations to be
performed by Sublandlord as “Lessee” under the Master Lease to the extent said
terms, covenants, conditions and obligations are incorporated in this Sublease
(and accrue from and after the Commencement Date of this Sublease), are not
modified or limited hereby and are applicable to the Premises demised hereby.
Unless otherwise expressly provided in this Sublease, both Sublandlord and
Master Landlord shall have all of the rights of Master Landlord under the Master
Lease to the extent such rights are applicable to the Premises, including,
without limitation, the right of entry set forth in Section 20 of the Master
Lease. Subtenant shall not commit or knowingly permit to be committed on the
Premises any act or omission which would constitute a breach of any of the
terms, covenants, conditions and obligations of Sublandlord under the Master
Lease. Notwithstanding the foregoing, in the case of any covenant contained in
the Master Lease that by its nature is to be performed by the Master Landlord,
Sublandlord’s obligation hereunder shall be limited to, within a reasonable time
after Subtenant provides notice to Sublandlord of such default, using
commercially reasonable efforts to enforce the Master Lease.

 

13.3 Sublandlord shall have no responsibility or obligations with respect to
furnishing any services under Section 17 of the Master Lease, to the extent the
same is made expressly the responsibility of the Master Landlord under the
Master Lease, including, but not limited to, utilities, with respect to the
Premises, and the sole responsibility of Sublandlord with respect to Section 17
of the Master Lease shall be to enforce the Master Lease with respect to any
obligation of Master Landlord to furnish such basic services under the Master
Lease.

 

13.4 Subtenant shall indemnify and save Sublandlord harmless against any loss,
damage or injury, including, without limitation, reasonable attorneys’ fees,
and/or any amounts assessed against Sublandlord by Master Landlord under the
Master Lease on account of any default by Subtenant that

 

12

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shall give rise to a default under Section 22 of the Master Lease, which
Sublandlord may suffer or incur under the Master Lease as the result of any
breach by Subtenant of its obligations under this Sublease, including, without
limitation, any provisions of the Master Lease that are incorporated herein.
Subtenant’s obligations under the immediately preceding sentence shall survive
termination of this Sublease. Notwithstanding any other provision of this
Sublease to the contrary, in the event of a material default of this Sublease
that may cause an event of default to occur under the Master Lease, Sublandlord
may, in addition to all other remedies granted to Sublandlord hereunder, at
Subtenant’s expense and after written notice to Subtenant, take such action as
may reasonably be required to prevent such matter from maturing into an
incurable event of default under the Master Lease, and Subtenant shall pay such
reasonable expenses so incurred by Sublandlord within thirty (30) days after
demand by Sublandlord. Notwithstanding the foregoing provisions of this Section
13.4, under no circumstances shall Subtenant be liable to Sublandlord for any
claims of lost profits, loss of business or lost income.

 

13.5 Sublandlord acknowledges that a true and correct copy of the Master Lease
is attached hereto and incorporated herein as Exhibit B. Subtenant covenants,
represents and warrants that it shall keep the terms of the Master Lease
confidential and will not disclose any such terms or distribute copies of the
Master Lease to any person or entity (other than Subtenant’s agents, employees,
contractors, attorneys, accountants, consultants and prospective subtenants,
Master Landlord and/or the City of Cupertino) without obtaining the prior
written consent of Sublandlord (which consent shall not be unreasonably withheld
or delayed). The preceding sentence to the contrary notwithstanding, Subtenant
shall also be entitled to disclose this Sublease and/or the Master Lease, or the
terms thereof, in connection with any securities laws or other regulatory
requirements affecting Subtenant.

 

14. MASTER LANDLORD’S CONSENT

 

14.1 This Sublease and the obligations of the parties hereunder are expressly
conditioned upon Sublandlord obtaining the Master Landlord’s prior written
consent to this Sublease in a form acceptable to the parties in their sole
discretion. Subtenant must promptly deliver to Sublandlord any information
reasonably requested by Master Landlord (in connection with Master Landlord’s
approval of this Sublease) with respect to the nature and operation of
Subtenant’s business and/or the financial condition of Subtenant.

 

14.2 Sublandlord and Subtenant hereby agree, for the benefit of Master Landlord,
that this Sublease and Master Landlord’s consent hereto will not (a) be deemed
to have amended the Master Lease between Master Landlord and Sublandlord in any
regard (unless Master Landlord will have expressly agreed writing to such
amendment); or (b) be construed as a waiver of Master Landlord’s right to
consent to any assignment of the Master Lease by Sublandlord or any further
subletting of the Master Premises, or as a waiver of Master Landlord’s right to
consent to any assignment by Subtenant of this Sublease or any sub-subletting of
the Premises or any part thereof.

 

14.3 If Master Landlord fails to consent to this Sublease within thirty (30)
days after the Execution Date, either party shall have the right to terminate
this Sublease be giving written notice thereof to the other at any time
thereafter, but before Master Landlord grants such consent. In the event of such
termination, Sublandlord shall promptly refund to Subtenant any prepaid Rent
received from Subtenant. Sublandlord agrees to exercise commercially reasonable
and diligent efforts to obtain Master Landlord’s written consent to this
Sublease as provided in Section 14.1 above and the transaction described herein.

 

15. NOTICES

 

15.1 All notices which may or are required to be given by either party to the
other must be in writing and will be deemed given when received or refused if
personally delivered, or if sent by United States registered or certified mail,
postage prepaid, return receipt requested, or if sent by a nationally recognized
overnight commercial courier service providing receipted delivery, to the
respective Notice Address specified in the Basic Sublease Provisions, or at such
other place as a party may from time to time designate by notice in writing.

 

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15.2 Subtenant agrees promptly to deliver to Sublandlord a copy of any notice,
demand, request, consent or approval received from Master Landlord or any
governmental agency. Sublandlord agrees promptly to deliver to Subtenant a copy
of any notice, demand, request, consent or approval received from or delivered
to Master Landlord or any governmental agency respecting the Premises.

 

16. SECURITY DEPOSIT

 

      [Intentionally omitted.]

 

17. MISCELLANEOUS

 

17.1 As of the Commencement Date, Sublandlord does hereby sell, grant, convey,
transfer, assign, deliver, and set unto Subtenant, at no cost to Subtenant, all
of Sublandlord’s rights, title and interest in and to the furniture located on
the Premises, a complete inventory of which is attached hereto as Exhibit D (the
“Furniture”). As of the Commencement Date, Subtenant does hereby accept the
Furniture in its “as is” condition “with all faults.” Subtenant acknowledges
that Sublandlord has made no representations or warranty of any kind, express or
implied with respect to the condition of the Furniture, except as provided in
the following sentence. Sublandlord hereby represents to Subtenant that the
Furniture is solely owned by Sublandlord and is free and clear of any and all
encumbrances or liens. Sublandlord shall indemnify, defend and hold harmless
Subtenant from and against any and all claims, demands, causes of action,
damages, liabilities, losses, obligations, costs and attorneys’ fees arising out
of, or in any way connected with any breach by Sublandlord of its representation
set forth in the immediately preceding sentence. Sublandlord’s obligations under
the immediately preceding sentence shall survive the expiration or earlier
termination of this Sublease. Subtenant does hereby forever release and
discharge Sublandlord, its agents, directors, officers and employees, to the
maximum extent permitted by law, of and from any and all claims, demands, causes
of action, damages, liabilities, losses, obligations, costs and attorneys’ fees
whether known or unknown, foreseen or unforeseen, arising out of, or in any way
connected with or concerning the condition of the Furniture to the extent
arising on or after the Commencement Date; provided, however, such release and
discharge shall not be applicable to any breach by Sublandlord or its
representation set forth in the fourth (4th) sentence of this Section 17.1.

 

17.2 Sublandlord hereby rescinds, waives and forfeits its option to extend the
term of the Master Lease as provided in Section 3 of the Master Lease.

 

17.3 Subtenant shall have the right to install, at its own cost (including
removal expenses), such exterior Building signage as the Master Landlord and any
applicable governing agency may allow. If Sublandlord installs a monument sign
or is granted monument signage rights by the Master Landlord, then Subtenant
shall have the right to Subtenant’s Share of the space on such sign.

 

17.4 Subject to the limitations specially expressed in this Sublease, so long as
Subtenant is not in Default under this Sublease. Subtenant’s quiet and peaceable
enjoyment of the Premises will not be disturbed or interfered with by
Sublandlord, or by any person claiming by, through, or under Sublandlord.

 

17.5 Neither party shall be deemed in default with respect to performance of any
of the terms, covenants and conditions of this Sublease (other than for payment
of money), if party’s failure to timely perform same is due in whole or in part
to any strike, lockout, labor trouble (whether legal or illegal), civil
disorder, failure of power, restrictive governmental laws and regulations,
riots, insurrections, war, shortages, accidents, casualties, acts of God or acts
of the other party’s agents, employees or invitees.

 

17.6 Each party warrants to the other that it has had no dealings with any
broker or agent in connection with this Sublease, except those Brokers specified
in the Basic Sublease Provisions. Each party covenants to protect, defend,
indemnify and hold harmless the other party from and against any and all costs
(including reasonably attorneys’ fees), expense or liability for any
compensation, commission

 

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and charges claimed by any broker or outer agent, other than the Brokers, with
respect to this Sublease or the negotiation thereof an behalf of such party.

 

17.7 This Sublease and the rights and obligations of the parties shall be
interpreted, construed and enforced in accordance with the laws of the State of
California, and Sublandlord and Subtenant hereby irrevocably consent to the
jurisdiction and proper venue of such state. If any term or provision of this
Sublease shall to any extent be invalid or unenforceable, the remainder of this
Sublease shall not be affected, and each provision of this Sublease shall be
valid and enforced to the fullest extent permitted by law. The headings and
titles to the Articles and Sections of this Sublease are for convenience only
and shall have no effect on the interpretation of any part of the Sublease.

 

17.8 Subtenant shall not record this Sublease or any memorandum without
Sublandlord’s and Master Landlord’s prior written consent.

 

17.9 Sublandlord and Subtenant hereby waive any right to trial by jury in any
proceeding based upon a breach of this Sublease.

 

17.10 The expiration of the Term, whether by lapse of time or otherwise, shall
not relieve either party of any obligations which accrued prior to or which may
continue to accrue after the expiration or early termination of this Sublease.
Without limiting the scope of the prior sentence, it is agreed that Subtenant’s
obligations under any provision of this Sublease or the Master Lease that is
expressly provided by its terms to survive termination of this Sublease shall
survive the expiration or early termination of this Sublease.

 

17.11 All understandings and agreements previously made between the parties are
superseded by this Sublease, and neither party is relying upon any warranty,
statement or representation not contained in this Sublease. This Sublease may be
modified only by a written agreement signed by Sublandlord and Subtenant.

 

17.12 Each party represents and warrants to the other that the person or persons
executing this Sublease for the representing party are fully authorized to so
act and no other action is required to bind Sublandlord to this Sublease and
that the representing party has the right and power to execute and deliver this
Sublease and to perform its obligations hereunder, subject only to Master
Landlord’s consent, and that the representing party is duly organized and in
good standing in its state of formation and is authorized to conduct business in
the state where the Premises are located.

 

(signatures follow on next page)

 

15

--------------------------------------------------------------------------------

In witness whereof, Sublandlord and Subtenant have executed this Sublease on the
dates set forth below, intending to be bound hereby.

 

SUBLANDLORD:

 

SUBTENANT:

Sun Microsystems, Inc., a Delaware corporation

 

Borland Software Corporation, a Delaware corporation

By:

 

--------------------------------------------------------------------------------

 

By:

 

/S/    ROGER A. BARNEY        

--------------------------------------------------------------------------------

Name:

 

--------------------------------------------------------------------------------

 

Name:

 

Roger A. Barney

--------------------------------------------------------------------------------

Its:

 

--------------------------------------------------------------------------------

 

Its:

 

SVP CORPORATE SERVICES & CAO

--------------------------------------------------------------------------------

Date:

 

--------------------------------------------------------------------------------

 

Date:

 

December 18, 2002

--------------------------------------------------------------------------------

 

[Both parties must also initial Section 4.5]

 

16

--------------------------------------------------------------------------------

In witness whereof, Sublandlord and Subtenant have executed this Sublease on the
dates set forth below, intending to be bound hereby.

 

SUBLANDLORD:

 

SUBTENANT:

Sun Microsystems, Inc., a Delaware corporation

 

Borland Software Corporation, a Delaware corporation

By:

 

/s/    Charles C Barry        

--------------------------------------------------------------------------------

 

By:

 

--------------------------------------------------------------------------------

Name:

 

Charles C Barry

--------------------------------------------------------------------------------

 

Name:

 

--------------------------------------------------------------------------------

Its:

 

SENIOR DIRECTOR

--------------------------------------------------------------------------------

 

Its:    

 

--------------------------------------------------------------------------------

Date:

 

12/19/02

--------------------------------------------------------------------------------

 

Date:

 

--------------------------------------------------------------------------------

 

[Both parties must also initial Section 4.5]

 

16

--------------------------------------------------------------------------------

 

EXHIBIT A

 

DESIGNATION OF PREMISES

 

 

EXHIBIT A

--------------------------------------------------------------------------------

 

 

 

[GRAPHIC APPEARS HERE]

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

[GRAPHIC APPEARS HERE]

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

[GRAPHIC APPEARS HERE]

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

MASTER LEASE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT B

--------------------------------------------------------------------------------

 

EXHIBIT C

 

WORK LETTER

 

This Work Letter shall set forth the terms and conditions relating to the
construction of the Premises.

 

1. SUBTENANT IMPROVEMENT ALLOWANCE ITEMS

 

Except as otherwise set forth in this Work Letter, the Subtenant Improvement
Allowance shall be disbursed by Sublandlord only for actually incurred cost for
the following items associated with the construction of the Subtenant
Improvements at the Premises: (a) the fees of the architect and the engineers;
(b) documents and materials supplied by Master Landlord, Sublandlord or their
consultants in connection with the preparation and review of the construction
drawings; and management fees charged by the Master Landlord (to the extent
permitted to be charged under the existing Master Lease); (c) any plan, permit
and license fees relating to construction of the Subtenant Improvements; (d)
demolition of the existing improvements and construction of the Subtenant
Improvements, including, without limitation, testing and inspection costs,
freight elevator usage, utility usage, parking charges and trash removal costs,
and contractors’ fees; (e) sales and use taxes; (f) installation of
telecommunications equipment and other specialty trade fixtures and equipment at
the Premises, (g) manufacture and installation of building signage for
identification of Subtenant at the Premises or the Building, (h) legal and
consulting fees associated with construction of the Subtenant Improvements; and
(i) moving costs, of any kind or nature, associated with Subtenant’s occupancy
of the Premises (collectively the “Subtenant Improvement Allowance Items”).

 

2. DISBURSEMENT OF SUBTENANT IMPROVEMENT ALLOWANCE

 

2.1 Upon (i) substantial completion of approximately one-third of the Subtenant
Improvements in compliance with the approved plans (as determined by inspection
by Sun); (ii) receipt of Subtenant’s interim application for payment not in
excess of 33.3% of the Subtenant Improvement Allowance, including subcontractor
back-up and copies of paid receipts or other reasonably acceptable proof of the
actual cost for Subtenant Improvement Allowance Items incurred to-date; and
(iii) properly executed mechanics lien releases in compliance with both
California Civil Code Section 3262(d)(2) and Section 3262(d)(4) for the then
fully completed and fully paid work; then Sublandlord shall reimburse Subtenant
for the a portion of the Subtenant Improvement Allowance Items, equal to the
cost of the Subtenant Improvement Allowance Items as applied for in the interim
application for payment.

 

2.2 Upon (i) substantial completion of approximately two-thirds of the Subtenant
Improvements in compliance with the approved plans (as determined by inspection
by Sun); (ii) receipt of Subtenant’s interim application for payment not in
excess of 33.3% of the Subtenant Improvement Allowance, including subcontractor
back-up and copies of paid receipts or other reasonably acceptable proof of the
actual cost for Subtenant Improvement Allowance Items incurred to-date; and
(iii) properly executed mechanics lien releases in compliance with both
California Civil Code Section 3262(d)(2) and Section 3262(d)(4) for the then
fully completed and fully paid work; then Sublandlord shall reimburse Subtenant
for the a portion of the Subtenant Improvement Allowance Items, equal to the
cost of the Subtenant Improvement Allowance Items as applied for in the interim
application for payment.

 

2.3 Upon (i) substantial completion of the Subtenant Improvements in compliance
with the approved plans (as determined by inspection by Sun); (ii) receipt of
Subtenant’s final application for payment up to the amount of the unpaid portion
of the Subtenant Improvement Allowance, including subcontractor back-up and
copies of paid receipts or other reasonably acceptable proof of the actual cost
for all Subtenant Improvement Allowance Items; and (iii) properly executed final
mechanics lien releases in compliance with both California Civil Code Section
3262(d)(2) and Section 3262(d)(4) for all work related to the Subtenant
Improvements; (iv) copies of the signed off building permit card, the
certificate of occupancy (if issued by the local municipality) and the recorded
notice of completion; then Sublandlord shall reimburse Subtenant for the
remaining unpaid portion of the Subtenant Improvement Allowance

 

EXHIBIT C

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CUPERTINO CITY CENTER

 

NET OFFICE LEASE

 

by and between

 

CUPERTINO CITY CENTER BUILDINGS,

 

a California limited partnership,

 

as Lessor

 

and

 

SUN MICROSYSTEMS, INC.,

 

a Delaware corporation,

 

as Lessee

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

         

Page

--------------------------------------------------------------------------------

1.

  

SUMMARY OF LEASE PROVISIONS

  

1

2.

  

PREMISES DEMISED

  

2

3.

  

TERM; OPTION TO EXTEND

  

2

4.

  

POSSESSION

  

4

5.

  

RENT

  

5

6.

  

INTENTIONALLY OMITTED

  

5

7.

  

PROJECT TAXES AND OPERATING EXPENSE ADJUSTMENTS

  

5

8.

  

USE

  

8

9.

  

COMPLIANCE WITH LAWS

  

10

10.

  

ALTERATIONS AND ADDITIONS

  

10

11.

  

REPAIRS

  

11

12.

  

LIENS

  

12

13.

  

ASSIGNMENT AND SUBLETTING

  

12

14.

  

HOLD HARMLESS

  

14

15.

  

SUBROGATION

  

15

16.

  

LESSEE’S INSURANCE

  

15

17.

  

SERVICES AND UTILITIES

  

16

18.

  

RULES AND REGULATIONS

  

17

19.

  

HOLDING OVER

  

17

20.

  

ENTRY BY LESSOR

  

17

21.

  

RECONSTRUCTION

  

18

22.

  

DEFAULT

  

18

23.

  

REMEDIES UPON DEFAULT

  

19

24.

  

EMINENT DOMAIN

  

20

25.

  

OFFSET STATEMENT; MODIFICATIONS FOR LENDER

  

21

26.

  

PARKING

  

21

27.

  

AUTHORITY

  

21

28.

  

SURRENDER OF PREMISES

  

22

29.

  

LESSOR DEFAULT AND MORTGAGEE PROTECTION

  

22

30.

  

RIGHTS RESERVED BY LESSOR

  

22

31.

  

EXHIBITS

  

22

32.

  

WAIVER

  

23

33.

  

NOTICES

  

23

34.

  

JOINT OBLIGATIONS

  

23

 

i

--------------------------------------------------------------------------------

         

Page

--------------------------------------------------------------------------------

35.

  

MARGINAL HEADINGS

  

23

36.

  

TIME

  

23

37.

  

SUCCESSORS AND ASSIGNS

  

23

38.

  

RECORDATION

  

23

39.

  

QUIET POSSESSION

  

23

40.

  

LATE CHARGES; ADDITIONAL RENT AND INTEREST

  

23

41.

  

PRIOR AGREEMENTS

  

24

42.

  

INABILITY TO PERFORM

  

24

43.

  

ATTORNEYS’ FEES

  

24

44.

  

SALE OF PREMISES BY LESSOR

  

24

45.

  

SUBORDINATION/ATTORNMENT

  

24

46.

  

NAME

  

25

47.

  

SEVERABILITY

  

25

48.

  

CUMULATIVE REMEDIES

  

25

49.

  

CHOICE OF LAW

  

25

50.

  

SIGNS

  

25

51.

  

GENDER AND NUMBER

  

25

52.

  

CONSENTS

  

25

53.

  

BROKERS

  

25

54.

  

SUBSURFACE AND AIRSPACE

  

25

55.

  

COMMON AREA

  

25

56.

  

LABOR DISPUTES

  

26

57.

  

CONDITIONS

  

26

58.

  

LESSEE’S FINANCIAL STATEMENTS

  

26

59.

  

LESSOR NOT A TRUSTEE

  

26

60.

  

MERGER

  

26

61.

  

NO PARTNERSHIP OR JOINT VENTURE

  

26

62.

  

LESSOR’S RIGHT TO PERFORM LESSEE’S COVENANTS

  

26

63.

  

PLANS

  

26

64.

  

COMMUNICATIONS EQUIPMENT

  

26

65.

  

WAIVER OF JURY

  

27

66.

  

JOINT PARTICIPATION

  

27

67.

  

EXPEDITED DISPUTE RESOLUTION

  

27

68.

  

COUNTERPARTS

  

28

 

 

ii

--------------------------------------------------------------------------------

CUPERTINO CITY CENTER

 

NET OFFICE LEASE

 

For and in consideration of rentals, covenants, and conditions hereinafter set
forth, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
herein described Premises for the term, at the rental rate specified herein and
subject to and upon all of the terms, covenants and agreements set forth in this
lease (“Lease”):

 

1.   SUMMARY OF LEASE PROVISIONS.

 

  a.   Lessee: SUN MICROSYSTEMS, INC., a Delaware corporation (“Lessee”).

 

  b.   Lessor: CUPERTINO CITY CENTER BUILDINGS, a California limited partnership
(“Lessor”).

 

  c.   Date of Lease (for reference purposes only): November 20, 1997.

 

  d.   Premises: That certain office space commonly known all of floors one (1)
through eight (8) of the building located at 20450 Stevens Creek Boulevard,
Cupertino, California, and shown cross-hatched on the reduced floor plans
attached hereto as Exhibit “A,” consisting of approximately one hundred
eighty-three thousand seventy-four (183,074) square feet of Rentable Area (the
“Premises”). (ARTICLE 2)

 

  e.   Term: Eight (8) years. (ARTICLE 3)

 

  f.   Commencement Date: December 1, 1997 (“Commencement Date”). (ARTICLE 3)

 

  g.   Lease Termination: November 30, 2005 (“Expiration Date”), unless sooner
terminated or extended pursuant to the terms of this Lease. (ARTICLE 3)

 

  h.   Base Rent: (ARTICLE 5)

 

Months

--------------------------------------------------------------------------------

  

Monthly Base Rent

--------------------------------------------------------------------------------

December 1, 1997-November 30, 1998

  

$338,686.90

December 1, 1998-November 30, 1999

  

$475,992.40

December 1, 1999-November 30, 2000

  

$494,299.80

December 1, 2000-November 30, 2001

  

$512,607.20

December 1, 2001-November 30, 2002

  

$530,914.60

December 1, 2002-November 30, 2003

  

$549,222.00

December 1, 2003-November 30, 2004

  

$567,529.40

December 1, 2004-November 30, 2005

  

$585,836.80

 

  i.   Security Deposit: None. (ARTICLE 6)

 

  j.   Lessee’s Percentage Share: One hundred percent (100%). (ARTICLE 7)

 

  k.   Parking: Non-Exclusive right to use three (3) unreserved, uncovered
spaces per each one thousand (1,000) square feet of Rentable Area in the
Premises (rounded to the nearest whole number) without charge during the Term,
subject to the provisions of Article 26. (ARTICLE 26)

 

  1.   Addresses for Notices:

 

Lessor:

  

c/o Maxim Property Management

    

350 Bridge Parkway

    

Redwood City, California 94065-1517

    

Attn: Mr. Sanford Diller

    

Telephone No.: (650) 596-5300

    

Fax No.: (650) 596-5377

    

with a concurrent copy to:

    

c/o Maxim Property Management

    

350 Bridge Parkway

    

Redwood City. California 94065-1517

    

Attn: Ms. Vicki Mullins

    

Telephone No.: (650) 596-5300

    

Fax No.: (650) 596-5377

 

-1-

--------------------------------------------------------------------------------

    

and with a concurrent copy to the

    

Project Management Office at:

    

20400 Stevens Creek Boulevard, Suite 200

    

Cupertino, California 95014

    

Telephone No.: (408) 873-0121

    

Fax No.: (408) 873-0122

Lessee:

  

Sun Microsystems, Inc.

    

1545 Charleston Road

    

MTV 81-103

    

Mountain View, California 94043

    

Attn: Lease Administrator

    

Telephone No.: (650) 934-9762

    

Fax No.: (650) 934-9832

    

with a concurrent copy to:

    

Sun Microsystems, Inc.

    

901 San Antonio Road

    

PAL 01-521

    

Palo Alto, California 94303

    

Attn: General Counsel

    

Telephone No.: (650) 336-0236

    

Fax No.: (650) 336-0530

 

m. Broker: LSP Services (California) Limited Partnership and Cornish & Carey
Commercial. (ARTICLE 53)

 

n. Summary Provisions in General. Parenthetical references in this Article 1 to
other articles in this Lease are for convenience of reference, and designate
some of the other Lease articles where applicable provisions are set forth. All
of the terms and conditions of each such referenced Article shall be construed
to be incorporated within and made a part of each of the above referred to
Summary of Lease Provisions. If any conflict exists between any Summary of Lease
Provisions as set forth above and the balance of the Lease, then the latter
shall control.

 

2. PREMISES DEMISED. Lessor does hereby lease to Lessee and Lessee hereby leases
from Lessor the Premises described in Article l.d., subject, nevertheless, to
all of the terms and conditions of this Lease. Notwithstanding anything to the
contrary contained in this Lease, the Premises shall be deemed for all purposes
of this Lease to contain the amount of Rentable Area specified in Article 1.d.
above, notwithstanding any deviation in actual Rentable Area of the Premises
from such amount. Calculation of the actual “Rentable Area” of the Building and
Project shall be performed by Lessor’s architect in accordance with Building
measurement standards, which calculation shall be conclusive and binding upon
Lessor and Lessee. The Premises is approximately as shown as cross-hatched on
the floor plan attached hereto as Exhibit “A”. As used in this Lease, the term
“Building” shall mean the building at the address listed in Article 1.d. above
in which the Premises is located. The Building is situated upon the parcel(s) of
land shown on Exhibit “B” attached hereto (collectively, the “Parcel”). The
Building and the “Exterior Common Area” (as defined in Article 55 below) and all
other improvements as now or hereafter located on the Parcel, if any, are herein
sometimes referred to collectively as the “Project”.

 

3. TERM: OPTION TO EXTEND.

 

a. Initial Term. The term of this Lease shall be for the period designated in
Article 1.f., commencing on the Commencement Date and ending on the Expiration
Date set forth in Article 1.g., unless sooner terminated or extended pursuant to
this Lease (“Term”). The expiration or sooner termination of the Lease is
hereinafter referred to as “Lease Termination”.

 

b. Option to Extend. Lessee shall have the option to extend the Term for a
period of four (4) years immediately following the expiration of the Term (the
“Extended Term”), on all provisions contained in this Lease (except for Base
Rent and such other terms and conditions as are specifically or by their
operation limited to the initial Term only and except that Lessee shall have no
further right or option to extend the term upon the expiration of the Extended
Term), by giving notice of exercise of the option (the “Option Notice”) to
Lessor at least twelve (12) months but not more than fifteen (15) months before
the expiration of the Term.

