EXHIBIT 10.61
LEASE AGREEMENT
     THIS LEASE, made the 31st day of October 1989 between JOHN ARRILLAGA,
Trustee, or his Successor Trustee, UTA dated 7/20/77 (JOHN ARRILLAGA SEPARATE
PROPERTY TRUST) as amended, and RICHARD T. PEERY, Trustee, or his Successor
Trustee, UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY TRUST) as
amended, hereinafter called Landlord and QUANTUM CORPORATION, a Delaware
corporation, hereinafter called Tenant.
WITNESSETH:
     Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord those certain premises (the “Premises”) outlined in red on Exhibit “A”
attached hereto and incorporated herein by this reference thereto more
particularly described as follows:
All of that land containing approximately 10.531+ acres and that certain
155,734+ square foot one and two-story combination building (“Building 1”) and
parking appurtenant thereto, to be constructed and landscaping to be installed
by Landlord as shown within the area outlined in red (“Lot 1”) on Exhibit A to
be located at the corner of Bellew Drive and Magnolia Drive, Milpitas,
California. Said Premises (“Lot 1”) is more particularly shown within the area
outlined in red on Exhibit A attached hereto and incorporated herein by this
reference. The entire parcel containing approximately 37.096+ acres, of which
the Premises is a part, is shown within the area outlined in green on Exhibit A
attached hereto and incorporated herein by this reference. The interior of the
leased Premises shall be improved in the configuration as shown in red on
Exhibit B to be attached hereto and incorporated herein by this reference. The
building shell shall be constructed in accordance with the shell and site
improvement specifications set forth on Exhibit A, and the general building
elevation set forth on Exhibit A. See Paragraph 49
     The word “Premises” as used throughout this lease is hereby defined to
include the nonexclusive use of sidewalks and driveways in front of or adjacent
to the Premises and the nonexclusive use of the area directly underneath or over
such sidewalks and driveways. The gross leasable area of the building shall be
measured from outside of exterior walls to outside of exterior walls, and shall
include any atriums, covered entrances or egresses and covered loading areas.
     Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth and Tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all of said terms,
covenants and conditions. This Lease is made upon the conditions of such
performance and observance.
     1. USE. Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances for the purpose of Office,
sales, R&D, light manufacturing and related uses necessary for the use of Tenant
or any approved assignee or subtenant to conduct its business providing any and
all uses of the Premises shall be subject to

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and in conformance with all governmental laws and ordinances, and for no other
purpose without Landlord’s prior written consent, Tenant shall not do or permit
to be done in or about the Premises nor bring or keep or permit to be brought or
kept in or about the Premises anything which is prohibited by or will in any way
increase the existing rate of (or otherwise affect) fire or any insurance
covering the Premises or any part thereof, or any of its contents without the
prior written consent of Landlord, and provided Tenant bears any cost related to
such increased rate, or will cause a cancellation of any insurance covering the
Premises or any part thereof, or any of its contents Tenant shall not do or
permit to be done anything in, on or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Premises or neighboring premises or injure or annoy them, or use or allow the
Premises to be used for any improper, immoral, unlawful or objectionable
purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about
the Premises. No sale by auction shall be permitted on the Premises. Tenant
shall not place any loads upon the floors, walls or ceiling which endanger the
structure, or place any harmful fluids or other materials in the drainage system
of the building, or overload existing electrical or other mechanical systems. No
waste materials or refuse shall be dumped upon or permitted to remain upon any
part of the Premises or outside of the building in which the Premises are a
part, except in trash containers placed inside exterior enclosures designated by
Landlord for that purpose or inside of the building proper where designated by
Landlord. No materials, supplies, equipment, finished products or semi-finished
products, raw materials or articles of any nature shall be stored upon or
permitted to remain outside the Premises. Tenant shall not place anything or
allow anything to be placed near the glass of any window, door partition or wall
which may appear unsightly from outside the Premises. No loudspeaker or other
device system or apparatus which can be heard outside the Premises shall be used
in or at the Premises without the prior written consent of Landlord. Tenant
shall not commit or suffer to be committed any waste in or upon the Premises.
Tenant shall indemnify, defend and hold Landlord harmless against any loss,
expense, damage, reasonable attorneys’ fees, or liability arising out of failure
of Tenant to comply with any applicable law that governs, Tenant use of the
Premises Tenant shall comply with any covenant, condition, or restriction
(“CC&R’s) affecting the Premises. The provisions of this paragraph are for the
benefit of Landlord only and shall not be construed to be for the benefit of any
tenant or occupant of the Premises.
     2. TERM AND COMMENCEMENT DATE OF LEASE. See Paragraphs 41, 42 & 43 of this
Lease.
     3. POSSESSION. If Landlord, for any reason whatsoever other than Landlord’s
default cannot deliver possession of said premises to Tenant at the commencement
of the said term, as hereinbefore specified, this Lease shall not be void or
voidable; no obligation of Tenant shall be affected thereby; nor shall Landlord
or Landlord’s agents be liable to Tenant for any loss or damage resulting
therefrom; but in that event the commencement and termination dates of the
Lease, and all other dates affected thereby shall be revised to conform to the
date of Landlord’s delivery of possession, as specified in Paragraph 28, above;
provided, however, it is agreed that in no event shall this Lease commence
sooner than December 15, 1990 unless the parties agree in writing to an earlier
date for the Lease to commence. The above is, however, subject to the provision
that the period of delay of delivery of the Premises shall not exceed 180 days
from the commencement date herein (except those delays caused by Acts of God,
strikes, war, utilities, governmental bodies, weather, unavailable materials,
and delays beyond Landlord’s control shall

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be excluded in calculating such period) in which instance Tenant, at its option,
may, by written notice to Landlord, terminate this Lease. See Paragraph 47
     4. RENT.
          A. Basic Rent. Tenant agrees to pay to Landlord at such place as
Landlord may designate without deduction, offset, prior notice, or demand, and
Landlord agrees to accept as Basic Rent for the leased Premises the total sum of
the amount to be calculated pursuant to Paragraph 39 in lawful money of the
United States of America, payable as follows: See Paragraphs 39 through 43.
          B. Time for Payment. Full monthly rent is due in advance on the first
day of each calendar month. In the event that the term of this Lease commences
on a date other than the first day of a calendar month, on the date of
commencement of the term hereof Tenant shall pay to Landlord as rent for the
period from such date of commencement to the first day of the next succeeding
calendar month that proportion of the monthly rent hereunder which the number of
days between such date of commencement and the first day of the next succeeding
calendar month bears to thirty (30). In the event that the term of this Lease
for any reason ends on a date other than the last day of a calendar month, on
the first day of the last calendar month of the term hereof Tenant shall pay to
Landlord as rent for the period from said first day of said last calendar month
to and including the last day of the term hereof that proportion of the monthly
rent hereunder which the number of days between said first day of said last
calendar month and the last day of the term hereof bears to thirty (30).
          C. Late Charge. Notwithstanding any other provision of this Lease, if
Tenant is in default in the payment of rental as set forth in this Paragraph 4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to the
delinquent rental due, a late charge for each rental payment in default ten
(10) days. Said late charge shall equal five percent (5%) of each rental payment
so in default. See Paragraph 50.
          D. Additional Rent. Beginning with the commencement date of the term
of this Lease, Tenant shall pay to Landlord or to Landlord’s designated agent in
addition to the Basic Rent and as Additional Rent the following:
               (a) All Taxes relating to the Premises as set forth in paragraph
9, and
               (b) All insurance premiums relating to the Premises, as set forth
in Paragraph 12, and
               (c) All charges, costs and expenses, which Tenant is required to
pay hereunder, together with all interest and penalties, costs and expenses
including reasonable attorneys’ fees and legal expenses, that may accrue thereto
in the event of Tenant’s failure to pay such amounts, and all damages,
reasonable costs and expenses which Landlord may incur by reason of default of
Tenant or failure on Tenant’s part to comply with the terms of this Lease. In
the event of nonpayment by Tenant of Additional Rent, Landlord shall have all
the rights and remedies with respect thereto as Landlord has for nonpayment of
rent.

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     The Additional Rent due hereunder shall be paid to Landlord or Landlord’s
agent (i) within five days after presentation of invoice from Landlord or
Landlord’s agent setting forth such Additional Rent and/or (ii) at the option of
Landlord, Tenant shall pay to Landlord monthly, in advance, Tenant’s prorata
share of an amount estimated by Landlord to be Landlord’s approximate average
monthly expenditure for such Additional Rent items, which estimated amount shall
be reconciled at the end of each calendar year as compared to Landlord’s actual
expenditure for said Additional Rent items, with Tenant paying to Landlord, upon
demand, any amount of actual expenses expended by Landlord in excess of said
estimated amount, or Landlord refunding to Tenant (providing Tenant is not in
default in the performance of any of the terms, covenants and conditions of the
Lease in which case such amount shall be held by Landlord as a credit for
Tenant’s account until such default has been cured any amount of estimated
payments made by Tenant in excess of Landlord’s actual expenditures for said
Additional Rent items.
     The respective obligations of Landlord and Tenant under this paragraph
shall survive the expiration or other termination of the term of this Lease, and
if the term hereof shall expire or shall otherwise terminate on a day other than
the last day of a calendar year, the actual Additional Rent incurred for the
calendar year in which the term hereof expires or otherwise terminates shall be
determined and settled on the basis of the statement of actual Additional Rent
for such calendar year and shall be prorated in the proportion which the number
of days in such calendar year preceding such expiration or termination bears to
365.
          E. Place of Payment of Rent and Additional Rent. All Basic Rent
hereunder and all payments hereunder for Additional Rent shall be paid to
Landlord at the office of Landlord at Perry/Arrillaga, file 1504, P.O. Box
60000, San Francisco, CA 94160 Four Hundred Twenty Thousand Four Hundred
Eighty-One Dollars 80/100 Dollars ($420,481.80.) Said sum shall be held by
Landlord as a Security Deposit for the faithful performance by Tenant of all of
the terms, covenants and conditions of this Lease to be kept and performed by
Tenant during the term hereof. If Tenant defaults with respect to any provision
of this Lease, including, but not limited to, the provisions relating to the
payment of rent and any of the monetary sums due herewith, Landlord may (but
shall not be required to) use, apply or retain all or any part of this Security
Deposit for the payment of any other amount which Landlord may spend by reason
of Tenant’s default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant’s default. If any portion of said
Deposit is so used or applied, Tenant shall, within 10 days after written
demand, therefore, deposit cash with Landlord in the amount sufficient to
restore the Security Deposit to its original amount. Tenant’s failure to do so
shall be a material breach of this Lease. Landlord shall not be required to keep
this Security Deposit separate from its general funds. Tenant shall not be
entitled to interest on such Deposit. If Tenant fully and faithfully performs
every provision of this Lease to be performed by it the Security Deposit or any
balance thereof shall be returned to Tenant or at Landlord’s option, to the last
assignee of Tenant’s interest hereunder at the expiration of Lease term and
after Tenant has vacated the Premises. In the event of termination of Landlord’s
interest in this Lease. Landlord shall transfer said Deposit Landlord’s
successor in interest whereupon Tenant agrees to release Landlord from liability
for the return of such Deposit or the accounting therefore. See Paragraph 51.

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     5. ACCEPTANCE AND SURRENDER OF PREMISES. By entry hereunder, Tenant accepts
the premises as being in good and sanitary order, conditions and repair and
accepts the building and improvements included in the Premises in their present
condition and without representation or warranty by Landlord as to the condition
of such building or as to the use or occupancy which may be made thereof. Any
exceptions to the foregoing must be by written agreement executed by Landlord
and Tenant. Tenant agrees on the last day of the Lease term, or on the sooner
termination of this Lease, to surrender the Premises promptly and peaceably to
Landlord in good condition and repair (damage by Acts of God, fire, normal wear
and tear excepted), with all interior walls cleaned so that they appear freshly
painted, and repaired and replaced, if damaged; all floors cleaned and waxed;
all carpets cleaned and shampooed, all broken, marred or nonconforming
acoustical ceiling tiles replaced; all windows washed, the air conditioning and
heating systems serviced by a reputable and licensed service firm and in good
operating condition and repair; the plumbing and electrical systems and lighting
in good order and repair, including replacement of any burned out or broken
light bulbs or ballasts; the lawn and shrubs in good condition including the
replacement of any dead or damaged plantings; the sidewalk, driveways and
parking areas in good order, condition and repair together with all alterations,
additions, and improvements which may have been made in, to, or on the Premises
(except movable trade fixtures installed at the expense of Tenant) except that
Tenant shall ascertain from Landlord within ninety (90) days before the end of
the term of this Lease whether Landlord desires to have the Premises or any part
or parts thereof restored to their condition and configuration as when the
Premises were delivered to Tenant and if Landlord shall so desire, then Tenant
shall restore said Premises or such part or parts thereof before the end of this
Lease at Tenant’s sole cost and expense. Tenant, on or before the end of the
term or sooner termination of this Lease, shall remove all of Tenant’s personal
property and trade fixtures from the Premises, and all property not so removed
on or before the end of the term or sooner termination of this Lease shall be
deemed abandoned by Tenant and title to same shall thereupon pass to Landlord
without compensation to Tenant. Landlord may, upon termination of this Lease,
remove all movable furniture and equipment so abandoned by Tenant, at Tenant’s
sole cost, and repair any damage caused by such removal at Tenant’s sole cost.
If the Premises be not surrendered at the end of the term or sooner termination
of this Lease, Tenant shall indemnify Landlord against loss or liability
resulting from the delay by Tenant in so surrendering the Premises including,
without limitation, any claims made by any succeeding tenant founded on such
delay. Nothing contained herein shall be construed as an extension of the term
hereof or as a consent of Landlord to any holding over by Tenant. The voluntary
or other surrender of this Lease or the Premises by Tenant or a mutual
cancellation of this Lease shall not work as a merger and, at the option of
Landlord, shall either terminate all or any existing subleases or subtenancies
or operate as an assignment to Landlord of all or any such subleases or
subtenancies. See Paragraph 52
     6. ALTERATIONS AND ADDITIONS. Tenant shall not make, or suffer to be made,
any alteration or addition to the Premises, or any part thereof, without the
written consent of Landlord first had and obtained by Tenant (such consent not
to be unreasonably withheld), but at the cost of Tenant, and any addition to, or
alteration of, the Premises, except moveable furniture and trade fixtures, shall
at once become a part of the Premises and belong to Landlord. Landlord reserves
the right to approve all contractors and mechanics proposed by Tenant to make
such alterations and additions. Tenant shall retain title to all moveable
furniture and trade fixtures placed in the Premises. All heating, lighting,
electrical, airconditioning, partitioning,

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drapery, carpeting, and floor installations made by Tenant, together with all
property that has become an integral part of the Premises, shall not be deemed
trade fixtures. Tenant agrees that it will not proceed to make such alteration
or additions, without having obtained consent from Landlord to do so, and until
five (5) days from the receipt of such consent, in order that Landlord may post
appropriate notices to avoid any liability to contractors or material suppliers
for payment for Tenant’s improvements. Tenant will at all times permit such
notices to be posted and to remain posted until the completion of work. Tenant
shall, if required by Landlord, secure at Tenant’s own cost and expense, a
completion and lien indemnity bond, satisfactory to Landlord, for such work.
Tenant further covenants and agrees that any mechanic’s lien filed against the
Premises for work claimed to have been done for, or materials claimed to have
been furnished to Tenant, will be discharged by Tenant, by bond or otherwise,
within ten (10) days after Tenant receives notice of the filing thereof, at the
cost and expense of Tenant. Any exceptions to the foregoing must be made in
writing and executed by both Landlord and Tenant. See Paragraph 52
     7. TENANT MAINTENANCE. Tenant shall, at its sole cost and expense, keep and
maintain the Premises (including appurtenances) and every part thereof in a high
standard of maintenance and repair, or replacement, and in good and sanitary
condition. Tenant’s maintenance and repair responsibilities herein referred to
include, but are not limited to, janitorization, all windows (interior and
exterior), window frames, plate glass and glazing (destroyed by accident or act
of third parties), truck doors, plumbing systems (such as water and drain lines,
sinks, toilets, faucets, drains, showers and water fountains), electrical
systems (such as panels, conduits, outlets, lighting fixtures, lamps, bulbs,
tubes and ballasts), heating and airconditioning systems (such as compressors,
fans, air handlers, ducts, mixing boxes, thermostats, time clocks, boilers,
heaters, supply and return grills), structural elements and exterior surfaces of
the building, store fronts, roofs, downspouts, all interior improvements within
the premises including but not limited to wall coverings, window coverings,
carpet, floor coverings, partitioning, ceilings, doors (both interior and
exterior), including closing mechanisms, latches, locks, skylights (if any),
automatic fire extinguishing systems, and elevators and all other interior
improvements of any nature whatsoever, and all exterior improvements including
but not limited to landscaping, sidewalks, driveways, parking lots including
striping and sealing, sprinkler systems, lighting, ponds, fountains, waterways,
and drains. Tenant agrees to provide carpet shields under all rolling chairs or
to otherwise be responsible for wear and tear of the carpet caused by such
rolling chairs if such wear and tear exceeds that caused by normal foot traffic
in surrounding areas. Areas of excessive wear shall be replaced at Tenant’s sole
expense upon Lease termination. Tenant hereby waives all rights under, and
benefits of, Subsection 1 of Section 1932 and Section 1941 and 1942 of the
California Civil Code and under any similar law, statute or ordinance now or
hereafter in effect. In the event any of the above maintenance responsibilities
apply to any other tenant(s) of Landlord where there is common usage with other
tenant(s), such maintenance responsibilities and charges shall be allocated to
the leased Premises by square footage or other equitable basis as calculated and
determined by Landlord. See Paragraph 53
     8. UTILITIES. Tenant shall pay promptly, as the same become due, all
charges for water, gas, electricity, telephone, telex and other electronic
communication service, sewer service, waste pick-up and any other utilities,
materials or services furnished directly to or used by Tenant on or about the
Premises during the term of this Lease, including, without limitation,

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any temporary or permanent utility surcharge or other exactions whether or not
hereinafter imposed. In the event the above charges apply to any other tenant(s)
of Landlord where there is common usage with other tenant(s), such charges shall
be allocated to the leased Premises by square footage or other equitable basis
as calculated and determined by Landlord.
     Landlord shall not be liable for and Tenant shall not be entitled to any
abatement or reduction of rent by reason of any interruption or failure of
utility services to the Premises when such interruption or failure is caused by
accident, breakage, repair, strikes, lockouts, or other labor disturbances or
labor disputes of any nature, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord.
     9. TAXES.
          A. As Additional Rent and in accordance with Paragraph 4D of this
Lease, Tenant shall pay to Landlord, or if Landlord so directs, directly to the
Tax Collector, all Real Property Taxes relating to the Premises. In the event
the Premises leased hereunder consist of only a portion of the entire tax
parcel. Tenant shall pay to Landlord Tenant’s proportionate share of such real
estate taxes allocated to the leased Premises by square footage or other
reasonable basis as calculated and determined by Landlord cancellation of or
nonresponsibility for payment of penalties for nonpayment or late payment by
Tenant. The term “Real Property Taxes” as used herein, shall mean (i) all taxes,
assessments, levies and other charges of any kind or nature whatsoever, general
and special, foreseen and unforeseen (including all installments of principal
and interest required to pay any general or special assessments for public
improvements and any increases resulting from reassessments caused by any change
in ownership of the Premises) now or hereafter imposed by any governmental or
quasi-governmental authority or special district having the direct or indirect
power to tax or levy assessments, which are levied or assessed against, or with
respect to the value, occupancy or use of, all or any portion of the Premises
(as now constructed or as may at any time hereafter be constructed, altered, or
otherwise changed) or Landlord’s interest therein; any improvements located
within the Premises (regardless of ownership); the fixtures, equipment and other
property of Landlord, real or personal, that are an integral part of and located
in the Premises; or parking areas, public utilities, or energy within the
premises; (ii) all charges, levies or fees imposed by reason of environmental
regulation or other governmental control of the Premises; and (iii) all costs
and fees (including reasonable attorney’s fees) incurred by Landlord in
reasonably contesting any Real Property Tax and in negotiating with public
authorities as to any Real Property Tax. If at any time during the term of this
Lease the taxation or assessment of the Premises prevailing as of the
commencement date of this Lease shall be altered so that in lieu of or in
addition to any Real Property Tax described above there shall be levied,
assessed or imposed (whether by reason of a change in the method of taxation or
assessment, creation of a new tax or charge, or any other cause) an alternate or
additional tax or charge (i) on the value, use or occupancy of the Premises or
Landlord’s interest therein or (ii) on or measured by the gross receipts, income
or rentals from the Premises, on Landlord’s business of leasing the Premises, or
computed in any manner with respect to the operation of the Premises, then any
such tax or charge, however designated, shall be included within the meaning of
the term “Real Property Taxes” for purposes of this Lease. If any Real Property
Tax is based upon the property or rents unrelated to the Premises, then only
that part of such Real Property Tax that is fairly allocable to the Premises
shall be included within the meaning of the term “Real Property Taxes”.
Notwithstanding the foregoing, the term “Real Property Taxes” shall not

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include estate, inheritance, gift or franchise taxes of Landlord or the federal
or state net income tax imposed on Landlord’s income from all sources. See
Paragraph 54.
          B. Taxes on Tenant’s Property. Tenant shall be liable for and shall
pay ten days before delinquency, taxes levied against any personal property or
trade fixtures placed by Tenant in or about the Premises. If any such taxes on
Tenant’s personal property or trade fixtures are levied against Landlord or
Landlord’s property or if the assessed value of the Premises is increased by the
inclusion thereof on a value placed upon such personal property or trade
fixtures of Tenant and if Landlord, after written notice to Tenant, pays the
taxes based on such increased assessment, which Landlord shall have the right to
do regardless of the validity thereof, but only under proper protest if
requested by Tenant. Tenant shall upon demand, as the case may be, repay to
Landlord the taxes so levied against Landlord, or the proportion of such taxes
resulting from such increase in the assessment; provided that in any event
Tenant shall have the right, in the name of Landlord and with Landlord’s full
cooperation, to bring suit in any court of competent jurisdiction to recover the
amount of such taxes so paid under protest, and any amount so recovered shall
belong to Tenant.
     10. LIABILITY INSURANCE. Tenant at Tenant’s expense, agrees to keep in
force during the term of this Lease a policy of comprehensive general liability
insurance for bodily injury and property damage occurring in, on or about the
Premises, including parking and landscaped areas, in the amount of $2,000,000
combined single limit. Such insurance shall be primary and noncontributory as
respects any insurance carried by Landlord. The policy or policies effecting
such insurance shall name Landlord as additional insureds, and shall insure any
liability of Landlord, contingent or otherwise, as respects acts or omissions of
Tenant, its agents, employees or invitees or otherwise by any conduct or
transactions of any of said persons in or about or concerning the Premises
including any failure of Tenant to observe or perform any of its obligations
hereunder; shall be issued by an insurance company admitted to transact business
in the State of California; and shall provide that the insurance effected
thereby shall not be canceled, except upon thirty (30) days’ prior written
notice to Landlord. A copy of said policy shall be delivered to Landlord. If,
during the term of this Lease, in the considered opinion of Landlord’s Lender,
insurance advisor, or counsel, the amount of insurance described in this
Paragraph 10 is not adequate, Tenant agrees to increase said coverage to such
reasonable amount as Landlord’s Lender, insurance advisor, or counsel shall deem
adequate.
     11. TENANT’S PERSONAL PROPERTY INSURANCE AND WORKMAN’S COMPENSATION
INSURANCE. Tenant shall maintain a policy or policies of fire and property
damage insurance in “all risk” form with a sprinkler leakage endorsement
insuring the personal property, inventory, trade fixtures, and leasehold
improvements within the leased Premises for the full replacement value thereof.
The proceeds from any of such policies shall be used for the repair or
replacement of such items so insured.
     Tenant shall also maintain a policy or policies of workman’s compensation
insurance and any other employee benefit insurance sufficient to comply with all
laws.
     12. PROPERTY INSURANCE. Landlord shall purchase and keep in force, and as
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord Tenant’s proportionate share (allocated to the leased premises
by square footage or

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other equitable basis as calculated and determined by Landlord) of the cost of,
policy or policies of insurance covering loss or damage to the Premises
(excluding routine maintenance and repairs and incidental damage or destruction
caused by accidents or vandalism for which Tenant is responsible under
Paragraph 7) in the amount of the full replacement value thereof, providing
protection against those perils included within the classification of “all
risks” insurance and flood and/or earthquake insurance, if available, plus a
policy of rental income insurance in the amount of one hundred (100%) percent of
twelve (12) months Basic Rent, plus sums paid as Additional Rent. If such
insurance cost is increased due to Tenant’s use of the Premises, Tenant agrees
to pay to Landlord the full cost of such increase. Tenant shall have no interest
in nor any right to the proceeds of any insurance procured by Landlord for the
Premises. See Paragraph 55.
     Landlord and Tenant do each hereby respectively release the other, to the
extent of insurance coverage of the releasing party, from any liability for loss
or damage caused by fire or any of the extended coverage casualties included in
the releasing party’s insurance policies, irrespective of the cause of such fire
or casualty; provided, however, that if the insurance policy of either releasing
party prohibits such waiver, then this waiver shall not take effect until
consent to such waiver is obtained. If such waiver is so prohibited, the insured
party affected shall promptly notify the other party thereof.
     13. INDEMNIFICATION. Landlord shall not be liable to Tenant and Tenant
hereby waives all claims against Landlord for any injury to or death of any
person or damage to or destruction of property in or about the Premises by or
from any cause whatsoever, including, without limitation, gas, fire, oil,
electricity or leakage of any character from the roof, walls, basement or other
portion of the Premises but excluding, however, the negligence of Landlord, its
agents, servants, employees, invitees, contractors of which negligence Landlord
has knowledge and reasonable time to correct. Except as injury to persons or
damage of property the principal cause of which is the negligence of the
Landlord and subject to the last two sentences of Paragraph 12, Tenant shall
hold Landlord harmless from and defend Landlord against any and all expenses,
including reasonable attorney’s fees, in connection therewith, arising out of
any injury to or death of any person or damage to or destruction of property
occurring in, on or about the Premises, or any part thereof, from any cause
whatsoever.
     14. COMPLIANCE. Tenant at its sole cost and expense, shall promptly comply
with all laws, statutes, ordinances and governmental rules, regulations or
requirements now or hereafter in effect; with the requirements of any board of
fire underwriters of other similar body now or hereafter constituted; and with
any direction or occupancy certificate issued pursuant to law by any public
officer; provided, however, that no such failure shall be deemed a breach of the
provisions if Tenant, immediately upon notification, commences to remedy or
rectify said failure. The judgment of any court of competent jurisdiction or the
admission of Tenant in any action against Tenant, whether Landlord be a party
thereto or not, that Tenant has violated any such law, statute, ordinance or
governmental rule, regulation, requirement direction or provision shall be
conclusive of that fact as between Landlord and Tenant. Tenant shall, at its
sole cost and expense, comply with any and all requirements pertaining to said
Premises, of any insurance organization or company, necessary for the
maintenance of reasonable fire and public liability insurance covering
requirements pertaining to said Premises, of any insurance organization or
company, necessary for the maintenance of reasonable fire and public liability
insurance covering the Premises. See Paragraph 45 & 53.

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     15. LIENS. Tenant shall keep the Premises free from any liens arising out
of any work performed, materials furnished or obligation incurred by Tenant. In
the event that Tenant shall not, within ten (10) days following Tenant’s receipt
of notice of the imposition of such lien, cause the same to be released of
record. Landlord shall have, in addition to all other remedies provided herein
and by law, the right, but no obligation, to cause the same to be released by
such means as it shall deem proper, including payment of the claim giving rise
to such lien. All sums paid by Landlord for such purpose, and all expenses
incurred by it in connection therewith shall be payable to Landlord by Tenant on
demand with interest at the prime rate of interest as quoted by the Bank of
America.
     16. ASSIGNMENT AND SUBLETTING Tenant shall not assign, transfer, or
hypothecate the leasehold estate under this Lease, or any interest therein, and
shall not sublet the Premises, or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person or entity to occupy or use the
Premises, or any portion thereof, without, in each case, the prior written
consent of Landlord which consent will not be unreasonably withheld. In the
event Tenant is allowed to assign, transfer or sublet the whole or any part of
the premises, with the prior written consent of Landlord, no assignee,
transferee or subtenant shall assign or transfer this Lease, either in whole or
in part, or sublet the whole or any part of the Premises, without also having
obtained the prior written consent of Landlord. A consent of Landlord to one
assignment, transfer, hypothecation, subletting, occupation or use by any other
person shall not release Tenant from any of Tenant’s obligations hereunder or be
deemed to be a consent to any subsequent similar or dissimilar assignment,
transfer, hypothecation, subletting, occupation or use by any other person. Any
such assignment, transfer, hypothecation, subletting, occupation or use without
such consent shall be void and shall constitute a breach of this Lease by Tenant
and shall, at the option of Landlord exercised by written notice to Tenant,
terminate this Lease. The leasehold estate under this Lease shall not, nor shall
any interest therein, be assignable for any purpose by operation of law without
the written consent of Landlord. As a condition to its consent, Landlord may
require Tenant to pay all reasonable expenses in connection with the assignment,
and Landlord may require Tenant’s assignee or transferee (or other assignees or
transferees) to assume in writing all of the obligations under this Lease and
for Tenant to remain liable to Landlord under the Lease. SEE PARAGRAPHS 56 AND
57.
     17. SUBORDINATION AND MORTGAGES. In the event Landlord’s title or leasehold
interest is now or hereafter encumbered by a deed of trust, upon the interest of
Landlord in the land and buildings in which the demised Premises are located, to
secure a loan from a lender (hereinafter referred to as “Lender”) to Landlord,
Tenant shall, at the request of Landlord or Lender, execute in writing an
agreement subordinating its rights under this Lease to the lien of such deed or
trust, or, if so requested, agreeing that the lien of Lender’s deed of trust
shall be or remain subject and subordinate to the rights of Tenant under this
Lease. Notwithstanding any such subordination, Tenant’s possession under this
Lease shall not be disturbed if Tenant is not in default and so long as Tenant
shall pay all rent and observe and perform all of the provisions set forth in
this Lease. See Paragraph 58.
     18. ENTRY BY LANDLORD. Landlord reserves, and shall at all reasonable times
have, the right to enter the Premises to inspect them; to perform any services
to be provided by Landlord hereunder; to make repairs or provide any services to
a contiguous tenant(s): to submit the Premises to prospective purchasers,
mortgagors or tenants; to post notices of

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nonresponsibility; and to alter, improve or repair the Premises or other parts
of the building, all without abatement of rent, and may erect scaffolding and
other necessary structures in or through the Premises where reasonably required
by the character of the work to be performed; provided, however that the
business of Tenant shall be interfered with to the least extent that is
reasonably practical. Any entry to the Premises by Landlord for the purposes
provided for herein 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, actual or constructive, of Tenant from the Premises or any portion
thereof. See Paragraph 59.
     19. BANKRUPTCY AND DEFAULT. The commencement of a bankruptcy action or
liquidation action or reorganization action or insolvency action or an
assignment of or by Tenant for the benefit of creditors, or any similar action
undertaken by Tenant, or the insolvency of Tenant, shall, at Landlord’s option,
constitute a breach of this Lease by Tenant. If the trustee or receiver
appointed to serve during a bankruptcy, liquidation, reorganization, insolvency
or similar action elects to reject Tenant’s unexpired Lease, the trustee or
receiver shall notify Landlord in writing of its election within thirty
(30) days after an order for relief in a liquidation action or within thirty
(30) days after the commencement of any action.
     Within thirty (30) days after court approval of the assumption of this
Lease, the trustee or receiver shall cure (or provide adequate assurance to the
reasonable satisfaction of Landlord that the trustee or receiver shall cure) any
and all previous defaults under the unexpired Lease and shall compensate
Landlord for all actual pecuniary loss and shall provide adequate assurance of
future performance under said Lease to the reasonable satisfaction of Landlord.
Adequate assurance of future performance, as used herein, includes, but shall
not be limited to: (i) assurance of source and payment of rent and other
consideration due under this Lease (ii) assurance that the assumption or
assignment of this Lease will not breach substantially any provision, such as
radius, location, use, or exclusivity provision, in any agreement relating to
the above described Premises.
     Nothing contained in this section shall affect the existing right of
Landlord to refuse to accept an assignment upon commencement of or in connection
with a bankruptcy, liquidation, reorganization or insolvency action or an
assignment of Tenant for the benefit of creditors or other similar act. Nothing
contained in this Lease shall be construed as giving or granting or creating an
equity in the demised Premises to Tenant. In no event shall the leasehold estate
under this Lease, or any interest therein, be assigned by voluntary or
involuntary bankruptcy proceeding without the prior written consent of Landlord.
In no event shall this Lease or any rights or privileges hereunder be an asset
of Tenant under any bankruptcy, insolvency or reorganization proceedings.
     The failure to perform or honor any covenant, condition or representation
made under this Lease shall constitute a default hereunder by Tenant upon
expiration of the appropriate grace period hereinafter provided. Tenant shall
have a period of ten (10) days from the date of written notice from Landlord
within which to cure any default in the payment of rental or adjustment thereto.
Tenant shall have a period of thirty (30) days from the date of written notice
from Landlord within which to cure any other default under this Lease. Upon an
uncured default of this Lease by Tenant Landlord shall have the following rights
and remedies in addition to any other rights or remedies available to Landlord
at law or in equity:

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          (a) The rights and remedies provided for by California Civil Code
Section 1951.2, including but not limited to, recovery of the worth at the time
of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of rental loss for the same period
that Tenant proves could be reasonably avoided, as computed pursuant to
subsection (b) of said Section 1951.2.
          (b) The rights and remedies provided by California Civil Code Section
which allows Landlord to continue the Lease in affect and to enforce all of its
rights and remedies under this Lease, including the right to recover rent as it
becomes due, for so long as Landlord does not terminate Tenant’s right to
possession, acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver upon Landlord’s initiative to protect its
interest under this Lease shall not constitute a termination of Tenant’s right
to possession.
          (c) The right to terminate this Lease by giving notice to Tenant in
accordance with applicable law.
          (d) The right and power after compliance with all statutory
requirements and in any event on not less than three (3) business days prior
written notice to enter the Premises and remove therefrom all persons and
property, to store such property in a public warehouse or elsewhere at the cost
of and for the account of Tenant, and to sell such property and apply such
proceeds therefrom pursuant to applicable California law. Landlord may from time
to time sublet the Premises or any part thereof for such term or terms (which
may extend beyond the term of this Lease) and at such rent and such other terms
as Landlord in its reasonable sole discretion may deem advisable, with the right
to make alterations and repairs to the Premises. Upon each subletting (i) Tenant
shall be immediately liable to pay Landlord, in addition to indebtedness other
than rent due hereunder, the reasonable cost of such subletting, including, but
not limited to, reasonable attorneys’ fees, and any real estate commissions
actually paid, and the cost of such reasonable alterations and repairs incurred
by Landlord and the amount, if any, by which the rent hereunder for the period
of such subletting (to the extent such period does not exceed the term hereof)
exceeds the amount to be paid as rent for the Premises for such period or
(ii) at the option of Landlord, rents received from such subletting shall be
applied first to payment of indebtedness other than rent due hereunder from
Tenant to Landlord; second, to the payment of any costs of such subletting and
of such alterations and repairs; third to payment of rent due and unpaid
hereunder; and the residue, if any, shall be held by Landlord and applied in
payment of future rent as the same becomes due hereunder. If Tenant has been
credited with any rent to be received by such subletting under option (i) and
such rent shall not be promptly paid to Landlord by the subtenant(s), or if such
rentals received from such subletting under option (ii) during any month be less
than that to be paid during that month by Tenant hereunder. Tenant shall pay and
such deficient to Landlord. Such deficiency shall be calculated and paid
monthly. No taking possession of the Premises by Landlord shall be construed as
an election on its part to terminate this Lease unless a written notice of such
intention be given to Tenant. Notwithstanding any such subletting without
termination, Landlord may at any time hereafter elect to terminate this Lease
for such previous breach.
          (e) The right to have a receiver appointed for Tenant upon application
by Landlord, to take possession of the Premises and to apply any rental
collected from the

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Premises and to exercise all other rights and remedies granted to Landlord
pursuant to subparagraph d. above. See Paragraph 60.
     20. ABANDONMENT. Tenant shall not vacate or abandon the Premises at any
time during the term of this Lease; and if Tenant shall abandon, vacate or
surrender said Premises, or be dispossessed by the process of law, or otherwise,
any personal property belonging to Tenant and left on the Premises shall be
deemed to be abandoned, at the option of Landlord, except such property as may
be mortgaged to Landlord. See Paragraph 61.
     21. DESTRUCTION. In the event the Premises are destroyed in whole or in
part from any cause, except for routine maintenance and repairs and incidental
damage and destruction caused from vandalism and accidents for which Tenant is
responsible under Paragraph 7. Landlord may, at its option:
               (a) Rebuild or restore the Premises to their condition prior to
the damage or destruction, or
               (b) Terminate this Lease.
     If Landlord does not give Tenant notice in writing within thirty (30) days
from the destruction of the Premises of its election either rebuild and restore
them or to terminate this Lease, Landlord shall be deemed to have elected to
rebuild or restore them, in which event Landlord agrees, at its expense,
promptly to rebuild or restore the Premises to their condition prior to the
damage or destruction. Tenant shall be entitled to a reduction in rent when such
repair is being made in the proportion that the area of the Premises rendered
untenantable by such damage bears to the total area of the Premises. If Landlord
does not complete the rebuilding or restoration within one hundred eighty
(180) days following the date of destruction (such period of time to be extended
for delays caused by the fault or neglect of Tenant or because of Acts of God,
acts of public agencies, labor disputes, strikes, fires, freight embargos, rainy
or stormy weather, inability to obtain materials, supplies or fuels, acts of
contractors or subcontractors, or delay of the contractors or subcontractors due
to such causes or other contingencies beyond the control of Landlord), then
Tenant shall have the right to terminate this Lease by giving fifteen (15) days
prior written notice to Landlord. Notwithstanding anything herein to the
contrary. Landlord’s obligation to rebuild or restore shall be limited to the
building and interior improvements constructed by Landlord as they existed as of
the commencement date of the Lease and shall not include restoration of Tenant’s
trade fixtures, equipment, merchandise, or any improvements, alterations or
additions made by Tenant to the Premises, which Tenant shall forthwith replace
or fully repair at Tenant’s sole cost and expense provided this Lease is not
cancelled according to the provisions above.
     Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect. Tenant hereby expressly waives the
provisions of Section 1932, Subdivision 2, in Section 1933, Subdivision 4 of the
California Civil Code.
     In the event that the building in which the Premises are situated is
damaged or destroyed to the extent of not less than 33% of the replacement cost
thereof. Landlord may elect to terminate this Lease, whether the Premises be
injured or not. In the event the destruction of the

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Premises is caused by Tenant, Tenant shall pay the deductible portion of
Landlord’s insurance proceeds. See Paragraph 62.
     22. EMINENT DOMAIN. If all or any part of the Premises shall be taken by
any public or quasi-public authority under the power of eminent domain or
conveyance in lieu thereof, the Lease shall terminate as to any portion of the
Premises so taken or conveyed on the date when title vests in the condemnor and
Landlord shall be entitled to any and all payment, income, rent, award, or any
interest therein whatsoever which may be paid or made in connection with such
taking or conveyance, and Tenant shall have no claim against Landlord or
otherwise for the value of any unexpired term of this Lease. Notwithstanding the
foregoing paragraph, any compensation specifically awarded Tenant for loss of
business, Tenant’s personal property, moving cost or loss of goodwill shall be
and remain the property of Tenant.
     If any action or proceeding is commenced for such taking of the Premises or
any part thereof, or if Landlord is advised in writing by any entity or body
having the right or power of condemnation of its intention to condemn the
premises or any portion thereof, then Landlord shall have the right to terminate
this Lease by giving Tenant written notice thereof within sixty (60) days of the
date of receipt of said written advice or commencement of said action or
proceeding, or taking conveyance, which termination shall take place as of the
first to occur of the last day of the calendar month next following the month in
which such notice is given or the date on which title to the Premises shall vest
in the condemnor.
     In the event of such a partial taking or conveyance of the Premises, if the
portion of the Premises taken or conveyed is so substantial that the Tenant can
no longer reasonably conduct its business, Tenant shall have the privilege of
terminating this Lease within sixty (60) days from the date of such taking or
conveyance, upon written notice to Landlord of its intention so to do, and upon
giving of such notice this Lease shall terminate on the last day of the calendar
month next following the month in which such notice is given, upon payment by
Tenant of the rent from the date of such taking or conveyance to the date of
termination.
     If a portion of the Premises be taken by condemnation or conveyance in lieu
thereof and neither Landlord nor Tenant shall terminate the Lease as provided
herein, this Lease shall continue in full force and effect as to the part of the
Premises not so taken or conveyed, and the rent herein shall be apportioned as
of the date of such taking or conveyance so that thereafter the rent to be paid
by Tenant shall be in the ratio that the area of the portion of the Premises not
so taken or conveyed bears to the total area of the Premises prior to such
taking. See Paragraph 63
     23. SALE OR CONVEYANCE BY LANDLORD. In the event of a sale or conveyance of
the Premises or any interest therein, by any owner of the reversion then
constituting Landlord, the transferor shall thereby be released from any further
liability upon any of the terms, covenants or conditions (express or implied)
herein contained in favor of Tenant, and in such event, insofar as such transfer
is concerned, Tenant agrees to look solely to the responsibility of the
successor in interest of such transferor in and to the Premises and this Lease.
This Lease shall not be affected by any such sale or conveyance, and Tenant
agrees to attorn to the successor in interest of such transferor. See
Paragraph 64.

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     24. ATTORNMENT TO LENDER OR THIRD PARTY. In the event the interest of
Landlord in the land and buildings in which the leased Premises are located
(whether such interest of Landlord is a fee title interest or a leasehold
interest is encumbered by deed of trust, and such interest is acquired by the
lender or any third party through judicial foreclosure or by exercise of a power
of sale at private trustee’s foreclosure sale. Tenant hereby agrees to attorn to
the purchaser at any such foreclosure sale and to recognize such purchaser as
the Landlord under this Lease. In the event the lien of the deed of trust
securing the loan from a Lender to Landlord is prior and paramount to the Lease,
this Lease shall nonetheless continue in full force and effect for the remainder
of the unexpired term thereof at the same rental herein reserved and upon all
the other terms, conditions and conveyance herein contained.
     25. HOLDING OVER. Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in this Lease. Any holding over after the expiration or other termination of the
term of this Lease, with the consent of Landlord, shall be construed to be a
tenancy from month to month, on the same terms and conditions herein specified
insofar as applicable except that the monthly Basic Rent shall be increased to
an amount equal to One Hundred Twenty-Five Percent (125%) percent of the monthly
Basic Rent required during the last month of the Lease term.
     26. CERTIFICATE OF ESTOPPEL. Either party shall at any time upon not less
than ten (10) days prior written notice from the other party, execute,
acknowledge and deliver to the requesting party, 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) and the date to which the
rent and other charges are paid in advance, if any, and (ii) acknowledging that
there are not, to the best of such party’s knowledge, any uncured defaults on
the part of the other party hereunder, or specifying such defaults, if any, are
claimed. Any such statement may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises. Tenant’s failure to deliver such
statement within such time shall be conclusive upon the party receiving such
request that this Lease is in full force and effect, without modification except
as may be represented by Landlord; that there are no uncured defaults in the
requesting party’s performance, and that not more than one month’s rent has been
paid in advance.
     27. CONSTRUCTION CHANGES. It is understood that the description of the
Premises and the location of ductwork, plumbing and other facilities therein are
subject to such minor changes as Landlord or Landlord’s architect determines to
be desirable in the course of construction of the Premises, and no such changes
shall affect this Lease or entitle Tenant to any reduction of rent hereunder or
result in any liability of Landlord to Tenant. Landlord does not guarantee the
accuracy of any drawings supplied to Tenant and verification of the accuracy of
such drawing rests with Tenant.
     28. RIGHT OF LANDLORD TO PERFORM. All terms, covenants and conditions of
this Lease to be performed or observed by Tenant shall be performed or observed
by Tenant at Tenant’s sole cost and expense and without any reduction in rent.
If Tenant shall fail to pay any sum of money, or other rent, required to be paid
by it hereunder or shall fail to

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perform any other term or covenant hereunder on its part to be performed, and
such failure shall continue for five (5) days after written notice thereof of
Landlord. Landlord, without waiving or releasing Tenant from any obligation of
Tenant hereunder, may, but shall not be obliged to, make any such payment or
perform any such other term or covenant on Tenant’s part to be performed. All
sums so paid by Landlord and all necessary costs of such performance by Landlord
together with interest thereon at the rate of the prime rate of interest per
annum as quoted by the Bank of America from the date of such payment on
performance by Landlord, shall be paid (and Tenant covenants to make such
payment) to Landlord on demand by Landlord, and Landlord shall have (in addition
to any other right or remedy of Landlord) the same rights and remedies in the
event of nonpayment by Tenant as in the case of failure by Tenant in the payment
of rent hereunder.
     29. ATTORNEYS’ FEES.
          A. In the event that either Landlord or Tenant should bring suit for
the possession of the Premises, for the recovery of any sum due under this
Lease, or because of the breach of any provision of this Lease, or for any other
relief against the other party hereunder, then all costs and expenses, including
reasonable attorneys’ fees incurred by the prevailing party therein shall be
paid by the other party, which obligation on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action an
shall be enforceable whether or not the action is prosecuted to judgment.
          B. Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant’s occupancy hereunder, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including a
reasonable attorney’s fee.
     30. WAIVER. The waiver by either party of the other party’s failure to
perform or observe any term, covenant or condition herein contained to be
performed or observed by such waiving party shall not be deemed to be a waiver
of such term, covenant or condition or of any subsequent failure of the party
failing to perform or observe the same or any other such term, covenant or
condition therein contained, and no custom or practice which may develop between
the parties hereto during the term hereof shall be deemed a waiver of, or in any
way, affect the right of either party to insist upon performance and observance
by the other party in strict accordance with the terms hereof.
     31. NOTICES. All notices, demands, requests, advices or designations which
may be or are required to be given by either party to the other hereunder shall
be in writing. All notices, demands, requests, advices or designations by
Landlord to Tenant shall be sufficiently given, made or delivered if personally
served on Tenant by leaving the same at the Premises or if sent by United States
certified or registered mail, postage prepaid, addressed to Tenant at the
Premises. All notices, demands, requests, advices or designations by Tenant to
Landlord shall be sent by United States certified or registered mail, postage
prepaid, addressed to Landlord at its offices at Peery/Arrillaga 2560 Mission
College Boulevard, Suite 101, Santa Clara, CA 95054. Each notice, request,
demand advice or designation referred to in this paragraph shall be deemed
received on the date of the personal service or mailing thereof in the manner
herein provided, as the case may be.

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     32. EXAMINATION OF LEASE. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument is not effective as a lease or otherwise until its execution
and delivery by both Landlord and Tenant.
     33. DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but
in no event earlier than (30) days after written notice by Tenant to Landlord
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have heretofore been furnished to Tenant in
writing, specifying wherein Landlord has failed to perform such obligations;
provided, however, that if the nature of Landlord’s obligations is such that
more than thirty (30) days are required for performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
     34. CORPORATE AUTHORITY. If Tenant is a corporation (or a partnership),
each individual executing this Lease on behalf of said corporation (or
partnership) represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of said corporation (or partnership) in accordance
with the by-laws of said corporation (or partnership in accordance with the
partnership agreement) and that this Lease is binding upon said corporation (or
partnership) in accordance with its terms. If Tenant is a corporation, Tenant
shall, within thirty (30) days after execution of this Lease, deliver to
Landlord a certified copy of the resolution of the Board of Directors of said
corporation authorizing or ratifying the execution of this Lease.
     35. INTENTIONALLY LEFT BLANK
     36. LIMITATION OF LIABILITY. In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that in the
event of any actual or alleged failure, breach or default hereunder by Landlord:
               (a) the sole and exclusive remedy shall be against Landlord and
Landlord’s assets;
               (b) no partner of Landlord shall be sued or named as a party in
any suit or action (except as may be necessary to secure jurisdiction of the
partnership);
               (c) no service of process shall be made against any partner of
Landlord (except as may be necessary to secure jurisdiction of the partnership);
               (d) no partner of Landlord shall be required to answer or
otherwise plead to any service of process;
               (e) no judgment will be taken against any partner of Landlord;
               (f) any judgment taken against any partner of Landlord may be
vacated and set aside at any time without hearing;

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               (g) no writ of execution will ever be levied against the assets
of any partner of Landlord;
               (h) these covenants and agreements are enforceable both by
Landlord and also by any partner of Landlord.
     Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreements either expressly contained in this
Lease or imposed by statute or at common law.
     37. SIGNS. No sign, placard, picture advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside of
the Premises or any exterior windows of the Premises without the written consent
of Landlord, first had and obtained and Landlord shall have the right to remove
any such sign, placard, picture, advertisement, name or notice without notice to
and at the expense of Tenant. If Tenant is allowed to print or affix or in any
way place a sign in, on or about the Premises, upon expiration or other sooner
termination of this Lease, Tenant, at Tenant’s sole cost and expense shall both
remove such sign and repair all damage in such a manner as to restore all
aspects of the appearance of the Premises to the condition prior to the
placement of said sign. All approved signs or lettering on outside doors shall
be printed, painted, affixed or inscribed at the expense of Tenant by a person
reasonably approved of by Landlord.
     Tenant shall not place anything or allow anything to be placed near the
glass of any window, door partition or wall which may appear unsightly from
outside the Premises.
     38. MISCELLANEOUS AND GENERAL PROVISIONS.
          A. Use of Building Name. Tenant shall not, without the written consent
of Landlord, use the name of the building for any purpose other than as the
address of the business conducted by Tenant in the Premises.
          B. Choice of Law: Severability. This Lease shall in all respects be
governed by and construed in accordance with the laws of the State of California
any provision of this Lease shall be invalid, unenforceable or ineffective for
any reason whatsoever, all other provisions hereof shall be and remain in full
force and effect.
          C. Definition of Terms. The term “Premises” includes the space leased
hereby and any improvements now or hereafter installed therein or attached
thereto. The term “Landlord” or any pronoun used in place thereof includes the
plural as well as the singular and the successors and assigns of Landlord. The
term “Tenant” or any pronoun used in place thereof includes the plural as well
as the singular and individuals, firms, associations, partnerships and
corporations, and their and each of their respective heirs, executors,
administrators, successors and permitted assigns, according to the context
hereof, and the provisions of this Lease shall inure to the benefit of and bind
such heirs, executors, administrators, successors and permitted assigns.
     The term “person” includes the plural as well as the singular and
individuals, firms, associations, partnerships and corporations. Words used in
any gender include other genders. If

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there be more than one Tenant the obligations of Tenant hereunder are joint and
several. The paragraph headings of this Lease are for convenience of reference
only and shall have no effect upon the construction or interpretation of any
provision hereof.
          D. Time of Essence. Time is of the essence of this Lease and of each
and all of its provisions.
          E. Quitclaim. At the expiration or earlier termination of this Lease.
Tenant shall execute, acknowledge and deliver to Landlord, within ten (10) days
after written demand from Landlord to Tenant, any quitclaim deed or other
document required by any reputable title company, licensed to operate in the
State of California, to remove the cloud or encumbrance created by this Lease
from the real property of which Tenant’s Premises are a part.
          F. Incorporation of Prior Agreements, Amendments. This agreement and
the exhibits and attachments may be altered, amended or revoked only by an
instrument in writing signed by both Landlord and Tenant. Landlord and Tenant
agree hereby that all prior or contemporaneous oral agreements between and among
themselves and their agents or representatives relative to the leasing of the
Premises are merged in or revoked by this agreement.
          G. Recording. Landlord and Tenant shall record a short form memorandum
hereof in the form attached hereto as Exhibit D.
          H. Amendments for Financing. Tenant further agrees to execute any
amendments reasonably required by a lender to enable Landlord to obtain
financing, so long as Tenant’s rights hereunder are not materially and adversely
affected and there is no change in the Basic Rent, Options to Renew, Lease Term
or Construction obligations of Landlord.
          I. Additional Paragraphs. Paragraphs 39 through 65 are added hereto
and are included as a part of this Lease.
          J. Clauses, Plats and Riders. Clauses, plats and riders, if any,
signed by Landlord and Tenant and endorsed on or affixed to this Lease are a
part hereof.
          K. Diminution of Light. Air or View. Tenant covenants and agrees that
no diminution or shutting off of light, air or view by any structure which may
be hereafter erected (whether or not by Landlord) shall in any way affect his
Lease, entitle Tenant to any reduction of rent hereunder or result in any
liability of Landlord to Tenant.

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     IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year first above written.

                  LANDLORD:       TENANT:
 
                JOHN ARRILLAGA       QUANTUM CORPORATION, SEPARATE PROPERTY
TRUST       a Delaware corporation
 
               
By
    /s/ John Arrillaga       By     /s/ Joseph C. Shepela
 
               
 
  John Arrillaga, Trustee            
 
               
 
          Title      VP Human Resources
 
               
 
                RICHARD T. PEERY             SEPARATE PROPERTY TRUST            
 
               
By
    /s/ Richard Peery            
 
               

  Richard T. Peery, Trustee      

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Paragraphs 39 through 65 to Lease Agreement Dated October 31, 1989, By and
Between JOHN ARRILLAGA AND RICHARD T. PEERY SEPARATE PROPERTY TRUSTS, as
Landlord, and QUANTUM CORPORATION, a Delaware corporation, as Tenant for 155,734
± Square Feet of Space Located at the corner of Bellew and Magnolia Drive,
Milpitas, California.
     39. BASIC RENT: In accordance with Paragraph 4A, subject to the provisions
of Paragraph 40 and 41, Basic Rent shall be payable as follows during the
indicated months of the term of the Lease based upon the gross leasable area
within the building that is part of the Premises:

          Period   Monthly Basic Rent
Months 1-17 $1.00/sf (plus the partial calendar month, if any, following the
Commencement Date)
  $1.00/sf
 
       
Months 18-29
  $1.05/sf
 
       
Months 30-41
  $1.10/sf
 
       
Months 42-53
  $1.15/sf
 
       
Months 54-65
  $1.20/sf
 
       
Months 66-77
  $1.25/sf
 
       
Months 78-89
  $1.30/sf
 
       
Months 90-101
  $1.35/sf
 
       
Months 102-113
  $1.40/sf
 
       
Months 114-125
  $1.45/sf
 
       
Months 126-137
  $1.50/sf
 
       
Months 138-149
  $1.55/sf
 
       
Months 150- 161
  $1.60/sf
 
       
Months 162-173
  $1.65/sf
 
       
Months 174-185
  $1.70/sf

     Example of calculation for Basic Rent per month for the period commencing
with the first through the seventeenth month of said Lease:

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Square footage of Building
    155,734  
Per square foot Basic Monthly Rent:
    x$1.00  
 
     
Basic Rent per Month:
  $ 155,734  
 
     

     40. BASIC RENT REDUCTION DURING PHASE IN PERIOD: For the period commencing
on [Illegible] basis. In the event Tenant does not occupy the entire building
from the Commencement Date of this Lease, it is agreed that Tenant’s monthly
Basic Rent will be reduced by $1.00 per square foot on the square footage not
occupied. This reduction in Basic Rent is only allowed from the Commencement
Date through May 31, 1991 (but not under any circumstances after May 31, 1991).
In no event whatsoever shall Tenant be entitled to such reduction in rent and
this Paragraph 40 shall not be considered in effect and binding on Landlord
after May 31, 1991 regardless of the Commencement Date of this Lease and
regardless of the reason for any delays in the Commencement date of this Lease.
In the event Tenant occupies the Premises on a phased in basis in accordance
with the foregoing, Landlord and Tenant agree to execute an amendment to this
Lease reflecting the number of square feet so occupied and adjusting the Basic
Rent accordingly. It is further agreed that during the phase-in period Tenant
will be responsible for paying all Additional Rent expense as outlined in
Paragraph 4D on the entire building from the Commencement Date.
     41. LEASE TERM AND COMMENCEMENT DATE: The following provisions relate to
the commencement and duration of the term of this Lease:
          A. Lease Term: The term of this Lease shall commence on the
“Commencement Date” (as defined herein) and shall continue for a period of
fifteen (15) years and five (5) months, plus the partial calendar month, if any,
in which the Commencement Date occurs, subject to (i) earlier termination in
accordance with the provisions of this Lease, and (ii) extension pursuant to the
options to renew granted by Paragraphs 42 and 43. By way of example only, if the
Commencement Date occurs on December 15, 1990, the term of the Lease shall
continue until May 30, 2006 (i.e., a period of 15 years and 5 calendar months,
along with the partial calendar month following December 15, 1990 until
December 31, 1990).
          B. Commencement Date Defined: As used herein, the term “Commencement
Date” shall mean the later to occur of the following: (i) the date upon which
the “Improvements” are “Substantially Completed”; or (ii) December 15, 1990;
provided, however, that if prior to the later of such dates Tenant’s operating
personnel enter into occupancy of the Premises and commence the operation of
Tenant’s business within the Premises, the Commencement Date shall be the date
such personnel of Tenant so enter into occupancy of the Premises. The term
“Substantially Completed” and/or “Substantial Completion” shall mean the date
when all of the following have occurred with respect to the Improvements in
question: (i) the construction of the Improvements in question has been
substantially completed in accordance with the approved plans therefor except
for punch list items which do not prevent Tenant from reasonably using the
Premises to conduct Tenant’s business; (ii) Landlord. has executed a certificate
or statement representing that the Improvements in question have been
substantially completed in accordance with the plans and specifications therefor
except for punch list items which do- net prevent Tenant from reasonably using
the Premises to conduct Tenant’s business; and (iii) the Building Department of
the City of Milpitas has completed its final inspection of such Improvements and
has “signed off” the building inspection card approving such work as complete
except for punch list items which do not prevent Tenant from reasonably using
the

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Premises to conduct Tenant’s business. Notwithstanding the foregoing,
Substantial Completion of the Interior Improvements shall not be deemed to have
occurred until Landlord has obtained final or conditional approval from the Fire
Department of the City of Milpitas that the Improvements have been completed in
accordance with such department’s requirements (subject only to conditions that
do not prevent Tenant from occupying the Improvements).
          C. Lease Terms Co-Extensive: It is acknowledged that [Illegible]
adjacent property upon which is to be constructed a building for Tenant’s use
consisting of approximately 176,516 square feet (the “Companion Lease”), and
(ii) it is the intention of the parties that the term of this Lease be
co-extensive with the term of the Companion Lease, such that the terms of both
leases expire on the same date. To that end, in the event that following the
date upon which the Commencement Date of this Lease and the comparable
“Commencement Date” of the Companion Lease become established as a date certain
following completion of improvements and satisfaction of any other conditions
related to determining such dates, and if such dates are not the same, then
whichever date occurs later shall be the expiration date of the lease term for
both leases (subject to the right of Tenant to extend either lease pursuant to
the options to extend granted in the two leases). It is acknowledged that the
implementation of this paragraph may result in an extension of the term of this
Lease, in which event Tenant shall continue to pay rent at the rate applicable
for the period immediately prior to the adjusted lease term expiration date. As
soon as the parties are able to implement the provisions of this paragraph
because the Commencement Date of this Lease and “Commencement Date” of the
Companion Lease have been determined following completion of improvements and
satisfaction of other appropriate conditions, the parties shall execute
amendments to this Lease and the Companion Lease establishing the applicable
Commencement Date, the expiration date of the term of the leases in accordance
with the foregoing provisions of this Paragraph 41C, the actual rent based upon
the measurements of the completed building covered by such lease as certified
prior to the Commencement Date by an architect or general contractor reasonably
approved by the parties, and the actual date for each rent adjustment provided
for in each lease, based upon the actual Commencement Date.
     42. FIRST FIVE-YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant an
option to extend the term of this Lease for an additional five (5) year period
upon the following terms and conditions:
          A. If Tenant elects to exercise the option to extend, Tenant shall
give Landlord written notice of Tenant’s exercise of this option to extend at
least one hundred eighty (180) days prior to the expiration of the Basic Term
hereof, in which event the Lease shall be considered extended for an additional
five (5) year period upon the same terms and conditions as this Lease, absent
this Paragraph 42 and subject to the rental as set forth below. In the event
that Tenant fails to timely exercise Tenant’s option asset forth herein in
writing, Tenant shall have no further option to extend this Lease, and this
Lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 42.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

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                              Monthly Period   Basic Rent
Months
    1-12     $1.75/sf
Months
    13-24     $1.80/sf
Months
    25-36     $1.85/sf
Months
    37-48     $1.90/sf
Months
    49-60     $1.95/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to renew granted by this Paragraph 42 at any time that Tenant is in
material default of its obligations under this Lease, if [Illegible] cured
within the time period provided for in this Lease; provided, however, that if
such default of Tenant is not for money due under this Lease and cannot be
cured, and if Landlord does not elect to terminate this Lease as a result of
such non-curable default by Tenant, Tenant may exercise the option to extend
granted by this Paragraph 42 notwithstanding such non-curable default.
     43. SECOND FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the
Lease for an additional five (5) year period as set forth in Paragraph 42,
Landlord hereby grants to Tenant an option to extend the term of this Lease for
an additional five (5) year period upon the following terms and conditions:
          A. Tenant shall give Landlord written notice of Tenant’s exercise of
this option to extend at least one hundred eighty (180) days prior to the
expiration of the Lease term as extended pursuant to Paragraph 42, in which
event the Lease shall be considered extended for an additional five (5) year
period upon the same terms and conditions as this Lease, absent this
Paragraph 43A and subject to the rental as set forth below. In the event that
Tenant fails to timely exercise Tenant’s option as set forth herein in writing,
Tenant shall have no further option to extend this Lease, and this Lease shall
continue in full force and effect for the full remaining term hereof, absent
this Paragraph 43.
          B. The monthly rental for the option period shall be as follows in the
event the option is exercised:

                              Monthly Period   Basic Rent
Months
    1-12     $2.00/sf
Months
    13-24     $2.05/sf
Months
    25-36     $2.10/sf
Months
    37-48     $2.15/sf
Months
    49-60     $2.20/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to extend granted by this Paragraph 43 at any time that Tenant is in
material default of its obligations under this Lease, if Tenant has received
written notice from Landlord that Tenant is in default, and such default has not
been timely cured within the time period provided for in this

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Lease; provided, however, that if such default of Tenant is not for money due
under this Lease and cannot be cured, and if Landlord does not elect to
terminate this Lease as a result of such non-curable default by Tenant, Tenant
may exercise the option to extend granted by this Paragraph 43 notwithstanding
such non-curable default.
     44. ASSESSMENT CREDITS: The demised property herein is subject to a special
assessment levied by the City of Milpitas in Improvement District No. 12. As a
part of said special assessment proceedings, additional bonds were sold and
assessments levied to provide for construction contingencies and reserve funds.
Interest will be earned on such funds created for contingencies and on reserve
funds which will be credited for the benefit of said assessment district. To the
extent surpluses are created in said district through unused contingency funds,
interest earnings or reserve funds, such surpluses shall be deemed the property
of Landlord. Notwithstanding that such surpluses may be credited on assessments
otherwise due against the demised premises, Tenant shall pay to Landlord, as
additional [ Illegible].
     45. HAZARDOUS MATERIALS: The parties agree as follows with respect to the
existence or use of hazardous material on the Premises:
          A. Tenant shall have no obligation to “clean up”, to comply with any
law regarding, or to reimburse, release, indemnify, or defend Landlord with
respect to any hazardous materials or wastes which Tenant or other parties on
the Premises did not store, dispose, or transport in, use, or cause to be on the
Premises in violation of applicable law during the term of this Lease. Any
handling, transportation, storage, treatment, disposal or use of hazardous
materials by Tenant or other parties in or about the Premises during the term of
this Lease shall strictly comply with all applicable laws and regulations.
Tenant will be 100 percent liable and responsible for any and all “clean up” of
said toxic waste and/or hazardous materials contamination which Tenant, its
agents, or future subtenants, if any, does store, dispose, or transport in, use
or-cause to be on the Premises in violation of applicable law or governing
agency(s) (or which originate on the Premises during the term of this Lease from
any manner whatsoever, including but not limited to, dumping by others), and
will indemnify Landlord and hold Landlord harmless from any liabilities,
demands, costs, expenses and damages, including attorney fees incurred as a
result of any claims resulting from such contamination, or from any claims for
personal injury or property damage or diminution in the value of the Premises
caused by the use, storage, disposal or transportation of hazardous materials on
the Premises by Tenant or other parties during the term of this Lease. It is
agreed that the Tenant’s responsibilities related to toxic waste and hazardous
materials will survive the termination date of the Lease. Tenant agrees to
complete compliance with governmental regulations regarding use or removal or
remediation of Hazardous Materials used, stored, disposed, transported or caused
to be on the Premises by Tenant or its agents or subtenants, or which originate
on the Premises during the term of this Lease, and prior to the termination of
said Lease Tenant agrees to follow the proper closure procedures and will obtain
a clearance from the local fire department and/or the appropriate city agency.
Tenant also agrees to install such toxic waste and/or hazardous materials
monitoring devices as Landlord reasonably deems necessary to monitor any use of
hazardous materials by Tenant, its agents or subtenants, originating from the
Premises during the Lease term, if recommended by a qualified environmental
consulting firm.