 

Lessor’s ability to plan for the orderly transaction of its rental business, to
accommodate the needs of other existing and potential tenants, and to enjoy the
benefits of increasing rentals at such times as Lessor is able to do so in its
sole and absolute discretion, are fundamental elements of Lessor’s willingness
to provide Lessee with the option to extend contained herein. Accordingly,
Lessee hereby acknowledges that strict compliance with the notification
provisions contained herein, and Lessee’s strict compliance with the time period
for such notification contained herein, are material elements of the bargained
for exchange between Lessor and Lessee and are material elements of Lessee’s
consideration paid to Lessor in exchange for the grant of the option. Therefore,
Lessee’s failure to adhere strictly and completely to the provisions and time
frame contained in this provision shall render the option automatically null,
void and of no further force or effect, without notice, acknowledgement, or any
action of any nature or sort, required of Lessor. Lessee acknowledges that no
other act or notice, other than the express

 

-2-

--------------------------------------------------------------------------------

written notice set forth hereinabove, shall act to put Lessor on notice of
Lessee’s intent to extend, and Lessee hereby waives any claims to the contrary,
notwithstanding any other actions of Lessee during the Term of this Lease or any
statements, written or oral, of Lessee to Lessor to the contrary during the Term
of this Lease. Notwithstanding the foregoing, if Lessee is in default (after the
expiration of any applicable period for cure pursuant to Article 22 below) on
the date of giving the Option Notice, the Option Notice shall be totally
ineffective, or if Lessee is in default (after the expiration of any applicable
period for cure pursuant to Article 22 below) on the date the Extended Term is
to commence, in addition to any and all other remedies available to Lessor under
this Lease, at Lessor’s election, the exercise of the option shall be deemed
null and void, the Extended Term shall not commence, and this Lease shall expire
at the end of the Term. Further, the option to extend granted pursuant hereto
and this entire Article 3.b. shall be null and void and of no further force or
effect if during the twelve (12) month period prior to the delivery of the
Option Notice, Lessee has incurred two or more late charges pursuant to Article
40.a. below, due to late payment of Base Rent (regardless of whether such late
payment was subsequently cured).

 

The option to extend granted pursuant hereto is personal to original Lessee
signatory to this Lease and cannot be assigned, transferred or conveyed to, or
exercised for the benefit of, any other person or entity (voluntarily,
involuntarily, by operation of law or otherwise) including, without limitation,
to any assignee or subtenant permitted under Article 13. All of Lessee’s rights
under this Article 3.b. shall terminate upon the expiration of the initial Term
or sooner termination of this Lease.

 

The parties shall have thirty (30) days after Lessor receives the Option Notice
in which to agree upon the Base Rent to be payable during the Extended Term. The
Base Rent payable during the Extended Term shall be an amount equal to the then
current “Fair Market Rental Value” (defined below) of the Premises at the time
of commencement of the proposed Extended Term. The term “Fair Market Rental
Value” of the Premises as used in this Lease shall mean the then prevailing fair
market rent for the Premises at the expiration of the Term. In determining such
rate, the parties may consider first class office space comparable in size and
quality to the Premises, if any, located in the vicinity of the Project and
located in the Building and other buildings comparable in size and quality to
the Building in which the Premises is located, and taking into consideration all
other factors normally considered when determining fair market rental value
(including, without limitation, the duration of the Extended Term and such
rental increases as may be appropriate during such period).

 

Upon determination of the Fair Market Rental Value for the Premises, the parties
shall immediately execute an amendment to this Lease stating the Base Rent to be
paid during the Extended Term. In the event Lessee has retained the services of
a real estate broker to represent Lessee during the negotiations of the Extended
Term, it is expressly understood that Lessor shall have no obligation for the
payment of all or any part of a real estate commission or other brokerage fee to
Lessee’s real estate broker in connection with the Extended Term. Lessee shall
be solely responsible for payment of fees for services rendered to Lessee by
such broker in connection with the Extended Term.

 

If the parties are unable to agree, in their sole and absolute discretion, on
the Fair Market Rental Value for the Premises within such thirty (30) day
period, then the Fair Market Rental Value for the Extended Term shall be
determined as follows:

 

a. Following the expiration of such thirty (30) day period, Lessor and Lessee
shall meet and endeavor in good faith to agree upon a licensed commercial real
estate agent with at least seven (7) years full-time experience as a real estate
agent active in leasing of commercial office buildings in the area of the
Premises to appraise and set the Fair Market Rental Value for the Extended Term.
If Lessor and Lessee fail to reach agreement upon such agent within fifteen (15)
days following the expiration of such thirty (30) day period, then, within
fifteen (15) days thereafter, each party, at its own cost and by giving notice
to the other party, shall appoint a licensed commercial real estate agent with
at least seven (7) years full-time experience as a real estate agent active in
leasing of commercial office buildings in the area of the Premises to appraise
and set the Fair Market Rental Value for the Extended Term. If a party does not
appoint an agent within fifteen (15) days after the other party has given notice
of the name of its agent, the single agent appointed shall be the sole agent and
shall set the Fair Market Rental Value for the Extended Term. If there are two
(2) agents appointed by the parties as stated above, the agents shall meet
within ten (10) days after the second agent has been appointed and attempt to
set Fair Market Rental Value for the Extended Term. If the two (2) agents are
unable to agree on such Fair Market Rental Value within fifteen (15) days after
the second agent has been appointed, they shall, within fifteen (15) days after
the last day the two (2) agents were to have set such Fair Market Rental Value,
attempt to select a third agent who shall be a licensed commercial real estate
agent meeting the qualifications stated above. If the two (2) agents are unable
to agree on the third agent within such twenty (20) day period, either Lessor or
Lessee may request the President of the local chapter of the Society of
Industrial and Office Realtors (SIOR) or a then equivalent organization if SIOR
is not then in existence to select a third agent meeting the qualifications
stated in this subsection. Each of the parties shall bear one-half (1/2) of the
cost of appointing the third agent and of paying the third agent’s fee. No agent
shall be employed by, or otherwise be engaged in business with or affiliated
with, Lessor or Lessee, except as an independent contractor.

 

b. Within fifteen (15) days after the selection of the third agent, a majority
of the agents shall set the Fair Market Rental Value for the Extended Term. If a
majority of the agents are unable to set such Fair Market Rental Value within
the stipulated period of time, each agent shall make a separate determination of
such Fair Market Rental Value and the three (3) appraisals shall be added
together and the total shall be divided by three (3). The resulting quotient
shall be the Fair Market Rental Value for the Premises for the Extended Term.
If, however, the low appraisal and/or high appraisal is/are more than twenty
percent (20%) lower and/or higher than the middle appraisal, the low appraisal
and/or the high appraisal shall be disregarded. If only one (1) appraisal is
disregarded, the remaining two (2) appraisals shall be added together and their
total divided by two (2), and the

 

-3-

--------------------------------------------------------------------------------

resulting quotient shall be Fair Market Rental Value for the Extended Term. If
both the low appraisal and the high appraisal are disregarded as stated in this
subsection, the middle appraisal shall be the Fair Market Rental Value for the
Extended Term.

 

c. Each agent shall hear, receive and consider such information as Lessor and
Lessee each care to present regarding the determination of Fair Market Rental
Value for the Extended Term and each agent shall have access to the information
used by each other agent. Upon determination of the Fair Market Rental Value for
the Extended Term, the agents shall immediately notify the parties hereto in
writing of such determination by certified mail, return receipt requested.

 

4. POSSESSION.

 

a. Construction of Improvements/Delay in Possession. If Lessor, for any reason
whatsoever, cannot deliver possession of the Premises to Lessee at the date
specified in Article 1.f. above, this Lease shall not be void or voidable, nor
shall Lessor be liable to Lessee for any loss or damage resulting therefrom;
except, however, that in such event the “Commencement Date” for all purposes of
this Lease shall be adjusted to be the date when Lessor delivers possession or
such earlier date upon which such delivery of possession would have occurred but
for delay in delivery of possession of the Premises caused and/or contributed to
by Lessee and/or Lessee’s agents, officers, employees, representatives,
contractors, servants, invitees and/or guests (collectively “Lessee’s Agents”),
and the “Expiration Date” for all purposes of this Lease shall be the date which
is the period of the Term specified in Article 1.e. following such Commencement
Date. Lessor shall be deemed to have delivered possession to Lessee on the date
of the execution and delivery of this Lease by Lessor and Lessee.

 

b. Construction of Improvements: Early Possession. Subject to Article 4.c.
below, Lessee shall be permitted access to the Premises prior to the
Commencement Date and following the full execution and delivery of this Lease
for purposes of construction of certain improvements to be permanently affixed
to the Premises (the “Lessee Improvements”) and installation of Lessee’s
furnishings, trade fixtures and equipment. Subject in all events to compliance
with the requirements of the City of Cupertino and other applicable governmental
requirements, Lessor hereby approves the general schematics for the Lessee
Improvements prepared by LEM Construction, Inc., a copy of which has been
provided by Lessee to Lessor prior to the execution of this Lease, and agrees to
reasonably approve the final plans and specifications for the Lessee
Improvements when submitted to the extent consistent with, and logical
extensions of, such general schematics, and otherwise consistent with Building
systems. Lessee’s construction of the Lessee Improvements shall be governed by
the provisions of this Lease respecting Lessee’s making of Alterations to the
Premises including, without limitation, the requirement set forth in this Lease
that Lessor’s prior written consent be obtained for any such Alterations;
except, however, that as to the removal of the Lessee Improvements, the parties
agree as follows: (i) Lessor shall specify in writing at the time of approval of
Lessee’s plans and specifications for the Lessee Improvements, which items of
the Lessee Improvements shall be required to be removed by Lessee by the
expiration of the Term to restore the Premises from a hard walled office plan to
an open plan pursuant to this Lease; provided that Lessee shall not be required
to remove any compartment walls or electrical/mechanical distribution systems;
(ii) Lessee shall not be required to so remove such of the Lessee Improvements
which have so been designated for removal by Lessor if a successor lessee with
whom Lessor has entered into a lease for the Premises commencing upon the
expiration of the Term of this Lease specifies in writing its desire to make use
of such Lessee Improvements; (iii) in the event of the extension of the Term by
the Extended Term, then Lessee shall not be required to remove any of such
Lessee Improvements as are so designated for removal by Lessor; and (iv)
restoration of the Premises upon expiration of the Term shall not include
refinishing of wall or floor surfaces. Lessor hereby pre-approves Swinerton &
Walberg, Rudolph & Sletten, Lem Construction, Inc. or Toenis Koetter & Breeding
as general Contractor for the construction of the Lessee Improvements if any
such entity is selected by Lessee, provided that any other general contractor
selected by Lessee shall be subject to Lessor’s prior approval as set forth in
the provisions of this Lease governing Lessee’s making of Alterations. Lessee’s
occupancy of the Premises prior to the Commencement Date shall be subject to all
the provisions of this Lease other than Lessee’s obligation for payment of Base
Rent and Lessee’s Percentage Share of Building Expenses. Said early possession
shall not advance the Expiration Date.

 

c. Certificates and Licenses. Prior to occupancy, Lessee shall provide to Lessor
the certificate(s) of insurance required by Article 16 and a copy of all
licenses and authorizations that may be required for the lawful operation of
Lessee’s business upon the Premises, including any City business licenses as may
be required.

 

d. Condition of Premises on Delivery. Lessee acknowledges that except as
specifically otherwise provided in this Lease and subject to Lessor’s
representations, warranties and covenants set forth in this Lease, (i) the lease
of the Premises by Lessee pursuant hereto shall be in its present “AS IS”
condition, in the broadest sense of that term, with all faults, if any, (ii)
neither Lessor nor any employee, representative or agent of Lessor has made any
representation or warranty, express or implied, with respect to the Premises or
any other portion of the Project, and (iii) Lessor shall have no obligation to
improve or alter the Premises or Project for the benefit of Lessee. Without
regard to Lessee’s particular use of, or Alterations to, the Premises, upon the
delivery of possession of the Premises to Lessee, the Building roof, parking lot
serving the Project (including parking lot lighting, ballasts and tubes), and
HVAC, electrical, plumbing and lighting systems serving the Premises shall be in
good working condition, and the core Building systems (including toilet rooms,
elevator lobbies, janitorial rooms and associated circulation areas) shall all
be fully operable. In the event it is established within ninety (90) days
following delivery of possession of the Premises that, other than as a result of
work necessitated by Lessee’s particular use of, or Alterations to, the
Premises, the Building roof, parking lot serving the Project, and/or HVAC,
electrical, plumbing and/or lighting systems serving the Premises were not in
good working condition as of the delivery of possession of the Premises or such
core Building systems were not fully operable as of the delivery of possession
of the Premises, Lessor shall promptly thereafter commence and diligently
prosecute to completion the work necessary

 

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to restore such systems to working order or fully operable condition, as
applicable (provided that Lessor shall not be responsible for any increased
costs of performance of such work resulting from Lessee’s particular use (as
opposed to mere general office use) of, or Alterations to, the Premises). Lessor
shall be responsible, at Lessor’s cost, for taking such actions as are required
to correct any current non-compliance of the Premises and Common Areas with
applicable laws, including, without limitation, laws respecting accessibility
and use by disabled persons (as enforced by applicable governmental authorities)
as of the delivery of possession of the Premises, which work shall include work
required to correct such non-compliance which is necessitated by mere use of the
Premises (as opposed to the particular nature of Lessee’s use), or by mere
performance of improvement work to the Premises (as opposed to the particular
nature of the Lessee Improvements or Lessee’s Alterations)), except that Lessee
shall be responsible for Premises work required to correct non-compliance which
is necessitated by the particular nature of Lessee’s use, or the particular
nature of the Lessee Improvements or Lessee’s Alterations. Notwithstanding
anything to the contrary contained in this Lease, in the event Lessee is unable
to obtain a building permit for the construction of the Lessee Improvements
solely due to pre-existing non-compliance of the Project with applicable laws,
then Lessee shall have the right to terminate this Lease effective upon thirty
(30) days prior written notice to Lessor, provided that if Lessor is able to
obtain necessary sign offs, approvals or otherwise takes action within such
thirty (30) day period so that such pre-existing non-compliance no longer
prevents Lessee’s obtaining a building permit for the Lessee Improvements, then
such election by Lessee to terminate pursuant hereto shall be null and void and
this Lease shall continue in full force and effect as if such notice were never
given.

 

5. RENT. Lessee agrees to pay to Lessor as rental for the Premises, without
offset, deduction, prior notice or demand, the monthly Base Rent designated in
Article 1.h. Base Rent shall be payable monthly in advance on or before the
first day of each calendar month during the Term. Base Rent for any period
during the Term which is for less than one (1) month shall be prorated based
upon a thirty (30) day month. Base Rent and all other amounts owing to Lessor
pursuant to this shall be paid to Lessor in lawful money of the United States of
America which shall be legal tender at the time of payment, at the office of the
Project, or to such other person or at such other place as Lessor may from time
to time designate in writing.

 

6. INTENTIONALLY OMITTED.

 

7. PROJECT TAXES AND OPERATING EXPENSE ADJUSTMENTS.

 

a. Intentionally Omitted.

 

b. Building Taxes and Building Operating Expenses. Lessee shall pay to Lessor,
as additional rent and without deduction or offset, Lessee’s percentage share
set forth in Article 1.j. (“Lessee’s Percentage Share”) of the amount of annual
“Building Taxes” and “Building Operating Expenses” (as such terms are defined
below). Building Taxes and Building Operating Expenses are collectively referred
to herein as “Building Expenses”. Lessee’s Percentage Share shall be determined
by dividing the Rentable Area of the Premises by the total Rentable Area in the
Building. Lessee’s Percentage Share shall be subject to an equitable adjustment
upon a condemnation, sale by Lessor of part of the Building, reconstruction
after damage or destruction or expansion or reduction of the areas within the
Building. Lessee’s Percentage Share of Building Expenses shall be payable during
the Term in equal monthly installments on the first day of each month in
advance, without deduction, offset or prior demand.

 

At any time during the Term, Lessor may give Lessee notice of Lessor’s estimate
of the Building Expenses for the current calendar year. An amount equal to one
twelfth (1/12) of Lessee’s Percentage Share of the estimated Building Expenses
shall be payable monthly by Lessee as aforesaid, commencing on the first day of
the calendar month following thirty (30) days written notice and continuing
until receipt of any notice of adjustment from Lessor given pursuant to this
paragraph. Until notice of the estimated Building Expenses for a subsequent
calendar year is delivered to Lessee, Lessee shall continue to pay its
Percentage Share of Building Expenses on the basis of the prior year’s estimate.
Lessor may at any time during the Term adjust estimates of the Building Expenses
to reflect current expenditures and following Lessor’s written notice to Lessee
of such revised estimate, subsequent payments by Lessee shall be based upon such
revised estimate.

 

If the Commencement Date is on a date other than the first day of a calendar
year, the amount of the Building Expenses payable by Lessee in such calendar
year shall be prorated based upon a fraction, the numerator of which is the
number of days from the Commencement Date to the end of the calendar year in
which the Commencement Date falls, and the denominator of which is three hundred
sixty (360).

 

Within one hundred twenty (120) days after the end of each calendar year during
the Term or as soon thereafter as practicable, Lessor will furnish to Lessee a
statement (“Lessor’s Statement”) setting forth in reasonable detail the actual
Building Expenses paid or incurred by Lessor during the preceding year, and
thereupon within ten (10) days an adjustment will be made by Lessee’s payment to
Lessor or credit to Lessee by Lessor against the Building Expenses next becoming
due from Lessee, as the case may require, to the end that Lessor’s shall receive
the entire amount of Lessee’s Percentage Share of Building Expenses for such
calendar year and no more. If, based on Lessor’s Statement a payment from Lessee
is required, Lessee shall not have the right to withhold or defer such payment
pending a review of Lessor’s books and records pursuant to the following
paragraph or the resolution of any dispute relating to Building Expenses. If the
Expiration Date is on a day other than the last day of a calendar year, the
amount of Building Expenses payable by Lessee for the calendar year in which
Lease Termination falls shall be prorated on the basis which the number of days
from the commencement of such calendar year to and including such Expiration
Date bears to three hundred sixty (360). The termination of this Lease shall not
affect the obligations of Lessor and Lessee pursuant to this Article 7.

 

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Within sixty (60) days after Lessee receives a statement of actual Building
Expenses paid or incurred for a calendar year, Lessee shall have the right, upon
written demand and reasonable notice, to inspect Lessor’s books and records
relating to such Building Expenses for the calendar year covered by Lessor’s
Statement for the purpose of verifying the amount set forth in such statement.
Such inspection shall be made during Lessor’s normal business hours, at the
place where such books and records are customarily maintained by Lessor. In no
event may any such inspection be performed by a person or entity being
compensated on a contingency fee basis or based upon a share of any refund
obtained by Lessee. Information obtained by such inspection shall be kept in the
strictest confidence by Lessee. Unless Lessee asserts in writing a specific
error within ninety (90) days following Lessee’s receipt of Lessor’s Statement,
the amounts set forth in Lessor’s Statement shall be conclusively deemed correct
and binding on Lessee.

 

(i) Operating Expenses. As used in this Lease, “Building Operating Expenses”
means all of the Building Service Expenses and an allocable portion of the
Project Expenses as follows:

 

(A) Building Service Expenses. Building Operating Expenses shall include all
costs of operation, maintenance, repair and management of the Building and
Building Common Area (defined in Article 55), hereinafter collectively referred
to as “Building Service Expenses,” as determined by Lessor’s standard accounting
practices. Building Service Expenses as used herein shall include, but not be
limited to, all sums expended in connection with all general maintenance,
repairs, painting, cleaning, sweeping and janitorial services; maintenance and
repair of signs, indoor plants, and atriums; trash removal; sewage; electricity,
gas, water and any other utilities (including any temporary or permanent utility
surcharge or other exaction whether now or hereafter imposed); maintenance and
repair of any fire protection systems, elevator systems, lighting systems, storm
drainage systems, heating, ventilation and air conditioning systems and other
utility and/or mechanical systems; any governmental imposition or surcharge
imposed upon Lessor with respect to the Building or assessed against the
Building; all costs and expenses pertaining to a security alarm system or other
security services or measures for the Building, if Lessor deems necessary in
Lessor’s sole business judgment; materials; supplies; tools; depreciation on
maintenance and operating machinery and equipment (if owned) and rental paid for
such machinery and equipment (if rented); service agreements on equipment;
maintenance and repair of the roof (including repair of leaks and resurfacing)
and the exterior surfaces of all improvements (including painting);
non-structural maintenance and repair of structural parts (including repair of
leaks and resurfacing) and the exterior surfaces of all improvements (including
painting); window cleaning; elevator or escalator services; materials handling;
fees for licenses and permits relating to the Building; the cost of complying
with rules, regulations and orders of governmental authorities; Building office
rent or rental value; accounting and legal fees; the cost of contesting the
validity or applicability of any governmental enactment which may affect
Building Service Expenses; personnel to implement such services, including, if
Lessor deems necessary, the cost of security guards and valet attendants; public
liability, environmental impairment, property damage and fire and extended
coverage insurance on the Building (in such amounts and providing such coverage
as determined in Lessor’s sole discretion and which may include, without
limitation, liability, all risk property, lessor’s risk liability, war risk,
vandalism, malicious mischief, boiler and machinery, rental income, earthquake,
flood and worker’s compensation insurance); compensation and fringe benefits
payable to all persons employed by Lessor in connection with the operation,
maintenance, repair and management of the Building; and a management fee equal
to five percent (5%) of gross receipts from the Building (including, without
limitation, all rentals and parking receipts from Building tenants and/or
visitors). Lessor may cause any or all of said services to be provided by an
independent contractor or contractors or they may be rendered by Lessor. It is
the intent of the parties hereto that Building Service Expenses shall include
every cost paid or incurred by Lessor in connection with the operation,
maintenance, repair, and management of the Building, and the specific examples
of Building Service Expenses stated in this Article 7 are in no way intended to,
and shall not, limit the costs comprising Building Service Expenses, nor shall
such examples be deemed to obligate Lessor to incur such costs or to provide
such services or to take such actions, except as may be expressly required of
Lessor in other portions of this Lease, or except as Lessor, in its sole
discretion, may elect. The maintenance of the Building shall be at the sole
discretion of Lessor and all costs incurred by Lessor in good faith shall be
deemed conclusively binding on Lessee. If less than one hundred percent (100%)
of the Rentable Area of the Building is occupied during any calendar year, then
in calculating Building Service Expenses for such year, the components of
Building Service Expenses which vary based upon occupancy level shall be
adjusted to equal Lessor’s reasonable estimate of the amount of such Building
Service Expenses had one hundred percent (100%) of the total Rentable Area of
the Building been occupied during such year. Notwithstanding anything to the
contrary contained in this Lease, in no event shall Building Service Expenses
include any costs relating to the structural repairs to maintain the structural
integrity of the Building (including, without limitation, the structural repairs
to the structural elements of the exterior, walls, roof, columns, footings and
floor slab of the Building) and in no event shall Building Service Expenses
include the cost of correction of the Building exterior caulking system to
correct existing leakage, which correction work shall be completed by Lessor
prior to September 1, 1998. Prior to completion of such correction work, Lessor
shall respond within twenty-four (24) hours following receipt of notification
from Lessee of the need for repair of such leakage and thereafter diligently
prosecute to completion the work of repair of such leakage and any Premises
improvements damaged by such leakage (but Lessor shall not in any event be
responsible for repair of Lessee’s personal property, fixtures, furnishings
and/or equipment), at Lessor’s cost without such cost constituting a Building
Service Expense. In addition, if any capital expenditure otherwise includable in
Building Service Expenses costs more than fifty cents ($0.50) per square foot of
Rentable Area in the Building, then such capital expenditure shall be amortized
over the useful life of the applicable item as reasonably determined by Lessor,
and Building Service Expenses shall not include the entire cost of such
expenditure in the year incurred, but shall include annual amortization of such
expenditure during each year of such useful life.

 

(B) Project Expenses. Building Operating Expenses shall include the Building’s
equitable share of all direct costs of operation, maintenance, repair and
management of the Project (as opposed to expenses relating solely to the
Building or any other particular building within the Project) and/or the
Exterior

 

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Common Area, determined by Lessor’s standard accounting practices (collectively,
“Project Expenses”). Such costs shall be allocated by Lessor between the
Building containing the Premises and the other buildings located within the
Project from time to time, in such manner as Lessor reasonably determines in
good faith. Project Expenses as used herein shall include, but not be limited
to, all sums expended in connection with all general maintenance, repairs,
resurfacing, painting, restriping, cleaning, sweeping, and janitorial services;
maintenance and repair of sidewalks, curbs, signs and other Exterior Common
Areas; maintenance and repair of sprinkler systems, planting, and landscaping;
trash removal; sewage; electricity, gas, water and any other utilities
(including any temporary or permanent utility surcharge or other exaction
whether now or hereafter imposed); maintenance and repair of directional signs
and other markers and bumpers; maintenance and repair of any fire protection
systems, elevator systems, lighting systems, storm drainage systems and other
utility systems; any governmental imposition or surcharge imposed upon Lessor or
assessed against the Exterior Common Area or the Project; materials; supplies,
tools; depreciation on maintenance and operating machinery and equipment (if
owned) and rental paid for such machinery and equipment (if rented); service
agreements on equipment; maintenance and repair of parking areas and parking
structures, if any; maintenance and repair of structural parts (including
foundation and floor slabs); elevator services, if applicable; material
handling; fees for licenses and permits relating to the Exterior Common Area;
the cost of complying with rules, regulation and orders of governmental
authorities; accounting and legal fees; the cost of contesting the validity or
applicability of any governmental enactment which may affect Project Expenses;
personnel to implement such services, including if Lessor deems necessary, the
cost of security guards and valet attendants; all annual assessments and special
assessments levied or charged against the Project and/or Lessor pertaining to
the Project by the Cupertino City Center Owner’s Association pursuant to the
“CC&R’s” (as hereinafter defined); public liability, environmental impairments,
property damage and fire and extended coverage insurance on Exterior Common Area
(in such amounts and providing such coverage as determined in Lessor’s sole
discretion and which may include, without limitation, liability, all risk
property, lessor’s risk liability, war risk, vandalism, malicious mischief,
sprinkler leakage, boiler and machinery, parking income, earthquake, flood and
worker’s compensation insurance); compensation and fringe benefits payable to
all persons employed by Lessor in connection with the operation, maintenance,
repair and management of the Exterior Common Area; and a management fee equal to
five percent (5%) of gross receipts from the Project (exclusive of amounts
collected from tenants of any building within the Project under their respective
leases). Lessor may cause any or all of said services to be provided by an
independent contractor or contractors, or they may be rendered by Lessor. It is
the intent of the parties hereto that Project Expenses shall include every Cost
paid or incurred by Lessor in connection with the operation, maintenance, repair
and management of the Exterior Common Area, and the specific examples of Project
Expenses stated in this Article 7 are in no way intended to, and shall not limit
the costs comprising Project Expenses, nor shall such examples be deemed to
obligate Lessor to incur such costs or to provide such services or to take such
actions except as Lessor may be expressly required in other portions of this
Lease, or except as Lessor, in its sole discretion, may elect. The maintenance
of the Exterior Common Areas shall be at the sole discretion of Lessor and all
costs incurred by Lessor in good faith shall be deemed conclusively binding on
Lessee. If less than one hundred percent (100%) of the Rentable Area of the
Project is occupied during any calendar year, then in calculating Project
Expenses for such year, the components of Project Expenses which vary based upon
occupancy level shall be adjusted to equal Lessor’s reasonable estimate of the
amount of such Project Expenses had one hundred percent (100%) of the total
Rentable Area of the Project been occupied during such year. If any capital
expenditure otherwise includable in Project Expenses costs more than fifty cents
($0.50) per square foot of Rentable Area in the Project, then such capital
expenditure shall be amortized over the useful life of the applicable item as
reasonably determined by Lessor, and Project Expenses shall not include the
entire cost of such expenditure in the year incurred, but shall include annual
amortization of such expenditure during each year of such useful life.

 

(ii) Project Taxes. “Building Taxes” as used in this Lease, shall mean those
items of “Project Taxes” (as hereinafter defined) which relate solely to the
Building, plus an equitable share of Project Taxes which relate to the land
underlying the Project, to the Exterior Common Areas and/or to the Project as a
whole (as opposed to Project Taxes relating solely to the Building or any other
particular building within the Project), which equitable share shall be
allocated by Lessor between the Building and the other buildings located within
the Project from time to time, in such manner as Lessor reasonably determines in
good faith. For purposes of clarification, in no event shall Building Taxes
include any impositions or assessments imposed in connection with any future
development of one or more other buildings within the Project. The term “Project
Taxes” as used in this Lease shall collectively mean (to the extent any of the
following are not paid by Lessee pursuant to Article 7.c. below) all: real
estate taxes and general or assessments (including, but not limited to,
assessments for public improvements or benefits); personal property taxes; taxes
based on vehicles utilizing parking areas on the Parcel; taxes computed or based
on rental income (including without limitation any municipal business tax but
excluding federal, state and municipal net income taxes); Environmental
Surcharges; excise taxes; gross receipts taxes; sales and/or use taxes: employee
taxes; water and sewer taxes, levies, assessments and other charges in the
nature of taxes or assessments (including, but not limited to, assessments for
public improvements or benefit); and all other governmental, quasi-governmental
or special district impositions of any kind and nature whatsoever, regardless of
whether now customary or within the contemplation of the parties hereto and
regardless of whether resulting from increased rate and/or valuation, or whether
extraordinary or ordinary, general or special, unforeseen or foreseen, or
similar or dissimilar to any of the foregoing which during the Lease Term are
laid, levied, assessed or imposed upon Lessor and/or become a lien upon or
chargeable against the Project or the Premises, Building, Common Area and/or
Parcel under or by virtue of any present or future laws, statutes, ordinances,
regulations, or other requirements of any governmental authority or
quasi-governmental authority or special district having the direct or indirect
power to tax or levy assessments whatsoever. The term “Environmental Surcharges”
shall include any and all expenses, taxes, charges or penalties imposed by the
Federal Department of Energy, Federal Environmental Protection Agency, the
Federal Clean Air Act, or any regulations promulgated thereunder, or imposed by
any other local, state or federal governmental agency or entity now or hereafter
vested with the power to impose taxes, assessments or other types of surcharges
as a means of controlling or abating environmental pollution or the use of
energy in regard to the use, operation or occupancy of the Project including the
Premises, Building, Common Area and/or Parcel. The term

 

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“Project Taxes” shall include (to the extent the same are not paid by Lessee
pursuant to Article 7.c. below), without limitation: the cost to Lessor of
contesting the amount or validity or applicability of any Project Taxes
described above; and all taxes, assessments, levies, fees, impositions or
charges levied, imposed, assessed, measured, or based in any manner whatsoever
upon or with respect to the use, possession, occupancy, leasing, operation or
management of the Project (including, without limitation, the Premises,
Building, Common Area and/or Parcel) or in lieu of or equivalent to any Project
Taxes set forth in this Article 7.b.(ii).

 

If at any time during the Term, Project Taxes are under-assessed by the taxing
authorities so that they are not computed on a fully-completed and occupied
basis in accordance with the then applicable taxing authority of the
governmental entities having jurisdiction, Lessor shall have the right, but not
the obligation, to adjust Project Taxes to reflect the amount that Project Taxes
would be if the Project were assessed on a fully-completed and occupied basis,
as determined in Lessor’s reasonable discretion, and such adjusted amount shall
be allocated to the Project in accordance with the terms of this Lease.

 

c. Other Taxes. Lessee shall pay the following:

 

(i) Lessee shall pay (or reimburse Lessor as additional rent if Lessor is
assessed), before delinquency, any and all taxes levied or assessed, and which
become payable for or in connection with any period during the Term, upon all of
the following (collectively, “Leasehold Improvements and Personal Property”):
Lessee’s Leasehold Improvements, the Lessee Improvements, equipment, furniture,
furnishings, fixtures, merchandise, inventory, machinery, appliances and other
personal property located in the Premises; except only that which has been paid
for by Lessor and is the standard of the Building. Lessee hereby acknowledges
receipt of a copy of a schedule setting forth the improvements comprising the
standard of the Building. If any or all of the Leasehold Improvements and
Personal Property are assessed and taxed with the Project, Lessee shall pay to
Lessor such taxes within ten (10) days after delivery to Lessee by Lessor of a
statement in writing setting forth the amount applicable to the Leasehold
Improvements and Personal Property. If the Leasehold Improvements and Personal
Property are not separately assessed on the tax statement or bill, Lessor’s good
faith determination of the amount of such taxes applicable to the Leasehold
Improvements and Personal Property shall be a conclusive determination of
Lessee’s obligation to pay such amount as so determined by Lessor.

 

(ii) Lessee shall pay (or reimburse Lessor if Lessor is assessed, as additional
rent), prior to delinquency or within ten (10) days after receipt of a statement
thereof, any and all other taxes, levies, assessments, or surcharges payable by
Lessor or Lessee and relating to this Lease, the Premises or Lessee’s activities
in the Premises (other than Lessor’s net income, succession, transfer, gift,
franchise, estate, or inheritance taxes), whether or not now customary or within
the contemplation of the parties hereto, now in force or which may hereafter
become effective, including but not limited to taxes: (1) upon, allocable to, or
measured by the area of the Premises or on the Rentals payable hereunder,
including without limitation any gross income, gross receipts, excise, or other
tax levied by the state, any political subdivision thereof, city or federal
government with respect to the receipt of such Rentals; (2) upon or with respect
to the use, possession, occupancy, leasing, operation and management of the
Premises or any portion thereof; (3) upon this transaction or any document to
which Lessee is a party creating or transferring an interest or an estate in the
Premises; or (4) imposed as a means of controlling or abating environmental
pollution or the use of energy, including, without limitation, any parking
taxes, levies or charges or vehicular regulations imposed by any governmental
agency. Lessee shall also pay, prior to delinquency, all privilege, sales,
excise, use, business, occupation, or other taxes, assessments, license fees, or
charges levied, assessed, or imposed upon Lessee’s business operations conducted
at the Premises. If any such taxes are payable by Lessor and it shall not be
lawful for Lessee to reimburse Lessor for such taxes, then the Rentals payable
hereunder shall be increased to net Lessor the net Rental after imposition of
any such tax upon Lessor as would have been payable to Lessor prior to the
imposition of any such tax.

 

(iii) Any payments made by Lessee directly to the applicable taxing authority
pursuant to this subsection 7.c. shall be made prior to the applicable
delinquency date for such payment, and Lessee shall deliver evidence of such
payment to Lessor within fifteen (15) days thereafter.

 

8. USE.

 

a. In no event shall Lessee use or permit the use of the Premises for any
purpose other than general office use (which may include, subject to compliance
with applicable laws and governmental requirements, use of the Premises for
administration, software design and non-destructive, research and development
purposes and for other incidental lawful uses, all not involving Hazardous
Materials, and all in a manner consistent with operation within a first-class
general office use building, so as not to exceed the capacity of the mechanical
and utility systems serving, and/or the floor load capacity of, the Premises or
interfere with the use or occupancy of any other occupant of the Project).
Lessor and Lessee hereby acknowledge and agree that the foregoing use
restriction is an absolute prohibition against a change in use of the Premises
as contemplated under California Civil Code Section 1997.230. Lessee shall not
do or permit to be done in or about the Premises nor bring or keep anything
therein which will in any way increase the existing rate of or affect any fire
or other insurance upon the Building or the Project or any of its contents, or
cause cancellation of any insurance policy covering the Building or the Project
or any part thereof or any of its contents. Lessee shall not, without prior
consent of Lessor, bring into the Building or the Premises or use or incorporate
in the Premises any apparatus, equipment or supplies that may cause substantial
noise, odor, or vibration or overload the Premises or the Building or any of its
utility or elevator systems or jeopardize the structural integrity of the
Building or any part thereof. Lessee and Lessee’s Agents shall not use, store,
or dispose of any “Hazardous Materials” (defined below) on any portion of the
Project. Without limiting the generality of the foregoing, Lessee shall not
(either with or without negligence) cause or permit the escape, disposal or
release of any Hazardous Materials in, on or below the Premises or any other
portion of the Project. If any lender or

 

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governmental agency shall ever require testing to ascertain whether or not there
has been any release or other use of Hazardous Materials at the Premises during
the Term of this Lease, then the reasonable costs thereof shall be reimbursed by
Lessee to Lessor upon demand as additional rent. In addition, Lessee shall
execute such affidavits, representations and certifications as may be reasonably
required by Lessor from time to time concerning Lessee’s best knowledge and
belief regarding the presence of Hazardous Materials at the Premises. Lessee
shall indemnify, defend with counsel acceptable to Lessor, and hold Lessor and
Lessor’s employees, agents, partners, officers, directors and shareholders
harmless from and against any and all claims, actions, suits, proceedings,
orders, judgment, losses, costs, damages, liabilities, penalties, or expenses
(including, without limitation, attorneys’ fees) arising in connection with the
breach of the obligations described in any of the previous four sentences and
the obligations of Lessee pursuant hereto and under the previous four sentences
shall survive the Lease Termination. As used in this paragraph, “Hazardous
Materials” means any chemical, substance or material which has been determined
or is hereafter determined by any federal, state, or local governmental
authority to be capable of posing risk of injury to health or safety, including,
without limitation, petroleum, asbestos, polychlorinated biphenyls, radioactive
materials, radon gas, and/or biologically and/or chemically active materials.
Without limiting the generality of the foregoing, the definition of “Hazardous
Materials” shall include those definitions found in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§
9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §§
6901 et. seq., the Hazardous Materials Transportation Authorization Act, 49
U.S.C. §§ 5101 et. seq., the National Environmental Policy Act, 42 U.S.C. §§
4321 et. seq., the Clean Water Act, 33 U.S.C. §§ 1251., the Clean Air Act, 42
U.S.C. §§ 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et
seq., the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq., the Occupational
Safety and Health Act, 29 U.S.C. §§ 651 et seq., Division 20 of the California
Health and Safety Code commencing at Section 24000, Division 7 of the California
Water Code commencing at Section 13000, each as amended from time to time, and
all similar federal, state and local statutes and ordinances and all rules,
regulations or policies promulgated thereunder. Lessee shall not do or permit
anything to be done in or about the Premises which will in any way obstruct or
interfere with the rights of other tenants or occupants of the Building or the
Project or injure or annoy them or use or allow the Premises to be used for any
improper, immoral, unlawful or objectionable purpose, nor shall Lessee cause,
maintain or permit any nuisance in, on or about the Premises. Lessee shall not
commit or suffer to be committed any waste in or upon the Premises.

 

Lessor shall promptly notify Lessee of any Hazardous Materials actually known by
Lessor to exist in or about the Premises or other portions of the Project at
levels in violation of applicable laws or which otherwise pose a material risk
of having a material and adverse affect upon the operation of Lessee’s business
from the Premises (including, without limitation, access to and/or use of the
Premises and parking areas serving the Project). If requested by Lessee within
thirty (30) days following the execution of this Lease, Lessor shall provide to
Lessee copies of any Hazardous Materials reports or other environmental reports
respecting the Project then existing in Lessor’s possession, which reports shall
be maintained by Lessee in strict confidence. Notwithstanding anything to the
contrary contained herein, Lessee shall not be responsible for costs related to
the testing, remediation and/or presence of Hazardous Materials on or about the
Premises or Project except if caused, in whole or in part, to be present thereon
or thereabout by Lessee, any subtenant of Lessee and/or any of their respective
employees, agents, representatives, contractors and/or invitees.

 

b. Effect of Use Restriction. Lessor and Lessee hereby acknowledge and agree
that the use restriction set forth in subsection 8.a. above shall be deemed
reasonable in all respects and under all circumstances. Lessor and Lessee
further acknowledge and agree that, notwithstanding any provision of this Lease
to the contrary, (i) in the event Lessee requests Lessor’s consent to a proposed
assignment of this Lease or subletting of the Premises, Lessor shall be deemed
reasonable in withholding its Consent to such assignment or subletting if the
proposed assignee or subtenant desires to use the Premises for any purpose other
than as expressly provided in subsection 8 .a. above, and (ii) in the event of a
default by Lessee under the Lease, the enforcement of the use restriction set
forth in subsection 8.a. above shall be deemed reasonable for purposes of
computing the rental loss that could be or could have been reasonably avoided by
Lessor pursuant to California Civil Code Section 1951.2 and in connection with
the exercise of Lessor’s remedies under California Civil Code Section 1951.4.

 

Notwithstanding the preceding to the contrary, if Lessor withholds its consent
to an assignment of the Lease or subletting of the Premises based upon the
desire of the proposed assignee or subtenant to use the Premises for any purpose
other than as expressly provided in subsection 8.a. above, or if Lessee is in
default under this Lease, then, prior to commencing or pursuing any claim or
defense against Lessor based upon the unreasonableness of the use restriction
set forth in subsection 8.a. above, Lessee shall provide Lessor with written
notice (by certified mail, postage prepaid and return receipt requested) setting
forth Lessee’s objections to the enforcement of the use restriction in such
instance, the basis upon which Lessee intends to demonstrate that the
enforcement of such use restriction would be unreasonable in such instance, and
the use(s) which Lessee believes Lessor should allow Lessee or its proposed
assignee or subtenant, as the case may be, to make of the Premises. Within
thirty (30) days of Lessor’s receipt of Lessee’s written notice of objection,
Lessor shall provide Lessee with written notice of Lessor’s election to either
(A) enforce the use restriction set forth in subsection 8.a. above, or (B)
permit a change in the use of the Premises, provided that such proposed use
shall in no event (1) require the use, storage or disposal of Hazardous
Materials on or about the Premises or the Project, (2) increase or affect any
fire or other insurance covering the Building or the Project, (3) interfere with
the rights of other tenants of the Building or Project, including, without
limitation, any exclusive use rights of such tenants, (4) be in violation of
applicable federal, state or local laws, rules, regulations, codes or
ordinances, or (5) require Lessor to construct or install, or to provide any
allowance for the construction or installation of, any tenant improvements in
the Premises. Notwithstanding the preceding to the contrary, in no event shall
Lessor have any obligation to allow a change in the use of the premises, it
being expressly understood by the parties that the use restriction set forth in
subsection 8.a. above is an absolute prohibition against a change in use of the
Premises. In the event Lessor fails to provide Lessee with written notice of its
election to either enforce the use restriction or allow a change in use of the
Premises within

 

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said thirty (30) day period, Lessor shall be deemed to have elected to enforce
the use restriction. In the event Lessor elects or is deemed to have elected to
enforce the use restriction as provided hereinabove, Lessee shall have the right
to pursue such valid claims or defenses against Lessor as may be permitted under
California Civil Code section 1997.040 and which Lessee is able to prove.

 

9. COMPLIANCE WITH LAWS. Lessee shall not use the Premises or permit anything to
be done in or about the Premises which will in any way conflict with or violate
any law, statute, ordinance, order or governmental rule or regulation or
requirement of duly constituted public authorities or quasi-public authorities
now in force or which may hereafter be enacted or promulgated. Lessee shall, at
its sole cost and expense, promptly comply with all laws, statutes, ordinances,
orders and governmental or quasi-governmental rules, regulations or requirements
now in force or which may hereafter be in force and with all recorded documents
which relate to or affect the condition, use or occupancy of the Premises,
including, without limitation, that certain Declaration of Covenants, Conditions
and Restrictions and Grant of Easements for Cupertino City Center, recorded
October 9, 1985, Series No. 8554457 of the Official Records of Santa Clara
County, California, as amended by First Amendment to Declaration of Covenants,
Conditions and Restrictions and Grant of Easements for Cupertino City Center
recorded September 12, 1987, Series No. 9417820 of the Official Records of Santa
Clara County, California (as amended, the “CC&R’s”), and with the requirements
of any board of fire insurance underwriters or other similar bodies now or
hereafter constituted, relating to, or affecting the condition, use or occupancy
of the Premises, excluding structural changes not related to or affected by
Lessee’s improvements, acts or use or occupancy of the Premises. The judgment of
any court of competent jurisdiction or the admission of Lessee in any action
against Lessee, whether Lessor be a party thereto or not, that Lessee has
violated any law, statute, ordinance, or governmental or quasi-governmental
rule,

regulation or requirement, shall be conclusive of that fact as between the
Lessor and Lessee. Lessee shall obtain, prior to taking possession of the
Premises, all permits, licenses, or other authorizations for the lawful
operation of its business at the Premises. Lessee shall indemnify, defend with
counsel acceptable to Lessor and hold Lessor and Lessor’s employees, agents,
partners, officers, directors and shareholders harmless from and against any
claim, action, suit, proceeding, order, judgment, liability, penalty or expense
(including, without limitation, attorneys’ fees) arising out of the failure of
Lessee to comply with any applicable law, statute, ordinance, order, rule,
regulation, requirement or recorded document. Lessee acknowledges that Lessee
has independently investigated and is satisfied that the Premises are suitable
for Lessee’s intended use and that the Building and Premises meet all
governmental and quasi-governmental requirements for such intended use.

 

Lessor and Lessee acknowledge that, in accordance with the provisions of the
Americans with Disabilities Act of 1990 (the “ADA”), responsibility for
compliance with the terms and conditions of Title III of the ADA may be
allocated as between Lessor and Lessee. In this regard and notwithstanding
anything to the contrary contained in the Lease, Lessor and Lessee agree that
the responsibility for compliance with the ADA (including, without limitation,
the removal of architectural and communications barriers and the provision of
auxiliary aids and services to the extent required) shall be allocated as
follows: (i) Lessee shall be responsible for compliance with the provisions of
Title I of the ADA, and of Title II and Title III of the ADA as Titles II and
III relate to any construction, renovations, alterations and repairs made within
the Premises if such construction, renovations, alterations and repairs are made
by Lessee, at its expense without the assistance of Lessor; (ii) Lessor shall be
responsible for compliance with the provisions of Title II and III of the ADA
for all construction, renovations, alterations and repairs which Lessor is
required, under this Lease, to make within the Premises, whether (pursuant to
the relevant provisions of the Lease) at Lessor’s or Lessee’s expense; and (iii)
Lessor shall be responsible for compliance with the provisions of Title III of
the ADA for all exterior and interior areas of the Building not included within
the Premises except to the extent such compliance is necessitated as a result of
Lessee’s particular use of, or alterations to, the Premises. Lessor agrees to
indemnify, defend and hold Lessee harmless from and against any claims, damages,
costs and liabilities arising out of Lessor’s failure, or alleged failure, as
the case may be, to comply with the ADA, to the extent such compliance has been
allocated to Lessor herein, which indemnification obligation shall survive the
expiration or termination of this Lease if the Lease has not been terminated by
reason of a default by Lessee. Lessee agrees to indemnify, defend and hold
Lessor harmless from and against any claims, damages, costs and liabilities
arising out of Lessee’s failure, or alleged failure, as the case may be, to
comply with the ADA to the extent such compliance has been allocated to Lessee
herein, which indemnification obligation shall survive the expiration or
termination of this Lease. Lessor and Lessee each agree that the allocation of
responsibility for ADA compliance shall not require Lessor or Lessee to
supervise, monitor or otherwise review the compliance activities of the other
with respect to its assumed responsibilities for ADA compliance as set forth in
this Article 9. Lessor shall, in complying with the ADA (to the extent such
compliance has been allocated to Lessor herein), be entitled to rely upon
representations made to, or information given to Lessor by Lessee in regard to
Lessee’s use of the Premises, Lessee’s employees, and other matters pertinent to
compliance with the ADA. The indemnity of Lessee set forth above shall apply as
to any liability arising against Lessor by reason of any misrepresentations or
misinformation given by Lessee to Lessor. The allocation of responsibility for
ADA compliance between Lessor and Lessee, and the obligations of Lessor and
Lessee established by such allocations, shall supersede any other provisions of
the Lease that may contradict or otherwise differ from the requirements of this
Article 9; except, however, that in the event of any conflict between the
provisions of Article 4.d. above and the provisions of this Article 9, the
provisions of Article 4.d. above shall control.

 

10. ALTERATIONS AND ADDITIONS.

 

a. Lessee’s Alterations. Lessee shall not make or suffer to be made any
alterations, additions, changes or improvements (collectively, “Alterations”) to
or of the Premises, or any part thereof without Lessor’s prior written consent,
which consent shall not, except as otherwise expressly provided in the Lease, be
unreasonably withheld. Lessor may impose, as a condition to the aforesaid
consent, such requirements as Lessor may deem necessary in its sole discretion,
including without limitation: the manner in which the work is done; a right of
approval of the contractor by whom the work is to be performed; the times during
which such work is to be

 

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accomplished; the requirement that Lessee reimburse Lessor, as additional rent,
for Lessor’s reasonable out-of-pocket costs incurred in reviewing any proposed
Alterations, whether or not Lessor’s consent is granted; and the requirement
that at Lease Termination, either (i) Lessee, at its expense, will remove any
and all such Alterations installed by Lessee and shall, at its cost, promptly
repair all damages to the Project caused by such removal, or (ii) the
Alterations made by Lessee shall remain with the Premises, be a part of the
realty, and belong to Lessor. If Lessor consents to any Alterations to the
Premises by Lessee, the same shall be made by Lessee at Lessee’s sole cost and
expense in accordance with plans and specifications approved by Lessor. Any such
Alterations made by Lessee shall be performed in accordance with all applicable
laws, ordinances and codes and in a first class workmanlike manner, and shall
not weaken or impair the structural strength or lessen the value of the
Building, shall not invalidate, diminish, or adversely affect any warranty
applicable to the Building or any other improvements located within the Project,
including any equipment therein, and shall be performed in a manner causing
Lessor and Lessor’s agents and other tenants of the Building the least
interference and inconvenience practicable under the circumstances. In making
any such Alterations, Lessee shall, at Lessee’s sole cost and expense:

 

(i) File for and secure any necessary permits or approvals from all governmental
departments or authorities having jurisdiction, and any utility company having
an interest therein,

 

(ii) Notify Lessor in writing at least fifteen (15) days prior to the
commencement of work on any Alteration, so that Lessor can post and record
appropriate notices of non-responsibility, and

 

(iii) Provide Lessor with copies of all drawings and specifications prior to
commencement of construction of any Alterations, and provide Lessor with “as
built” plans and specifications (on CAD diskette if available) following
completion of such Alterations.

 

In no event shall Lessee make or suffer to be made any Alteration to the Common
Area or the structural portions of the Building or any part thereof without
Lessor’s prior written consent, which consent may be withheld in Lessor’s sole
discretion.

 

b. Removal. Upon Lease Termination, Lessee shall, upon written demand by Lessor
at Lessee’s sole cost and expense, forthwith and with all due diligence remove
any Alterations made by Lessee, which is then designated by Lessor to be removed
and Lessee shall, forthwith and with all due diligence at its sole cost and
expense, repair any damage to the Project caused by such removal. Lessee shall
also, upon Lease Termination and provided that Lessee is not then in default
hereunder, remove Lessee’s movable equipment, furnishings, trade fixtures and
other personal property (excluding any Alterations made by Lessee not
specifically designated by Lessor to be removed), provided that Lessee shall,
forthwith and with all due diligence at its sole cost and expense, repair any
damages to the Project caused by such removal. Unless Lessor elects to have
Lessee remove any such Alterations, all such Alterations except for movable
furniture and trade fixtures of Lessee not affixed to the Premises, shall become
the property of Lessor upon Lease Termination (without any payment therefor) and
remain upon and be surrendered with the Premises.

 

c. Alterations Required by Law. Lessee shall pay to Lessor as additional rent,
the cost of any structural or non-structural alteration, addition or change to
the Building and/or at Lessor’s election, shall promptly make, at Lessee’s sole
expense and in accordance with the provisions of subsection 10.a. above, any
structural or non-structural alteration, addition or change to the Premises
required to comply with laws, regulations, ordinances or orders of any public
agencies, whether now existing or hereinafter promulgated, where such
alterations, additions or changes are required by reason of: Lessee’s or
Lessee’s Agents’ acts; Lessee’s use or change of use to the Premises;
alterations or improvements to the Premises made by or for Lessee; or Lessee’s
application for any permit or governmental approval.

 

d. Lessor’s Improvements. All fixtures, improvements or equipment which are
installed, constructed on or attached to the Premises, or any part of the
Project by Lessor at its expense shall be a part of the realty and belong to
Lessor.

 

11. REPAIRS.

 

a. By Lessee. Subject to the express covenants, representations and warranties
of Lessor set forth in this Lease, by taking possession of the Premises, Lessee
shall be deemed to have accepted the Premises as being in good and sanitary
order, condition and repair and to have accepted the Premises in their condition
existing as of the date of such possession, subject to all applicable laws,
covenants, conditions, restrictions, easements, and other matters of public
record and the Rules and Regulations from time to time promulgated by Lessor
governing the use of any portion of the Project. Lessee shall at Lessee’s sole
cost and expense, keep every part of the Premises in good condition and repair,
damage thereto from causes beyond the control of Lessee (and not caused by any
act or omission of Lessee or Lessee’s Agents) and ordinary wear and tear
excepted. If Lessee fails to maintain the Premises as required by this Lease,
Lessor may give Lessee notice to do such acts as are reasonably required to so
maintain the Premises and if Lessee fails to commence such work immediately in
an emergency or where immediate action is required to protect the Premises or
any portion of the Project, or within ten (10) days after such notice is given
under other circumstances, and diligently prosecute it to completion, then
Lessor or Lessor’s agents, in addition to all of the rights and remedies
available hereunder or by law and without waiving any alternative remedies,
shall have the right to enter the Premises and to do such acts and expend such
funds at the expense of Lessee as are reasonably required to perform such work.
Any amount so expended by Lessor shall be paid by Lessee to Lessor as additional
rent, upon demand. With respect to any work performed by Lessor pursuant to this
Article 11.a., Lessor shall be liable to Lessee only for physical damage caused
to Lessee’s personal property located within the Premises to the extent such
damage is caused by Lessor’s active negligence or willful misconduct and

 

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is not covered by the insurance required to be maintained by Lessee pursuant to
this Lease. In no event shall Lessor have any liability to Lessee for any other
damages, or for any inconvenience or interference with the use of the Premises
by Lessee, or for any consequential damages, including lost profits, as a result
of performing any such work. Except as specifically provided in this Lease,
Lessor shall have no obligation whatsoever to alter, remodel, improve, repair,
decorate or paint the Premises or any part thereof and the parties hereto affirm
that Lessor has made no representations or warranties, express or implied, to
Lessee respecting the condition of the Premises or any part of the Project
except as specifically set forth in this Lease.