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          B. Landlord hereby makes the following representations to Tenant, each
of which is made only to the best of Landlord’s knowledge as of the date
Landlord executes this Lease, without any inquiry or investigation having been
made or required by Landlord regarding this subject, nor does Landlord have any
obligation to investigate or make inquiry regarding the subject:
               (1) The soil and ground water on or under the Premises does not
contain hazardous materials in amounts which violate any laws to the extent that
any governmental entity could require either Landlord or Tenant to take any
remedial action with respect to such hazardous materials.
               (2) During the time that Landlord has owned the Premises,
Landlord has received no notice of (i) any violation, or alleged violation, of
any law that has not been corrected to the satisfaction of the appropriate
authority, (ii) any pending claims relating to the presence of hazardous
material on the Premises, or (iii) any pending investigation by any governmental
agency concerning the Premises relating to hazardous materials.
          C. Landlord [Illegible] received from any governmental authority
concerning hazardous materials which relates to the Premises, and (ii) any
contamination of the Premises by hazardous materials which constitutes a
violation of any law. Attached as Exhibit “C”, hereto is a list of hazardous
materials that Tenant intends to use at the Premises. If during the Lease term
Tenant proposes to use other hazardous materials at the Premises, Tenant shall
inform Landlord of such use, identifying the hazardous materials and the manner
of their use, storage and disposal, and shall agree (i) to use, store and
dispose of such materials strictly in compliance with all laws and (ii) that the
indemnity set forth in paragraph 45A shall be applicable to Tenant’s use of such
material.
          D. Landlord or Tenant may, at any time, cause testing wells to be
installed on the Premises, and may cause the ground water to be tested to detect
the presence of hazardous material by the use of such tests as are then
customarily used for such purposes. Testing wells installed by Tenant shall be
paid for by Tenant. If tests conducted by Landlord disclose that Tenant has
violated any hazardous materials laws, or Tenant or parties on the Premises
during the term of this Lease have contaminated the Premises as determined by
regulatory agencies pursuant to hazardous materials laws, or that Tenant has
liability to Landlord pursuant to paragraph 45A, then Tenant shall pay for 100%
of the cost of the test and all related expense. Prior to the expiration of the
Lease term, Tenant shall remove any testing wells it has installed at the
Premises, and return the Premises to the condition existing prior to the
installation of such wells, unless Landlord requests in writing that Tenant
leave all or some of the testing wells in which instance the wells requested to
be left shall not be removed.
          E. If any tests performed by Tenant or Landlord prior to the
Commencement Date disclose hazardous materials at the Premises, Landlord at its
expense will promptly take all reasonable action required by law with respect to
the existence of such materials at the Premises. The Commencement Date shall not
be delayed because of such action by Landlord unless occupation of the Premises
is prohibited by law.

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          F. The obligations of Landlord and Tenant under this Paragraph 45
shall survive the expiration or earlier termination of the term of this Lease.
The rights and obligations of Landlord and Tenant with respect to issues
relating to hazardous materials are exclusively established by this
Paragraph 45.
     46. APPROVALS: Whenever this Lease requires the approval or consent of
either Landlord or Tenant before an action may be taken, such approval or
consent shall not be unreasonably withheld or delayed.
     47. LANDLORD’S RIGHT TO TERMINATE: It is understood that the Premises to be
leased by Tenant are to be constructed by Landlord, and that Landlord is
required to obtain the necessary building permits for the building shell before
construction of said Premises can commence. Therefore, it is agreed that in the
event Landlord cannot obtain all the necessary building permits for the building
shell by June 1, 1990, then either Landlord or Tenant can terminate this Lease
by written notice to the other party given within thirty (30) days thereafter,
without any liability to the other party of any type whatsoever, and that this
Lease Agreement will be null and void as of the date of receipt of such notice.
Landlord agrees to use its best efforts to obtain the required permits by
June 1, 1990.
     48. CROSS DEFAULT: As set forth in Paragraph 41C, Landlord and Tenant have
entered into another lease dated October 31, 1989 referred to herein as the
“Companion Lease” affecting property contiguous to the Premises leased
hereunder. As a material part of the consideration for the execution of this
Lease by Landlord, it is agreed between Landlord and Tenant that a default under
this Lease, or a default under said Companion Lease dated October 31, 1989 may,
at the option of Landlord, be considered a default under both leases, in which
event Landlord shall be entitled (but in no event required) to apply all rights
and remedies of Landlord under the terms of one Lease to both Leases including,
but not limited to, the right to terminate one or both of said leases by reason
of a default under said Companion Lease dated October 31, 1989 or hereunder.
     49. SUBDIVISION: With respect to the development of the Premises:
          A. The parties acknowledge that as of the date this Lease is signed by
the last party (the “Effective Date”) the Premises is not constituted as a
separate legal parcel, but is part of a larger parcel consisting of
approximately 37.096 acres (“Larger Parcel”), all of which is shown by the site
plan attached to the lease as Exhibit “A”. Landlord agrees to use reasonable
efforts to cause the Premises to be constituted as a separate legal parcel
containing approximately 10.531 acres in the approximate area and configuration
shown and outlined within the area marked in red on Exhibit “A”, and to use
reasonable efforts to cause lot 2, as shown on Exhibit “A” to the companion
Lease and lots 3 through 5 as shown on Exhibit “A” to the Option Agreement (the
“Option”) between Landlord and Tenant of even date herewith to be subdivided by
means of the recordation of a subdivision map by July 1, 1990. In causing such
property to be subdivided, Landlord and Tenant agree to consent to reasonable
lot line modifications as required by the City of Milpitas; provided, however,
that the configuration of the Premises shall be established in such manner that
does not result in a material reduction in the Improvements or in parking,
access, or landscape amenities which are shown on the site plan attached to this
Lease as Exhibit “A”. Tenant agrees to reimburse Landlord for actual expenses
paid by Landlord in the

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preparation, processing and recordation of such subdivision map and to meet
other requirements necessary to make said lots 1-5 separate lots; provided,
however, Tenant’s total reimbursement obligation pursuant hereto, the Companion
Lease and the Option shall not exceed Twenty Five Thousand Dollars ($25,000). At
such time is Landlord causes any such subdivision to be completed, Landlord and
Tenant shall execute an amendment to this Lease which shall set forth the
description of the Premises resulting from the subdivision.
          B. Landlord and Tenant agree that the Premises and the Larger Parcel
during (and limited to) the term of this Lease shall be developed and used only
in accordance with a master plan, developed by Landlord. The parties have
mutually agreed to a Master Plan for the general development of the entire
37.096 ± acre site which is attached hereto as Exhibit “A” and entitled “Master
Site Plan”. Said Master Site Plan sets forth the buildings and land to be leased
under this Lease and the Companion Lease (Building 1 and 2 on Lots 1 and 2), and
the buildings and land proposed to be developed on the remainder of the property
(Building 3, 4, and 5 to be constructed on Lots 3, 4, and 5 respectively) as
well as the general location of the parking and landscaping pertaining thereto.
The parties agree that the Master Site Plan may be modified provided that (i) a
perimeter driveway is developed in front of each building which generally runs
near and parallel with the street surrounding the 37 ± acre site, (ii) a
landscape and recreation area at the rear of Lot 4 (as shown on the Site Plan)
is developed when a building is constructed on Lot 4 [Illegible] streets between
the street and parking area closest to the street. The parties agree that
(i) Landlord may change the master plan, shape and sizes of the buildings,
parking and landscaping as long as the general development concept set forth
above is generally followed by Landlord, and (ii) any successor or assign of
Landlord or Tenant shall be required to consent and agree to develop the
Premises and the Larger Parcel in accordance with the foregoing, and shall be
deemed to have assumed the obligation to so develop such property by acceptance
of a deed, assignment or other means of transfer of Landlord’s or Tenant’s
interest in such property or any portion thereof, as the case may be. Further,
the memorandum of lease to be recorded by Landlord and Tenant pursuant to
paragraph 38G shall contain the following statement:
“The Lease provides that from and after the commencement date of the Lease and
continuing for a period of fifteen years, whichever first occurs, the Premises
and the larger 37.096 acre parcel in which the Premises were originally
included, shall be developed by the parties to the Lease or their successors or
assigns, as more particularly set forth in the Lease, so that (i) a perimeter,
driveway is developed in front of each building which generally runs near and
parallel with the street surrounding the 37 ± acre site, (ii) a landscape area
is developed along the frontage of all streets between the street and parking
area closest to the street, (iii) a landscape and recreation area at the rear of
Lot 4 (as shown on the Site Plan identified in the Lease) is developed when a
building is constructed on Lot 4, and (iv) all buildings will be similar and
generally architecturally compatible, it being agreed that Landlord may change
the shape and sizes of the buildings, parking and landscaping as long as the
general development concept set forth above and in the Lease is generally
followed by Landlord. Tenant understands that the lots shown on the Master Site
Plan described in the Lease are for lease purposes only and that the lots have
not been legally subdivided and do not constitute separate legal lots, but
Landlord agrees to use reasonable efforts to cause Lots 1-5 to be

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subdivided in accordance with the approved Master Plan by July 1, 1990. If a
Public Agency requires modifications to the lot lines as shown on the Master
Plan, the parties agree to reasonable lot line modifications. Tenant agrees to
reimburse Landlord for actual expenses paid by Landlord in the processing and
recordation of such subdivision map and to meet all other requirements necessary
to make said Lots 1-5 separate lots; provided, however, Tenant’s total
reimbursement obligation (pursuant to all agreements between Landlord and
Tenant) shall in no event exceed Twenty-Five Thousand Dollars ($25,000.00).”
     50. LIMITATION ON IMPOSITION OF LATE CHARGE: Notwithstanding anything
contained in Paragraph 4C, if Tenant is delinquent in the payment of Basic Rent
or Additional Rent and is subject to a late charge, Landlord agrees to waive the
late charge if the Basic Rent or Additional Rent due is paid within five days of
Landlord’s written notice to Tenant of the delinquent amount owed and provided
Tenant has not been delinquent in its payment of Basic Rent or Additional Rent
owed under said Lease during the twelve (12) month period preceding the rent
delinquency in question.
     51. SECURITY DEPOSIT: The following provisions shall modify Paragraph 4F:
          A. Within thirty (30) days after the expiration or earlier [Illegible]
Deposit except for amounts that Landlord has deducted therefrom that are needed
by Landlord to cure defaults of Tenant under the Lease or compensate Landlord
for damages for which Tenant is liable pursuant to this Lease. The use or
disposition of the Security Deposit shall be subject to the provisions of
California Civil Code Section 1950.7.
          B. Tenant shall have the option of satisfying its obligation with
respect to an amount equal to one-half (1/2) of the Security Deposit by
providing to Landlord, at Tenant’s sole cost, a letter of credit which (i) is
drawn upon an institutional lender reasonably acceptable to Landlord, (ii) is in
the amount of one-half (1/2) of the Security Deposit, (iii) is for a term of at
least twelve (12) months, (iv) with respect to any letter of credit in effect
within the six month period immediately prior to the expiration of the Lease
term, shall provide that the term of such letter of credit shall extend at least
thirty (30) days past the Lease expiration date, (v) may be drawn upon by
Landlord upon submission of a declaration of Landlord that Tenant is in default
(as defined in Paragraph 19 and as modified by Paragraph 60). Landlord shall not
be obligated to furnish proof of default to such institutional lender, and
Landlord shall only be required to give the institutional lender written
notification that Tenant is in default and upon receiving such written
notification from Landlord the institutional lender shall be obligated to
immediately deliver cash to Landlord equal to the amount Landlord may spend or
become obligated to spend by reason of Tenant’s default or to compensate
Landlord for any loss or damage which Landlord may suffer by reason of Tenant’s
default up to 1/2 of the total Security Deposit, (vi) shall provide that if the
letter of credit is not renewed, replaced or extended within twenty (20) days of
its expiration date the issuer of the credit shall automatically make payment of
the amount of the letter of credit directly to Landlord after the date which is
twenty (20) days before the expiration date, and no later than the expiration
date, without Landlord being required to make demand upon the letter of credit,
and (vii) is otherwise in form and content reasonably satisfactory to Landlord.
If Tenant provides Landlord with a letter of credit meeting the foregoing
requirements, one-half (1/2) of the cash Security Deposit (i.e., $210,240.90 of
the $420,481.80

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Deposit) shall be returned to Tenant by Landlord inasmuch as the cash deposit
remaining and the Letter of Credit equal the total Security Deposit required in
Paragraph 4F. If Tenant defaults with respect to any provisions of this Lease,
including but not limited to provisions relating to the payment of rent,
Landlord may (but shall not be required to) draw down on the letter of credit
for payment of any sum which Landlord may spend or become obligated to spend by
reason of Tenant’s default, or to compensate Landlord for any loss or damage
which Landlord may suffer by reason of Tenant’s default. Landlord and Tenant
acknowledge that such letter of credit will be treated as if it were a cash
security deposit, and such letter of credit may be drawn down upon by Landlord
upon demand and presentation of evidence of the identity of Landlord to the
issuer, in the event that Tenant defaults with respect to any provision of this
Lease and such default is not cured within any applicable cure period.
Notwithstanding anything to the contrary in this Lease, Landlord shall not be
obligated to furnish proof of default to such institutional lender and Landlord
is only required to give the institutional lender written notification that
Tenant is in default and upon receiving such written notification from Landlord
the institutional lender shall be obligated to immediately deliver cash to
Landlord equal to the amount Landlord may spend or become obligated to spend by
reason of Tenant’s default, or to compensate Landlord for any loss or damage
which Landlord may suffer by reason of Tenant’s default up to 1/2 of the total
Security Deposit. Landlord acknowledges that it is not entitled to draw down
such letter of credit unless Landlord would have been entitled to draw upon the
cash security deposit pursuant to the terms of Paragraph 4.F of the Lease.
Concurrent with the delivery of the [Illegible] the default upon which the draw
down was based, together with evidence that Landlord has provided to Tenant the
written notice of such default which was required under the applicable provision
of the Lease, and evidence of the failure of Tenant to cure such default within
the applicable grace period following receipt of such notice of default. Any
proceeds received by Landlord by drawing upon the letter of credit shall be
applied in accordance with the provisions governing the Security Deposit imposed
by Paragraph 4F and this Paragraph 51. If Landlord draws upon the letter of
credit, thereafter Tenant shall once again shall have the right to post a letter
of credit in place of one-half (1/2) of a cash Security Deposit so long as
Tenant is not then in default. In any event Tenant will be obligated to
replenish the amount drawn to restore the Security Deposit to its original
amount as provided for in paragraph 4F. If any portion of the letter of credit
is used or applied pursuant hereto, Tenant shall, within ten (10) days after
receipt of a written demand therefor from Landlord, restore and replace the
value of such security by either (i) depositing cash with Landlord in the amount
equal to the sum drawn down under the letter of credit, or (ii) increasing the
letter of credit to its value immediately prior to such application. Tenant’s
failure to replace the value of the security as provided in the preceding
sentence shall be a material breach of its obligation under this Lease.
     52. ALTERATIONS MADE BY TENANT: The provisions of this Paragraph 52 shall
modify Paragraphs 5 and 6:
          A. As used herein, the term “Alteration” shall mean any alteration,
addition or improvement made by Tenant to the Premises during the term of the
Lease, but shall not include Tenant’s trade fixtures so long as such trade
fixtures are not installed in such a manner that they have become an integral
part of the building.
          B. Tenant shall not construct any Alterations or otherwise alter the
Premises without Landlord’s prior written approval if the total cost of such
Alterations exceeds $20,000

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per the scope of any single remodeling job to the Premises, or if such
Alteration is structural in nature. Any other non-structural Alteration of less
than $20,000 for the total cost of the remodeling job may be undertaken by
Tenant without Landlord’s prior written approval but with the understanding that
Tenant shall be obligated to restore the Premises as set forth in Paragraph 5 at
the termination of this Lease, except as otherwise provided in Paragraph 52.D.
Notwithstanding the foregoing, Tenant shall have the right to reconfigure
modular freestanding walls and partitions without Landlord’s prior consent,
which have been installed by Tenant and paid for by Tenant.
          C. At all times during the Lease Term (i) Tenant shall maintain and
keep up dated “as-built” plans for all Alterations constructed by Tenant, and
(ii) Tenant shall provide to Landlord copies of such “as-built” plans as such
Alterations are made.
          D. Tenant shall have the right to remove at any time during the Lease
term or prior to the expiration thereof any (i) process equipment such as clean
hoods, thermal cycling chambers, freon piping, high temperature furnaces, air
handlers and special air-conditioning, (ii) process systems such as compressed
air or processed exhaust systems and (iii) the clean room modules and all
related process equipment which are paid for 100% by Tenant (excluding building
standard HVAC, electrical, plumbing and other building standard systems which
are an integral part of the building not related to Tenant’s clean room modules
or other [Illegible] Lease shall be deemed to be trade fixtures, so long as
Tenant repairs all damage caused by the installation and/or removal thereof,
returns the Premises prior to the termination of the Lease to the condition
existing prior to the installation of such item, and repairs and restores any
so-called “doughnuts” or gaps in the roof and/or floor tiles and/or ceiling and
lighting resulting from such removal. At the time Tenant requests the consent of
Landlord to approve the installation of an Alteration requiring the consent of
Landlord, Tenant shall seek from Landlord a written statement of whether or not
Landlord will require Tenant to remove such Alteration and restore all or part
of the Premises as required by Landlord in accordance with this paragraph and
Paragraph 5 at the expiration or earlier termination of the term of the Lease.
If Tenant does not obtain from Landlord a statement in writing that Landlord
will not require such Alteration to be removed, then at the expiration or sooner
termination of the term of the Lease, it is agreed that Tenant may be required
to remove all or part of such Alterations, and return the Premises to the
condition existing prior to the installation of such Alterations as provided for
in Paragraph 5 above. In addition, if Tenant has installed Alterations without
Landlord’s consent, if Landlord so requires, Tenant shall also remove all or
part of such Alterations so installed without Landlord’s consent as Landlord may
designate and return the Premises to the condition existing prior to the
installation of such Alteration. Alterations for which Landlord has given its
written consent to Tenant that such Alteration need not be removed, shall not be
removed by Tenant at the expiration or earlier termination of the term of the
Lease.
          E. At all times during the term of the Lease, Tenant shall have the
right to install and remove trade fixtures as defined in the Lease and installed
and paid for by Tenant, so long as Tenant repairs all damage caused by the
installation thereof and returns the Premises to the condition existing prior to
the installation of such fixtures and repairs and restores any so called
“doughnuts” or gaps in the roof and/or floor (including floor structure,
sub-floor and appropriate floor covering for said area) and/or floor tiles
and/or ceiling tiles and lighting resulting from such removal.

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     53. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: The provisions of this Paragraph 53 shall modify Paragraphs 7
and 14:
          A. If during the last five (5) years of the term of the Lease if
Tenant has not extended the Lease as provided for in Paragraphs 42 and 43, or
during either of the five (5) year extension periods permitted by Paragraphs 42
and 43, it becomes necessary (due to any governmental requirement for continued
occupancy of the Premises) to make structural improvements required by laws
enacted or legal requirements imposed by governmental agency(s) after the
Commencement Date, and the cost for each required work or improvement exceeds
$100,000, then if such legal requirement is not imposed because of Tenant’s
specific use of the Premises and is not “triggered” by Tenant’s Alterations or
Tenant’s application for a building permit or any other governmental approval
(in which instance Tenant shall be responsible for 100% of the cost of such
improvements), Landlord shall be responsible for paying the cost of such
improvement and constructing such improvement, subject to a cash contribution
from Tenant of a portion of the cost thereof as provided for and calculated in
Paragraph 53B.
          B. When Landlord makes an improvement pursuant to Paragraph 53A, and
as a condition to Landlord’s obligation to construct such improvement, Tenant
shall make the following contribution in cash to Landlord for the cost therefore
prior to the [Illegible] 100% of the cost or the first $100,000.00 worth of each
improvement. After the first $100,000.00, all costs above $100,000.00 shall be
divided by 15 and multiplied by the time period remaining in the last five years
of the Lease term from the date work on such improvement commences.
     For example, if the cost of such improvement was $400,000 and there was one
year and six months remaining in the Lease term when the work commenced, then
Tenant would be responsible for reimbursing Landlord in cash $130,000 computed
as follows:

                 
Total Cost of Work
          $ 400,000.00  
Tenant Responsible for 1st $100,000
            -100.000.00  
 
             
Total Amount To Be Amortized
            300,000.00  
 
               
$300,000.00/15 — $20,000/yr. x 1.5 yrs
    =     $ 30,000.00  
 
               
Tenant responsible for $100,000 + 30,000
    =     $ 130,000.00  

          C. If Landlord has made improvements, for which Tenant has reimbursed
Landlord for the cost thereof pursuant to Paragraph 53B, and the term of this
Lease is subsequently extended pursuant to the exercise by Tenant of an option
to renew pursuant to Paragraph 42 or 43, upon the exercise of any such option by
Tenant, Tenant shall pay to Landlord an additional sum equal to the total amount
of said improvement less the amount previously paid for by Tenant. Using the
example in Paragraph 53B above, Tenant would owe Landlord the additional amount
of $270,000.00 ($400,000.00 - $130,000.00 = $270,000.00).

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     54. REAL PROPERTY TAXES: Paragraph 9 is modified by the following:
          A. The term “Real Property Taxes” shall not include charges, levies or
fees directly related to the use, storage, disposal or release of hazardous
materials on the Premises unless directly related to Tenant’s activities, which
subject is exclusively governed by Paragraph 45.
          B. If any assessments for public improvements are levied against the
Premises, Landlord may elect either to pay the assessment in full or to allow
the assessment to go to bond. If Landlord pays the assessment in full, Tenant
shall pay to Landlord or any assignee or purchaser of the Premises each time
payment of Real Property Taxes is made a sum equal to that which would have been
payable (as both principal and interest) had Landlord allowed the assessment to
go to bond.
          C. Tenant at its cost shall have the right, at any time, to seek a
reduction in the assessed valuation of the Premises or to contest any Real
Property Taxes that are to be paid by Tenant. If Tenant seeks a reduction or
contests such Real Property Taxes, the failure on Tenant’s part to pay such Real
Property Taxes being so contested shall not constitute a default so long as
Tenant complies with the provisions of this Paragraph. Landlord shall not be
required to join in any proceeding or contest brought by Tenant unless the
provisions of any law require that the proceeding or contest be brought by or in
the name of Landlord. In that case Landlord shall join in the proceedings or
contest or permit it to be brought in Landlord’s name as long as Landlord is not
required to bear any cost. Tenant, on final determination of the proceeding or
contest, shall immediately pay or discharge its share of any Real Property Taxes
determined by any decision or judgment rendered, together with all costs,
charges, interest, and penalties incidental to the [Illegible] contests them as
provided in this paragraph, before the commencement of the proceeding or contest
Tenant shall furnish to Landlord a surety bond in form reasonably satisfactory
to Landlord issued by an insurance company qualified to do business in
California. The amount of the bond shall equal 125% of the total amount of Real
Property Taxes in dispute and any such bond shall be assignable to any lender or
purchaser of the Premises. The bond shall hold Landlord and the Premises
harmless from any damage arising out of the proceeding or contest and shall
insure the payment of any judgment that may be rendered.
     55. PROPERTY INSURANCE: Paragraph 12 is modified by the following:
          A. If Tenant so elects, Tenant may obtain from a third party insurance
company the insurance required to be carried by Landlord pursuant to
Paragraph 12 so long as each of the following conditions is satisfied: (i) the
Landlord is not the John Arrillaga and Richard T. Peery Separate Property Trusts
or an affiliated entity; (ii) the insurance to be carried by Tenant to satisfy
this requirement strictly complies with all of the provisions of Paragraph 12;
(iii) such insurance shall name Landlord as the insured and provide that it is
to be payable to Landlord in the same manner as if such insurance had been
carried by Landlord pursuant to Paragraph 12 (subject to the rights of any
lender holding a mortgage or deed of trust encumbering the Premises); (iv) each
lender holding a mortgage or deed or trust encumbering the Premises shall have
given its written consent to Tenant carrying such insurance and such insurance
shall comply with the requirements of any such lender; (v) Tenant must notify
Landlord, by certified mail, no later than one hundred eighty (180) days prior
to the expiration

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date of Landlord’s insurance policy (which expiration date is currently 3/13/xx
of a given year and is subject to change), that Tenant will directly obtain the
required insurance coverage for the insurance year commencing 3/14/XX through
3/13/XX and each insurance year through the termination data of this Lease, or
until Tenant is no longer able to comply with all of the provisions of this
paragraph 55; (vi) the annual premium must be paid in full at the commencement
of the policy; (vii) the insurance policy must be issued for a one-year period
following the expiration date of Landlord’s insurance policy (i.e., from 3/14/XX
to 3/13/XX); (viii) any and all deductibles required under the policy will be
paid entirely by Tenant; (ix) the terms of the coverage must be broad form and
cover all items to be covered as set forth in Paragraph 12 of this Lease;
(x) the Building and Premises must be insured for their full replacement cost;
(xi) the insurance policy containing the required coverage in accordance with
the provisions of this paragraph must be sent to Landlord for retention within
thirty (30) days prior to the expiration date of Landlord’s insurance policy,
and may not be terminated or altered without thirty (30) days written notice to
Landlord by the company providing such insurance (it is agreed that if the
insurance policy is cancelled or altered, Landlord will have the right to obtain
the property insurance coverage on said building, and Landlord will bill the
Tenant for the related insurance premium); and (xii) at all times while Tenant
is so carrying such insurance, Tenant is Quantum Corporation or a successor
entity and the then net worth of such corporation is substantially the same as
the net worth of Quantum Corporation as of the date of this Lease is executed by
Landlord and Tenant. Tenant shall provide such evidence as is required by
Landlord and any lender to establish that the insurance that Tenant carries
pursuant to this Paragraph 55 has been obtained and meets the requirement of
this Paragraph 55. Such insurance carried by Tenant shall be in form and
provided by an insurance company that is reasonably acceptable to Landlord,
which must be rated “A plus” or better by Best’s Insurance Service (or an
equivalent rating from anther rating agency should Best’s no longer provide
[Illegible] insurance provided by Tenant does not satisfy the requirements of
paragraph 12, in the event of a subsequent casualty, Tenant shall be responsible
for and shall pay for that portion of the restoration cost, in excess of the
insurance proceeds actually available, that would have been covered by insurance
satisfying the requirements of paragraph 12.
          B. Tenant shall not obligated to contribute to the cost of earthquake
insurance more than an amount equal to six (6) times the then annual cost of
fire and “all risk” insurance per year. For example, if the 1993 annual premium
for fire and “all risk” insurance is $9,000, then Tenant’s share of the cost of
any premium for earthquake insurance for the following year (1994) shall be
limited to $54,000 ($9,000 x 6). Tenant shall have the right to require
earthquake insurance providing it is available if Tenant agrees to pay full cost
thereof.
     56. ASSIGNMENT AND SUBLETTING: The following modifications are made to
Paragraph 16:
          A. In the event that Tenant seeks to make any assignment or sublease,
then Landlord, by giving Tenant written notice of its election within fifteen
(15) days after Tenant’s notice of intent to assign or sublease has been given
to Landlord, shall have the right to elect (i) to withhold its consent to such
assignment or sublease, as permitted pursuant to Paragraph 16, or (ii) to permit
Tenant to so assign the Lease or sublease such part of the Premises, in which
event Tenant may do so, but without being released of its liability for the
performance of all of its

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obligations under the Lease, and the following shall apply (except the following
shall not apply to a “Permitted Transfer” described in Paragraph 57):
               (1) If Tenant assigns its interest in this Lease, then in
addition to the rental provided for in this Lease, Tenant shall pay to Landlord
fifty percent (50%) of all consideration received by Tenant over and above
(i) the assignee’s agreement to assume the obligations of Tenant under this
Lease and (ii) all “Permitted Transfer Costs” (as defined herein) related to
such assignment. As used herein, the term “Permitted Transfer Costs” shall mean
all reasonable leasing commissions paid to third parties not affiliated with
Tenant in order to obtain the assignment or sublease in question.
               (2) (If Tenant sublets all or part of the Premises, then Tenant
shall pay to Landlord in addition to the rental provided for in this Lease fifty
percent (50%) of the positive difference, if any, between (i) all rent and other
consideration paid by the subtenant to Tenant, less (ii) all rent paid by Tenant
to Landlord pursuant to this Lease which is allocable to the area so sublet and
all Permitted Transfer Costs related to such sublease. After Tenant has
recovered all Permitted Transfer Costs Tenant shall pay to Landlord the amount
specified in the preceding sentence on the same basis, whether periodic or in
lump sum that such rent and other consideration is paid to Tenant by its
subtenant, within seven (7) days after it is received by Tenant.
               (3) Tenant’s obligations under this subparagraph shall survive
any assignment or sublease. At the time Tenant makes any payment to Landlord
required by this subparagraph, Tenant shall deliver an itemized statement of the
method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right to
inspect Tenant’s books and records relating to the payments due pursuant to this
subparagraph. Upon request therefor, Tenant shall deliver to [Illegible]
               (4) As used herein, the term “consideration” shall mean any
consideration of any kind received, or to be received, by Tenant as a result of
the assignment or sublease, if such sums are paid for Tenant’s interest in this
Lease or in the Premises.
     57. PERMITTED ASSIGNMENTS AND SUBLEASES: Notwithstanding anything contained
in Paragraph 16, so long as Tenant otherwise complies with the provisions of
Paragraph 16 and the Permitted Transfer does not release Tenant from its
obligations hereunder, Tenant may enter into any of the following transfers (a
“Permitted Transfer”) without Landlord’s prior written consent, and the
provisions of Paragraph 56A shall not apply to any such Permitted Transfer:
          A. Tenant may sublease all or part of the Premises or assign its
interest in this Lease to any corporation which controls, is controlled by, or
is under common control with Tenant by means of an ownership interest of more
than fifty percent (50%) providing Tenant remains liable for the payment of rent
and full performance of the lease;
          B. Tenant may assign its interest in the Lease to a corporation which
results from a merger, consolidation or other reorganization in which Tenant is
not the surviving corporation so long as 95% of all assets of Tenant are
permanently transferred to such assignee.

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In the event there is not a permanent transfer of 95% or more of the assets and
liabilities from Tenant to a third party, and Tenant continues to exist as a
separate entity, both companies shall be jointly and severally liable for the
full terms and conditions of the Lease;
          C. Tenant may assign this Lease to a corporation which purchases or
otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets of Tenant are permanently transferred to such assignee (in the event
there is not a permanent transfer of 95% or more of the assets and liabilities
from Tenant to a third party and Tenant continues to exist as a separate entity,
both companies shall be jointly and severally liable for the full terms and
conditions of the Lease).
     58. SUBORDINATION AND MORTGAGES: Paragraph 17 is modified to provide that
this Lease shall not be subordinate to a mortgage or deed of trust unless the
Lender holding such mortgage or deed of trust enters into a written
subordination, non-disturbance and attornment agreement in which the Lender
agrees that notwithstanding any subordination of this Lease to such Lender’s
mortgage or deed of trust, (i) such Lender shall recognize all of Tenant’s
rights under this Lease, and (ii) in the event of a foreclosure this Lease shall
not be terminated so long as Tenant is not in material default of its
obligations under this Lease, but shall continue in effect and Tenant and such
Lender (or any party acquiring the Premises through such foreclosure) shall each
be bound to perform the respective obligations of Tenant and Landlord with
respect to the Premises arising after such foreclosure.
     59. LANDLORD’S RIGHT TO ENTER: Notwithstanding the provisions of
Paragraph 18, (i) except in the event of an emergency, Landlord shall give
Tenant twenty-four (24) hours notice prior to entering the Premises, agrees to
comply with any reasonably safety and/or security regulations imposed by Tenant
with respect to such entry, and shall only enter the Premises when accompanied
by Tenant or its agent (so long as Tenant makes itself reasonably available for
this purpose), and (ii) Landlord may install “for lease” signs relating to the
Premises only during the last 150 days of the Lease term. Landlord agrees to use
[Illegible].and invitees shall be performed in a manner with as minimal
interference as possible with Tenant’s business at the Premises. Subject to the
foregoing, Tenant agrees to cooperate with Landlord and Landlord’s agents,
employees and contractors so that responsibilities of Landlord under the Lease
can be fulfilled in a reasonable manner during normal business hours so that no
extraordinary costs are incurred by Landlord.
     60. BANKRUPTCY AND DEFAULT: Paragraph 19 is modified to provide that with
respect to non-monetary defaults not involving Tenant’s failure to pay Basic
Rent or Additional Rent, Tenant shall not be in default of any non-monetary
obligation if (i) more than thirty (30) days is required to cure such
non-monetary default, and (ii) Tenant commences cure of such default as soon as
reasonably practicable after receiving written notice of such default from
Landlord and thereafter continuously and with due diligence prosecutes such cure
to completion.
     61. ABANDONMENT: Paragraph 20 is modified to provide that Tenant shall not
be in default under the Lease if it leaves all or any part of Premises vacant so
long as (i) Tenant is performing all of its other obligations under the Lease
including the obligation to pay Basic Rent and Additional Rent, (ii) Tenant
provides on-site security during normal business hours for those parts of the
Premises left vacant, (iii) such vacancy does not materially and adversely
affect the

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validity or coverage of any policy of insurance carried by Landlord with respect
to the Premises, and (iv) the utilities and heating and ventilation system are
operated to the extent necessary to prevent damage to the Premises or its
systems.
     62. DESTRUCTION: Paragraph 21 is modified by the following:
          A. Except as provided in Paragraph 62B, Landlord may not terminate the
Lease if the Premises are damaged by a peril that is covered by the insurance
carried by Landlord pursuant to Paragraph 12, but instead shall restore the
Premises in the manner described by Paragraph 21.
          B. If the Premises are damaged by a peril covered by the insurance
carried by Landlord pursuant to Paragraph 12, Landlord shall have the option to
terminate the Lease if each of the following conditions is satisfied: (i) the
cost to repair or the damage exceeds thirty-three percent (33%) of the then
replacement cost of the Premises; and (ii) the damage occurs at a time when
there is less than five (5) years remaining in the term of the Lease.
Notwithstanding the foregoing, if such damage occurs at a time when there is
less than five (5) years remaining in the term of the Lease and Landlord
notifies Tenant of Landlord’s election to terminate the Lease pursuant to the
provisions of this Paragraph 62B, if Tenant has the right to extend the term of
this Lease pursuant to either Paragraph 42 or 43 such that the remaining term of
the Lease (including the option period) will be more than five (5) years
following the date of such damage, this Lease shall not terminate if Tenant
notifies Landlord in writing of Tenant’s exercise of an option to extend granted
to Tenant by either Paragraph 42 or 43. In such event, this Lease shall not
terminate, the term shall be so extended, and Landlord shall restore the
Premises in the manner provided in Paragraph 21.
          C. If the Premises are damaged by any peril, then as soon as
reasonably practicable, Landlord shall furnish Tenant with the [Illegible]
completed. Tenant shall have the option to terminate this Lease in the event any
of the following occurs, which option may be exercised only by delivery to
Landlord of a written notice of election to terminate within seven (7) days
after Tenant receives from Landlord the estimate of the time needed to complete
such restoration:
               (1) The Premises are damaged by any peril and, in the reasonable
opinion of Landlord’s architect or construction consultant, the restoration of
the Leased Premises cannot be substantially completed within 180 days after the
date of such damage; or
               (2) The Premises are damaged by any peril within twelve
(12) months of the last day of the Lease term and provided Tenant has not
exercised an option to renew pursuant to the provisions of Paragraph 42 or 43,
and, in the reasonable opinion of Landlord’s architect or construction
consultant, the restoration of the Leased Premises cannot be substantially
completed within sixty (60) days after the date of such damage.
     63. EMINENT DOMAIN: Paragraph 22 is modified by the following:
     Landlord may not terminate the Lease if less than 1/3 of the building is
taken by condemnation or if a taking by condemnation is only threatened.

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     64. TRANSFER BY LANDLORD: The provisions of Paragraph 23 of the Lease to
the contrary notwithstanding, Landlord shall not be relieved of its obligations
under the Lease which may accrue after the date of a sale or other transfer
unless and until (i) the transferee agrees to assume and be bound by the terms
of this Lease and to perform all obligations of the landlord under the Lease
which may accrue after the date of such transfer, and (ii) Landlord transfers
the Security Deposit to its successor in interest (transferee) in accordance
with the provisions of California Civil Code Section 1950.7, as amended or
recodified.
     65. LANDLORD’S LIEN WAIVER: Landlord, within thirty (30) days after demand
from Tenant, shall execute and deliver such lien waiver documents that are
reasonably required by any supplier, lessor, or lender in connection with the
installation in the Premises of the Tenant’s personal property or trade fixtures
providing Landlord approves the form of any such waiver and Landlord’s rights
under this Lease are not materially and adversely affected.

                  QUANTUM CORPORATION       JOHN ARRILLAGA SEPARATE PROPERTY a
Delaware corporation       TRUST
 
               
By
    /s/ Joseph C. Shepela       By     /s/ John Arrillaga
 
               
 
              John Arrillaga, Trustee
 
                By     VP Human Resources       RICHARD T. PEERY SEPARATE
PROPERTY
 
                            TRUST
 
               
 
          By     /s/ Richard Peery
 
               
 
              Richard T. Peery, Trustee

38

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

 

AMENDMENT NO. 1
     THIS AMENDMENT NO. 1 is made and entered into this 24th day of April, 1990,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SEPARATE PROPERTY TRUST) as amended, and RICHARD T.
PEERY, Trustee, or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY
SEPARATE PROPERTY TRUST) as amended, as LANDLORD, and QUANTUM CORPORATION, a
Delaware corporation, as TENANT.
RECITALS
     A. WHEREAS, by Lease Agreement dated October 31, 1989, Landlord leased to
Tenant all of that certain 155,734 ± square foot building located at Bellew
Drive and Magnolia Drive, Milpitas, California, the details of which are more
particularly set forth in said October 31, 1989 Lease Agreement, and
     B. WHEREAS, it is now the desire of the parties hereto to amend said Lease
to reflect the delay of the Commencement Date of the Lease from December 15,
1990 to April 1, 1991 and to amend the Basic Rent schedule accordingly; deletion
of the Phase In Right of said Lease; and commencement of payment of Additional
Rent as of December 15, 1990; as hereinafter set forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. LEASE TERM AND COMMENCEMENT DATE: Paragraph 41.B. of the Lease is
amended by changing the reference to the December 15, 1990 Commencement Date to
April 1, 1991. Subject paragraph will be amended to read as follows:
     “B. Commencement Date Defined: As used herein, the term “Commencement Date”
shall mean the later to occur of the following: (i) the date upon which the
“Improvements” are “Substantially Completed”; or (ii) April 1, 1991; provided,
however, that if prior to the later of such dates Tenant’s operating personnel
enter into occupancy of the Premises and commence the operation of Tenant’s
business within the Premises, the Commencement Date shall be the date such
personnel of Tenant so enter into occupancy of the Premises. The term
“Substantially Completed” and/or “Substantial Completion” shall mean the date
when all of the following have occurred with respect to the Improvements in
question: (i) the construction of the Improvements in question has been
substantially completed in accordance with the approved plans therefore except
for punch list items which do not prevent Tenant from reasonably using the
Premises to conduct Tenant’s business; (ii) Landlord has executed a certificate
or statement representing that the Improvements in question have been
substantially completed in accordance with the plans and specifications
therefore except for punch list items which do not prevent Tenant from
reasonably using the Premises to conduct Tenant’s business; and (iii) the
Building Department of the City of Milpitas has completed its final inspection
of such Improvements and has “signed off” the building inspection card approving
such work as complete except for punch list items

1

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

 

which do not prevent Tenant from reasonably using the Premises to
Conduct-Tenant’s business. Notwithstanding the foregoing, Substantial Completion
of the Interior Improvements shall not be deemed to have occurred until Landlord
has obtained final or conditional approval from the Fire Department of the City
of Milpitas that the Improvements have been completed in accordance with such
department’s requirements (subject only to conditions that do not prevent Tenant
from occupying the Improvements).”
     2. DELETION OF “BASIC RENT REDUCTION DURING PHASE IN PERIOD”: As a material
inducement to Landlord to postpone the commencement of the Lease Agreement,
Paragraph 40 shall be deleted in its entirety, and Tenant will be responsible
for paying Basic Rent to Landlord, from the Commencement Date of said Lease, on
the entire 155,734 ± square foot building.
     3. COMMENCEMENT OF PAYMENT OF ADDITIONAL RENT: Notwithstanding the
commencement date of this Lease as stated above, Tenant shall be responsible for
paying one hundred percent (100%) of the Additional Rent Expenses as outlined in
Paragraph 4.D. of said Lease Agreement for the entire 155,734+ square foot Lease
Premises commencing December 15, 1990.
     4. BASIC RENT SCHEDULE: Furthermore, as Landlord is accommodating Tenant in
deferring the Commencement Date of said Lease from December 15, 1990 to April 1,
1991, the parties have agreed that the Basic Rent increases will be calculated
from December 15, 1990 and that Paragraph 39 “Basic Rent” of said Lease
Agreement shall be amended as follows:

          Period   Monthly Basic Rent
Months 1-13
  $1.00/sf
Months 14-25
  $1.05/sf
Months 26-37
  $1.10/sf
Months 38-49
  $1.15/sf
Months 50-61
  $1.20/sf
Months 62-73
  $1.25/sf
Months 74-85
  $1.30/sf
Months 86-97
  $1.35/sf
Months 98-109
  $1.40/sf
Months 110-121
  $1.45/sf
Months 122-133
  $1.50/sf

2

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

 

          Period   Monthly Basic Rent
Months 134-145
  $1.55/sf
Months 146-157
  $1.60/sf
Months 158-169
  $1.65/sf
Months 170-185
  $1.70/sf

     5. LANDLORD’S RIGHT TO TERMINATE: Paragraph 47 of the Lease is amended by
deleting the references to June 1, 1990 and adding in lieu thereof references to
August 1, 1990. Subject paragraph will be amended to read as follows:
     “It is understood that the Premises to be leased by Tenant are to be
constructed by Landlord, and that Landlord is required to obtain the necessary
building permits for the building shell before construction of said Premises can
commence. Therefore, it is agreed that in the event Landlord cannot obtain all
the necessary building permits for the building shell by August 1, 1990, then
either Landlord or Tenant can terminate this Lease by written notice to the
other party given within thirty (30) days thereafter, without any liability to
the other party of any the whatsoever, and that this Lease Agreement will be
null and void as of the date of receipt of such notice. Landlord agrees to use
its best efforts to obtain the required permits by August 1, 1990.”
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said October 31, 1989 Lease Agreement shall remain in full force and effect.
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 1
to Lease as of the day and year first hereinabove set forth.

                      LANDLORD:       TENANT:    
 
                    JOHN ARRILLAGA SEPARATE       QUANTUM CORPORATION    
PROPERTY TRUST       a Delaware corporation    
 
                   
By
  /s/ John Arrillaga       By   /s/ Joseph C. Shepala    
 
 
 
John Arrillaga, Trustee          
 
   
 
                    RICHARD T. PEERY SEPARATE PROPERTY TRUST       Title:   VP
Human Resources 
 
                    By   /s/ Richard Peery       Dated:   6/12/90
 
                   
 
  Richard T. Peery, Trustee                

3

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

 

AMENDMENT No. 2
     THIS AMENDMENT NO. 2 is made and entered into this 26th day of June, 1991,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SEPARATE PROPERTY TRUST) as amended, and RICHARD T.
PEERY, Trustee, or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY
SEPARATE PROPERTY TRUST) as amended, as LANDLORD, and QUANTUM CORPORATION, a
Delaware corporation, as TENANT.
RECITALS
     A. WHEREAS, by Lease Agreement dated October 31, 1989 Landlord leased to
Tenant all of that certain 155,734 ± square foot building located at 1130 Bellew
Drive Milpitas, California, the details of which are more particularly set forth
in said October 31, 1989 Lease Agreement, and
     B. WHEREAS, the Lease was amended by Amendment No. 1 dated April 24, 1990
to delay the Commencement Date of the Lease from December 15, 1990 to April 1,
1991, and
     C. WHEREAS, the Lease was amended by Commencement Letter dated March 4,
1991 to commence the Lease March 1, 1991, and
     D. WHEREAS, it is now the desire of the parties hereto to: (1) extend the
Term for two (2) months so the termination date of said Lease will coincide with
the termination date of the “Companion Lease” (additional premises leased from
Landlord at 490 McCarthy Blvd., Milpitas, California); and (2) amend the Basic
Rent schedule and aggregate Rent of said Lease Agreement as hereinafter set
forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. TERM OF LEASE: Pursuant to Lease Paragraph 41.C. “Lease Terms
Co-extensive”, it is agreed between the parties that the term of said Lease
Agreement shall be extended for an additional two (2) months and the Lease
termination date is hereby extended from July 31, 2006 to September 30, 2006.
     2. BASIC RENTAL FOR EXTENDED TERM OF LEASE: The monthly Basic Rental for
the Extended Term of the Lease shall be as follows:
     On August 1, 2006 the sum of TWO HUNDRED SIXTY FOUR THOUSAND SEVEN HUNDRED
FORTY SEVEN AND 80/100 DOLLARS ($264,747.80) shall be due, and a like sum due on
the first day of each month thereafter, through and including September 1, 2006.
     The aggregate rental for the lease shall be increased by $529,495.60 or
from $39,058,087.20 to $39,587,582.80.

1

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

 

     3. OPTION TO EXTEND PURSUANT TO PARAGRAPHS 42 AND 43 OF THE LEASE: Pursuant
to Paragraph 42 “First Five-Year Option to Extend” and Paragraph 43 “Second
Five-Year Option to Extend”, the latest dates Tenant may exercise its first and
second five-year options to extend, as specified in the aforementioned
Paragraphs, are April 3, 2006 and April 3, 2011, respectively.
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said October 31, 1989 Lease Agreement shall remain in full force and effect.
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 2
to Lease as of the day and year first hereinabove set forth.

                  LANDLORD:       TENANT:
 
                JOHN ARRILLAGA SEPARATE       QUANTUM CORPORATION PROPERTY TRUST
      a Delaware corporation
 
               
By
  /s/ John Arrillaga       By   /s/ Joseph C. Shepala
 
               
 
  John Arrillaga, Trustee            
 
                RICHARD T. PEERY SEPARATE PROPERTY TRUST       Title:   VP Human
Resources
 
                By   /s/ Richard Peery       Dated:   7/19/91
 
               
 
  Richard T. Peery, Trustee            

2

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

 

Quantum 2
AMENDMENT NO. 3
TO LEASE
     THIS AMENDMENT NO. 3 is made and entered into this 16th day of April, 1997,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST) (previously known as the “John
Arrillaga Separate Property Trust”) as amended, and RICHARD T. PEERY, Trustee,
or his Successor Trustee UTA dated 7/20/7’ (RICHARD T. PEERY SEPARATE PROPERTY
TRUST) as amended, collectively as LANDLORD, and QUANTUM CORPORATION, a Delaware
corporation, as TENANT.
RECITALS
     A. WHEREAS, by Lease Agreement dated October 31, 1989 Landlord leased to
Tenant all of that certain 155,734 ± square foot building located at 1140
Technology Drive, Milpitas, California, the details of which are more
particularly set forth in said October 31, 1989 Lease Agreement, and
     B. WHEREAS, said Lease was amended by Letter Agreement dated October 31,
1989 which provided for a Basic Rent Credit for the period commencing with the
Lease Commencement Date and ending on May 31, 1991, and
     C. WHEREAS, said Lease was amended by Amendment No. 1 dated April 24, 1990
which canceled the reduction in Basic Rent Credit Letter dated October 31, 1989,
and which delayed the Lease Commencement Date from December 15, 1990 to April 1,
1991, and,
     D. WHEREAS, said Lease was amended by the Commencement Letter dated
March 4, 1991 which changed the Commencement Date of the Lease from April 1,
1991 to March 1, 1991, and established the Termination Date of July 31, 2006,
and,
     E. WHEREAS, said Lease was amended by Amendment No. 2 dated June 26, 1991
which extended the Term of the Lease for an additional two month period, amended
the Basic Rent schedule and Aggregate Rent accordingly; and amended the
deadlines in which Tenant could exercise its Optics to Extend pursuant to Lease
Paragraphs 42 and 43, and
     F. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by (i) extending the Term for five years, changing the Termination Date from
September 30, 2006 to September 30, 2011, (ii) amending the Basic Rent schedule
and Aggregate Rent accordingly, (iii) adding a third Five Year Option to Extend,
(iv) replacing Paragraphs 41C (“Lease Terms Co-extensive”) and 48 (“Cross
Default”) and 53 (“Structural Capital Costs Regulated by Governmental Agencies
After the Commencement of this Lease not Caused by Tenant or Tenant’s Uses or
Remodeling of the Premises” (v) amending Lease Paragraph 12 (“Property
Insurance”) and (vi) amending and/or replacing certain provisions of the Lease
commencing as of the commencement of the Third Extended Term of said Lease as
hereinafter set forth.

1

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

 

Quantum 2
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. TERM OF LEASE: It is agreed between the parties that Tenant has
exercised its First Five-Year Option to Extend the lease term of that certain
lease agreement dated March 23, 1994 for premises located at 1101 Sumac Drive,
Milpitas, California (the “Building 5 Lease”), as detailed in Paragraph 41 of
said Building 5 Lease. Paragraph 40C of said Building 5 Leases provides that in
the event the term of said Building 5 Lease is extended for any reason
whatsoever, the terms of the Existing Leases (i.e. two of said leases dated
October 31, 1989 are for Premises located at 1140 Technology Drive and 500
McCarthy Blvd., Milpitas, California (the “1989 Leases”); one of said leases
dated September 17, 1990 is for Premises located at 1000 Sumac Drive, Milpitas,
California) and one of said leases dated April 10, 1992 is for Premises located
at 900 Sumac Drive, Milpitas, California) shall also be extended so that all
five Leases expire on the same date; therefore, it is agreed between the parties
that by exercising its Option to Extend the Building 5 Lease, Tenant has in
effect exercised its Option to Extend under Lease Paragraph 42 (“First Five-Year
Option to Extend”), and that pursuant to said Lease Paragraph 42, the Term of
this Lease Agreement shall he extended for an additional five (5) year period,
and the Lease Termination Date shall be changed from September 30, 2006 to
September 30, 2011.
     2. BASIC RENTAL FOR FIRST EXTENDED TERM OF LEASE: The monthly Basic Rental
for the First Extended Term of Lease shall be as follows:
     On October 1, 2006, the sum of TWO HUNDRED SEVENTY TWO THOUSAND FIVE
HUNDRED THIRTY FOUR AND 50/100 DOLLARS ($272,534.50) shall be due, and a like
sum due on the first day of each month thereafter through and including
September 1, 2007.
     On October 1, 2007, the sum of TWO HUNDRED EIGHTY THOUSAND THREE HUNDRED
TWENTY ONE AND 20/100 DOLLARS ($280,321.20) shall be due, and a like sum due on
the first day of each month thereafter through and including September 1, 2008.
     On October 1, 2008, the sum of TWO HUNDRED EIGHTY EIGHT THOUSAND ONE
HUNDRED SEVEN AND 90/100 DOLLARS ($288,107.90) shall be due, and a like sum due
on the first day of each month thereafter through and including September 1,
2009.
     On October 1, 2009, the sum of TWO HUNDRED NINETY FIVE THOUSAND EIGHT
HUNDRED NINETY FOUR AND 60/100 DOLLARS ($295,894.60) shall be due, and a like
sum due on the first day of each month thereafter through and including
September 1, 2010.
     On October 1, 2010, the sum of THREE HUNDRED THREE THOUSAND SIX HUNDRED
EIGHTY ONE AND 30/100 DOLLARS ($303,681.30) shall be due, and a like sum due on
the first day of each month thereafter through and including September 1, 2011.
     The Aggregate Basic Rent for the Lease shall be increased by $17,286,474.00
or from $39,587,582.80 to $56,874,056.80.

2

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

 

Quantum 2
     3. THIRD FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the Lease
for an additional five (5) year period pursuant to Lease Paragraph 43 (“Second
Five Year Option To Extend”), Landlord hereby grants to Tenant a third option to
extend the Term of this Lease for an additional five (5) year period upon the
following terms and conditions:
          A. Tenant shall give Landlord written notice of Tenant’s exercise of
this option to extend at least one hundred eighty (180) days prior to the
expiration of the Lease Term as extended pursuant to Lease Paragraph 43 (“Second
Five Year Option To Extend”), in which event the Lease shall be considered
extended for an additional five (5) year period upon the same terms and
conditions as this Lease, absent this Paragraph 3 and subject to the Rental as
set forth below. In the event that Tenant fails to timely exercise Tenant’s
option as set forth herein in writing, Tenant shall have no further option to
extend this Lease or the Other Leases, and this Lease shall continue in full
force and effect for the full remaining term hereof, absent this Paragraph 3.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

          Period   Monthly Basic Rent
Months
  1-12   $2.25/sf
Months
  13-24   $2.30/sf
Months
  25-36   $2.35/sf
Months
  37-48   $2.40/sf
Months
  49-60   $2.45/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to extend granted by this Paragraph 3 at any time that Tenant is in
default (default for monetary and material default for non-monetary) of its
obligations under this Lease, if Tenant has received written notice from
Landlord that Tenant is in default, and such default has not been timely cured
within the time period provided for in this Lease; provided, however, that if
such default of Tenant is not for money due under this Lease and cannot be
cured, and if Landlord does not elect to terminate this Lease as a result of
such non-curable default by Tenant, Tenant may exercise the option to extend
granted by this Paragraph 3 notwithstanding such non-curable default.
     4. LEASE TERMS CO-EXTENSIVE: Lease Paragraph 40C (“Lease Terms
Co-extensive”) is hereby deleted in its entirety and replaced with the
following:
     “40C. LEASE TERMS CO-EXTENSIVE: It is acknowledged that (i) Landlord and
Tenant have previously executed four separate leases in addition to this Lease:
one of said leases dated October 31, 1989 is for Premises located at 500
McCarthy Blvd., Milpitas, California (the “Building Two Lease”); one of said
leases dated September- 17, 1990 is for Premises located at 1000 Sumac Drive,
Milpitas, California (the “Building Four Lease”); one of said leases dated
April 10, 1992 is for Premises located at 900 Sumac Drive, Milpitas, California
(the “Building 3 Lease”); and one of said leases dated March 23, 1994 is for
premises

3

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

 

Qunatum 2
located at 1101 Sumac Drive, Milpitas, California (the “Building 5 Lease”)
(hereinafter collectively referred to as the “Other Leases”); and (ii) it is the
intention of the parties that the term of this Lease be co-extensive with the
term of the Other Leases, such that the terms of all five leases (“the Leases”)
expire on the same date. The provisions of this Paragraph 40C also requires the
terms of all the Leases to be extended accordingly if Tenant exercises its
Option to Extend under any of the Leases. The monthly Basic Rent during the
extended term under each of the Leases shall be increased by $.05 per square
foot on the commencement date of the extended term and thereafter on each and
every anniversary of the respective lease’s commencement date of the extended
term.”
     5. CROSS DEFAULT: Lease Paragraph 48 (“Cross Default”) is hereby deleted in
its entirety and replaced with the following:
     “48. CROSS DEFAULT: It is agreed between Landlord and Tenant that a default
under this Lease, or a default under any of the Other Leases may, at the option
of Landlord, be considered a default under all Leases, in which event Landlord
shall be entitled (but in no event required) to apply all rights and remedies of
Landlord under the terms of one lease to all the Leases including, but not
limited to, the right to terminate any or all of the aforementioned Other Leases
or this Lease by reason of a default under the Leases or hereunder.
     Notwithstanding the above, Landlord shall have the option of considering a
default under this Lease or a default under any of the Other Leases to be a
default under all such leases, only with respect to such leases under which
Landlord is also the ‘Landlord’ at the time such default occurs. By way of
example, if at the time a default of Tenant occurs under this Lease, Landlord
has sold the premises described in any of the Other Leases and is no longer the
‘Landlord’ thereunder, then a default under this Lease shall not constitute a
default under any of such Other Leases so sold by Landlord (unless the premises
leased under this Lease and the Other Leases are sold to the same entity), and a
default by Tenant under any of such Other Leases so sold by Landlord shall not
constitute a default under this Lease or any other of the Other Leases then
remaining between Landlord and Tenant. However, if the Landlord under this Lease
and the Other Leases is one in the same at the time of said default, said cross
default provisions shall apply.”
     6. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANTS USES OR REMODELING OF
THE PREMISES: Lease Paragraph 53 (“Structural Capital Costs Regulated by
Governmental Agencies after the Commencement of this Lease Not Caused by Tenant
or Tenant’s Uses or Remodeling of the Premises”) is hereby deleted and replaced
with the following:
     53. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODLING OF
THE PREMISES: The provisions of this Paragraph 53 shall modify Paragraphs 7 and
14:

4

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

 

Quantum 2
     A. If (i) during the last five (5) years of the First Extended Term of the
Lease if said Lease has not been extended as provided for in Lease Paragraph 43
(“Second Five Year Option To Extend”) or in Paragraph 3 (“Third Five Year Option
to Extend”) or Paragraph 4 (“Lease Terms Co-Extensive”) above, or (ii) during
either of the five (5) year extension periods permitted by Lease Paragraph 43 or
Paragraph 3, or Paragraph 4 above, it becomes necessary (due to any governmental
requirement for continued occupancy of the Premises) to make structural
improvements required by laws enacted or legal requirements imposed by
governmental agency(s) after the Commencement Date, and the cost for each
required work or improvements exceeds $100,000, then if such legal requirement
is not imposed because of Tenant’s specific use of the Premises and is not
“triggered” by Tenant’s Alterations or Tenant’s application for a building
permit or any other governmental approval (collectively “Tenant’s Actions”) in
which instance Tenant shall be responsible for 100% of the cost of such
improvements, Landlord shall be responsible for paying the cost of such
improvement and constructing such improvement, subject to a cash contribution
from Tenant of a portion of the cost thereof as provided for and calculated in
Paragraph 53B.
     B. When Landlord makes an improvement pursuant to Paragraph 53A, and as a
condition to Landlord’s obligation to construct such improvement, Tenant shall
make the following contribution in cash to Landlord for the cost thereof prior
to the commencement of the work by Landlord. It is agreed that Tenant shall pay
to Landlord 100% of the cost of the first $100,000.00 worth of each improvement.
After the first $100,000.00, all costs above $100,000.00 shall be divided by 15
and multiplied by the time period remaining in the last five years of the Lease
Term from the date work on such improvement commences.
     For example, if the improvement is not required as a result of Tenant’s
Action and if the cost of such improvement was $400,000 and there was one year
and six months remaining in the Lease term when the work commenced, then Tenant
would be responsible for reimbursing Landlord in cash $130,000.00 computed as
follows:

         
Total Cost of Work
  $ 400,000.00  
Tenant Responsible for 1st $100,000
    -100.000.00  
 
     
Total Amount To Be Amortized
  $ 300,000.00  
 
       
$300,000.00/15 - $20,000/yr. x 1.5 yrs =
  $ 30,000.00  
 
       
Tenant responsible for $100,000 + 30,000 =
  $ 130,000.00  

     C. If Landlord has made improvements, for which Tenant has reimbursed
Landlord for the cost thereof pursuant to Paragraph 53B, and the term of this
Lease is subsequently extended pursuant to the exercise by Tenant of an option
to renew pursuant to Lease Paragraph 43 or Paragraph 3 above, upon the exercise
of any such option by Tenant, Tenant shall pay to Landlord an additional sum
equal to the total amount of said

5

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

 

Quantum 2
     improvement less the amount previously paid for by Tenant. Using the
example in Paragraph 53B above, Tenant would owe Landlord the additional amount
of $270,000.00 ($400,000.00 — $130,000.00 = $270,000.00).”
     7. PROPERTY INSURANCE: Lease Paragraph 12 (“Property Insurance”) is hereby
an to include the following: “Tenant acknowledges that as part of the cost of
insurance policies for the Premises, Tenant is responsible for the payment of
insurance deductibles on insurance claims as they relate to the Premises subject
to the limitations provided in Lease Paragraph 55 (“Property Insurance”) which
limitations are applicable only during the initial Lease Term and the First
Lease Extension Period and the Second Lease Extension Period. Said limitation
provided for in Lease Paragraph 55 are null and void at the commencement of the
Third Lease Extended Term”.
     8. THIRD OPTION PERIOD — LEASE PROVISION CHANGES: In the event Tenant
exercises its Third Option to Extend as provided for in Paragraph 3 above, the
following amendments (contained within Paragraphs 9 through 19) are herein made
to the Lease to be effective upon the commencement of the third option period
(“Third Option Period”), or during any period following expiration of the Lease
Term or expiration of the Lease when Tenant is in possession of the Premises.
     9. LATE CHARGE: Effective as of the first day of the Third Option Period,
the Late Charge referenced in Lease Paragraph 4.D (“Late Charge”) shall be
changed from five percent (5%) to ten percent (10%), and Lease Paragraph 50
(“Limitation on Late Charge”) shall be deleted in its entirety and of no further
force or effect.
     10. MANAGEMENT FEE: Notwithstanding anything to the contrary in the Lease,
effective as of the first day of the Third Option Period, and on the first day
of each month thereafter, Tenant shall pay to Landlord, in addition to the Basic
Rent and Additional Rent, a fixed monthly manage fee (“Management Fee”) equal to
one percent (1%) of the Basic Rent due for each month during the Lease Term.
     11. HAZARDOUS MATERIALS: Effective as of the first day of the Third Option
Period Lease Paragraph 45 (“Hazardous Materials”) shall be deleted in its
entirety and replaced with the following:
     “45. HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with respect
to the existence or use of “Hazardous Materials” (as defined herein) on, in,
under or about the Premises and real property located beneath said Premises,
which includes the entire parcel of land on which the Premises are located as
shown in Green on Exhibit A to the Lease (hereinafter collectively referred to
as the “Property”):
     A. As used herein, the term “Hazardous Materials shall mean any material,
waste, chemical, mixture or byproduct which is or hereafter is defined, listed
or designated under Environmental Laws (defined below) as a pollutant, or as a
contaminant, or as a toxic or hazardous substance, waste or material, or any
other unwholesome, hazardous, toxic, biohazardous, or radioactive material,
waste, chemical, mixture or byproduct, or which is listed, regulated or
restricted by any Environmental

6

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Quantum 2
Law (including, without limitation, petroleum hydrocarbons or any distillates or
derivatives or fractions thereof, polychlorinated biphenyls, or asbestos). As
used herein, the term “Environmental Laws” shall mean any applicable Federal,
State of California or local government law (including common law), statute,
regulation, rule, ordinance, permit, license, order, requirement, agreement, or
approval, or any determination, judgment, directive, or order of any executive
or judicial authority at any level of Federal, State of California or local
government (whether now existing or subsequently adopted or promulgated)
relating to pollution or the protection of the environment, ecology, natural
resources, or public health and safety.
     B. Tenant shall notify Landlord prior to the occurrence of any Tenant’s
Hazardous Materials Activities (defined below). Landlord acknowledges that
Tenant shall use, in compliance with applicable Environmental Laws, customary
household and office supplies (Tenant shall first provide Landlord with a list
of said materials use), such as mild cleaners, lubricants and copier toner. Any
and all of Tenant’s Hazardous Materials Activities shall be conducted in
conformity with this Paragraph, 45, Paragraph 14 of this Lease, and in
compliance with all Environmental Laws and regulations. As used herein, the term
“Tenant’s Hazardous Materials Activities” shall mean any and all use, handling,
generation, storage, disposal, treatment, transportation, release, discharge, or
emission of any Hazardous Materials on, in, beneath, to, from, at or about the
Property, in connection with Tenant’s use of the Property, or by Tenant or by
any of Tenant’s agents, employees, contractors, vendors, invitees, visitors or
its future subtenants or assignees or other third parties (including “dumping”
by others) (or which Hazardous Materials originate on the surface of the
Premises any time on or after the Commencement Date of this Lease, but excluding
Hazardous Materials on the Premises prior to the Lease Commencement Date because
of the storage, use, disposal, or transportation of such materials or waste by
any of Landlord’s contractors or otherwise arising out of construction work
performed by or under the direction of Landlord on the Premises and Landlord
shall be responsible for all required actions with respect to such materials or
wastes). Tenant agrees to provide Landlord with prompt written notice of any
spill or release of Hazardous Materials at the Property during the term of the
Lease of which Tenant becomes aware, and further agrees to provide Landlord with
prompt written notice of any violation of Environmental Laws in connection with
Tenant’s Hazardous Materials Activities of which Tenant becomes aware. If
Tenant’s Hazardous Materials Activities involve Hazardous Materials other than
normal use of customary household and office supplies, Tenant also agrees at
Tenant’s expense: (i) to install such Hazardous Materials monitoring, storage
and containment devices as may be required by Environmental Laws, regulations
and/or governing agencies; (ii) to provide Landlord with a written inventory of
such Hazardous Materials, including an update of same each year upon the
anniversary date of the Commencement Date of the Lease (“Anniversary Date”); and
(iii) on each Anniversary Date to provide to Landlord copies of all
documentation and records, required by applicable Environmental Laws to be
prepared and submitted to governmental authorities, relating to use at the
Property of Hazardous Materials or to Tenant’s Hazardous Materials Activities,
if any. If upon completion of Landlord’s review of said documentation and
records, Landlord reasonably questions if Tenant is in compliance with all
applicable Environmental Laws with respect to Tenant’s Hazardous Materials
Activities, Tenant agrees within thirty (30) days following receipt of

7

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Quantum 2
written notice from Landlord, to retain a qualified environmental consultant,
acceptable to Landlord, to evaluate whether Tenant is in compliance with all
applicable Environmental Laws with respect to Tenant’s Hazardous Materials
Activities. Tenant, at its expense, shall submit to Landlord a report from such
environmental consultant which discusses the environmental consultant’s findings
within two (2) months of each Anniversary Date. Tenant, at its expense, shall
promptly undertake and complete any and all steps necessary, and in full
compliance with applicable Environmental Laws, to fully correct any and all
problems or deficiencies identified by the environmental consultant, and
promptly provide Landlord with documentation of all such corrections.
     C. Prior to termination or expiration of the Lease, Tenant, at its expense,
shall (i) properly remove from the Property all Hazardous Materials which come
to be located at the Property in connection with Tenant’s Hazardous Materials
Activities, and (ii) fully comply with and complete all facility closure
requirements of applicable Environmental Laws regarding Tenant’s Hazardous
Materials Activities, including but not limited to (x) properly restoring and
repairing the Property to the extent damaged by such closure activities, and
(y) obtaining from the local Fire Department or other appropriate governmental
authority with any legal or regulatory jurisdiction a written concurrence that
closure has been completed in compliance with applicable Environmental Laws.
Tenant shall promptly provide Landlord with copies of any claims, notices, work
plans, data and reports prepared, received or submitted in connection with any
such closure activities.
     D. If Landlord, upon consultation with Tenant, reasonably concludes that
Property has become contaminated as a result of Tenant’s Hazardous Materials
Activities, Landlord in addition to any other rights it may have under this
Lease or under Environmental Laws or other laws, may enter upon the Property and
conduct inspection, sampling and analysis, including but not limited to
obtaining and analyzing samples of soil and groundwater, for the purpose of
determining the nature and extent of such contamination except to the extent
that such activities may be inconsistent with Tenant’s compliance with
Environmental Laws. Tenant shall promptly reimburse Landlord for the costs of
such an investigation, including but not limited to reasonable attorneys’ fees
Landlord incurs with respect to such investigation to the extent, and only to
the extent, that it that discloses Hazardous Materials contamination for which
Tenant is liable under this Lease. Except as may be required of Tenant by
applicable Environmental Laws, Tenant shall not perform any sampling, testing,
or drilling to identify the presence of any Hazardous Materials at the Property,
without Landlord’s prior written consent which shall not be unreasonably
withheld. Tenant shall promptly provide Landlord with copies of any claims,
notices, work plans, data and reports prepared, received or submitted in
connection with any sampling, testing or drilling performed pursuant to the
preceding sentence.
     E. Tenant shall indemnify, defend (with legal counsel acceptable to
Landlord, whose consent shall not unreasonably be withheld) and hold harmless
Landlord, its employees, assigns, successors, successors-in-interest, agents and
representatives from and against any and all claims (including but not limited
to third party claims from a private party or a government authority),
liabilities, obligations,

8

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Quantum 2
losses, causes of action, demands, governmental proceedings or directives,
fines, penalties, expenses, costs (including but not limited to reasonable
attorneys’, consultants’ and other experts’ fees and costs), and damages, which
arise from or relate to: (i) Tenant’s Hazardous Materials Activities; (ii) any
Hazardous Materials contamination caused by Tenant prior to the Commencement
Date of the Lease; or (iii) the breach of any obligation of Tenant under this
Paragraph 45 (collectively, “Tenant’s Environmental Indemnification”). Tenant’s
Environmental Indemnification shall include but is not limited to the obligation
to promptly and fully reimburse Landlord for losses in or reductions to rental
income, and diminution in fair market value of the Property. Tenant’s
Environmental Indemnification shall further include but is not limited to the
obligation to diligently and properly implement to completion, at Tenant’s
expense, any and all environmental investigation, removal, remediation,
monitoring, reporting, closure activities, or other environmental response
action as may be required by applicable Environmental Laws, regulations or
governing agencies (collectively, “Response Actions”). Tenant shall promptly
provide Landlord with copies of any claims, notices, work plans, data and
reports prepared, received or submitted in connection with any Response Actions.
     F. Landlord hereby makes the following representations to Tenant, each of
which is made only to the best of Landlord’s knowledge as of the date Landlord
executes this Lease, without any inquiry or investigation having been made or
required by Landlord regarding this subject, nor does Landlord have any
obligation to investigate or make inquiry regarding the subject:
          (1) The soil and ground water on or under the Premises does not
contain Hazardous Materials in amounts which violate any laws to the extent that
any governmental entity could require either Landlord or Tenant to take any
remedial action with respect to such Hazardous Materials.
          (2) During the time that Landlord has owned the Premises, Landlord has
received no notice of (i) any violation, or alleged violation, of any law that
has not been corrected to the satisfaction of the appropriate authority,
(ii) any pending claims relating to the presence of Hazardous Material on the
Premises, or (iii) any pending investigation by any governmental agency
concerning the Premises relating to Hazardous Materials.
     G. Landlord and Tenant shall each give written notice to the other as soon
as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Premises, and (ii) any contamination of the Premises by Hazardous Materials
which constitutes a violation of any law. Attached as Exhibit “C” to the Lease
is a list of Hazardous Materials that Tenant intends to use at the Premises. If
during the Lease Term Tenant proposes to use other Hazardous Materials at the
Premises, Tenant shall inform Landlord of such use, identifying the Hazardous
Materials and the manner of their use, storage disposal, and shall agree (i) to
use, store and dispose of such Hazardous Materials strictly in compliance with
all laws, regulations and governing agencies and (ii) that the indemnity set
forth in Paragraph 45 shall be applicable to Tenant’s use of such Hazardous
Material.

9

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Quantum 2
     H. Landlord or Tenant may, at any time, cause testing wells to be installed
on the Premises, and may cause the ground water to be tested to detect the
presence of Hazardous Material by the use of such tests as are then customarily
used for such purposes. Testing wells installed by Tenant shall be paid for by
Tenant. If tests conducted by Landlord disclose that Tenant has violated any
Hazardous Materials laws, or Tenant or parties on the Premises during the Term
of this Lease have contaminated the Premises as determined by regulatory
agencies pursuant to Hazardous Materials laws, or that Tenant has liability to
Landlord pursuant to Paragraph 45A, then Tenant shall pay for 100 percent of the
cost of the test and all related expense. Prior to the expiration of the Lease
Term, Tenant shall remove any testing wells it hag installed at the Premises,
and return the Premises to the condition existing prior to the installation of
such wells, unless Landlord requests in writing that Tenant leave all or some of
the testing wells in which instance the wells requested to be left shall not be
removed.
     I. If any tests performed by Tenant or Landlord prior to the Commencement
Date disclose Hazardous Materials at the Premises, Landlord at its expense will
promptly take all reasonable action required by law with respect to the
existence of such Hazardous Materials at the Premises. The Commencement Date
shall not be delayed because of such action by Landlord unless occupation of the
Premises is prohibited by law.
     J. The obligations of Landlord and Tenant under this Paragraph 45 shall
survive the expiration or earlier termination of the Term of this Lease. The
rights and obligations of Landlord and Tenant with respect to issues relating to
Hazardous Materials are exclusively established by this Paragraph 45.”
     12. SECURITY DEPOSIT: Effective as of the first day of the Third Option
Period, Lease Paragraph 51 (“Security Deposit”) shall be deleted in its entirety
and replaced with the following:
     “51. SECURITY DEPOSIT: The following provisions shall modify Lease
Paragraph 4F:
     A. Within thirty (30) days after the expiration or earlier termination of
the Lease term and after Tenant has vacated the Premises, Landlord shall return
to Tenant the entire Security Deposit except for amounts that Landlord has
deducted therefrom that are needed by Landlord to cure defaults of Tenant under
the Lease or compensate Landlord for damages for which Tenant is liable pursuant
to this Lease. The use or disposition of the Security Deposit shall be subject
to the provisions of California Civil Code Section 1950.7.
     B. During the first thirty (30) days following Tenant’s exercise of its
Third Option to Extend, and only during said thirty day period, Tenant shall
have the one-time option of satisfying its obligation with respect to an amount
equal to one-half (1/2) ($210,240.90) of the $420,481.80 Security Deposit
required under Lease Paragraph 4F by providing to Landlord, at Tenant’s sole
cost, a letter of credit which: (1) is drawn upon an institutional lender
reasonably acceptable and accessible to Landlord in form and content reasonably
satisfactory to Landlord; (ii) is in the amount of one-half (1/2) of the

10

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Quantum 2
Security Deposit; (iii) is for a term of at lease twelve (12) months; (iv) with
respect to any letter of credit in effect within the six month period
immediately prior to the expiration of the Lease term, shall provide that the
term of such letter of credit shall extend at least forty five (45) days past
the Lease expiration date (including extensions thereof); and (v) may be drawn
upon by Landlord upon submission of a declaration of Landlord that Tenant is in
default (as defined in Paragraph 19 and as modified by Paragraph 60). Landlord
shall not be obligated to furnish proof of default to such institutional lender,
and Landlord shall only be required to give the institutional lender written
notification that Tenant is in default and upon receiving such written
notification from Landlord the institutional lender shall be obligated to
immediately deliver cash to Landlord equal to the amount Landlord may spend or
become obligated to spend by reason of Tenant’s default or to compensate
Landlord for any loss or damage which Landlord may suffer by reason of Tenant’s
default up to 1/2 of the total Security Deposit required under Lease
Paragraph 4F. Said letter of credit shall provide that if the letter of credit
is not renewed, replaced or extended within twenty (20) days prior to its
expiration date the issuer of the credit shall automatically issue a cashiers
check payable to Landlord in the amount of the letter of credit after the date
which is twenty (20) days before the expiration date, and no later than the
expiration date, without Landlord being required to make demand upon the letter
of credit. If Tenant provides Landlord with a letter of credit, within thirty
(30) days of the execution of this Lease, meeting the foregoing requirements,
one-half (1/2) of the cash Security Deposit (i.e., $210.240.90 of the
$420.481.80 Security Deposit) shall be returned to Tenant by Landlord inasmuch
as the cash deposit remaining and the Letter of Credit equal the total Security
Deposit required in Lease Paragraph 4F. If Tenant defaults with respect to any
provisions of this Lease, including but not limited to provisions relating to
the payment of Rent, Landlord may (but shall not be required to) draw down on
the letter of credit for payment of any sum which Landlord may spend or become
obligated to spend by reason of Tenant’s default, or to compensate Landlord for
any loss or damage which Landlord may suffer by reason of Tenant’s default.
Landlord and Tenant acknowledge that such letter of credit will be treated as if
it were a cash security deposit, and such letter of credit may be drawn down
upon by Landlord upon demand and presentation of evidence of the identity of
Landlord to the issuer, in the event that Tenant defaults with respect to any
provision of this Lease and such default is not cured within any applicable cure
period. Notwithstanding anything to the contrary in this Lease, Landlord shall
not be obligated to furnish proof of default to such institutional lender and
Landlord is only required to give the institutional lender written notification
that Tenant is in default and upon receiving such written notification from
Landlord the institutional lender shall be obligated to immediately deliver cash
to Landlord equal to the amount Landlord may spend or become obligated to spend
by reason of Tenant’s default, or to compensate Landlord for any loss or damage
which Landlord may suffer by reason of Tenant’s default up to ‘ of the total
Security Deposit. Landlord acknowledges that it is not entitled to draw down
such letter of credit unless Landlord would have been entitled to draw upon the
cash security deposit pursuant to the terms of Paragraph 4F of the Lease.
Concurrently with the delivery of the required information to the issuer,
Landlord shall deliver to Tenant written evidence of the default upon which the
draw down was based, together with evidence that Landlord has provided to Tenant
the written notice of such default which was required under the applicable
provision of the Lease,

11

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

 

Quantum 2
and evidence of the failure of Tenant to cure such default within the applicable
grace period following receipt of such notice of default. Any proceeds received
by Landlord by drawing upon the letter of credit shall be applied in accordance
with the provisions governing the Security Deposit imposed by Lease Paragraph 4F
and this Paragraph 51. If Landlord draws upon the letter of credit, thereafter
Tenant shall once again have the right to post a letter of credit in place of
one-half (1/2) of a cash Security Deposit so long as Tenant is not then in
default. In any event Tenant will be obligated to replenish the amount drawn to
restore the Security Deposit to its original amount as provided for in
Paragraph 4F. If any portion of the letter of credit is used or applied pursuant
hereto, Tenant shall, within ten (10) days after receipt of a written demand
therefor from Landlord, restore and replace the value of such security by either
(i) depositing cash with Landlord in the amount equal to the sum drawn down
under the letter of credit, or (ii) increasing the letter of credit to its value
immediately prior to such application. Tenant’s failure to replace the value of
the security as provided in the preceding sentence shall be a material breach of
its obligation under this Lease.”
     13. REAL ESTATE TAXES: Effective as of the first day of the Third Option
Period, Lease Paragraph 54 (“Real Estate Taxes”) shall be deleted in its
entirety and replaced with the following:
     “54. REAL PROPERTY TAXES: Paragraph 9 is modified by the following:
     A. The term “Real Property Taxes” shall not include charges, levies or fees
directly related to the use, storage, disposal or release of Hazardous Materials
on the Premises unless directly related to Tenant’s Activities at this site or
on other sites leased and/or owned by Tenant; however, Tenant shall be
responsible for general or special tax and/or assessments (related to Hazardous
Materials and/or toxic waste) imposed on the Property provided said special tax
and/or assessment is not imposed due to on-site originated contamination on the
Property (by third parties not related to Tenant) prior to the Lease
Commencement Date. Subject to the terms and conditions stated herein, Tenant
shall be responsible for paying one hundred percent (100%) of said taxes and/or
assessments allocated to the Property.
     B. If any assessments for public improvements are levied against the
Premises, Landlord may elect either to pay the assessment in full or to allow
the assessment to go to bond. If Landlord pays the assessment in full, Tenant
shall pay to Landlord or any assignee or purchaser of the Premises each time
payment of Real Property Taxes is made a sum equal to that which would have been
payable (as both principal and interest) had Landlord allowed the assessment to
go to bond.
     C. Tenant at its cost shall have the right, at any time, to seek a
reduction in the assessed valuation of the Premises or to contest any Real
Property Taxes that are to be paid by Tenant. If Tenant seeks a reduction or
contests such Real Property Taxes, the failure on Tenant’s part to pay such Real
Property Taxes being so contested shall not constitute a default so long as
Tenant complies with the provisions of this Paragraph. Landlord shall not be
required to join in any proceeding or contest brought by Tenant unless the
provisions of any law require that the proceeding or contest be brought by or in

12

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

 

Quantum 2
the name of Landlord. In that case Landlord shall join in the proceedings or
contest or permit it to be brought in Landlord’s name as long as Landlord is not
required to bear any cost Tenant, on final determination of the proceeding or
contest, shall immediately pay or discharge its share of any Real Property Taxes
determined by any decision or judgment rendered, together with all costs,
charges, interest, and penalties incidental to the decision or judgment. If
Tenant does not pay the Real Property Taxes when due pursuant to the Lease and
Tenant seeks a reduction or contests them as provided in this paragraph, before
the commencement of the proceeding or contest Tenant shall furnish to Landlord a
surety bond in form reasonably satisfactory to Landlord issued by an insurance
company qualified to do business in California. The amount of the bond shall
equal 125% of the total amount of Real Property Taxes in dispute and any such
bond shall be assignable to any lender or purchaser of the Premises. The bond
shall hold Landlord and the Premises harmless from any damage arising out of the
proceeding or contest and shall insure the payment of any judgment that may be
rendered.”
     14. PROPERTY INSURANCE: Effective as of the first day of the Third Option
Period, section B of Lease Paragraph 55 (“Property Insurance”) shall be deleted
in its entirety and be of no further force or effect.
     15. ASSIGNMENT AND SUBLETTING: Effective as of the first day of the Third
Option Period, Lease Paragraph 56 (“Assignment and Subletting”) shall be deleted
in its entirety and replaced with the following:
     “56. ASSIGNMENT AND SUBLETTING: The following modifications are made to
Paragraph 16:
     A. In the event that Tenant seeks to make any assignment or sublease, then
Landlord, by giving Tenant written notice of its election within fifteen
(15) days after Tenant’s notice of intent to assign or sublease has been given
to Landlord, shall have the right to elect (i) to withhold its consent to such
assignment or sublease, as permitted pursuant to Paragraph 16, or (ii) to permit
Tenant to so assign the lease or sublease such part of the Premises, in which
event Tenant may do so, but without being released of its liability for the
performance of all of its obligations under the Lease, and the following shall
apply (except the following shall not apply to a “Permitted Transfer” described
in Paragraph 57):
          (1) If Tenant assigns its interest in this Lease, then in addition to
the rental provided for in this Lease, Tenant shall pay to Landlord fifty
percent (50%) of all Rent and other consideration received by Tenant over and
above (i) the assignee’s agreement to assume the obligations of Tenant under
this Lease and (ii) all “Permitted Transfer Costs” (as defined herein) related
to such assignment. As used herein, the term “Permitted Transfer Costs” shall
mean all reasonable leasing commissions paid to, third parties not affiliated
with Tenant in order to obtain the assignment or sublease in question.
          (2) If Tenant sublets all or part of the Premises, then Tenant shall
pay to Landlord in addition to the Rent provided for in this Lease fifty percent
(50%) of the

13

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Quantum 2
positive difference, if any, between (i) all rent and other consideration paid
or provided to Tenant by the subtenant, less (ii) all Rent paid by Tenant to
Landlord pursuant to this Lease which is allocable to the area so sublet and all
Permitted Transfer Costs related to such sublease. After Tenant has recovered
all Permitted Transfer Costs Tenant shall pay to Landlord the amount specified
in the preceding sentence on the same basis, whether periodic or in lump sum,
that such rent and other consideration is paid to Tenant by its subtenant,
within seven (7) days after it is received by Tenant.
          (3) Tenant’s obligations under this subparagraph shall survive any
assignment or sublease. At the time Tenant makes any payment to Landlord
required by this subparagraph, Tenant shall deliver an itemized statement of the
method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right to
inspect Tenant’s books and records relating to the payments due pursuant to this
subparagraph. Upon request therefor, Tenant shall deliver to Landlord copies of
all bills, invoices or other documents upon which its calculations are based.
          (4) As used herein, the term “consideration” shall mean any
consideration of any kind received, or to be received (including, but not
limited to, services rendered and/or value received) by Tenant as a result of
the assignment or sublease, if such sums are paid or provided to Tenant for
Tenant’s interest in this Lease or in the Premises.
          (5) This Paragraph 56.A does not apply to a “Permitted Transfer”, as
provided in Paragraph 57 hereof. The parties agree that if any of the following
transactions occur and do not qualify as “Permitted Transfers”, Tenant must
obtain Landlord’s consent to such transaction and if Landlord consents to any of
the following transactions which do not otherwise qualify as “Permitted
Transfers”, then the provisions of this Paragraph 56.A shall not apply to the
following transactions: (i) a merger, consolidation or other reorganization in
which Tenant is not the surviving corporation so long as 95% of all assets and
liabilities of Tenant are permanently transferred to such assignee; and (ii) an
assignment of this Lease to a corporation which purchases or otherwise acquires
95% or more of the assets of Tenant so long as 95% of all assets and liabilities
of Tenant are permanently transferred to such assignee and Tenant remains liable
and responsible under the Lease to the extent Tenant continues in existence
following such transaction.”
     16. PERMITTED ASSIGNMENTS AND SUBLEASES: Effective as of the first day of
the Third Option Period, Lease Paragraph 57 (“Permitted Assignments and
Subleases”) shall be deleted in its entirety and replaced with the following:
     “57. PERMITTED ASSIGNMENTS AND SUBLEASES: Notwithstanding anything
contained in Paragraph 16, so long as Tenant otherwise complies with the
provisions of Paragraph 16 and the Permitted Transfer does not release Tenant
from its obligations hereunder, Tenant may enter into any of the following
transfers (a “Permitted Transfer”) without Landlord’s prior written consent, and
the provision Paragraph 56A shall not apply to any such Permitted Transfer:

14

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

 

Quantum 2
     A. Tenant may sublease all or part of the Premises or assign its interest
in this Lease to any corporation which controls, is controlled by, or is under
common control with Tenant by means of an ownership interest of more than fifty
percent (50%) providing Tenant remains liable for the payment of Rent and full
performance of the Lease;
     B. Tenant may assign its interest in the Lease to a corporation which
results from a merger, consolidation or other reorganization in which Tenant is
not the surviving corporation so long as (i) 95% of all assets and liabilities
of Tenant are permanently transferred to such assignee, and (ii) immediately
prior to the merger, consolidation or other reorganization, the corporation into
which Tenant is, to be merged has a net worth equal to or greater than the net
worth of Tenant at the time of Lease execution or at the time of such
assignment, merger, consolidation or reorganization (whichever is greater), or
if it does not, Landlord is provided a guaranty of the Lease (in a form
reasonably acceptable to Landlord) from a corporation (a) that is the parent of,
or is otherwise affiliated with, the corporation into which Tenant is to be
merged, and (b) which has a current net worth equal to or greater than the net
worth of Tenant at the time of Lease execution or at the time of such
assignment, merger, consolidation or reorganization (whichever is greater). In
the event there is not a permanent transfer of 95% or more of the assets and
liabilities from Tenant to a third party, and Tenant continues to exist as a
separate entity, both companies shall be jointly and severally liable for the
full terms and conditions of the Lease;
     C. Tenant may assign this Lease to a corporation which purchases or
otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets and liabilities of Tenant are permanently transferred to such assignee
(in the event there is not a permanent transfer of 95% or more of the assets and
liabilities from Tenant to a third party and Tenant continues to exist as a
separate entity, both companies shall be jointly and severally liable for the
full terms and conditions of the Lease), and provided that immediately prior to
such assignment said corporation, has a net worth equal to or greater than the
net worth of Tenant (a) at the time of Lease execution or (b) at the time of
such assignment (whichever is greater), or Kit does not, Landlord is provided a
guaranty of the Lease (in a form reasonably acceptable to Landlord) from a
corporation (a) that is the parent of, or is otherwise affiliated with, said
corporation and (b) which has a current net worth equal to or greater than the
net worth of Tenant at the time of Lease execution or at the time of such
assignment, (whichever is greater).”
     17. DESTRUCTION: Effective as of the first day of the Third Option Period,
Lease Paragraph 62 (“Destruction”) shall be deleted in its entirety and replaced
with the following:
          “62. Destruction: Paragraph 21 is modified by the following:
          A. Notwithstanding anything to the contrary within Paragraph 21,
Landlord may terminate this Lease in the event of an uninsured event or if
insurance proceeds, net of the deductible, are insufficient to cover one hundred
percent of the rebuilding costs; provided, however, Tenant shall have the right
to elect, in its discretion, to contribute such excess funds to permit Landlord
to repair the Premises.

15

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Quantum 2
     B. Except as provided in Paragraph 62C, Landlord may not terminate the
Lease if the Premises are damaged by a peril whereby the cost to replace and/or
repair is one hundred percent (100%) covered by the insurance carried by
Landlord pursuant to Paragraph 12, but instead shall restore the Premises in the
manner described by Paragraph 21.
     C. If the Premises are damaged by a peril covered by the insurance carried
by Landlord pursuant to Paragraph 12, Landlord shall have the option to
terminate the Lease if each of the following conditions is satisfied: (i) the
cost to repair or the damage exceeds thirty-three percent (33%) of the then
replacement cost of the Premises; and (ii) the damage occurs at a time when
there is less than five (5) remaining in the term of the Lease.
     D. If Landlord fails to obtain insurance as required pursuant to
Paragraph 12 and said insurance would have been available to cover any damage or
destruction to the Premises, Landlord shall be required to rebuild, at its cost,
net of the deductible which would have been required under said insurance policy
(which deductible Tenant is required to pay).
     E. If the Premises are damaged by any peril, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord’s architect or construction consultant as to when the restoration work
required of Landlord may be completed. Tenant shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Landlord of a written notice of election to
terminate within seven (7) days after Tenant receives from Landlord the estimate
of the time needed to complete such, restoration:
          (1) The Premises are damaged by any peril (not caused by or resulting
from an action of Tenant or Tenant’s agents, employees, contractors or invitees)
and, in the reasonable opinion of Landlord’s architect or construction
consultant, the restoration of the Leased Premises cannot be substantially
completed within 180 days after the date of such damage (subject to force
majeure conditions); or
          (2) The Premises are damaged by any peril (not caused by or resulting
from an action of Tenant or Tenant’s agents, employees, contractors or invitees)
within twelve (12) months of the last day of the Lease term, and, In the
reasonable opinion of Landlord’s architect or construction consultant, the
restoration of the Leased Premises cannot be substantially completed within
sixty (60) days after the date of such damage and Tenant has not exercised its
Option to Extend said Term (or Extended Term as the case may be),”
     18. LIABILITY INSURANCE: Effective as of the first day of the Third Option
Period, the first sentence of Lease Paragraph 10 (“Liability Insurance”) shall
be deleted and replaced with the following: “Tenant, at Tenant’s expense, agrees
to keep in force during the Term of this Lease a policy of commercial general
liability insurance with combined single limit coverage of not less than Two
Million Dollars ($2,000,000) per occurrence for bodily injury and

16

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Quantum 2
property damage occurring in, on or about the Premises, including parking and
landscaped areas.”
     19. LIMITATION OF LIABILITY: Effective as of the first day of the Third
Option Period, Lease Paragraph 36 (“Limitation of Liability”) shall be deleted
in its entirety and replaced with the following:
     “36. LIMITATION OF LIABILITY In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord:
(i) the sole and exclusive remedy shall be against Landlord’s interest in the
Premises leased herein;

(ii) no partner of Landlord shall be sued or named as a party in any suit or
action (except as may be necessary to secure jurisdiction of the partnership);

(iii) no service of process shall be made against any partner of Landlord
(except as may be necessary to secure jurisdiction of the partnership);

(iv) no partner of Landlord shall be required to answer or otherwise plead to
any service of process;

(v) no judgment will be taken against any partner of Landlord;

(vi) any judgment taken against any partner of Landlord may be vacated and set
aside at any time without hearing;

(vii) no writ of execution will ever be levied against the assets of any partner
of Landlord;

(viii) these covenants and agreements are enforceable both by Landlord and also
b any partner of Landlord.
     Tenant agrees that each of the foregoing covenants and amendments shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or at common law.”
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said October 31, 1989 Lease Agreement shall remain in full force and effect.

17

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Quantum 2
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 3
to Lease as of the day and year last written below.

                      LANDLORD:       TENANT:    
 
                    JOHN ARRILLAGA SEPARATE PROPERTY TRUST       QUANTUM
CORPORATION                 a Delaware corporation    
 
                   
By
  /s/ John Arrillaga       By   /s/ Andrew Kryder    
 
 
 
John Arrillaga, Trustee          
 
   
 
                                Andrew Kryder    
 
 
 
     
Print or Type Name 
    Date: 6/30/97            
 
                    RICHARD T. PEERY SEPARATE PROPERTY TRUST       Title:  
Finance & Corporate General Counsel    
 
                                          By   /s/ Richard Peery       Dated:  
June 25, 1997    
 
                   
 
  Richard T. Peery, Trustee                
 
                    Date: 6/26/97                

18

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AMENDMENT NO. 4
TO LEASE
     THIS AMENDMENT NO.4 is made and entered into this 22nd day of March, 2001,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST) (previously known as the “John
Arrillaga Separate Property Trust”) as amended, and RICHARD T. PEERY, Trustee,
or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY
TRUST) as amended, collectively as LANDLORD, and MAXTOR CORPORATION, a Delaware
corporation, as “ASSIGNEE” or “MAXTOR”.
RECITALS
     A. WHEREAS, by Lease Agreement dated October 31, 1989 Landlord leased to
QUANTUM CORPORATION, a Delaware corporation (the “ASSIGNOR” or “QUANTUM”) all of
that certain 155,734 ± square foot building located at 1140 Technology Drive,
Milpitas, California (the “Premises”), the details of which are more
particularly set forth in said October 31, 1989 Lease Agreement, and
     B. WHEREAS, said Lease was amended by Letter Agreement dated October 31,
1989 which provided for a Basic Rent Credit for the period commencing with the
Lease Commencement Date and ending on May 31, 1991, and
     C. WHEREAS, said Lease was amended by Amendment No. 1 dated April 24, 1990
which canceled the reduction in Basic Rent Credit Letter dated October 31, 1989,
and which delayed the Lease Commencement Date from December 15, 1990 to April 1,
1991, and,
     D. WHEREAS, said Lease was amended by the Commencement Letter dated
March 4, 1991 which changed the Commencement Date of the Lease from April 1,
1991 to March 1, 1991, and established the Termination Date of July 31, 2006,
and,
     E. WHEREAS, said Lease was amended by Amendment No. 2 dated June 26, 1991
which extended the Term of the Lease for an additional two month period, amended
the Basic Rent schedule and Aggregate Rent accordingly, and amended the
deadlines in which the Tenant under the Lease (herein the “Tenant”) could
exercise its Option to Extend pursuant to Lease Paragraphs 42 and 43, and
     F. WHEREAS, said Lease was amended by Amendment No. 3 dated April 16, 1997,
which amended the Lease by (i) extending the Term for five years, changing the
Termination Date from September 30, 2006 to September 30, 2011, (ii) amending
the Basic Rent schedule and Aggregate Rent accordingly, (iii) adding a third
Five Year Option to Extend, (iv) replacing Paragraphs 41C (“Lease Terms
Co-extensive”) and 48 (“Cross Default”) and 53 (“Structural Capital Costs
Regulated by Governmental Agencies After the Commencement of this Lease not
Caused by Tenant or Tenant’s Uses or Remodeling of the Premises”), (v) amending
Lease Paragraph 12 (“Property Insurance”) and (vi) amending and/or replacing
certain provisions of the Lease commencing as of the commencement of the Third
Extended Term of said Lease, and

1

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     G. WHEREAS, the Lease, together with those certain Amendments described
above in Recitals B through F shall hereinafter collectively be referred to as
“the Lease Agreement”, and
     H. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by (i) acknowledging Landlord’s consent to the assignment of said Lease from
“Quantum Corporation, a Delaware corporation” to “Maxtor Corporation, a Delaware
corporation”, and (ii) replacing Lease Paragraph 43 (“Second Five Year Option to
Extend”) and Paragraph 3 to Amendment No. 3 dated April 16, 1997 (“Third Five
Year Option to Extend”) as hereinafter set forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. ASSIGNMENT OF TENANT’S INTEREST: Notwithstanding anything to the
contrary contained in the Lease Agreement, Landlord hereby understands that
based on Quantum’s notice to Landlord, Landlord hereby acknowledges that the
following transactions have occurred:
          A. Quantum has operated its business at the Premises through two
separate business groups: Quantum HDD, tracked by Quantum HDD common stock, and
Quantum DSS, tracked by Quantum DSS common stock.
          B. On or about, October 3, 2000, Quantum and Maxtor entered into that
certain an Amended and Restated Agreement and Plan of Merger and Reorganization,
dated as of October 3, 2000 (the “Merger Agreement”), wherein they agreed that:
               (i) Quantum will separate its Quantum HDD business from its
Quantum DSS and transfer the assets of Quantum HDD to a newly-formed subsidiary,
Insula Corporation, a Delaware corporation (“Insula”), in exchange for all of
Insula’s common stock and Insula’s agreement to be entirely responsible for all
of the Quantum HDD obligations and liabilities.
               (ii) Immediately after such separation, each currently
outstanding share of Quantum HDD common stock will be redeemed in return for a
share of Insula common stock, such that the holders of Quantum HDD common stock
shall own all of the common stock of Insula.
               (iii) Immediately after said redemption, Insula will merge into
Maxtor and each share of the Insula’s common stock will be converted into the
right to receive approximately 1.52 shares of Maxtor common stock, subject to
possible adjustment as described in the Merger Agreement.
          C. As part of the legal separation of the Quantum HDD business from
the Quantum DSS business, all of the right title and interest of Quantum in the
Lease will be

2

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assigned by Quantum to Insula and Insula will assume and agree to be liable for
all of the obligations of Quantum, as Tenant, under the Lease.
     As a result of said merger transaction, as of April 2, 2001, the effective
date of the merger, Maxtor will become the Tenant under the Lease Agreement, and
Maxtor shall assume all obligations of Tenant under the Lease Agreement dated
October 31, 1989, as amended.
     Landlord hereby consents to the foregoing transactions (“Landlord’s
Consent”). Except as expressly set forth below, Landlord’s Consent shall in no
way void or alter any of the terms of the Lease Agreement by and between
Landlord and Tenant, nor shall Landlord’s Consent alter or diminish in any way
Tenant’s obligations to Landlord.
     Landlord has not reviewed the terms of any agreement between Quantum,
Insula and/or Maxtor, and Landlord shall not be bound by any agreement other
than the terms of the Lease Agreement between Landlord and Tenant. Landlord does
not make any warranties or representations as to the condition of the Leased
Premises or the terms of the Lease Agreement between Landlord and Quantum.
Landlord’s consent to the assignment shall in no way obligate Landlord to any
further consents or agreements between Quantum and/or Assignee. So long as
Quantum continues to exist as a Delaware corporation, it is agreed that both
Quantum and Maxtor will be jointly and severally liable for all the terms and
conditions of the Lease and all Amendments thereto; provided, however, that so
long as Quantum remains liable for said Lease, no material amendment to the
Lease Agreement after the date hereof shall be binding upon Quantum without the
prior written consent of Quantum, which consent shall not be unreasonably
withheld, and Quantum’s approval shall not be required on transactions related
to Landlord’s Waivers, Landlord’s Consents to Sublease and/or Landlord’s
Consents to Alterations. The foregoing, however, shall not prevent Tenant and
Landlord from entering into any such modification or amendment between
themselves.
     It is further understood that the Security Deposit of Quantum is being
transferred to Maxtor.
     1. OPTIONS TO EXTEND: As consideration for the consent of Landlord herein
set forth, Lease Paragraph 43 (“Second Five Year Option to Extend”) and
Paragraph 3 to Amendment No. 3 dated April 16, 1997 (“Third Five Year Option to
Extend”) are hereby deleted in their entirety and shall be replaced with the
following:
          A. SECOND FIVE YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant
an option to extend this Lease Agreement (“Option to Extend” or the “Option”)
for an additional five years (“Second Extended Term”) upon the following terms
and conditions:
               1) Tenant shall give Landlord written notice of Tenant’s exercise
of this Option to Extend at least one hundred eighty (180) days prior to the
expiration of the Lease Term pursuant to Paragraph A hereof (not later than
April 3, 2011), in which event the Term of the Lease shall be considered
extended for an additional five (5) years, subject to the Basic Rent set forth
below and with: (i) the Basic Rent to be determined pursuant to Paragraph 2)
below; (ii) management fee and the terms and conditions subject to amendment by
Landlord (Landlord, in its sole and absolute discretion, may, but is not
required to, incorporate its then current Lease

3

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

 

provisions that are standard in Landlord’s leases for comparable buildings as of
the date of Tenant’s exercise of its Option to Extend); and (iii) this
Paragraph 2.A thereafter deleted. In the event that Tenant fails to timely
exercise Tenant’s Option as set forth herein in writing, Tenant shall have no
further Option to Extend this Lease, and the Lease shall continue in full force
and effect for the full remaining term hereof, absent this Paragraph 2.
               2) In the event Tenant timely exercises Tenant’s Option to Extend
as set forth herein, Landlord shall, within fifteen (15) days after receipt of
Tenant’s exercise of the Option, advise Tenant of any changes in the management
fee and the terms and conditions as referenced in Paragraph 2.A.l(ii) above) and
the Basic Rent (which shall not be less than the Basic Rent for the fifth year
of the current Term) required for the Extended Term of the Lease to make the
Basic Rent for the Premises comparable to the then current market triple net
basic rent for comparable properties either (i) then owned in whole or in part
by the above mentioned Landlord or by members of its immediate family in the
vicinity of the Premises or (ii) if not owned by Landlord or its family as
stated herein, other third party properties in the vicinity of the Premises.
Tenant shall have five (5) days after receipt from the Landlord of said new
terms and conditions and Basic Rent in which to accept said new terms and
conditions and Basic Rent and enter into written documentation confirming same.
In the event Tenant fails to execute said written documentation confirming said
new teens and conditions and Basic Rent for the Second Extended Term of Lease
within said five (5) day period, Tenant shall have no further Option to Extend
this Lease, and this Lease shall continue in full force and effect for the full
remaining term hereof absent of this Paragraph 2, with Landlord having no
further responsibility or obligation to Tenant with respect to Tenant’s Option
to Extend.
               3) It is agreed that if Tenant is at any time prior to exercising
its Option to Extend in default of this Lease and has failed to cure the default
in the time period allowed, this Paragraph 2 shall be null and void and Tenant
will have no further rights under this Paragraph. It is further agreed that if
Tenant has exercised its Option to Extend and is subsequently in default, and
has failed to cure the default in the time period allowed by the Lease at any
time prior to, or at the time the lease commences on the Second Extended Term,
Landlord may at its sole and absolute discretion, cancel Tenant’s Option to
Extend, and this Lease will continue in full force and effect for the full
remaining Term hereof, absent of this Paragraph 2.
               4) The Option rights of Tenant under this Paragraph 2.A, and the
Second Extended Term thereunder, are granted for Tenant’s personal benefit and
may not be assigned or transferred by Tenant, except as provided for in Lease
Paragraph 57 (“Permitted Assignments and Subleases”), either voluntarily or by
operation of law, in any manner whatsoever.
               5) Notwithstanding anything to the contrary in this Paragraph,
this Option to Extend is automatically forfeited by Tenant (without notice from
Landlord) in the event Tenant is, at any time during the Term of this Lease, in
default of said Lease and if Tenant does not completely cure said default within
five days for a monetary default and thirty days for a non-monetary default (or
such longer time as permitted by cure in the Lease Agreement). In the event said
Option to Extend is forfeited as stated herein, Tenant shall have no further
Option to Extend this Lease.

4

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     B. THIRD FIVE (5)-YEAR OPTION PERIOD: Provided Tenant has extended the
Lease for an additional five year period as set forth in Paragraph A above,
Landlord hereby grants to Tenant another Option to Extend the Lease Agreement
upon the following terms and conditions;
          1) Tenant shall give Landlord written notice of Tenant’s exercise of
this Option to Extend at least one hundred eighty (180) days prior to the
expiration of the Basic Term hereof (not later than April 3, 2016), in which
event the Term of the Lease shall be considered extended for an additional five
(5) years (“Third Extended Term”) subject to the Basic Rent set forth below and
with: (i) the Basic Rent to be determined pursuant to Paragraph 2) below;
(ii) the management fee and the terms and conditions subject to amendment by
Landlord (Landlord, in its sole and absolute discretion, may, but is not
required to, incorporate its then current Lease provisions that are standard in
Landlord’s leases for comparable buildings as of the date of Tenant’s exercise
of its Option to Extend); and (iii) this Paragraph 2.B thereafter deleted. In
the event that Tenant fails to timely exercise Tenant’s Option as set forth
herein in writing, Tenant shall have no further Option to Extend this Lease, and
the Lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 2.B.
          2) In the event Tenant timely exercises Tenant’s Option to Extend as
set forth herein, Landlord shall, within fifteen (15) days after receipt of
Tenant’s exercise of option, advise Tenant of any changes in the management fee
and the terms and conditions as referenced in Paragraph 2.B.1(ii) above and
Basic Rent (which shall not be less than the Basic Rent for the fifth year of
the Second Extended Term) required for the Third Extended Term of the Lease to
make the Basic Rent for the Premises comparable to the then current market
triple net basic rent for comparable properties either (i) then owned in whole
or in part by the above mentioned Landlord or by members of its immediate family
in the vicinity of the Premises or (ii) if not owned by Landlord or its family
as stated herein, other third party properties in the vicinity of the Premises.
Tenant shall have five (5) days after receipt from the Landlord of said new
terms and conditions and Basic Rent in which to accept said new terms and
conditions and Basic Rent and enter into written documentation confirming same.
In the event Tenant fails to execute said written documentation confirming said
new terms and conditions and Basic Rent for the Third Extended Term of Lease
within said five (5) day period, Tenant shall have no further Option to Extend
this Lease, and this Lease shall continue in full force and effect for the full
remaining term hereof absent of this Paragraph 2.B, with Landlord having no
further responsibility or obligation to Tenant with respect to Tenant’s Option
to Extend.
          3) It is agreed that if Tenant is at any time prior to exercising its
Option to Extend in default of this Lease and has failed to cure the default in
the time period allowed, this Paragraph 2.B will be null and void and Tenant
will have no further rights under this Paragraph. It is further agreed that if
Tenant has exercised its Option to Extend and is subsequently in default, and
has failed to cure the default in the time period allowed by the Lease at any
time prior to, or at the scheduled Commencement Date of the Third Extended Term,
Landlord may at its sole and absolute discretion, cancel Tenant’s Option to
Extend, and this Lease will continue in full force and effect for the full
remaining Term hereof, absent of this Paragraph Z.B.
          4) The Option rights of Tenant under this Paragraph 2.B and the Third
Extended Term thereunder, are granted for Tenant’s personal benefit and may not
be assigned or

5

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transferred by Tenant, except as provided for in Lease Paragraph 57 (“Permitted
Assignments and Subleases”), either voluntarily or by operation of law, in any
manner whatsoever,
          5) Notwithstanding anything to the contrary in this Paragraph 2.B,
this Option to Extend is automatically forfeited by Tenant (without notice from
Landlord) in the event Tenant is, at any time during the Term of this Lease, in
default of said Lease and if Tenant does not completely cure said default within
five days for a monetary default and thirty days for a non-monetary default (or
such longer time as permitted by cure in the Lease Agreement). In the event said
Option to Extend is forfeited as stated herein, Tenant shall have no further
Option to Extend this Lease.
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said October 31, 1989 Lease Agreement, as heretofore amended, shall remain in
full force and effect.

6

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     IN WITNESS WHEREOF, Landlord and Tenant have executed this, Amendment No. 4
to Lease as of the day and year last written below.

                 
 
                LANDLORD:   ASSIGNEE/MAXTOR;    
 
                JOHN ARRILLAGA SURVIOR’S TRUST   MAXTOR CORPORATION            
a Delaware corporation    
 
               
 
               
By
/s/ John Arrillaga by Richard Perry   By /s/ Glenn Stevens    
 
           
 
   John Arrillaga, Trustee                     Glenn H. Stevens                
  Date:   3/30/01   Print or Type Name    
 
                RICHARD T. PEERY SEPARATE PROPERTY TRUST   Title:   V.P.,
General Counsel & Secretary    
 
               
By
/s/ Richard Peery   Date:   4/1/01    
 
             
 
  Richard T. Peery, Trustee            
 
               
Date:
  3/30/01                     ASSIGNOR/QUANTUM:    
 
                        QUANTUM CORPORATION             a Delaware corporation  
 
 
               
 
               
 
      By /s/ Norm Claus    
 
             
 
                        Norm Claus                           Print or Type Name
   
 
               
 
      Title:   V.P. Real Estate    
 
               
 
      Dated:   3/30/01  
 
               

7

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LEASE AGREEMENT
     THIS LEASE made this 31st day of October 1989 between JOHN ARRILLAGA,
Trustee, or his Successor Trustee, UTA dated 7/20/77 (JOHN ARRILLAGA SEPARATE
PROPERTY TRUST) as amended, and RICHARD T. PEERY, Trustee, or his Successor
Trustee, UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY TRUST) as
amended, hereinafter called Landlord and QUANTUM CORPORATION, a Delaware
corporation, hereinafter called Tenant.
WITNESSETH:
     Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord those certain premises (the “Premises”) outlined in red on Exhibit A
attached hereto and incorporated herein by this reference thereto more
particularly described as follows:
All of that land containing approximately 11.848 ± acres and that certain 176,
516 ± square foot two story building (“Building 2”) and parking appurtenant
thereto, to be constructed and landscaping to be installed by Landlord as shown
within the area outlined in red (“Lot 2”) on Exhibit A to be located at the
corner of Bellew Drive and McCarthy Blvd., Milpitas, California. Said Premises
(“Lot 2”) is more particularly shown within the area outlined in red on
Exhibit A attached hereto and incorporated herein by this reference. The entire
parcel containing approximately 37.096 ± acres, of which the Premises is a part,
is shown within the area outlined in green on Exhibit A attached hereto and
incorporated herein by this reference. The interior of the leased Premises shall
be improved in the configuration as shown in red on Exhibit B to be attached
hereto and incorporated herein by this reference. The building shell shall be
constructed in accordance with the shell and site improvement specifications set
forth on Exhibit A, and the general building elevation set forth on Exhibit A.
See Paragraph 49
     The word “Premises” as used throughout this lease is hereby defined to
include the nonexclusive use of sidewalks and driveways in front of or adjacent
to the Premises, and the nonexclusive use of the area directly underneath or
over such sidewalks and driveways. The gross leasable area of the building shall
be measured from outside of exterior walls to outside of exterior walls and
shall include any atriums, covered entrances or egresses and covered loading
areas.
     Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth and Tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all of said terms,
covenants and conditions. This Lease is made upon the conditions of such
performance and observance.
     1. USE. Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances for the purpose of Office,
sales, R & D, light manufacturing and related uses necessary for the use of
Tenant or any approved assignee or subtenant to conduct its business providing
any and all uses of the Premises shall be subject to and in conformance with all
governmental laws and ordinances, and for no other purpose without

1

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Landlord’s prior written consent, Tenant shall not do or permit to be done in or
about the Premises nor bring or keep or permit to be brought or kept in or about
the Premises anything which is prohibited by or will in any way increase the
existing rate of (or otherwise affect) fire or any insurance covering the
Premises or any part thereof, or any of its contents without the prior written
consent of Landlord, and provided Tenant bears any cost related to such
increased rate, or will cause a cancellation of any insurance covering the
Premises or any part thereof, or any of its contents. Tenant shall not do or
permit to be done anything in, on or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Premises or neighboring premises or injure or annoy them, or use or allow the
Premises to be used for any improper, immoral, unlawful or objectionable
purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about
the Premises. No sale by auction shall be permitted on the Premises. Tenant
shall not place any loads upon the floors, walls, or ceiling which endanger the
structure, or place any harmful fluids or other materials in the drainage system
of the building, or overload existing electrical or other mechanical systems. No
waste materials or refuse shall be dumped upon or permitted to remain upon any
part of the Premises or outside of the building in which the Premises are a
part, except in trash containers placed inside exterior enclosures designated by
Landlord for that purpose or inside of the building proper where designated by
Landlord. No materials, supplies, equipment, finished products or semi-finished
products, raw materials or articles of any nature shall be stored upon or
permitted to remain outside the Premises. Tenant shall not place anything or
allow anything to be placed near the glass of any window, door partition or wall
which may appear unsightly from outside the Premises. No loudspeaker or other
device, system or apparatus which can be heard outside the Premises shall be
used in or at the Premises without the prior written consent of Landlord. Tenant
shall not commit or suffer to be committed any waste in or upon the Premises.
Tenant shall indemnify, defend and hold Landlord harmless against any loss,
expense, damage, reasonable attorneys’ fees, or liability arising out of failure
of Tenant to comply with any applicable law that that governs Tenant use of the
Premises. Tenant shall comply with any covenant, condition, or restriction
(“CC&R’s”) affecting the Premises. The provisions of this paragraph are for the
benefit of Landlord only and shall not be construed to be for the benefit of any
tenant or occupant of the Premises.
     2. TERM AND COMMENCEMENT DATE OF LEASE. See Paragraphs 41, 42 & 43 of this
Lease
     3. POSSESSION. If Landlord, for any reason whatsoever other than Landlord’s
default cannot deliver possession of said premises to Tenant at the commencement
of the said term, as hereinbefore specified, this Lease shall not be void or
voidable; no obligation of Tenant shall be affected thereby; nor shall Landlord
or Landlord’s agents be liable to Tenant for any loss or damage resulting
therefrom; but in that event the commencement and termination dates of the
Lease, and all other dates affected thereby shall be revised to conform to the
date of Landlord’s delivery of possession, as specified in Paragraph 28 above;
provided, however, it is agreed that in no event shall the Lease commence sooner
than December 15, 1990 unless the parties agree in writing to an earlier date
for the Lease to commence. The above is, however, subject to the provision that
the period of delay of delivery of the Premises shall not exceed 180 days from
the commencement date herein (except those delays caused by Acts of God,
strikes, war, utilities, governmental bodies, weather, unavailable materials,
and delays beyond Landlord’s control shall

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be excluded in calculating such period) in which instance Tenant, at its option,
may, by written notice to Landlord, terminate this Lease. See Paragraph 47
     4. RENT.
          A. Basic Rent. Tenant agrees to pay to Landlord at such place as
Landlord may designate without deduction, offset, prior notice, or demand, and
Landlord agrees to accept as Basic Rent for the leased Premises the total sum of
the amount to be calculated pursuant to Paragraph 39 in lawful money of the
United States of America, payable as follows: See Paragraphs 39 through 43
          B. Time for Payment. Full monthly rent is due in advance on the first
day of each calendar month. In the event that the term of this Lease commences
on a date other than the first day of a calendar month, on the date of
commencement of the term hereof Tenant shall pay to Landlord as rent for the
period from such date of commencement to the first day of the next succeeding
calendar month that proportion of the monthly rent hereunder which the number of
days between such date of commencement and the first day of the next succeeding
calendar month bears to thirty (30). In the event that the term of this Lease
for any reason ends on a date other than the last day of a calendar month, on
the first day of the last calendar month of the term hereof Tenant shall pay to
Landlord as rent for the period from said first day of said last calendar month
to and including the last day of the term hereof that proportion of the monthly
rent hereunder which the number of days between said first day of said last
calendar month and the last day of the term hereof bears to thirty (30).
          C. Late Charge. Notwithstanding any other provision of this Lease, if
Tenant is in default in the payment of rental as set forth in this Paragraph 4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to the
delinquent rental due, a late charge for each rental payment in default ten
(10) days. Said late charge shall equal five percent (5%) of each rental payment
so in default. See Paragraph 50
          D. Additional Rent. Beginning with the commencement date of the term
of this Lease, Tenant shall pay to Landlord or to Landlord’s designated agent in
addition to the Basic Rent and as Additional Rent the following:
               (a) All Taxes relating to the Premises as set forth in
Paragraph 9, and
               (b) All insurance premiums relating to the Premises, as set forth
in Paragraph 12, and
               (c) All charges, costs and expenses, which Tenant is required to
pay hereunder, together with all interest and penalties, costs and expenses
including reasonable attorneys’ fees and legal expenses, that may accrue thereto
in the event of Tenant’s failure to pay such amounts, and all damages,
reasonable costs and expenses which Landlord may incur by reason of default of
Tenant or failure on Tenant’s part to comply with the terms of this Lease. In
the event of nonpayment by Tenant of Additional Rent, Landlord shall have all
the rights and remedies with respect thereto as Landlord has for nonpayment of
rent.