 

b. By Lessor. Except as expressly otherwise provided in this Lease, the costs of
repairs and maintenance which are the obligation of Lessor under this Lease or
which Lessor elects to perform under this Lease except such repairs and
maintenance which are the responsibility of Lessee hereunder, shall be an
Operating Expense. Lessor shall repair and maintain the structural portions of
the Building, including the basic plumbing, air conditioning, heating and
electrical systems installed or furnished by Lessor, unless such maintenance or
repairs are caused in part or in whole by the act, neglect, fault or omission of
any duty by Lessee or Lessee’s Agents, in which case Lessee shall pay to Lessor
the reasonable cost of such maintenance or repairs as additional rent. Lessor
shall not be liable for any failure to make any such repairs or to perform any
maintenance for which Lessor is responsible as provided above unless Lessor
fails to commence such work for a period of more than thirty (30) days after
written notice of the need of such repairs or maintenance is given to Lessor by
Lessee and the failure is due solely to causes within Lessor’s reasonable
control. Except as provided in Article 21 of this Lease, there shall be no
abatement of Rentals, and in any event there shall be no liability of Lessor by
reason of any injury to or interference with Lessee’s business arising from the
making of any repairs, alterations or improvements in or to any portion of the
Project or in or to fixtures, appurtenances and equipment therein. Lessee waives
the benefits of any statute now or hereafter in effect (including, without
limitation, the provisions of subsection 1 of Section 1932, Section 1941 and
Section 1942 of the California Civil Code and any similar or dissimilar law,
statute or ordinance now or hereafter in effect) which would otherwise afford
Lessee the right to make repairs at Lessor’s expense (or to deduct the cost of
such repairs from Rentals due hereunder) or to terminate this Lease because of
Lessor’s failure to keep the Premises in good and sanitary order; except,
however, that in the event of an emergency situation which (i) materially and
adversely affects the operation of Lessee’s business from the Premises or which
results an imminent risk of injury to persons or material property damage, and
(ii) is susceptible of cure by Lessee’s performance of a Lessor maintenance
and/or repair obligation under this Lease, then if Lessor shall fail to promptly
commence and diligently prosecute to completion such cure following receipt of
notice from Lessee of the existence of such situation, Lessee shall have the
right, but not the obligation, to promptly take such measures as are necessary
to cure such default (using the Building-standard subcontractors for utility or
mechanical system work or work affecting the Building exterior, if such cure
requires subcontractor work, provided such subcontractors are available at
commercially reasonable rates for the work to be performed), and Lessor shall
reimburse Lessee for the reasonable costs of completing such cure within thirty
(30) days following Lessee’s submission to Lessor of reasonable evidence of the
amount of such costs.

 

12. LIENS. Lessee shall keep the Premises and every portion of the Project free
from any and all mechanics’, materialmen’s and other liens, and claims thereof,
arising out of any work performed, materials furnished or obligations incurred
by or for Lessee. Lessee shall indemnify and defend with counsel acceptable to
Lessor and hold Lessor harmless from and against any liens, demands, claims,
actions, suits, proceedings, orders, losses, costs, damages, liabilities,
penalties, expenses, judgments or encumbrances (including without limitation,
attorneys’ fees) arising out of any work or services performed or materials
furnished by or at the direction of Lessee or Lessee’s Agents or any contractor
employed by Lessee with respect to the Premises. Should any claims of lien
relating to work performed, materials furnished or obligations incurred by
Lessee be filed against, or any action be commenced affecting the Premises, any
part of the Project, and/or Lessee’s interest therein, Lessee shall give Lessor
notice of such lien or action within three (3) days after Lessee receives notice
of the filing of the lien or the commencement of the action. If Lessee does not,
within twenty (20) days following the imposition of any such lien, cause such
lien to be released of record by payment or posting of a proper bond, Lessor
shall have, in addition to all other remedies provided herein and by law, the
right, but not the obligation, to cause the same to be released by such means as
it shall deem proper, including by payment of the claim giving rise to such lien
or by posting a proper bond, or by requiring Lessee to post for Lessor’s benefit
a bond, surety, or cash amount equal to one and one-half (1-1/2) times the
amount of lien and sufficient to release the Premises and Project from the lien.
All sums paid by Lessor pursuant to this Article 12 and all expenses incurred by
it in connection therewith including attorneys’ fees and costs shall be payable
to Lessor by Lessee as additional rent on demand.

 

13. ASSIGNMENT AND SUBLETTING

 

a. Prohibitions in General. Lessee shall not (whether voluntarily,
involuntarily, or by operation of law) assign this Lease or allow all or any
part of the Premises to be sublet, without Lessor’s prior written consent in
each instance, which consent shall not be unreasonably withheld, subject,
nevertheless, to the provisions of this Article 13. Notwithstanding anything to
the contrary contained herein, Lessee shall have the right without Lessor’s
prior consent and without being subject to Article 13.e. or l3.g. below, but
upon not less than fifteen (15) days prior written notice to Lessor, to assign
this Lease or sublet the Premises to any entity (i) controlling, controlled by
or having fifty percent (50%) or more common control with Lessee, or (ii)
resulting from a merger or consolidation with Lessee or acquiring all of the
assets and/or stock of Lessee; provided that any such entity shall have a
tangible net worth no less than the greater of Lessee’s tangible net worth as of
the execution of this Lease or the time of such proposed assignment or
subletting, and shall assume the obligations and liabilities of Lessee under
this Lease, and no such assignment or sublease shall in any manner release
Lessee from its primary liability under this Lease. Except for an allowed
assignment or subletting pursuant to the foregoing provisions of this Article
l3.a., Lessee shall not (whether voluntarily, involuntarily, or by operation of
law) (i) allow all or any part of the Premises to be occupied or used by any
person or entity other than Lessee, (ii) transfer any right appurtenant to this

 

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Lease or the Premises, (iii) mortgage, hypothecate or encumber the Lease or
Lessee’s interest in the Lease or Premises (or otherwise use the Lease as a
security device) in any manner, or (iv) permit any person to assume or succeed
to any interest whatsoever in this Lease, without Lessor’s prior written consent
in each instance, which consent may be withheld in Lessor’s sole and absolute
discretion.

 

Any assignment, sublease, hypothecation, encumbrance, or transfer (collectively
“Transfer”) without Lessor’s consent shall constitute a default by Lessee and
shall be voidable. Lessor’s consent to any one Transfer shall not constitute a
waiver of the provisions of this Article 13 as to any subsequent Transfer nor a
consent to any subsequent Transfer. The provisions of this subsection l3.a.
expressly apply to all heirs, successors, sublessees, assigns and transferees of
Lessee. If Lessor consents to a proposed Transfer, such Transfer shall be valid
and the transferee shall have the right to take possession of the Premises only
if the Assumption Agreement described in subsection l3.c. below is executed and
delivered to Lessor, Lessee has paid the costs and fees described in subsection
13.i. below, and an executed counterpart of the assignment, sublease or other
document evidencing the Transfer is delivered to Lessor and such transfer
document contains the same terms and conditions as stated in Lessee’s notice
given to Lessor pursuant to subsection 13.d. below, except for any such
modifications Lessor has consented to in writing. The acceptance of Rentals by
Lessor from any person or entity other than Lessee shall not be deemed to be a
waiver by Lessor of any provision of this Lease or to be a consent to any
Transfer.

 

b. Collection of Rent. Lessee irrevocably assigns to Lessor, as security for
Lessee’s obligations under this Lease, all rent not otherwise payable to Lessor
by reason of any Transfer of all or any part of the Premises or this Lease.
Lessor, as assignee of Lessee, or a receiver for Lessee appointed on Lessor’s
application, may collect such rent and apply it toward Lessee’s obligations
under this Lease; provided, however, that until the occurrence of any default by
Lessee or except as provided by the provisions of subsection 13 .f. below,
Lessee shall have the right to collect such rent.

 

c. Assumption Agreement. As a condition to Lessor’s consent to any Transfer of
Lessee’s interest in this Lease or the Premises, Lessee and Lessee’s assignee,
sublessee, encumbrancer, hypothecate, or transferee (collectively “Transferee”),
shall execute a written Assumption Agreement, in a form approved by Lessor,
which Agreement shall include a provision that Lessee’s Transferee shall
expressly assume all obligations of Lessee under this Lease, and shall be and
remain jointly and severally liable with Lessee for the performance of all
conditions, covenants, and obligations under this Lease from the effective date
of the Transfer of Lessee’s interest in this Lease (except that as to a
subletting, such Assumption Agreement shall relate only to performance of
Lessee’s non-rent payment obligations under this Lease relating to the portion
of the Premises subleased). In no event shall Lessor have any obligation to
materially amend or modify this Lease in connection with any proposed Transfer,
including, without limitation, amending or modifying the use restriction set
forth in subsection 8.a. above.

 

d. Request for Transfer. Lessee shall give Lessor at least forty-five (45) days
prior written notice of any desired Transfer and of the proposed terms of such
Transfer, including but not limited to: the name and legal composition of the
proposed Transferee; an audited financial statement of the proposed Transferee
prepared in accordance with generally accepted accounting principles within one
year prior to the proposed effective date of the Transfer; the nature of the
proposed Transferee’s business to be carried on in the Premises; the payment to
be made or other consideration to be given on account of the Transfer; and other
such pertinent information as may be requested by Lessor, all in sufficient
detail to enable Lessor to evaluate the proposed Transfer and the prospective
Transferee. Lessee’s notice shall not be deemed to have been served or given
until such time as Lessee has provided Lessor with all information specified
above and all additional information requested by Lessor pursuant to this
subsection 13.d. Lessee shall immediately notify Lessor of any modification to
the proposed terms of such Transfer.

 

e. Excess Consideration. In the event of any Transfer, Lessor shall receive as
additional rent hereunder, fifty percent (50%) of Lessee’s “Excess
Consideration” derived from such Transfer. If Lessee shall elect to Transfer,
Lessee shall use reasonable and good faith efforts to secure consideration from
any such Transferee which would be generally equivalent to then-current market
rent, but in no event shall Lessee’s monetary obligations to Lessor, as set
forth in this Lease, be reduced. As used herein, “Excess Consideration” shall
mean all rent, additional rent, key money, bonus money and/or other
consideration (including, without limitation, any payment in excess of fair
market value for services rendered by Lessee to the Transferee for assets,
fixtures, inventory, equipment, or furniture transferred by Lessee to the
Transferee in connection with the Transfer) received by Lessee from a Transferee
and/or paid by a Transferee on behalf of Lessee in connection with the Transfer
in excess of the rent, additional rent and other sums payable by Lessee under
this Lease (on a per square foot basis if less than all of the Premises is
subject to such Transfer), less the sum of Lessee’s reasonable out-of-pocket
costs incurred for brokerage commissions, attorneys’ fees and any Alterations to
the Premises in connection with such Transfer. If part of the Excess
Consideration shall be payable by the Transferee other than in cash, then
Lessor’s share of such non-cash consideration shall be in such form as is
reasonably satisfactory to Lessor.

 

f. Standards for Consent. Without otherwise limiting the criteria upon which
Lessor may withhold its consent to any proposed Transfer, the parties hereby
agree that it shall be deemed presumptively reasonable for Lessor to withhold
its consent to a proposed Transfer if:

 

(i) The proposed Transferee’s net worth (according to generally accepted
accounting principles) is not sufficient in Lessor’s business judgment given the
obligations to be performed by the proposed Transferee pursuant to the proposed
Transfer;

 

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(ii) The proposed Transferee’s use of the Premises is inconsistent with the
permitted use of the Premises set forth in this Lease or the proposed Transferee
is of a character or reputation which is not consistent with the quality of the
Building or Project;

 

(iii) As to a Transfer of less than all of the Premises, the space to be
Transferred is not regular in shape with appropriate means of ingress and egress
suitable for normal leasing purposes;

 

(iv) The proposed Transferee is a governmental agency or instrumentality thereof
or a person or entity (or an affiliate thereof) currently leasing or occupying
space within the Project or with whom Lessor is then negotiating for the lease
or occupancy of space within the Project;

 

(v) Lessee is in default under this Lease at the time Lessee requests consent to
the proposed Transfer;

 

(vi) The proposed Transfer will result in more than a reasonable and safe number
of occupants per floor within the space proposed to be Transferred or will
result in insufficient parking for the Building; or

 

(vii) For any Transfer proposed to be entered into during the initial year
following the Commencement Date, the rent proposed to be payable by the proposed
Transferee will be less (on a per square foot of Rentable Area basis) than the
average net effective rent payable by Lessee under this Lease.

 

g. Right of Recapture. In addition to and without limitation upon, the other
rights of Lessor in the event of a proposed Transfer by Lessee pursuant to this
Article 13, in the event of a proposed Transfer by Lessee, Lessor may elect (by
written notice delivered to Lessee within thirty (30) days following Lessee’s
submission to Lessor of all information required pursuant to subsection l3.d.
above) to terminate this Lease effective as of the date Lessee proposes to enter
into such Transfer (or in the case of a proposed Transfer of less than all of
the Premises, terminate this Lease as to the portion of the Premises proposed to
be Transferred as of the date of such proposed Transfer). Nothing contained in
this Article shall be deemed to nullify Lessor’s right to elect to terminate
this Lease in accordance with this subsection l3.g. including, but not limited
to, Lessor’s failure to exercise the right to terminate this Lease with respect
to any previous Transfer. Further, Lessee understands and acknowledges that
Lessor’s option to terminate this Lease rather than approve a proposed Transfer
is a material inducement for Lessor’s agreeing to lease the Premises to Lessee
upon the terms and conditions herein set forth and is deemed a reasonable
limitation upon Lessee’s right to enter into a Transfer.

 

h. Corporations and Partnerships. If Lessee is a partnership, a withdrawal or
substitution (whether voluntary, involuntary, or by operation of law and whether
occurring at one time or over a period of time) of any partner(s) owning
twenty-five percent (25%) or more of the partnership, any assignment(s) of
twenty-five percent (25%) or more (cumulatively) of any interest in the capital
or profits of the partnership, or the dissolution of the partnership shall be
deemed a Transfer of this Lease. If Lessee is a corporation, limited liability
company or other entity, any dissolution, merger, consolidation or other
reorganization of Lessee, any sale or transfer (or cumulative sales or
transfers) of the capital stock of or equity interests in Lessee in excess of
twenty-five percent (25%) or any sale (or cumulative sales) of more than fifty
percent (50%) of the value of the assets of Lessee shall be deemed a Transfer of
this Lease. This subsection 13.h. shall not apply to corporations the capital
stock of which is publicly traded.

 

i. Attorneys’ Fees and Costs. Lessee shall pay, as additional rent, Lessor’s
actual costs and attorneys’ fees incurred for reviewing, investigating,
processing and/or documenting any requested Transfer, whether or not Lessor’s
consent is granted.

 

j. Miscellaneous. Regardless of Lessor’s consent, no Transfer shall release
Lessee of Lessee’s obligations under this Lease or alter the primary liability
of Lessee to pay the Rentals and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of Rentals by Lessor from any
other person shall not be deemed to be a waiver by Lessor of any provision
hereof. Upon default by any assignee of Lessee or any successor of Lessee in the
performance of any of the terms hereof, Lessor may proceed directly against
Lessee without the necessity of exhausting remedies against said assignee or
successor. Lessor may consent to subsequent assignments or subletting of this
Lease or amendments or modifications to this Lease with any assignee of Lessee,
without notifying Lessee, or any successor of Lessee, and without obtaining its
or their consent thereto and such action shall not relieve Lessee of liability
under this Lease.

 

k. Reasonable Provisions. Lessee acknowledges that, but for Lessee’s identity,
financial condition and ability to perform the obligations of Lessee under the
Lease, Lessor would not have entered into this Lease nor demised the Premises in
the manner set forth in this Lease, and that in entering into this Lease, Lessor
has relied specifically on Lessee’s identity, financial condition,
responsibility and capability of performing the obligations of Lessee under the
Lease. Lessee acknowledges that Lessor’s rights under this Article 13, including
the right to terminate this Lease or withhold consent to certain Transfers in
Lessor’s sole and absolute discretion, are reasonable, agreed upon and bargained
for rights of Lessor and that the Rentals set forth in the Lease have taken into
consideration such rights. Lessee expressly agrees that the provisions of this
Article 13 are not unreasonable standards or conditions for purposes of Section
1951.4(b)(2) of the California Civil Code, as amended from time to time, under
the Federal Bankruptcy Code or for any other purpose.

 

14. HOLD HARMLESS. Lessee shall to the fullest extent permitted by law,
indemnify, defend with counsel acceptable to Lessor, and hold Lessor and
Lessor’s employees, agents, partners, officers, directors and shareholders
harmless from and against any and all claims, damages, losses, liabilities,
penalties, judgments, and costs and

 

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expenses (including, without limitation, attorneys’ fees) and any suit, action
or proceeding brought pursuant thereto (collectively, “Claims”), including,
without limitation, Claims for property damage, or personal injury including
death, arising out of (i) Lessee’s use of the Premises or any part thereof, or
any activity, work or other thing done in or about the Premises, (ii) any breach
or default in the performance of any obligation on Lessee’s part to be performed
under the terms of this Lease, (including, without limitation, a failure to
maintain insurance as provided in Article 16), or (iii) any act or negligence of
the Lessee or Lessee’s Agents.

 

The indemnity herein shall extend to the costs and expenses incurred by Lessor
for administrative expenses, consultant fees, expert costs, investigation
expenses and costs incurred in settling indemnified claims, whether such costs
occurred before or after any litigation is commenced, provided that any such
settlement shall be subject to Lessee’s prior written approval, which approval
shall not be unreasonably withheld, conditioned or delayed. The obligations of
Lessee pursuant to this Article 14 and elsewhere in this Lease with respect to
indemnification of Lessor shall survive the Lease Termination and shall continue
in effect until any and all claims, actions or causes of action with respect to
any of the matters indemnified against are fully and finally barred by the
applicable statute of limitations. In no event shall any of insurance provisions
set forth in Article 16 of this Lease be construed as any limitation on the
scope of indemnification set forth herein.

 

As a material part of the consideration to Lessor, as between Lessee and Lessor,
Lessee hereby assumes all risk of damage or loss to property or injury or death
to person in, upon or about all portions of the Project from any cause except as
hereinafter stated. Lessor or its agents shall not be liable for any damage or
loss to property encrusted to Lessor’s employees nor for loss or damage to any
property of Lessee or Lessee’s Agents by theft or otherwise, nor for any injury
or death to Lessee or any of Lessee’s Agents or for damage or loss to persons or
property of Lessee or any of Lessee’s Agents resulting from any accident,
casualty or condition occurring in or about any portion of the Project, or to
any equipment, appliances or fixtures of Lessee or any of Lessee’s Agents
therein. Lessee’s assumption of risk and the exculpation of Lessor pursuant
hereto is unqualified with the single exception that it shall not apply to the
portion of any claim, damage or loss to the extent arising out of Lessor’s
negligence or willful misconduct and which is not covered by the insurance
required to be maintained by Lessee pursuant to this Lease. Lessor or its agents
shall not be liable for interference with the light or other incorporeal
hereditaments, nor shall Lessor be liable for any latent defect in the Premises
or in the Building (subject to Lessor’s obligations pursuant to Article
4.b.(i)(A) above respecting repair of existing leakage). Notwithstanding any
other provision of this Lease, in no event shall Lessor have any liability for
loss of business (including, without limitation, lost profits) by Lessee. Lessee
shall give prompt written notice to Lessor in case of fire or accidents in the
Premises or in the Building or of defects therein or in the fixtures or
equipment.

 

If, by reason of any act or omission of Lessee or Lessee’s Agents, Lessor is
made a party defendant to any litigation concerning this Lease or any part of
the Project or otherwise, Lessee shall indemnify, defend with counsel acceptable
to Lessor, and hold Lessor harmless from any liability and damages incurred by
(or threatened against) Lessor as a party defendant, including without
limitation all damages, costs and expenses, including attorneys’ fees.

 

15. SUBROGATION. Lessor releases Lessee and Lessee’s officers, directors,
agents, employees, partners and shareholders from any and all claims or demands
for damages, loss, expense or injury arising out of any perils to the extent
covered by insurance carried by Lessor, or that are due to the negligence of
Lessee or Lessee’s officers, directors, agents, employees, partners and
shareholders and regardless of cost or origin, to the extent such waiver is
permitted by Lessor’s insurers and does not prejudice the insurance required to
be carried by Lessor under this Lease. Lessee releases Lessor and Lessor’s
officers, directors, agents, employees, partners and shareholders from any and
all claims or demands for damages, loss, expense or injury arising out of any
perils which are insured against under any insurance carried by Lessee, whether
due to the negligence of Lessor or its officers, directors, agents, employees,
partners and shareholders and regardless of cost or origin, to the extent such
waiver is permitted by Lessee’s insurers and does not prejudice the insurance
required to be carried by Lessee under this Lease.

 

16. LESSEE’S INSURANCE.

 

a. Lessee shall, at Lessee’s expense, obtain and keep in force during the Term a
policy of commercial general liability insurance, including the broad form
endorsement, insuring Lessor and Lessee against any liability arising out of the
use, occupancy, maintenance, repair or improvement of the Premises and out of
the use of the Common Areas by Lessee, any subtenant of Lessee and any of
Lessee’s or such subtenant’s employees, agents, contractors or invitees. Such
insurance shall provide single limit liability coverage of not less than Five
Million Dollars ($5,000,000.00) per occurrence for bodily injury or death and
property damage. Such insurance shall name Lessor’s request, Lessor’s mortgagee,
each as an additional insured, and shall provide that Lessor and any such
mortgagee, although an additional insured, may recover for any loss suffered by
Lessor or Lessor’s agents by reason of Lessee’s or Lessee’s Agent’s negligence.
All such insurance shall be primary and non-contributing with respect to any
insurance maintained by Lessor and shall specifically insure Lessee’s
performance of the indemnity and hold harmless agreements contained in Article
14 above although Lessee’s obligations pursuant to Article 14 shall not be
limited to the amount of any insurance required of or carried by Lessee under
this Article 16 and Lessee is responsible for ensuring that the amount of
liability insurance carried by Lessee is sufficient for Lessee’s purposes.
Lessee may carry said insurance under a blanket policy provided that such policy
conforms with the requirements specified in this Article and the coverage
afforded Lessor is not diminished thereby.

 

b. Lessee acknowledges and agrees that insurance coverage carried by Lessor will
not cover Lessee’s property within the Premises or within the Building. Lessee
shall, at Lessee’s expense, obtain and keep in force during the Term a policy of
“All Risk” property insurance, including without limitation, coverage for
earthquake and flood (provided that Lessee may elect to self-insure for
earthquake and flood); boiler and machinery (if applicable); sprinkler damage;
vandalism; malicious mischief; and demolition, increased cost of construction
and

 

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contingent liability from changes in building laws on all leasehold improvements
installed in the Premises by Lessee at its expense (if any), and on all
equipment, trade fixtures, inventory, fixtures and personal property located on
or in the Premises, including improvements or fixtures hereinafter constructed
or installed on the Premises. Such insurance shall be in an amount equal to the
full replacement cost of the aggregate of the foregoing and shall provide
coverage comparable to the coverage in the Standard ISO All Risk form, when such
form is supplemented with the coverage required above.

 

c. If Lessee fails to procure and maintain any insurance required to be procured
and maintained by Lessee pursuant to this Lease, Lessor may, but shall not be
required to, procure and maintain all or any portion of the same, at the expense
of Lessee. Lessor’s election pursuant to this subsection 16.c. to procure and
maintain all or any portion of the insurance which Lessee fails to procure and
maintain is acknowledged by Lessee to be for Lessor’s sole benefit. Lessee
acknowledges that any insurance procured and maintained by Lessor pursuant to
this subsection 16.c. may not be sufficient to adequately protect Lessee. Any
personal property insurance procured and maintained by Lessor for Lessee’s
equipment, trade fixtures, inventory, fixtures and personal property located on
or in the Premises, including improvements or fixtures hereinafter constructed
or installed on the Premises, may not sufficiently cover the replacement cost
thereof. Any insurance procured and maintained by Lessor pursuant to this
subsection l6.c. may provide for less coverage than is required to be maintained
by Lessee pursuant to this Lease. Lessee acknowledges and agrees that Lessee is
and shall remain solely responsible for procuring insurance sufficient for
Lessee’s purposes, notwithstanding the fact that Lessor has procured or
maintained any insurance pursuant to this subsection 16.c. Any insurance
required to be maintained by Lessee hereunder shall be in companies with a
security rating of A or better, and a financial size category rating of X or
better, in the then most recently published “Best’s Insurance Guide”. Prior to
occupancy of the Premises (and thereafter annually with respect to renewals, not
later than thirty (30) days prior to expiration of then existing policies),
Lessee shall deliver to Lessor certificates evidencing the existence and amount
of the policies of insurance required to be kept by Lessee hereunder and current
payment of premiums. No policy shall be cancelable or subject to reduction of
coverage except after thirty (30) days prior written notice to Lessor.

 

d. Not more frequently than once every year, Lessee shall increase the amounts
of insurance as recommended by Lessor’s insurance broker provided that the
amount of insurance recommended by such broker shall not exceed the amount
customarily required of tenants in comparable projects located within Cupertino,
California. Any limits set forth in this Lease on the amount or type of coverage
required by Lessee’s insurance shall not limit the liability of Lessee under
this Lease.

 

17. SERVICES AND UTILITIES. Provided that Lessee is not in default hereunder,
Lessor agrees to furnish to the Premises during the hours of 7:00 a.m. to 6:00
p.m., Monday through Friday, other than recognized Building holidays
(collectively, “Building Hours”), and subject to the rules and regulations of
the Building of which the Premises are a part, electricity for normal lighting,
water, heat, air-conditioning and elevator service which are required in
Lessor’s good faith judgment for the comfortable use and occupation of the
Premises. During recognized business days for the Building, and subject to the
reasonable rules and regulations of the Building and Project, Lessor shall
furnish to the Premises and the Common Areas, janitorial service, window
washing, fluorescent tube replacement and toilet supplies; provided, however,
Lessor shall not be required to provide janitorial services for any portion of
the Premises to the extent required as a result of the preparation or
consumption of food or beverages (provided that nothing in this paragraph shall
be construed as a consent by Lessor to the preparation or consumption of such
food or beverages unless otherwise expressly provided elsewhere in this Lease).
Lessor shall also maintain and keep lighted during such hours the common stairs,
common entries and toilet rooms in the Building. Lessor shall not be liable for,
and Lessee shall not be entitled to, any reduction of Rentals by reason of
Lessor’s failure to furnish any of the foregoing when such failure is caused by
casualty, Act of God, accident, breakage, repairs, strikes, lockouts or other
labor disturbances or labor disputes of any character, or by any other cause,
similar or dissimilar, beyond the reasonable control of Lessor. Lessor shall not
be liable under any circumstances for injury to or death of or loss or damage to
persons or property or damage to Lessee’s business, however occurring, through
or in connection with or incidental to failure to furnish any of the foregoing.
Wherever heat generating machines or equipment are used in the Premises which
affect the temperature otherwise maintained by the air conditioning system,
Lessor reserves the right to install supplementary air conditioning units in the
Premises and the cost thereof, including the cost of installation and the cost
of operation and maintenance thereof, shall be paid by Lessee to Lessor upon
demand by Lessor as additional rent. The costs of all utilities and services
furnished by Lessor to Lessee pursuant to this Article 17 which are not
specified as being reimbursed or paid directly by Lessee shall be included as
items of Building Operating Expenses.

 

Lessee will not, without the prior written consent of Lessor, use or permit the
use of any apparatus or device in or upon the Premises (including, but without
limitation thereto, machines using in excess of 120 volts), which will in any
way increase the amount of gas, electricity or water usually furnished or
supplied for the use of the Premises as general office space (which, as to
electricity consumption, the parties hereby agree to mean not more than three
(3) watts per square foot of usable area on a demand load basis); nor will
Lessee connect or permit connection of any apparatus or device for the purpose
of using gas, electric current or water with electric current, gas or water
supply lines, except for electricity through existing electrical outlets in the
Premises. If Lessee requires water or electric current in excess of that usually
furnished or supplied for the use of the Premises as general office space,
Lessee shall first procure the written consent of Lessor (which consent may be
granted or withheld in Lessor’s sole and absolute discretion), to the use
thereof and Lessor may cause a water or gas meter or electric current meter to
be installed in the Premises so as to measure the amount of water, gas and
electric current consumed for any such use. The cost of any such meters and of
installation, maintenance and repair thereof shall be paid for by the Lessee and
Lessee agrees to pay to Lessor, as additional rent, promptly upon demand
therefor by Lessor for all such water, gas and electric current consumed as
shown by said meters, at the rates charged for such services by the local public
utility furnishing the same, plus any additional expense incurred in keeping
account

 

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of the water, gas and electric current so consumed. If a separate meter is not
installed, such excess cost for such water, gas and electric current will be
conclusively established by an estimate made by a utility company or electrical
engineer selected by Lessor.