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     The Additional Rent due hereunder shall be paid to Landlord or Landlord’s
agent (i) within five days after presentation of invoice from Landlord or
Landlord’s agent setting forth such Additional Rent and/or (ii) at the option of
Landlord. Tenant shall pay to Landlord monthly, in advance, Tenant’s prorata
share of an amount estimated by Landlord to be Landlord’s approximate average
monthly expenditure for such Additional Rent items, which estimated amount shall
be reconciled at the end of each calendar year as compared to Landlord’s actual
expenditure for said Additional Rent terms, with Tenant paying to Landlord, upon
demand, any amount of actual expenses expended by Landlord in excess of said
estimated amount, or Landlord refunding to Tenant (providing Tenant is not in
default in the performance of any of the terms, covenants and conditions of this
Lease in which case such amount shall be held by Landlord as a credit for
Tenant’s account until such default has been cured any amount of estimated
payments made by Tenant in excess of Landlord’s actual expenditures for said
Additional Rent items.
     The respective obligations of Landlord and Tenant under this paragraph
shall survive the expiration or other termination of the term of this Lease, and
if the term hereof shall expire or shall otherwise terminate on a day other than
the last day of a calendar year, the actual Additional Rent incurred for the
calendar year in which the term hereof expires or otherwise terminates shall be
determined and settled on the basis of the statement of actual Additional Rent
for such calendar year and shall be prorated in the proportion which the number
of days in such calendar year preceding such expiration or termination bears to
365.
          E. Place of Payment of Rent and Additional Rent. All Basic Rent
hereunder and all payments hereunder for Additional Rent shall be paid to
Landlord at the office of Landlord at Peery/Arrillaga, File 1504, P.O. Box
60000, San Francisco, CA 94160 or to such other person or to such other place as
Landlord may from time to time designate in writing.
          F. Security Deposit. Concurrently with Tenant’s execution of this
Lease, Tenant shall deposit with Landlord the sum of Four Hundred Seventy-Six
Thousand Five Hundred Ninety-Three and 20/100 Dollars ($476,593.20.). Said sum
shall be held by Landlord as a Security Deposit for the faithful performance by
Tenant of all of the terms, covenants, and conditions of this Lease to be kept
and performed by Tenant during the term hereof. If Tenant defaults with respect
to any provision of this Lease, including, but not limited to, the provisions
relating to the payment of rent and any of the monetary sums due herewith,
Landlord may (but shall not be required to) use, apply or retain all or any part
of this Security Deposit for the payment of any other amount which Landlord may
spend by reason of Tenant’s default or to compensate Landlord for any other loss
or damage which Landlord may suffer by reason of Tenant’s default. If any
portion of said Deposit is so used or applied, Tenant shall, within ten
(10) days after written demand therefor, deposit cash with Landlord in the
amount sufficient to restore the Security Deposit to its original amount. Tenant
failure to do so shall be a material breach of this Lease. Landlord shall not be
required to keep this Security Deposit separate from its general funds, and
Tenant shall not be entitled to interest on such Deposit. If Tenant fully and
faithfully performs every provision of this Lease to be performed by it, the
Security Deposit or any balance thereof shall be returned to Tenant (or at
Landlord’s option, to the last assignee of Tenant’s interest hereunder) at the
expiration of the Lease term and after Tenant has vacated the Premises. In the
event of termination of Landlord’s interest in this Lease, Landlord shall
transfer

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said Deposit to Landlord’s successor in interest whereupon Tenant agrees to
release Landlord from liability for the return of such Deposit or the accounting
therefor. See Paragraph 51
     5. ACCEPTANCE AND SURRENDER OF PREMISES. By entry hereunder, Tenant accepts
the Premises as being in good and sanitary order, condition and repair and
accepts the building and improvements included in the Premises in their present
condition and without representation or warranty by Landlord as to the condition
of such building or as to the use or occupancy which may be made thereof. Any
exceptions to the foregoing must be by written agreement executed by Landlord
and Tenant. Tenant agrees on the last day of the Lease term, or on the sooner
termination of this Lease, to surrender the Premises promptly and peaceably to
Landlord in good condition and repair (damage by Acts of God, fire, normal wear
and tear excepted), with all interior walls cleaned so that they appear freshly
painted, and repaired and replaced, if damaged; all floors cleaned and waxed:
all carpets cleaned and shampooed; all broken, marred or nonconforming
acoustical ceiling tiles replaced; all windows washed; the air conditioning and
heating systems serviced by a reputable and licensed service firm and in good
operating condition and repair the plumbing and electrical systems and lighting
in good order and repair, including replacement of any burned out or broken
light bulbs or ballasts; the lawn and shrubs in good condition including the
replacement of any dead or damaged plantings; the sidewalk, driveways and
parking areas in good order, condition and repair; together with all
alterations, additions, and improvements which may have been made in, to, or on
the Premises (except moveable trade fixtures installed at the expense of Tenant)
except that Tenant shall ascertain from Landlord within ninety (90) days before
the end of the term of this Lease whether Landlord desires to have the Premises
or any part or parts thereof restored to their condition and configuration as
when the Premises were delivered to Tenant and if Landlord shall so desire, then
Tenant shall restore said Premises or such part or parts thereof before the end
of this Lease at Tenant’s sole cost and expense. Tenant, on or before the end of
the term or sooner termination of this Lease, shall remove all of Tenant’s
personal property and trade fixtures from the Premises and all property not so
removed on or before the end of the term or sooner termination of this Lease
shall be deemed abandoned by Tenant and title to same shall thereupon pass to
Landlord without compensation to Tenant. Landlord may, upon termination of this
Lease, remove all moveable furniture and equipment so abandoned by Tenant at
Tenant’s sole cost, and repair any damage caused by such removal at Tenant’s
sole cost. If the Premises be not surrendered at the end of the term or sooner
termination of this Lease, Tenant shall indemnify Landlord against loss or
liability resulting from the delay by Tenant in so surrendering the Premises
including, without limitation, any claims made by any succeeding Tenant founded
on such delay. Nothing contained herein shall be construed as an extension of
the term hereof or as a consent of Landlord to any holding over by Tenant. The
voluntary or other surrender of this Lease or the Premises by Tenant or a mutual
cancellation of this Lease shall not work as a merger and, at the option of
Landlord, shall either terminate all or any existing subleases or subtenancies
or operate as an assignment to Landlord of all or any such subleases or
subtenancies. See Paragraph 52.
     6. ALTERATIONS AND ADDITIONS. Tenant shall not make, or suffer to be made
any alteration or addition to the Premises, or any part thereof, without the
written consent of Landlord first had and obtained by Tenant (such consent not
to be unreasonably withheld), but at the cost of Tenant, and any addition to, or
alteration of, the Premises, except moveable furniture and trade fixtures, shall
at once become a part of the Premises and belong to Landlord.

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Landlord reserves the right to approve all contractors and mechanics proposed by
Tenant to make such alterations and additions. Tenant shall retain title to all
moveable furniture and trade fixtures placed in the Premises. All heating,
lighting, electrical, air conditioning, partitioning, drapery, carpeting, and
floor installations made by Tenant, together with all property that has become
an integral part of the Premises, shall not be deemed trade fixtures. Tenant
agrees that it will not proceed to make such alteration or additions, without
having obtained consent from Landlord to do so, and until five (5) days from the
receipt of such consent, in order that Landlord may post appropriate notices to
avoid any liability to contractors or material suppliers for payment for
Tenant’s improvements. Tenant will at all times permit such notices to be posted
and to remain posted until the completion of work. Tenant shall, if required by
Landlord, secure at Tenant’s own cost and expense, a completion and lien
indemnity bond, satisfactory to Landlord, for such work. Tenant further
covenants and agrees that any mechanic’s lien filed against the Premises for
work claimed to have been done for, or materials claimed to have been furnished
to Tenant, will be discharged by Tenant, by bond or otherwise, within ten (10)
days after Tenant receives notice of the filing thereof, at the cost and expense
of Tenant. Any exceptions to the foregoing must be made in writing and executed
by both Landlord and Tenant. See Paragraph 52
     7. TENANT MAINTENANCE. Tenant shall, at its sole cost and expense, keep and
maintain the Premises (including appurtenances) and every part thereof in a high
standard of maintenance and repair, or replacement, and in good and sanitary
condition. Tenant’s maintenance and repair responsibilities herein referred to
include, but are not limited to, janitorization, all windows (interior and
exterior), window frames, plate glass and glazing (destroyed by accident or act
of third parties), truck doors, plumbing systems (such as water and drain lines,
sinks, toilets, faucets, drains, showers and water fountains), electrical
systems (such as panels, conduits, outlets, lighting fixtures, lamps, bulbs,
tubes and ballasts), heating and air conditioning systems (such as compressors,
fans, air handlers, ducts, mixing boxes, thermostats, time clocks, boilers
heaters, supply and return grills), structural elements and exterior surfaces of
the building, store fronts, roofs, downspouts, all interior improvements within
the premises including but not limited to wall coverings, window coverings,
carpet, floor coverings, partitioning, ceilings, doors (both interior and
exterior), including closing mechanisms, latches, locks, skylights (if any),
automatic fire extinguishing systems, and elevators and all other interior
improvements of any nature whatsoever, and all exterior improvements including
but not limited to landscaping, sidewalks, driveways, parking lots including
striping and sealing, sprinkler systems, lighting, ponds, fountains, waterways,
and drains. Tenant agrees to provide carpet shields under all rolling chairs or
to otherwise be responsible for wear and tear of the carpet caused by such
rolling chairs if such wear and tear exceeds that caused by normal foot traffic
in surrounding areas. Areas of excessive wear shall be replaced at Tenant’s sole
expense upon Lease termination. Tenant hereby waives all rights under, and
benefits of, Subsection 1 of Section 1932 and Section 1941 and 1942 of the
California Civil Code and under any similar law, statute or ordinance now or
hereafter in effect. In the event any of the above maintenance responsibilities
apply to any other tenant(s) of Landlord where there is common usage with other
tenant(s), such maintenance responsibilities and charges shall be allocated to
the leased Premises by square footage or other equitable basis as calculated and
determined by Landlord. See Paragraph 53

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     8. UTILITIES. Tenant shall pay promptly, as the same become due, all
charges for water, gas, electricity, telephone, telex and other electronic
communication service, sewer service, waste pick-up and any other utilities,
materials or services furnished directly to or used by Tenant on or about the
Premises during the term of this Lease, including, without limitation, any
temporary or permanent utility surcharge or other exactions whether or not
hereinafter imposed. In the event the above charges apply to any other tenant(s)
of Landlord where there is common usage with other tenant(s), such charges shall
be allocated to the leased Premises by square footage or other equitable basis
as calculated and determined by Landlord.
     Landlord shall not be liable for and Tenant shall not be entitled to any
abatement or reduction of rent by reason of any interruption or failure of
utility services to the Premises when such interruption or failure is caused by
accident, breakage, repair, strikes, lockouts, or other labor disturbances or
labor disputes of any nature, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord.
     9. TAXES.
          A. As Additional Rent and in accordance with Paragraph 4D of this
Lease, Tenant shall pay to Landlord, or if Landlord so directs, directly to the
Tax Collector, all Real Property Taxes relating to the Premises. In the event
the Premises leased hereunder consist of only a portion of the entire tax
parcel, Tenant shall pay to Landlord Tenant’s proportionate share of such real
estate taxes allocated to the leased Premises by square footage or other
reasonable basis as calculated and determined by Landlord. If the tax billing
pertains 100% to the leased Premises, and Landlord chooses to have Tenant pay
said real estate taxes directly to the Tax collector, then in such event it
shall be the responsibility of Tenant to obtain the tax and assessment bills and
pay, prior to delinquency, the applicable real property taxes and assessments
pertaining to the leased Premises, and failure to receive a bill for taxes
and/or assessments shall not provide a basis for cancellation of or
nonresponsibility for payment of penalties for nonpayment or late payment by
Tenant. The term “Real Property Taxes” as used herein, shall mean (i) all taxes,
assessments, levies and other charges of any kind or nature whatsoever, general
and special, foreseen and unforeseen (including all installments of principal
and interest required to pay any general or special assessments for public
improvements and any increases resulting from reassessments caused by any change
in ownership of the Premises) now or hereafter imposed by any governmental or
quasi-governmental authority or special district having the direct or indirect
power to tax or levy assessments, which are levied or assessed against, or with
respect to the value, occupancy or use of, all or any portion of the Premises
(as now constructed or as may at any time hereafter be constructed, altered, or
otherwise changed) or Landlord’s interest therein; any improvements located
within the Premises (regardless of ownership); the fixtures, equipment and other
property of Landlord, real or personal, that are an integral part and located in
the Premises; or parking areas, public utilities, or energy within the Premises,
(ii) all charges, levies or fees imposed by reason of environmental regulation
or other governmental control of the Premises; and (iii) all costs and fees
(including reasonable attorney’s fees) incurred by Landlord in reasonably
contesting any Real Property Tax and in negotiating with public authorities as
to any Real Property Tax. If at any time during the term of this Lease the
taxation or assessment of the Premises prevailing as of the commencement date of
this Lease shall be altered so that in lieu of or in addition to any Real
Property Tax described above there shall be levied, assessed or imposed (whether
by reason of a change in the method of taxation or

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assessment, creation of a new tax or charge, or any other cause) an alternate or
additional tax or charge (i) on the value use or occupancy of the Premises or
Landlord’s interest therein or (ii) on or measured by the gross receipts, income
or rentals from the Premises, on Landlord’s business of leasing the Premises, or
computed in any manner with respect to the operation of the Premises, then any
such tax or charge, however designated, shall be included within the meaning of
the term “Real Property Taxes” for purposes of this Lease. If any Real Property
Tax is based upon property or rents unrelated to the Premises, then only that
part of such Real Property Tax that is fairly allocable to the Premises shall be
included within the meaning of the term “Real Property Taxes”. Notwithstanding
the foregoing, the term “Real Property Taxes” shall not include estate,
inheritance, gift or franchise taxes of Landlord or the federal or state net
income tax imposed on Landlord’s income from all sources. See Paragraph 54
          B. Taxes on Tenant’s Property Tenant shall be liable for and shall pay
ten days before delinquency, taxes levied against any personal property or trade
fixtures placed by Tenant in or about the Premises. If any such taxes on
Tenant’s personal property or trade fixtures are levied against Landlord or
Landlord’s property or if the assessed value of the Premises is increased by the
inclusion therein of a value placed on such personal property or trade fixtures
of Tenant and if Landlord, after written notice to Tenant, pays the taxes based
on such increased assessment, which Landlord shall have the right to do
regardless of the validity thereof, but only under proper protest if requested
by Tenant. Tenant shall upon demand, as the case may be, repay to Landlord the
taxes so levied against Landlord, or the proportion of such taxes resulting from
such increase in the assessment; provided that in any such event Tenant shall
have the right, in the name of Landlord and with Landlord’s full cooperation, to
bring suit in any court of competent jurisdiction to recover the amount of such
taxes so paid under protest, and any amount so recovered shall belong to Tenant.
     10. LIABILITY INSURANCE. Tenant at Tenant’s expense, agrees to keep in
force during the term of this Lease a policy of comprehensive general liability
insurance for bodily injury and property damage occurring in, on or about the
Premises, including parking and landscaped areas, in the amount of $2,000,000
combined single limit. Such insurance shall be primary and noncontributory as
respects any insurance carried by Landlord. The policy or policies effecting
such insurance shall name Landlord as additional insureds, and shall insure any
liability of Landlord, contingent or otherwise, as respects acts or omissions of
Tenant, its agents, employees or invitees or otherwise by any conduct or
transactions of any said persons in or about or concerning the Premises,
including any failure of Tenant to observe or perform any of its obligations
hereunder; shall be issued by an insurance company admitted to transact business
in the State of California; and shall provide that the insurance effected
thereby shall not be canceled, except upon thirty (30) days prior written notice
to Landlord. A copy of said policy shall be delivered to Landlord. If, during
the term of this Lease, in the considered opinion of Landlord’s Lender insurance
advisor, or counsel, the amount of insurance described in this Paragraph 10 is
not adequate, Tenant agrees to increase said coverage to such reasonable amount
as Landlord’s Lender, insurance advisor, or counsel shall deem adequate.
     11. TENANT’S PERSONAL PROPERTY INSURANCE AND WORKMAN’S COMPENSATION
INSURANCE Tenant shall maintain a policy or policies of fire and property damage
insurance in “all risk” form with a sprinkler leakage endorsement insuring the
personal property, inventory, trade fixtures, and leasehold improvements within
the leased

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Premises for the full replacement value thereof. The proceeds from any such
policies shall be used for the repair or replacement of such items so insured.
     Tenant shall also maintain a policy or policies of workman’s compensation
insurance and any other employee benefit insurance sufficient to comply with all
laws.
     12. PROPERTY INSURANCE. Landlord shall purchase and keep in force and as
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord Tenant’s proportionate share (allocated to the leased Premises
by square footage or other equitable-basis as calculated and determined by
Landlord) of the cost of, policy or policies of insurance covering loss or
damage to the Premises (excluding routine maintenance and repairs and incidental
damage or destruction caused by accidents or vandalism for which Tenant is
responsible under Paragraph 7) in the amount of the full replacement value
thereof, providing protection against those perils included within the
classification of “all risks” insurance and flood and/or earthquake insurance,
if available, plus a policy of rental income insurance in the amount of one
hundred (100%) percent of twelve (12) months Basic Rent, plus sums paid as
Additional Rent. If such insurance cost is increased due to Tenant’s use of the
Premises, Tenant agrees to pay to Landlord the full cost of such increase.
Tenant shall have no interest in nor any right to the proceeds of any insurance
procured by Landlord for the Premises. See Paragraph 55
     Landlord and Tenant do each hereby respectively release the other, to the
extent of insurance coverage of the releasing party, from any liability for loss
or damage caused by fire or any of the extended coverage casualties included in
the releasing party’s insurance policies, irrespective of the cause of such fire
or casualty; provided, however, that if the insurance policy of either releasing
party prohibits such waiver, then this waiver shall not take effect until
consent to such waiver is obtained. If such waiver is so prohibited, the insured
party affected shall promptly notify the other party thereof.
     13. INDEMNIFICATION. Landlord shall not be liable to Tenant and Tenant
hereby waives all claims against Landlord for any injury to or death of any
person or damage to or destruction of property in or about the Premises by or
from any cause whatsoever, including, without limitation, gas, fire, oil,
electricity or leakage of any character from the roof, walls, basement or other
portion of the Premises but excluding, however, the negligence of Landlord, its
agents, servants, employees, invitees, or contractors of which negligence
Landlord has knowledge and reasonable time to correct. Except as to injury to
persons or damage to property the principal cause of which is the negligence of
Landlord and subject to the last two sentences of Paragraph 12, Tenant shall
hold Landlord harmless from and defend Landlord against any and all expenses,
including reasonable attorneys’ fees, in connection therewith, arising out of
any injury to or death of any person or damage to or destruction of property
occurring in, on or about the Premises, or any part thereof, from any cause
whatsoever.
     14. COMPLIANCE. Tenant, at its sole cost and expense, shall promptly comply
with all laws, statutes, ordinances and governmental rules, regulations or
requirements now or hereafter in effect; with the requirements of any board of
fire underwriters or other similar body now or hereafter constituted; and with
any direction or occupancy certificate issued pursuant to law by any public
officer; provided, however, that no such failure shall be deemed a breach of the
provisions if Tenant, immediately upon notification, commences to remedy or
rectify said

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failure. The judgment of any court of competent jurisdiction or the admission of
Tenant in any action against Tenant, whether Landlord be a party thereto or not,
that Tenant has violated any such law, statute, ordinance or governmental rule,
regulation, requirement, direction or provision, shall be conclusive of that
fact as between Landlord and Tenant. Tenant shall, at its sole cost and expense,
comply with any and all requirements pertaining to said Premises, of any
insurance organization or company, necessary for the maintenance of reasonable
fire and public liability insurance covering requirements pertaining to said
Premises, of any insurance organization or company, necessary for the
maintenance of reasonable fire and public liability insurance covering the
Premises. See Paragraphs 45 & 53
     15. LIENS. Tenant shall keep the Premises free from any liens arising out
of any work performed, materials furnished or obligation incurred by Tenant. In
the event that Tenant shall not, within ten (10) days following Tenant’s receipt
of notice of the imposition of such lien, cause the same to be released of
record, Landlord shall have, in addition to all other remedies provided herein
and by law, the right, but no obligation, to cause the same to be released by
such means as it deem proper, including payment of the claim giving rise to such
lien. All sums paid by Landlord for such purpose, and all expenses incurred by
it in connection therewith, shall be payable to Landlord by Tenant on demand
with interest at the prime rate as quoted by the Bank of America.
     16. ASSIGNMENT AND SUBLETTING. Tenant shall not assign, transfer, or
hypothecate the leasehold estate under this Lease, or any interest therein, and
shall not sublet the Premises, or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person or entity to occupy or use the
Premises, or any portion thereof, without, in each case, the prior written
consent of Landlord which consent will not be unreasonably withheld. In the
event Tenant is allowed to assign, transfer or sublet the whole or any part of
the Premises, with the prior written consent of Landlord, no assignee,
transferee or subtenants shall assign or transfer this Lease, either in whole or
in part, or sublet the whole or any part of the Premises, without also having
obtained the prior written consent of Landlord. A consent of Landlord to one
assignment, transfer, hypothecation, subletting, occupation or use by any other
person shall not release Tenant from any of Tenant’s obligations hereunder or be
deemed to be a consent to any subsequent similar or dissimilar assignment,
transfer, hypothecation, subletting, occupation or use by any other person. Any
such assignment, transfer, hypothecation, subletting, occupation or use without
such consent shall be void and shall constitute a breach of this Lease by Tenant
and shall, at the option of Landlord exercised by written notice to Tenant,
terminate this Lease. The leasehold estate under this Lease shall not, nor shall
any interest therein, be assignable for any purpose by operation of law without
the written consent of Landlord. As a condition to its consent, Landlord may
require Tenant to pay all reasonable expenses in connection with the assignment,
and Landlord may require Tenant’s assignee or transferee (or other assignees or
transferees) to assume in writing all of the obligations under this Lease and
for Tenant to remain liable to Landlord under the Lease. See Paragraphs 56 & 57
     17. SUBORDINATION AND MORTGAGES. In the event Landlord’s title or leasehold
interest is now or hereafter encumbered by a deed of trust, upon the interest of
Landlord in the land and buildings in which the demised Premises are located, to
secure a loan from a lender (hereinafter referred to as “Lender”) to Landlord,
Tenant shall, at the request of Landlord or Lender, execute in writing an
agreement subordinating its rights under this Lease to

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the lien of such deed of trust, or, if so requested, agreeing that the lien of
Lender’s deed of trust shall be or remain subject and subordinate to the rights
of Tenant under this Lease. Notwithstanding any such subordination, Tenant’s
possession under this Lease shall not be disturbed if Tenant is not in default
and so long as Tenant shall pay all rent and observe and perform all of the
provisions set forth in this Lease. See Paragraph 58
     18. ENTRY BY LANDLORD. Landlord reserves, and shall at all reasonable times
have, the right to enter the Premises to inspect them; to perform any services
to be provided by Landlord hereunder; to make repairs or provide any services to
a contiguous tenant(s); to submit the Premises to prospective purchasers,
mortgagers or tenants; to post notices of nonresponsibility; and to alter,
improve or repair the Premises or other parts of the building, all without
abatement of rent, and may erect scaffolding and other necessary structures in
or through the Premises where reasonably required by the character of the work
to be performed; provided, however that the business of Tenant shall be
interfered with to the least extent that is reasonably practical. Any entry to
the Premises by Landlord for the purposes provided for herein 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, actual or constructive, of Tenant
from the Premises or any portion thereof. See Paragraph 59
     19. BANKRUPTCY AND DEFAULT. The commencement of a bankruptcy action or
liquidation action or reorganization action or insolvency action or an
assignment of or by Tenant for the benefit of creditors, or any similar action
undertaken by Tenant, or the insolvency of Tenant, shall, at Landlord’s option,
constitute a breach of this Lease by Tenant. If the trustee or receiver
appointed to serve during a bankruptcy, liquidation, reorganization, insolvency
or similar action elects to reject Tenant’s unexpired Lease, the trustee or
receiver shall notify Landlord in writing of its election within thirty
(30) days after an order for relief in a liquidation action or within thirty
(30) days after the commencement of any action.
     Within thirty (30) days after court approval of the assumption of this
Lease, the trustee or receiver shall cure (or provide adequate assurance to the
reasonable satisfaction of Landlord that the trustee or receiver shall cure) any
and all previous defaults under the unexpired Lease and shall compensate
Landlord for all actual pecuniary loss and shall provide adequate assurance of
future performance under said Lease to the reasonable satisfaction of Landlord.
Adequate assurance of future performance, as used herein, includes, but shall
not be limited to: (i) assurance of source and payment of rent, and other
consideration due under this Lease; (ii) assurance that the assumption or
assignment of this Lease will not breach substantially any provision, such as
radius, location, use, or exclusivity provision, in any agreement relating to
the above described Premises.
     Nothing contained in this section shall affect the existing right of
Landlord to refuse to accept an assignment upon commencement of or in connection
with a bankruptcy, liquidation, reorganization or insolvency action or an
assignment of Tenant for the benefit of creditors or other similar act. Nothing
contained in this Lease shall be construed as giving or granting or creating an
equity in the demised Premises to Tenant. In no event shall the leasehold estate
under this Lease, or any interest therein, be assigned by voluntary or
involuntary bankruptcy proceeding without the prior written consent of Landlord.
In no event shall this Lease or any

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rights or privileges hereunder be an asset of Tenant under any bankruptcy,
insolvency or reorganization proceedings.
     The failure to perform or honor any covenant, condition or representation
made under this Lease shall constitute a default hereunder by Tenant upon
expiration of the appropriate grace period hereinafter provided. Tenant shall
have a period of ten (10) days from the date of written notice from Landlord
within which to cure any default in the payment of rental or adjustment thereto.
Tenant shall have a period of thirty (30) days from the date of written notice
from Landlord within which to cure any other default under this Lease. Upon an
uncured default of this Lease by Tenant, Landlord shall have the following
rights and remedies in addition to any other rights and remedies available to
Landlord at law or in equity.
               (a) The rights and remedies provided for by California Civil Code
Section 1951.2 including but not limited to, recovery of the worth at the time
of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of rental loss for the same period
that Tenant proves could be reasonably avoided, as computed pursuant to
subsection (b) of said Section 1951.2.
               (b) The rights and remedies provided by California Civil Code
which allows Landlord to continue the Lease in effect and to enforce all of its
rights and remedies under this Lease, including the right to recover rent as it
becomes due, for so long as Landlord does not terminate Tenant’s right to
possession; acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver upon Landlord’s initiative to protect its
interest under this Lease shall not constitute a termination of Tenant’s right
to possession.
               (c) The right to terminate this Lease by giving notice to Tenant
in accordance with applicable law.
               (d) The right and power, after compliance with all statutory
requirements and in any event on not less than three (3) business days prior
written notice to enter the Premises and remove therefrom all persons and
property, to store such property in a public warehouse or elsewhere at the cost
of and for the account of Tenant and to sell such property and apply such
proceeds therefrom pursuant to applicable California law. Landlord, may from
time to time sublet the Premises or any part thereof for such term or terms
(which may extend beyond the term of this Lease) and at such rent and such other
terms as Landlord in its reasonable sole discretion may deem advisable, with the
right to make alterations and repairs to the Premises. Upon each subletting,
(i) Tenant shall be immediately liable to pay Landlord, in addition to
indebtedness other than rent due hereunder, the reasonable cost of such
subletting, including , but not limited to, reasonable attorneys’ fees, and any
real estate commissions actually paid, and the cost of such reasonable
alterations and repairs incurred by Landlord and the amount, if any, by which
the rent hereunder for the period of such subletting (to the extent such period
does not exceed the term hereof) exceeds the amount to be paid as rent for the
Premises for such period or (ii) at the option of Landlord, rents received from
such subletting shall be applied first to payment of indebtedness other than
rent due hereunder from Tenant to Landlord; second, to the payment of any costs
of such subletting and of such alterations and repairs; third to payment of rent
due and unpaid hereunder; and the residue, if any, shall be held by Landlord and
applied in payment of future rent as the same becomes due hereunder. If

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Tenant has been credited with any rent to be received by such subletting under
option (i) and such rent shall not be promptly paid to Landlord by the
subtenant(s), or if such rentals received from such subletting under option
(ii) during any month be less than that to be paid during that month by Tenant
hereunder, Tenant shall pay any such deficiency to Landlord. Such deficiency
shall be calculated and paid monthly. No taking possession of the Premises by
Landlord shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention be given to Tenant. Notwithstanding
any such subletting without termination, Landlord may at any time hereafter
elect to terminate this Lease for such previous breach.
               (e) The right to have a receiver appointed for Tenant upon
application by Landlord, to take possession of the Premises and to apply any
rental collected from the Premises and to exercise all other rights and remedies
granted to Landlord pursuant to subparagraph d above. See Paragraph 60.
     20. ABANDONMENT. Tenant shall not vacate or abandon the Premises at any
time during the term of this Lease; and if Tenant shall abandon, vacate or
surrender said Premises, or be dispossessed by the process of law, or otherwise,
any personal property belonging to Tenant and left on the Premises shall be
deemed to be abandoned, at the option of Landlord, except such property as may
be mortgaged to Landlord. See Paragraph 61
     21. DESTRUCTION. In the event the Premises are destroyed in whole or in
part from any cause, except for routine maintenance and repairs and incidental
damage and destruction caused from vandalism and accidents for which Tenant is
responsible under Paragraph 7. Landlord may, at its option:
               (a) Rebuild or restore the Premises to their condition prior to
the damage or destruction, or
               (b) Terminate this Lease.
     If Landlord does not give Tenant notice in writing within thirty (30) days
from the destruction of the Premises of its election to either rebuild and
restore them or to terminate this Lease, Landlord shall be deemed to have
elected to rebuild or restore them, in which event Landlord agrees, at its
expense, promptly to rebuild or restore the Premises to their condition prior to
the damage or destruction. Tenant shall be entitled to a reduction in rent while
such repair is being made in the proportion that the area of the Premises
rendered untenantable by such damage bears to the total area of the Premises. If
Landlord does not complete the rebuilding or restoration within one hundred
eighty (180) days following the date of destruction (such period of time to be
extended for delays caused by the fault or neglect of Tenant or because of Acts
of God, acts of public agencies, labor disputes, strikes, fires, freight
embargos, rainy or stormy weather, inability to obtain materials, supplies or
fuels, acts of contractors or subcontractors, or delay of the contractors or
subcontractors due to such causes or other contingencies beyond the control of
Landlord), then Tenant shall have the right to terminate this Lease by giving
fifteen (15) days prior written notice to Landlord. Notwithstanding anything
herein to the contrary, Landlord’s obligation to rebuild or restore shall be
limited to the building and interior improvements constructed by Landlord as
they existed as of the commencement date of the Lease and shall not include
restoration of Tenant’s trade fixtures, equipment, merchandise,

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or any improvements, alterations or additions made by Tenant to the Premises,
which Tenant shall forthwith replace or fully repair at Tenant’s sole cost and
expense provided this Lease is not cancelled according to the provisions above.
     Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect. Tenant hereby expressly waives the
provisions of Section 1932, Subdivision 2, in Section 1933, Subdivision 4 of the
California Civil Code.
     In the event that the building in which the Premises are situated is
damaged or destroyed to the extent of not less than 331/2% of the replacement
cost thereof, Landlord may elect to terminate this Lease, whether the Premises
be injured or not. In the event the destruction of the Premises is caused by
Tenant, Tenant shall pay the deductible portion of Landlord’s insurance
proceeds. See Paragraph 62
     22. EMINENT DOMAIN. If all or any part of the Premises shall be taken by
any public or quasi-public authority under the power of eminent domain or
conveyance in lieu thereof, this Lease shall terminate as to any portion of the
Premises so taken or conveyed on the date when title vests in the condemnor and
Landlord shall be entitled to any and all payment, income, rent, award, or any
interest therein whatsoever which may be paid or made in connection with such
taking or conveyance, and Tenant shall have no claim against Landlord or
otherwise for the value of any unexpired term of this Lease. Notwithstanding the
foregoing paragraph, any compensation specifically awarded Tenant for loss of
business, Tenant’s personal property, moving cost or loss of goodwill, shall be
and remain the property of Tenant.
     If any action or proceeding is commenced for such taking of the Premises or
any part thereof, or if Landlord is advised in writing by any entity or body
having the right or power of condemnation of its intention to condemn the
premises or any portion thereof, then Landlord shall have the right to terminate
this Lease by giving Tenant written notice thereof within sixty (60) days of the
date of receipt of said written advice, or commencement of said action or
proceeding, or taking conveyance, which termination shall take place as of the
first to occur of the last day of the calendar month next following the month in
which such notice is given or the date on which title to the Premises shall vest
in the condemnor.
     In the event of such a partial taking or conveyance of the Premises, if the
portion of the Premises taken or conveyed is so substantial that the Tenant can
no longer reasonably conduct its business, Tenant shall have the privilege of
terminating this Lease within sixty (60) days from the date of such taking or
conveyance, upon written notice to Landlord of its intention so to do, and upon
giving of such notice this Lease shall terminate on the last day of the calendar
month next following the month in which such notice is given, upon payment by
Tenant of the rent from the date of such taking or conveyance to the date of
termination.
     If a portion of the Premises be taken by condemnation or conveyance in lieu
thereof and neither Landlord nor Tenant shall terminate this Lease as provided
herein, this Lease shall continue in full force and effect as to the part of the
Premises not so taken or conveyed, and the rent herein shall be apportioned as
of the date of such taking or conveyance so that thereafter the rent to be paid
by Tenant shall be in the ratio that the area of the portion of the Premises not
so taken or conveyed bears to the total area of the Premises prior to such
taking. See Paragraph 63

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     23. SALE OR CONVEYANCE BY LANDLORD. In the event of a sale or conveyance of
the Premises or any interest therein, by any owner of the reversion then
constituting Landlord, the transferor shall thereby be released from any further
liability upon any of the terms, covenants or conditions (express or implied)
herein contained in favor of Tenant, and in such event, insofar as such transfer
is concerned, Tenant agrees to look solely to the responsibility of the
successor in interest of such transferor in and to the Premises and this Lease.
This Lease shall not be affected by any such sale or conveyance, and Tenant
agrees to attorn to the successor in interest of such transferor. See
Paragraph 64
     24. ATTORNMENT TO LENDER OR THIRD PARTY. In the event the interest of
Landlord in the land and buildings in which the leased Premises are located
(whether such interest of Landlord is a fee title interest or a leasehold
interest is encumbered by deed of trust, and such interest is acquired by the
lender or any third party through judicial foreclosure or by exercise of a power
of sale at private trustee’s foreclosure sale. Tenant hereby agrees to attorn to
the purchaser at any such foreclosure sale and to recognize such purchaser as
the Landlord under this Lease. In the event the lien of the deed of trust
securing the loan from a Lender to Landlord is prior and paramount to the Lease,
this Lease shall nonetheless continue in full force and effect for the remainder
of the unexpired term hereof, at the same rental herein reserved and upon all
the other terms, conditions and covenants herein contained.
     25. HOLDING OVER. Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in this Lease. Any holding over after the expiration or other termination of the
term of this Lease, with the consent of Landlord, shall be construed to be a
tenancy from month to month, on the same terms and conditions herein specified
insofar as applicable except that the monthly Basic Rent shall be increased to
an amount equal to one hundred twenty-five (125%) percent of the monthly Basic
Rent required during the last month of the Lease term.
     26. CERTIFICATE OF ESTOPPEL. Either party shall at any time upon not less
than ten (10) days prior written notice from the other party execute,
acknowledge and deliver to the requesting party 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) and the date to which the
rent and other charges are paid in advance, if any, and (ii) acknowledging that
there are not, to the best of such party’s knowledge, any uncured defaults on
the part of the other party hereunder, or specifying such defaults, if any, are
claimed. Any such statement may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises. Tenant’s failure to deliver such
statement within such time shall be conclusive upon the party receiving such
request that this Lease is in full force and effect, without modification except
as may be represented by Landlord; that there are no uncured defaults in the
requesting party’s performance, and that not more than one month’s rent has been
paid in advance.
     27. CONSTRUCTION CHANGES. It is understood that the description of the
Premises and the location of ductwork, plumbing and other facilities therein are
subject to such minor changes as Landlord or Landlord’s architect determines to
be desirable in the course of

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construction of the Premises, and no such changes shall affect this Lease or
entitle Tenant to any reduction of rent hereunder or result in any liability of
Landlord to Tenant. Landlord does not guarantee the accuracy of any drawings
supplied to Tenant and verification of the accuracy of such drawings rests with
Tenant.
     28. RIGHT OF LANDLORD TO PERFORM. All terms, covenants and conditions of
this Lease to be performed or observed by Tenant shall be performed or observed
by Tenant at Tenant’s sole cost and expense and without any reduction in rent.
If Tenant shall fail to pay any sum of money, or other rent required to be paid
by a hereunder or shall fail to perform any other term or covenant hereunder on
its part to be performed, and such failure shall continue for five (5) days
after written notice thereof by Landlord. Landlord, without waiving or releasing
Tenant from any obligation of Tenant hereunder, may, but shall not be obliged
to, make any such payment or perform any such other term or covenant on Tenant’s
part to be performed. All sums so paid by Landlord and all necessary costs of
such performance by Landlord together with interest thereon at the rate of the
prime rate of interest per annum as quoted by the Bank of America from the date
of such payment on performance by Landlord, shall be paid (and Tenant covenants
to make such payment) to Landlord on demand by Landlord, and Landlord shall have
(in addition to any other right or remedy of Landlord) the same rights and
remedies in the event of nonpayment by Tenant as in the case of failure by
Tenant in the payment of rent hereunder.
     29. ATTORNEYS’ FEES.
          A. In the event that either Landlord or Tenant should bring suit for
the possession of the Premises, for the recovery of any sum due under this Lease
or because of the breach of any provision of this Lease, or for any other relief
against the other party hereunder, then all costs and expenses, including
reasonable attorneys’ fees, incurred by the prevailing party therein shall be
paid by the other party, which obligation on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action and
shall be enforceable whether or not the action is prosecuted to judgment.
          B. Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant’s occupancy hereunder, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including a
reasonable attorneys’ fee.
     30. WAIVER. The waiver by either party of the other party’s failure to
perform or observe any term, covenant or condition herein contained to be
performed or observed by such waiving party shall not be deemed to be a waiver
of such term, covenant or condition or of any subsequent failure of the party
failing to perform or observe the same or any other such term, covenant or
condition therein contained, and no custom or practice which may develop between
the parties hereto during the term hereof shall be deemed a waiver of, or in any
way affect, the right of either party to insist upon performance and observance
by the other party in strict accordance with the terms hereof.
     31. NOTICES. All notices, demands, requests, advices or designations which
may be or are required to be given by either party to the other hereunder shall
be in writing. All notices, demands, requests, advices or designations by
Landlord to Tenant shall be sufficiently given, made or delivered if personally
served on Tenant by leaving the same at the Premises of it

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sent by United Stated certified or registered mail, postage prepaid, addressed
to Tenant at the Premises. All notices, demands, requests, advices or
designations by Tenant to Landlord shall be sent by United States certified or
registered mail, postage prepaid, addressed to Landlord at its offices at
Peery/Arrillaga, 2560 Mission College Boulevard, Suite 101, Santa Clara, CA
95054. Each notice, request, demand, advice or designation referred to in this
paragraph shall be deemed received on the date of the personal service or
mailing thereof in the manner herein provided, as the case may be.
     32. EXAMINATION OF LEASE. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument is not effective as a lease or otherwise until its execution
and delivery by both Landlord and Tenant.
     33. DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but
in no event earlier than (30) days after written notice by Tenant to Landlord
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have heretofore been furnished to Tenant in
writing, specifying wherein Landlord has failed to perform such obligations;
provided, however, that if the nature of Landlord’s obligations is such more
than thirty (30) days are required for performance, then Landlord shall not be
in default if Landlord commences performance within such thirty (30) day period
and thereafter diligently prosecutes the same to completion.
     34. CORPORATE AUTHORITY. If Tenant is a corporation (or a partnership),
each individual executing this Lease on behalf of said corporation (or
partnership) represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of said corporation (or partnership) in accordance
with the by-laws of said corporation (or partnership in accordance with the
partnership agreement) and that this Lease is binding upon said corporation (or
partnership) in accordance with its terms. If Tenant is a corporation, Tenant
shall, within thirty (30) days after execution of this Lease, deliver to
Landlord a certified copy of the resolution of the Board of Directors of said
corporation authorizing or ratifying the execution of this Lease.
35. INTENTIONALLY LEFT BLANK
     36. LIMITATION OF LIABILITY. In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord:
               (a) the sole and exclusive remedy shall be against Landlord and
Landlord’s assets;
               (b) no partner of Landlord shall be sued or named as a party in
any suit or action (except as may be necessary to secure jurisdiction of the
partnership);
               (c) no service of process shall be made against any partner of
Landlord (except as may be necessary to secure jurisdiction of the partnership);

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               (d) no partner of Landlord shall be required to answer or
otherwise plead to any service of process;
               (e) no judgment will be taken against any partner of Landlord;
               (f) any judgment taken against any partner of Landlord may be
vacated and set aside at any time without hearing;
               (g) no writ of execution will ever be levied against the assets
of any partner of Landlord;
               (h) these covenants and agreements are enforceable both by
Landlord and also by any partner of Landlord.
     Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or at common law.
     37. SIGNS. No sign, placard, picture, advertisement, name or notice shall
be inscribed, displayed or printed or affixed on or to any part of the outside
of the Premises or any exterior windows of the Premises without the written
consent of Landlord first had and obtained and Landlord shall have the right to
remove any such sign, placard, picture, advertisement, name or notice without
notice to and at the expense of Tenant. If Tenant is allowed to print or affix
or in any way place a sign in, on or about the Premises, upon expiration or
other sooner termination of this Lease, Tenant at Tenant’s sole cost and expense
shall both remove such sign and repair all damage in such a manner as to restore
all aspects of the appearance of the Premises to the condition prior to the
placement of said sign.
     All approved signs or lettering on outside doors shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person reasonably approved of
by Landlord.
     Tenant shall not place anything or allow anything to be placed near the
glass of any window, door partition or wall which may appear unsightly from
outside the Premises.
     38. MISCELLANEOUS AND GENERAL PROVISIONS.
          A. Use of Building Name. Tenant shall not, without the written consent
of Landlord, use the name of the building for any purpose other than as the
address of the business conducted by Tenant in the Premises.
          B. Choice of Law: Severability. This Lease shall in all respects be
governed by and construed in accordance with the laws of the State of
California. If any provision of this Lease shall be invalid, unenforceable or
ineffective for any reason whatsoever, all other provisions hereof shall be and
remain in full force and effect.
          C. Definition of Terms. The term “Premises” includes the space leased
hereby and any improvements now or hereafter installed therein or attached
thereto. The term “Landlord” or any pronoun used in place thereof includes the
plural as well as the singular and

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the successors and assigns of Landlord. The term “Tenant” or any pronoun used in
place thereof includes the plural as well as the singular and individuals,
firms, associations, partnerships and corporations, and their and each of their
respective heirs, executors, administrators, successors and permitted assigns,
according to the context hereof, and the provisions of this Lease shall inure to
the benefit of and bind such heirs, executors, administrators, successors and
permitted assigns.
     The term “person” includes the plural as well as the singular and
individuals, firms, associations, partnerships and corporations. Words used in
any gender include other genders. If there be more than one Tenant the
obligations of Tenant hereunder are joint and several. The paragraph headings of
this Lease are for convenience of reference only and shall have no effect upon
the construction or interpretation of any provision hereof.
          D. Time of Essence. Time is of the essence of this Lease and of each
and all of its provisions.
          E. Quitclaim. At the expiration or earlier termination of this Lease,
Tenant shall execute, acknowledge and deliver to Landlord, within ten (10) days
after written demand from Landlord to Tenant, any quitclaim deed or other
document required by any reputable title company, licensed to operate in the
State of California, to remove the cloud or encumbrance created by this Lease
from the real property of which Tenant’s Premises are a part.
          F. Incorporation of Prior Agreements: Amendments. This agreement and
the exhibits and attachments may be altered, amended or revoked only by an
instrument in writing signed by both Landlord and Tenant. Landlord and Tenant
agree hereby that all prior or contemporaneous oral agreements between and among
themselves and their agents or representatives relative to the leasing of the
Premises are merged in or revoked by this agreement.
          G. Recording. Landlord and Tenant shall record a short form memorandum
hereof in the form attached hereto as Exhibit D.
          H. Amendments for Financing. Tenant further agrees to execute any
amendments reasonably required by a lender to enable Landlord to obtain
financing, so long as Tenant’s rights hereunder are not materially and adversely
affected and there is no change in the Basic Rent, Options to Renew, Lease Term
or Construction obligations of Landlord.
          I. Additional Paragraphs. Paragraphs 39 through 65 are added hereto
and are included as a part of this Lease
          J. Clauses, Plats and Riders. Clauses, plats and riders, if any,
signed by Landlord and Tenant and endorsed on or affixed to this Lease are a
part hereof.
          K. Diminution of Light, Air or View. Tenant covenants and agrees that
no diminution or shutting off of light, air or view by any structure which may
be hereafter erected (whether or not by Landlord) shall in any way affect this
Lease, entitle Tenant to any reduction of rent hereunder or result in any
liability of Landlord to Tenant.

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     IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year first above written.

                 
 
                LANDLORD:   TENANT:    
 
                JOHN ARRILLAGA   QUANTUM CORPORATION,     SEPARATE PROPERTY
TRUST   a Delaware corporation    
 
               
 
               
By
    /s/ John Arrillaga   By     /s/ Joseph C. Shepela    
 
               
 
  John Arrillaga, Trustee            
 
               
 
      Title     VP Human Resources    
 
               
 
                RICHARD T. PEERY             SEPARATE PROPERTY TRUST            
 
               
By
    /s/ Richard Peery            
 
               
 
  Richard T. Peery, Trustee            

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     Paragraphs 39 through 65 to Lease Agreement Dated October 31, 1989, By and
Between JOHN ARRILLAGA AND RICHARD T. PEERY SEPARATE PROPERTY TRUSTS, as
Landlord, and QUANTUM CORPORATION, a Delaware corporation, as Tenant for 176,516
± Square Feet of Space Located at the corner of Bellew and McCarthy Boulevard,
Milpitas, California.
     39. BASIC RENT: In accordance with Paragraph 4A, subject to the provisions
of Paragraph 40 and 41, Basic Rent shall be payable as follows during the
indicated months of the term of the Lease based upon the gross leasable area
within the building that is part of the Premises:

          Period   Monthly Basic Rent  
Months 1-17
       
(plus the partial calendar month, if any,
       
following the Commencement Date)
  $1.00/sf
 
       
Months 18-29
  $1.05/sf
 
       
Months 30-41
  $1.10/sf
 
       
Months 42-53
  $1.15/sf
 
       
Months 54-65
  $1.20/sf
 
       
Months 66-77
  $1.25/sf
 
       
Months 78-89
  $1.30/sf
 
       
Months 90-101
  $1.35/sf
 
       
Months 102-113
  $1.40/sf
 
       
Months 114-125
  $1.45/sf
 
       
Months 126-137
  $1.50/sf
 
       
Months 138-149
  $1.55/sf
 
       
Months 150-161
  $1.60/sf
 
       
Months 162-173
  $1.65/sf
 
       
Months 174-185
  $1.70/sf

     Example of calculation for Basic Rent per month for the period commencing
with the first through the seventeenth month of said Lease:

         
Square footage of Building
    176,516  
Per square foot Basic Monthly Rent:
    x$1.00  
 
     
 
       
 
  [Illegible]

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     40. BASIC RENT REDUCTION DURING PHASE IN PERIOD: For the period commencing
on the Commencement Date through May 31, 1991, Landlord acknowledges that Tenant
may occupy the building on a phased-in basis. In the event Tenant does not
occupy the entire building from the Commencement Date of this Lease, it is
agreed that Tenant’s monthly Basic Rent will be reduced by $1.00 per square foot
on the square footage not occupied. This reduction in Basic Rent is only allowed
from the Commencement Date through May 31, 1991 (but not under any circumstances
after May 31, 1991). In no event whatsoever shall Tenant be entitled to such
reduction in rent and this Paragraph 40 shall not be considered in effect and
binding on Landlord after May 31, 1991 regardless of the Commencement Date of
this Lease and regardless of the reason for any delays in the Commencement date
of this Lease. In the event Tenant occupies the Premises on a phased in basis in
accordance with the foregoing, Landlord and Tenant agree to execute an amendment
to this Lease reflecting the number of square feet so occupied and adjusting the
Basic Rent accordingly. It is further agreed that during the phase-in period
Tenant will be responsible for paying all Additional Rent expense as outlined in
Paragraph 4D on the entire building from the Commencement Date.
     41. LEASE TERM AND COMMENCEMENT DATE: The following provisions relate to
the commencement and duration of the term of this Lease:
          A. Lease Term: The term of this Lease shall commence on the
“Commencement Date” (as defined herein) and shall continue for a period of
fifteen (15) years and five (5) months, plus the partial calendar month, if any,
in which the Commencement Date occurs, subject to (i) earlier termination in
accordance with the provisions of this Lease, and (ii) extension pursuant to the
options to renew granted by Paragraphs 42 and 43. By way of example only, if the
Commencement Date occurs on December 15, 1990, the term of the Lease shall
continue until May 30, 2006 (i.e., a period of 15 years and 5 calendar months,
along with the partial calendar month following December 15, 1990 until
December 31, 1990).
          B. Commencement Date Defined: As used herein, the term “Commencement
Date” shall mean the later to occur of the following: (i) the date upon which
the “Improvements” are “Substantially Completed”; or (ii) December 15, 1990;
provided, however, that if prior to the later of such dates Tenant’s operating
personnel enter into occupancy of the Premises and commence the operation of
Tenant’s business within the Premises, the Commencement Date shall be the date
such personnel of Tenant so enter into occupancy of the Premises. The term
“Substantially Completed” and/or “Substantial Completion” shall mean the date
when all of the following have occurred with respect to the Improvements in
question: (i) the construction of the Improvements in question has been
substantially completed in accordance with the approved plans therefor except
for punch list items which do not prevent Tenant from reasonably using the
Premises to conduct Tenant’s business; (ii) Landlord has executed a certificate
or statement representing that the Improvements in question have been
substantially completed in accordance with the plans and specifications therefor
except for punch list items which do not prevent Tenant from reasonably using
the Premises to conduct Tenant’s business; and (iii) the Building Department of
the City of Milpitas has completed its final inspection of such Improvements and
has “signed off” the building inspection card approving such work as complete
except for punch list items which do not prevent Tenant from reasonably using
the Premises to conduct Tenant’s business. Notwithstanding the foregoing,
Substantial Completion

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of the Interior Improvements shall not be deemed to have occurred until Landlord
has obtained final or [Illegible] that do not prevent Tenant from occupying the
improvements.
          C. Lease Terms Co-extensive: It is acknowledged that (i) concurrently
with the execution of this Lease, Landlord and Tenant are also executing a lease
dated October 31, 1989 affecting adjacent property upon which is to be
constructed a building for Tenant’s use consisting of approximately 155,734
square feet (the “Companion Lease”), and (ii) it is the intention of the parties
that the term of this Lease be co-extensive with the term of the Companion
Lease, such that the terms of both leases expire on the same date. To that end,
in the event that following the date upon which the Commencement Date of this
Lease and the comparable “Commencement Date” of the Companion Lease become
established as a date certain following completion of improvements and
satisfaction of any other conditions related to determining such dates, and if
such dates are not the same, then whichever date occurs later shall be the
expiration date of the lease term for both leases (subject to the right of
Tenant to extend either lease pursuant to the options to extend granted in the
two leases). It is acknowledged that the implementation of this paragraph may
result in an extension of the term of this Lease, in which event Tenant shall
continue to pay rent at the rate applicable for the period immediately prior to
the adjusted lease term expiration date. As soon as the parties are able to
implement the provisions of this paragraph because the Commencement Date of this
Lease and “Commencement Date” of the Companion Lease have been determined
following completion of improvements and satisfaction of other appropriate
conditions, the parties shall execute amendments to this Lease and the Companion
Lease establishing the applicable Commencement Date, the expiration date of the
term of the leases in accordance with the foregoing provisions of this
Paragraph 41C, the actual rent based upon the measurements of the completed
building covered by such lease as certified prior to the Commencement Date by an
architect or general contractor reasonably approved by the parties, and the
actual date for each rent adjustment provided for in each lease, based upon the
actual Commencement Date.
     42. FIRST FIVE-YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant an
option to extend the term of this Lease for an additional five (5) year period
upon the following terms and conditions:
          A. If Tenant elects to exercise the option to extend, Tenant shall
give Landlord written notice of Tenant’s exercise of this option to extend at
least one hundred eighty (180) days prior to the expiration of the Basic Term
hereof, in which event the Lease shall be considered extended for an additional
five (5) year period upon the same terms and conditions as this Lease, absent
this Paragraph 42 and subject to the rental as set forth below. In the event
that Tenant fails to timely exercise Tenant’s option as set forth herein in
writing, Tenant shall have no further option to extend this Lease, and this
Lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 42.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

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              Monthly Period   Basic Rent
Months 1-12
  $1.75/sf
Months 13-24
  $1.80/sf
Months 25-36
  $1.85/sf
Months 37-48
  $1.90/sf
Months 49-60
  $1.95/sf

          C. Notwithstanding anything concerned herein, Tenant may not exercise
the option to renew granted by this Paragraph 42 at any time that Tenant is in
material default of its obligations under this Lease, if Tenant has received
written notice from Landlord that Tenant is in default, and such default has not
been timely cured within the time period provided for in this Lease; provided,
however, that if such default of Tenant is not for money due under this Lease
and cannot be cured, and if Landlord does not elect to terminate this Lease as a
result of such non-curable default by Tenant, Tenant may exercise the option to
extend granted by this Paragraph 42 notwithstanding such non-curable default.
     43. SECOND FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the
Lease for an additional five (5) year period as set forth in Paragraph 42,
Landlord hereby grants to Tenant an option to extend the term of this Lease for
an additional five (5) year period upon the following terms and conditions:
          A. Tenant shall give Landlord written notice of Tenant’s exercise of
this option to extend at least one hundred eighty (180) days prior to the
expiration of the Lease term as extended pursuant to Paragraph 42, in which
event the Lease shall be considered extended for an additional five (5) year
period upon the same terms and conditions as this Lease, absent this
Paragraph 43A and subject to the rental as set forth below. In the event that
Tenant fails to timely exercise Tenant’s option as set forth herein in writing,
Tenant shall have no further option to extend this Lease, and this Lease shall
continue in full force and effect for the full remaining term hereof, absent
this Paragraph 43.
          B. The monthly rental for the option period shall be as follows in the
event the option is exercised:

              Monthly Period   Basic Rent
Months 1-12
  $2.00/sf
Months 13-24
  $2.05/sf
Months 25-36
  $2.10/sf
Months 37-48
  $2.15/sf
Months 49-60
  $2.20/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to extend granted by this Paragraph 43 at any time that Tenant is in
material default of its obligations under this Lease, if Tenant has received
written notice from Landlord that Tenant is in default, and such default has not
been timely cured within the time period provided for in this

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Lease; provided, however, that if such default of Tenant is not for money due
under this Lease and cannot be cured, and if Landlord does not elect to
terminate this Lease as a result of such non-curable default by Tenant, Tenant
may exercise the option to extend granted by this Paragraph 43 notwithstanding
such non-curable default.
     44. ASSESSMENT CREDITS: The demised property herein is subject to a special
assessment levied by the City of Milpitas in Improvement District No. 12. As a
part of said special assessment proceedings, additional bonds were sold and
assessments levied to provide for construction contingencies and reserve funds.
Interest will be earned on such funds created for contingencies and on reserve
funds which will be credited for the benefit of said assessment district. To the
extent surpluses are created in said district through unused contingency funds,
interest earnings or reserve funds, such surpluses shall be deemed the property
of Landlord. Notwithstanding that such surpluses may be [Illegible] additional
rent if, and at the time of any such credit of surpluses, an amount equal to all
such surpluses so credited.
     45. HAZARDOUS MATERIALS: The parties agree as follows with respect to the
existence or use of hazardous material on the Premises:
          A. Tenant shall have no obligation to “clean up”, to comply with any
law regarding, or to reimburse, release, indemnify, or defend Landlord with
respect to any hazardous materials or wastes which Tenant or other parties on
the Premises did not store, dispose, or transport in, use, or cause to be on the
Premises in violation of applicable law during the term of this Lease. Any
handling, transportation, storage, treatment, disposal or use of hazardous
materials by Tenant or other parties in or about the Premises during the term of
this Lease shall strictly comply with all applicable laws and regulations.
Tenant will be 100 percent liable and responsible for any and all “clean up” of
said toxic waste and/or hazardous materials contamination which Tenant, its
agents, or future subtenants, if any, does store, dispose, or transport in, use
or cause to be on the Premises in violation of applicable law or governing
agency(s) (or which originate on the Premises during the term of this Lease from
any manner whatsoever, including but not limited to, dumping by others), and
will indemnify Landlord and hold Landlord harmless from any liabilities,
demands, costs, expenses and damages, including attorney fees incurred as a
result of any claims resulting from such contamination, or from any claims for
personal injury or property damage or diminution in the value of the Premises
caused by the use, storage, disposal or transportation of hazardous materials on
the Premises by Tenant or other parties during the term of this Lease. It is
agreed that the Tenant’s responsibilities related to toxic waste and hazardous
materials will survive the termination date of the Lease. Tenant agrees to
complete compliance with governmental regulations regarding use or removal or
remediation of Hazardous Materials used, stored, disposed, transported or caused
to be on the Premises by Tenant or its agents or subtenants, or which originate
on the Premises during the term of this Lease, and prior to the termination of
said Lease Tenant agrees to follow the proper closure procedures and will obtain
a clearance from the local fire department and/or the appropriate city agency.
Tenant also agrees to install such toxic waste and/or hazardous materials
monitoring devices as Landlord reasonably deems necessary to monitor any use of
hazardous materials by Tenant, its agents or subtenants, originating from the
Premises during the Lease term, if recommended by a qualified environmental
consulting firm.

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          B. Landlord hereby makes the following representations to Tenant, each
of which is made only to the best of Landlord’s knowledge as of the date
Landlord executes this Lease, without any inquiry or investigation having been
made or required by Landlord regarding this subject, nor does Landlord have any
obligation to investigate or make inquiry regarding the subject:
               (1) The soil and ground water on or under the Premises does not
contain hazardous materials in amounts which violate any laws to the extent that
any governmental entity could require either Landlord or Tenant to take any
remedial action with respect to such hazardous materials.
               (2) During the time that Landlord has owned the Premises,
Landlord has received no notice of (i) any violation, or alleged violation, of
any law that has not been corrected to the [Illegible]
               (3) any pending investigation by any governmental agency
concerning the Premises relating to hazardous materials.
          C. Landlord and Tenant shall each give written notice to the other as
soon as reasonably practicable of (i) any communication received from any
governmental authority concerning hazardous materials which relates to the
Premises, and (ii) any contamination of the Premises by hazardous materials
which constitutes a violation of any law. Attached as Exhibit “C” hereto is a
list of hazardous materials that Tenant intends to use at the Premises. If
during the Lease term Tenant proposes to use other hazardous materials at the
Premises, Tenant shall inform Landlord of such use, identifying the hazardous
materials and the manner of their use, storage and disposal, and shall agree
(i) to use, store and dispose of such materials strictly in compliance with all
laws and (ii) that the indemnity set forth in paragraph 45A shall be applicable
to Tenant’s use of such material.
          D. Landlord or Tenant may, at any time, cause testing wells to be
installed on the Premises, and may cause the ground water to be tested to detect
the presence of hazardous material by the use of such tests as are then
customarily used for such purposes. Testing wells installed by Tenant shall be
paid for by Tenant. If tests conducted by Landlord disclose that Tenant has
violated any hazardous materials laws, or Tenant or parties on the Premises
during the term of this Lease have contaminated the Premises as determined by
regulatory agencies pursuant to hazardous materials laws, or that Tenant has
liability to Landlord pursuant to paragraph 45A, then Tenant shall pay for 100%
of the cost of the test and all related expense. Prior to the expiration of the
Lease term, Tenant shall remove any testing wells it has installed at the
Premises, and return the Premises to the condition existing prior to the
installation of such wells, unless Landlord requests in writing that Tenant
leave all or some of the testing wells in which instance the wells requested to
be left shall not be removed.
          E. If any tests performed by Tenant or Landlord prior to the
Commencement Date disclose hazardous materials at the Premises, Landlord at its
expense will promptly take all reasonable action required by law with respect to
the existence of such materials at the Premises. The Commencement Date shall not
be delayed because of such action by Landlord unless occupation of the Premises
is prohibited by law.

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          F. The obligations of Landlord and Tenant under this Paragraph 45
shall survive the expiration or earlier termination of the term of this Lease.
The rights and obligations of Landlord and Tenant with respect to issues
relating to hazardous materials are exclusively established by this
Paragraph 45.
     46. APPROVALS: Whenever this Lease requires the approval or consent of
either Landlord or Tenant before an action may be taken, such approval or
consent shall not be unreasonably withheld or delayed.
     47. LANDLORD’S RIGHT TO TERMINATE: It is understood that the Premises to be
leased by Tenant are to be constructed by Landlord, and that Landlord is
required to obtain the necessary building permits for the building shell before
construction of said Premises can commence. Therefore, it is agreed that in the
event Landlord cannot obtain all the necessary building permits for the building
shell by June 1, 1990, then either Landlord or Tenant can terminate this Lease
by written notice to the other party given within thirty (30) days thereafter,
without any liability to the other party of any type whatsoever, and that this
Lease Agreement will be null and void [Illegible] to use its best efforts to
obtain the required permits by June 1, 1990.
     48. CROSS DEFAULT: As set forth in Paragraph 41C, Landlord and Tenant have
entered into another lease dated October 31, 1989 referred to herein as the
“Companion Lease” affecting property contiguous to the Premises leased
hereunder. As a material part of the consideration for the execution of this
Lease by Landlord, it is agreed between Landlord and Tenant that a default under
this Lease, or a default under said Companion Lease dated October 31, 1989 may,
at the option of Landlord, be considered a default under both leases, in which
event Landlord shall be entitled (but in no event required) to apply all rights
and remedies of Landlord under the terms of one Lease to both Leases including,
but not limited to, the right to terminate one or both of said leases by reason
of a default under said Companion Lease dated October 31, 1989 or hereunder.
     49. SUBDIVISION: With respect to the development of the Premises:
          A. The parties acknowledge that as of the date this Lease is signed by
the last party (the “Effective Date”) the Premises is not constituted as a
separate legal parcel, but is part of a larger parcel consisting of
approximately 37.096 acres (“Larger Parcel”), all of which is shown by the site
plan attached to the lease as Exhibit “A”. Landlord agrees to use reasonable
efforts to cause the Premises to be constituted as a separate legal parcel
containing approximately 11.848 acres in the approximate area and configuration
shown and outlined within the area marked in red on Exhibit “A”, and to use
reasonable efforts to cause lot 1, as shown on Exhibit “A” to the Companion
Lease and lots 3 through 5 as shown on Exhibit “A” to the Option Agreement (the
“Option”) between Landlord and Tenant of even date herewith to be subdivided by
means of the recordation of a subdivision map by July 1, 1990. In causing such
property to be subdivided, Landlord and Tenant agree to consent to reasonable
lot line modifications as required by the City of Milpitas; provided, however,
that the configuration of the Premises shall be established in such manner that
does not result in a material reduction in the Improvements or in parking,
access, or landscape amenities which are shown on the site plan attached to this
Lease as Exhibit “A”. Tenant agrees to reimburse Landlord for actual expenses
paid by Landlord in the

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preparation, processing and recordation of such subdivision map and to meet
other requirements necessary to make said lots 1-5 separate lots; provided,
however, Tenant’s total reimbursement obligation pursuant hereto, the Companion
Lease and the Option shall not exceed Twenty Five Thousand Dollars ($25,000). At
such time is Landlord causes any such subdivision to be completed, Landlord and
Tenant shall execute an amendment to this Lease which shall set forth the
description of the Premises resulting from the subdivision.
          B. Landlord and Tenant agree that the Premises and the Larger Parcel
during (and limited to) the term of this Lease shall be developed and used only
in accordance with a master plan, developed by Landlord. The parties have
mutually agreed to a Master Plan for the general development of the entire
37.096 ± acre site which is attached hereto as Exhibit “A” and entitled “Master
Site Plan”. Said Master Site Plan sets forth the buildings and land to be leased
under this Lease and the Companion Lease (Building 1 and 2 on Lots 1 and 2), and
the buildings and land proposed to be developed on the remainder of the property
(Building 3, 4, and 5 to be constructed on Lots 3, 4, and 5 respectively) as
well as the general location of the parking and landscaping pertaining thereto.
The parties agree that the Master Site Plan may be modified provided that (i) a
perimeter driveway is developed in front of [Illegible] generally runs near
[Illegible] recreation area at the rear of Lot 4 (as shown on the Site Plan) is
developed when a building is constructed on Lot 4, (iii) all buildings will be
similar and generally architecturally compatible, and (iv) a landscape area is
developed along the frontage of all streets between the street and parking area
closest to the street. The parties agree that (i) Landlord may change the master
plan, shape and sizes of the buildings, parking and landscaping as long as the
general development concept set forth above is generally followed by Landlord,
and (ii) any successor or assign of Landlord or Tenant shall be required to
consent and agree to develop the Premises and the Larger Parcel in accordance
with the foregoing, and shall be deemed to have assumed the obligation to so
develop such property by acceptance of a deed, assignment or other means of
transfer of Landlord’s or Tenant’s interest in such property or any portion
thereof, as the case may be. Further, the memorandum of lease to be recorded by
Landlord and Tenant pursuant to paragraph 38G shall contain the following
statement:
“The Lease provides that from and after the commencement date of the Lease and
continuing for a period of fifteen years the Premises and the larger 37.096 acre
parcel in which the Premises were originally included, shall be developed by the
parties to the Lease or their successors or assigns, as more particularly set
forth in the Lease, so that (i) a perimeter driveway is developed in front of
each building which generally runs near and parallel with the street surrounding
the 37 ± acre site, (ii) a landscape area is developed along the frontage of all
streets between the street and parking area closest to the street, (iii) a
landscape and recreation area at the rear of Lot 4 (as shown on the Site Plan
identified in the Lease) is developed when a building is constructed on Lot 4,
and (iv) all buildings will be similar and generally architecturally compatible,
it being agreed that Landlord may change the shape and sizes of the buildings,
parking and landscaping as long as the general development concept set forth
above and in the Lease is generally followed by Landlord. Tenant understands
that the lots shown on the Master Site Plan described in the Lease are for lease
purposes only and that the lots have not been legally subdivided and do not
constitute separate legal lots, but Landlord agrees to use reasonable efforts to
cause Lots 1-5 to be subdivided in accordance

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with the approved Master Plan by July 1, 1990. If a Public Agency requires
modifications to the lot lines as shown on the Master Plan, the parties agree to
reasonable lot line modifications. Tenant agrees to reimburse Landlord for
actual expenses paid by Landlord in the processing and recordation of such
subdivision map and to meet all other requirements necessary to make said Lots
1-5 separate lots; provided, however, Tenant’s total reimbursement obligation
(pursuant to all agreements between Landlord and Tenant) shall in no event
exceed Twenty-Five Thousand Dollars ($25,000.00).”
     50. LIMITATION ON IMPOSITION OF LATE CHARGE: Notwithstanding anything
contained in Paragraph 4C, if Tenant is delinquent in the payment of Basic Rent
or Additional Rent and is subject to a late charge, Landlord agrees to waive the
late charge if the Basic Rent or Additional Rent due is paid within five days of
Landlord’s written notice to Tenant of the delinquent amount owed and provided
Tenant has not been delinquent in its payment of Basic Rent or Additional Rent
owed under said Lease during the twelve (12) month period preceding the rent
delinquency in question.
     51. SECURITY DEPOSIT: The following provisions shall modify paragraph 4F:
          A. [Illegible] within thirty (30) days after the expiration or earlier
termination of the Lease term and after Tenant has vacated the Premises,
Landlord shall return to Tenant the entire Security Deposit except for amounts
that Landlord has deducted therefrom that are needed by Landlord to cure
defaults of Tenant under the Lease or compensate Landlord for damages for which
Tenant is liable pursuant to this Lease. The use or disposition of the Security
Deposit shall be subject to the provisions of California Civil Code
Section 1950.7.
          B. Tenant shall have the option of satisfying its obligation with
respect to an amount equal to one-half (1/2) of the Security Deposit by
providing to Landlord, at Tenant’s sole cost, a letter of credit which (i) is
drawn upon an institutional lender reasonably acceptable to Landlord, (ii) is in
the amount of one-half (1/2) of the Security Deposit, (iii) is for a term of at
least twelve (12) months, (iv) with respect to any letter of credit in effect
within the six month period immediately prior to the expiration of the Lease
term, shall provide that the term of such letter of credit shall extend at least
thirty (30) days past the Lease expiration date, (v) may be drawn upon by
Landlord upon submission of a declaration of Landlord that Tenant is in default
(as defined in Paragraph 19 and as modified by Paragraph 60). Landlord shall not
be obligated to furnish proof of default to such institutional lender, and
Landlord shall only be required to give the institutional lender written
notification that Tenant is in default and upon receiving such written
notification from Landlord the institutional lender shall be obligated to
immediately deliver cash to Landlord equal to the amount Landlord may spend or
become obligated to spend by reason of Tenant’s default or to compensate
Landlord for any loss or damage which Landlord may suffer by reason of Tenant’s
default up to 1/2 of the total Security Deposit, (vi) shall provide that if the
letter of credit is not renewed, replaced or extended within twenty (20) days of
its expiration date the issuer of the credit shall automatically make payment of
the amount of the letter of credit directly to Landlord after the date which is
twenty (20) days before the expiration date, and no later than the expiration
date, without Landlord being required to make demand upon the letter of credit,
and (vii) is otherwise in form and content reasonably satisfactory to Landlord.
If Tenant provides Landlord with a letter of credit meeting the foregoing

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requirements, one-half (1/2) of the cash Security Deposit (i.e., $238,296.60 of
the $476,593.20 Deposit) shall be returned to Tenant by Landlord inasmuch as the
cash deposit remaining and the Letter of Credit equal the total Security Deposit
required in Paragraph 4F. If Tenant defaults with respect to any provisions of
this Lease, including but not limited to provisions relating to the payment of
rent, Landlord may (but shall not be required to) draw down on the letter of
credit for payment of any sum which Landlord may spend or become obligated to
spend by reason of Tenant’s default, or to compensate Landlord for any loss or
damage which Landlord may suffer by reason of Tenant’s default. Landlord and
Tenant acknowledge that such letter of credit will be treated as if it were a
cash security deposit, and such letter of credit may be drawn down upon by
Landlord upon demand and presentation of evidence of the identity of Landlord to
the issuer, in the event that Tenant defaults with respect to any provision of
this Lease and such default is not cured within any applicable cure period.
Notwithstanding anything to the contrary in this Lease, Landlord shall not be
obligated to furnish proof of default to such institutional lender and Landlord
is only required to give the institutional lender written notification that
Tenant is in default and upon receiving such written notification from Landlord
the institutional lender shall be obligated to immediately deliver cash to
Landlord equal to the amount Landlord may spend or become obligated to spend by
reason of Tenant’s default, or to compensate Landlord [Illegible] acknowledges
that it is not entitled to draw down such letter of credit unless Landlord would
have been entitled to draw upon the cash security deposit pursuant to the terms
of Paragraph 4.F of the Lease. Concurrently with the delivery of the required
information to the issuer, Landlord shall deliver to Tenant written evidence of
the default upon which the draw down was based, together with evidence that
Landlord has provided to Tenant the written notice of such default which was
required under the applicable provision of the Lease, and evidence of the
failure of Tenant to cure such default within the applicable grace period
following receipt of such notice of default. Any proceeds received by Landlord
by drawing upon the letter of credit shall be applied in accordance with the
provisions governing the Security Deposit imposed by Paragraph 4F and this
Paragraph 51. If Landlord draws upon the letter of credit, thereafter Tenant
shall once again shall have the right to post a letter of credit in place of
one-half (1/2) of a cash Security Deposit so long as Tenant is not then in
default. In any event Tenant will be obligated to replenish the amount drawn to
restore the Security Deposit to its original amount as provided for in paragraph
4F. If any portion of the letter of credit is used or applied pursuant hereto,
Tenant shall, within ten (10) days after receipt of a written demand therefor
from Landlord, restore and replace the value of such security by either
(i) depositing cash with Landlord in the amount equal to the sum drawn down
under the letter of credit, or (ii) increasing the letter of credit to its value
immediately prior to such application. Tenant’s failure to replace the value of
the security as provided in the preceding sentence shall be a material breach of
its obligation under this Lease.
     52. ALTERATIONS MADE BY TENANT: The provisions of this Paragraph 52 shall
modify Paragraphs 5 and 6:
          A. As used herein, the term “Alteration” shall mean any alteration,
addition or improvement made by Tenant to the Premises during the term of the
Lease, but shall not include Tenant’s trade fixtures so long as such trade
fixtures are not installed in such a manner that they have become an integral
part of the building.
          B. Tenant shall not construct any Alterations or otherwise alter the
Premises without Landlord’s prior written approval if the total cost of such
Alterations exceeds $20,000

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per the scope of any single remodeling job to the Premises, or if such
Alteration is structural in nature. Any other non-structural Alteration of less
than $20,000 for the total cost of the remodeling job may be undertaken by
Tenant without Landlord’s prior written approval but with the understanding that
Tenant shall be obligated to restore the Premises as set forth in Paragraph 5 at
the termination of this Lease, except as otherwise provided in Paragraph 52.D.
Notwithstanding the foregoing, Tenant shall have the right to reconfigure
modular freestanding walls and partitions without Landlord’s prior’ consent,
which have been installed by Tenant and paid for by Tenant.
          C. At all times during the Lease Term (i) Tenant shall maintain and
keep up dated “as-built” plans for all Alterations constructed by Tenant, and
(ii) Tenant shall provide to Landlord copies of such “as-built” plans as such
Alterations are made.
          D. Tenant shall have the right to remove at any time during the Lease
term or prior to the expiration thereof any (i) process equipment such as clean
hoods, thermal cycling chambers, freon piping, high temperature furnaces, air
handlers and special air-conditioning, (ii) process systems such as compressed
air or processed exhaust systems and (iii) the clean room modules and all
related process equipment, which are paid for 100% by Tenant (excluding building
[Illegible] part of the building not related to Tenant’s clean room modules or
other special purpose process equipment or systems), which systems, equipment
and modules the parties agree for the purposes of this Lease shall be deemed to
be trade fixtures, so long as Tenant repairs all damage caused by the
installation and/or removal thereof, returns the Premises prior to the
termination of the Lease to the condition existing prior to the installation of
such item, and repairs and restores any so-called “doughnuts” or gaps in the
roof and/or floor tiles and/or ceiling and lighting resulting from such removal.
At the time Tenant requests the consent of Landlord to approve the installation
of an Alteration requiring the consent of Landlord, Tenant shall seek from
Landlord a written statement of whether or not Landlord will require Tenant to
remove such Alteration and restore all or part of the Premises as required by
Landlord in accordance with this paragraph and Paragraph 5 at the expiration or
earlier termination of the term of the Lease. If Tenant does not obtain from
Landlord a statement in writing that Landlord will not require such Alteration
to be removed, then at the expiration or sooner termination of the term of the
Lease, it is agreed that Tenant may be required to remove all or part of such
Alterations, and return the Premises to the condition existing prior to the
installation of such Alterations as provided for in Paragraph 5 above. In
addition, if Tenant has installed Alterations without Landlord’s consent, if
Landlord so requires, Tenant shall also remove all or part of such Alterations
so installed without Landlord’s consent as Landlord may designate and return the
Premises to the condition existing prior to the installation of such Alteration.
Alterations for which Landlord has given its written consent to Tenant that such
Alteration need not be removed, shall not be removed by Tenant at the expiration
or earlier termination of the term of the Lease.
          E. At all times during the term of the Lease, Tenant shall have the
right to install and remove trade fixtures as defined in the Lease and installed
and paid for by Tenant, so long as Tenant repairs all damage caused by the
installation thereof and returns the Premises to the condition existing prior to
the installation of such fixtures and repairs and restores any so called
“doughnuts” or gaps in the roof and/or floor (including floor structure,
sub-floor and

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appropriate floor covering for said area) and/or floor tiles and/or ceiling
tiles and lighting resulting from such removal.
     53. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: The provisions of this Paragraph 53 shall modify Paragraphs 7
and 14:
          A. If during the last five (5) years of the term of the Lease if
Tenant has not extended the Lease as provided for in Paragraphs 42 and 43, or
during either of the five (5) year extension periods permitted by Paragraphs 42
and 43, it becomes necessary (due to any governmental requirement for continued
occupancy of the Premises) to make structural improvements required by laws
enacted or legal requirements imposed by governmental agency(s) after the
Commencement Date, and the cost for each required work or improvement exceeds
$100,000, then if such legal requirement is not imposed because of Tenant’s
specific use of the Premises and is not “triggered” by Tenant’s Alterations or
Tenant’s application for a building permit or any other governmental approval
(in which instance Tenant shall be responsible for 100% of the cost of such
improvements), Landlord shall be responsible for paying the cost of such
improvement and constructing such improvement, subject to a cash contribution
from Tenant of a portion of the cost thereof as provided for and calculated in
Paragraph 53B.
          B. [Illegible] improvement pursuant [Illegible] such improvement,
Tenant shall make the following contribution in cash to Landlord for the cost
thereof prior to the commencement of the work by Landlord. It is agreed that
Tenant shall pay to Landlord 100% of the cost of the first $100,000.00 worth of
each improvement. After the first $100,000.00, all costs above $100,000.00 shall
be divided by 15 and multiplied by the time period remaining in the last five
years of the Lease term from the date work on such improvement commences.
     For example, if the cost of such improvement was $400,000 and there was one
year and six months remaining in the Lease term when the work commenced, then
Tenant would be responsible for reimbursing Landlord in cash $130,000 computed
as follows:

                 
Total Cost of Work
          $ 400,000.00  
Tenant Responsible for 1st $100,000
            -100.000.00  
 
             
Total Amount To Be Amortized
            300,000.00  
 
               
$300,000.00/15 = $20,000/yr. x 1.5 yrs
    =     $ 30,000.00  
 
               
Tenant responsible for $100,000 + 30,000
    =     $ 130,000.00  

          C. If Landlord has made improvements, for which Tenant has reimbursed
Landlord for the cost thereof pursuant to Paragraph 53B, and the term of this
Lease is subsequently extended pursuant to the exercise by Tenant of an option
to renew pursuant to Paragraph 42 or 43, upon the exercise of any such option by
Tenant, Tenant shall pay to Landlord an additional sum equal to the total amount
of said improvement less the amount

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previously paid for by Tenant. Using the example in Paragraph 53B above, Tenant
would owe Landlord the additional amount of $270,000.00 ($400,000.00 —
$130,000.00 = $270,000.00).
     54. REAL PROPERTY TAXES: Paragraph 9 is modified by the following:
          A. The term “Real Property Taxes” shall not include charges, levies or
fees directly related to the use, storage, disposal or release of hazardous
materials on the Premises unless directly related to Tenant’s activities, which
subject is exclusively governed by Paragraph 45.
          B. If any assessments for public improvements are levied against the
Premises, Landlord may elect either to pay the assessment in full or to allow
the assessment to go to bond. If Landlord pays the assessment in full, Tenant
shall pay to Landlord or any assignee or purchaser of the Premises each time
payment of Real Property Taxes is made a sum equal to that which would have been
payable (as both principal and interest) had Landlord allowed the assessment to
go to bond.
          C. Tenant at its cost shall have the right, at any time, to seek a
reduction in the assessed valuation of the Premises or to contest any Real
Property Taxes that are to be paid by Tenant. If Tenant seeks a reduction or
contests such Real Property Taxes, the failure on Tenant’s part to pay such Real
Property Taxes being so contested shall not constitute a default so long as
Tenant complies with the provisions of this Paragraph. Landlord shall not be
required to join in any proceeding or contest brought by Tenant unless the
provisions of any law require that the proceeding or contest be brought by or in
the name of Landlord. In that case Landlord shall join in the proceedings or
contest or permit it to be brought in Landlord’s name as long as Landlord is not
required to bear any cost. Tenant, on final determination of the proceeding or
contest, shall [Illegible] decision or judgment rendered, together with all
costs, charges, interest, and penalties incidental to the decision or judgment.
If Tenant does not pay the Real Property Taxes when due pursuant to the Lease
and Tenant seeks a reduction or contests them as provided in this paragraph,
before the commencement of the proceeding or contest Tenant shall furnish to
Landlord a surety bond in form reasonably satisfactory to Landlord issued by an
insurance company qualified to do business in California. The amount of the bond
shall equal 125% of the total amount of Real Property Taxes in dispute and any
such bond shall be assignable to any lender or purchaser of the Premises. The
bond shall hold Landlord and the Premises harmless from any damage arising out
of the proceeding or contest and shall insure the payment of any judgment that
may be rendered.
     55. PROPERTY INSURANCE: Paragraph 12 is modified by the following:
          A. If Tenant so elects, Tenant may obtain from a third party insurance
company the insurance required to be carried by Landlord pursuant to
Paragraph 12 so long as each of the following conditions is satisfied: (i) the
Landlord is not the John Arrillaga and Richard T. Peery Separate Property Trusts
or an affiliated entity; (ii) the insurance to be carried by Tenant to satisfy
this requirement strictly complies with all of the provisions of Paragraph 12;
(iii) such insurance shall name Landlord as the insured and provide that it is
to be payable to Landlord in the same manner as if such insurance had been
carried by Landlord pursuant to Paragraph 12 (subject to the rights of any
lender holding a mortgage or deed of trust

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encumbering the Premises); (iv) each lender holding a mortgage or deed or trust
encumbering the Premises shall have given its written consent to Tenant carrying
such insurance and such insurance shall comply with the requirements of any such
lender; (v) Tenant must notify Landlord, by certified mail, no later than one
hundred eighty (180) days prior to the expiration date of Landlord’s insurance
policy (which expiration date is currently 3/13/xx of a given year and is
subject to change), that Tenant will directly obtain the required insurance
coverage for the insurance year commencing 3/14/XX through 3/13/XX and each
insurance year through the termination date of this Lease, or until Tenant is no
longer able to comply with all of the provisions of this paragraph 55; (vi) the
annual premium must be paid in full at the commencement of the policy; (vii) the
insurance policy must be issued for a one-year period following the expiration
date of Landlord’s insurance policy (i.e., from 3/14/XX to 3/13/XX); (viii) any
and all deductibles required under the policy will be paid entirely by Tenant;
(ix) the terms of the coverage must be broad form and cover all items to be
covered as set forth in Paragraph 12 of this Lease; (x) the Building and
Premises must be insured for their full replacement cost; (xi) the insurance
policy containing the required coverage in accordance with the provisions of
this paragraph must be sent to Landlord for retention within thirty (30) days
prior to the expiration date of Landlord’s insurance policy, and may not be
terminated or altered without thirty (30) days written notice to Landlord by the
company providing such insurance (it is agreed that if the insurance policy is
cancelled or altered, Landlord will have the right to obtain the property
insurance coverage on said building, and Landlord will bill the Tenant for the
related insurance premium); and (xii) at all times while Tenant is so carrying
such insurance, Tenant is Quantum Corporation or a successor entity and the then
net worth of such corporation is substantially the same as the net worth of
Quantum Corporation as of the date of this Lease is executed by Landlord and
Tenant. Tenant shall provide such evidence as is required by Landlord and any
lender to establish that the insurance that Tenant carries pursuant to this
Paragraph 55 has been obtained and meets the requirement of this [Illegible]
Such insurance [Illegible] is reasonably acceptable[Illegible] which must be
rated “A plus” or better by Best’s Insurance Service (or an equivalent rating
from another rating agency should Best’s no longer provide such service). A copy
of any such policy shall be delivered to Landlord. If Tenant elects to insure
and such insurance provided by Tenant does not satisfy the requirements of
paragraph 12, in the event of a subsequent casualty, Tenant shall be responsible
for and shall pay for that portion of the restoration cost, in excess of the
insurance proceeds actually available, that would have been covered by insurance
satisfying the requirements of paragraph 12.
          B. Tenant shall not obligated to contribute to the cost of earthquake
insurance more than an amount equal to six (6) times the then annual cost of
fire and “all risk” insurance per year. For example, if the 1993 annual premium
for fire and “all risk” insurance is $9,000, then Tenant’s share of the cost of
any premium for earthquake insurance for the following year (1994) shall be
limited to $54,000 ($9,000 x 6). Tenant shall have the right to require
earthquake insurance providing it is available if Tenant agrees to pay full cost
thereof.
     56. ASSIGNMENT AND SUBLETTING: The following modifications are made to
Paragraph 16:
          A. In the event that Tenant seeks to make any assignment or sublease,
then Landlord, by giving Tenant written notice of its election within fifteen
(15) days after Tenant’s notice of intent to assign or sublease has been given
to Landlord, shall have the right to elect (i)

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to withhold its consent to such assignment or sublease, as permitted pursuant to
Paragraph 16, or (ii) to permit Tenant to so assign the Lease or sublease such
part of the Premises, in which event Tenant may do so, but without being
released of its liability for the performance of all of its obligations under
the Lease, and the following shall apply (except the following shall not apply
to a “Permitted Transfer” described in Paragraph 57):
               (1) If Tenant assigns its interest in this Lease, then in
addition to the rental provided for in this Lease, Tenant shall pay to Landlord
fifty percent (50%) of all consideration received by Tenant over and above
(i) the assignee’s agreement to assume the obligations of Tenant under this
Lease and (ii) all “Permitted Transfer Costs” (as defined herein) related to
such assignment. As used herein, the term “Permitted Transfer Costs” shall mean
all reasonable leasing commissions paid to third parties not affiliated with
Tenant in order to obtain the assignment or sublease in question.
               (2) If Tenant sublets all or part of the Premises, then Tenant
shall pay to Landlord in addition to the rental provided for in this Lease fifty
percent (50%) of the positive difference, if any, between (i) all rent and other
consideration paid by the subtenant to Tenant, less (ii) all rent paid by Tenant
to Landlord pursuant to this Lease which is allocable to the area so sublet and
all Permitted Transfer Costs related to such sublease. After Tenant has
recovered all Permitted Transfer Costs Tenant shall pay to Landlord the amount
specified in the preceding sentence on the same basis, whether periodic or in
lump sum, that such rent and other consideration is paid to Tenant by its
subtenant, within seven (7) days after it is received by Tenant.
               (3) Tenant’s obligations under this subparagraph shall survive
any assignment or sublease. At the time Tenant makes any payment to Landlord
required by this subparagraph, Tenant shall [Illegible] an itemized statement
[Illegible] certified by Tenant as true and correct. Landlord shall have the
right to inspect Tenant’s books and records relating to the payments due
pursuant to this subparagraph. Upon request therefor, Tenant shall deliver to
Landlord copies of all bills, invoices or other documents upon which its
calculations are based.
               (4) As used herein, the term “consideration” shall mean any
consideration of any kind received, or to be received, by Tenant as a result of
the assignment or sublease, if such sums are paid for Tenant’s interest in this
Lease or in the Premises.
     57. PERMITTED ASSIGNMENTS AND SUBLEASES: Notwithstanding anything contained
in Paragraph 16, so long as Tenant otherwise complies with the provisions of
Paragraph 16 and the Permitted Transfer does not release Tenant from its
obligations hereunder, Tenant may enter into any of the following transfers (a
“Permitted Transfer”) without Landlord’s prior written consent, and the
provisions of Paragraph 56A shall not apply to any such Permitted Transfer:
          A. Tenant may sublease all or part of the Premises or assign its
interest in this Lease to any corporation which controls, is controlled by, or
is under common control with Tenant by means of an ownership interest of more
than fifty percent (50%) providing Tenant remains liable for the payment of rent
and full performance of the lease;

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          B. Tenant may assign its interest in the Lease to a corporation which
results from a merger, consolidation or other reorganization in which Tenant is
not the surviving corporation so long as 95% of all assets of Tenant are
permanently transferred to such assignee. In the event there is not a permanent
transfer of 95% or more of the assets and liabilities from Tenant to a third
party, and Tenant continues to exist as a separate entity, both companies shall
be jointly and severally liable for the full terms and conditions of the Lease;
          C. Tenant may assign this Lease to a corporation which purchases or
otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets of Tenant are permanently transferred to such assignee (in the event
there is not a permanent transfer of 95% or more of the assets and liabilities
from Tenant to a third party and Tenant continues to exist as a separate entity,
both companies shall be jointly and severally liable for the full terms and
conditions of the Lease).
     58. SUBORDINATION AND MORTGAGES: Paragraph 17 is modified to provide that
this Lease shall not be subordinate to a mortgage or deed of trust unless the
Lender holding such mortgage or deed of trust enters into a written
subordination, non-disturbance and attornment agreement in which the Lender
agrees that notwithstanding any subordination of this Lease to such Lender’s
mortgage or deed of trust, (i) such Lender shall recognize all of Tenant’s
rights under this Lease, and (ii) in the event of a foreclosure this Lease shall
not be terminated so long as Tenant is not in material default of its
obligations under this Lease, but shall continue in effect and Tenant and such
Lender (or any party acquiring the Premises through such foreclosure) shall each
be bound to perform the respective obligations of Tenant and Landlord with
respect to the Premises arising after such foreclosure.
     59. LANDLORD’S RIGHT TO ENTER: Notwithstanding the provisions of
Paragraph 18, (i) except in the event of an emergency, Landlord shall give
Tenant twenty-four (24) hours notice prior to entering [Illegible] shall only
enter the Premises when accompanied by Tenant or its agent (so long as Tenant
makes itself reasonably available for this purpose), and (ii) Landlord may
install “for lease” signs relating to the Premises only during the last 150 days
of the Lease term. Landlord agrees to use its reasonable, good faith efforts
such that any entry by Landlord, and Landlord’s agents, employees, contractors
and invitees shall be performed in a manner with as minimal interference as
possible with Tenant’s business at the Premises. Subject to the foregoing,
Tenant agrees to cooperate with Landlord and Landlord’s agents, employees and
contractors so that responsibilities of Landlord under the Lease can be
fulfilled in a reasonable manner during normal business hours so that no
extraordinary costs are incurred by Landlord.
     60. BANKRUPTCY AND DEFAULT: Paragraph 19 is modified to provide that with
respect to non-monetary defaults not involving Tenant’s failure to pay Basic
Rent or Additional Rent, Tenant shall not be in default of any non-monetary
obligation if (i) more than thirty (30) days is required to cure such
non-monetary default, and (ii) Tenant commences cure of such default as soon as
reasonably practicable after receiving written notice of such default from
Landlord and thereafter continuously and with due diligence prosecutes such cure
to completion.
     61. ABANDONMENT: Paragraph 20 is modified to provide that Tenant shall not
be in default under the Lease if it leaves all or any part of Premises vacant so
long as (i) Tenant is

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performing all of its other obligations under the Lease including the obligation
to pay Basic Rent and Additional Rent, (ii) Tenant provides on-site security
during normal business hours for those parts of the Premises left vacant,
(iii) such vacancy does not materially and adversely affect the validity or
coverage of any policy of insurance carried by Landlord with respect to the
Premises, and (iv) the utilities and heating and ventilation system are operated
to the extent necessary to prevent damage to the Premises or its systems.
     62. DESTRUCTION: Paragraph 21 is modified by the following:
          A. Except as provided in Paragraph 62B, Landlord may not terminate the
Lease if the Premises are damaged by a peril that is covered by the insurance
carried by Landlord pursuant to Paragraph 12, but instead shall restore the
Premises in the manner described by Paragraph 21.
          B. If the Premises are damaged by a peril covered by the insurance
carried by Landlord pursuant to Paragraph 12, Landlord shall have the option to
terminate the Lease if each of the following conditions is satisfied: (i) the
cost to repair or the damage exceeds thirty-three percent (33%) of the then
replacement cost of the Premises; and (ii) the damage occurs at a time when
there is less than five (5) years remaining in the term of the Lease.
Notwithstanding the foregoing, if such damage occurs at a time when there is
less than five (5) years remaining in the term of the Lease and Landlord
notifies Tenant of Landlord’s election to terminate the Lease pursuant to the
provisions of this Paragraph 62B, if Tenant has the right to extend the term of
this Lease pursuant to either Paragraph 42 or 43 such that the remaining term of
the Lease (including the option period) will be more than five (5) years
following the date of such damage, this Lease shall not terminate if Tenant
notifies Landlord in writing of Tenant’s exercise of an option to extend granted
to Tenant by either Paragraph 42 or 43. In such event, this Lease shall not
terminate, [Illegible] shall be so extended [Illegible]
          C. If the Premises are damaged by any peril, then as soon as
reasonably practicable, Landlord shall furnish Tenant with the written opinion
of Landlord’s architect or construction consultant as to when the restoration
work required of Landlord may be completed. Tenant shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Landlord of a written notice of election to
terminate within seven (7) days after Tenant receives from Landlord the estimate
of the time needed to complete such restoration:
               (1) The Premises are damaged by any peril and, in the reasonable
opinion of Landlord’s architect or construction consultant, the restoration of
the Leased Premises cannot be substantially completed within 180 days after the
date of such damage; or
               (2) The Premises are damaged by any peril within twelve
(12) months of the last day of the Lease term and provided Tenant has not
exercised an option to renew pursuant to the provisions of Paragraph 42 or 43,
and, in the reasonable opinion of Landlord’s architect or construction
consultant, the restoration of the Leased Premises cannot be substantially
completed within sixty (60) days after the date of such damage.

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     63. EMINENT DOMAIN: Paragraph 22 is modified by the following:
     Landlord may not terminate the Lease if less than 1/3 of the building is
taken by condemnation or if a taking by condemnation is only threatened.
     64. TRANSFER BY LANDLORD: The provisions of Paragraph 23 of the Lease to
the contrary notwithstanding, Landlord shall not be relieved of its obligations
under the Lease which may accrue after the date of a sale or other transfer
unless and until (i) the transferee agrees to assume and be bound by the terms
of this Lease and to perform all obligations of the landlord under the Lease
which may accrue after the date of such transfer, and (ii) Landlord transfers
the Security Deposit to its successor in interest (transferee) in accordance
with the provisions of California Civil Code Section 1950.7, as amended or
recodified.
     65. LANDLORD’S LIEN WAIVER: Landlord, within thirty (30) days after demand
from Tenant, shall execute and deliver such lien waiver documents that are
reasonably required by any supplier, lessor, or lender in connection with the
installation in the Premises of the Tenant’s personal property or trade fixtures
providing Landlord approves the form of any such waiver and Landlord’s rights
under this Lease are not materially and adversely affected.

                 
 
                QUANTUM CORPORATION,   JOHN ARRILLAGA SEPARATE     a Delaware
corporation   PROPERTY TRUST    
 
               
By
  /s/ Joseph Shepala   By   /s/ John Arrillaga    
 
               
 
                VP Human Resources            
 
                        RICHARD T. PEERY SEPARATE             PROPERTY TRUST    
 
               
 
      By   /s/ Richard Peery    
 
               

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AMENDMENT NO. 1
     THIS AMENDMENT NO. 1 is made and entered into this 24th day of April, 1990,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SEPARATE PROPERTY TRUST) as amended, and RICHARD T.
PEERY, Trustee, or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY
SEPARATE PROPERTY TRUST) as amended, as LANDLORD, and QUANTUM CORPORATION, a
Delaware corporation, as TENANT.
RECITALS
     A. WHEREAS, by Lease Agreement dated October 31, 1989, Landlord leased to
Tenant all of that certain 176,516 ± square foot building located at Bellew
Drive and Magnolia Drive, Milpitas, California, the details of which are more
particularly set forth in said October 31, 1989 Lease Agreement, and
     B. WHEREAS, it is now the desire of the parties hereto to amend said Lease
to reflect the: delay of the Commencement Date of the Lease from December 15,
1990 to April 1, 1991 and to amend the Basic Rent schedule accordingly; deletion
of the Phase In Right of said Lease; and commencement of payment of Additional
Rent as of December 15, 1990; as hereinafter set forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. LEASE TERM AND COMMENCEMENT DATE: Paragraph 41.B. of the Lease is
amended by changing the reference to the December 15, 1990 Commencement Date to
April 1, 1991. Subject paragraph will be amended to read as follows:
     “B. Commencement Date Defined: As used herein, the term “Commencement Date”
shall mean the later to occur of the following: (i) the date upon which the
“Improvements” are “Substantially Completed”; or (ii) April 1, 1991; provided,
however, that if prior to the later of such dates Tenant’s operating personnel
enter into occupancy of the Premises and commence the operation of Tenant’s
business within the Premises, the Commencement Date shall be the date such
personnel of Tenant so enter into occupancy of the Premises. The term
“Substantially Completed” and/or “Substantial Completion” shall mean the date
when all of the following have occurred with respect to the Improvements in
question: (i) the construction of the Improvements in question has been
substantially completed in accordance with the approved plans therefore except
for punch list items which do not prevent Tenant from reasonably using the
Premises to conduct Tenant’s business; (ii) Landlord has executed a certificate
or statement representing that the Improvements in question have been
substantially completed in accordance with the plans and specifications
therefore except for punch list items which do not prevent Tenant from
reasonably using the Premises to conduct Tenant’s business; and (iii) the
Building Department of the City of Milpitas has completed its final inspection
of such Improvements and has “signed off” the building inspection card approving
such work as complete except for punch list items

1

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which do not prevent Tenant from reasonably using the Premises to conduct
Tenant’s business. Notwithstanding the foregoing, Substantial Completion of the
Interior Improvements shall not be deemed to have occurred until Landlord has
obtained final or conditional approval from the Fire Department of the City of
Milpitas that the Improvements have been completed in accordance with such
department’s requirements (subject only to conditions that do not prevent Tenant
from occupying the Improvements).”
     2. DELETION OF “BASIC RENT REDUCTION DURING PHASE IN PERIOD”: As a material
inducement to Landlord to postpone the commencement of the Lease Agreement,
Paragraph 40 shall be deleted in its entirety, and Tenant will be responsible
for paying Basic Rent to Landlord, from the Commencement Date of said Lease, on
the entire 155,734 ± square foot building.
     3. COMMENCEMENT OF PAYMENT OF ADDITIONAL RENT: Notwithstanding the
commencement date of this Lease as stated above, Tenant shall be responsible for
paying one hundred percent (100%) of the Additional Rent Expenses as. outlined
in Paragraph 4.D. of said Lease Agreement for the entire 155,734 ± square foot
Lease Premises commencing December 15, 1990.
     4. BASIC RENT SCHEDULE: Furthermore, as Landlord is accommodating Tenant in
deferring the Commencement Date of said Lease from December 15, 1990 to April 1,
1991, the parties have agreed that the Basic Rent increases will be calculated
from December 15, 1990 and that Paragraph 39 “Basic Rent” of said Lease
Agreement shall be amended as follows:

      Period   Monthly Basic Rent
Months 1-13
  $1.00/sf
 
   
Months 14-25
  $1.05/sf
 
   
Months 26-37
  $1.10/sf
 
   
Months 38-49
  $1.15/sf
 
   
Months 50-61
  $1.20/sf
 
   
Months 62-73
  $1.25/sf
 
   
Months 74-85
  $1.30/sf
 
   
Months 86-97
  $1.35/sf
 
   
Months 98-109
  $1.40/sf
 
   
Months 110-121
  $1.45/sf
 
   

2

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

 

      Period   Monthly Basic Rent
Months 122-133
  $1.50/sf
 
   
Months 134-145
  $1.55/sf
 
   
Months 146-157
  $1.60/sf
 
   
Months 158-169
  $1.65/sf
 
   
Months 170-185
  $1.70/sf

     5. LANDLORD’S RIGHT TO TERMINATE: Paragraph 47 of the Lease is amended by
deleting the references to June 1, 1990 and adding in lieu thereof references to
August 1, 1990. Subject paragraph will be amended to read as follows:
     “It is understood that the Premises to be leased by Tenant are to be
constructed by Landlord, and that Landlord is required to obtain the necessary
building permits for the building shell before construction of said Premises can
commence. Therefore, it is agreed that in the event Landlord cannot obtain all
the necessary building permits for the building shell by August 1, 1990, then
either Landlord or Tenant can terminate this Lease by written notice to the
other party given within thirty (30) days thereafter, without any liability to
the other party of any type whatsoever, and that this Lease Agreement will be
null and void as of the date of receipt of such notice. Landlord agrees to use
its best efforts to obtain the required permits by August 1, 1990.”
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said October 31, 1989 Lease Agreement shall remain in full force and effect.
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 1
to Lease as of the day and year first hereinabove set forth.

                 
 
                LANDLORD:   TENANT:    
 
                JOHN ARRILLAGA SEPARATE   QUANTUM CORPORATION     PROPERTY TRUST
  a Delaware corporation    
 
               
By
    /s/ John Arrillaga   By     /s/ Joseph Shepala    
 
               
 
    John Arrillaga, Trustee            
 
                RICHARD T. PEERY SEPARATE   Title:     VP Human Resources    
 
                PROPERTY TRUST            
 
               
By
    /s/ Richard Peery   Dated:     6/12/90    
 
               
 
    Richard T. Peery, Trustee            

3

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

 

AMENDMENT NO. 2
TO LEASE
     THIS AMENDMENT NO. 2 is made and entered into this 8th day of June, 1992,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SEPARATE PROPERTY TRUST) as amended, and RICHARD T.
PEERY, Trustee, or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY
SEPARATE PROPERTY TRUST) as amended, collectively as LANDLORD, and QUANTUM
CORPORATION, a Delaware corporation, as TENANT.
RECITALS
     A. WHEREAS, by Lease Agreement dated October 31, 1989 Landlord leased to
Tenant all of that certain 155,734 ± square foot building located at 500
McCarthy Blvd., Milpitas, California, the details of which are more particularly
set forth in said October 31, 1989 Lease Agreement, and
     B. WHEREAS, said Lease was amended by Amendment No. 1 dated April 24, 1990
which amended said Lease to delay the Commencement Date to April 1, 1991 and
amend the Basic Rent schedule, and
     C. WHEREAS, said Lease was amended by the Commencement Letter dated May 3,
1991 which amended the Lease to commence April 7, 1991, and,
     D. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by replacing Exhibit A and amending the description of the Premises to said
Lease Agreement as hereinafter set forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. REPLACEMENT OF EXHIBIT A: Pursuant to Lot Line/Parcel Adjustment dated
April 1, 1992, it is hereby agreed between the parties that Exhibit A to Lease
Agreement dated October 31, 1989 shall be considered null and void and shall be
replaced with Exhibit A to this Amendment No. 2.
     2. DELETION OF DESCRIPTION QF THE PREMISES ON PAGE 1 OF LEASE AGREEMENT
DATED OCTOBER 31, 1989: It is agreed between the parties that the Premises as
described on Page 1 of said Lease Agreement shall be deleted and considered null
and void; therefore, said description is deleted in its entirety and replaced by
the following:
“All of that land containing approximately 11.589 ± acres and that certain
176,516 ± square foot two story building (“Building 2”) and parking appurtenant
thereto, to be constructed and landscaping to be installed by Landlord as shown
within the area outlined in red (“Lot 2”) on Exhibit A to be located at 500

1

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

 

McCarthy Blvd., Milpitas, California. Said Premises (‘‘Lot 2”) is more
particularly shown within the area outlined in red on Exhibit A attached hereto
and incorporated herein by this reference. The entire parcel containing
approximately 37.096 ± acres, of which the Premises is a part, is shown within
the area outlined in green on Exhibit A attached hereto and incorporated herein
by this reference. The interior of the Leased Premises shall be improved in the
configuration as shown in red on Exhibit B to be attached hereto and
incorporated herein by this reference. The building shell shall be constructed
in accordance with the shell and site improvement specification set forth on
Exhibit A, and the general building elevation set forth on Exhibit A.”
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said October 31, 1989 Lease Agreement shall remain in full force and effect.
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 2
to Lease as of the day and year first hereinabove set forth.

                      LANDLORD:       TENANT:        
 
                    JOHN ARRILLAGA SEPARATE       QUANTUM CORPORATION    
PROPERTY TRUST       a Delaware corporation    
 
                   
By
  /s/ John Arrillaga       By   /s/ Joseph Shepala    
 
                        John Arrillaga, Trustee       Print or Type Name: Joseph
Shepala    
 
                    RICHARD T. PEERY SEPARATE       Title:   Vice President,
Human Resources    
PROPERTY
  TRUST          
 
   
 
                   
By
  /s/ Richard Peery       Dated:   6/9/92    
 
                   
 
  Richard T. Peery, Trustee                

2

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

 

Quantum 2
AMENDMENT NO. 3
TO LEASE
     THIS AMENDMENT NO. 3 is made and entered into this 16th day of April, 1997,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST) (previously known as the “John
Arrillaga Separate Property Trust”) as amended, and RICHARD T. PEERY, Trustee,
or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY
TRUST) as amended, collectively as LANDLORD, and QUANTUM CORPORATION, a Delaware
corporation, as TENANT.
RECITALS
     A. WHEREAS, by Lease Agreement dated October 31, 1989 Landlord leased to
Tenant all of that certain 176,516 ± square foot building located at 500
McCarthy Blvd., Milpitas, California, the details of which are more particularly
set forth in said October 31, 1989 Lease Agreement, and
     B. WHEREAS, said Lease was amended by Letter Agreement dated October 31,
1989 which provided for a Basic Rent Credit for the period commencing with the
Lease Commencement Date and ending on May 31, 1991, and
     C. WHEREAS, said Lease was amended by Letter Agreement dated April 24, 1990
which canceled the reduction in Basic Rent Credit Letter dated October 31, 1989,
and
     D. WHEREAS, said Lease was amended by Amendment No. 1 dated April 24, 1990
which which delayed the Lease Commencement Date from December 15, 1990 to
April 1, 1991, and,
     E. WHEREAS, said Lease was amended by the Commencement Letter dated
March 7, 1991 which changed the Commencement Date of the Lease from April 1,
1991 to April 7, 1991, and established the Termination Date of September 30,
2006, and,
     E. WHEREAS, said Lease was amended by Amendment No. 2 dated June 8, 1992
which replaced Lease Exhibit A and amended the description of the Premises, and
     F. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by (i) extending the Term for five years, changing the Termination Date from
September 30, 2006 to September 30, 2011, (ii) amending the Basic Rent schedule
and Aggregate Rent accordingly, (iii) adding a third Five Year Option to Extend,
(iv) replacing Paragraphs 41C (“Lease Terms Co-extensive”) and 48 (“Cross
Default”) and 53 (“Structural Capital Costs Regulated by Governmental Agencies
After the Commencement of this Lease not Caused by Tenant or Tenant’s Uses or
Remodeling of the Premises”), (v) amending Lease Paragraph 12 (“Property
Insurance”) and (vi) amending and/or replacing certain provisions of the Lease
commencing as of the commencement of the Third Extended Term of said Lease as
hereinafter set forth.

1

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

 

Quantum 2
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. TERM OF LEASE: It is agreed between the parties that Tenant has
exercised its First Five-Year Option to Extend the lease term of that certain
lease agreement dated March 23, 1994 for premises located at 1101 Sumac Drive,
Milpitas, California (the “Building 5 Lease”), as detailed in Paragraph 41 of
said Building 5 Lease. Paragraph 40C of said Building 5 Lease provides that in
the event the term of said Building 5 Lease is extended for any reason
whatsoever, the terms of the Existing Leases (i.e. two of said leases dated
October 31, 1989 are for Premises located at 1140 Technology Drive and 500
McCarthy Blvd., Milpitas, California (the “1989 Leases”); one of said leases
dated September 17, 1990 is for Premises located at 1000 Sumac Drive, Milpitas,
California, and one of said leases dated April 10, 1992 is for Premises located
at 900 Sumac Drive, Milpitas, California) shall also be extended so that all
five Leases expire on the same date; therefore, it is agreed between the parties
that by exercising its Option to Extend the Building 5 Lease, Tenant has in
effect exercised its Option to Extend under Lease Paragraph 42 (“First Five-Year
Option to Extend”), and that pursuant to said Lease Paragraph 42, the Term of
this Lease Agreement shall be extended for an additional five (5) year period,
and the Lease Termination Date shall be changed from September 30, 2006 to
September 30, 2011.
     2. BASIC RFNTAL FOR FIRST EXTENDED TERM OF LEASE: The monthly Basic Rental
for the First Extended Term of Lease shall be as follows:
     On October 1, 2006, the sum of THREE HUNDRED EIGHT THOUSAND NINE HUNDRED
THREE AND NO/100 DOLLARS ($308,903.00) shall be due, and a like sum due on the
first day of each month thereafter through and including September 1, 2007.
     On October 1, 2007, the sum of THREE HUNDRED SEVENTEEN THOUSAND SEVEN
HUNDRED TWENTY EIGHT AND 80/100 DOLLARS ($317,728.80) shall be due, and a like
sum due on the first day of each month thereafter through and including
September 1, 2008.
     On October 1, 2008, the sum of THREE HUNDRED TWENTY SIX THOUSAND FIVE
HUNDRED FIFTY FOUR AND 60/100 DOLLARS ($326,554.60) shall be due, and a like sum
due on the first day of each month thereafter through and including September 1,
2009.
     On October 1, 2009, the sum of THREE HUNDRED THIRTY FIVE THOUSAND THREE
HUNDRED EIGHTY AND 40/100 DOLLARS ($335,380.40) shall be due, and a like sum due
on the first day of each month thereafter through and including September 1,
2010.
     On October 1, 2010, the sum of THREE HUNDRED FORTY FOUR THOUSAND TWO
HUNDRED SIX AND 20/100 DOLLARS ($344,206.20) shall be due, and a like sum due on
the first day of each month thereafter through and including September 1, 2011.

2

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

 

Quantum 2
     The Aggregate Basic Rent for the Lease shall be increased by $19,593,276.00
or from $44,409,491.18 to $64,002,767.18.
     3. THIRD FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the Lease
for an additional five (5) year period pursuant to Lease Paragraph 43 (“Second
Five Year Option To Extend”), Landlord hereby grants to Tenant a third option to
extend the Term of this Lease for an additional five (5) year period upon the
following terms and conditions:
          A. Tenant shall give Landlord written notice of Tenant’s exercise of
this option to extend at least one hundred eighty (180) days prior to the
expiration of the Lease Term as extended pursuant to Lease Paragraph 43 (“Second
Five Year Option To Extend”), in which event the Lease shall be considered
extended for an additional five (5) year period upon the same terms and
conditions as this Lease, absent this Paragraph 3 and subject to the Rental as
set forth below. In the event that Tenant fails to timely exercise Tenant’s
option as set forth herein in writing, Tenant shall have no further option to
extend this Lease or the Other Leases, and this Lease shall continue in full
force and effect for the full remaining term hereof, absent this Paragraph 3.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

      Period   Monthly Basic Rent
Months 1-12
  $2.25/sf
Months 13-24
  $2.30/sf
Months 25-36
  $2.35/sf
Months 37-48
  $2.40/sf
Months 49-60
  $2.45/sf

     C. Notwithstanding anything contained herein, Tenant may not exercise the
option to extend granted by this Paragraph 3 at any time that Tenant is in
default (default for monetary and material default for non-monetary) of its
obligations under this Lease, if Tenant has received written notice from
Landlord that Tenant is in default, and such default has not been timely cured
within the time period provided for in this Lease; provided, however, that if
such default of Tenant is not for money due under this Lease and cannot be
cured, and if Landlord does not elect to terminate this Lease as a result of
such non-curable default by Tenant, Tenant may exercise the option to extend
granted by this Paragraph 3 notwithstanding such non-curable default.
     4. LEASE TERMS CO-EXTENSIVE: Lease Paragraph 40C (“Lease Terms
Co-extensive”) is hereby deleted in its entirety and replaced with the
following:
“40C. LEASE TERMS CO-EXTENSIVE: It is acknowledged that (i) Landlord and Tenant
have previously executed four separate leases in addition to this Lease: one of
said leases dated October 31, 1989 is for Premises located at 1140 Technology
Drive, Milpitas, California (the “Building One Lease”); one of said leases dated
September 17, 1990 is for Premises located at 1000 Sumac

3

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

 

Quantum 2
Drive, Milpitas, California (the “Building Four Lease”); one of said leases
dated April 10, 1992 is for Premises located at 900 Sumac Drive, Milpitas,
California (the “Building 3 Lease”); and one of said leases dated March 23, 1994
is for premises located at 1101 Sumac Drive, Milpitas, California (the “Building
5 Lease”) (hereinafter collectively referred to as the “Other Leases”); and
(ii) it is the intention of the parties that the term of this Lease be
co-extensive with the term of the Other Leases, such that the terms of all five
leases (“the Leases”) expire on the same date. The provisions of this
Paragraph 40C also requires the terms of all the Leases to be extended
accordingly if Tenant exercises its Option to Extend under any of the Leases.
The monthly Basic Rent during the extended term under each of the Leases shall
be increased by $.05 per square foot on the commencement date of the extended
term and thereafter on each and every anniversary of the respective lease’s
commencement date of the extended term.”
     5. CROSS DEFAULT: Lease Paragraph 48 (“Cross Default”) is hereby deleted in
its entirety and replaced with the following:
“48. CROSS DEFAULT: It is agreed between Landlord and Tenant that a default
under this Lease, or a default under any of the Other Leases may, at the option
of Landlord, be considered a default under all Leases, in which event Landlord
shall be entitled (but in no event required) to apply all rights and remedies of
Landlord under the terms of one lease to all the Leases including, but not
limited to, the right to terminate any or all of the aforementioned Other Leases
or this Lease by reason of a default under the Leases or hereunder.
Notwithstanding the above, Landlord shall have the option of considering a
default under this Lease or a default under any of the Other Leases to be a
default under all such leases, only with respect to such leases under which
Landlord is also the ‘Landlord’ at the time such default occurs. By way of
example, if at the time a default of Tenant occurs under this Lease, Landlord
has sold the premises described in any of the Other Leases and is no longer the
‘Landlord’ thereunder, then a default under this Lease shall not constitute a
default under any of such Other Leases so sold by Landlord (unless the premises
leased under this Lease and the Other Leases are sold to the same entity), and a
default by Tenant under any of such Other Leases so sold by Landlord shall not
constitute a default under this Lease or any other of the Other Leases then
remaining between Landlord and Tenant. However, if the Landlord under this Lease
and the Other Leases is one in the same at the time of said default, said cross
default provisions shall apply.”
     6. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: Lease Paragraph 53 (“Structural Capital Costs Regulated by
Governmental Agencies after the Commencement of this Lease Not Caused by Tenant
or Tenant’s Uses or Remodeling of the Premises”) is hereby deleted and replaced
with the following:

4

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

 

Quantum 2
“53. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: The provisions of this Paragraph 53 shall modify Paragraphs 7
and 14:
          A. If (i) during the last five (5) years of the First Extended Term of
the Lease if said Lease has not been extended as provided for in Lease
Paragraph 43 (“Second Five Year Option To Extend”) or in Paragraph 3 (“Third
Five Year Option to Extend”) or Paragraph 4 (“Lease Terms Co-Extensive”) above,
or (ii) during either of the five (5) year extension periods permitted by Lease
Paragraph 43 or Paragraph 3, or Paragraph 4 above, it becomes necessary (due to
any governmental requirement for continued occupancy of the Premises) to make
structural improvements required by laws enacted or legal requirements imposed
by governmental agency(s) after the Commencement Date, and the cost for each
required work or improvements exceeds $100,000, then if such legal requirement
is not imposed because of Tenant’s specific use of the Premises and is not
“triggered” by Tenant’s Alterations or Tenant’s application for a building
permit or any other governmental approval (collectively “Tenant’s Actions”) in
which instance Tenant shall be responsible for 100% of the cost of such
improvements, Landlord shall be responsible for paying the cost of such
improvement and constructing such improvement, subject to a cash contribution
from Tenant of a portion of the cost thereof as provided for and calculated in
Paragraph 53B.
          B. When Landlord makes an improvement pursuant to Paragraph 53A, and
as a condition to Landlord’s obligation to construct such improvement, Tenant
shall make the following contribution in cash to Landlord for the cost thereof
prior to the commencement of the work by Landlord. It is agreed that Tenant
shall pay to Landlord 100% of the cost of the first $100,000.00 worth of each
improvement. After the first $100,000.00, all costs above $100,000.00 shall be
divided by 15 and multiplied by the time period remaining in the last five years
of the Lease Term from the date work on such improvement commences.
     For example, if the improvement is not required as a result of Tenant’s
Actions and if the cost of such improvement was $400,000 and there was one year
and six months remaining in the Lease term when the work commenced, then Tenant
would be responsible for reimbursing Landlord in cash $130,000.00 computed as
follows:

         
Total Cost of Work
  $ 400,000.00  
Tenant Responsible for
       
1st $100,000
    -100.000.00  
 
       
Total Amount To Be Amortized
  $ 300,000.00  
 
       
$300,000.00/15 = $20,000.00/yr. x 1.5 yrs =
  $ 30,000.00  
 
       
Tenant responsible for $100,000 + $30,000.00 =
  $ 130,000.00  

          C. If Landlord has made improvements, for which Tenant has reimbursed
Landlord for the cost thereof pursuant to Paragraph 53B, and the term of this
Lease is subsequently extended pursuant to the exercise by Tenant of an option
to renew pursuant to

5

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

 

Quantum 2
Lease Paragraph 43 or Paragraph 3 above, upon the exercise of any such option by
Tenant, Tenant shall pay to Landlord an additional sum equal to the total amount
of said improvement less the amount previously paid for by Tenant. Using the
example in Paragraph 53B above, Tenant would owe Landlord the additional amount
of $270,000.00 ($400,000.00 — $130,000.00 = $270,000.00).”
     7. PROPERTY INSURANCE: Lease Paragraph 12 (“Property Insurance”) is hereby
amended to include the following: “Tenant acknowledges that as part of the cost
of insurance policies for the Premises, Tenant is responsible for the payment of
insurance deductibles on insurance claims as they relate to the Premises subject
to the limitations provided in Lease Paragraph 55 (“Property Insurance”) which
limitations are applicable only during the initial Lease Term and the First
Lease Extension Period and the Second Lease Extension Period. Said limitation
provided for in Lease Paragraph 55 are null and void at the commencement of the
Third Lease Extended Term”.
     8. THIRD OPTION PERIOD — LEASE PROVISION CHANGES: In the event Tenant
exercises its Third Option to Extend as provided for in Paragraph 3 above, the
following amendments (contained within Paragraphs 9 through 19) are herein made
to the Lease to be effective upon the commencement of the third option period
(“Third Option Period”), or during any period following the expiration of the
Lease Term or expiration of the Lease when Tenant is in possession of the
Premises.
     9. LATE CHARGE: Effective as of the first day of the Third Option Period,
the Late Charge referenced in Lease Paragraph 4.D (“Late Charge”) shall be
changed from five percent (5%) to ten percent (10%), and Lease Paragraph 50
(“Limitation on Late Charge”) shall be deleted in its entirety and of no further
force or effect.
     10. MANAGEMENT FEE: Notwithstanding anything to the contrary in the Lease,
effective as of the first day of the Third Option Period, and on the first day
of each month thereafter, Tenant shall pay to Landlord, in addition to the Basic
Rent and Additional Rent, a fixed monthly management fee (“Management Fee”)
equal to one percent (1 %) of the Basic Rent due for each month during the Lease
Term.
     11. HAZARDOUS MATERIALS: Effective as of the first day of the Third Option
Period, Lease Paragraph 45 (“Hazardous Materials”) shall be deleted in its
entirety and replaced with the following:
“45. HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with respect to
the existence or use of “Hazardous Materials” (as defined herein) on, in, under
or about the Premises and real property located beneath said Premises, which
includes the entire parcel of land on which the Premises are located as shown in
Green on Exhibit A to the Lease (hereinafter collectively referred to as the
“Property”):
     A. As used herein, the term “Hazardous Materials” shall mean any material,
waste, chemical, mixture or byproduct which is or hereafter is defined, listed
or designated under Environmental Laws (defined below) as a pollutant, or

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as a contaminant, or as a toxic or hazardous substance, waste or material, or
any other unwholesome, hazardous, toxic, biohazardous, or radioactive material,
waste, chemical, mixture or byproduct, or which is listed, regulated or
restricted by any Environmental Law (including, without limitation, petroleum
hydrocarbons or any distillates or derivatives or fractions thereof,
polychlorinated biphenyls, or asbestos). As used herein, the term “Environmental
Laws” shall mean any applicable Federal, State of California or local government
law (including common law), statute, regulation, rule, ordinance, permit,
license, order, requirement, agreement, or approval, or any determination,
judgment, directive, or order of any executive or judicial authority at any
level of Federal, State of California or local government (whether now existing
or subsequently adopted or promulgated) relating to pollution or the protection
of the environment, ecology, natural resources, or public health and safety.
B. Tenant shall notify Landlord prior to the occurrence of any Tenant’s
Hazardous Materials Activities (defined below). Landlord acknowledges that
Tenant shall use, in compliance with applicable Environmental Laws, customary
household and office supplies (Tenant shall first provide Landlord with a list
of said materials use), such as mild cleaners, lubricants and copier toner. Any
and all of Tenant’s Hazardous Materials Activities shall be conducted in
conformity with this Paragraph 45, Paragraph 14 of this Lease, and in compliance
with all Environmental Laws and regulations. As used herein, the term “Tenant’s
Hazardous Materials Activities” shall mean any and all use, handling,
generation, storage, disposal, treatment, transportation, release, discharge, or
emission of any Hazardous Materials on, in, beneath, to, from, at or about the
Property, in connection with Tenant’s use of the Property, or by Tenant or by
any of Tenant’s agents, employees, contractors, vendors, invitees, visitors or
its future subtenants or assignees or other third parties (including “dumping”
by others) (or which Hazardous Materials originate on the surface of the
Premises any time on or after the Commencement Date of this Lease, but excluding
Hazardous Materials on the Premises prior to the Lease Commencement Date because
of the storage, use, disposal, or transportation of such materials or waste by
any of Landlord’s contractors or otherwise arising out of construction work
performed by or under the direction of Landlord on the Premises and Landlord
shall be responsible for all required actions with respect to such materials or
wastes). Tenant agrees to provide Landlord with prompt written notice of any
spill or release of Hazardous Materials at the Property during the term of the
Lease of which Tenant becomes aware, and further agrees to provide Landlord with
prompt written notice of any violation of Environmental Laws in connection with
Tenant’s Hazardous Materials Activities of which Tenant becomes aware. If
Tenant’s Hazardous Materials Activities involve Hazardous Materials other than
normal use of customary household and office supplies, Tenant also agrees at
Tenant’s expense: (i) to install such Hazardous Materials monitoring, storage
and containment devices as may be required by Environmental Laws, regulations
and/or governing agencies; (ii) to provide Landlord with a written inventory of
such Hazardous Materials, including an update of same each year upon the
anniversary date of the Commencement Date of the Lease (“Anniversary Date”);

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Quantum 2
and (iii) on each Anniversary Date to provide to Landlord copies of all
documentation and records, required by applicable Environmental Laws to be
prepared and submitted to governmental authorities, relating to use at the
Property of Hazardous Materials or to Tenant’s Hazardous Materials Activities,
if any. If upon completion of Landlord’s review of said documentation and
records, Landlord reasonably questions if Tenant is in compliance with all
applicable Environmental Laws with respect to Tenant’s Hazardous Materials
Activities, Tenant agrees within thirty (30) days following receipt of written
notice from Landlord, to retain a qualified environmental consultant, acceptable
to Landlord, to evaluate whether Tenant is in compliance with all applicable
Environmental Laws with respect to Tenant’s Hazardous Materials Activities.
Tenant, at its expense, shall submit to Landlord a report from such
environmental consultant which discusses the environmental consultant’s findings
within two (2) months of each Anniversary Date. Tenant, at its expense, shall
promptly undertake and complete any and all steps necessary, and in full
compliance with applicable Environmental Laws, to fully correct any and all
problems or deficiencies identified by the environmental consultant, and
promptly provide Landlord with documentation of all such corrections.
C. Prior to termination or expiration of the Lease, Tenant, at its expense,
shall (i) properly remove from the Property all Hazardous Materials which come
to be located at the Property in connection with Tenant’s Hazardous Materials
Activities, and (ii) fully comply with and complete all facility closure
requirements of applicable Environmental Laws regarding Tenant’s Hazardous
Materials Activities, including but not limited to (x) properly restoring and
repairing the Property to the extent damaged by such closure activities, and
(y) obtaining from the local Fire Department or other appropriate governmental
authority with any legal or regulatory jurisdiction a written concurrence that
closure has been completed in compliance with applicable Environmental Laws.
Tenant shall promptly provide Landlord with copies of any claims, notices, work
plans, data and reports prepared, received or submitted in connection with any
such closure activities.
D. If Landlord, upon consultation with Tenant, reasonably concludes that the
Property has become contaminated as a result of Tenant’s Hazardous Materials
Activities, Landlord in addition to any other rights it may have under this
Lease or under Environmental Laws or other laws, may enter upon the Property and
conduct inspection, sampling and analysis, including but not limited to
obtaining and analyzing samples of soil and groundwater, for the purpose of
determining the nature and extent of such contamination except to the extent
that such activities may be inconsistent with Tenant’s compliance with
Environmental Laws. Tenant shall promptly reimburse Landlord for the costs of
such an investigation, including but not limited to reasonable attorneys’ fees
Landlord incurs with respect to such investigation to the extent, and only to
the extent, that it that discloses Hazardous Materials contamination for which
Tenant is liable under this Lease. Except as may be required of Tenant by
applicable Environmental Laws, Tenant shall not perform any sampling, testing,
or drilling

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Quantum 2
to identify the presence of any Hazardous Materials at the Property, without
Landlord’s prior written consent which shall not be unreasonably withheld.
Tenant shall promptly provide Landlord with copies of any claims, notices, work
plans, data and reports prepared, received or submitted in connection with any
sampling, testing or drilling performed pursuant to the preceding sentence.
E. Tenant shall indemnify, defend (with legal counsel acceptable to Landlord,
whose consent shall not unreasonably be withheld) and hold harmless Landlord,
its employees, assigns, successors, successors-in-interest, agents and
representatives from and against any and all claims (including but not limited
to third party claims from a private party or a government authority),
liabilities, obligations, losses, causes of action, demands, governmental
proceedings or directives, fines, penalties, expenses, costs (including but not
limited to reasonable attorneys’, consultants’ and other experts’ fees and
costs), and damages, which arise from or relate to: (i) Tenant’s Hazardous
Materials Activities; (ii) any Hazardous Materials contamination caused by
Tenant prior to the Commencement Date of the Lease; or (iii) the breach of any
obligation of Tenant under this Paragraph 45 (collectively, “Tenant’s
Environmental Indemnification”). Tenant’s Environmental Indemnification shall
include but is not limited to the obligation to promptly and fully reimburse
Landlord for losses in or reductions to rental income, and diminution in fair
market value of the Property. Tenant’s Environmental Indemnification shall
further include but is not limited to the obligation to diligently and properly
implement to completion, at Tenant’s expense, any and all environmental
investigation, removal, remediation, monitoring, reporting, closure activities,
or other environmental response action as may be required by applicable
Environmental Laws, regulations or governing agencies (collectively, “Response
Actions”). Tenant shall promptly provide Landlord with copies of any claims,
notices, work plans, data and reports prepared, received or submitted in
connection with any Response Actions.
F. Landlord hereby makes the following representations to Tenant, each of which
is made only to the best of Landlord’s knowledge as of the date Landlord
executes this Lease, without any inquiry or investigation having been made or
required by Landlord regarding this subject, nor does Landlord have any
obligation to investigate or make inquiry regarding the subject:
          (1) The soil and ground water on or under the Premises does not
contain Hazardous Materials in amounts which violate any laws to the extent that
any governmental entity could require either Landlord or Tenant to take any
remedial action with respect to such Hazardous Materials.
          (2) During the time that Landlord has owned the Premises, Landlord has
received no notice of (i) any violation, or alleged violation, of any law that
has not been corrected to the satisfaction of the appropriate authority,
(ii) any pending claims relating to the presence of Hazardous Material on the
Premises, or (iii) any pending investigation by any governmental agency
concerning the Premises relating to Hazardous Materials.