 

If requested by Lessee upon reasonable prior notice to Lessor, heating,
ventilation and air conditioning (“HVAC”) service shall be provided to the
Premises other than during Building Hours, provided that Lessee shall pay to
Lessor for each such hour of HVAC service during non-Building Hours, the then
prevailing charge by Lessor for such service on such floor (which shall equal
Lessor’s determination, in Lessor’s reasonable business judgment, of the actual
cost of providing such non-Building Hours HVAC service, including, without
limitation, a reasonable administrative charge for items including, without
limitation, reasonable wear and tear and depreciation). Amounts payable by
Lessee hereunder shall be paid as additional rent within thirty (30) days
following Lessee’s receipt of Lessor’s billing therefor. However, Lessor shall
train security personnel of Lessee on the use of the controls for providing HVAC
service to the Premises during times other than Building Hours so as to allow
Lessee to directly access such non-Building Hours service without the
requirement of providing reasonable prior notice to Lessor.

 

The parties shall reasonably cooperate to endeavor to coordinate Lessee’s
security systems with Lessor’s existing security system to achieve acceptable
levels of security for both parties. To the extent Lessee desires additional
security beyond that which is provided by Lessor, Lessee may provide such
additional security at Lessee’s expense, so long as such additional security
does not interfere with the security provided by Lessor (which additional
security may include installation of access control system at any Premises
entrances located on the Building exterior, subject to the provisions of this
Lease governing Lessee’s making of Alterations). Lessee shall be permitted
access to the Building on a twenty-four (24) hours per day, seven (7) days per
week basis.

 

18. RULES AND REGULATIONS. Lessee shall faithfully observe and comply with the
rules and regulations that Lessor shall from time to time promulgate for the
Building and the Project. Lessor reserves the right from time to time to make
all reasonable modifications to said rules and regulations. The additions and
modifications to these rules and regulations shall be binding upon Lessee upon
delivery of a copy of them to Lessee. Lessor shall not be responsible to Lessee
for the non-performance of any said rules by any other tenants or occupants. The
current “Rules and Regulations” are attached hereto as Exhibit “D”.

 

19. HOLDING OVER. If Lessee remains in possession of the Premises or any part
thereof after Lease Termination, with the express written consent of Lessor,
such occupancy shall be a tenancy from month to month at a Base Rent in the
amount of one hundred fifty percent (150%) of the Base Rent in effect
immediately preceding such Lease Termination, plus all other rental charges
payable hereunder, and upon all the terms hereof applicable to a month to month
tenancy. In such case, either party may thereafter terminate this Lease at any
time upon giving not less than thirty (30) days written notice to the other
party. For any possession of the Premises after the Lease Termination without
Lessor’s consent, Lessee shall be liable for all detriment proximately caused by
Lessee’s possession, including without limitation, attorneys’ fees, costs and
expenses, claims of any succeeding tenant founded on Lessee’s failure to vacate
and for payment to Lessor of Base Rent in an amount equal to the greater of (a)
two hundred percent (200%) of the Base Rent in effect immediately preceding such
Lease Termination, or (b) the fair market rental value for the Base Rent for the
Premises, together with such other Rentals provided in this Lease to the date
Lessee actually vacates the Premises, and such other remedies as are provided by
law, in equity or under this Lease, including without limitation punitive
damages recoverable under California Code of Civil Procedure Section 1174.

 

20. ENTRY BY LESSOR. Lessor reserves and shall at any and all reasonable times
have the right to enter the Premises, inspect the same, supply janitorial
service and any other service to be provided by Lessor to Lessee hereunder, to
submit said Premises to prospective purchasers, mortgagees, lenders or tenants,
to post notices of non-responsibility, and to alter, improve or repair the
Premises and any portion of the Building that Lessor may deem necessary or
desirable, without any abatement of Rentals, and may for such purposes erect
scaffolding and other necessary structures where reasonably required by the
character of the work to be performed, provided that the entrance to the
Premises shall not be unreasonably blocked thereby, and further provided that
the business of the Lessee shall not be interfered with unreasonably. In no
event shall Lessor have any liability to Lessee for, and Lessee hereby waives
any claim for, damages or for any injury or inconvenience to or interference
with Lessee’s business, any loss of occupancy or quiet enjoyment of the
Premises, and any other damage or loss occasioned thereby. Any such entry by
persons not having “Sun Screen” approval from Lessee shall require reasonable
prior oral or written notice to Lessee (except that no such prior notice shall
be required in the event of an emergency). Lessee may accompany the persons
conducting any such entry during the course of such entry (provided that such
accompaniment by Lessee shall not be a condition to any such entry so long as
Lessee has received prior notice of such entry and such entry is conducted in
the presence of a person having “Sun Screen” approval from Lessee). For each of
the aforesaid purposes, Lessor shall at all times have and retain a key with
which to unlock all of the doors in, upon and about the Premises, excluding
Lessee’s vaults, safes, files, laboratories and/or server rooms (if any, as
designated by Lessee), and Lessor shall have the right to use any and all means
which Lessor may deem proper to open said doors in an emergency in order to
obtain entry to the Premises, without liability to Lessee except for any failure
to exercise due care for Lessee’s property under the circumstances of each
entry. Any entry to the Premises obtained by Lessor by any of said means or
otherwise shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into, or a detainer of, the Premises, or an eviction
of Lessee from the Premises or any portion thereof. If Lessee has removed
substantially all of Lessee’s property from the Premises, Lessor may, without
abatement of Rentals, enter the Premises for alteration, renovation or
decoration during the last thirty (30) days of the Term. With respect to any
entry by Lessor into the Premises, Lessor shall be liable to Lessee solely for
physical damage caused to Lessee’s personal property located within the Premises
to the extent such damage is caused by Lessor’s active negligence or willful
misconduct and which is not covered by

 

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the insurance required to be maintained by Lessee pursuant to this Lease, and
only with respect to an entry in an non-emergency situation.

 

21. RECONSTRUCTION. If the Premises are damaged and rendered substantially
untenantable, or if the Building is damaged (regardless of damage to the
Premises) or destroyed, Lessor may, within ninety (90) days after the casualty,
notify Lessee of Lessor’s election not to repair, in which event this Lease
shall terminate at the expiration of the ninetieth (90th) day. If Lessor elects
to repair the damage or destruction, this Lease shall remain in effect and the
then current Base Rent and Lessee’s Percentage Share of Building Expenses shall
be proportionately reduced during the period of repair. The reduction shall be
based upon the extent to which the making of repairs interferes with Lessee’s
business conducted in the Premises, as reasonably determined by Lessor. All
other Rentals due hereunder shall continue unaffected, and Lessee shall have no
claim against Lessor for compensation for inconvenience or loss of business
during any period of repair or reconstruction. Lessee shall continue the
operation of its business on the Premises during any period of reconstruction or
repair to the extent reasonably practicable from the standpoint of prudent
business management. Upon Lessor’s election to repair, Lessor shall diligently
repair the damage to the extent of insurance proceeds available to Lessor.
Lessor shall not be required to repair or replace, whether injured or damaged by
fire or other cause, any items required to be insured by Lessee under this Lease
including Lessee’s fixtures, equipment, merchandise, personal property,
inventory, panels, decoration, furniture, railings, floor covering, partitions
or any other improvements, alterations, additions, or property made or installed
by Lessee to the Premises, and Lessee shall be obligated to promptly rebuild or
restore the same to the same condition as they were in immediately before the
casualty. Lessee hereby waives all claims for loss or damage to the foregoing.
Lessee waives any rights to terminate this Lease if the Premises are damaged or
destroyed, including without limitation any rights pursuant to the provisions of
Subdivision 2 of Section 1932 and Subdivision 4 of Section 1933 of the Civil
Code of California, as amended from time to time, and the provisions of any
similar law hereinafter enacted. If the Lease is terminated by Lessor pursuant
to this Article 21, any Rentals unearned as of the effective date of termination
shall be refunded to Lessee. Lessee shall pay to Lessor any Rentals or other
charges due Lessor under the Lease, prorated as of the effective date of
termination. Notwithstanding anything to the contrary in the foregoing, if the
damage is due to the fault or neglect of Lessee, or Lessee’s Agents, there shall
be no abatement of Base Rent or any other Rentals.

 

Notwithstanding the foregoing, if less than thirty-three percent (33%) of the
Rentable Area of the Building is damaged from an insured casualty and the
insurance proceeds actually available to Lessor for reconstruction (net of costs
to recover such proceeds and after all claimants thereto including lienholders
have been satisfied or waive their respective claims) (“Net Insurance Proceeds”)
are sufficient to completely restore the Building, Lessor agrees to make such
reparations and continue this Lease in effect. If, upon damage of less than
thirty-three percent (33%) of the Rentable Area of the Building there are not
sufficient insurance proceeds actually available to allow Lessor to completely
restore the Building, Lessor shall not be obligated to repair the Building and
the provisions of the first paragraph of this Article shall control.

 

Lessee shall not be entitled to any compensation or damages from Lessor for loss
of the use of the whole or any part of the Premises, or for any damage to
Lessee’s business, or any inconvenience or annoyance occasioned by such damage,
or by any repair, reconstruction or restoration by Lessor, or by any failure of
Lessor to make any repairs, reconstruction or restoration under this Article or
any other provision of this Lease.

 

22. DEFAULT. The occurrence of any one or more of the following events shall
constitute a material default and breach of this Lease by Lessee:

 

a. Lessee’s failure to pay when due Base Rent or any other Rentals or other sums
payable hereunder where such failure is not cured within three (3) days
following Lessor’s delivery of written notice thereof (which notice shall be in
lieu of, and not in addition to, any notice required under applicable laws,
including, without limitation, notices required under California Code of Civil
Procedure Section 1161 or any similar or successor statute);

 

b. Lessee’s failure to occupy and use the Premises for thirty (30) consecutive
days, which failure shall deem an abandonment of the Premises by Lessee;

 

c. Commencement, and continuation for at least thirty (30) days, of any case,
action, or proceeding by, against, or concerning Lessee, or any guarantor of
Lessee’s obligations under this Lease (“Guarantor”), under any federal or state
bankruptcy, insolvency, or other debtor’s relief law, including without
limitation, (i) a case under Title 11 of the United States Code concerning
Lessee, or a Guarantor, whether under Chapter 7, 11, or 13 of such Title or
under any other Chapter, or (ii) a case, action, or proceeding seeking Lessee’s
or a Guarantor’s financial reorganization or an arrangement with any of Lessee’s
or a Guarantor’s creditors;

 

d. Voluntary or involuntary appointment of a receiver, trustee, keeper, or other
person who takes possession for more than thirty (30) days of substantially all
of Lessee’s or a Guarantor’s assets, or of any asset used in Lessee’s business
on the Premises, regardless of whether such appointment is as a result of
insolvency or any other cause;

 

e. Execution of an assignment for the benefit of creditors of substantially all
assets of Lessee or a Guarantor available by law for the satisfaction of
judgment creditors;

 

f. Commencement of proceedings for winding up or dissolving (whether voluntary
or involuntary) the entity of Lessee or a Guarantor, if Lessee or such Guarantor
is a corporation, partnership, limited liability company or other entity;

 

 

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g. Levy of a writ of attachment or execution on Lessee’s interest under this
Lease, if such writ continues for a period of ten (10) days;

 

h. Any Transfer or attempted Transfer of this Lease by Lessee contrary to the
provisions of Article 13 above which is not nullified or rescinded within ten
(10) days following Lessor’s delivery of written notice thereof;

 

i. With respect to any report that Lessee is required to submit hereunder, the
wilful submission by Lessee of a report which Lessee knows to be materially
inaccurate;

 

j. The use or occupancy of the Premises for any use or purpose not specifically
allowed by the terms of this Lease which is not cured within ten (10) days
following Lessor’s delivery of written notice thereof;

 

k. Breach by Lessee of any term, covenant, condition, warranty, or provision
contained in this Lease or of any other obligation owing or due to Lessor other
than as described in subsections 22.a., b., c., d., e., f., g., h., i. or j. of
this Article 22, where such failure shall continue for the period specified in
this Lease or if no such period is specified, for a period of thirty (30) days
after written notice thereof by Lessor to Lessee; provided, however, that if the
nature of Lessee’s default is such that more than thirty (30) days are
reasonably required for its cure, Lessee shall not be deemed to be in default if
Lessee commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion, and if Lessee provides Lessor
with such security as Lessor may require to fully compensate Lessor for any loss
or liability to which Lessor might be exposed; provided that any such notice
from Lessor shall be in lieu of, and not in addition to, any notice required
under applicable laws, including, without limitation, notices required under
California Code of Civil Procedure Section 1161 or any similar or successor
statute; or

 

l. The occurrence of any default by Lessee which is not cured within any
applicable period for cure as set forth in that certain Net Office Lease entered
into by Lessee, as “Lessee”, and Lessor, as “Lessor”, concurrently herewith,
respecting the lease of certain premises located at floors one (1) through eight
(8) of the building located at 20450 Stevens Creek Boulevard, Cupertino,
California.

 

23. REMEDIES UPON DEFAULT. Upon any default or breach by Lessee which is not
cured within any applicable period for cure pursuant to Article 22 above, at any
time thereafter, with or without notice or demand, and without limiting Lessor
in the exercise of any right or remedy which Lessor may have hereunder or
otherwise at law or in equity by reason of such default or breach Lessor may do
the following:

 

a. Termination of Lease. Lessor may terminate this Lease or Lessee’s right to
possession of the Premises by notice to Lessee or any other lawful means, in
which case this Lease shall terminate and Lessee shall immediately surrender
possession of the Premises to Lessor. In such event Lessor shall be entitled to
recover from Lessee:

 

(i) The worth at the time of award of the unpaid Rentals which had been earned
at the time of termination;

 

(ii) The worth at the time of award of the amount by which the unpaid Rentals
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that Lessee proves could have been reasonably
avoided;

 

(iii) The worth at the time of award (computed by discounting at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent) of the amount by which the unpaid Rentals for the balance of the Term
after the time of award exceeds the amount of such rental loss that Lessee
proves could be reasonably avoided; and

 

(iv) Any other amounts necessary to compensate Lessor for detriment proximately
caused by the default by Lessee or which in the ordinary course of events would
likely result, including without limitation the reasonable costs and expenses
incurred by Lessor for:

 

(A) Retaking possession of the Premises;

 

(B) Cleaning and making repairs and alterations (including installation of
leasehold improvements, whether or not the same shall be funded by a reduction
of rent, direct payment or otherwise) necessary to return the Premises to good
condition and preparing the Premises for reletting;

 

(C) Removing, transporting, and storing any of Lessee’s property left at the
Premises (although Lessor shall have no obligation to remove, transport, or
store any of the property);

 

(D) Reletting the Premises, including without limitation, brokerage commissions,
advertising costs, and attorneys’ fees;

 

(E) Attorneys’ fees, expert witness fees and court costs;

 

(F) Any unamortized real estate brokerage commissions paid in connection with
this Lease; and

 

(G) Costs of carrying the Premises, such as repairs, maintenance, taxes and
insurance premiums, utilities and security precautions, if any.

 

 

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The “worth at the time of award” of the amounts referred to in Articles 23.a.(i)
and 23.a.(ii) is computed by allowing interest at an annual rate equal to the
greater of: ten percent (10%); or five percent (5%) plus the rate established by
the Federal Reserve Bank of San Francisco, as of the 25th day of the month
immediately preceding the default by Lessee, on advances to member banks under
Section 13 and 13(a) of the Federal Reserve Act, as not in effect or hereafter
from time to time amended (the “Stipulated Rate”). The computation of the amount
of rental loss that could be or could have been reasonably avoided by Lessor
pursuant to California Civil Code section 1951.2 shall take into account the use
restrictions set forth in Article 8.a. above except to the extent that Lessee
proves that under all circumstances the enforcement of the use restriction would
be unreasonable.

 

b. Continuation of Lease. Lessor may continue this Lease in full force and
effect, and the Lease shall continue in effect as long as Lessor does not
terminate Lessee’s right to possession, and Lessor shall have the right to
enforce all rights and remedies under this Lease including the right to collect
all Rentals when due. During the period Lessee is in default, Lessor can enter
the Premises and relet them, or any part of them, to third parties for Lessee’s
account. Lessee shall be liable immediately to Lessor for all costs Lessor
incurs in reletting the Premises, including without limitation, those items
outlined in subsections a.(i) through a.(iv) of this Article 23, and other like
costs. Reletting can be for a period shorter or longer than the remaining Term.
Lessee shall pay to Lessor all Rentals due under this Lease on the date the
Rentals are due, less the rent Lessor receives from any reletting. The use
restriction provided in Article 8.a. above shall apply to Lessor’s remedies
under California Civil Code section 1951.4 except to the extent that Lessee
proves that under all circumstances enforcement of the use restriction would be
unreasonable.

 

c. Other Remedies. Lessor may pursue any other remedy now or hereafter available
to Lessor under the laws or judicial decisions of the State in which the
Premises are located.

 

d. General. The following shall apply to Lessor’s remedies:

 

(i) No entry upon or taking of possession of the Premises or any part thereof by
Lessor, nor any letting or subletting thereof by Lessor for Lessee, nor any
appointment of a receiver, nor any other act of Lessor, whether acceptance of
keys to the Premises or otherwise, shall constitute or be construed as an
election by Lessor to terminate this Lease or Lessee’s right to possession of
the Premises unless a written notice of such election be given to Lessee by
Lessor.

 

(ii) If Lessor elects to terminate this Lease or Lessee’s right to possession
hereunder, Lessee shall surrender and vacate the Premises in broom-clean
condition, and Lessor may re-enter and take possession of the Premises and may
eject all parties in possession or eject some and not others or eject none. Any
personal property of or under the control of Lessee remaining on the Premises at
the time of such re-entry may be considered and treated by Lessor as abandoned.

 

24. EMINENT DOMAIN. If more than twenty-five percent (25%) of the area of the
Premises is taken or appropriated for any public or quasi-public use under the
power of eminent domain, or conveyed in lieu thereof, either party hereto shall
have the right, at its option, to terminate this Lease by written notice to the
other party given within ten (10) days of the date of such taking, appropriation
or conveyance, and Lessor shall be entitled to any and all income, rent, award,
or any interest therein whatsoever which may be paid or made (the “Award”) in
connection with such public or quasi-public use or purpose, and Lessee shall
have no claim against Lessor for (and hereby assigns to Lessor any claim which
Lessee may have for) the value of any unexpired Term of this Lease. If any part
of the Building or the Project other than the Premises may be so taken,
appropriated or conveyed, Lessor shall have the right at its option to terminate
this Lease, and in any such event Lessor shall be entitled to the entire Award
whether or not this Lease is terminated. If this Lease is terminated as provided
above: (i) the termination shall be effective as of the date upon which title to
the Premises, the Building, the Project, or a portion thereof, passes to and
vests in the condemnor or the effective date of any order for possession if
issued prior to the date title vests in the condemnor; (ii) Lessor shall refund
to Lessee any prepaid but unearned Rentals; and (iii) Lessee shall pay to Lessor
any Rentals or other charges due Lessor under the Lease, prorated as of the date
of taking.

 

If less than twenty-five percent (25%) of the Premises is so taken, appropriated
or conveyed, or more than twenty-five percent (25%) thereof is so taken,
appropriated or conveyed and neither party elects to terminate as herein
provided, (i) Lessor shall be entitled to the entirety of the Award, and Lessee
shall be entitled to make a claim for any separate award attributable to any
taking of Lessee’s trade fixtures so long as any such award to Lessee does not
reduce the amount of the Award available to Lessor; and (ii) the Rental
thereafter to be paid hereunder for the Premises shall be reduced in the same
ratio that the percentage of the area of the Premises so taken, appropriated or
conveyed bears to the total area of the Premises immediately prior to the
taking, appropriation or conveyance. In addition, if any Rentable Area in the
Building containing the Premises is so taken, appropriated or conveyed and this
Lease is not terminated by Lessor, Lessee’s Percentage Share of Building
Expenses shall be adjusted pursuant to Article 7.

 

Notwithstanding this Article 24 above, upon a temporary taking of all or any
portion of the Premises, the Lease shall remain in effect and Lessee shall
continue to pay and be liable for all Rentals under this Lease. Upon such
temporary taking, Lessee shall be entitled to any Award for the temporary use of
the portion of the Premises taken which is attributable to the period prior to
the date of Lease Termination, and Lessor shall be entitled to any portion of
the Award for such use attributable to the period after Lease Termination. As
used in this paragraph, a temporary taking shall mean a taking for a period of
one year or less and does not include a taking which is to last for an
indefinite period and/or which will terminate only upon the happening of a
specified event unless it can be determined at the time of the taking when such
event will occur.

 

 

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25. OFFSET STATEMENT; MODIFICATIONS FOR LENDER. Lessee shall at any time and
from time to time within ten (10) days following request from Lessor execute,
acknowledge and deliver to Lessor a statement in writing, (i) certifying that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease as so modified is
in full force and effect), (ii) acknowledging that there are not, to Lessee’s
knowledge, any uncured defaults on the part of the Lessor hereunder, or
specifying such defaults if any are claimed, (iii) certifying the date Lessee
entered into occupancy of the Premises and that Lessee is open and conducting
business at the Premises, (iv) certifying the date to which Rentals and other
charges are paid in advance, if any, (v) evidencing the status of this Lease as
may be required either by a lender making a loan affecting or a purchaser of the
Premises, or part of the Project from Lessor, (vi) certifying that all
improvements to be constructed on the Premises by Lessor are substantially
completed (if applicable), except for any punch list items which do not prevent
Lessee from using the Premises for its intended use, and (vii) certifying such
other matters relating to this Lease and/or the Premises as may be requested by
Lessor or a lender making a loan to Lessor or a purchaser of the Premises, or
any part of the Project from Lessor. Any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the Project,
or any interest therein. Lessee shall, within ten (10) days following request of
Lessor, deliver such other documents including Lessee’s financial statements as
are reasonably requested in connection with the sale of, or loan to be secured
by, any portion of the Project, or any interest therein.

 

If in connection with obtaining non-disturbance protection for Lessee (which
shall be deemed to include an election by a senior lienholder to subordinate its
lien to this Lease) with respect to any existing or future lender providing
financing for all or any portion of the Project, such lender shall request
modifications of this Lease as a condition issuing such non-disturbance
protection, Lessee will not unreasonably withhold, delay or condition its
consent thereto, provided that such modifications do not increase the financial
obligations of Lessee hereunder or otherwise materially decrease the rights or
materially increase the obligations of Lessee under this Lease.

 

26. PARKING. Lessee shall have the right to use the number of non-exclusive
parking spaces located within the Project as designated in Article 1.k. without
charge during the Term; except, however, notwithstanding anything to the
contrary contained in this Lease, if a charge, fee, tax or other imposition is
assessed against Lessor or the Project by applicable governmental authorities
based upon use of parking spaces at the Project or is required by applicable
governmental authorities to be assessed by Lessor upon users of parking spaces
at the Project, then Lessee shall pay its equitable share of such charge, fee,
tax or other imposition to Lessor monthly in advance as additional rent. Use of
all parking spaces shall be subject to rules and regulations established by
Lessor which may be altered at any time and from time to time during the Term.
The location of all parking spaces may be designated from time to time by
Lessor. Lessor shall designate a portion of the parking spaces within the
Project as “visitor parking”. Neither Lessee nor Lessee’s Agents shall at any
time use more parking spaces than the number so allocated to Lessee or park or
permit the parking of their vehicles in any portion of the Parcel not designated
by Lessor as a non-exclusive parking area. Lessee and Lessee’s Agents shall not
have the exclusive right to use any specific parking space, except as expressly
stated in this Article 26.

 

Notwithstanding the number of parking spaces designated for Lessee’s
non-exclusive use, in the event by reason of any rule, regulation, order, law,
statute or ordinance of any governmental or quasi-governmental authority
relating to or affecting parking on the Parcel, or any cause beyond Lessor’s
reasonable control, Lessor is required to reduce the number of parking spaces on
the Parcel, Lessor shall have the right to proportionately reduce the number of
Lessee’s parking spaces and the non-exclusive parking spaces of other tenants of
the Building. Lessor reserves the right in its reasonable discretion: to
determine whether parking facilities are becoming overcrowded and in such event
to re-allocate parking spaces among Lessee and other tenants of the Project; to
have any vehicles owned by Lessee or Lessee’s Agents which are parked in
violation of the provisions of this Article 26 or Lessor’s rules and regulations
relating to parking, towed away at Lessee’s cost, after having given Lessee
reasonable notice. In the event Lessor elects or is required by any law to limit
or control parking on the Parcel, by validation of parking tickets or any other
method, Lessee agrees to participate in such validation or other program under
such reasonable rules and regulations as are from time to time established by
Lessor. Lessor shall have the right to close all or any portion of the parking
areas at reasonable times for any purpose, including, without limitation, the
prevention of a dedication thereof, or the accrual of rights in any person or
the public therein. Employees of Lessee shall be required to park in areas
designated for employee parking, if any. The parking areas shall not be used by
Lessee or Lessee’s Agents for any purpose other than the parking of motor
vehicles and the ingress and egress of pedestrians and motor vehicles.

 

27. AUTHORITY. If Lessee is a corporation, partnership, limited liability
company or other entity, each individual executing this Lease on behalf of said
entity represents and warrants that he is duly authorized to execute and deliver
this Lease on behalf of said entity in accordance with a duly adopted resolution
of the Board of Directors of said corporation or in accordance with the by-laws
of said corporation or on behalf of said partnership in accordance with the
partnership agreement of such partnership or otherwise on behalf of said entity
in accordance with the organizational documents governing such entity, and that
this Lease is binding upon said entity in accordance with its terms. If Lessee
is a corporation or other entity, Lessee shall, upon execution of this Lease,
deliver to Lessor a certified copy of a resolution of the Board of Directors of
said corporation or other evidence of organizational approval authorizing or
ratifying the execution of this Lease. If Lessee fails to deliver such
resolution or other evidence to Lessor upon execution of this Lease, Lessor
shall not be deemed to have waived its right to require delivery of such
resolution or other evidence, and at any time during the Term Lessor may request
Lessee to deliver the same, and Lessee agrees it shall thereafter promptly
deliver such resolution or other evidence to Lessor. If Lessee is a corporation
or other entity, Lessee hereby represents, warrants, and covenants that (i)
Lessee is a valid and existing corporation or other entity; (ii) Lessee is
qualified to do business in California; (iii) all fees and all franchise and
corporate taxes of Lessee are paid to date, and will be paid when due; (iv) all
required

 

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forms and reports will be filed when due; and (v) the signers of this Lease are
properly authorized to execute this Lease on behalf of Lessee and to bind Lessee
hereto.

 

28. SURRENDER OF PREMISES.

 

a. Condition of Premises. Lessee shall, upon Lease Termination, surrender the
Premises in the condition required pursuant to subsection 10.b. above, and
otherwise in broom clean, trash free, and in good condition, reasonable wear and
tear, and insured casualties to the extent of Net Insurance Proceeds recovered
by Lessor, alone excepted. By written notice to Lessee, Lessor may elect to
cause Lessee to remove from the Premises or cause to be removed, at Lessee’s
expense, any logos, signs, notices, advertisements or displays placed on the
Premises by Lessee. If the Premises is not so surrendered as required by this
Article 28, Lessee shall indemnify, defend and hold harmless Lessor from and
against any loss or liability resulting from Lessee’s failure to comply with the
provisions of this Article 28, including, without limitation, any claims made by
any succeeding tenant or losses to Lessor due to lost opportunities to lease to
succeeding tenants, and the obligations of Lessee pursuant hereto shall survive
the Lease Termination.

 

b. Removal of Personal Property. Lessee shall remove all its personal property
from the Premises upon Lease Termination, and shall immediately repair all
damage to the Premises, Building and Common Area caused by such removal. Any
personal property remaining on the Premises after Lease expiration or sooner
termination may be packed, transported, and stored at a public warehouse at
Lessee’s expense. If after Lease Termination and, within ten (10) days after
written demand by Lessor, Lessee fails to remove Lessee’s personal property or,
if removed by Lessor, fails to pay the removal expenses, the personal property
may be deemed abandoned property by Lessor and may be disposed of as Lessor
deems appropriate. Lessee shall repair any damage to the Premises caused by or
in connection with the removal of any personal property, including without
limitation, the floor and patch and paint the walls, when required by Lessor, to
Lessor’s reasonable satisfaction, all at Lessee’s sole cost and expense. The
provisions of this Article 28 shall survive Lease Termination.

 

29. LESSOR DEFAULT AND MORTGAGEE PROTECTION. Lessor shall not be in default
under this Lease unless Lessee shall have given Lessor written notice of the
breach, and, within thirty (30) days after notice, Lessor has not cured the
breach or, if the breach is such that it cannot reasonably be cured under the
circumstances within thirty (30) days, has not commenced diligently to prosecute
the cure to completion. The liability of Lessor pursuant to this Lease shall be
limited to Lessor’s interest in the Building and any money judgment obtained by
Lessee based upon Lessor’s breach of this Lease or otherwise relating to this
Lease or the Premises, shall be satisfied only out of the proceeds of the sale
or disposition of Lessor’s interest in the Building (whether by Lessor or by
execution of judgment). Lessee agrees that the obligations of Lessor under this
Lease do not constitute personal obligations of the individual partners, whether
general or limited, members, directors, officers or shareholders of Lessor, and
Lessee shall not seek recourse against the individual partners, members,
directors, officers or shareholders of Lessor or any of their personal assets
for satisfaction of any liability with respect to this Lease. Upon any default
by Lessor under this Lease, Lessee shall give notice by registered mail to any
beneficiary or mortgagee of a deed of trust or mortgage encumbering the
Premises, and/or any portion of the Project, whose address shall have been
furnished to it, and shall offer such beneficiary or mortgagee a reasonable
opportunity to cure the default, including time to obtain possession of the
Premises, and/or Project, or any portion thereof, by power of sale or judicial
foreclosure, if such should prove necessary to effect a cure.

 

30. RIGHTS RESERVED BY LESSOR. Lessor reserves the right from time to time,
without abatement of Rentals and without limiting Lessor’s other rights under
this Lease: (i) to install, use, maintain, repair and replace pipes, ducts,
conduits, wires and appurtenant meters and equipment for service to other parts
of the Project above the ceiling surfaces, below the floor surfaces, within the
walls and in the central core areas, and to relocate any pipes, ducts, conduits,
wires and appurtenant meters and equipment included in the Premises which are
located in the Premises or located elsewhere outside the Premises, and to expand
any building within the Project; (ii) to designate other land outside the
current boundaries of the Project be a part of the Project, in which event the
Parcel shall be deemed to include such additional land, and the Common Areas
shall be deemed to include Common Areas upon such additional land; (iii) to add
additional buildings and/or other improvements (including, without limitation,
additional parking structures or extension of existing parking structures) to
the Project, which may be located on land added to the Project pursuant to
clause (ii) above; (iv) to make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscape areas and walkways; (v) to close
temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available; (vi) to use the Common
Areas while engaged in making additional improvements, repairs or alterations to
the Building or the Project, or any portion thereof; (vii) to grant the right to
the use of the Exterior Common Area to the occupants of other improvements
located on the Parcel; (viii) to designate the name, address, or other
designation of the Building and/or Project, without notice or liability to
Lessee; (ix) to close entrances, doors, corridors, elevators, escalators or
other Building facilities or temporarily abate their operation; (x) to change or
revise the business hours of the Building; and (xi) to do and perform such other
acts and make such other changes in, to or with respect to the Common Areas, the
Building or any other portion of the Project as Lessor deems to be appropriate
in the exercise of its reasonable business judgment. In the exercise of its
rights under this Article, Lessor shall use reasonable efforts to minimize any
unreasonable interference with the operation of Lessee’s business from the
Premises.

 

31. EXHIBITS. Exhibits and riders, if any, signed by the Lessor and the Lessee
and endorsed on or affixed to this Lease are a part hereof.

 

 

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32. WAIVER. No covenant, term or condition in this Lease or the breach thereof
shall be deemed waived, except by written consent of the party against whom the
waiver is claimed. Any waiver of the breach of any covenant, term or condition
herein shall not be deemed to be a waiver of any preceding or succeeding breach
of the same or any other covenant, term or condition. Acceptance by Lessor of
any performance by Lessee after the time the same shall have become due shall
not constitute a waiver by Lessor of the breach or default of any covenant, term
or condition unless otherwise expressly agreed to by Lessor in writing. The
acceptance by Lessor of any sum less than that which is required to be paid by
Lessee shall be deemed to have been received only on account of the obligation
for which it is paid (or for which it is allocated by Lessor, in Lessor’s
absolute discretion, if Lessee does not designate the obligation as to which the
payment should be credited), and shall not be deemed an accord and satisfaction
notwithstanding any provisions to the contrary written on any check or contained
in a letter of transmittal. Lessor’s efforts to mitigate damages caused by any
default by Lessee shall not constitute a waiver of Lessor’s right to recover
damages for any default by Lessee. No custom or practice which may arise between
the parties hereto in the administration of the terms hereof shall be construed
as a waiver or diminution of Lessor’s right to demand performance by Lessee in
strict accordance with the terms of this Lease.

 

33. NOTICES. All notices, consents and demands which may or are to be required
or permitted to be given by either party to the other hereunder shall be in
writing. All notices, consents and demands by Lessor to Lessee shall be
personally delivered, sent by overnight courier providing receipt of delivery
(such as Federal Express), or sent by United States Certified Mail, postage
prepaid return receipt requested, addressed to Lessee as designated in Article
1.1., or to such other place as Lessee may from time to time designate in a
notice to Lessor pursuant to this Article 33. All notices and demands by Lessee
to Lessor shall be personally delivered, sent by overnight courier providing
receipt of delivery (such as Federal Express) or sent by United States Certified
Mail, postage prepaid return receipt requested (provided that a copy of any such
notice or demand so sent by United States Certified Mail shall be concurrently
sent by Lessee to Lessor by facsimile transmission), addressed to Lessor as
designated in Article 1.1., or to such other person or place as Lessor may from
time to time designate in a notice to Lessee pursuant to this Article 33.
Notices sent by overnight courier shall be deemed delivered upon the next
business day following deposit with such overnight courier for next business day
delivery. Mailed notices shall be deemed delivered two (2) business days after
deposit in the United States mail as required by this Article 33.

 

34. JOINT OBLIGATIONS. If Lessee consists of more than one person or entity, the
obligations of each Lessee under this Lease shall be joint and several.

 

35. MARGINAL HEADINGS. The captions of paragraphs and articles of this Lease are
not a part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.

 

36. TIME. Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor except as to the delivery of
possession of the Premises to Lessee.

 

37. SUCCESSORS AND ASSIGNS. The covenants and conditions herein contained,
subject to the provisions of Article 13, apply to and bind the heirs,
successors, executors, administrators, legal representatives and assigns of the
parties hereto.

 

38. RECORDATION. Upon request by Lessor, Lessee shall execute and acknowledge a
short form of this Lease in form for recording which may be recorded at Lessor’s
election. Lessee shall not record this Lease or a short form or memorandum
hereof without the prior written consent of Lessor.

 

39. QUIET POSSESSION. Upon Lessee paying the Rentals reserved hereunder and
observing and performing all of the covenants, conditions and provisions on
Lessee’s part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire Term, subject to all the provisions of
this Lease and subject to any ground or underlying leases, mortgages or deeds of
trust now or hereafter affecting the Premises or the Building and the rights
reserved by Lessor hereunder.

 

40. LATE CHARGES; ADDITIONAL RENT AND INTEREST.

 

a. Late Charges. Lessee acknowledges that late payment by Lessee to Lessor of
Rentals or other sums due hereunder will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which are impracticable or
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any mortgage or trust deed covering the Premises or any
part of the Project. Accordingly, if any installment of Rentals or any other sum
due from Lessee is not received by Lessor or Lessor’s designee within three (3)
business days after the due date, then Lessee shall pay to Lessor, in each case,
a late charge equal to ten percent (10%) of such overdue amount; provided,
however, that with respect to the first such late payment in any twelve (12)
consecutive month period during the Term, such late charge shall not be due and
payable unless such late payment by Lessee shall not be cured within ten (10)
days following Lessee’s receipt of written notice from Lessor of Lessee’s
failure to make such payment when due. The parties agree that such late charge
represents a fair and reasonable estimate of the cost that Lessor will incur by
reason of late payment by Lessee. Acceptance of any late charges by Lessor shall
in no event constitute a waiver of Lessee’s default with respect to such overdue
amount, nor prevent Lessor from exercising any of its other rights and remedies
under this Lease.

 

b. Rentals, Additional Rent and Interest. All taxes, charges, costs, expenses,
and other amounts which Lessee is required to pay hereunder, including without
limitation Lessee’s Percentage Share of Building Expenses, and all interest and
charges (including late charges) that may accrue thereon upon Lessee’s failure
to pay the same and all damages, costs and expenses which Lessor may incur by
reason of any default by Lessee shall

 

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be deemed to be additional rent hereunder. Upon nonpayment by Lessee of any
additional rent, Lessor shall have all the rights and remedies with respect
thereto as Lessor has for the nonpayment of Base Rent. The term “Rentals” as
used in this Lease is Base Rent and all additional rent. Any payment due from
Lessee to Lessor (including but not limited to Base Rent and all additional
rent) which is not paid within three (3) business days of when due shall bear
interest from the date when due until paid, at an annual rate equal to the
maximum rate that Lessor is allowed to contract for by law. Payment of such
interest shall not excuse or cure any default by Lessee. In addition, Lessee
shall pay all costs and attorneys’ fees incurred by Lessor in collection of such
amounts. All Rentals and other moneys due under this Lease shall survive the
Lease Termination. Interest on Rentals past due as provided herein shall be in
addition to the late charges levied pursuant to 40.a. above. All Rentals shall
be paid to Lessor, in lawful money of the United States of America which shall
be legal tender at the time of payment, at the address of Lessor a provided
herein, or to such other person or at such other place as Lessor may from time
to time designate in writing. If at any time during the Term Lessee pays any
Rentals by check which is returned for insufficient funds, Lessor shall have the
right, in addition to any other rights or remedies Lessor may have hereunder, to
require that Rentals thereafter be paid in cash or by cashier’s or certified
check.

 

41. PRIOR AGREEMENTS. This Lease contains all of the agreements of the parties
hereto with respect to the Premises, this Lease or any matter covered or
mentioned in this Lease, and no prior agreements or understanding pertaining to
any such matters shall be effective for any purpose. No provision of this Lease
may be amended or added to except by an agreement in writing signed by the
parties hereto or their respective successors in interest. This Lease shall not
be effective or binding on Lessor until fully executed by Lessor.

 

42. INABILITY TO PERFORM. This Lease and the obligations of the Lessee hereunder
shall not be affected or impaired because the Lessor is unable to fulfill any of
its obligations hereunder or is delayed in doing so, if such inability or delay
is caused by reason of strike, labor troubles, Acts of God, or any other cause,
similar or dissimilar, beyond the reasonable control of the Lessor.

 

43. ATTORNEYS’ FEES. If either party to this agreement shall bring an action to
interpret or enforce this agreement or for any relief against the other,
including, but not limited to, declaratory relief or a proceeding in
arbitration, the losing party shall pay to the prevailing party a reasonable sum
for attorney’s fees, expert witness fees and other costs incurred in such action
or proceeding. Additionally, the prevailing party shall be entitled to all
additional attorney’s fees and costs incurred in enforcing and collecting any
such judgment or award. Any judgment or order entered in such action shall
contain a specific provision providing for the recovery of attorney’s fees and
costs incurred in enforcing such award or judgment.

 

44. SALE OF PREMISES BY LESSOR. Upon a sale or conveyance by the Lessor herein
named (and in case of any subsequent transfers or conveyances, the then grantor)
of Lessor’s interest in the Building, other than a transfer for security
purposes only, the Lessor herein named (and in case of any subsequent transfers
or conveyances, the then grantor) shall be relieved, from and after the date of
such transfer, of all obligations and liabilities accruing thereafter on the
part of Lessor, provided that any funds in the hands of Lessor or the then
grantor at the time of transfer and in which Lessee has an interest, less any
deductions permitted by law or this Lease, shall be delivered to Lessor’s
successor. Following such sale or conveyance by Lessor or the then grantor,
Lessee agrees to look solely to the responsibility of the successor-in-interest
of Lessor in and to this Lease. This Lease shall not be affected by any such
sale or conveyance and Lessee agrees to attorn to the purchaser or assignee
provided such purchaser or assignee acquires its interest subject to this Lease.

 

45. SUBORDINATION/ATTORNMENT. This Lease shall automatically be subject and
subordinate to all ground or underlying leases which now exist or may hereafter
be executed affecting any portion of the Project and to the lien of any
mortgages or deeds of trust (including all advances thereunder, renewals,
replacements, modifications, supplements, consolidations, and extensions
thereof) in any amount or amounts whatsoever now or hereafter placed on or
against any portion of the Project, or on or against Lessor’s interest or estate
therein, or on or against any ground or underlying lease, without the necessity
of the execution and delivery of any further instruments on the part of Lessee
to effectuate such subordination. Lessee covenants and agrees to execute and
deliver upon demand and without charge therefor, such further instruments
evidencing the subordination of this Lease to such ground or underlying leases
and/or to the lien of any such mortgages or deeds of trusts as may be required
by Lessor or a lender making a loan affecting the Project; provided that such
mortgagee or beneficiary under such mortgage or deed of trust or lessor under
such ground or underlying lease agrees in writing that so long as Lessee is not
in default under this Lease, this Lease shall not be terminated in the event of
any foreclosure or termination of any ground or underlying lease. Failure of
Lessee to execute such instruments evidencing subordination of this Lease shall
constitute a default by Lessee under this Lease. If any mortgagee, beneficiary
or lessor elects to have this Lease prior to the lien of its mortgage, deed of
trust or lease, and shall give written notice thereof to Lessee, this Lease
shall be deemed prior to such mortgage, deed of trust or lease, whether this
Lease is dated prior or subsequent to the date of said mortgage, deed of trust,
or lease or the date of the recording thereof. Notwithstanding anything to the
contrary contained in this Lease, so long as a mortgage or deed of trust
encumbering the Project or Building remains outstanding with respect to which
Lessee has previously entered into a non-disturbance agreement with the
applicable mortgagee or trust deed beneficiary providing that Lessee will not
subordinate this Lease to any other lien against the Project or Building without
the consent of such mortgagee or trust deed beneficiary, then Lessee shall not
be required to subordinate this Lease to any other lien against the Project or
Building without the consent of such mortgagee or trust deed beneficiary.

 

If any proceedings are brought to terminate any ground or underlying leases or
for foreclosure, or upon the exercise of the power of sale, under any mortgage
or deed of trust covering any portion of the Project, Lessee shall attorn to the
lessor or purchaser upon any such termination, foreclosure or sale and recognize
such lessor or purchaser as the Lessor under this Lease. So long as Lessee is
not in default hereunder and attorns as required

 

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above, this Lease shall remain in full force and effect for the full term hereof
after any such termination, foreclosure or sale.

 

Notwithstanding anything to the contrary contained in the foregoing, Lessor
shall use commercially reasonable efforts to obtain from any existing mortgagee
or trust deed beneficiary under a mortgage or deed of trust encumbering the
Project or Building as of the execution of this Lease, non-disturbance
protection for Lessee (which shall be deemed to include an election by such
mortgagee or beneficiary to subordinate its lien to this Lease) on commercially
reasonable terms within thirty (30) days following the execution of this Lease.

 

46. NAME. Lessee shall not use any name, picture or representation of the
Building or Project for any purpose other than as an address of the business to
be conducted by the Lessee in the Premises.

 

47. SEVERABILITY. Any provision of this Lease which proves to be invalid, void
or illegal shall in no way affect, impair or invalidate any other provision of
this Lease and all such other provisions shall remain in full force and effect;
however, if Lessee’s obligation to pay the Rentals is determined to be invalid
or unenforceable, this Lease shall terminate at the option of Lessor.

 

48. CUMULATIVE REMEDIES. Except has otherwise expressly provided in this Lease,
no remedy or election hereunder shall be deemed exclusive but shall, wherever
possible, be cumulative with all other remedies at law or in equity.

 

49. CHOICE OF LAW. This Lease shall be governed by the laws of the State of
California.

 

50. SIGNS. Lessee shall not inscribe, paint, affix or place any sign, awning,
canopy, advertising matter, decoration or lettering upon any portion of the
Premises, including, without limitation, any exterior door, window or wall,
without Lessor’s prior written consent. Subject in all events to the
requirements of the City of Cupertino and other applicable governmental
requirements and any other restrictions of record or to which the Project is
subject, Lessee shall be entitled to Building standard identification of Lessee
upon the common Building lobby directory board sign to be installed by Lessor in
the Building lobby. In no event shall Lessor grant exterior signage rights at
the Building to Microsoft.

 

51. GENDER AND NUMBER. Wherever the context so requires, each gender shall
include any other gender, and the singular number shall include the plural and
vice-versa.

 

52. CONSENTS. Whenever the consent of Lessor is required herein, the giving or
withholding of such consent in any one or any number of instances shall not
limit or waive the need for such consent in any other or future instances. Any
consent given by Lessor shall not be binding upon Lessor unless in writing and
signed by Lessor or Lessor’s agents. Notwithstanding any other provision of this
Lease, where Lessee is required to obtain the consent of Lessor to do any act,
or to refrain from the performance of any act, Lessee agrees that if Lessee is
in default with respect to any term, condition, covenant or provision of this
Lease, then Lessor shall be deemed to have acted reasonably in withholding its
consent if said consent is, in fact, withheld.

 

53. BROKERS. Lessee warrants that it has had no dealing with any real estate
broker or agents in connection with the negotiation of this Lease excepting only
the broker or agent designated in Article l.m., and that it knows of no other
real estate broker or agent who is entitled to or can claim a commission in
connection with this Lease. Lessee agrees to indemnify, defend and hold Lessor
harmless from and against any and all claims, demands, losses, liabilities,
lawsuits, judgments, and costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) with respect to any alleged leasing
commission or equivalent compensation alleged to be owing on account of Lessee’s
dealings with any real estate broker or agent.

 

54. SUBSURFACE AND AIRSPACE. This Lease confers on Lessee no rights either with
respect to the subsurface of the Parcel or with regard to airspace above the top
of the Building or above any paved or landscaped areas on the Parcel or Common
Area and Lessor expressly reserves the right to use such subsurface and airspace
areas, including without limitation the right to perform construction work
thereon and in regard thereto. Any diminution or shutting off of light, air or
view by any structure which may be erected by Lessor on those portions of the
Parcel, Common Area and/or Building reserved by Lessor shall in no way affect
this Lease or impose any liability on Lessor. Lessor shall have the exclusive
right to use all or any portion of the roof, side and rear walls of the Premises
and Building for any purpose. Lessee shall have no right whatsoever to the
exterior of the exterior walls or the roof of the Premises or any portion of the
Project outside the Premises except as provided in Article 55 of this Lease.

 

55. COMMON AREA. For purposes of the Lease, “Common Area” shall collectively
mean the following:

 

a. Exterior Common Area. That portion of the Parcel other than the land
comprising the property, and all facilities and improvements on such portion for
the non-exclusive use of Lessee in common with other authorized users,
including, but not limited to, vehicle parking areas, driveways, sidewalks,
landscaped areas, and the facilities and improvements necessary for the
operation thereof (the “Exterior Common Area”); and

 

b. Building Common Area. That portion of the Building in which the Premises are
located, and all of the facilities therein, set aside by Lessor for the
non-exclusive use of Lessee in common with other authorized users, including,
but not limited to, entrances, lobbies, halls, atriums, corridors, toilets and
lavatories, passenger elevators and service areas (the “Building Common Area”).

 

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Subject to the limitations and restrictions contained in this Lease, and the
Rules arid Regulations, Lessor grants to Lessee and Lessee’s Agents the
nonexclusive right to use the Common Area in common with Lessor, Lessor’s agent,
other occupants of the Building and Project, other authorized users and their
agents, subject to the provisions of this Lease. The right to use the Common
Area shall terminate upon Lease Termination.

 

56. LABOR DISPUTES. If Lessee becomes involved in or is the object of a labor
dispute which subjects the Premises or any part of the Project to any picketing,
work stoppage, or other concerted activity which in the reasonable opinion of
Lessor is in any manner detrimental to the operation of any part of the Project,
or its tenants, Lessor shall have the right to require Lessee, at Lessee’s own
expense and within a reasonable period of time specified by Lessor, to use
Lessee’s best efforts to either resolve such labor dispute or terminate or
control any such picketing, work stoppage or other concerted activity to the
extent necessary to eliminate any interference with the operation of the
Projector its tenants. To the extent such labor dispute interferes with the
performance of Lessor’s duties hereunder, Lessor shall be excused from the
performance of such duties and Lessee hereby waives any and all claims against
Lessor for damages or losses in regard to such duties. If Lessee fails to use
its best efforts to so resolve such dispute or terminate or control such
picketing, work stoppage or other concerted activity within the period of time
specified by Lessor, Lessor shall have the right to terminate this Lease.
Nothing contained in this Article 56 shall be construed as placing Lessor in an
employer-employee relationship with any of Lessee’s employees or with any other
employees who may be involved in such labor dispute. Lessee shall indemnify,
defend and hold harmless Lessor from and against any and all liability
(including, without limitation, attorneys’ fees and expenses) arising from any
labor dispute in which Lessee is involved and which affects any part of the
Project.

 

57. CONDITIONS. All agreements by Lessee contained in this Lease, whether
expressed as covenants or conditions, shall be construed to be both covenants
and conditions, conferring upon Lessor, upon breach thereof, the right to
terminate this Lease.

 

58. LESSEE’S FINANCIAL STATEMENTS. Lessee hereby warrants that all financial
statements delivered by Lessee to Lessor prior to the execution of this Lease by
Lessee, or that shall be delivered in accordance with the terms hereof, are or
shall be at the time delivered true, correct, and complete, and prepared in
accordance with generally accepted accounting principles. Lessee acknowledges
and agrees that Lessor is relying on such financial statements in accepting this
Lease, and that a breach of Lessee’s warranty as to such financial statements
shall constitute a default by Lessee.

 

59. LESSOR NOT A TRUSTEE. Lessor shall not be deemed to be a trustee of any
funds paid to Lessor by Lessee (or held by Lessor for Lessee) pursuant to this
Lease. Lessor shall not be required to keep any such funds separate from
Lessor’s general funds or segregated from any funds paid to Lessor by (or held
by Lessor for) other tenants of the Building. Any funds held by Lessor pursuant
to this Lease shall not bear interest.

 

60. MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, shall not work a merger, and shall, at the option
of the Lessor, terminate all or any existing subleases or subtenancies, or may,
at the option of Lessor, operate as an assignment to it of any or all such
subleases or subtenancies.

 

61. NO PARTNERSHIP OR JOINT VENTURE. Nothing in this Lease shall be construed as
creating a partnership or joint venture between Lessor, Lessee, or any other
party, or cause Lessor to be responsible for the debts or obligations of Lessee
or any other party.

 

62. LESSOR’S RIGHT TO PERFORM LESSEE’S COVENANTS. Except as otherwise expressly
provided herein, if Lessee fails at any time to make any payment or perform any
other act on its part to be made or performed under this Lease, then upon ten
(10) days written notice to Lessee (provided that no such notice shall be
required in the event of an emergency), Lessor may, but shall not be obligated
to, and without waiving or releasing Lessee from any obligation under this
Lease, make such payment or perform such other act to the extent that Lessor may
deem desirable, and in connection therewith, pay expenses and employ counsel.
All sums so paid by Lessor and all penalties, interest and costs in connection
therewith shall be due and payable by Lessee to Lessor as additional rent upon
demand.

 

63. PLANS. Lessee acknowledges that any plan of the Project which may have been
displayed or furnished to Lessee or which may be a part of Exhibit “A” or
Exhibit “B” is tentative; Lessor may from time to time change the shape, size,
location, number, and extent of the improvements shown on any such plan and
eliminate or add any improvements to the Project, in Lessor’s sole discretion.

 

64. COMMUNICATIONS EOUIPMENT.

 

a. Subject to the provisions of this Article 64 and the other provisions of this
Lease respecting Alterations, Lessee shall have the right during the Term, at
Lessee’s sole cost and expense, to install upon a portion of the roof of the
Building designated by Lessor (which portion shall be a pro rata share of the
Building roof based upon the Rentable Area of the Premises within the Building
leased by Lessee) for Lessee’s own use such microwave, satellite or DSS dishes
and other antenna equipment (collectively, the “Communications Equipment”),
which Communications Equipment shall include, without limitation, the related
vertical and horizontal utility and telecommunication lines (“Communication
Lines”) throughout the Premises which are compatible with the Building structure
and/or mechanical and utility systems, which Communications Equipment shall be
of such size, weight and quantity, and at such location as is reasonably
approved by Lessor and Lessor’s structural engineer. Lessee shall reimburse
Lessor for the reasonable fees of Lessor’s structural engineer incurred in
evaluating Lessee’s plans

 

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for installation of the Communications Equipment and any modifications thereto,
within thirty (30) days following submission by Lessor to Lessee of invoices
therefor.

 

b. The installation, maintenance, repair, operation and removal (as hereinafter
provided) of such Communications Equipment shall be completed in a good and
workmanlike manner and in conformity with (i) plans and specifications therefor
(the “Communications Equipment Plans”) showing matters including, without
limitation, equipment size, location, weight and composition, and Lessee’s plan
for assembly, installation, maintenance and removal of such equipment, which
Communications Equipment Plans shall be subject to Lessor’s prior written
approval, which approval shall not be unreasonably withheld or delayed, and (ii)
all applicable laws, including, without limitation, Lessee’s obtaining and
keeping in force any necessary governmental permits or approvals for the
operation of such Communications Equipment. Notwithstanding anything to the
contrary contained herein, the supporting structures for such Communications
Equipment shall not penetrate the Building roof without Lessor’s prior written
approval, which approval shall not be unreasonably withheld or delayed. At
Lessor’s option, all work of installation, maintenance, repair and other work
affecting the roof in connection with the Communications Equipment shall be
performed, at Lessee’s sole cost and expense, by Lessor or Lessor’s designated
roof contractor. Lessee shall, at its sole cost and expense, install screening
of such Communications Equipment to prevent visibility from the street level, as
Lessor may reasonably require, and any other screening of such Communications
Equipment as may be required by applicable laws. Lessee shall not be permitted
to access the roof except when previously scheduled with Lessor or upon receipt
of prior written approval from Lessor (which approval shall not be unreasonably
withheld or delayed),

 

c. Lessee shall be solely responsible for any liability, cost, claim, expense
(including, without limitation, attorneys’ fees) and/or damage to the Building
and/or the Project resulting from Lessee’s installation, maintenance, operation,
use, presence or removal of such Communications Equipment. Lessee shall, at all
times during the Term, pay to Lessor within thirty (30) days following demand
therefor accompanied by reasonable evidence of such charges, all increased real
estate taxes, insurance premiums or other charges which may be incurred by or
charged to Lessor as a result of the installation, operation, maintenance and/or
removal of the Communications Equipment. Lessee shall pay all costs and expenses
of operation of the Communications Equipment, including, without limitation, any
necessary utility services therefor. Lessee shall be entirely responsible for
all maintenance of and repairs to the Communications Equipment so that at all
times the Communications Equipment is in good condition and repair. Lessee shall
maintain such insurance upon the Communications Equipment as Lessee is obligated
to maintain with respect to the Premises pursuant to this Lease.