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Quantum 2
G. Landlord and Tenant shall each give written notice to the other as soon as
reasonably practicable of (i) any communication received from any governmental
authority concerning Hazardous Materials which relates to the Premises, and
(ii) any contamination of the Premises by Hazardous Materials which constitutes
a violation of any law. Attached as Exhibit “C” to the Lease is a list of
Hazardous Materials-that Tenant intends to use at the Premises. If during the
Lease Term Tenant proposes to use other Hazardous Materials at the Premises,
Tenant shall inform Landlord of such use, identifying the Hazardous Materials
and the manner of their use, storage and disposal, and shall agree (i) to use,
store and dispose of such Hazardous Materials strictly in compliance with all
laws, regulations and governing agencies and (ii) that the indemnity set forth
in Paragraph 45 shall be applicable to Tenant’s use of such Hazardous Material.
H. Landlord or Tenant may, at any time, cause testing wells to be installed on
the Premises, and may cause the ground water to be tested to detect the presence
of Hazardous Material by the use of such tests as are then customarily used for
such purposes. Testing wells installed by Tenant shall be paid for by Tenant. If
tests conducted by Landlord disclose that Tenant has violated any Hazardous
Materials laws, or Tenant or parties on the Premises during the Term of this
Lease have contaminated the Premises as determined by regulatory agencies
pursuant to Hazardous Materials laws, or that Tenant has liability to Landlord
pursuant to Paragraph 45A, then Tenant shall pay for 100 percent of the cost of
the test and all related expense. Prior to the expiration of the Lease Term,
Tenant shall remove any testing wells it has installed at the Premises, and
return the Premises to the condition existing prior to the installation of such
wells, unless Landlord requests in writing that Tenant leave all or some of the
testing wells in which instance the wells requested to be left shall not be
removed.
I. If any tests performed by Tenant or Landlord prior to the Commencement Date
disclose Hazardous Materials at the Premises, Landlord at its expense will
promptly take all reasonable action required by law with respect to the
existence of such Hazardous Materials at the Premises. The Commencement Date
shall not be delayed because of such action by Landlord unless occupation of the
Premises is prohibited by law.
J. The obligations of Landlord and Tenant under this Paragraph 45 shall survive
the expiration or earlier termination of the Term of this Lease. The rights and
obligations of Landlord and Tenant with respect to issues relating to Hazardous
Materials are exclusively established by this Paragraph 45.”
     12. SECURITY DEPOSIT: Effective as of the first day of the Third Option
Period, Lease Paragraph 51 (“Security Deposit”) shall be deleted in its entirety
and replaced with the following:
“51. SECURITY DEPOSIT: The following provisions shall modify Lease Paragraph 4F:

10

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Quantum 2
A. Within thirty (30) days after the expiration or earlier termination of the
Lease term and after Tenant has vacated the Premises, Landlord shall return to
Tenant the entire Security Deposit except for amounts that Landlord has deducted
therefrom that are needed by Landlord to cure defaults of Tenant under the Lease
or compensate Landlord for damages for which Tenant is liable pursuant to this
Lease. The use or disposition of the Security Deposit shall be subject to the
provisions of California Civil Code Section 1950.7.
B. During the first thirty (30) days following Tenant’s exercise of its Third
Option to Extend, and only during said thirty day period, Tenant shall have the
one-time option of satisfying its obligation with respect to an amount equal to
one-half (1/2) ($238,296.60) of the $476,593.20 Security Deposit required under
Lease Paragraph 4F by providing to Landlord, at Tenant’s sole cost, a letter of
credit which: (i) is drawn upon an institutional lender reasonably acceptable
and accessible to Landlord in form and content reasonably satisfactory to
Landlord; (ii) is in the amount of one-half (1/2) of the Security Deposit;
(iii) is for a term of at lease twelve (12) months; (iv) with respect to any
letter of credit in effect within the six month period immediately prior to the
expiration of the Lease term, shall provide that the term of such letter of
credit shall extend at least forty five (45) days past the Lease expiration date
(including any extensions thereof); and (v) may be drawn upon by Landlord upon
submission of a declaration of Landlord that Tenant is in default (as defined in
Paragraph 19 and as modified by Paragraph 60). Landlord shall not be obligated
to furnish proof of default to such institutional lender, and Landlord shall
only be required to give the institutional lender written notification that
Tenant is in default and upon receiving such written notification from Landlord
the institutional lender shall be obligated to immediately deliver cash to
Landlord equal to the amount Landlord may spend or become obligated to spend by
reason of Tenant’s default or to compensate Landlord for any loss or damage
which Landlord may suffer by reason of Tenant’s default up to 1/2 of the total
Security Deposit required under Lease Paragraph 4F. Said letter of credit shall
provide that if the letter of credit is not renewed, replaced or extended within
twenty (20) days prior to its expiration date the issuer of the credit shall
automatically issue a cashiers check payable to Landlord in the amount of the
letter of credit after the date which is twenty (20) days before the expiration
date, and no later than the expiration date, without Landlord being required to
make demand upon the letter of credit. If Tenant provides Landlord with a letter
of credit, within thirty (30) days of the execution of this Lease, meeting the
foregoing requirements, one-half (1/2) of the cash Security Deposit (i.e.
$238,296.60 of the $476,593.20 Security Deposit) shall be returned to Tenant by
Landlord inasmuch as the cash deposit remaining and the Letter of Credit equal
the total Security Deposit required in Lease Paragraph 4F. If Tenant defaults
with respect to any provisions of this Lease, including but not limited to
provisions relating to the payment of Rent, Landlord may (but shall not be
required to) draw down on the letter of credit for payment of any sum which
Landlord may spend or become obligated to spend by reason of Tenant’s default,
or to compensate Landlord for any loss or damage which Landlord may suffer by
reason of Tenant’s default. Landlord and Tenant acknowledge that such letter of

11

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Quantum 2
credit will be treated as if it were a cash security deposit, and such letter of
credit may be drawn down upon by Landlord upon demand and presentation of
evidence of the identity of Landlord to the issuer, in the event that Tenant
defaults with respect to any provision of this Lease and such default is not
cured within any applicable cure period. Notwithstanding anything to the
contrary in this Lease, Landlord shall not be obligated to furnish proof of
default to such institutional lender and Landlord is only required to give the
institutional lender written notification that Tenant is in default and upon
receiving such written notification from Landlord the institutional lender shall
be obligated to immediately deliver cash to Landlord equal to the amount
Landlord may spend or become obligated to spend by reason of Tenant’s default,
or to compensate Landlord for any loss or damage which Landlord may suffer by
reason of Tenant’s default up to 1/2 of the total Security Deposit. Landlord
acknowledges that it is not entitled to draw down such letter of credit unless
Landlord would have been entitled to draw upon the cash security deposit
pursuant to the terms of Paragraph 4F of the Lease. Concurrently with the
delivery of the required information to the issuer, Landlord shall deliver to
Tenant written evidence of the default upon which the draw down was based,
together with evidence that Landlord has provided to Tenant the written notice
of such default which was required under the applicable provision of the Lease,
and evidence of the failure of Tenant to cure such default within the applicable
grace period following receipt of such notice of default. Any proceeds received
by Landlord by drawing upon the letter of credit shall be applied in accordance
with the provisions governing the Security Deposit imposed by Lease Paragraph 4F
and this Paragraph 51. If Landlord draws upon the letter of credit, thereafter
Tenant shall once again have the right to post a letter of credit in place of
one-half (1/2) of a cash Security Deposit so long as Tenant is not then in
default. In any event Tenant will be obligated to replenish the amount drawn to
restore the Security Deposit to its original amount as provided for in
Paragraph 4F. If any portion of the letter of credit is used or applied pursuant
hereto, Tenant shall, within ten (10) days after receipt of a written demand
therefor from Landlord, restore and replace the value of such security by either
(i) depositing cash with Landlord in the amount equal to the sum drawn down
under the letter of credit, or (ii) increasing the letter of credit to its value
immediately prior to such application. Tenant’s failure to replace the value of
the security as provided in the preceding sentence shall be a material breach of
its obligation under this Lease.”
     13. REAL ESTATE TAXES: Effective as of the first day of the Third Option
Period, Lease Paragraph 54 (“Real Estate Taxes”) shall be deleted in its
entirety and replaced with the following:
“54. REAL PROPERTY TAXES: Paragraph 9 is modified by the following:
A. The term “Real Property Taxes” shall not include charges, levies or fees
directly related to the use, storage, disposal or release of Hazardous Materials
on the Premises unless directly related to Tenant’s Activities at this site or
on other sites leased and/or owned by Tenant; however, Tenant shall be

12

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Quantum 2
responsible for general or special tax and/or assessments (related to Hazardous
Materials and/or toxic waste) imposed on the Property provided said special tax
and/or assessment is not imposed due to on-site originated contamination on the
Property (by third parties not related to Tenant) prior to the Lease
Commencement Date. Subject to the terms and conditions stated herein, Tenant
shall be responsible for paying one hundred percent (100%) of said taxes and/or
assessments allocated to the Property.
B. If any assessments for public improvements are levied against the Premises,
Landlord may elect either to pay the assessment in full or to allow the
assessment to go to bond. If Landlord pays the assessment in full, Tenant shall
pay to Landlord or any assignee or purchaser of the Premises each time payment
of Real Property Taxes is made a sum equal to that which would have been payable
(as both principal and interest) had Landlord allowed the assessment to go to
bond.
C. Tenant at its cost shall have the right, at any time, to seek a reduction in
the assessed valuation of the Premises or to contest any Real Property Taxes
that are to be paid by Tenant. If Tenant seeks a reduction or contests such Real
Property Taxes, the failure on Tenant’s part to pay such Real Property Taxes
being so contested shall not constitute a default so long as Tenant complies
with the provisions of this Paragraph. Landlord shall not be required to join in
any proceeding or contest brought by Tenant unless the provisions of any law
require that the proceeding or contest be brought by or in the name of Landlord.
In that case Landlord shall join in the proceedings or contest or permit it to
be brought in Landlord’s name as long as Landlord is not required to bear any
cost. Tenant, on final determination of the proceeding or contest, shall
immediately pay or discharge its share of any Real Property Taxes determined by
any decision or judgment rendered, together with all costs, charges, interest,
and penalties incidental to the decision or judgment. If Tenant does not pay the
Real Property Taxes when due pursuant to the Lease and Tenant seeks a reduction
or contests them as provided in this paragraph, before the commencement of the
proceeding or contest Tenant shall furnish to Landlord a surety bond in form
reasonably satisfactory to Landlord issued by an insurance company qualified to
do business in California. The amount of the bond shall equal 125% of the total
amount of Real Property Taxes in dispute and any such bond shall be assignable
to any lender or purchaser of the Premises. The bond shall hold Landlord and the
Premises harmless from any damage arising out of the proceeding or contest and
shall insure the payment of any judgment that may be rendered.”
     14. PROPERTY INSURANCE: Effective as of the first day of the Third Option
Period, section B of Lease Paragraph 55 (“Property Insurance”) shall be deleted
in its entirety and be of no further force or effect.
     15. ASSIGNMENT AND SUBLETTING: Effective as of the first day of the Third
Option Period, Lease Paragraph 56 (“Assignment and Subletting”) shall be deleted
in its entirety and replaced with the following:

13

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Quantum 2
          “56. ASSIGNMENT AND SUBLETTING: The following modifications are made
to Paragraph 16:
          A. In the event that Tenant seeks to make any assignment or sublease,
then Landlord, by giving Tenant written notice of its election within fifteen
(15) days after Tenant’s notice of intent to assign or sublease has been given
to Landlord, shall have the right to elect (i) to withhold its consent to such
assignment or sublease, as permitted pursuant to Paragraph 16, or (ii) to permit
Tenant to so assign the Lease or sublease such part of the Premises, in which
event Tenant may do so, but without being released of its liability for the
performance of all of its obligations under the Lease, and the following shall
apply (except the following shall not apply to a “Permitted Transfer” described
in Paragraph 57):
          (1) If Tenant assigns its interest in this Lease, then in addition to
the rental provided for in this Lease, Tenant shall pay to Landlord fifty
percent (50%) of all Rent and other consideration received by Tenant over and
above (i) the assignee’s agreement to assume the obligations of Tenant under
this Lease and (ii) all “Permitted Transfer Costs” (as defined herein) related
to such assignment. As used herein, the term “Permitted Transfer Costs” shall
mean all reasonable leasing commissions paid to third parties not affiliated
with Tenant in order to obtain the assignment or sublease in question.
          (2) If Tenant sublets all or part of the Premises, then Tenant shall
pay to Landlord in addition to the Rent provided for in this Lease fifty percent
(50%) of the positive difference, if any, between (i) all rent and other
consideration paid or provided to Tenant by the subtenant, less (ii) all Rent
paid by Tenant to Landlord pursuant to this Lease which is allocable to the area
so sublet and all Permitted Transfer Costs related to such sublease. After
Tenant has recovered all Permitted Transfer Costs Tenant shall pay to Landlord
the amount specified in the preceding sentence on the same basis, whether
periodic or in lump sum, that such rent and other consideration is paid to
Tenant by its subtenant, within seven (7) days after it is received by Tenant.
          (3) Tenant’s obligations under this subparagraph shall survive any
assignment or sublease. At the time Tenant makes any payment to Landlord
required by this subparagraph, Tenant shall deliver an itemized statement of the
method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right to
inspect Tenant’s books and records relating to the payments due pursuant to this
subparagraph. Upon request therefor, Tenant shall deliver to Landlord copies of
all bills, invoices or other documents upon which its calculations are based.
          (4) As used herein, the term “consideration” shall mean any
consideration of any kind received, or to be received (including, but not
limited to, services rendered and/or value received) by Tenant as a result of
the

14

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Quantum 2
     assignment or sublease, if such sums are paid or provided to Tenant for
Tenant’s interest in this Lease or in the Premises.
     (5) This Paragraph 56.A does not apply to a “Permitted Transfer”, as
provided in Paragraph 57 hereof. The parties agree that if any of the following
transactions occur and do not qualify as “Permitted Transfers”, Tenant must
obtain Landlord’s consent to such transaction and if Landlord consents to any of
the following transactions which do not otherwise qualify as “Permitted
Transfers”, then the provisions of this Paragraph 56.A shall not apply to the
following transactions: (i) a merger, consolidation or other reorganization in
which Tenant is not the surviving corporation so long as 95% of all assets and
liabilities of Tenant are permanently transferred to such assignee; and (ii) an
assignment of this Lease to a corporation which purchases or otherwise acquires
95% or more of the assets of Tenant so long as 95% of all assets and liabilities
of Tenant are permanently transferred to such assignee and Tenant remains liable
and responsible under the Lease to the extent Tenant continues in existence
following such transaction.”
     16. PERMITTED ASSIGNMENTS AND SUBLEASES: Effective as of the first day of
the Third Option Period, Lease Paragraph 57 (“Permitted Assignments and
Subleases”) shall be deleted in its entirety and replaced with the following:
“57. PERMITTED ASSIGNMENTS AND SUBLEASES: Notwithstanding anything contained in
Paragraph 16, so long as Tenant otherwise complies with the provisions of
Paragraph 16 and the Permitted Transfer does not release Tenant from its
obligations hereunder, Tenant may enter into any of the following transfers (a
“Permitted Transfer”) without Landlord’s prior written consent, and the
provisions of Paragraph 56A shall not apply to any such Permitted Transfer:
A. Tenant may sublease all or part of the Premises or assign its interest in
this Lease to any corporation which controls, is controlled by, or is under
common control with Tenant by means of an ownership interest of more than fifty
percent (50%) providing Tenant remains liable for the payment of Rent and full
performance of the Lease;
B. Tenant may assign its interest in the Lease to a corporation which results
from a merger, consolidation or other reorganization in which Tenant is not the
surviving corporation so long as (i) 95% of all assets and liabilities of Tenant
are permanently transferred to such assignee, and (ii) immediately prior to the
merger, consolidation or other reorganization, the corporation into which Tenant
is to be merged has a net worth equal to or greater than the net worth of Tenant
at the time of Lease execution or at the time of such assignment, merger,
consolidation or reorganization (whichever is greater), or if it does not,
Landlord is provided a guaranty of the Lease (in a form reasonably acceptable to
Landlord) from a corporation (a) that is the parent of, or is otherwise
affiliated with, the corporation into which Tenant is to be merged, and
(b) which has a current net

15

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Quantum 2
worth equal to or greater than the net worth of Tenant at the time of Lease
execution or at the time of such assignment, merger, consolidation or
reorganization (whichever is greater). In the event there is not a permanent
transfer of 95% or more of the assets and liabilities from Tenant to a third
party, and Tenant continues to exist as a separate entity, both companies shall
be jointly and severally liable for the full terms and conditions of the Lease;
     C. Tenant may assign this Lease to a corporation which purchases or
otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets and liabilities of Tenant are permanently transferred to such assignee
(in the event there is not a permanent transfer of 95% or more of the assets and
liabilities from Tenant to a third party and Tenant continues to exist as a
separate entity, both companies shall be jointly and severally liable for the
full terms and conditions of the Lease), and provided that immediately prior to
such assignment said corporation, has a net worth equal to or greater than the
net worth of Tenant (a) at the time of Lease execution or (b) at the time of
such assignment (whichever is greater), or if it does not, Landlord is provided
a guaranty of the Lease (in a form reasonably acceptable to Landlord) from a
corporation (a) that is the parent of, or is otherwise affiliated with, said
corporation and (b) which has a current net worth equal to or greater than the
net worth of Tenant at the time of Lease execution or at the time of such
assignment, (whichever is greater).”
     17. DESTRUCTION: Effective as of the first day of the Third Option Period,
Lease Paragraph 62 (“Destruction”) shall be deleted in its entirety and replaced
with the following:
“62. DESTRUCTION: Paragraph 21 is modified by the following:
     A. Notwithstanding anything to the contrary within Paragraph 21, Landlord
may terminate this Lease in the event of an uninsured event or if insurance
proceeds, net of the deductible, are insufficient to cover one hundred percent
of the rebuilding costs; provided, however, Tenant shall have the right to
elect, in its discretion, to contribute such excess funds to permit Landlord to
repair the Premises.
     B. Except as provided in Paragraph 62C, Landlord may not terminate the
Lease if the Premises are damaged by a peril whereby the cost to replace and/or
repair is one hundred percent (100%) covered by the insurance carried by
Landlord pursuant to Paragraph 12, but instead shall restore the Premises in the
manner described by Paragraph 21.
     C. If the Premises are damaged by a peril covered by the insurance carried
by Landlord pursuant to Paragraph 12, Landlord shall have the option to
terminate the Lease if each of the following conditions is satisfied: (i) the
cost to repair or the damage exceeds thirty-three percent (33%) of the then
replacement cost of the Premises; and (ii) the damage occurs at a time when
there is less than five (5) years remaining in the term of the Lease.

16

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Quantum 2
     D. If Landlord fails to obtain insurance as required pursuant to
Paragraph 12, and said insurance would have been available to cover any damage
or destruction to the Premises, Landlord shall be required to rebuild, at its
cost, net of the deductible which would have been required under said insurance
policy (which deductible Tenant is required to pay).
     E. If the Premises are damaged by any peril, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord’s architect or construction consultant as to when the restoration work
required of Landlord may be completed. Tenant shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Landlord of a written notice of election to
terminate within seven (7) days after Tenant receives from Landlord the estimate
of the time needed to complete such restoration:
                    (1) The Premises are damaged by any peril (not caused by or
resulting from an action of Tenant or Tenant’s agents, employees, contractors or
invitees) and, in the reasonable opinion of Landlord’s architect or construction
consultant, the restoration of the Leased Premises cannot be substantially
completed within 180 days after the date of such damage (subject to force
majeure conditions); or
                    (2) The Premises are damaged by any peril (not caused by or
resulting from an action of Tenant or Tenant’s agents, employees, contractors or
invitees) within twelve (12) months of the last day of the Lease term, and, in
the reasonable opinion of Landlord’s architect or construction consultant, the
restoration of the Leased Premises cannot be substantially completed within
sixty (60) days after the date of such damage and Tenant has not exercised its
Option to Extend said Term (or Extended Term as the case may be).”
     18. LIABILITY INSURANCE: Effective as of the first day of the Third Option
Period, the first sentence of Lease Paragraph 10 (“Liability Insurance”) shall
be deleted and replaced with the following: “Tenant, at Tenant’s expense, agrees
to keep in force during the Term of this Lease a policy of commercial general
liability insurance with combined single limit coverage of not less than Two
Million Dollars ($2,000,000) per occurrence for bodily injury and property
damage occurring in, on or about the Premises, including parking and landscaped
areas.”
     19. LIMITATION OF LIABILITY: Effective as of the first day of the Third
Option Period, Lease Paragraph 36 (“Limitation of Liability”) shall be deleted
in its entirety and replaced with the following:
     “36. LIMITATION OF LIABILITY. In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord:

17

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Quantum 2
(i) the sole and exclusive remedy shall be against Landlord’s interest in the
Premises leased herein;
(ii) no partner of Landlord shall be sued or named as a party in any suit or
action (except as may be necessary to secure jurisdiction of the partnership);
(iii) no service of process shall be made against any partner of Landlord
(except as may be necessary to secure jurisdiction of the partnership);
(iv) no partner of Landlord shall be required to answer or otherwise plead to
any service of process;
(v) no judgment will be taken against any partner of Landlord;
(vi) any judgment taken against any partner of Landlord may be vacated and set
aside at any time without hearing;
(vii) no writ of execution will ever be levied against the assets of any partner
of Landlord;
(viii) these covenants and agreements are enforceable both by Landlord and also
by any partner of Landlord.
     Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or at common law.”
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said October 31, 1989 Lease Agreement shall remain in full force and effect.
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 3
to Lease as of the day and year last written below.

                     
LANDLORD:
      TENANT:        
 
                    JOHN ARRILLAGA SURVIVOR’S TRUST     QUANTUM CORPORATION    
          a Delaware corporation
By
  /s/ John Arrillaga       By   /s/ Andrew Kryder    
 
                    John Arrillaga, Tustee                         Andrew Kryder
 
            Date:   6/30/97       Print or Type Name
 
                      RICHARD T. PEERY SEPARATE   Title:   Finance & Corporate
General Counsel    
 
               
 
                   
 
                    PROPERTY TRUST             By   /s/ Richard Peery      
Date:    June 25, 1997
 
                   
 
  Richard T. Peery, Trustee                 Date:   6/26/97        
 
                   

18

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Quantum 2
AMENDMENT NO.4
TO LEASE
     THIS AMENDMENT NO. 4 is made and entered into this 22nd day of March, 2001,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST) (previously known as the “John
Arrillaga Separate Property Trust”) as amended, and RICHARD T. PEERY, Trustee,
or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY
TRUST) as amended, collectively as LANDLORD, and MAXTOR CORPORATION, a Delaware
corporation, as “ASSIGNEE” or “MAXTOR”.
RECITALS
     A. WHEREAS, by Lease Agreement dated October 31, 1989 Landlord leased to
QUANTUM CORPORATION, a Delaware corporation (the “ASSIGNOR” or “QUANTUM”) all of
that certain 176,516 ± square foot building located at 500 McCarthy Blvd.,
Milpitas, California, the details of which are more particularly set forth in
said October 31, 1989 Lease Agreement, and
     B. WHEREAS, said Lease was amended by Letter Agreement dated October 31,
1989 which provided for a Basic Rent Credit for the period commencing with the
Lease Commencement Date and ending on May 31, 1991, and
     C. WHEREAS, said Lease was amended by Letter Agreement dated April 24, 1990
which canceled the reduction in Basic Rent Credit Letter dated October 31, 1989,
and
     D. WHEREAS, said Lease was amended by Amendment No. 1 dated April 24, 1990
which delayed the Lease Commencement Date from December 15, 1990 to April 1,
1991, and,
     E. WHEREAS, said Lease was amended by the Commencement Letter dated
March 7, 1991 which changed the Commencement Date of the Lease from April 1,
1991 to April 7, 1991, and established the Termination Date of September 30,
2006, and,
     F. WHEREAS, said Lease was amended by Amendment No. 2 dated June 8, 1992
which replaced Lease Exhibit A and amended the description of the Premises, and
     G. WHEREAS, said Lease was amended by Amendment No. 3 dated April 16, 1997,
which amended the Lease by (i) extending the Term for five years, changing the
Termination Date from September 30, 2006 to September 30, 2011, (ii) amending
the Basic Rent schedule and Aggregate Rent accordingly, (iii) adding a third
Five Year Option to Extend, (iv) replacing Paragraphs 41C (“Lease Terms
Co-extensive”) and 48 (“Cross Default”) and 53 (“Structural Capital Costs
Regulated by Governmental Agencies After the Commencement of this Lease not
Caused by Tenant or Tenant’s Uses or Remodeling of the Premises”), (v) amending
Lease Paragraph 12 (“Property Insurance”) and (vi) amending and/or replacing
certain provisions of the Lease commencing as of the commencement of the Third
Extended Term of said Lease, and

1

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Quantum 2
H. WHEREAS, the Lease, together with those certain Amendments described above in
Recitals B through G shall herein after collectively be referred to as “the
Lease Agreement”, and
     I. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by (i) acknowledging Landlord’s consent to the assignment of said Lease from
“Quantum Corporation, a Delaware corporation” to “Maxtor Corporation, a Delaware
corporation”, and (ii) replacing Lease Paragraph 43 (“Second Five Year Option to
Extend”) and Paragraph 3 to Amendment No. 3 dated April 16, 1997 (“Third Five
Year Option to Extend”) as hereinafter set forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. ASSIGNMENT OF TENANT’S INTEREST: Notwithstanding anything to the
contrary contained in the Lease Agreement, Landlord hereby understands that
based on Quantum’s notice to Landlord, Landlord hereby acknowledges that the
following transactions have occurred:
     A. Quantum has operated its business at the Premises through two separate
business groups: Quantum HDD, tracked by Quantum HDD common stock, and Quantum
DSS, tracked by Quantum DSS common stock.
     B. On or about, October 3, 2000, Quantum and Maxtor entered into that
certain an Amended and Restated Agreement and Plan of Merger and Reorganization,
dated as of October 3, 2000 (the “Merger Agreement”), wherein they agreed that:
          (i) Quantum will separate its Quantum HDD business from its Quantum
DSS and transfer the assets of Quantum HDD to a newly-formed subsidiary, Insula
Corporation, a Delaware corporation (“Insula”), in exchange for all of Insula’s
common stock and Insula’s agreement to be entirely responsible for all of the
Quantum HDD obligations and liabilities.
          (ii) Immediately after such separation, each currently outstanding
share of Quantum HDD common stock will be redeemed in return for a share of
Insula common stock, such that the holders of Quantum HDD common stock shall own
all of the common stock of Insula.
          (iii) Immediately after said redemption, Insula will merge into Maxtor
and each share of the Insula’s common stock will be converted into the right to
receive approximately 1.52 shares of Maxtor common stock, subject to possible
adjustment as described in the Merger Agreement.
     C. As part of the legal separation of the Quantum HDD business from the
Quantum DSS business, all of the right title and interest of Quantum in the
Lease will be assigned by Quantum to Insula and Insula will assume and agree to
be liable for all of the obligations of Quantum, as Tenant, under the Lease.

2

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Quantum 2
     D. Because the actual physical separation of the Quantum HDD business from
the Quantum DSS business cannot be completed prior to the closing of the
foregoing transactions described above, Insula has agreed to provide to Quantum
with a limited license for the use of the premises subject to the Leases,
identified as “License Back” Leases in attached Exhibit A for a period of time
not exceeding the number of months specified in attached Exhibit A.
As a result of said merger transaction, as of April 2, 2001, the effective date
of the merger, Maxtor will become the Tenant under the Lease Agreement, and
Maxtor shall assume all obligations of Tenant under the Lease Agreement dated
October 31, 1989, as amended.
Landlord hereby consents to the foregoing transactions (“Landlord’s Consent”).
Except as expressly set forth below, Landlord’s Consent shall in no way void or
alter any of the terms of the Lease Agreement by and between Landlord and
Tenant, nor shall Landlord’s Consent alter or diminish in any way Tenant’s
obligations to Landlord.
Landlord has not reviewed the terms of any agreement between Quantum, Insula
and/or Maxtor, and Landlord shall not be bound by any agreement other than the
terms of the Lease Agreement between Landlord and Tenant. Landlord does not make
any warranties or representations as to the condition of the Leased Premises or
the terms of the Lease Agreement between Landlord and Quantum. Landlord’s
consent to the assignment shall in no way obligate Landlord to any further
consents or agreements between Quantum and/or Assignee. So long as Quantum
continues to exist as a Delaware corporation, it is agreed that both Quantum and
Maxtor will be jointly and severally liable for all the terms and conditions of
the Lease and all Amendments thereto; provided, however, that so long as Quantum
remains liable for said Lease, no material amendment to the Lease Agreement
after the date hereof shall be binding upon Quantum without the prior written
consent of Quantum, which consent shall not be unreasonably withheld, and
Quantum’s approval shall not be required on transactions related to Landlord’s
Waivers, Landlord’s Consents to Sublease and/or Landlord’s Consents to
Alterations. The foregoing, however, shall not prevent Tenant and Landlord from
entering into any such modification or amendment between themselves.
It is further understood that the Security Deposit of Quantum is being
transferred to Maxtor.
     1. OPTIONS TO EXTEND: As consideration for the consent of Landlord herein
set forth, Lease Paragraph 43 (“Second Five Year Option to Extend”) and
Paragraph 3 to Amendment No. 3 dated April 16, 1997 (“Third Five Year Option to
Extend”) are hereby deleted in their entirety and shall be replaced with the
following:
          A. SECOND FIVE YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant
an option to extend this Lease Agreement (“Option to Extend” or the “Option”)
for an additional five years (“Second Extended Term”) upon the following terms
and conditions:
               1) Tenant shall give Landlord written notice of Tenant’s exercise
of this Option to Extend at least one hundred eighty (180) days prior to the
expiration of the Lease

3

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Quantum 2
Term pursuant to Paragraph A hereof (not later than April 3, 2011), in which
event the Term of the Lease shall be considered extended for an additional five
(5) years, subject to the Basic Rent set forth below and with: (i) the Basic
Rent to be determined pursuant to Paragraph 2) below; (ii) management fee and
the terms and conditions subject to amendment by Landlord (Landlord, in its sole
and absolute discretion, may, but is not required to, incorporate its then
current Lease provisions that are standard in Landlord’s leases for comparable
buildings as of the date of Tenant’s exercise of its Option to Extend); and
(iii) this Paragraph 2.A thereafter deleted. In the event that Tenant fails to
timely exercise Tenant’s Option as set forth herein in writing, Tenant shall
have no further Option to Extend this Lease, and the Lease shall continue in
full force and effect for the full remaining term hereof, absent this
Paragraph 2.
               2) In the event Tenant timely exercises Tenant’s Option to Extend
as set forth herein, Landlord shall, within fifteen (15) days after receipt of
Tenant’s exercise of the Option, advise Tenant of any changes in the management
fee and the terms and conditions as referenced in Paragraph 2.A.1(ii) above) and
the Basic Rent (which shall not be less than the Basic Rent for the fifth year
of the current Term) required for the Extended Term of the Lease to make the
Basic Rent for the Premises comparable to the then current market triple net
basic rent for comparable properties either (i) then owned in whole or in part
by the above mentioned Landlord or by members of its immediate family in the
vicinity of the Premises or (ii) if not owned by Landlord or its family as
stated herein, other third party properties in the vicinity of the Premises.
Tenant shall have five (5) days after receipt from the Landlord of said new
terms and conditions and Basic Rent in which to accept said new terms and
conditions and Basic Rent and enter into written documentation confirming same.
In the event Tenant fails to execute said written documentation confirming said
new terms and conditions and Basic Rent for the Second Extended Term of Lease
within said five (5) day period, Tenant shall have no further Option to Extend
this Lease, and this Lease shall continue in full force and effect for the full
remaining term hereof absent of this Paragraph 2, with Landlord having no
further responsibility or obligation to Tenant with respect to Tenant’s Option
to Extend.
               3) It is agreed that if Tenant is at any time prior to exercising
its Option to Extend in default of this Lease and has failed to cure the default
in the time period allowed, this Paragraph 2 shall be null and void and Tenant
will have no further rights under this Paragraph. It is further agreed that if
Tenant has exercised its Option to Extend and is subsequently in default, and
has failed to cure the default in the time period allowed by the Lease at any
time prior to, or at the time the lease commences on the Second Extended Term,
Landlord may at its sole and absolute discretion, cancel Tenant’s Option to
Extend, and this Lease will continue in full force and effect for the full
remaining Term hereof, absent of this Paragraph 2.
               4) The Option rights of Tenant under this Paragraph 2.A, and the
Second Extended Term thereunder, are granted for Tenant’s personal benefit and
may not be assigned or transferred by Tenant, except as provided for in Lease
Paragraph 57 (“Permitted Assignments and Subleases”), either voluntarily or by
operation of law, in any manner whatsoever.
               5) Notwithstanding anything to the contrary in this Paragraph,
this Option to Extend is automatically forfeited by Tenant (without notice from
Landlord) in the event Tenant is, at any time during the Term of this Lease, in
default of said Lease and if Tenant

4

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Quantum 2
does not completely cure said default within five days for a monetary default
and thirty days for a non-monetary default (or such longer time as permitted by
cure in the Lease Agreement). In the event said Option to Extend is forfeited as
stated herein, Tenant shall have no further Option to Extend this Lease.
     B. THIRD FIVE (5)-YEAR OPTION PERIOD: Provided Tenant has extended the
Lease for an additional five year period as set forth in Paragraph A above,
Landlord hereby grants to Tenant another Option to Extend the Lease Agreement
upon the following terms and conditions;
          1) Tenant shall give Landlord written notice of Tenant’s exercise of
this Option to Extend at least one hundred eighty (180) days prior to the
expiration of the Basic Term hereof (not later than April 3, 2016), in which
event the Term of the Lease shall be considered extended for an additional five
(5) years (“Third Extended Term”) subject to the Basic Rent set forth below and
with: (i) the Basic Rent to be determined pursuant to Paragraph 2) below;
(ii) the management fee and the terms and conditions subject to amendment by
Landlord (Landlord, in its sole and absolute discretion, may, but is not
required to, incorporate its then current Lease provisions that are standard in
Landlord’s leases for comparable buildings as of the date of Tenant’s exercise
of its Option to Extend); and (iii) this Paragraph 2.B thereafter deleted. In
the event that Tenant fails to timely exercise Tenant’s Option as set forth
herein in writing, Tenant shall have no further Option to Extend this Lease, and
the Lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 2.B.
          2) In the event Tenant timely exercises Tenant’s Option to Extend as
set forth herein, Landlord shall, within fifteen (15) days after receipt of
Tenant’s exercise of option, advise Tenant of any changes in the management fee
and the terms and conditions as referenced in Paragraph 2.B.l(ii) above and
Basic Rent (which shall not be less than the Basic Rent for the fifth year of
the Second Extended Term) required for the Third Extended Term of the Lease to
make the Basic Rent for the Premises comparable to the then current market
triple net basic rent for comparable properties either (i) then owned in whole
or in part by the above mentioned Landlord or by members of its immediate family
in the vicinity of the Premises or (ii) if not owned by Landlord or its family
as stated herein, other third party properties in the vicinity of the Premises.
Tenant shall have five (5) days after receipt from the Landlord of said new
terms and conditions and Basic Rent in which to accept said new terms and
conditions and Basic Rent and enter into written documentation confirming same.
In the event Tenant fails to execute said written documentation confirming said
new terms and conditions and Basic Rent for the Third Extended Term of Lease
within said five (5) day period, Tenant shall have no further Option to Extend
this Lease, and this Lease shall continue in full force and effect for the full
remaining term hereof absent of this Paragraph 2.B, with Landlord having no
further responsibility or obligation to Tenant with respect to Tenant’s Option
to Extend.
          3) It is agreed that if Tenant is at any time prior to exercising its
Option to Extend in default of this Lease and has failed to cure the default in
the time period allowed, this Paragraph 2.B will be null and void and Tenant
will have no further rights under this Paragraph. It is further agreed that if
Tenant has exercised its Option to Extend and is subsequently in default, and
has failed to cure the default in the time period allowed by the Lease at any
time prior to, or at the scheduled Commencement Date of the Third Extended Term,
Landlord may at

5

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Quantum 2
its sole and absolute discretion, cancel Tenant’s Option to Extend, and this
Lease will continue in full force and effect for the full remaining Term hereof,
absent of this Paragraph 2.B.
          4) The Option rights of Tenant under this Paragraph 2.B and the Third
Extended Term thereunder, are granted for Tenant’s personal benefit and may not
be assigned or transferred by Tenant, except as provided for in Lease
Paragraph 57 (“Permitted Assignments and Subleases”), either voluntarily or by
operation of law, in any manner whatsoever.
          5) Notwithstanding anything to the contrary in this Paragraph 2.B,
this Option to Extend is automatically forfeited by Tenant (without notice from
Landlord) in the event Tenant is, at any time during the Term of this Lease, in
default of said Lease and if Tenant does not completely cure said default within
five days for a monetary default and thirty days for anon-monetary default (or
such longer time as permitted by cure in the Lease Agreement). In the event said
Option to Extend is forfeited as stated herein, Tenant shall have no further
Option to Extend this Lease.
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said October 31, 1989 Lease Agreement, as heretofore amended, shall remain in
full force and effect.

6

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Quantum 2
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 4
to Lease as of the day and year last written below.

                      LANDLORD: JOHN ARRILLAGA SURVIVOR’S TRUST      
ASSIGNEE/MAXTOR:

MAXTOR CORPORATION
a Delaware corporation
 
                   
By
  /s/ John Arrillaga, by Richard       By   /s/ Glenn Stevens    
 
  Peery, his attorney-in-fact          
 
   
 
  John Arrillaga, Trustee       Glenn H. Stevens       
 
                        Print or Type Name
Date:
  3/30/01              
 
                      RICHARD T. PEERY SEPARATE       Title:   V.P., General
Counsel & Secretary    
 
                   
 
                    PROPERTY TRUST                
 
                   
By
  /s/ Richard Peery       Date:   4/1/01    
 
                   
 
  Richard T. Peery, Trustee                
 
                    Date:   3/30/01       ASSIGNOR/QUANTUM:    
 
                   
 
                                QUANTUM CORPORATION
a Delaware corporation      
 
          By   /s/ Norm Claus    
 
                     
 
                        Print or Type Name    
 
                   
 
          Title:   V.P. Real Estate    
 
                     
 
          Date:   3/30/01    
 
                   

7

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LEASE AGREEMENT
     THIS LEASE, made this 10th day of April, 1992 between JOHN ARRILLAGA,
Trustee, or his Successor Trustee, UTA dated 7/20/77 (JOHN ARRILLAGA SEPARATE
PROPERTY TRUST) as amended, and RICHARD T. PEERY Trustee, or his Successor
Trustee, UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY TRUST) as
amended, hereinafter called Landlord and QUANTUM CORPORATION, a Delaware
corporation, hereinafter called Tenant.
WITNESSETH:
     Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord those certain premises (the “Premises”) outlined in red on Exhibit “A”,
attached hereto and incorporated herein by this reference thereto more
particularly described as follows:
All of that land containing approximately 3.752± acres and that certain 60.128 ±
square foot two-story building (“Building 3”) and parking appurtenant thereto,
to be constructed and landscaping to be installed by Landlord as shown within
the area outlined in Red (“Lot 3”) on Exhibit A to be located at 900 Sumac
Drive, Milpitas, California 95035. Said Premises is more particularly shown
within the area outlined in Red on Exhibit A attached hereto and incorporated
herein by this reference. The interior of the leased Premises shall be improved
in the configuration as shown in Red on Exhibit B to be attached hereto and
incorporated herein by this reference. The building shell shall be constructed
in accordance with the shell and site improvement specifications set forth on
Exhibit A, and the general building elevation set forth on Exhibit A.
SEE PARAGRAPH 49.
          The word “Premises” as used throughout this lease is hereby defined to
include the nonexclusive use of sidewalks and driveways in front of or adjacent
to the Premises, and the nonexclusive use of the area directly underneath or
over such sidewalks and driveways. The gross leasable area of the building shall
be measured from outside of exterior walls to outside of exterior walls, and
shall include any atriums, covered entrances or egresses and covered loading
areas.
          Said letting and hiring is upon and subject to the terms, covenants
and conditions hereinafter set forth and Tenant covenants as a material part of
the consideration for this Lease to perform and observe each and all of said
terms, covenants and conditions. This Lease is made upon the conditions of such
performance and observance.
     1. USE Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances for the purpose of office,
sales and R&D, and related uses necessary for the use of Tenant or any approved
assignee or subtenant to conduct its business providing any and all uses of the
Premises shall be subject to and in conformance with all governmental laws and
ordinances, and for no other purpose without

1

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

 

Landlord’s prior written consent, Tenant shall not do or permit to be done in or
about the Premises nor bring or keep or permit to be brought or kept in or about
the Premises anything which is prohibited by or will in any way increase the
existing rate of (or otherwise affect) fire or any insurance covering the
Premises or any part thereof, or any of its contents without the prior written
consent of Landlord, and provided Tenant bears any cost related to such
increased rate, or will cause a cancellation of any insurance covering the
Premises or any part thereof, or any of its contents. Tenant shall not do or
permit to be done anything in, on or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Premises or neighboring premises or injure or annoy them, or use or allow the
Premises to be used for any improper, immoral, unlawful or objectionable
purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about
the Premises. No sale by auction shall be permitted on the Premises. Tenant
shall not place any loads upon the floors, walls, or ceiling which endanger the
structure, or place any harmful fluids or other materials in the drainage system
of the building, or overload existing electrical or other mechanical systems. No
waste materials or refuse shall be dumped upon or permitted to remain upon any
part of the Premises or outside of the building in which the Premises are a
part, except in trash containers placed inside exterior enclosures designated by
Landlord for that purpose or inside of the building proper where designated by
Landlord. No materials, supplies, equipment, finished products or semi-finished
products, raw materials or articles of any nature shall be stored upon or
permitted to remain outside the Premises. Tenant shall not place anything or
allow anything to be placed near the glass of any window, door partition or wall
which may appear unsightly from outside the Premises. No loudspeaker or other
device, system or apparatus which can be heard outside the Premises shall be
used in or at the Premises without the prior written consent of Landlord. Tenant
shall not commit or suffer to be committed any waste in or upon the Premises.
Tenant shall indemnify, defend and hold Landlord harmless against any loss,
expense, damage, reasonable attorneys’ fees, or liability arising out of failure
of Tenant to comply with any applicable law that governs Tenant use of the
Premises. Tenant shall comply with any covenant, condition, or restriction
(“CC&R’s”) affecting the Premises. The provisions of this paragraph are for the
benefit of Landlord only and shall not be construed to be for the benefit of any
tenant or occupant of the Premises.
     2. TERM AND COMMENCEMENT DATE OF LEASE See Paragraphs 41, 42, & 43 of this
Lease.
     3. POSSESSION If Landlord, for any reason whatsoever other than Landlord’s
default cannot deliver possession of said premises to Tenant at the commencement
of the said term, as hereinbefore specified, this Lease shall not be void or
voidable; no obligation of Tenant shall be affected thereby; nor shall Landlord
or Landlord’s agents be liable to Tenant for any loss or damage resulting
therefrom; but in that event the commencement and termination dates of the
Lease, and all other dates affected thereby shall be revised to conform to the
date of Landlord’s delivery of possession, as specified in Paragraph 28, above;
provided, however, it is agreed that in no event shall the Lease commence sooner
that April 1, 1993 unless the parties agree in writing to an earlier date for
the Lease to commence. The above is, however, subject to the provision that the
period of delay of delivery of the Premises shall not exceed 180 days from the
commencement date herein (except those delays caused by Acts of God, strikes,
war, utilities, governmental bodies, weather, unavailable materials, and delays
beyond Landlord’s

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control shall be excluded in calculating such period) in which instance Tenant,
at its option, may, by written notice to Landlord, terminate this Lease. SEE
PARAGRAPH 47.
     4. RENT
          A. Basic Rent Tenant agrees to pay to Landlord at such place as
Landlord may designate without deduction, offset, prior notice, or demand, and
Landlord agrees to accept as Basic Rent for the leased Premises the total sum of
the amount to be calculated pursuant to Paragraph 39 in lawful money of the
United States of America, payable as follows:
SEE PARAGRAPHS 39 THROUGH 43.
          B. Time for Payment Full monthly rent is due in advance on the first
day of each calendar month. In the event that the term of this Lease commences
on a date other than the first day of a calendar month, on the date of
commencement of the term hereof Tenant shall pay to Landlord as rent for the
period from such date of commencement to the first day of the next succeeding
calendar month that proportion of the monthly rent hereunder which the number of
days between such date of commencement and the first day of the next succeeding
calendar month bears to thirty (30). In the event that the term of this Lease
for any reason ends on a date other than the last day of a calendar month, on
the first day of the last calendar month of the term hereof Tenant shall pay to
Landlord as rent for the period from said first day of said last calendar month
to and including the last day of the term hereof that proportion of the monthly
rent hereunder which the number of days between said first day of said last
calendar month and the last day of the term hereof bears to thirty (30).
          C. Late Charge Notwithstanding any other provision of this Lease, if
Tenant is in default in the payment of rental as set forth in this Paragraph 4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to the
delinquent rental due, a late charge for each rental payment in default ten
(10) days. Said late charge shall equal five percent (5%) of each rental payment
so in default. See Paragraph 50.
          D. Additional Rent Beginning with the commencement date of the term of
this Lease, Tenant shall pay to Landlord or to Landlord’s designated agent in
addition to the Basic Rent and as Additional Rent the following:
               (a) All Taxes relating to the Premises as set forth in
Paragraph 9, and
               (b) All insurance premiums relating to the Premises, as set forth
in Paragraph 12, and
               (c) All charges, costs and expenses, which Tenant is required to
pay hereunder, together with all interest and penalties, costs and expenses
including reasonable attorneys’ fees and legal expenses, that may accrue thereto
in the event of Tenant’s failure to pay such amounts, and all damages,
reasonable costs and expenses which Landlord may incur by reason of default of
Tenant or failure on Tenant’s part to comply with the terms of this Lease. In
the event of nonpayment by Tenant of Additional Rent, Landlord shall have all
the rights and remedies with respect thereto as Landlord has for nonpayment of
rent.

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     The Additional Rent due hereunder shall be paid to Landlord or Landlord’s
agent (i) within five days after presentation of invoice from Landlord or
Landlord’s agent setting forth such Additional Rent and/or (ii) at the option of
Landlord, Tenant shall pay to Landlord monthly, in advance, Tenant’s prorata
share of an amount estimated by Landlord to be Landlord’s approximate average
monthly expenditure for such Additional Rent items, which estimated amount shall
be reconciled at the end of each calendar year as compared to Landlord’s actual
expenditure for said Additional Rent items, with Tenant paying to Landlord, upon
demand, any amount of actual expenses expended by Landlord in excess of said
estimated amount, or Landlord refunding to Tenant (providing Tenant is not in
default in the performance of any of the terms, covenants and conditions of this
Lease in which case such amount shall be held by Landlord as a credit for
Tenant’s account until such default has been cured) any amount of estimated
payments made by Tenant in excess of Landlord’s actual expenditures for said
Additional Rent items.
     The respective obligations of Landlord and Tenant under this paragraph
shall survive the expiration or other termination of the term of this Lease, and
if the term hereof shall expire or shall otherwise terminate on a day other than
the last day of a calendar year, the actual Additional Rent incurred for the
calendar year in which the term hereof expires or otherwise terminates shall be
determined and settled on the basis of the statement of actual Additional Rent
for such calendar year and shall be prorated in the proportion which the number
of days in such calendar year preceding such expiration or termination bears to
365.
          E. Place of Payment of Rent and Additional Rent All Basic Rent
hereunder and all payments hereunder for Additional Rent shall be paid to
Landlord at the office of Landlord at Peery/Arrillaga, File 1504, P.O. Box
60000, San Francisco, CA 94160 or to such other person or to such other place as
Landlord may from time to time designate in writing.
          F. Security Deposit Concurrently with Tenant’s execution of this
Lease, Tenant shall deposit with Landlord the sum of ONE HUNDRED SIXTY SIX
THOUSAND FIVE HUNDRED FIFTY FOUR AND 56/00 Dollars ($166,554.56). Said sum shall
be held by Landlord as a Security Deposit for the faithful performance by Tenant
of all of the terms, covenants, and conditions of this Lease to be kept and
performed by Tenant during the term hereof. If Tenant defaults with respect to
any provision of this Lease, including, but not limited to, the provisions
relating to the payment of rent and any of the monetary sums due herewith,
Landlord may (but shall not be required to) use, apply or retain all or any part
of this Security Deposit for the payment of any other amount which Landlord may
spend by reason of Tenant’s default or to compensate Landlord for any other loss
or damage which Landlord may suffer by reason of Tenant’s default. If any
portion of said Deposit is so used or applied, Tenant shall, within ten
(10) days after written demand therefor, deposit cash with Landlord in the
amount sufficient to restore the Security Deposit to its original amount.
Tenant’s failure to do so shall be a material breach of this Lease. Landlord
shall not be required to keep this Security Deposit separate from its general
funds and Tenant shall not be entitled to interest on such Deposit. If Tenant
fully and faithfully performs every provision of this Lease to be performed by
it, the Security Deposit or any balance thereof shall be returned to Tenant (or
at Landlord’s option, to the last assignee of Tenant’s interest hereunder) at
the expiration of the Lease term and after Tenant has vacated the Premises. In
the event of termination of Landlord’s interest in this Lease, Landlord shall
transfer said Deposit to Landlord’s successor in interest whereupon Tenant
agrees

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to release Landlord from liability for the return of such Deposit or the
accounting therefor. SEE PARAGRAPH 51
     5. ACCEPTANCE AND SURRENDER OF PREMISES By entry hereunder, Tenant accepts
the Premises as being in good and sanitary order, condition and repair and
accepts the building and improvements included in the Premises in their present
condition and without representation or warranty by Landlord as to the condition
of such building or as to the use or occupancy which may be made thereof. Any
exceptions to the foregoing must be by written agreement executed by Landlord
and Tenant. Tenant agrees on the last day of the Lease term, or on the sooner
termination of this Lease, to surrender the Premises promptly and peaceably to
Landlord in good condition and repair (damage by Acts of God, fire, normal wear
and tear excepted), with all interior walls cleaned so that they appear freshly
painted, and repaired and replaced, if damaged; all floors cleaned and waxed;
all carpets cleaned and shampooed; all broken, marred or nonconforming
acoustical ceiling tiles replaced; all windows washed; the air conditioning and
heating systems serviced by a reputable and licensed service firm and in good
operating condition and repair; the plumbing and electrical systems and lighting
in good order and repair, including replacement of any burned out or broken
light bulbs or ballasts; the lawn and shrubs in good condition including the
replacement of any dead or damaged plantings; the sidewalk, driveways and
parking areas in good order, condition and repair; together with all
alterations, additions, and improvements which may have been made in, to, or on
the Premises (except moveable trade fixtures installed at the expense of Tenant)
except that Tenant shall ascertain from Landlord within ninety (90) days before
the end of the term of this Lease whether Landlord desires to have the Premises
or any part or parts thereof restored to their condition and configuration as
when the Premises were delivered to Tenant and if Landlord shall so desire, then
Tenant shall restore said Premises or such part or parts thereof before the end
of this Lease at Tenant’s sole cost and expense. Tenant, on or before the end of
the term or sooner termination of this Lease, shall remove all of Tenant’s
personal property and trade fixtures from the Premises, and all property not so
removed on or before the end of the term or sooner termination of this Lease
shall be deemed abandoned by Tenant and title to same shall thereupon pass to
Landlord without compensation to Tenant. Landlord may, upon termination of this
Lease, remove all moveable furniture and equipment so abandoned by Tenant, at
Tenant’s sole cost, and repair any damage caused by such removal at Tenant’s
sole cost. If the Premises be not surrendered at the end of the term or sooner
termination of this Lease, Tenant shall indemnify Landlord against loss or
liability resulting from the delay by Tenant in so surrendering the Premises
including, without limitation, any claims made by any succeeding tenant founded
on such delay. Nothing contained herein shall be construed as an extension of
the term hereof or as a consent of Landlord to any holding over by Tenant. The
voluntary or other surrender of this Lease or the Premises by Tenant or a mutual
cancellation of this Lease shall not work as a merger and, at the option of
Landlord, shall either terminate all or any existing subleases or subtenancies
or operate as an assignment to Landlord of all or any such subleases or
subtenancies. SEE PARAGRAPH 52.
     6. ALTERATIONS AND ADDITIONS Tenant shall not make, or suffer to be made,
any alteration or addition to the Premises, or any part thereof, without the
written consent of Landlord first had and obtained by Tenant (such consent not
to be unreasonably withheld), but at the cost of Tenant, and any addition to, or
alteration of, the Premises, except moveable furniture and trade fixtures, shall
at once become a part of the Premises and belong to Landlord.