 

d. Upon the expiration of the Term or earlier termination of this Lease, Lessee
shall remove the Communications Equipment and restore that portion of the
Building and Project, including, without limitation, the Building roof, affected
by the Communications Equipment, to the same condition as existed prior to such
installation, subject to reasonable wear and tear, all at Lessee’s sole cost and
expense. In the event Lessee fails to so remove the Communications Equipment and
restore the affected portions of the Building by such expiration or earlier
termination, Lessor may, at its option and at Lessee’s sole cost and expense,
remove and store and/or dispose of the Communications Equipment and restore the
affected portions of the Building and Project, in which event all amounts paid
or incurred by Lessor in connection therewith shall be paid by Lessee to Lessor
within thirty (30) days following Lessor’s submission to Lessee of reasonable
evidence of the amount of such costs.

 

e. Subject to the provisions of this Article 64 and the provisions of this Lease
respecting Alterations, Lessee shall have the right to install, maintain,
modify, replace and remove the Communications Equipment and Communications Lines
during the Term of the Lease.

 

f. Lessor makes no representation or warranty regarding the availability,
feasibility or legality of the installation, operation, maintenance or removal
of the Communications Equipment. Lessee acknowledges and agrees that Lessee’s
inability to install, maintain, operate and/or remove the Communications
Equipment, either pursuant to the terms hereof or for any other reason, shall
not affect the remainder of this Lease and shall not entitle Lessee to any
reduction in the rent.

 

65. WAIVER OF JURY. LESSOR AND LESSEE HEREBY WAIVE THEIR RESPECTIVE RIGHT TO
TRIAL BY JURY ON ANY CAUSE OF ACTION, CLAIM, COUNTER-CLAIM OR CROSS-COMPLAINT IN
ANY ACTION, PROCEEDING AND/OR HEARING BROUGHT BY EITHER LESSOR AGAINST LESSEE OR
LESSEE AGAINST LESSOR ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE.

 

66. JOINT PARTICIPATION. Lessor and Lessee hereby acknowledge that both parties
have been represented by counsel in connection with this Lease and that both
parties have participated in the negotiation and drafting of all of the terms
and provisions hereof. By reason of this joint participation, no term or
provision of this Lease will be construed against either party as the “drafter”
thereof, which terms and provisions shall include, without limitation, Article
14 hereof.

 

67. EXPEDITED DISPUTE RESOLUTION. Except as to any unlawful detainer dispute,
controversy, or claim, in the case of any dispute, controversy, or claim arising
from, out of, or in connection with, or relating to, this Lease, the negotiation
or creation of this Lease, and/or any term, provision and/or condition of this
Lease, including, without limitation, any breach or alleged breach of this
Lease, the parties shall meet and confer in an attempt to resolve their
differences. At any time after fifteen (15) days following notice in writing by
any party that it desires to so meet and confer (the “Meet and Confer Notice”),
any party may require mediation and then, if the mediation is unsuccessful,
within fifteen (15) days from the end of such mediation, binding arbitration
through J.A.M.S./Endispute (“JAMS”) in San Francisco, California. Also, if no
party commences mediation within forty-

 

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five (45) days of the Meet and Confer Notice, then thereafter any party may
require binding arbitration as and where above-described. If for any reason JAMS
in San Francisco cannot administer the matter, then such JAMS as is selected by
Lessor in any county within a fifty (50) mile radius of San Francisco County
shall be utilized. The costs of mediation shall be borne equally by the parties
thereto. Reimbursement for the costs and attorneys’ fees for binding arbitration
shall be as determined by the arbitrator.

 

Any arbitration shall be conducted under JAMS streamlined arbitration rules and
procedures whether or not JAMS is used. Hearings shall be held in San Francisco,
California. All notices shall be given as provided in this Lease. By executing
this Lease, each party agrees to have any dispute, controversy, or claim arising
from the matters contemplated by this Article (but specifically excluding any
unlawful detainer dispute, controversy, or claim) decided by neutral and binding
arbitration as provided by California law, and each party waives any rights
which it may possess to have the dispute litigated in a court or by jury trial
and any rights of appeal. Any court of competent jurisdiction shall, upon the
petition of any party, confirm the award of the arbitrator and enter judgment in
conformity therewith. Any decision of the arbitrator and any such judgment shall
be final, binding, and non-appealable. By executing this Lease, each party
waives its judicial rights to discovery and appeal in any matter to be resolved
by arbitration pursuant hereto. If either party refuses to submit to arbitration
with respect to any matter to be resolved by arbitration pursuant hereto after
agreeing to this provision, then such party may be compelled to arbitrate under
the authority of the California Code of Civil Procedure. This arbitration clause
shall self-executing, and arbitration may proceed in the absence of any party or
any party’s representative who, after due notice, fails to be present or fails
to obtain a postponement. An award shall not be made solely on the default of a
party: the arbitrator shall require the party who is present to submit such
evidence as the arbitrator may require for the making of an award. Each party’s
agreement to this arbitration provision is voluntary.

 

Notwithstanding anything to the contrary contained in this Article, the
provisions concerning meeting and conferring to resolve differences, mediation
and arbitration shall not be applicable whatsoever to any unlawful detainer
dispute, controversy, claim or action, and all rights of any party to pursue any
unlawful detainer dispute, controversy, claim or action shall remain in full
force and effect.

 

By initialling in the space provided below, each of the parties hereto
specifically agrees that it has read and understands the foregoing and agrees to
submit any dispute, controversy, or claim arising from the matters described
above (but specifically excluding any unlawful detainer dispute, controversy, or
claim) to neutral and binding arbitration in accordance herewith.

 

/S/    VRM    

 

/S/    WTA    

Lessor’s Initials

 

Lessee’s Initials

 

68. COUNTERPARTS. This Lease may be executed in any number of counterparts, each
of which shall be deemed to be an original, but any number of which, taken
together, shall be deemed to constitute one and the same instrument.

 

IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE LESSOR
BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTIONS
RELATING THERETO.

 

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

 

LESSOR:

         

LESSEE:

CUPERTINO CITY CENTER BUILDINGS,

a California limited partnership

     

SUN MICROSYSTEMS, INC.,

a Delaware corporation

By:

 

SUNSET RIDGE DEVELOPMENT CO., INC.,

a California corporation, its general partner

     

By: /S/    WILLIAM T. AGNELLO        

               

Print Name: WILLIAM T. AGNELLO

               

Its: VP, REAL ESTATE & THE WORK PLACE

   

By:

 

PROM MANAGEMENT GROUP, INC.,

a California corporation, dba Maxim Property Management, agent for owner

     

Date:  November 20, 1997

       

By:   /S/    VICKI R. MULLINS      

               

Print Name: VICKI R. MULLINS

               

Its: EVP & CFO

               

Date:  November 20, 1997

       

 

 

[NOTE: PARTIES ALSO TO INITIAL BELOW ARTICLE 67]

 

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EXHIBIT “A”

 

FLOOR PLAN OF THE PREMISES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[GRAPHIC APPEARS HERE]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT “B”

 

DEPICTION OF THE PROJECT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[GRAPHIC APPEARS HERE]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT “C”

 

RULES AND REGULATIONS

 

1. No sign, placard, picture, advertisement, name or notice shall be inscribed,
displayed or printed or affixed on or to any part of the outside or inside of
the Building without prior written consent of Lessor. Lessor shall have the
right to remove any such sign, placard, picture, advertisement, name or notice
without notice to and at the expense of Lessee. All approved signs or lettering
on doors shall be printed, painted, affixed or inscribed at the expense of
Lessee by a person approved of by Lessor. Lessee shall not place anything or
allow anything to be places near the glass of any exterior window, door,
partition or wall which may appear unsightly from outside the Premises. Lessee
shall not, without prior written consent of Lessor cover or otherwise sunscreen
any window.

 

2. The sidewalks, halls, passages, exits, entrances, elevators and stairways
shall not be obstructed by Lessee or used by Lessee for any purpose other than
for ingress or egress from its Premises.

 

3. Lessor will furnish Lessee, free of charge, with two keys to each door lock
in the Premises. Lessor may make a reasonable charge for any additional keys.
Lessee shall return all keys issued for the Premises. Lessee shall pay to Lessor
the costs of re-keying the Premises if all keys are not returned. Without
Lessor’s prior approval and otherwise complying with the provisions of this
Lease governing the making of Alterations, Lessee shall not alter any lock or
install any new or additional locks or any bolts on any doors or windows of the
Premises.

 

4. The Common Area toilet rooms, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed and
no foreign substance of any kind whatsoever shall be thrown therein and the
expense of any breakage, stoppage or damage resulting from the violation of this
rule shall be borne by the Lessee who, or whose agents, officers, employees,
contractors, servants, invitees or guests shall have caused it.

 

5. Lessee shall not overload the floor of the Premises or in any way deface the
Premises or any part thereof. Lessor shall have the right to prescribe the
weight, size and position of all safes and other heavy equipment brought into
the Building and also the time and manner of moving the same in and out of the
Building. Safes and other heavy objects shall, if considered necessary by
Lessor, stand on supports of such thickness as is necessary to properly
distribute the weight. Lessor will not be responsible for loss of or damage to
any such safe or property from any cause and all damage done to the Building by
moving or maintaining any such safe or other property shall be repaired at the
expense of Lessee.

 

6. No furniture, freight or equipment of any kind shall be brought into the
Building without prior notice to Lessor and all moving of the same into or out
of the Building shall be done at such time and in such manner as Lessor shall
designate. Unless otherwise agreed to in writing by Lessor, any such movement of
furniture, freight, or equipment shall be made during non-business hours for the
Building.

 

7. Lessee shall have the right to use the loading facilities provided at the
Building, if any, in common with the other tenants. All Lessee deliveries of
bulk items shall be through the Building loading facilities, if any. Freight
elevator(s) will be available for use by all tenants in the Building, subject to
such reasonable scheduling as Lessor, in its discretion, deems appropriate.
Lessor shall have the right at its sole discretion to prohibit Lessee’s delivery
through the main lobbies.

 

8. Lessee shall not use, keep or permit to be used or kept, any foul or noxious
gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to Lessor or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds be in or kept in or about the Premises or Building
(other than “seeing-eye” dogs or other animals providing assistance to disabled
persons).

 

9. The Premises will not be used for lodging, storage of merchandise, washing
clothes, or manufacturing of any kind, nor shall the Premises be used for any
improper, immoral or objectionable purpose. No cooking will be done or permitted
on the Premises without Lessor’s consent, except the use by Lessee of
Underwriters Laboratory approved equipment for brewing coffee, tea, hot
chocolate and similar beverages shall be permitted, and the use of a microwave
oven for employees use will be permitted, provided that such equipment and use
is in accordance with all applicable federal, state, county and city laws,
codes, ordinances, rules and regulations.

 

10. Lessee shall not use or keep in the Premises or the Building any kerosene,
gasoline or inflammable or combustible fluid or material, or any method of
heating or air conditioning other than supplied by Lessor.

 

11. Lessor shall approve in writing the method of attachment of any objects
affixed to walls, ceilings or doors. Lessor will direct electricians as to where
and how telephone and telegraph wires are to be introduced. No boring or cutting
for the wires will be allowed without the consent of Lessor. The location of
telephones, call boxes and other office equipment affixed to the Premises shall
be subject to the approval of Lessor. Lessee shall not install any wiring above
the ceiling tiles that does not comply with the fire codes. Any such wiring not
in compliance herewith shall be removed immediately at the expense of Lessee.
Lessee will not affix any floor covering to the floor of the Premises in any
manner except as approved by Lessor.

 

12. All cleaning and janitorial services for the Building and the Premises will
be provided exclusively through Lessor, and except with the written consent of
Lessor, no person or persons other than those approved by Lessor will be
employed by Lessee or permitted to enter the Building for the purpose of
cleaning the same.

 

RULES AND REGULATIONS - PAGE 1

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13. Lessee will store all its trash and garbage within its Premises or in other
facilities provided by Lessor. Lessee will not place in any trash box or
receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse disposal
is to be made in accordance with directions issued form time to time by Lessor.

 

14. On Saturdays, Sundays and legal holidays, and on other days between the
hours of 6:00 p.m. and 7:00 am. the following day, access to the Building, or to
the halls, corridors, elevators or stairways in the Building, or to the Premises
may be refused unless the person seeking access is known to the person or
employee of the Building in charge and has a pass or is properly identified.
Lessor shall in no case be liable for damages for any error with regard to the
admission to or exclusion from the Building of any person. In case of invasion,
mob, riot, public excitement or other commotion, Lessor reserves the right to
prevent access to the Building during the continuance of the same by closing the
doors or otherwise, for the safety of the tenants and protection of the Building
and of property in the Building.

 

15. Lessee will not waste electricity, water or air conditioning and agrees to
cooperate fully with Lessor to assure the most effective operation of the
Building’s heating and air conditioning and to comply with any governmental
energy-saving rules, laws or regulations of which Lessee has actual notice, and
will refrain from attempting to adjust controls (except for Lessee’s adjustment
of controls with approval of and training by Lessor as provided in this Lease).
Lessee will keep corridor doors closed, and shall keep all window coverings
pulled down.

 

16. Lessor reserves the right to exclude or expel from the Building any person
who, in the judgment of Lessor, is intoxicated or under the influence of liquor
or drugs, or who shall in any manner do any act in violation of any of the rules
and regulations of the Building.

 

17. No vending machine or machines of any description shall be installed,
maintained or operated upon the Premises without the written consent of Lessor,
which approval shall not be unreasonably withheld, conditioned or delayed.

 

18. Lessor shall have the right, exercisable without notice and without
liability to Lessee to change the name and street address of the Building or the
Project.

 

19. Lessee shall not disturb, solicit or canvass any occupant of the Building or
Project and shall cooperate to prevent the same.

 

20. Lessor shall have the right to control and operate the public portions of
the Buildings and the public facilities, and heating and air conditioning, as
well as facilities furnished for the common use of the tenants, in such manner
as it deems best for the benefit of the tenants generally.

 

21. All entrance doors in the Premises shall be left locked when the Premises
are not in use and all doors opening to public corridors shall be kept closed
except for normal ingress or egress from the Premises.

 

22. Without the written consent of Lessor, Lessee shall not use the name of the
Building or Project in connection with or in promoting or advertising the
business of Lessee except as Lessee’s address.

 

23. Lessee shall place pads under all desk chairs, or have carpet coasters to
protect chairs.

 

24. Except as specifically otherwise provided in this Lease, Lessee will not
install any radio or television antenna, loudspeaker, satellite dishes or other
devices on the roof(s) or exterior walls of the Building or the Project. Lessee
will not interfere with radio or television broadcasting or reception from or in
the Project or elsewhere.

 

25. Lessee agrees to comply with all safety, fire protection and evacuation
procedures and regulations established by Lessor or any governmental agency.

 

26. Lessee assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.

 

27. Lessor may prohibit smoking in the Building and/or any other portion of the
Project and may require Lessee and any of its employees, agents, clients,
customers, invitees and guests who desire to smoke, to smoke within designated
smoking areas within the Project, if any such smoking areas are provided.

 

28. Lessee’s requirements will be attended to by Lessor only upon appropriate
application to Lessor’s management office for the Project by an authorized
individual of Lessee. Employees of Lessor will not perform any work or do
anything outside of their regular duties unless under special instructions from
Lessor, and no employee of Lessor will admit any person (Lessee or otherwise) to
any office without specific instructions form Lessor.

 

29. In the event of any conflict between these Rules and Regulations and the
Lease of which they are a part, the other provisions of the Lease shall prevail.
Lessor may waive any one or more of these Rules and Regulations for the benefit
of Lessee or any other tenant, but no such waiver by Lessor will be construed as
a waiver of such Rules and Regulations in favor of Lessee or any other tenant,
nor prevent Lessor from thereafter enforcing any such Rules and Regulations
against any or all of the tenants of the Project.

 

RULES AND REGULATIONS - PAGE 2

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CONSENT TO SUBLEASE AND AMENDMENT TO LEASE

 

THIS CONSENT TO SUBLEASE AND AMENDMENT TO LEASE (“Consent and Amendment”) is
made as of December 18, 2002, by CUPERTINO CITY CENTER BUILDINGS, a California
limited partnership (“Lessor”), to SUN MICROSYSTEMS, INC., a Delaware
corporation (“Lessee”), and BORLAND SOFTWARE CORPORATION, a Delaware corporation
(“Sublessee”).

 

R E C I T A L S:

 

A. Lessor and Lessee have entered into that certain Lease (the “Lease”) dated as
of November 20, 1997, wherein Lessor leased to Lessee certain “Premises” (as
more particularly described in the Lease) being certain space within the
building located at 20450 Stevens Creek Boulevard, Cupertino, California (the
“Building”). A copy of the Lease is attached hereto as Exhibit A and
incorporated herein by this reference. All initial capitalized terms used herein
but not herein defined shall have the meaning ascribed to such terms in the
Lease.

 

B. Lessee desires to sublease a portion of the Premises (the “Subleased
Premises”), being all space on the sixth, seventh and eighth floors of the
Building, as more particularly described in and pursuant to the provisions of
that certain Sublease dated as of December 16, 2002 (the “Sublease”), a copy of
which is attached hereto as Exhibit B.

 

C. The parties desire to agree to certain amendments to the Lease.

 

D. Lessee desires to obtain Lessor’s consent to the Sublease.

 

NOW, THEREFORE, Lessor hereby consents to the Sublease and the parties agree to
certain amendments to the Lease, subject to and upon the following terms and
conditions to which Lessee and Sublessee hereby agree:

 

1. The Sublease is subject and subordinate to the Lease and to all of its terms,
covenants, conditions and provisions. In the event of any conflict between the
terms and provisions of the Lease and the Sublease, the terms and provisions of
the Lease shall control.

 

2. Neither the Sublease nor this Consent and Amendment shall:

 

a. release or discharge Lessee from any liability, whether past, present or
future, under the Lease;

 

b. operate as a consent or approval by Lessor to or of any of the terms,
covenants, conditions or provisions of the Sublease, and Lessor shall not be
bound thereby;

 

c. except as expressly provided in Section 6 below, be construed to modify,
waive or affect any of the terms, covenants, conditions or provisions of the
Lease, or to waive any breach thereof, or any of Lessor’s rights thereunder, or
to enlarge or increase Lessor’s obligations thereunder; or

 

d. be construed as a consent by Lessor to any further subletting either by
Lessee or by Sublessee or to any assignment by Lessee of the Lease or an
assignment by Sublessee of the Sublease, whether or not the Sublease purports to
permit the same and, without limiting the generality of the foregoing, both
Lessee and Sublessee agree that, without Lessor’s consent (which consent shall
not be unreasonably withheld), Sublessee has no right whatsoever to sell,
assign, transfer or hypothecate the Sublease nor to sublet any portion of the
Subleased Premises or permit any of the Subleased Premises to be used or
occupied by any other party; in that regard, both Lessee and Sublessee agree
that an assignment by operation of law or a transfer of control of Sublessee
shall be deemed to be a prohibited assignment hereunder.

 

3. The acceptance by Lessor of any payment or performance from Sublessee,
regardless of the circumstances or reasons therefor, shall in no manner
whatsoever be deemed an attornment by Sublessee to Lessor or a recognition or
non-disturbance of Sublessee or the Sublease by Lessor or to serve to release
Lessee from any liability

 

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under the terms, covenants, conditions or provisions under the Lease; provided,
however, nothing herein shall in any manner obligate Lessor to accept any such
payment or performance. Nothing stated herein shall in any manner affect the
rights of Sublesseee under the “SNDA” (as hereinafter defined).

 

4. Except in the event of a “Lease Termination” (as defined in the SNDA), in
which case the provisions of the SNDA shall apply, the term of the Sublease
shall expire and come to an end on its stated expiration date (but in no event
later than the stated expiration date of the Lease) or any premature termination
date thereof or concurrently with any premature termination of the Lease,
whether by right under the Lease or by operation of law or in the event of a
default by Lessee; provided that Lessor and Lessee hereby agree not to mutually
agree to an early termination of the Lease, but nothing contained herein shall
be deemed to limit Lessor’s rights of termination of the Lease as specified in
the Lease (including, without limitation, in the event of Lessee default,
casualty or condemnation, in each case, subject to the terms and conditions
provided in the Lease). As used herein, the “SNDA” shall mean that certain
Subordination, Non-Disturbance and Attornment Agreement entered into by and
among the parties hereto concurrently herewith.

 

5. Lessee and Sublessee covenant and agree that under no circumstances shall
Lessor be liable for any brokerage commission or other charge or expense in
connection with the Sublease, and Lessee and Sublessee agree to indemnify,
defend and hold Lessor harmless against same and against any fees, costs,
expenses or liabilities (including, but not limited to, attorneys’ fees)
incurred by Lessor in connection with same.

 

6. Notwithstanding anything to the contrary contained in this Consent and
Amendment or in the Lease;

 

(a) Lessor agrees that without Lessor’s consent but upon at least ten (10)
business days prior written notice to Lessor and otherwise complying with the
provisions of the Lease governing the making of Alterations, Sublessee may make
interior, non-structural “Alterations” (as defined in the Lease) to the
Subleased Premises costing less than Twenty-Five Thousand Dollars ($25,000.00)
per work of Alterations and not (1) requiring the demolition of any material
existing improvements, or (2) affecting the mechanical or utility systems
serving the Subleased Premises or the exterior appearance of the Building. In
addition, Lessor agrees that Lessor shall notify Sublessee at the time of
Lessor’s consent to any Alterations requiring the consent of Lessor whether
Lessor shall require the removal of such Alterations at the expiration of the
Term or earlier termination of the Lease in accordance with the rights reserved
to Lessor pursuant to the Lease.

 

(b) Sublessee may operate electrical equipment within the Subleased Premises
using such electrical capacity as is customary for general office use, and if
Sublessee requires water or electric current in excess of that usually furnished
or supplied for the use of the Subleased Premises as general office space,
Sublessee shall first procure the written consent of Lessor (which consent shall
not be unreasonably withheld or delayed), to any required Alterations in
connection therewith (which Alterations shall be performed at Sublessee’s sole
cost and shall be governed by the provisions of the Lease regarding the making
of Alterations by Lessee), and Lessor may cause a water or gas meter or electric
current meter to be installed in the Subleased Premises so as to measure the
amount of water, gas and electric current consumed for any such use. The cost of
any such meters and of installation, maintenance and repair thereof shall be
paid for by Sublessee and Sublessee agrees to pay to Lessor, as additional rent,
promptly upon demand therefor by Lessor for all such water, gas and electric
current consumed as shown by said meters, at the rates charged for such services
by the local public utility furnishing the same, plus any additional expense
incurred in keeping account of the water, gas and electric current so consumed.
If a separate meter is not installed, such excess cost for such water, gas and
electric current will be conclusively established by an estimate made by a
utility company or electrical engineer selected by Lessor. In addition, if such
Alterations to allow such excess electrical consumption result in increased
heating loads in the Subleased Premises, Sublessee shall be solely responsible
for installing such supplemental HVAC systems as are reasonably required to
address such additional heating loads, at Sublessee’s sole cost, subject to the
provisions of the Lease.

 

(c) As used herein, the term “Lessee Restoration Obligations” shall mean all of
the obligations of Lessee under the Lease (including, without limitation the
provisions of Sections 28.a and 10.b of the Lease) and under that certain letter
agreement between Lessor and Lessee dated February 27, 1998, with respect to the
condition in which the Subleased Premises must be surrendered upon the
expiration or earlier termination of the Lease. Notwithstanding anything to the
contrary set forth in the Lease or such letter agreement dated February 27,

 

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1998, Lessor acknowledges and agrees that Lessee shall have no obligation to
perform any Lessee Restoration Obligations with respect to the Subleased
Premises. Upon the expiration or earlier termination of the Lease, Lessee shall
have no obligation to demolish, alter or modify any improvements or alterations
now existing or hereafter constructed on the Subleased Premises. Lessor and
Sublessee hereby acknowledge and agree that, notwithstanding anything to the
contrary set forth in the Lease or under the letter agreement dated February 27,
1998 referred to above, at the expiration or earlier termination of the term of
the Successor Lease (or at the expiration or earlier termination of the term of
the Sublease should the Successor Lease not become effective upon any
termination of the Sublease prior to the commencement date of the Successor
Lease), Sublessee shall surrender the Subleased Premises with sixty percent of
the Subleased Premises as “open area” and forty percent (40%) as general office
space, and otherwise in broom clean, trash free and in good condition,
reasonable wear and tear and damage or destruction not required to be repaired
by Lessee excepted. The parties hereto acknowledge and agree that so long as
Sublessee surrenders the Subleased Premises in the condition described in the
immediately preceding sentence, then Sublessee shall have no obligation to
demolish, alter, modify or remove any particular alterations, additions or
improvements that Lessee has made to the Subleased Premises. Without limiting
the foregoing, the parties hereto agree that if the Sublease terminates prior to
the natural expiration of the Sublease Term for any reason other than as a
result of a breach or default by Lessee or Sublessee, or if the Successor Lease
terminates prior to the natural expiration of the Successor Lease for any reason
other than a breach or default by Sublessee, then Sublessee shall be given a
reasonable period of time following the termination of the Sublease or Successor
Lease, as the case may be, to place the Subleased Premises in the condition
required to be surrendered by Sublessee as stated above.

 

(d) During the term of the Sublease, Sublessee shall have the right to a
proportionate share of the Building -top signage rights granted to Lessee
pursuant to Lease Article 50 and such rights are hereby assigned to Sublessee,
and Lessor hereby consents to such assignment. Sublessee’s right to such
Building top signage shall be subject to all provisions of Lease Article 50 and
shall be personal to Sublessee and any entity succeeding to the interest of
Sublessee by merger or consolidation or acquiring all or substantially all of
the stock or assets of Sublessee.

 

(e) Notwithstanding anything to the contrary contained in Lease Article 15, the
parties agree as follows: Lessor releases Lessee, Sublessee and their respective
officers, directors, agents, employees, partners and shareholders from any and
all claims or demands for damages, loss, expense or injury arising out of any
perils to the extent covered by insurance carried by Lessor, or that are due to
the negligence of Lessee, Sublessee or their respective officers, directors,
agents, employees, partners and shareholders and regardless of cost or origin,
to the extent such waiver is permitted by Lessor’s insurers and does not
prejudice the insurance required to be carried by Lessor under this Lease.
Lessee and Sublessee each release Lessor and Lessor’s officers, directors,
agents, employees, partners and shareholders from any and all claims or demands
for damages, loss, expense or injury arising out of any perils which are insured
against under any insurance carried by Lessee or Sublessee, whether due to the
negligence of Lessor or its officers, directors, agents, employees, partners and
shareholders and regardless of cost or origin, to the extent such waiver is
permitted by the insurers of Lessee or Sublessee (as applicable) and does not
prejudice the insurance required to be carried by Lessee or Sublessee (as
applicable) under this Lease or the Sublease.

 

(f) Notwithstanding anything to the contrary contained in the Lease, Sublessee
shall be entitled to use of fifty (50) reserved, designated parking spaces
within the Project parking areas for the exclusive use of Sublessee and
Sublessee’s agents, employees, licensees, guests and invitees (which spaces
shall be included as a part of the total parking allotment which Lessor is
required to provide to Lessee pursuant to the Lease). The location of such
reserved parking spaces shall be as designated by Lessor on the lower level of
the underground parking structure, but such spaces may be relocated by Landlord
from time to time on such level, upon reasonable prior written notice to
Sublessee. Lessor shall, at Lessee’s expense, cause each reserved parking space
to be designated as “reserved” or otherwise designated for Lessee’s use. If
Lessee desires any additional signage identifying such reserved parking spaces,
such signage shall be subject to Lessor’s prior written approval (which approval
shall not be unreasonably withheld, conditioned or delayed) as to design and
manner of installation and shall be installed by Lessor at Lessee’s cost. Lessor
shall not be required to police or otherwise monitor Sublessee’s “reserved”
parking rights granted pursuant hereto.