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Landlord reserves the right to approve all contractors and mechanics proposed by
Tenant to make such alterations and additions. Tenant shall retain title to all
moveable furniture and trade fixtures placed in the Premises. All heating,
lighting, electrical, airconditioning, partitioning, drapery, carpeting, and
floor installations made by Tenant, together with all property that has become
an integral part of the Premises, shall not be deemed trade fixtures. Tenant
agrees that it will not proceed to make such alteration or additions, without
having obtained consent from Landlord to do so, and until five (5) days from the
receipt of such consent, in order that Landlord may post appropriate notices to
avoid any liability to contractors or material suppliers for payment for
Tenant’s improvements. Tenant will at all times permit such notices to be posted
and to remain posted until the completion of work. Tenant shall, if required by
Landlord, secure at Tenant’s own cost and expense, a completion and lien
indemnity bond, satisfactory to Landlord, for such work. Tenant further
covenants and agrees that any mechanic’s lien filed against the Premises for
work claimed to have been done for, or materials claimed to have been furnished
to Tenant, will be discharged by Tenant, by bond or otherwise, within ten
(10) days after Tenant receives notice of the filing thereof, at the cost and
expense of Tenant. Any exceptions to the foregoing must be made in writing and
executed by both Landlord and Tenant. SEE PARAGRAPH 52.
     7. TENANT MAINTENANCE Tenant shall, at its sole cost and expense, keep and
maintain the Premises (including appurtenances) and every part thereof in a high
standard of maintenance and repair, or replacement, and in good and sanitary
condition. Tenant’s maintenance and repair responsibilities herein referred to
include, but are not limited to, janitorization, all windows (interior and
exterior), window frames, plate glass and glazing (destroyed by accident or act
of third parties), truck doors, plumbing systems (such as water and drain lines,
sinks, toilets, faucets, drains, showers and water fountains), electrical
systems (such as panels, conduits, outlets, lighting fixtures, lamps, bulbs,
tubes and ballasts), heating and airconditioning systems (such as compressors,
fans, air handlers, ducts, mixing boxes, thermostats, time clocks, boilers,
heaters, supply and return grills), structural elements and exterior surfaces of
the building, store fronts, roofs, downspouts, all interior improvements within
the premises including but not limited to wall coverings, window coverings,
carpet floor coverings partitioning, ceilings, doors (both interior and
exterior), including closing mechanisms, latches locks, skylights (if any),
automatic fire extinguishing systems, and elevators and all other interior
improvements of any nature whatsoever, and all exterior improvements including
but not limited to landscaping, sidewalks, driveways, parking lots including
striping and sealing, sprinkler systems, lighting, ponds, fountains, waterways,
and drains. Tenant agrees to provide carpet shields under all rolling chairs or
to otherwise be responsible for wear and tear of the carpet caused by such
rolling chairs if such wear and tear exceeds that caused by normal foot traffic
in surrounding areas. Areas of excessive wear shall be replaced at Tenant’s sole
expense upon Lease termination. Tenant hereby waives all rights under, and
benefits of, Subsection 1 of Section 1932 and Section 1941 and 1942 of the
California Civil Code and under any similar law, statute or ordinance now or
hereafter in effect. In the event any of the above maintenance responsibilities
apply to any other tenant(s) of Landlord where there is common usage with other
tenant(s), such maintenance responsibilities and charges shall be allocated to
the leased Premises by square footage or other equitable basis as calculated and
determined by Landlord. SEE PARAGRAPH 53.

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     8. UTILITIES Tenant shall pay promptly, as the same become due, all charges
for water, gas, electricity, telephone, telex and other electronic communication
service, sewer service, waste pick-up and any other utilities, materials or
services furnished directly to or used by Tenant on or about the Premises during
the term of this Lease, including, without limitation, any temporary or
permanent utility surcharge or other exactions whether or not hereinafter
imposed. In the event the above charges apply to any other tenant(s) of Landlord
where there is common usage with other tenant(s), such charges shall be
allocated to the leased Premises by square footage or other equitable basis as
calculated and determined by Landlord.
     Landlord shall not be liable for and Tenant shall not be entitled to any
abatement or reduction of rent by reason of any interruption or failure of
utility services to the Premises when such interruption or failure is caused by
accident, breakage, repair, strikes, lockouts, or other labor disturbances or
labor disputes of any nature, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord.
     9. TAXES
          A. Notwithstanding the following and pursuant to the terms of the
Option Agreement dated October 31, 1989 related to this Lease Tenant is
responsible for paying all real estate taxes and assessments assessed against
the Premises leased hereunder from the date Tenant exercised its option on said
Premises which date was April 6, 1992. As Additional Rent and in accordance with
Paragraph 4D of this Lease, Tenant shall pay to Landlord, or if Landlord so
directs, directly to the Tax Collector, all Real Property Taxes relating to the
Premises. In the event the Premises leased hereunder consist of only a portion
of the entire tax parcel, Tenant shall pay to Landlord Tenant’s proportionate
share of such real estate taxes allocated to the leased Premises by square
footage or other reasonable basis as calculated and determined by Landlord. If
the tax billing pertains 100% to the leased Premises, and Landlord chooses to
have Tenant pay said real estate taxes directly to the Tax Collector, then in
such event it shall be the responsibility of Tenant to obtain the tax and
assessment bills and pay, prior to delinquency, the applicable real property
taxes and assessments pertaining to the leased Premises, and failure to receive
a bill for taxes and/or assessments shall not provide a basis for cancellation
of or nonresponsibility for payment of penalties for nonpayment or late payment
by Tenant. The term “Real Property Taxes”, as used herein, shall mean (i) all
taxes, assessments, levies and other charges of any kind or nature whatsoever,
general and special, foreseen and unforeseen (including all installments of
principal and interest required to pay any general or special assessments for
public improvements and any increases resulting from reassessments caused by any
change in ownership of the Premises) now or hereafter imposed by any
governmental or quasi-governmental authority or special district having the
direct or indirect power to tax or levy assessments, which are levied or
assessed against, or with respect to the value, occupancy or use of, all or any
portion of the Premises (as now constructed or as may at any time hereafter be
constructed, altered, or otherwise changed) or Landlord’s interest therein; any
improvements located within the Premises (regardless of ownership); the
fixtures, equipment and other property of Landlord, real or personal, that are
an integral part of and located in the Premises; or parking areas, public
utilities, or energy within the Premises; (ii) all charges, levies or fees
imposed by reason of environmental regulation or other governmental control of
the Premises: and (iii) all costs and fees (including reasonable attorneys fees)
incurred by Landlord in reasonably contesting any Real Property Tax and in
negotiating with public authorities as to any Real

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Property Tax. If at any time during the term of this Lease the taxation or
assessment of the Premises prevailing as of the commencement date of this Lease
shall be altered so that in lieu of or in addition to any Real Property Tax
described above there shall be levied, assessed or imposed (whether by reason of
a change in the method of taxation or assessment, creation of a new tax or
charge, or any other cause) an alternate or additional tax or charge (i) on the
value, use or occupancy of the Premises or Landlord’s interest therein or
(ii) on or measured by the gross receipts, income or rentals from the Premises,
on Landlord’s business of leasing the Premises, or computed in any manner with
respect to the operation of the Premises, then any such tax or charge, however
designated, shall be included within the meaning of the term “Real Property
Taxes” for purposes of this Lease. If any Real Property Tax is based upon
property or rents unrelated to the Premises, then only that part of such Real
Property Tax that is fairly allocable to the Premises shall be included within
the meaning of the term “Real Property Taxes”. Notwithstanding the foregoing,
the term “Real Property Taxes” shall not include estate, inheritance, gift or
franchise taxes of Landlord or the federal or state net income tax imposed on
Landlord’s income from all sources. SEE PARAGRAPH 54.
          B. Taxes on Tenant’s Property Tenant shall be liable for and shall pay
ten days before delinquency, taxes levied against any personal property or trade
fixtures placed by Tenant in or about the Premises. If any Such taxes on
Tenant’s personal property or trade fixtures are levied against Landlord or
Landlord’s property or if the assessed value of the Premises is increased by the
inclusion therein of a value placed on such personal property or trade fixtures
of Tenant and if Landlord, after written notice to Tenant, pays the taxes based
on such increased assessment, which Landlord shall have the right to do
regardless of the validity thereof, but only under proper protest if requested
by Tenant, Tenant shall upon demand, as the case may be, repay to Landlord the
taxes so levied against Landlord, or the proportion of such taxes resulting from
such increase in the assessment; provided that in any such event Tenant shall
have the right, in the name of Landlord and with Landlord’s full cooperation, to
bring suit in any court of competent jurisdiction to recover the amount of such
taxes so paid under protest, and any amount so recovered shall belong to Tenant.
     10. LIABILITY INSURANCE Tenant, at Tenant’s expense, agrees to keep in
force during the term of this Lease a policy of comprehensive general liability
insurance for bodily injury and property damage occurring in, on or about the
Premises, including parking and landscaped areas, in the amount of $2,000,000
combined single limit. Such insurance shall be primary and noncontributory as
respects any insurance carried by Landlord. The policy or policies effecting
such insurance shall name Landlord as additional insureds, and shall insure any
liability of Landlord, contingent or otherwise, as respects acts or omissions of
Tenant, its agents, employees or invitees or otherwise by any conduct or
transactions of any of said persons in or about or concerning the Premises,
including any failure of Tenant to observe or perform any of its obligations
hereunder; shall be issued by an insurance company admitted to transact business
in the State of California; and shall provide that the insurance effected
thereby shall not be canceled, except upon thirty (30) days’ prior written
notice to Landlord. A copy of said policy shall be delivered to Landlord. If,
during the term of this Lease, in the considered opinion of Landlord’s Lender,
insurance advisor, or counsel, the amount of insurance described in this
Paragraph 10 is not adequate, Tenant agrees to increase said coverage to such
reasonable amount as Landlord’s Lender, insurance advisor, or counsel shall deem
adequate.

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     11. TENANT’S PERSONAL PROPERTY INSURANCE AND WORKMAN’S COMPENSATION
INSURANCE Tenant shall maintain a policy or policies of fire and property damage
insurance in “all risk” form with a sprinkler leakage endorsement insuring the
personal property, inventory, trade fixtures, and leasehold improvements within
the leased Premises for the full replacement value thereof. The proceeds from
any of such policies shall be used for the repair or replacement of such items
so insured.
     Tenant shall also maintain a policy or policies of workman’s compensation
insurance and any other employee benefit insurance sufficient to comply with all
laws.
     12. PROPERTY INSURANCE Landlord shall purchase and keep in force, and as
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord Tenant’s proportionate share (allocated to the leased Premises
by square footage or other equitable basis as calculated and determined by
Landlord) of the cost of, policy or policies of insurance covering loss or
damage to the Premises (excluding routine maintenance and repairs and incidental
damage or destruction caused by accidents or vandalism for which Tenant is
responsible under Paragraph 7) in the amount of the full replacement value
thereof, providing protection against those perils included within the
classification of “all risks” insurance and flood and/or earthquake insurance,
if available, plus a policy of rental income insurance in the amount of one
hundred (100%) percent of twelve (12) months Basic Rent, plus sums paid as
Additional Rent. If such insurance cost is increased due to Tenant’s use of the
Premises, Tenant agrees to pay to Landlord the full cost of such increase.
Tenant shall have no interest in nor any right to the proceeds of any insurance
procured by Landlord for the Premises.
     Landlord and Tenant do each hereby respectively release the other, to the
extent of insurance coverage of the releasing party, from any liability for loss
or damage caused by fire or any of the extended coverage casualties included in
the releasing party’s insurance policies, irrespective of the cause of such fire
or casualty; provided, however, that if the insurance policy of either releasing
party prohibits such waiver, then this waiver shall not take effect until
consent to such waiver is obtained. If such waiver is so prohibited, the insured
party affected shall promptly notify the other party thereof. SEE PARAGRAPH 55.
     13. INDEMNIFICATION Landlord shall not be liable to Tenant and Tenant
hereby waives all claims against Landlord for any injury to or death of any
person or damage to or destruction of property in or about the Premises by or
from any cause whatsoever, including, without limitation, gas, fire, oil,
electricity or leakage of any character from the roof, walls, basement or other
portion of the Premises but excluding, however, the negligence of Landlord, its
agents, servants, employees, invitees, or contractors of which negligence
Landlord has knowledge and reasonable time to correct. Except as to injury to
persons or damage to property the principal cause of which is the negligence of
Landlord, and subject to the last two sentences of Paragraph 12, Tenant shall
hold Landlord harmless from and defend Landlord against any and all expenses,
including reasonable attorneys’ fees in connection therewith, arising out of any
injury to or death of any person or damage to or destruction of property
occurring in, on or about the Premises, or any part thereof, from any cause
whatsoever.
     14. COMPLIANCE Tenant, at its sole cost and expense, shall promptly comply
with all laws, statutes, ordinances and governmental rules, regulations or
requirements now or

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hereafter in effect; with the requirements of any board of fire underwriters or
other similar body now or hereafter constituted; and with any direction or
occupancy certificate issued pursuant to law by any public officer; provided,
however, that no such failure shall be deemed a breach of the provisions if
Tenant, immediately upon notification, commences to remedy or rectify said
failure. The judgment of any court of competent jurisdiction or the admission of
Tenant in any action against Tenant, whether Landlord be a party thereto or not,
that Tenant has violated any such law, statute, ordinance or governmental rule,
regulation, requirement, direction or provision, shall be conclusive of that
fact as between Landlord and Tenant. Tenant shall, at its sole cost and expense,
comply with any and all requirements pertaining to said Premises, of any
insurance organization or company, necessary for the maintenance of reasonable
fire and public liability insurance covering requirements pertaining to said
Premises, of any insurance organization or company, necessary for the
maintenance of reasonable fire and public liability insurance covering the
Premises. SEE PARAGRAPHS 45 AND 53.
     15. LIENS Tenant shall keep the Premises free from any liens arising out of
any work performed, materials furnished or obligation incurred by Tenant. In the
event that Tenant shall not, within ten (10) days following Tenant’s receipt of
notice of the imposition of such lien, cause the same to be released of record,
Landlord shall have, in addition to all other remedies provided herein and by
law, the right, but no obligation, to cause the same to be released by such
means as it shall deem proper, including payment of the claim giving rise to
such lien. All sums paid by Landlord for such purpose, and all expenses incurred
by it in connection therewith, shall be payable to Landlord by Tenant on demand
with interest at the prime rate of interest as quoted by the Bank of America.
     16. ASSIGNMENT AND SUBLETTING Tenant shall not assign, transfer, or
hypothecate the leasehold estate under this Lease, or any interest therein, and
shall not sublet the Premises, or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person or entity to occupy or use the
Premises, or any portion thereof, without, in each case, the prior written
consent of Landlord which consent will not be unreasonably withheld. In the
event Tenant is allowed to assign, transfer or sublet the whole or any part of
the premises, with the prior written consent of Landlord, no assignee,
transferee or subtenant shall assign or transfer this Lease, either in whole or
in part, or sublet the whole or any part of the Premises, without also having
obtained the prior written consent of Landlord. A consent of Landlord to one
assignment, transfer, hypothecation, subletting, occupation or use by any other
person shall not release Tenant from any of Tenant’s obligations hereunder or be
deemed to be a consent to any subsequent similar or dissimilar assignment,
transfer, hypothecation, subletting, occupation or use by any other person. Any
such assignment, transfer, hypothecation, subletting, occupation or use without
such consent shall be void and shall constitute a breach of this Lease by Tenant
and shall, at the option of Landlord exercised by written notice to Tenant,
terminate this Lease. The leasehold estate under this Lease shall not, nor shall
any interest therein, be assignable for any purpose by operation of law without
the written consent of Landlord. As a condition to its consent, Landlord may
require Tenant to pay all reasonable expenses in connection with the assignment,
and Landlord may require Tenant’s assignee or transferee (or other assignees or
transferees) to assume in writing all of the obligations under this Lease and
for Tenant to remain liable to Landlord under the Lease. SEE PARAGRAPHS 56 AND
57.

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     17. SUBORDINATION AND MORTGAGES In the event Landlord’s title or leasehold
interest is now or hereafter encumbered by a deed of trust, upon the interest of
Landlord in the land and buildings in which the demised Premises are located, to
secure a loan from a lender (hereinafter referred to as “Lender”) to Landlord,
Tenant shall, at the request of Landlord or Lender, execute in writing an
agreement subordinating its rights under this Lease to the lien of such deed of
trust, or, if so requested, agreeing that the lien of Lender’s deed of trust
shall be or remain subject and subordinate to the rights of Tenant under this
Lease. Notwithstanding any such subordination, Tenant’s possession under this
Lease shall not be disturbed if Tenant is not in default and so long as Tenant
shall pay all rent and observe and perform all of the provisions set forth in
this Lease. SEE PARAGRAPH 58.
     18. ENTRY BY LANDLORD Landlord reserves, and shall at all reasonable times
have, the right to enter the Premises to inspect them; to perform any services
to be provided by Landlord hereunder; to make repairs or provide any services to
a contiguous tenant(s); to submit the Premises to prospective purchasers,
mortgagers or tenants; to post notices of nonresponsibility; and to alter,
improve or repair the Premises or other parts of the building, all without
abatement of rent, and may erect scaffolding and other necessary structures in
or through the Premises where reasonably required by the character of the work
to be performed; provided, however that the business of Tenant shall be
interfered with to the least extent that is reasonably practical. Any entry to
the Premises by Landlord for the purposes provided for herein 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, actual or constructive, of Tenant
from the Premises or any portion thereof. SEE PARAGRAPH 59.
     19. BANKRUPTCY AND DEFAULT The commencement of a bankruptcy action or
liquidation action or reorganization action or insolvency action or an
assignment of or by Tenant for the benefit of creditors, or any similar action
undertaken by Tenant, or the insolvency of Tenant, shall, at Landlord’s option,
constitute a breach of this Lease by Tenant. If the trustee or receiver
appointed to serve during a bankruptcy, liquidation, reorganization, insolvency
or similar action elects to reject Tenant’s unexpired Lease, the trustee or
receiver shall notify Landlord in writing of its election within thirty
(30) days after an order for relief in a liquidation action or within thirty
(30) days after the commencement of any action.
          Within thirty (30) days after court approval of the assumption of this
Lease, the trustee or receiver shall cure (or provide adequate assurance to the
reasonable satisfaction of Landlord that the trustee or receiver shall cure) any
and all previous defaults under the unexpired Lease and shall compensate
Landlord for all actual pecuniary loss and shall provide adequate assurance of
future performance under said Lease to the reasonable satisfaction of Landlord.
Adequate assurance of future performance, as used herein, includes, but shall
not be limited to: (i) assurance of source and payment of rent, and other
consideration due under this Lease; (ii) assurance that the assumption or
assignment of this Lease will not breach substantially any provision, such as
radius, location, use, or exclusivity provision, in any agreement relating to
the above described Premises.
          Nothing contained in this section shall affect the existing right of
Landlord to refuse to accept an assignment upon commencement of or in connection
with a bankruptcy, liquidation, reorganization or insolvency action or an
assignment of Tenant for the benefit of

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creditors or other similar act. Nothing contained in this Lease shall be
construed as giving or granting or creating an equity in the demised Premises to
Tenant. In no event shall the leasehold estate under this Lease, or any interest
therein, be assigned by voluntary or involuntary bankruptcy proceeding without
the prior written consent of Landlord. In no event shall this Lease or any
rights or privileges hereunder be an asset of Tenant under any bankruptcy,
insolvency or reorganization proceedings.
          The failure to perform or honor any covenant, condition or
representation made under this Lease shall constitute a default hereunder by
Tenant upon expiration of the appropriate grace period hereinafter provided.
Tenant shall have a period of ten (10) days from the date of written notice from
Landlord within which to cure any default in the payment of rental or adjustment
thereto. Tenant shall have a period of thirty (30) days from the date of written
notice from Landlord within which to cure any other default under this Lease.
Upon an uncured default of this Lease by Tenant, Landlord shall have the
following rights and remedies in addition to any other rights or remedies
available to Landlord at law or in equity:
               (a) The rights and remedies provided for by California Civil Code
Section 1951.2, including but not limited to, recovery of the worth at the time
of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of rental loss for the same period
that Tenant proves could be reasonably avoided, as computed pursuant to
subsection (b) of said Section 1951.2.
               (b) The rights and remedies provided by California Civil Code
Section which allows Landlord to continue the Lease in affect and to enforce all
of its rights and remedies under this Lease, including the right to recover rent
as it becomes due, for so long as Landlord does not terminate Tenant’s right to
possession; acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver upon Landlord’s initiative to protect its
interest under this Lease shall not constitute a termination of Tenant’s right
to possession.
               (c) The right to terminate this Lease by giving notice to Tenant
in accordance with applicable law.
               (d) The right and power, after compliance with all statutory
requirements and in any event on not less than three (3) business days prior
written notice, to enter the Premises and remove therefrom all persons and
property, to store such property in a public warehouse or elsewhere at the cost
of and for the account of Tenant, and to sell such property and apply such
proceeds therefrom pursuant to applicable California law. Landlord, may from
time to time sublet the Premises or any part thereof for such term or terms
(which may extend beyond the term of this Lease) and at such rent and such other
terms as Landlord in its reasonable sole discretion may deem advisable, with the
right to make alterations and repairs to the Premises. Upon each subletting,
(i) Tenant shall be immediately liable to pay Landlord, in addition to
indebtedness other than rent due hereunder, the reasonable cost of such
subletting, including, but not limited to, reasonable attorneys’ fees, and any
real estate commissions actually paid, and the cost of such reasonable
alterations and repairs incurred by Landlord and the amount, if any, by which
the rent hereunder for the period of such subletting (to the extent such period
does not exceed the term hereof) exceeds the amount to be paid as rent for the
Premises

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for such period or (ii) at the option of Landlord, rents received from such
subletting shall be applied first to payment of indebtedness other than rent due
hereunder from Tenant to Landlord; second, to the payment of any costs of such
subletting and of such alterations and repairs; third to payment of rent due and
unpaid hereunder; and the residue, if any, shall be held by Landlord and applied
in payment of future rent as the same becomes due hereunder. If Tenant has been
credited with any rent to be received by such subletting under option (i) and
such rent shall not be promptly paid to Landlord by the subtenant(s), or if such
rentals received from such subletting under option (ii) during any month be less
than that to be paid during that month by Tenant hereunder, Tenant shall pay any
such deficiency to Landlord. Such deficiency shall be calculated and paid
monthly. No taking possession of the Premises by Landlord shall be construed as
an election on its part to terminate this Lease unless a written notice of such
intention be given to Tenant. Notwithstanding any such subletting without
termination, Landlord may at any time hereafter elect to terminate this Lease
for such previous breach.
               (e) The right to have a receiver appointed for Tenant upon
application by Landlord, to take possession of the Premises and to apply any
rental collected from the Premises and to exercise all other rights and remedies
granted to Landlord pursuant to subparagraph d above. SEE PARAGRAPH 60.
     20. ABANDONMENT Tenant shall not vacate or abandon the Premises at any time
during the term of this Lease; and if Tenant shall abandon, vacate or surrender
said Premises, or be dispossessed by the process of law, or otherwise, any
personal property belonging to Tenant and left on the Premises shall be deemed
to be abandoned, at the option of Landlord, except such property as may be
mortgaged to Landlord. SEE PARAGRAPH 61.
     21. DESTRUCTION In the event the Premises are destroyed in whole or in part
from any cause, except for routine maintenance and repairs and incidental damage
and destruction caused from vandalism and accidents for which Tenant is
responsible under Paragraph 7, Landlord may, at its option:
               (a) Rebuild or restore the Premises to their condition prior to
the damage or destruction, or
               (b) Terminate this Lease.
          If Landlord does not give Tenant notice in writing within thirty
(30) days from the destruction of the Premises of its election to either rebuild
and restore them, or to terminate this Lease, Landlord shall be deemed to have
elected to rebuild or restore them, in which event Landlord agrees, at its
expense, promptly to rebuild or restore the Premises to their condition prior to
the damage or destruction. Tenant shall be entitled to a reduction in rent while
such repair is being made in the proportion that the area of the Premises
rendered untenantable by such damage bears to the total area of the Premises. If
Landlord does not complete the rebuilding or restoration within one hundred
eighty (180) days following the date of destruction (such period of time to be
extended for delays caused by the fault or neglect of Tenant or because of Acts
of God, acts of public agencies, labor disputes, strikes, fires, freight
embargos, rainy or stormy weather, inability to obtain materials, supplies or
fuels, acts of contractors or subcontractors, or delay of the contractors or
subcontractors due to such causes or other

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contingencies beyond the control of Landlord), then Tenant shall have the right
to terminate this Lease by giving fifteen (15) days prior written notice to
Landlord. Notwithstanding anything herein to the contrary, Landlord’s obligation
to rebuild or restore shall be limited to the building and interior improvements
constructed by Landlord as they existed as of the commencement date of the Lease
and shall not include restoration of Tenant’s trade fixtures, equipment
merchandise, or any improvements, alterations or additions made by Tenant to the
Premises which Tenant shall forthwith replace or fully repair at Tenant’s sole
cost and expense provided this Lease is not cancelled according to the
provisions above.
          Unless this Lease is terminated pursuant to the foregoing provisions,
this Lease shall remain in full force and effect. Tenant hereby expressly waives
the provisions of Section 1932, Subdivision 2, in Section 1933, Subdivision 4 of
the California Civil Code.
          In the event that the building in which the Premises are situated is
damaged or destroyed to the extent of not less than 331/3% of the replacement
cost thereof, Landlord may elect to terminate this Lease, whether the Premises
be injured or not. In the event the destruction of the Premises is caused by
Tenant, Tenant shall pay the deductible portion of Landlord’s insurance
proceeds. SEE PARAGRAPH 62.
     22. EMINENT DOMAIN If all or any part of the Premises shall be taken by any
public or quasi-public authority under the power of eminent domain or conveyance
in lieu thereof, this Lease shall terminate as to any portion of the Premises so
taken or conveyed on the date when title vests in the condemnor and Landlord
shall be entitled to any and all payment, income, rent, award, or any interest
therein whatsoever which may be paid or made in connection with such taking or
conveyance, and Tenant shall have no claim against Landlord or otherwise for the
value of any unexpired term of this Lease. Notwithstanding the foregoing
paragraph, any compensation specifically awarded Tenant for loss of business,
Tenant’s personal property, moving cost or loss of goodwill shall be and remain
the property of Tenant.
          If any action or proceeding is commenced for such taking of the
Premises or any part thereof, or if Landlord is advised in writing by any entity
or body having the right or power of condemnation of its intention to condemn
the premises or any portion thereof, then Landlord shall have the right to
terminate this Lease by giving Tenant written notice thereof within sixty (60)
days of the date of receipt of said written advice, or commencement of said
action or proceeding, or taking conveyance, which termination shall take place
as of the first to occur of the last day of the calendar month next following
the month in which such notice is given or the date on which title to the
Premises shall vest in the condemnor.
          In the event of such a partial taking or conveyance of the Premises,
if the portion of the Premises taken or conveyed is so substantial that the
Tenant can no longer reasonably conduct its business, Tenant shall have the
privilege of terminating this Lease within sixty (60) days from the date of such
taking or conveyance, upon written notice to Landlord of its intention so to do,
and upon giving of such notice this Lease shall terminate on the last day of the
calendar month next following the month in which such notice is given, upon
payment by Tenant of the rent from the date of such taking or conveyance to the
date of termination.

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          If a portion of the Premises be taken by condemnation or conveyance in
lieu thereof and neither Landlord nor Tenant shall terminate this Lease as
provided herein, this Lease shall continue in full force and effect as to the
part of the Premises not so taken or conveyed, and the rent herein shall be
apportioned as of the date of such taking or conveyance so that thereafter the
rent to be paid by Tenant shall be in the ratio that the area of the portion of
the Premises not so taken or conveyed bears to the total area of the Premises
prior to such taking. SEE PARAGRAPH 63.
     23. SALE OR CONVEYANCE BY LANDLORD In the event of a sale or conveyance of
the Premises or any interest therein, by any owner of the reversion then
constituting Landlord, the transferor shall thereby be released from any further
liability upon any of the terms, covenants or conditions (express or implied)
herein contained in favor of Tenant, and in such event, insofar as such transfer
is concerned, Tenant agrees to look solely to the responsibility of the
successor in interest of such transferor in and to the Premises and this Lease.
This Lease shall not be affected by any such sale or conveyance, and Tenant
agrees to attorn to the successor in interest of such transferor. SEE PARAGRAPH
64.
     24. ATTORNMENT TO LENDER OR THIRD PARTY In the event the interest of
Landlord in the land and buildings in which the leased Premises are located
(whether such interest of Landlord is a fee title interest or a leasehold
interest) is encumbered by deed of trust, and such interest is acquired by the
lender or any third party through judicial foreclosure or by exercise of a power
of sale at private trustee’s foreclosure sale, Tenant hereby agrees to attorn to
the purchaser at any such foreclosure sale and to recognize such purchaser as
the Landlord under this Lease. In the event the lien of the deed of trust
securing the loan from a Lender to Landlord is prior and paramount to the Lease,
this Lease shall nonetheless continue in full force and effect for the remainder
of the unexpired term hereof, at the same rental herein reserved and upon all
the other terms, conditions and covenants herein contained.
     25. HOLDING OVER Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in this Lease. Any holding over after the expiration or other termination of the
term of this Lease, with the consent of Landlord, shall be construed to be a
tenancy from month to month, on the same terms and conditions herein specified
insofar as applicable except that the monthly Basic Rent shall be increased to
an amount equal to one hundred twenty five (125%) percent of the monthly Basic
Rent required during the last month of the Lease term.
     26. CERTIFICATE OF ESTOPPEL Either party shall at any time upon not less
than ten (10) days prior written notice from the other party execute,
acknowledge and deliver to the requesting party 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) and the date to which the
rent and other charges are paid in advance, if any, and (ii) acknowledging that
there are not, to the best of such party’s knowledge, any uncured defaults on
the part of the other party hereunder, or specifying such defaults, if any, are
claimed. Any such statement may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises. A party’s failure to deliver such

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statement within such time shall be conclusive upon the party receiving such
request that this Lease is in full force and effect, without modification except
as may be represented by Landlord that there are no uncured defaults in the
requesting party’s performance, and that not more than one month’s rent has been
paid in advance.
     27. CONSTRUCTION CHANGES It is understood that the description of the
Premises and the location of ductwork, plumbing and other facilities therein are
subject to such minor changes as Landlord or Landlord’s architect determines to
be desirable in the course of construction of the Premises, and no such changes
shall affect this Lease or entitle Tenant to any reduction of rent hereunder or
result in any liability of Landlord to Tenant. Landlord does not guarantee the
accuracy of any drawings supplied to Tenant and verification of the accuracy of
such drawings rests with Tenant.
     28. RIGHT OF LANDLORD TO PERFORM All terms, covenants and conditions of
this Lease to be performed or observed by Tenant shall be performed or observed
by Tenant at Tenant’s sole cost and expense and without any reduction of rent.
If Tenant shall fail to pay any sum of money, or other rent, required to be paid
by it hereunder or shall fail to perform any other term or covenant hereunder on
its part to be performed, and such failure shall continue for five (5) days
after written notice thereof by Landlord. Landlord, without waiving or releasing
Tenant from any obligation of Tenant hereunder, may, but shall not be obliged
to, make any such payment or perform any such other term or covenant on Tenant’s
part to be performed. All sums so paid by Landlord and all necessary costs of
such performance by Landlord together with interest thereon at the rate of the
prime rate of interest per annum as quoted by the Bank of America from the date
of such payment on performance by Landlord, shall be paid (and Tenant covenants
to make such payment) to Landlord on demand by Landlord and Landlord shall have
(in addition to any other right or remedy of Landlord) the same rights and
remedies in the event of nonpayment by Tenant as in the case of failure by
Tenant in the payment of rent hereunder.
     29. ATTORNEYS’ FEES
          A. In the event that either Landlord or Tenant should bring suit for
the possession of the Premises, for the recovery of any sum due under this
Lease, or because of the breach of any provision of this Lease, or for any other
relief against the other party hereunder, then all costs and expenses, including
reasonable attorney’s fees, incurred by the prevailing party therein shall be
paid by the other party, which obligation on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action and
shall be enforceable whether or not the action is prosecuted to judgment.
          B. Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant’s occupancy hereunder, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including a
reasonable attorney’s fee.
     30. WAIVER The waiver by either party of the other party’s failure to
perform or observe any term, covenant or condition herein contained to be
performed or observed by such waiving party shall not be deemed to be a waiver
of such term, covenant or condition or of any subsequent failure of the party
failing to perform or observe the same or any other such term, covenant or
condition therein contained, and no custom or practice which may develop between

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the parties hereto during the term hereof shall be deemed a waiver of, or in any
way affect, the right of either party to insist upon performance and observance
by the other party in strict accordance with the terms hereof.
     31. NOTICES All notices, demands, requests, advices or designations which
may be or are required to be given by either party to the other hereunder shall
be in writing. All notices, demands, requests, advices or designations by
Landlord to Tenant shall be sufficiently given, made or delivered if personally
served on Tenant by leaving the same at the Premises of if sent by United Stated
certified or registered mail, postage prepaid, addressed to Tenant at the
Premises. All notices, demands, requests, advices or designations by Tenant to
Landlord shall be sent by United States certified or registered mail, postage
prepaid, addressed to Landlord at its offices at Peery/Arrillaga, 2560 Mission
College Blvd., Suite 101, Santa Clara, CA 95054. Each notice, request, demand,
advice or designation referred to in this paragraph shall be deemed received on
the date of the personal service or mailing thereof in the manner herein
provided, as the case may be.
     32. EXAMINATION OF LEASE Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument is not effective as a lease or otherwise until its execution
and delivery by both Landlord and Tenant.
     33. DEFAULT BY LANDLORD Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but
in no event earlier than (30) days after written notice by Tenant to Landlord
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have heretofore been furnished to Tenant in
writing, specifying wherein Landlord has failed to perform such obligations;
provided, however, that if the nature of Landlord’s obligations is such that
more than thirty (30) days are required for performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
     34. CORPORATE AUTHORITY If Tenant is a corporation (or a partnership), each
individual executing this Lease on behalf of said corporation (or partnership)
represents and warrants that he is duly authorized to execute and deliver this
Lease on behalf of said corporation (or partnership) in accordance with the
by-laws of said corporation (or partnership in accordance with the partnership
agreement) and that this Lease is binding upon said corporation (or partnership)
in accordance with its terms. If Tenant is a corporation, Tenant shall, within
thirty (30) days after execution of this Lease, deliver to Landlord a certified
copy of the resolution of the Board of Directors of said corporation authorizing
or ratifying the execution of this Lease.
     35. INTENTIONALLY LEFT BLANK
     36. LIMITATION OF LIABILITY In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord:

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               (a) the sole and exclusive remedy shall be against Landlord and
Landlord’s assets;
               (b) no partner of Landlord shall be sued or named as a party in
any suit or action (except as may be necessary to secure jurisdiction of the
partnership);
               (c) no service of process shall be made against any partner of
Landlord (except as maybe necessary to secure jurisdiction of the partnership);
               (d) no partner of Landlord shall be required to answer or
otherwise plead to any service of process;
               (e) no judgment will be taken against any partner of Landlord;
               (f) any judgment taken against any partner of Landlord may be
vacated and set aside at any time without hearing;
               (g) no writ of execution will ever be levied against the assets
of any partner of Landlord;
               (h) these covenants and agreements are enforceable both by
Landlord and also by any partner of Landlord.
     Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or at common law.
     37. SIGNS No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside of
the Premises or any exterior windows of the Premises without the written consent
of Landlord first had and obtained and Landlord shall have the right to remove
any such sign, placard, picture, advertisement, name or notice without notice to
and at the expense of Tenant. If Tenant is allowed to print or affix or in any
way place a sign in, on or about the Premises, upon expiration or other sooner
termination of this Lease, Tenant at Tenant’s sole cost and expense shall both
remove such sign and repair all damage in such a manner as to restore all
aspects of the appearance of the Premises to the condition prior to the
placement of said sign.
          All approved signs or lettering on outside doors shall be printed,
painted, affixed or inscribed at the expense of Tenant by a person reasonably
approved of by Landlord.
          Tenant shall not place anything or allow anything to be placed near
the glass of any window, door partition or wall which may appear unsightly from
outside the Premises.
     38. MISCELLANEOUS AND GENERAL PROVISIONS
          A. Use of Building Name. Tenant shall not, without the written consent
of Landlord, use the name of the building for any purpose other than as the
address of the business conducted by Tenant in the Premises.

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     B. Choice of Law; Severability. This Lease shall in all respects be
governed by and construed in accordance with the laws of the State of
California. If any provision of this Lease shall be invalid, unenforceable or
ineffective for any reason whatsoever, all other provisions hereof shall be and
remain in full force and effect.
     C. Definition of Terms. The term “Premises” includes the space leased
hereby and any improvements now or hereafter installed therein or attached
thereto. The term “Landlord” or any pronoun used in place thereof includes the
plural as well as the singular and the successors and assigns of Landlord. The
term “Tenant” or any pronoun used in place thereof includes the plural as well
as the singular and individuals, firms, associations, partnerships and
corporations, and their and each of their respective heirs, executors,
administrators, successors and permitted assigns, according to the context
hereof, and the provisions of this Lease shall inure to the benefit of and bind
such heirs, executors, administrators, successors and permitted assigns.
     The term “person” includes the plural as well as the singular and
individuals, firms, associations, partnerships and corporations. Words used in
any gender include other genders. If there be more than one Tenant the
obligations of Tenant hereunder are joint and several. The paragraph headings of
this Lease are for convenience of reference only and shall have no effect upon
the construction or interpretation of any provision hereof.
     D. Time of Essence. Time is of the essence of this Lease and of each and
all of its provisions.
     E. Quitclaim. At the expiration or earlier termination of this Lease,
Tenant shall execute, acknowledge and deliver to Landlord, within ten (10) days
after written demand from Landlord to Tenant, any quitclaim deed or other
document required by any reputable title company, licensed to operate in the
State of California, to remove the cloud or encumbrance created by this Lease
from the real property of which Tenant’s Premises are a part.
     F. Incorporation of Prior Agreements; Amendments. This agreement and the
exhibits and attachments may be altered, amended or revoked only by an
instrument in writing signed by both Landlord and Tenant. Landlord and Tenant
agree hereby that all prior or contemporaneous oral agreements between and among
themselves and their agents or representatives relative to the leasing of the
Premises are merged in or revoked by this agreement.
     G. Recording. Landlord and Tenant shall record a short form memorandum
hereof in the form attached hereto as Exhibit D.
     H. Amendments for Financing. Tenant further agrees to execute any
amendments reasonably required by a lender to enable Landlord to obtain
financing, so long as Tenant’s rights hereunder are not materially and adversely
affected and there is no change in the Basic Rent Options to Renew, Lease Term
or Construction obligations of Landlord.
     I. Additional Paragraphs. Paragraphs 39 through 65 are added hereto and are
included as a part of this Lease.

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          J. Clauses, Plats and Riders. Clauses, plats and riders, if any,
signed by Landlord and Tenant and endorsed on or affixed to this Lease are a
part hereof.
          K. Diminution of Light, Air or View. Tenant covenants and agrees that
no diminution or shutting off of light, air or view by any structure which may
be hereafter erected (whether or not by Landlord) shall in any way affect this
Lease, entitle Tenant to any reduction of rent hereunder or result in any
liability of Landlord to Tenant.

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     IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year first above written.

                      LANDLORD:       TENANT:    
 
                    JOHN ARRILLAGA       QUANTUM CORPORATION,     SEPARATE
PROPERTY TRUST       a Delaware corporation    
 
                   
By
  /s/ John Arrillaga       By   /s/ Joseph C. Shepela    
 
                   
 
  John Arrillaga, Trustee                
 
                   
 
          Title   Vice President Human Resources    
 
                   
 
                   
 
                    RICHARD T. PEERY                 SEPARATE PROPERTY TRUST    
           
 
                   
By
  /s/ Richard Peery                
 
                   
 
  Richard T. Peery, Trustee                

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     Paragraphs 39 through 65 to Lease Agreement dated April 10, 1992. By and
Between JOHN ARRILLAGA AND RICHARD T. PEERY SEPARATE PROPERTY TRUSTS, as
Landlord, and QUANTUM CORPORATION, a Delaware corporation, as Tenant for 60,128
± Square Feet of Space Located at 900 Sumac Drive, Milpitas, California.
     39. BASIC RENT: In accordance with Paragraph 4A, subject to the provisions
of Paragraphs 39 and 40, Basic Rent shall be payable as follows during the
indicated months of the term of the Lease based upon the gross leasable area
within the building that is part of the Premises:

          Period   Monthly Basic Rent
Months 1-12 (plus the partial calendar month, if any, following the Commencement
Date)
  $1.16/sf
 
       
Months 13-24
  $1.21/sf
 
       
Months 25-36
  $1.26/sf
 
       
Months 37-48
  $1.31/sf
 
       
Months 49-60
  $1.36/sf
 
       
Months 61-72
  $1.41/sf
 
       
Months 73-84
  $1.46/sf
 
       
Months 85-96
  $1.51/sf
 
       
Months 97-108
  $1.56/sf
 
       
Months 109-120
  $1.61/sf
 
       
Months 121-132
  $1.66/sf
 
       
Months 133-144
  $1.71/sf
 
       
Months 145-156
  $1.76/sf
 
       
Months 157-163
  $1.81/sf

     Example of calculation of Basic Rent per month for the period commencing
with the first through the twelfth months of said Lease:

         
Square footage of Building
    60,128  
Per square foot Basic Monthly Rent
    x $1.16  
 
     
Basic Rent per Month
  $ 69,748.48  
 
     

In the event this Lease commences on June 1, 1993 or thereafter, the Basic Rent
schedule shown above may be amended in accordance with Article I.F.2.(b)(1)
entitled “Basic Monthly Rental” of Option Agreement dated October 31, 1989
between the parties.

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     40. BASIC RENT REDUCTION IN THE EVENT TENANT DEFERS ITS OCCUPANCY OF THE
LEASED PREMISES: It is agreed between the parties that the Lease term will
commence on the Commencement Date as defined in Paragraph 41.B., however,
Landlord has agreed that Tenant may, by providing Landlord 30 days prior written
notice, defer its occupancy of the Leased Premises from the Lease Commencement
Date (projected to be April 1, 1993) through July 31, 1993 (hereinafter referred
to as the “Deferral Period”). Provided Tenant notifies Landlord of its election
to defer its occupancy, as provided above, and further provided Tenant does not
occupy any portion of the Leased Premises, the Monthly Basic Rent will be
reduced to FORTY THOUSAND AND NO/100 DOLLARS ($40,000.00) per month during the
Deferral Period and the Lease will be amended to reflect said adjustment to the
Basic Rent Schedule. In the event Tenant occupies any part of the Leased
Premises during the Deferral Period, the Lease will be further amended and
Tenant will pay, from the date of occupancy of any part of the Leased Premises,
Basic Rent per the Schedule outlined in Paragraph 39 “Basic Rent.” For example,
if the Lease Commencement Date is April 1, 1993 and Tenant notifies Landlord by
March 1, 1993 of its intent to defer occupancy until July 1, 1993, and Tenant
occupies part or all of the Leased Premises on June 1, 1993, the Basic Rent for
the Deferral Period shall be payable as follows: April 1 through
30th....$40,000.00; May 1 through 31st....$40,000.00; June 1 through
30th....$69,748.48; July I through 31st....$69,748.48. In the event the Lease
term commences on a date other than the first day of the month, or Tenant
occupies the Leased Premises during the Deferral Period on a date other than the
first day of the month, the Basic Rent shall be pro rated on a daily basis for
such partial month at the Basic Rent rate scheduled for the Commencement Date as
shown in Paragraph 39 above, and/or the reduced Basic Rent as provided for in
this Paragraph 40. For example, if the Lease Commencement Date is April 1, 1993
and Tenant occupies part or all of the Leased Premises on April 15, 1993,
Tenant’s Basic Rent due for the period April 1, 1993 through April 30, 1993
shall be $55,100.59, calculated as follows:

     
$40,000.00/mo x 12
  = $480,000.00/year
 
   
$480,000.00 divided by 365
  = $1,315.07/day
 
   
$ 1,315.07 x 14 days
  = $18,410.98 due for the period 4/1/93 — 4/14/93
 
   
$ 69,748.48/mo x 12
  = $836,981.76/year
 
   
$836,981.76 divided by 365
  = $2,293.10/day
 
   
$ 2,293.10 x 16 days
  = $36,689.61 due for the period 4/15/93 — 4/30/93

     
$18,410.98
  due for the period 4/01/93 - 4/14/93
$36,689.61
  due for the period 4/15/93 - 4/30/93
 
   
$55,100.59
  due for the period 4/01/93 - 4/30/93
 
   

This reduction in Basic Rent is only allowed from the Commencement Date through
July 31, 1993 (but under no circumstances after July 31, 1993). In no event
whatsoever shall Tenant be

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entitled to such reduction in Basic Rent after July 31, 1993 regardless of the
Commencement Date of this Lease and regardless of the reason for any delays in
the Commencement Date of this Lease. Subject to the above, commencing August 1,
1993, Tenant shall pay monthly Basic Rent in accordance with the Basic Rent
schedule shown in Paragraph 39 “Basic Rent” above (i.e. Months 1-12 $1.16 PSF,
Months 13-24 $1.21 PSF,...). For purposes of this Paragraph 40, Tenant shall be
deemed to occupy the Leased Premises on the date any of Tenant’s personnel
occupy any part of the Premises, provided however, entry into the Premises by
Tenant to install Tenant’s trade fixtures and furniture won’t be considered
occupancy by Tenant to the Premises.
It is further agreed that during the Deferral Period Tenant will be responsible,
from the Commencement Date of the Lease, for paying all Additional Rent expenses
as outlined in Paragraph 4D.
     41. LEASE TERM AND COMMENCEMENT DATE: The following provisions relate to
the commencement and duration of the term of this Lease:
          A. Lease Term: The term of this Lease shall commence on the
“Commencement Date” (as defined herein) which is projected to be April 1, 1993,
and shall continue for a period of thirteen years and six months plus the
partial calendar month, if any, in which the Commencement Date occurs, subject
to (i) earlier termination in accordance with the provisions of this Lease, and
(ii) extension pursuant to the options to renew granted by Paragraphs 42 and 43;
provided, however, that in the event the Lease term commences on a date other
than April 1, 1993, the Lease term shall be amended to reflect a term equal to
the period which commences on the Act Commencement Date and ends on
September 30, 2006 (the termination date) (i.e., In the event the Lease term
commences June 1, 1993, the term of this Lease shall be amended to reflect a
thirteen year four month term. In the event the Lease term commences February 1,
1993, the Lease term shall be for thirteen years eight months).
          B. Commencement Date Defined: As used herein, the term “Commencement
Date” shall mean the later to occur of the following: (i) the date upon which
the “Improvements” are “Substantially Completed”; or (ii) April 1, 1993;
provided, however, that if prior to the later of such dates Tenant’s operating
personnel enter into occupancy of the Premises and commence the operation of
Tenant’s business within the Premises, the Commencement Date shall be the date
such personnel of Tenant so enter into occupancy of the Premises. The term
“Substantially Completed” and/or “Substantial Completion” shall mean the date
when all of the following have occurred with respect to the Improvements in
question: (i) the construction of the Improvements in question has been
substantially completed in accordance with the approved plans therefor except
for punch list items which do not prevent Tenant from reasonably using the
Premises to conduct Tenant’s business; (ii) Landlord has executed a certificate
or statement representing that the Improvements in question have been
substantially completed in accordance with the plans and specifications therefor
except for the punch list items which do not prevent Tenant from reasonably
using the Premises to conduct Tenant’s business; and (iii) the Building
Department of the City of Milpitas has completed its final inspection of such
Improvements and has “signed off” the building inspection card approving such
work as complete except for punch list items which do not prevent Tenant from
reasonably using the Premises to conduct Tenant’s business. Notwithstanding the
foregoing, Substantial Completion of the Interior Improvements shall not be
deemed to have occurred until Landlord has obtained final or conditional
approval

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from the Fire Department of the City of Milpitas that the Improvements have been
completed in accordance with such department’s requirements (subject only to
conditions that do not prevent Tenant from occupying the Improvements).
          C. Lease Terms Co-extensive: It is acknowledged that (i) Landlord and
Tenant have previously executed three separate leases. Two of said leases dated
October 31, 1989 (hereinafter referred to as the 1989 Leases) are for Premises
located at 1130 Bellew Drive and 490 McCarthy Blvd., Milpitas, California and
one of said leases dated September 17, 1990 (hereinafter referred to as the
“1990 Lease”) is for Premises located at 1000 Sumac Drive, Milpitas, California,
and (ii) it is the intention of the parties that the term of this Lease be
co-extensive with the term of the 1989 Leases and the 1990 Lease, such that the
terms of all four leases expire on the same date. To that end, following the
date upon which the Commencement Date of this Lease becomes established as a
date certain following completion of improvements and satisfaction of any other
conditions related to determining such date, the term of this Lease may be
reduced or extended to coincide with the term of the 1989 Leases and the 1990
Lease, however, in no event will the term of this Lease be for a period of less
than ten (10) years. As soon as the parties are able to implement the provisions
of this paragraph because the Commencement Date of this Lease has been
determined following completion of improvements and satisfaction of other
appropriate conditions, the parties shall execute an amendment to this Lease
establishing the applicable Commencement Date in accordance with the foregoing
provisions of this Paragraph 41C, the actual rent based upon the measurements of
the completed building covered by this Lease as certified prior to the
Commencement Date by an architect or general contractor reasonably approved by
the parties, and the actual date for each rent adjustment provided for in this
Lease, based upon the actual Lease Commencement Date.
     42. FIRST FIVE-YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant an
option to extend the term of this Lease for an additional five (5) year period
upon the following terms and conditions:
          A. If Tenant elects to exercise the option to extend, Tenant shall
give Landlord written notice of Tenant’s exercise of this option to extend at
lease one hundred eighty (180) days prior to the expiration of the Basic Term
hereof, in which event the Lease shall be considered extended for an additional
five (5) year period upon the same terms and conditions as this Lease, absent
this Paragraph 42 and subject to the rental as set forth below. In the event
that Tenant fails to timely exercise Tenant’s option as set forth herein in
writing, Tenant shall have no further option to extend this Lease, and this
Lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 42.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

      Period   Monthly Basic Rent
Months 1-12
  $1.86/sf
Months 13-24
  $1.91/sf
Months 25-36
  $1.96/sf
Months 37-48
  $2.01/sf
Months 49-60
  $2.06/sf

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          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to renew granted by this Paragraph 42 at any time that Tenant is in
material default of its obligations under this Lease, if Tenant has received
written notice from Landlord that Tenant is in default, and such default has not
been timely cured within the time period provided for in this Lease; provided,
however, that if such default of Tenant is not for money due under this Lease
and cannot be cured, and if Landlord does not elect to terminate this Lease as a
result of such non-curable default by Tenant, Tenant may exercise the option to
extend granted by this Paragraph 42 notwithstanding such non-curable default.
     43. SECOND FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the
Lease for an additional five (5) year period as set forth in Paragraph 42,
Landlord hereby grants to Tenant an option to extend the term of this Lease for
an additional five (5) year period upon the following terms and conditions:
          A. Tenant shall give Landlord written notice of Tenant’s exercise of
this option to extend at least one hundred eighty (180) days prior to the
expiration of the Lease term as extended pursuant to Paragraph 42, in which
event the Lease shall be considered extended for an additional five (5) year
period upon the same terms and conditions as this Lease, absent this
Paragraph 43A and subject to the rental as set forth below. In the event that
Tenant fails to timely exercise Tenant’s option as set forth herein in writing,
Tenant shall have no further option to extend this Lease, and this Lease shall
continue in full force and effect for the full remaining term hereof, absent
this Paragraph 43.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

      Period   Monthly Basic Rent
Months 1-12
  $2.11/sf
Months 13-24
  $2.16/sf
Months 25-36
  $2.21/sf
Months 37-48
  $2.26/sf
Months 49-60
  $2.31/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to extend granted by this Paragraph 43 at any time that Tenant is in
material default of its obligations under this Lease, if Tenant has received
written notice from Landlord that Tenant is in default, and such default has not
been timely cured within the time period provided for in this Lease; provided,
however, that if such default of Tenant is not for money due under this Lease
and cannot be cured, and if Landlord does not elect to terminate this Lease as a
result of such non-curable default by Tenant, Tenant may exercise the option to
extend granted by this Paragraph 43 notwithstanding such non-curable default.
     44. ASSESSMENT CREDITS: The demised property herein is subject to a special
assessment levied by the City of Milpitas in Improvement District No. 12. As a
part of said special assessment proceedings, additional bonds were sold and
assessments levied to provide for construction contingencies and reserve funds.
Interest will be earned on such funds created

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for contingencies and on reserve funds which will be credited for the benefit of
said assessment district. To the extent surpluses are created in said district
through unused contingency funds, interest earnings or reserve funds, such
surpluses shall be deemed the property of Landlord. Notwithstanding that such
surpluses may be credited on assessments otherwise due against the demised
premises, Tenant shall pay to Landlord, as additional rent if, and at the time
of any such credit of surpluses, an amount equal to all such surpluses so
credited.
     45. HAZARDOUS MATERIALS: The parties agree as follows with respect to the
existence or the use of hazardous material on the Premises:
          A. Tenant shall have no obligations to “clean up”, to comply with any
law regarding, or to reimburse, release, indemnify, or defend Landlord with
respect to any hazardous materials or wastes which Tenant or other parties on
the Premises did not store, dispose, or transport in, use, or cause to be on the
Premises in violation of applicable law during the term of this Lease. Any
handling, transportation, storage, treatment, disposal or use of hazardous
materials by Tenant or other parties in or about the Premises during the term of
this Lease shall strictly comply with all applicable laws and regulations.
Tenant will be 100 percent liable and responsible for any and all “clean up” of
said toxic waste and/or hazardous materials contamination which Tenant, its
agents, or future subtenants, if any, does store, dispose, or transport in, use
or cause to be on the Premises in violation of applicable law or governing
agency(s) or which originate on Premises, during the term of this Lease from any
manner whatsoever, including but not limited to, dumping by others, (or which
originate on the surface of the Premises any time after October 28, 1989, the
date the Option Agreement dated October 31, 1989 related to said Lease was
executed by all parties, and before the Commencement Date of this Lease, but
excluding Hazardous Materials on the Premises prior to the Lease Commencement
Date because of the storage, use, disposal, or transportation of such materials
or waste by any of Landlord’s contractors or otherwise arising out of
construction work performed by or under the direction of Landlord on the
Premises and Landlord shall be responsible for all required actions with respect
to such materials or wastes), and will indemnify Landlord and hold Landlord
harmless from any liabilities, demands, costs, expenses and damages, including
attorney fees incurred as a result of any claims resulting from such
contamination, or from any claims for personal injury or property damage or
diminution in the value of the Premises caused by the use, storage, disposal or
transportation of hazardous materials on the Premises by Tenant or other parties
during the term of this Lease. It is agreed that the Tenant’s responsibilities
related to toxic waste and hazardous materials will survive the termination date
of the Lease. Tenant agrees to complete compliance with governmental regulations
regarding use or removal or remediation of Hazardous Materials used, stored,
disposed, transported or caused to be on the Premises by Tenant or its agents or
subtenants, or which originate on the Premises during the term of this Lease,
and prior to the termination of said Lease Tenant agrees to follow the proper
closure procedures and will obtain a clearance from the local fire department
and/or the appropriate city agency. Tenant also agrees to install such toxic
waste and/or hazardous materials monitoring devices as Landlord reasonably deems
necessary to monitor any use of hazardous materials by Tenant, its agents or
subtenants, originating from the Premises during the Lease term, if recommended
by a qualified environmental consulting firm.
          B. Landlord hereby makes the following representations to Tenant, each
of which is made only to the best of Landlord’s knowledge as of the date
Landlord executes this

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Lease, without any inquiry or investigation having been made or required by
Landlord regarding this subject, nor does Landlord have any obligation to
investigate or make inquiry regarding the subject:
               (1) The soil and ground water on or under the Premises does not
contain hazardous materials in amounts which violate any laws to the extent that
any governmental entity could require either Landlord or Tenant to take any
remedial action with respect to such hazardous materials.
               (2) During the time that Landlord has owned the Premises,
Landlord has received no notice of (i) any violation, or alleged violation, of
any law that has not been corrected to the satisfaction of the appropriate
authority, (ii) any pending claims relating to the presence of hazardous
material on the Premises, or (iii) any pending investigation by any governmental
agency concerning the Premises relating to hazardous materials.
          C. Landlord and Tenant shall each give written notice to the other as
soon as reasonably practicable of (i) any communication received from any
governmental authority concerning hazardous materials which relates to the
Premises, and (ii) any contamination of the Premises by hazardous materials
which constitutes a violation of any law. If during the Lease term Tenant
proposes to use other hazardous materials at the Premises, Tenant shall inform
Landlord of such use, identifying the hazardous materials and the manner of
their use, storage and disposal, and shall agree (i) to use, store and dispose
of such materials strictly in compliance with all laws and (ii) that the
indemnity set forth in Paragraph 45A shall be applicable to Tenant’s use of such
material.
          D. Landlord or Tenant may, at any time, cause testing wells to be
installed on the Premises, and may cause the ground water to be tested to detect
the presence of hazardous material by the use of such tests as are then
customarily used for such purposes. Testing wells installed by Tenant shall be
paid for by Tenant. If tests conducted by Landlord disclose that Tenant has
violated any hazardous materials laws, or Tenant or parties on the Premises
during the term of this Lease have contaminated the Premises as determined by
regulatory agencies pursuant to hazardous materials laws, or that Tenant has
liability to Landlord pursuant to Paragraph 45A, then Tenant shall pay for
l00 percent of the cost of the test and all related expense. Prior to the
expiration of the Lease term, Tenant shall remove any testing wells it has
installed at the Premises, and return the Premises to the condition existing
prior to the installation of such wells, unless Landlord requests in writing
that Tenant leave all or some of the testing wells in which instance the wells
requested to be left shall not be removed.
          E. If any tests performed by Tenant or Landlord prior to the
Commencement Date disclose hazardous materials at the Premises, Landlord at its
expense will promptly take all reasonable action required by law with respect to
the existence of such materials at the Premises. The Commencement Date shall not
be delayed because of such action by Landlord unless occupation of the Premises
is prohibited by law.
          F. The obligations of Landlord and Tenant under this Paragraph 45
shall survive the expiration or earlier termination of the term of this Lease.
The rights and obligations

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of Landlord and Tenant with respect to issues relating to hazardous materials
are exclusively established by this Paragraph 45.
     46. APPROVALS: Whenever this Lease requires the approval or consent of
either Landlord or Tenant before an action may be taken, such approval or
consent shall not be unreasonably withheld or delayed.
     47. LANDLORD’S RIGHT TO TERMINATE: It is understood that the Premises to be
leased by Tenant are to be constructed by Landlord, and that Landlord is
required to obtain the necessary building permits for the building shell before
construction of said Premises can commence. Therefore, it is agreed that in the
event Landlord cannot obtain all the necessary building permits for the building
shell by September 1, 1992, then either Landlord or Tenant can terminate this
Lease by written notice to the other party given within thirty (30) days
thereafter, without any liability to the other party of any type whatsoever, and
that this Lease Agreement shall be null and void as of the date of receipt of
such notice. Landlord agrees to use its best efforts to obtain the required
permits by September 1, 1992.
     48. CROSS DEFAULT: As set forth in Paragraph 41C, Landlord and Tenant have
entered into other leases dated October 31, 1989 referred to herein as the “1989
Leases” and Lease Agreement dated September 17, 1990 referred to herein as the
“1990 Lease”. As a material part of the consideration for the execution of this
Lease by Landlord, it is agreed between Landlord and Tenant that a default under
this Lease, or a default under said 1989 and 1990 Leases may, at the option of
Landlord, be considered a default under all leases, in which event Landlord
shall be entitled (but in no event required) to apply all rights and remedies of
Landlord under the terms of one lease to all Leases including, but not limited
to, the right to terminate one, two, three or all of said leases by reason of a
default under said 1989 and 1990 Leases or hereunder.
     49. SUBDIVISION: With respect to the development of the Premises:
     Landlord and Tenant agree that the Premises and all of Parcels 1, 2, 4, and
5 shown on that certain parcel map, recorded on July 23, 1990 in Book 616 of
Maps, Page 20 (the “Larger Parcel”) during (and limited to) the term of this
Lease shall be developed and used only in accordance with a master plan,
developed by Landlord. The parties have mutually agreed to a Master Plan for the
general development of the Premises and the Larger Parcel which is attached
hereto as Exhibit “Al” and entitled “Master Site Plan”. Said Master Site Plan
sets forth the buildings and land to be leased under this Lease (Building 3 on
Lot 3), the 1989 Leases (Buildings 1 and 2 on Lots 1 and 2, respectively) and
the 1990 Lease (Building 4 on Lot 4), and the building and land proposed to be
developed on the remainder of the property (Building 5 to be constructed on Lot
5) as well as the general location of the parking and landscaping pertaining
thereto. The parties agree that the Master Site Plan may be modified provided
that (i) a perimeter driveway is developed in front of each building which
generally runs near and parallel with the street surrounding the 37 ± acre site,
(ii) all buildings will be similar and generally architecturally compatible,
(iii) a landscape area is developed along the frontage of all streets between
the street and parking area closest to the street and (iv) a landscape and
recreation area at the rear of Lot 4 (as shown on the Site Plan) is developed
when a building is constructed on Lot 4. The parties agree that (i) Landlord may
change the Master Plan, shape and sizes of the

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buildings, parking and landscaping as long as the general development concept
set forth above is generally followed by Landlord, and (ii) any successor or
assign of Landlord or Tenant shall be required to consent and agree to develop
the Premises and the Larger Parcel in accordance with the foregoing, and shall
be deemed to have assumed the obligation to so develop such property by
acceptance of a deed, assignment or other means of transfer of Landlord’s or
Tenant’s interest in such property or any portion thereof, as the case may be.
Further, the memorandum of lease to be recorded by Landlord and Tenant pursuant
to Paragraph 38G shall contain the following statement:
“The Lease provides that from and after the commencement date of the 1989 Leases
(as defined in the Lease) and continuing for a period of fifteen (15) years, or
the date of termination of the Lease, whichever first occurs, the Premises and
the larger 37.096 acre parcel in which the Premises were originally included,
and which is described on the attached Exhibit “A”, incorporated herein by this
reference, shall be developed by Landlord and Tenant or their successors or
assigns, as more particularly set forth in the Lease, so that (i) a perimeter
driveway is developed in front of each building which generally runs near and
parallel with the street surrounding the 37 ± acre site, (ii) a landscape area
is developed along the frontage of all streets between the street and parking
area closest to the street, (iii) a landscape and recreation area at the rear of
Lot 4 (as shown on the Site Plan identified in the Lease) is developed when a
building is constructed on Lot 4, and (iv) all buildings will be similar and
generally architecturally compatible, it being agreed that Landlord may change
the shape and sizes of the buildings, parking and landscaping as long as the
general development concept set forth above and in the Lease is generally
followed by Landlord. If a Public Agency requires modifications to the lot lines
as shown on the Master Plan, the parties agree to reasonable lot line
modifications.”
     50. LIMITATION ON IMPOSITION OF LATE CHARGE: Notwithstanding anything
contained in Paragraph 4C, if Tenant is delinquent in the payment of Basic Rent
or Additional Rent and is subject to a late charge, Landlord agrees to waive the
late charge if the Basic Rent or Additional Rent due is paid within five days of
Landlord’s written notice to Tenant of the delinquent amount owed and provided
Tenant has not been delinquent in its payment of Basic Rent or Additional Rent
owed under said Lease during the twelve (12) month period preceding the rent
delinquency in question.
     51. SECURITY DEPOSIT: The following provisions shall modify Paragraph 4F:
          A. Within thirty (30) days after the expiration or earlier termination
of the Lease term and after Tenant has vacated the Premises, Landlord shall
return to Tenant the entire Security Deposit except for amounts that Landlord
has deducted therefrom that are needed by Landlord to cure defaults of Tenant
under the Lease or compensate Landlord for damages for which Tenant is liable
pursuant to this Lease. The use or disposition of the Security Deposit shall be
subject to the provisions of California Civil Code Section 1950.7.