 

(g) Lessee hereby agrees that it shall have no right to extend the Term of the
Lease by the

 

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Extended Term, and Article 3.b. of the Lease is hereby deleted and of no further
force or effect.

 

7. Any act or omission of Sublessee or anyone claiming under or through
Sublessee that violates any of the provisions of the Lease shall be deemed a
violation of the Lease by Lessee.

 

8. Lessor hereby certifies that (a) the Lease is in full force and effect, and
(2) to Lessor’s actual knowledge (without duty of investigation), Lessee is not
in default under the Lease. Lessee hereby certifies that (i) the Lease is in
full force and effect, and (ii) to Lessee’s actual knowledge (without duty of
investigation), Lessor is not in default under the Lease.

 

9. Lessor consents to the sublease of the Premises only at such time as this
Consent and Amendment has been executed by all of the parties hereto and an
original counterpart has been delivered to Lessor. Lessee hereby agrees to
reimburse Lessor’s actual and reasonable attorneys’ fees and costs incurred in
connection with the review of the Sublease and this Consent and Amendment within
thirty (30) days following submission of request for payment by Lessor
accompanied by reasonable supporting documentation. This Consent and Amendment
is not assignable, nor shall this Consent and Amendment be a consent to any
amendment or modification of the Sublease, without Lessor’s prior written
consent.

 

10. In the event any party(ies) shall institute any action or proceeding against
the other party relating to this Consent and Amendment or the Sublease, the
unsuccessful party(ies) in such action or proceeding shall reimburse the
successful party(ies) for its(their) disbursements incurred in connection
therewith and for its(their) reasonable attorneys’ fees and costs as fixed by
the court. In addition to the foregoing award of attorneys’ fees and costs to
the successful party(ies), the successful party(ies) in any lawsuit on this
Consent and Amendment or the Sublease shall be entitled to its(their) attorneys’
fees and costs incurred in any post-judgment proceedings to collect or enforce
the judgment. This provision is separate and several and shall survive the
merger of this Consent and Amendment into any judgment on this Consent and
Amendment.

 

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11. This Consent and Amendment may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which when taken together
shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, this Consent and Amendment has been executed by the parties
as of the date first above written.

 

LESSOR:

CUPERTINO CITY CENTER BUILDINGS,

a California limited partnership

By:

 

PROM XX, INC., a California corporation, its general partner

   

By:

 

PROMETHEUS REAL ESTATE GROUP, INC.,

a California corporation, agent for owner

 

       

By:                                                      

       

      Vicki R. Mullins, Vice President

 

       

By:                                                      

       

Name:                                                 

       

Its:                                                       

 

LESSEE:

SUN MICROSYSTEMS, INC.,

a Delaware corporation

By:    /s/    CHARLES K. BARRY        

Name:    Charles K. Barry                

Its:    Senior Director                        

 

By:                                                     

Name:                                                

Its:                                                      

 

SUBLESSEE:

BORLAND SOFTWARE CORPORATION,

a Delaware corporation

By:                                                     

Name:                                                

Its:                                                      

By:                                                      

Name:                                                 

Its:                                                      

 

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11. This Consent and Amendment may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which when taken together
shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, this Consent and Amendment has been executed by the parties
as of the date first above written.

 

LESSOR:

CUPERTINO CITY CENTER BUILDINGS,

a California limited partnership

By:    

 

PROM XX, INC., a California corporation, its general partner

   

By:

 

PROMETHEUS REAL ESTATE GROUP, INC.,

a California corporation, agent for owner

       

By:

 

/s/    VICKI R. MULLINS        

           

Vicki R. Mullins, Vice President

 

       

By:

 

/s/    ROBERT J. LAMPHER        

       

Name:

 

Robert J. Lampher

       

Its:

 

Vice President

 

LESSEE:

SUN MICROSYSTEMS, INC.,

a Delaware corporation

By:                                                  

Name:                                             

Its:                                                   

By:                                                  

Name:                                             

Its:                                                   

 

SUBLESSEE:

BORLAND SOFTWARE CORPORATION,

a Delaware corporation

By:

 

/s/    ROGER A. BARNEY        

Name:

 

Roger A. Barney

Its:

 

SVP Corporate Services & CAO

By:                                                  

Name:                                             

Its:                                                   

 

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SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

 

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”)
is made by and between CUPERTINO CITY CENTER BUILDINGS, a California limited
partnership (“Lessor”), SUN MICROSYSTEMS, INC., a Delaware corporation
(“Lessee”) and BORLAND SOFTWARE CORPORATION, a Delaware corporation
(“Sublessee”).

 

RECITALS:

 

A. Lessor and Lessee are parties to that certain Cupertino City Center Net
Office Lease dated November 20, 1997, wherein Lessor leased to Lessee certain
“Premises” (as more particularly described in the Lease) commonly known as
floors one (1) through eight (8) of the building located at 20450 Stevens Creek
Boulevard, Cupertino, California (the “Lease”).

 

B. Lessee and Sublessee have entered into that certain sublease agreement dated
December 16, 2002, whereby Lessee has leased to Sublessee certain “Subleased
Premises” (as more particularly described in the Sublease) consisting of
approximately 61,200 rentable square feet in the aggregate, and commonly known
as the entire sixth (6th), seventh (7th) and eighth (8th) floors of the
Premises.

 

C. Sublessee and Lessor have entered into that certain Cupertino City Center Net
Office Lease dated on or about the date hereof (the “Successor Lease”), whereby
Lessor has leased to Sublessee the Subleased Premises for a term commencing upon
the expiration of the Lease.

 

D. Pursuant to the Lease and the Sublease, the Sublease is subject and
subordinate to the Lease, but Lessor is willing to enter into this Agreement
with Lessee and Sublessee to provide that, in the event of the termination of
the Lease prior to the termination of the Sublease as a result of Lessee’s
default under the Lease, Lessor’s shall not disturb Sublessee’s occupancy of the
Subleased Premises and Sublessee shall attorn to Lessor, all on the terms and
subject to the conditions more particularly set forth in this Agreement.

 

IN CONSIDERATION of the mutual agreements contained in this Agreement, Lessor,
Lessee and Sublessee agree as follows:

 

1. The Sublease and all of Sublessee’s rights under the Sublease are and will
remain subject and subordinate to the Lease and all of Lessor’s rights under the
Lease. Accordingly, the term of the Sublease shall expire and come to an end on
its stated expiration date (but in no event later than the stated expiration
date of the Lease) or any premature termination date of the Sublease or
concurrently with any premature termination of the Lease (whether by consent or
other right, now or hereafter agreed to or by operation of law), except only
that in the event of the termination of the Lease prior to the termination of
the Sublease as a result of default by Lessee under the Lease (a “Lease
Termination”), then, so long as Sublessee is not then in default under this
Agreement and if Sublessee is not then in default beyond any applicable grace
and cure periods under the Sublease, Sublessee’s possession of the Subleased
Premises will not be disturbed but instead of the terms of the Sublease
continuing in force and effect, the Successor Lease shall commence immediately
upon such Lease Termination, with the period (the “Interim Period”) of time
between such Lease Termination and the scheduled Commencement of the Successor
Lease being added to the “Term” of the Successor Lease, and all terms and
conditions of the Successor Lease governing such Interim Period, except that
Base Rent shall be adjusted as of the effective date of such Lease Termination
to be the then “Fair Market Rental Value” (as hereinafter defined) of the
Subleased Premises as of the commencement of the Interim Period, but in no event
less than the Base Rent payable under the Sublease. Upon the occurrence of any
Lease Termination, Sublessee shall pay as Base Rent (pending determination of
the Fair Market Rental Value of the Subleased Premises for the Interim Period in
accordance herewith), the Base Rent payable under the Sublease, provided that
following the determination of the Fair Market Rental Value of the Subleased
Premises for the Interim Period in accordance herewith, if it is determined that
such Fair Market Rental Value is more than the Base Rent payable under the
Sublease, the Base Rent under the Successor Lease from and after the
commencement of the Interim Period shall be adjusted retroactive to the
commencement of the Interim Period based on such determination, and Sublessee
shall, within thirty (30) days of such determination, make such retroactive
adjustment payment as is applicable based thereon. The term “Fair Market Rental
Value” of the Subleased Premises as used herein shall mean

 

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the then prevailing fair market rent for the Subleased Premises at the
commencement of the Interim Period. In determining such rate, the parties may
consider “Class A” office space comparable in size and quality to the Subleased
Premises, if any, located in the West Valley marketplace (meaning West San Jose,
Campbell, Los Gatos/Saratoga and Cupertino) and located in the Building and
other buildings comparable in size and quality to the Building, which is
available on a direct lease basis from the owner of the building (and not any
sublease space offered for lease, regardless of location or quality) and taking
into consideration all other factors normally considered when determining fair
market rental value (including, without limitation, the duration of the Interim
Period, such rental increases as may be appropriate during such period, the fact
that the Premises comprise the top floors of the Building, and as such, the
premier space in the Project, and such concessions as are then available in the
marketplace including, but not limited to, free rent, customary improvement
allowances, moving allowances and landlord lease take-overs, provided that such
concessions shall not actually be given, but shall be factored in, if
applicable, when establishing a Fair Market Rental Value amount).

 

Upon determination of the Fair Market Rental Value for the Subleased Premises
for the Interim Period, the parties shall immediately execute an amendment to
the Successor Lease stating the Base Rent to be paid during the Interim Period.

 

The parties shall have thirty (30) days after the occurrence of a Lease
Termination in which to agree upon the Base Rent to be payable during the
Interim Period. If the parties are unable to agree, in their sole and absolute
discretion, on the Fair Market Rental Value for the Subleased Premises within
such thirty (30) day period, then the Fair Market Rental Value for the Extended
Term shall be determined as follows:

 

a. Following the expiration of such thirty (30) day period, Lessor and Sublessee
shall meet and endeavor in good faith to agree upon a licensed commercial real
estate agent with at least seven (7) years full-time experience as a real estate
agent active in leasing of commercial office buildings in the area of the
Premises to appraise and set the Fair Market Rental Value for the Subleased
Premises for the Interim Period. If Lessor and Sublessee fail to reach agreement
upon such agent within fifteen (15) days following the expiration of such thirty
(30) day period, then, within fifteen (15) days thereafter, each party, at its
own cost and by giving notice to the other party, shall appoint a licensed
commercial real estate agent with at least seven (7) years full-time experience
as a real estate agent active in leasing of commercial office buildings in the
area of the Subleased Premises to appraise and set the Fair Market Rental Value
for the Interim Period. If a party does not appoint an agent within fifteen (15)
days after the other party has given notice of the name of its agent, the single
agent appointed shall be the sole agent and shall set the Fair Market Rental
Value for the Interim Period. If there are two (2) agents appointed by the
parties as stated above, the agents shall meet within ten (10) days after the
second agent has been appointed and attempt to set Fair Market Rental Value for
the Interim Period. If the two (2) agents are unable to agree on such Fair
Market Rental Value within fifteen (15) days after the second agent has been
appointed, they shall, within fifteen (15) days after the last day the two (2)
agents were to have set such Fair Market Rental Value, attempt to select a third
agent who shall be a licensed commercial real estate agent meeting the
qualifications stated above. If the two (2) agents are unable to agree on the
third agent within such fifteen (15) day period, either Lessor or Sublessee may
request the President of the local chapter of the Society of Industrial and
Office Realtors (SIOR) or a then equivalent organization if SIOR is not then in
existence to select a third agent meeting the qualifications stated in this
subsection. Each of the parties shall bear one-half (1/2) of the cost of
appointing the third agent and of paying the third agent’s fee. No agent shall
be employed by, or otherwise be engaged in business with or affiliated with,
Lessor or Sublessee, except as an independent contractor.

 

b. Within fifteen (15) days after the selection of the third agent, a majority
of the agents shall set the Fair Market Rental Value for the Interim Period. If
a majority of the agents are unable to set such Fair Market Rental Value within
the stipulated period of time, each agent shall make a separate determination of
such Fair Market Rental Value and the three (3) appraisals shall be added
together and the total shall be divided by three (3). The resulting quotient
shall be the Fair Market Rental Value for the Premises for the Interim Period.
If, however, the low appraisal and/or high appraisal is/are more than twenty
percent (20%) lower and/or higher than the middle appraisal, the low appraisal
and/or the high appraisal shall be disregarded. If only one (1) appraisal is
disregarded, the remaining two (2) appraisals shall be added together and their
total divided by two (2), and the resulting quotient shall be Fair Market Rental
Value for the Interim Period. If both the low appraisal and the high appraisal
are disregarded as stated in this subsection, the middle appraisal shall be the
Fair Market Rental Value for the Interim Period.

 

 

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c. Each agent shall hear, receive and consider such information as Lessor and
Lessee each care to present regarding the determination of Fair Market Rental
Value for the Interim Period and each agent shall have access to the information
used by each other agent. Upon determination of the Fair Market Rental Value for
the Interim Period, the agents shall immediately notify the parties hereto in
writing of such determination by certified mail, return receipt requested.

 

2. Upon a Lease Termination, Sublessee will recognize and attorn to Lessor as
the “Lessor” under the Successor Lease for the Interim Period. Sublessee’s
attornment will be self-operative with no further instrument required to
effectuate the attornment except that at Lessor’s request, Sublessee will
execute instruments reasonably satisfactory to Lessor confirming the attornment.
Upon receipt of notice from Lessor, Sublessee will pay the rent (as adjusted in
accordance with Section 1 above) as and when due under the Successor Lease to
Lessor. Notwithstanding the attornment provided herein, Lessor shall not (i) be
liable for any previous act or omission of Lessee under the Sublease or any
misrepresentation by Lessee under the Sublease, (ii) be subject to any defense,
credit, claim, counterclaim, defense or offset previously accrued in favor of
the Sublessee against Lessee or be liable for any damages Sublessee may suffer
as a result of any misrepresentation, breach of warranty or any act of or
failure to act by any party other than Lessor, (iii) be bound by any amendment
or modification of the Sublease made without Lessor’s written consent or by any
previous prepayment by Sublessee of more than one month’s rent, (iv) be
responsible for any security deposit given by Sublessee to Lessee and not
received by Lessor, or (v) be bound by any obligation to make improvements to
the Subleased Premises, to make any payment or give any credit or allowance to
Sublessee provided for in the Sublease or to pay any leasing commissions arising
out of the Sublease.

 

3. Lessor will have the right, but not the obligation, to cure any default by
Lessee, as “Sublessor,” under the Sublease. Sublessee will notify Lessor of any
default that would entitle Sublessee to terminate the Sublease or abate the rent
payable thereunder and any notice of termination or abatement will not be
effective unless Sublessee has so notified Lessor of the default and Lessor has
had a 30-day cure period (or such longer period as may be necessary if the
default is not susceptible to cure within 30 days) commencing on the latest to
occur of the date on which (a) the cure period under the Sublease expires; (b)
Lessor receives the notice required by this paragraph; and (c) Lessor obtains
possession of the Subleased Premises if the default is not susceptible to cure
without possession.

 

4. Lessor hereby agrees to concurrently deliver to Sublessee a copy of any
notice of breach or default delivered by Lessor to Lessee under the Lease.
Sublessee shall have the right (but not the obligation) to cure any such breach
or default by Lessee under the Lease within same period for cure as is provided
Lessee under the Lease.

 

5. All notices, consents and demands which may or are to be required or
permitted to be given by either party to the other hereunder shall be in
writing. All notices, consents and demands shall be personally delivered, sent
by overnight courier providing receipt of delivery (such as Federal Express), or
sent by United States Certified Mail, postage prepaid return receipt requested,
addressed to the applicable party at the address specified below, or to such
other place as a party may from time to time designate in a notice to the other
parties pursuant to this Section. Notices sent by overnight courier shall be
deemed delivered upon the next business day following deposit with such
overnight courier for next business day delivery. Mailed notices shall be deemed
delivered two (2) business days after deposit in the United States mail as
required by this Section.

 

Lessor’s Notice Address:

 

with a concurrent copy to:

c/o Prometheus Real Estate Group, Inc.,

 

c/o Prometheus Real Estate Group, Inc.,

350 Bridge Parkway

 

350 Bridge Parkway

Redwood City, California 94065

 

Redwood City, California 94065

Attn: Vicki R. Mullins

 

Attn: Chief Financial Officer

 

Lessee’s Notice Address:

 

with a concurrent copy to:

Sun Microsystems Inc.

 

Sun Microsystems, Inc.

777 Gateway Boulevard

 

4120 Network Circle

MS NWK15-103

 

MS SCA12-202

Newark, California 94560

 

Santa Clara, California 95054

Attn: Lease Administration

 

Attn: Real Estate Counsel

 

 

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Sublessee’s Notice Address:

 

with a concurrent copy to:

Borland Software Corporation

 

Borland Software Corporation

100 Enterprise Way

 

100 Enterprise Way

Scotts Valley, California 94066

 

Scotts Valley, California 94066

Attention: Roger Barney

 

Attention: General Counsel

 

6. Any claim by Sublessee against Lessor under the Sublease, the Successor Lease
or this Agreement will be satisfied solely out of Lessor’s interest in the
Property and Lessee will not seek recovery against or out of any other assets of
Lessor. Lessor will have no liability or responsibility for any obligations
under the Lease that arise subsequent to any transfer of the Property by Lessor.

 

7. This Agreement is governed by and will be construed in accordance with the
laws of the State of California.

 

8. Each of the parties hereto waives trial by jury in any proceeding brought by,
or counterclaim asserted by, any of the parties hereto relating to this
Agreement.

 

9. If there is a conflict between the terms of the Lease and/or the Sublease and
this Agreement, the terms of this Agreement will prevail.

 

10. This Agreement binds and inures to the benefit of Lessor, Lessee and
Sublessee and their respective successors, assigns, heirs, administrators,
executors, agents and representatives.

 

11. This Agreement contains the entire agreement between the parties hereto with
respect to the subject matter of this Agreement, may be executed in counterparts
that together constitute a single document and may be amended only by a writing
signed by each of the parties hereto.

 

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12. Sublessee certifies that (a) the Sublease represents the entire agreement
between Lessee and Sublessee regarding the sublease of the Subleased Premises by
Sublessee; (b) the Sublease is in full force and effect; (c) to Sublessee’s
knowledge, neither Lessee nor Sublessee is in default under the Sublease beyond
any applicable grace and cure periods and no event has occurred which with the
giving of notice or passage of time would constitute a default under the
Sublease; and (d) to Sublessee’s knowledge, all conditions to be performed to
date by the Lessee under the Sublease have been satisfied.

 

IN WITNESS WHEREOF, Lessor, Lessee and Sublessee have executed and delivered
this Agreement as of December 19, 2002.

 

LESSOR:

CUPERTINO CITY CENTER BUILDINGS,

a California limited partnership

By:

 

PROM XX, INC., a California corporation, its general partner

   

By:

 

PROMETHEUS REAL ESTATE GROUP, INC.,

a California corporation, agent for owner

       

By:                                                         

           

Vicki R. Mullins, Vice President

       

By:                                                      

       

Name:                                                 

       

Its:                                                       

 

LESSEE:

SUN MICROSYSTEMS, INC.,

a Delaware corporation

By:    /s/    CHARLES C. BARRY        

Name: Charles C. Barry

Its: Senior Director

By:                                                      

Name:                                                 

Its:                                                       

 

SUBLESSEE:

BORLAND SOFTWARE CORPORATION,

a Delaware corporation

By:                                                      

Name:                                                 

Its:                                                       

By:                                                      

Name:                                                 

Its:                                                       

 

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12. Sublessee certifies that (a) the Sublease represents the entire agreement
between Lessee and Sublessee regarding the sublease of the Subleased Premises by
Sublessee; (b) the Sublease is in full force and effect; (c) to Sublessee’s
knowledge, neither Lessee nor Sublessee is in default under the Sublease beyond
any applicable grace and cure periods and no event has occurred which with the
giving of notice or passage of time would constitute a default under the
Sublease; and (d) to Sublessee’s knowledge, all conditions to be performed to
date by the Lessee under the Sublease have been satisfied.

 

IN WITNESS WHEREOF, Lessor, Lessee and Sublessee have executed and delivered
this Agreement as of December 19, 2002.

 

LESSOR:

CUPERTINO CITY CENTER BUILDINGS,

a California limited partnership

By:

 

PROM XX, INC., a California corporation, its general partner

   

By:

 

PROMETHEUS REAL ESTATE GROUP, INC.,

a California corporation, agent for owner

       

By:

 

/s/    VICKI R. MULLINS        

           

Vicki R. Mullins, Vice President

       

By:

 

/s/    ROBERT J. LAMPHER        

       

Name:

 

Robert J. Lampher

       

Its:

 

Vice President

 

 

LESSEE:

SUN MICROSYSTEMS, INC.,

a Delaware corporation

By:                                              

Name:                                         

Its:                                              

By:                                             

Name:                                        

Its:                                             

 

SUBLESSEE:

BORLAND SOFTWARE CORPORATION,

a Delaware corporation

By:

 

/s/    ROGER A. BARNEY        

Name:

 

Roger A. Barney

Its:

 

SVP Corporate Services & CAO

By:                                                 

Name:                                            

Its:                                                 

 

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[GRAPHICS TO APPEAR HERE]

 

VIA FACSIMILE (831.431.2016)

 

December 17, 2002

 

Mr. Roger Barney

Borland Software Corporation

100 Enterprise Way

Scotts Valley, California 95066

 

RE: Subleased Premises consisting of the sixth, seventh, and eighth floors

       of that certain eight-story office building located at

       20450 Stevens Creek Boulevard, Cupertino, California

 

Dear Mr. Barney

 

This letter is with respect to the above referenced premises to be subleased by
Borland Software Corporation, a Delaware corporation (“Borland”) and the
proposed alteration of the existing interior leasehold improvements installed by
the master tenant, Sun Microsystems, Inc., a Delaware corporation (“Sun”).
Subject to the concurrent review and approval by Sun, Borland has requested
Cupertino City Center Buildings, a California limited partnership (“Lessor”) to
approve certain proposed alterations to be constructed by Borland at the above
referenced subleased premises consisting of the entire sixth, seventh, and
eighth floors of the building (the “Subleased Premises”). The proposed
alterations are detailed on preliminary plans prepared by Borland’s architect,
Reel Grobman Interior Architecture, dated December 13, 2002, consisting of a
demolition plan and space plan for each floor of the Subleased premises (the
“Alterations”).

 

The following conditions of approval are granted by Lessor, and deemed accepted
by Borland when countersigned below and a copy of this letter returned to
Lessor. The proposed scope of work is hereby approved contingent upon Borland’s
compliance with the terms of Article 10 of the master lease “Alterations and
Additions,” which is Exhibit “A” of that certain sublease agreement of even date
by and between Borland and Sun (except that Borland’s obligations with respect
to the removal of the Alterations and/or restoration of the Subleased Premises
shall be governed by paragraph 14 of the Conditions of Approval below). The
following “Conditions of Approval” shall apply to Lessor’s consent to the
proposed Alterations.

 

1. Any revisions to the proposed scope of work shall require separate submission
to Lessor for review and approval (which approval shall not be unreasonably
withheld).

 

2. Borland shall submit complete construction documents to Lessor for Lessor’s
separate review and approval (which approval shall not be unreasonably
withheld). Lessor’s consent to the proposed Alterations is specifically
contingent upon Lessor’s review and written approval (which approval shall not
be unreasonably withheld) of a complete set of construction documents and design
build plans.

 

3. Within ten (10) days following Lessor’s receipt of Borland’s acceptance of
these Conditions of Approval, and prior to commencement of any construction upon
the Subleased Premises, a Notice of Nonresponsibility will be prepared, recorded
and posted by Lessor on behalf of Lessor.

--------------------------------------------------------------------------------

Mr. Roger Barney

December 17, 2002

Page 2

 

4. Borland must provide Lessor with a copy of the building permit issued by the
City of Cupertino prior to the commencement of construction. Borland shall
provide Lessor with copies of the final inspection reports from the City of
Cupertino within five (5) days following receipt by Borland.

 

5. Alterations are to be constructed, installed and completed at Borland’s sole
cost and expense by a licensed general contractor or subcontractor(s) approved
in advance by Lessor. Contractor and subcontractors are required to maintain and
provide proof of current policies of general liability insurance pursuant to the
terms of the lease.

 

6. Construction of the Alterations shall not impact the structural integrity of
the building. Lessee shall complete all structural upgrades required, if any, in
connection with its installation of the Alterations in conformance with the
requirements of the 1997 Uniform Building Code.

 

7. Within ten (10) days following the completion of the work, Borland shall
provide Lessor with one (1) set of reproducible as-built plans, and
corresponding CAD file (if available) for the renovated Subleased Premises.

 

8. All work is to be under warranty with the contractor and/or subcontractor(s)
for a period of one (1) year from the date of the final inspection.

 

9. Within ten (10) days following the completion of construction, Borland shall
cause to be recorded a “Notice of Completion.” Borland shall provide Lessor with
an original recorded Notice of Completion within five (5) days following
receipt.

 

10. All construction is subject to the lease provisions relating to mechanic’s
liens.

 

11. All work completed under this approval must comply with the provisions of
the Americans With Disabilities Act (ADA) and California Title-24 Lessor shall
have no obligation or responsibility to review the plans for such compliance.

 

12. Borland shall maintain the Alterations in good repair and condition,
ordinary wear and tear, damage or destruction and condemnation excepted.

 

13. Although not noted on the preliminary plans, included within the scope of
work for the Alterations is the responsibility to modify the electrical and
mechanical systems within the Subleased Premises such that they are appropriate
to the newly configured space and do not in any way impair or impede the
building systems. Under separate cover, Borland shall provide Lessor, for
Lessor’s prior review and approval (which approval shall not be unreasonably
withheld), copies of the proposed design build drawings for the reconfiguration
of the electrical and HVAC distribution within the Subleased Premises.

 

14. Based upon the scope of work specifically identified above as the proposed
Alterations, Borland shall not be required at the expiration or sooner
termination of the sublease term, or the term of the successor lease with
Lessor, to remove the Alterations and/or restore the Subleased Premises to its
original configuration and condition.

 

Please indicate your acceptance of the above Conditions of Approval by signing
below and returning a copy of this letter to the undersigned. Approval of the
preliminary plans will be deemed

 

--------------------------------------------------------------------------------

Mr. Roger Barney

December 17, 2002

Page 2

 

granted upon Lessor’s receipt of this countersigned letter. Should you have any
questions regarding this matter, please feel free to contact the undersigned at
650.596.5365. Thank you.

 

Sincerely,

 

CUPERTINO CITY CENTER BUILDINGS,
a California limited partnership

By:

 

PROM XX, INC.,
a California corporation, its general partner

   

By:   PROMETHEUS REAL ESTATE GROUP, INC.,

         a California corporation, agent for Owner

By:  

 

/s/    VICKI R. MULLINS        

   

Vicki R. Mullins

Its:

 

Vice President

 

Acceptance of Conditions of Approval dated December 17, 2002

 

BORLAND SOFTWARE CORPORATION,

a Delaware corporation

By:

 

/s/    ROGER A. BARNEY        

Its:

 

SVP Corporate Services & CAO

Date:

 

December 18, 2002

 

cc:     General Counsel; Sun Microsystems/Santa Clara Campus

Lease Administration; Sun Microsystems/Newark Campus

Mr. Anthony Smith; Sun Microsystems/Palo Alto Campus

Mr. Mike Furlow; Sun Microsystems, Inc./Palo Alto Campus

Ms. Meghan Khaitan; Jones Lang LaSalle/San Francisco