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          B. Tenant shall have the option of satisfying its obligation with
respect to an amount equal to one-half (1/2) of the Security Deposit by
providing to Landlord, at Tenant’s sole cost, a letter of credit which (i) is
drawn upon an institutional lender reasonably acceptable to Landlord, (ii) is in
the amount of one-half (1/2) of the Security Deposit, (iii) is for a term of at
lease twelve (12) months, (iv) with respect to any letter of credit in effect
within the six month period immediately prior to the expiration of the Lease
term, shall provide that the term of such letter of credit shall extend at least
thirty (30) days past the Lease expiration date, (v) may be drawn upon by
Landlord upon submission of a declaration of Landlord that Tenant is in default
(as defined in Paragraph 19 and as modified by Paragraph 60). Landlord shall not
be obligated to furnish proof of default to such institutional lender, and
Landlord shall only be required to give the institutional lender written
notification that Tenant is in default and upon receiving such written
notification from Landlord the institutional lender shall be obligated to
immediately deliver cash to Landlord equal to the amount Landlord may spend or
become obligated to spend by reason of Tenant’s default or to compensate
Landlord for any loss or damage which Landlord may suffer by reason of Tenant’s
default up to 1/2 of the total Security Deposit, (vi) shall provide that if the
letter of credit is not renewed, replaced or extended within twenty (20) days of
its expiration date the issuer of the credit shall automatically make payment of
the amount of the letter of credit directly to Landlord after the date which is
twenty (20) days before the expiration date, and no later than the expiration
date, without Landlord being required to make demand upon the letter of credit,
and (vii) is otherwise in form and content reasonably satisfactory to Landlord.
If Tenant provides Landlord with a letter of credit meeting the foregoing
requirements, one-half (1/2) of the cash Security Deposit (i.e., $83,277.28 of
the $166,554.56 Deposit) shall be returned to Tenant by Landlord inasmuch as the
cash deposit remaining and the Letter of Credit equal the total Security Deposit
required in Paragraph 4F. If Tenant defaults with respect to any provisions of
this Lease, including but not limited to provisions relating to the payment of
rent, Landlord may (but shall not be required to) draw down on the letter of
credit for payment of any sum which Landlord may spend or become obligated to
spend by reason of Tenant’s default, or to compensate Landlord for any loss or
damage which Landlord may suffer by reason of Tenant’s default. Landlord and
Tenant acknowledge that such letter of credit will be treated as if it were a
cash security deposit, and such letter of credit may be drawn down upon by
Landlord upon demand and presentation of evidence of the identity of Landlord to
the issuer, in the event that Tenant defaults with respect to any provision of
this Lease and such default is not cured within any applicable cure period.
Notwithstanding anything to the contrary in this Lease, Landlord shall not be
obligated to furnish proof of default to such institutional lender and Landlord
is only required to give the institutional lender written notification that
Tenant is in default and upon receiving such written notification from Landlord
the institutional lender shall be obligated to immediately deliver cash to
Landlord equal to the amount Landlord may spend or become obligated to spend by
reason of Tenant’s default, or to compensate Landlord for any loss or damage
which Landlord may suffer by reason of Tenant’s default up to 1/2 of the total
Security Deposit. Landlord acknowledges that it is not entitled to draw down
such letter of credit unless Landlord would have been entitled to draw upon the
cash security deposit pursuant to the terms of Paragraph 4F of the Lease.
Concurrently with the delivery of the required information to the issuer,
Landlord shall deliver to Tenant written evidence of the default upon which the
draw down was based, together with evidence that Landlord has provided to Tenant
the written notice of such default which was required under the applicable
provision of the Lease, and evidence of the failure of Tenant to cure such
default within the applicable grace

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period following receipt of such notice of default. Any proceeds received by
Landlord by drawing upon the letter of credit shall be applied in accordance
with the provisions governing the Security Deposit imposed by Paragraph 4F and
this Paragraph 51. If Landlord draws upon the letter of credit, thereafter
Tenant shall once again shall have the right to post a letter of credit in place
of one-half (1/2) of a cash Security Deposit so long as Tenant is not then in
default. In any event Tenant will be obligated to replenish the amount drawn to
restore the Security Deposit to its original amount as provided for in
Paragraph 4F. If any portion of the letter of credit is used or applied pursuant
hereto, Tenant shall, within ten (10) days after receipt of a written demand
therefor from Landlord, restore and replace the value of such security by either
(i) depositing cash with Landlord in the amount equal to the sum drawn down
under the letter of credit, or (ii) increasing the letter of credit to its value
immediately prior to such application. Tenant’s failure to replace the value of
the security as provided in the preceding sentence shall be a material breach of
its obligation under this Lease.
     52. ALTERATIONS MADE BY TENANT: The provisions of this Paragraph 52 shall
modify Paragraphs 5 and 6:
          A. As used herein, the term “Alteration” shall mean any alteration,
addition or improvement made by Tenant to the Premises during the term of the
Lease, but shall not include Tenant’s trade fixtures so long as such trade
fixtures are not installed in such a manner that they have become an integral
part of the building.
          B. Tenant shall not construct any Alterations or otherwise alter the
Premises without Landlord’s prior written approval if the total cost of such
Alterations exceeds $20,000 per the scope of any single remodeling job to the
Premises, or if such Alteration is structural in nature. Any other
non-structural Alteration of less than $20,000 for the total cost of the
remodeling job may be undertaken by Tenant without Landlord’s prior written
approval but with the understanding that Tenant shall be obligated to restore
the Premises as set forth in Paragraph 5 at the termination of this Lease,
except as otherwise provided in Paragraph 52.D.
Notwithstanding the foregoing, Tenant shall have the right to reconfigure
modular freestanding walls and partitions without Landlord’s prior consent,
which have been installed by Tenant and paid for by Tenant.
          C. At all times during the Lease Term (i) Tenant shall maintain and
keep updated “as-built” plans for all Alterations constructed by Tenant, and
(ii) Tenant shall provide to Landlord copies of such “as-built” plans as such
Alterations are made.
          D. Tenant shall have the right to remove at any time during the Lease
term or prior to the expiration thereof any (i) process equipment such as clean
hoods, thermal cycling chambers, freon piping, high temperature furnaces, air
handlers and special air-conditioning, and (ii) process systems such as
compressed air or processed exhaust systems and (iii) the clean room modules and
all related process equipment which are paid for 100% by Tenant (excluding
building standard HVAC, electrical, plumbing and other building standard systems
which are an integral part of the building not related to Tenant’s clean room
modules or other special purpose process equipment or systems), which systems,
equipment and modules the parties agree for the

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purposes of this Lease shall be deemed to be trade fixtures, so long as Tenant
repairs all damage caused by the installation and/or removal thereof, returns
the Premises prior to the termination of the Lease to the condition existing
prior to the installation of such item, and repairs and restores any so-called
“doughnuts” or gaps in the roof and/or floor tiles and/or ceiling and lighting
resulting from such removal. At the time Tenant requests the consent of Landlord
to approve the installation of an Alteration requiring the consent of Landlord,
Tenant shall seek from Landlord a written statement of whether or not Landlord
will require Tenant to remove such Alteration and restore all or part of the
Premises as required by Landlord in accordance with this paragraph and
Paragraph 5 at the expiration or earlier termination of the term of the Lease.
If Tenant does not obtain-from Landlord a statement in writing that Landlord
will not require such Alteration to be removed, then at the expiration or sooner
termination of the term of the Lease, it is agreed that Tenant may be required
to remove all or part of such Alterations, and return the Premises to the
condition existing prior to the installation of such Alterations as provided for
in Paragraph 5 above. In addition, if Tenant has installed Alterations without
Landlord’s consent, if Landlord so requires, Tenant shall also remove all or
part of such Alterations so installed without Landlord’s consent as Landlord may
designate and return the Premises to the condition existing prior to the
installation of such Alteration. Alterations for which Landlord has given its
written consent to Tenant that such Alteration need not be removed, shall not be
removed by Tenant at the expiration or earlier termination of the term of the
Lease.
          E. At all times during the term of the Lease, Tenant shall have the
right to install and remove trade fixtures as defined in the Lease and installed
and paid for by Tenant, so long as Tenant repairs all damage caused by the
installation thereof and returns the Premises to the condition existing prior to
the installation of such fixtures and repairs and restores any so called
“doughnuts” or gaps in the roof and/or floor (including floor structure,
sub-floor and appropriate floor covering for said area) and/or floor tiles
and/or ceiling tiles and lighting resulting from such removal.
     53. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: The provisions of this Paragraph 53 shall modify Paragraphs 7
and 14:
          A. If during the last five (5) years of the term of the Lease if
Tenant has not extended the Lease as provided for in Paragraphs 42 and 43, or
during either of the five (5) year extension periods permitted by Paragraphs 42
and 43, it becomes necessary (due to any governmental requirement for continued
occupancy of the Premises) to make structural improvements required by laws
enacted or legal requirements imposed by governmental agency(s) after the
Commencement Date, and the cost for each required work or improvements exceeds
$100,000, then if such legal requirement is not imposed because of Tenant’s
specific use of the Premises and is not “triggered” by Tenant’s Alterations or
Tenant’s application for a building permit or any other governmental approval
(in which instance Tenant shall be responsible for 100% of the cost of such
improvements), Landlord shall be responsible for paying the cost of such
improvement and constructing such improvement, subject to a cash contribution
from Tenant of a portion of the cost thereof as provided for and calculated in
Paragraph 53B.

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          B. When Landlord makes an improvement pursuant to Paragraph 53A, and
as a condition to Landlord’s obligation to construct such improvement, Tenant
shall make the following contribution in cash to Landlord for the cost thereof
prior to the commencement of the work by Landlord. It is agreed that Tenant
shall pay to Landlord 100% of the cost of the first $100,000.00 worth of each
improvement. After the first $100,000.00, all costs above $100,000.00 shall be
divided by 15 and multiplied by the time period remaining in the last five years
of the Lease term from the date work on such improvement commences.
     For example, if the cost of such improvement was $400,000 and there was one
year and six months remaining in the Lease term when the work commenced, then
Tenant would be responsible for reimbursing Landlord in cash $130,000.00
computed as follows:

         
Total Cost of Work
  $ 400,000.00  
Tenant Responsible for 1st $100,000
    -100,000.00  
 
     
Total Amount To Be Amortized
  $ 300,000.00  

         
$300,000.00/15 = $20,000.00/yr. x 1.5 yrs =
  $ 30,000.00  
Tenant responsible for $100,000 + $30,000.00 =
  $ 130,000.00  

          C. If Landlord has made improvements, for which Tenant has reimbursed
Landlord for the cost thereof pursuant to Paragraph 53B, and the term of this
Lease is subsequently extended pursuant to the exercise by Tenant of an option
to renew pursuant to Paragraph 42, or 43, upon the exercise of any such option
by Tenant, Tenant shall pay to Landlord an additional sum equal to the total
amount of said improvement less the amount previously paid for by Tenant. Using
the example in Paragraph 53B above, Tenant would owe Landlord the additional
amount of $270,000.00 ($400,000.00 - $130,000.00 = $270,000.00).
     54. REAL PROPERTY TAXES: Paragraph 9 is modified by the following:
          A. The term “Real Property Taxes” shall not include charges, levies or
fees directly related to the use, storage, disposal or release of hazardous
materials on the Premises unless directly related to Tenant’s activities, which
subject is exclusively governed by Paragraph 45.
          B. If any assessments for public improvements are levied against the
Premises, Landlord may elect either to pay the assessment in full or to allow
the assessment to go to bond. If Landlord pays the assessment in full, Tenant
shall pay to Landlord or any assignee or purchaser of the Premises each time
payment of Real Property Taxes is made a sum equal to that which would have been
payable (as both principal and interest) had Landlord allowed the assessment to
go to bond.
          C. Tenant at its cost shall have the right, at any time, to seek a
reduction in the assessed valuation of the Premises or to contest any Real
Property Taxes that are to be paid by Tenant. If Tenant seeks a reduction or
contests such Real Property Taxes, the failure on Tenant’s part to pay such Real
Property Taxes being so contested shall not constitute a default so long as
Tenant complies with the provisions of this Paragraph. Landlord shall not be
required to

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join in any proceeding or contest brought by Tenant unless the provisions of any
law require that the proceeding or contest be brought by or in the name of
Landlord. In that case Landlord shall join in the proceedings or contest or
permit it to be brought in Landlord’s name as long as Landlord is not required
to bear any cost. Tenant, on final determination of the proceeding or contest,
shall immediately pay or discharge its share of any Real Property Taxes
determined by any decision or judgment rendered, together with all costs,
charges, interest, and penalties incidental to the decision or judgment. If
Tenant does not pay the Real Property Taxes when due pursuant to the Lease and
Tenant seeks a reduction or contests them as provided in this paragraph, before
the commencement of the proceeding or contest Tenant shall furnish to Landlord a
surety bond in form reasonably satisfactory to Landlord issued by an insurance
company qualified to do business in California. The amount of the bond shall
equal 125% of the total amount of Real Property Taxes in dispute and any such
bond shall be assignable to any lender or purchaser of the Premises. The bond
shall hold Landlord and the Premises harmless from any damage arising out of the
proceeding or contest and shall insure the payment of any judgment that may be
rendered.
     55. PROPERTY INSURANCE: Paragraph 12 is modified by the following:
          A. If Tenant so elects, Tenant may obtain from a third party insurance
company the insurance required to be carried by Landlord pursuant to
Paragraph 12 so long as each of the following conditions is satisfied: (i) the
Landlord is not the John Arrillaga and Richard T. Peery Separate Property Trusts
or an affiliated entity; (ii) the insurance to be carried by Tenant to satisfy
this requirement strictly complies with all of the provisions of Paragraph 12;
(iii) such insurance shall name Landlord as the insured and provide that it is
to be payable to Landlord in the same manner as if such insurance had been
carried by Landlord pursuant to Paragraph 12 (subject to the rights of any
lender holding a mortgage or deed of trust encumbering the Premises); (iv) each
lender holding a mortgage or deed of trust encumbering the Premises shall have
given its written consent to Tenant carrying such insurance and such insurance
shall comply with the requirements of any such lender; (v) Tenant must notify
Landlord, by certified mail, no later than one hundred eighty (180) days prior
to the expiration date of Landlord’s insurance policy (which expiration date is
currently 3/13/xx of a given year and is subject to change), that Tenant will
directly obtain the required insurance coverage for the insurance year
commencing 3/14/XX through 3/13/XX and each insurance year through the
termination date of this Lease, or until Tenant is no longer able to comply with
all of the provisions of this Paragraph 55; (vi) the annual premium must be paid
in full at the commencement of the policy; (vii) the insurance policy must be
issued for a one-year period following the expiration date of Landlord’s
insurance policy from 3/14/XX to 3/13/XX; (viii) any and all deductibles
required under the policy will be paid entirely by Tenant; (ix) the terms of the
coverage must be broad form and cover all items to be covered as set forth in
Paragraph 12 of this Lease; (x) the Building and Premises must be insured for
their full replacement cost; (xi) the insurance policy containing the required
coverage in accordance with the provisions of this paragraph must be sent to
Landlord for retention within thirty (30) days prior to the expiration date of
Landlord’s insurance policy, and may not be terminated or altered without thirty
(30) days written notice to Landlord by the company providing such insurance (it
is agreed that if the insurance policy is cancelled or altered, Landlord will
have the right to obtain the property insurance coverage on said building, and
Landlord will bill the Tenant for the related insurance premium); and (xii) at
all times while Tenant is so carrying such insurance, Tenant is Quantum

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Corporation or a successor entity and the then net worth of such corporation is
substantially the same as the net worth of Quantum corporation as of the date of
this Lease is executed by Landlord and Tenant. Tenant shall provide such
evidence as is required by Landlord and any lender to establish that the
insurance that Tenant carries pursuant to this Paragraph 55 has been obtained
and meets the requirement of this Paragraph 55. Such insurance carried by Tenant
shall be in form and provided by an insurance company that is reasonably
acceptable to Landlord, which must be rated “A plus” or better by Best’s
Insurance Service (or an equivalent rating from another rating agency should
Best’s no longer provide such service). A copy of any such policy shall be
delivered to Landlord. If Tenant elects to insure and such insurance provided by
Tenant does not satisfy the requirements of Paragraph 12, in the event of a
subsequent casualty, Tenant shall be responsible for and shall pay for that
portion of the restoration cost, in excess of the insurance proceeds actually
available, that would have been covered by insurance satisfying the requirements
of Paragraph 12.
          B. Tenant shall not be obligated to contribute to the cost of
earthquake insurance more than an amount equal to six (6) times the then annual
cost of fire and “all risk” insurance per year. For example, if the 1993 annual
premium for fire and “all risk” insurance is $9,000, then Tenant’s share of the
cost of any premium for earthquake insurance for the following year (1994) shall
be limited to $54,000 ($9,000 x 6). Tenant shall have the right to require
earthquake insurance providing it is available if Tenant agrees to pay full cost
thereof.
     56. ASSIGNMENT AND SUBLETTING: The following modifications are made to
Paragraph 16:
          A. In the event that Tenant seeks to make any assignment or sublease,
then Landlord, by giving Tenant written notice of its election within fifteen
(15) days after Tenant’s notice of intent to assign or sublease has been given
to Landlord, shall have the right to elect (i) to withhold its consent to such
assignment or sublease, as permitted pursuant to Paragraph 16, or (ii) to permit
Tenant to so assign the Lease or sublease such part of the Premises, in which
event Tenant may do so, but without being released of its liability for the
performance of all of its obligations under the Lease, and the following shall
apply (except the following shall not apply to a “Permitted Transfer” described
in Paragraph 57):
               (1) If Tenant assigns its interest in this Lease, then in
addition to the rental provided for in this Lease, Tenant shall pay to Landlord
fifty percent (50%) of all consideration received by Tenant over and above
(i) the assignee’s agreement to assume the obligations of Tenant under this
Lease and (ii) all “Permitted Transfer Costs” (as defined herein) related to
such assignment. As used herein, the term “Permitted Transfer Costs” shall mean
all reasonable leasing commissions paid to third parties not affiliated with
Tenant in order to obtain the assignment or sublease in question.
               (2) If Tenant sublets all or part of the Premises, then Tenant
shall pay to Landlord in addition to the rental provided for in this Lease fifty
percent (50%) of the positive difference, if any, between (i) all rent and other
consideration paid by the subtenant to Tenant, less (ii) all rent paid by Tenant
to Landlord pursuant to this Lease which is allocable to the area so sublet and
all Permitted Transfer Costs related to such sublease. After Tenant has
recovered all Permitted Transfer Costs Tenant shall pay to Landlord the amount
specified in the

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preceding sentence on the same basis, whether periodic or in lump sum, that such
rent and other consideration is paid to Tenant by its subtenant, within seven
(7) days after it is received by Tenant.
               (3) Tenant’s obligations under this subparagraph shall survive
any assignment or sublease. At the time Tenant makes any payment to Landlord
required by this subparagraph, Tenant shall deliver an itemized statement of the
method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right to
inspect Tenant’s books and records relating to the payments due pursuant to this
subparagraph. Upon request therefor, Tenant shall deliver to Landlord copies of
all bills, invoices or other documents upon which its calculations are based.
               (4) As used herein, the term “consideration” shall mean any
consideration of any kind received, or to be received, by Tenant as a result of
the assignment or sublease, if such sums are paid for Tenant’s interest in this
Lease or in the Premises.
     57. PERMITTED ASSIGNMENTS AND SUBLEASES: Notwithstanding anything contained
in Paragraph 16, so long as Tenant otherwise complies with the provisions of
Paragraph 16 and the Permitted Transfer does not release Tenant from its
obligations hereunder, Tenant may enter into any of the following transfers (a
“Permitted Transfer”) without Landlord’s prior written consent, and the
provisions of Paragraph 56A shall not apply to any such Permitted Transfer:
          A. Tenant may sublease all or part of the Premises or assign its
interest in this Lease to any corporation which controls, is controlled by, or
is under common control with Tenant by means of an ownership interest of more
than fifty percent (50%) providing Tenant remains liable for the payment of rent
and full performance of the lease;
          B. Tenant may assign its interest in the Lease to a corporation which
results from a merger, consolidation or other reorganization in which Tenant is
not the surviving corporation so long as 95% of all assets of Tenant are
permanently transferred to such assignee. In the event there is not a permanent
transfer of 95% or more of the assets and liabilities from Tenant to a third
party, and Tenant continues to exist as a separate entity, both companies shall
be jointly and severally liable for the full terms and conditions of the Lease;
          C. Tenant may assign this Lease to a corporation which purchases or
otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets of Tenant are permanently transferred to such assignee (in the event
there is not a permanent transfer of 95% or more of the assets and liabilities
from Tenant to a third party and Tenant continues to exist as a separate entity,
both companies shall be jointly and severally liable for the full terms and
conditions of the Lease).
     58. SUBORDINATION AND MORTGAGES: Paragraph 17 is modified to provide that
this Lease shall not be subordinate to a mortgage or deed of trust unless the
Lender holding such mortgage or deed of trust enters into a written
subordination, non-disturbance and attornment agreement in which the Lender
agrees that notwithstanding any subordination of this Lease to such Lender’s
mortgage or deed of trust, (i) such Lender shall recognize all of Tenant’s

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rights under this Lease, and (ii) in the event of a foreclosure this Lease shall
not be terminated so long as Tenant is not in material default of its
obligations under this Lease, but shall continue in effect and Tenant and such
Lender (or any party acquiring the Premises through such foreclosure) shall each
be bound to perform the respective obligations of Tenant and Landlord with
respect to the Premises arising after such foreclosure.
     59. LANDLORD’S RIGHT TO ENTER: Notwithstanding the provisions of
Paragraph 18, (i) except in the event of an emergency, Landlord shall give
Tenant twenty-four (24) hours notice prior to entering the Premises, agrees to
comply with any reasonably safety and/or security regulations imposed by Tenant
with respect to such entry, and shall only enter the Premises when accompanied
by Tenant or its agent (so long as Tenant makes itself reasonably available for
this purpose), and (ii) Landlord may install “for lease” signs relating to the
Premises only during the last 150 days of the Lease term. Landlord agrees to use
its reasonable, good faith efforts such that any entry by Landlord, and
Landlord’s agents, employees, contractors and invitees shall be performed in a
manner with as minimal interference as possible with Tenant’s business at the
Premises. Subject to the foregoing, Tenant agrees to cooperate with Landlord and
Landlord’s agents, employees and contractors so that responsibilities of
Landlord under the Lease can be fulfilled in a reasonable manner during normal
business hours so that no extraordinary costs are incurred by Landlord.
     60. BANKRUPTCY AND DEFAULT: Paragraph 19 is modified to provide that with
respect to non-monetary defaults not involving Tenant’s failure to pay Basic
Rent or Additional Rent, Tenant shall not be in default of any non-monetary
obligation if (i) more than thirty (30) days is required to cure such
non-monetary default, and (ii) Tenant commences cure of such default as soon as
reasonably practicable after receiving written notice of such default from
Landlord and thereafter continuously and with due diligence prosecutes such cure
to completion.
     61. ABANDONMENT: Paragraph 20 is modified to provide that Tenant shall not
be in default under the Lease if it leaves all or any part of Premises vacant so
long as (i) Tenant is performing all of its other obligations under the Lease
including the obligation to pay Basic Rent and Additional Rent (ii) Tenant
provides on-site security during normal business hours for those parts of the
Premises left vacant, (iii) such vacancy does not materially and adversely
affect the validity or coverage of any policy of insurance carried by Landlord
with respect to the Premises, and (iv) the utilities and heating and ventilation
system are operated to the extent necessary to prevent damage to the Premises or
its systems.
     62. DESTRUCTION: Paragraph 21 is modified by the following:
          A. Except as provided in Paragraph 62B, Landlord may not terminate the
Lease if the Premises are damaged by a peril that is covered by the insurance
carried by Landlord pursuant to Paragraph 12, but instead shall restore the
Premises in the manner described by Paragraph 21.
          B. If the Premises are damaged by a peril covered by the insurance
carried by Landlord pursuant to Paragraph 12, Landlord shall have the option to
terminate the Lease if each of the following conditions is satisfied: (i) the
cost to repair or the damage exceeds thirty-three percent (33%) of the then
replacement cost of the Premises; and (ii) the damage occurs at a time

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when there is less than five (5) years remaining in the term of the Lease.
Notwithstanding the foregoing, if such damage occurs at a time when there is
less than five (5) years remaining in the term of the Lease and Landlord
notifies Tenant of Landlord’s election to terminate the Lease pursuant to the
provisions of this Paragraph 62B, if Tenant has the right to extend the term of
this Lease pursuant to either Paragraph 42 or 43 such that the remaining term of
the Lease (including the option period) will be more than five (5) years
following the date of such damage, this Lease shall not terminate if Tenant
notifies Landlord in writing of Tenant’s exercise of an option to extend granted
to Tenant by either Paragraph 42 or 43. In such event, this Lease shall not
terminate, the term shall be so extended, and Landlord shall restore the
Premises in the manner provided in Paragraph 21.
          C. If the Premises are damaged by any peril, then as soon as
reasonably practicable, Landlord shall furnish Tenant with the written opinion
of Landlord’s architect or construction consultant as to when the restoration
work required of Landlord may be completed. Tenant shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Landlord of a written notice of election to
terminate within seven (7) days after Tenant receives from Landlord the estimate
of the time needed to complete such restoration:
               (1) The Premises are damaged by any peril and, in the reasonable
opinion of Landlord’s architect or construction consultant, the restoration of
the Leased Premises cannot be substantially completed within 180 days after the
date of such damage; or
               (2) The Premises are damaged by any peril within twelve
(12) months of the last day of the Lease term and provided Tenant has not
exercised an option to renew pursuant to the provisions of Paragraph 42 or 43,
and, in the reasonable opinion of Landlord’s architect or construction
consultant, the restoration of the Leased Premises cannot be substantially
completed within sixty (60) days after the date of such damage.
     63. EMINENT DOMAIN: Paragraph 22 is modified by the following:
     Landlord may not terminate the Lease if less than 1/3 of the building is
taken by condemnation or if a taking by condemnation is only threatened.
     64. TRANSFER BY LANDLORD: The provisions of Paragraph 23 of the Lease to
the contrary notwithstanding, Landlord shall not be relieved of its obligations
under the Lease which may accrue after the date of a sale or other transfer
unless and until (i) the transferee agrees to assume and be bound by the terms
of this Lease and to perform all obligations of the Landlord under the Lease
which may accrue after the date of such transfer, and (ii) Landlord transfers
the Security Deposit to its successor in interest (transferee) in accordance
with the provisions of California Civil Code Section 1950.7, as amended or
recodified.
     65. LANDLORD’S LIEN WAIVER: Landlord, within thirty (30) days after demand
from Tenant, shall execute and deliver such lien waiver documents that are
reasonably required by any supplier, lessor, or lender in connection with the
installation in the Premises of the

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Tenant’s personal property or trade fixtures providing Landlord approves the
form of any such waiver and Landlord’s rights under this Lease are not
materially and adversely affected.

                      QUANTUM CORPORATION,
a Delaware corporation       JOHN ARRILLAGA
SEPARATE PROPERTY TRUST    
 
                   
By
  /s/ Joseph C. Shepela
 
      By   /s/ John Arrillaga
 
   
 
              John Arrillaga, Trustee    
 
                    Title Vice President Human Resources       RICHARD T. PEERY
SEPARATE PROPERTY TRUST    
 
                   
 
          By   /s/ Richard Peery    
 
                   
 
              Richard T. Peery, Trustee    

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AMENDMENT NO. 1
TO LEASE
     THIS AMENDMENT NO. 1 is made and entered into this 16th day of April, 1997,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST) (previously known as the “John
Arrillaga Separate Property Trust”) as amended, and RICHARD T. PEERY, Trustee,
or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY
TRUST) as amended, collectively as LANDLORD, and QUANTUM CORPORATION, a Delaware
corporation, as TENANT.
RECITALS
     A. WHEREAS, by Lease Agreement dated April 10, 1992 Landlord leased to
Tenant all of that certain 60,128 ± square foot building located at 900 Sumac
Drive, Milpitas, California, the details of which are more particularly set
forth in said April 10, 1992 Lease Agreement, and
     B. WHEREAS, said Lease was amended by the Commencement Letter dated
April 2, 1993 which established the February 26, 1993 Lease Commencement Date,
and established the Termination Date of September 30, 2006, and,
     C. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by (i) extending the Term for five years, changing the Termination Date from
September 30, 2006 to September 30, 2011, (ii) amending the Basic Rent schedule
and Aggregate Rent accordingly, (iii) adding a third Five Year Option to Extend,
(iv) replacing Paragraphs 41C (“Lease Terms Co-extensive”) and 48 (“Cross
Default”) and 53 (“Structural Capital Costs Regulated by Governmental Agencies
After the Commencement of this Lease not Caused by Tenant or Tenant’s Uses or
Remodeling of the Premises”), (v) amending Lease Paragraph 12 (“Property
Insurance”) and (vi) amending and/or replacing certain provisions of the Lease
commencing as of the commencement of the Third Extended Term of said Lease as
hereinafter set forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. TERM OF LEASE: It is agreed between the parties that Tenant has
exercised its First Five-Year Option to Extend the lease term of that certain
lease agreement dated March 23, 1994 for premises located at 1101 Sumac Drive,
Milpitas, California (the “Building 5 Lease”), as detailed in Paragraph 41 of
said Building 5 Lease. Paragraph 40C of said Building 5 Lease provides that in
the event the term of said Building 5 Lease is extended for any reason
whatsoever, the terms of the Existing Leases (i.e. two of said leases dated
October 31, 1989 are for Premises located at 1140 Technology Drive and 500
McCarthy Blvd., Milpitas, California (the “1989 Leases”); one of said leases
dated September 17, 1990 is for Premises located at 1000 Sumac Drive, Milpitas,
California, and one of said leases dated April 10, 1992 is for Premises located
at 900 Sumac Drive, Milpitas, California) shall also be extended so that all
five Leases expire on the same date; therefore, it is agreed between the parties
that by exercising its Option

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to Extend the Building 5 Lease, Tenant has in effect exercised its Option to
Extend under Lease Paragraph 42 (“First Five-Year Option to Extend”), and that
pursuant to said Lease Paragraph 42, the Term of this Lease Agreement shall be
extended for an additional five (5) year period, and the Lease Termination Date
shall be changed from September 30, 2006 to September 30, 2011.
     2. BASIC RENTAL FOR FIRST EXTENDED TERM OF LEASE: The monthly Basic Rental
for the First Extended Term of Lease shall be as follows:
     On October 1, 2006, the sum of ONE HUNDRED ELEVEN THOUSAND EIGHT HUNDRED
THIRTY EIGHT AND 08/100 DOLLARS ($111,838.08) shall be due, and a like sum due
on the first day of each month thereafter through and including September 1,
2007.
     On October 1, 2007, the sum of ONE HUNDRED FOURTEEN THOUSAND EIGHT HUNDRED
FORTY FOUR AND 48/100 DOLLARS ($114,844.48) shall be due, and a like sum due on
the first day of each month thereafter through and including September 1, 2008.
     On October 1, 2008, the sum of ONE HUNDRED SEVENTEEN THOUSAND EIGHT HUNDRED
FIFTY AND 88/100 DOLLARS ($117,850.88) shall be due, and a like sum due on the
first day of each month thereafter through and including September 1, 2009.
     On October 1, 2009, the sum of ONE HUNDRED TWENTY THOUSAND EIGHT HUNDRED
FIFTY SEVEN AND 28/100 DOLLARS ($120,857.28) shall be due, and a like sum due on
the first day of each month thereafter through and including September 1, 2010.
     On October 1, 2010, the sum of ONE HUNDRED TWENTY THREE THOUSAND EIGHT
HUNDRED SIXTY THREE AND 68/100 DOLLARS ($123,863.68) shall be due, and a like
sum due on the first day of each month thereafter through and including
September 1, 2011.
     The Aggregate Basic Rent for the Lease shall be increased by $7,071,052.80
or from $14,463,454.34 to $21,534,507.14.
     3. THIRD FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the Lease
for an additional five (5) year period pursuant to Lease Paragraph 43 (“Second
Five Year Option To Extend”), Landlord hereby grants to Tenant a third option to
extend the Term of this Lease for an additional five (5) year period upon the
following terms and conditions:
          A. Tenant shall give Landlord written notice of Tenant’s exercise of
this option to extend at least one hundred eighty (180) days prior to the
expiration of the Lease Term as extended pursuant to Lease Paragraph 43 (“Second
Five Year Option To Extend”), in which event the Lease shall be considered
extended for an additional five (5) year period upon the same terms and
conditions as this Lease, absent this Paragraph 3 and subject to the Rental as
set forth below. In the event that Tenant fails to timely exercise Tenant’s
option as set forth herein in writing, Tenant shall have no further option to
extend this Lease or the Other Leases, and this Lease shall continue in full
force and effect for the full remaining term hereof, absent this Paragraph 3.

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          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

          Period   Monthly Basic Rent
Months 1-12
  $2.36/sf
Months 13-24
  $2.41/sf
Months 25-36
  $2.46/sf
Months 37-48
  $2.51/sf
Months 49-60
  $2.56/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to extend granted by this Paragraph 3 at any time that Tenant is in
default (default for monetary and material default for non-monetary) of its
obligations under this Lease, if Tenant has received written notice from
Landlord that Tenant is in default, and such default has not been timely cured
within the time period provided for in this Lease; provided, however, that if
such default of Tenant is not for money due under this Lease and cannot be
cured, and if Landlord does not elect to terminate this Lease as a result of
such non-curable default by Tenant, Tenant may exercise the option to extend
granted by this Paragraph 3 notwithstanding such non-curable default.
     4. LEASE TERMS CO-EXTENSIVE: Lease Paragraph 40C (“Lease Terms
Co-extensive”) is hereby deleted in its entirety and replaced with the
following:
          “40C. LEASE TERMS CO-EXTENSIVE: It is acknowledged that (i) Landlord
and Tenant have previously executed four separate leases in addition to this
Lease: one of said leases dated October 31, 1989 is for Premises located at 1140
Technology Drive, Milpitas, California (the “Building One Lease”); one of said
leases dated October 31, 1989 is for Premises located at 500 McCarthy Blvd.,
Milpitas, California (the “Building Two Lease”); one of said leases dated
September 17, 1990 is for Premises located at 1000 Sumac Drive, Milpitas,
California (the “Building Four Lease”); and one of said leases dated March 23,
1994 is for premises located at 1101 Sumac Drive, Milpitas, California (the
“Building 5 Lease”) (hereinafter collectively referred to as the “Other
Leases”); and (ii) it is the intention of the parties that the term of this
Lease be co-extensive with the term of the Other Leases, such that the terms of
all five leases (“the Leases”) expire on the same date. The provisions of this
Paragraph 40C also requires the terms of all the Leases to be extended
accordingly if Tenant exercises its Option to Extend under any of the Leases.
The monthly Basic Rent during the extended term under each of the Leases shall
he increased by $.05 per square foot on the commencement date of the extended
term and thereafter on each and every anniversary of the respective lease’s
commencement date of the extended term.”
     5. CROSS DEFAULT: Lease Paragraph 48 (“Cross Default”) is hereby deleted in
its entirety and replaced with the following:

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          “48. CROSS DEFAULT: It is agreed between Landlord and Tenant that a
default under this Lease, or a default under any of the Other Leases may, at the
option of Landlord, be considered a default under all Leases, in which event
Landlord shall be entitled (but in no event required) to apply all rights and
remedies of Landlord under the terms of one lease to all the Leases including,
but not limited to, the right to terminate any or all of the aforementioned
Other Leases or this Lease by reason of a default under the Leases or hereunder.
          Notwithstanding the above, Landlord shall have the option of
considering a default under this Lease or a default under any of the Other
Leases to be a default under all such leases, only with respect to such leases
under which Landlord is also the ‘Landlord’ at the time such default occurs. By
way of example, if at the time a default of Tenant occurs under this Lease,
Landlord has sold the premises described in any of the Other Leases and is no
longer the `Landlord’ thereunder, then a default under this Lease shall not
constitute a default under any of such Other Leases so sold by Landlord (unless
the premises leased under this Lease and the Other Leases are sold to the same
entity), and a default by Tenant under any of such Other Leases so sold by
Landlord shall not constitute a default under this Lease or any other of the
Other Leases then remaining between Landlord and Tenant. However, if the
Landlord under this Lease and the Other Leases is one in the same at the time of
said default, said cross default provisions shall apply.”
     6. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: Lease Paragraph 53 (“Structural Capital Costs Regulated by
Governmental Agencies after the Commencement of this Lease Not Caused by Tenant
or Tenant’s Uses or Remodeling of the Premises”) is hereby deleted and replaced
with the following:
          “53. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER
THE COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR
REMODELING OF THE PREMISES: The provisions of this Paragraph 53 shall modify
Paragraphs 7 and 14:
          A. If (i) during the last five (5) years of the First Extended Term of
the Lease if said Lease has not been extended as provided for in Lease
Paragraph 43 (“Second Five Year Option To Extend”) or in Paragraph 3 (“Third
Five Year Option to Extend”) or Paragraph 4 (“Lease Terms Co-Extensive”) above,
or (ii) during either of the five (5) year extension periods permitted by Lease
Paragraph 43 or Paragraph 3, or Paragraph 4 above, it becomes necessary (due to
any governmental requirement for continued occupancy of the Premises) to make
structural improvements required by laws enacted or legal requirements imposed
by governmental agency(s) after the Commencement Date, and the cost for each
required work or improvements exceeds $100,000, then if such legal requirement
is not imposed because of Tenant’s specific use of the Premises and is not

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“triggered” by Tenant’s Alterations or Tenant’s application for a building
permit or any other governmental approval (collectively “Tenant’s Actions”) in
which instance Tenant shall be responsible for 100% of the cost of such
improvements, Landlord shall be responsible for paying the cost of such
improvement and constructing such improvement, subject to a cash contribution
from Tenant of a portion of the cost thereof as provided for and calculated in
Paragraph 53B.
          B. When Landlord makes an improvement pursuant to Paragraph 53A, and
as a condition to Landlord’s obligation to construct such improvement, Tenant
shall make the following contribution in cash to Landlord for the cost thereof
prior to the commencement of the work by Landlord. It is agreed that Tenant
shall pay to Landlord 100% of the cost of the first $100,000.00 worth of each
improvement. After the first $100,000.00, all costs above $100,000.00 shall be
divided by 15 and multiplied by the time period remaining in the last five years
of the Lease Term from the date work on such improvement commences.
          For example, if the improvement is not required as a result of
Tenant’s Actions and if the cost of such improvement was $400,000 and there was
one year and six months remaining in the Lease term when the work commenced,
then Tenant would be responsible for reimbursing Landlord in cash $130,000.00
computed as follows:

         
Total Cost of Work
  $ 400,000.00  
Tenant Responsible for 1st $100,000
    -100,000.00  
 
     
Total Amount To Be Amortized
  $ 300,000.00  
$300,000.00/15 = $20,000.00/yr. x 1.5 yrs  =
  $ 30,000.00  
Tenant responsible for $100,000 + $30,000.00  =
  $ 130,000.00  

          C. If Landlord has made improvements, for which Tenant has reimbursed
Landlord for the cost thereof pursuant to Paragraph 53B, and the term of this
Lease is subsequently extended pursuant to the exercise by Tenant of an option
to renew pursuant to Lease Paragraph 43 or Paragraph 3 above, upon the exercise
of any such option by Tenant, Tenant shall pay to Landlord an additional sum
equal to the total amount of said improvement less the amount previously paid
for by Tenant. Using the example in Paragraph 53B above, Tenant would owe
Landlord the additional amount of $270,000.00 ($400,000.00 — $130,000.00 =
$270,000.00).”
     7. PROPERTY INSURANCE: Lease Paragraph 12 (“Property Insurance”) is hereby
amended to include the following: “Tenant acknowledges that as part of the cost
of insurance policies for the Premises, Tenant is responsible for the payment of
insurance deductibles on insurance claims as they relate to the Premises subject
to the limitations provided in Lease Paragraph 55 (“Property Insurance”) which
limitations are applicable only during the initial Lease Term and the First
Lease Extension Period and the Second Lease Extension Period.

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Said limitation provided for in Lease Paragraph 55 are null and void at the
commencement of the Third Lease Extended Term”.
     8. THIRD OPTION PERIOD — LEASE PROVISION CHANGES: In the event Tenant
exercises its Third Option to Extend as provided for in Paragraph 3 above, the
following amendments (contained within Paragraphs 9 through 19) are herein made
to the Lease to be effective upon the commencement of the third option period
(“Third Option Period”), or during any period following the expiration of the
Lease Term or expiration of the Lease when Tenant is in possession of the
Premises.
     9. LATE CHARGE: Effective as of the first day of the Third Option Period,
the Late Charge referenced in Lease Paragraph 4.D (“Late Charge”) shall be
changed from five percent (5%) to ten percent (10%), and Lease Paragraph 50
(“Limitation on Late Charge”) shall be deleted in its entirety and of no further
force or effect.
     10. MANAGEMENT FEE: Notwithstanding anything to the contrary in the Lease,
effective as of the first day of the Third Option Period, and on the first day
of each month thereafter, Tenant shall pay to Landlord, in addition to the Basic
Rent and Additional Rent, a fixed monthly management fee (“Management Fee”)
equal to one percent (1%) of the Basic Rent due for each month during the Lease
Term.
     11. HAZARDOUS MATERIALS: Effective as of the first day of the Third Option
Period, Lease Paragraph 45 (“Hazardous Materials”) shall be deleted in its
entirety and replaced with the following:
          “45. HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with
respect to the existence or use of “Hazardous Materials” (as defined herein) on,
in, under or about the Premises and real property located beneath said Premises,
which includes the entire parcel of land on which the Premises are located as
shown in Green on Exhibit A to the Lease (hereinafter collectively referred to
as the “Property”):
          A. As used herein, the term “Hazardous Materials” shall mean any
material, waste, chemical, mixture or byproduct which is or hereafter is
defined, listed or designated under Environmental Laws (defined below) as a
pollutant, or as a contaminant, or as a toxic or hazardous substance, waste or
material, or any other unwholesome, hazardous, toxic, biohazardous, or
radioactive material, waste, chemical, mixture or byproduct, or which is listed,
regulated or restricted by any Environmental Law (including, without limitation,
petroleum hydrocarbons or any distillates or derivatives or fractions thereof,
polychlorinated biphenyls, or asbestos). As used herein, the term “Environmental
Laws” shall mean any applicable Federal, State of California or local government
law (including common law), statute, regulation, rule, ordinance, permit,
license, order, requirement, agreement, or approval, or any determination,
judgment, directive, or order of any executive or judicial authority at any
level of Federal, State of California or local government (whether now existing
or subsequently

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adopted or promulgated) relating to pollution or the protection of the
environment, ecology, natural resources, or public health and safety.
          B. Tenant shall notify Landlord prior to the occurrence of any
Tenant’s Hazardous Materials Activities (defined below). Landlord acknowledges
that Tenant shall use, in compliance with applicable Environmental Laws,
customary household and office supplies (Tenant shall first provide Landlord
with a list of said materials use), such as mild cleaners, lubricants and copier
toner. Any and all of Tenant’s Hazardous Materials Activities shall be conducted
in conformity with this Paragraph 45, Paragraph 14 of this Lease, and in
compliance with all Environmental Laws and regulations. As used herein, the term
“Tenant’s Hazardous Materials Activities” shall mean any and all use, handling,
generation, storage, disposal, treatment, transportation, release, discharge, or
emission of any Hazardous Materials on, in, beneath, to, from, at or about the
Property, in connection with Tenant’s use of the Property, or by Tenant or by
any of Tenant’s agents, employees, contractors, vendors, invitees, visitors or
its future subtenants or assignees or other third parties (including “dumping”
by others) (or which Hazardous Materials originate on the surface of the
Premises any time on or after the Commencement Date of this Lease, but excluding
Hazardous Materials on the Premises prior to the Lease Commencement Date because
of the storage, use, disposal, or transportation of such materials or waste by
any of Landlord’s contractors or otherwise arising out of construction work
performed-by or under the direction of Landlord on the Premises and Landlord
shall responsible for ‘ all required actions with respect to such materials or
wastes). Tenant agrees to provide Landlord with prompt written notice of any
spill or release of Hazardous Materials at the Property during the term of the
Lease of which Tenant becomes aware, and further agrees to provide Landlord with
prompt written notice of any violation of Environmental Laws in connection with
Tenant’s Hazardous Materials Activities of which Tenant becomes aware. If
Tenant’s Hazardous Materials Activities involve Hazardous Materials other than
normal use of customary household and office supplies, Tenant also agrees at
Tenant’s expense: (i) to install such Hazardous Materials monitoring, storage
and containment devices as may be required by Environmental Laws, regulations
and/or governing agencies; (ii) to provide Landlord with a written inventory of
such Hazardous Materials, including an update of same each year upon the
anniversary date of the Commencement Date of the Lease (“Anniversary Date”); and
(iii) on each Anniversary Date to provide to Landlord copies of all
documentation and records, required by applicable Environmental Laws to be
prepared and submitted to governmental authorities, relating to use at the
Property of Hazardous Materials or to Tenant’s Hazardous Materials Activities,
if any. If upon completion of Landlord’s review of said documentation and
records, Landlord reasonably questions if Tenant is in compliance-with all
applicable Environmental Laws with respect to Tenant’s Hazardous Materials
Activities, Tenant agrees within thirty (30) days following receipt of written
notice from Landlord, to retain a qualified environmental consultant, acceptable
to Landlord, to evaluate whether Tenant is in compliance with all applicable
Environmental Laws with respect to Tenant’s Hazardous Materials Activities.
Tenant, at its

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expense, shall submit to Landlord a report from such environmental consultant
which discusses the environmental consultant’s findings within two (2) months of
each Anniversary Date. Tenant, at its expense, shall promptly undertake and
complete any and all steps necessary, and in full compliance with applicable
Environmental Laws, to fully correct any and all problems or deficiencies
identified by the environmental consultant, and promptly provide Landlord with
documentation of all such corrections.
          C. Prior to termination or expiration of the Lease, Tenant, at its
expense, shall (i) properly remove from the Property all Hazardous Materials
which come to be located at the Property in connection with Tenant’s Hazardous
Materials Activities, and (ii) fully comply with and complete all facility
closure requirements of applicable Environmental Laws regarding Tenant’s
Hazardous Materials Activities, including but not limited to (x) properly
restoring and repairing the Property to the extent damaged by such closure
activities, and (y) obtaining from the local Fire Department or other
appropriate governmental authority with any legal or regulatory jurisdiction a
written concurrence that closure has been completed in compliance with
applicable Environmental Laws. Tenant shall promptly provide Landlord with
copies of any claims, notices, work plans, data and reports prepared, received
or submitted in connection with any such closure activities.
          D. If Landlord, upon consultation with Tenant, reasonably concludes
that the Property has become contaminated as a result of Tenant’s Hazardous
Materials Activities, Landlord in addition to any other rights it may have under
this Lease or under Environmental Laws or other laws, may enter upon the
Property and conduct inspection, sampling and analysis, including but not
limited to obtaining and analyzing samples of soil and groundwater, for the
purpose of determining the nature and extent of such contamination except to the
extent that such activities may be inconsistent with Tenant’s compliance with
Environmental Laws. Tenant shall promptly reimburse Landlord for the costs of
such an investigation, including but not limited to reasonable attorneys’ fees
Landlord incurs with respect to such investigation to the extent, and only to
the extent, that it that discloses Hazardous Materials contamination for which
Tenant is liable under this Lease. Except as may be required of Tenant by
applicable Environmental Laws, Tenant shall not perform any sampling, testing,
or drilling to identify the presence of any Hazardous Materials at the Property,
without Landlord’s prior written consent which shall not be unreasonably
withheld. Tenant shall promptly provide Landlord with copies of any claims,
notices, work plans, data and reports prepared, received or submitted in
connection with any sampling, testing or drilling, performed pursuant to the
preceding sentence.
          E. Tenant shall indemnify, defend (with legal counsel acceptable to
Landlord, whose consent shall not unreasonably be withheld) and hold harmless
Landlord, its employees, assigns, successors, successors-in-interest, agents and
representatives from and against any and ail claims (including but not limited
to third party claims from a private party or a government authority),
liabilities,

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obligations, losses, causes of action, demands, governmental proceedings or
directives, fines, penalties, expenses, costs (including but not limited to
reasonable attorneys’, consultants’ and other experts’ fees and costs), and
damages, which arise from or relate to: (i) Tenant’s Hazardous Materials
Activities; (ii) any Hazardous Materials contamination caused by Tenant prior to
the Commencement Date of the Lease; or (iii) the breach of any obligation of
Tenant under this Paragraph 45 (collectively, “Tenant’s Environmental
Indemnification”). Tenant’s Environmental Indemnification shall include but is
not limited to the obligation to promptly and fully reimburse Landlord for
losses in or reductions to rental income, and diminution in fair market value of
the Property. Tenant’s Environmental Indemnification shall further include but
is not limited to the obligation to diligently and properly implement to
completion, at Tenant’s expense, any and all environmental investigation,
removal, remediation, monitoring, reporting, closure activities, or other
environmental response action as may be required by applicable Environmental
Laws, regulations or governing agencies (collectively, “Response Actions”).
Tenant shall promptly provide Landlord with copies of any claims, notices, work
plans, data and reports prepared, received or submitted in connection with any
Response Actions.
          F. Landlord hereby makes the following representations to Tenant, each
of which is made only to the best of Landlord’s knowledge as of the date
Landlord executes this Lease, without any inquiry or investigation having been
made or required by Landlord regarding this subject, nor does Landlord have any
obligation to investigate or make inquiry regarding the subject:
               1) The soil and ground water on or under the Premises does not
contain Hazardous Materials in amounts which violate any laws to the extent that
any governmental entity could require either Landlord or Tenant to take any
remedial action with respect to such Hazardous Materials.
               2) During the time that Landlord has owned the Premises, Landlord
has received no notice of (i) any violation, or alleged violation, of any law
that has not been corrected to the satisfaction of the appropriate authority,
(ii) any pending claims relating to the presence of Hazardous Material on the
Premises, or (iii) any pending investigation by any governmental agency
concerning the Premises relating to Hazardous Materials.\
          G. Landlord and Tenant shall each give written notice to the other as
soon as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Premises, and (ii) any contamination of the Premises by Hazardous Materials
which constitutes a violation of any law. Attached as Exhibit “C” to the Lease
is a list of Hazardous Materials that Tenant intends to use at the Premises. If
during the Lease Term Tenant proposes to use other Hazardous Materials at the
Premises, Tenant shall inform Landlord of such use, identifying the Hazardous
Materials and the manner of their use, storage and disposal, and shall agree
(i) to use, store and dispose of such Hazardous Materials strictly in compliance
with all

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laws, regulations and governing agencies and (ii) that the indemnity set forth
in Paragraph 45 shall be applicable to Tenant’s use of such Hazardous Material.
          H. Landlord or Tenant may, at any time, cause testing wells to be
installed on the Premises, and may cause the ground water to be tested to detect
the presence of Hazardous Material by the use of such tests as are then
customarily used for such purposes. Testing wells installed by Tenant shall be
paid for by Tenant. If tests conducted by Landlord disclose that Tenant has
violated any Hazardous Materials laws, or Tenant or parties on the Premises
during the Term of this Lease have contaminated the Premises as determined by
regulatory agencies pursuant to Hazards Materials laws, or that Tenant has
liability to Landlord pursuant to Paragraph 45A, then Tenant shall pay for
100 percent of the cost of the test and all related expense. Prior to the
expiration of the Lease Term, Tenant shall remove any testing wells it has
installed at the Premises, and return the Premises to the condition existing
prior to the installation of such wells, unless Landlord requests in writing
that Tenant leave all or some of the testing wells in which instance the wells
requested to be left shall not be removed.
          I. If any tests performed by Tenant or Landlord prior to the
Commencement Date disclose Hazardous Materials at the Premises, Landlord at its
expense will promptly take all reasonable action required by law with respect to
the existence of such Hazardous Materials at the Premises. The Commencement Date
shall not be delayed because of such action by Landlord unless occupation of the
Premises is prohibited by law.
          J. The obligations of Landlord and Tenant under this Paragraph 45
shall survive the expiration or earlier termination of the Term of this Lease.
The rights and obligations of Landlord and Tenant with respect to issues
relating to Hazardous Materials are exclusively established by this
Paragraph 45.”
     12. SECURITY DEPOSIT: Effective as of the first day of the Third Option
Period, Lease Paragraph 51 (“Security Deposit”) shall be deleted in its entirety
and replaced with the following:
          “51. SECURITY DEPOSIT: The following provisions shall modify Lease
Paragraph 4F:
          A. Within thirty (30) days after the expiration or earlier termination
of the Lease term and after Tenant has vacated the Premises, Landlord shall
return to Tenant the entire Security Deposit except for amounts that Landlord
has deducted therefrom that are needed by Landlord to cure defaults of Tenant
under the Lease or compensate Landlord for damages for which Tenant is liable
pursuant to this Lease. The use or disposition of the Security Deposit shall be
subject to the provisions of California Civil Code Section 1950.7.

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          B. During the first thirty (30) days following Tenant’s exercise of
its Third Option to Extend, and only during said thirty day period, Tenant shall
have the one-time option of satisfying its obligation with respect to an amount
equal to one-half (1/2) ($83,277.28) of the $166,554.56 Security Deposit
required under Lease Paragraph 4F by providing to Landlord, at Tenant’s sole
cost, a letter of credit which: (i) is drawn upon an institutional lender
reasonably acceptable and accessible to Landlord in form and content reasonably
satisfactory to Landlord; (ii) is in the amount of one-half (1/2) of the
Security Deposit; (iii) is for a term of at lease twelve (12) months; (iv) with
respect to any letter of credit in effect within the six month period
immediately prior to the expiration of the Lease term, shall provide that the
term of such letter of credit shall extend at least forty five (45) days past
the Lease expiration date (including any extensions thereof); and (v) may be
drawn upon by Landlord upon submission of a declaration of Landlord that Tenant
is in default (as defined in Paragraph 19 and as modified by Paragraph 60).
Landlord shall not be obligated to furnish proof of default to such
institutional lender, and Landlord shall only be required to give the
institutional lender written notification that Tenant is in default and upon
receiving such written notification from Landlord the institutional lender shall
be obligated to immediately deliver cash to Landlord equal to the amount
Landlord may spend or become obligated to spend by reason of Tenant’s default or
to compensate Landlord for any loss or damage which Landlord may suffer by
reason of Tenant’s default up to 1/2 of the total Security Deposit required
under Lease Paragraph 4F. Said letter of credit shall provide that if the letter
of credit is not renewed, replaced or extended within twenty (20) days prior to
its expiration date the issuer of the credit shall automatically issue a
cashiers check payable to Landlord in the amount of the letter of credit after
the date which is twenty (20) days before the expiration date, and no later than
the expiration date, without Landlord being required to make demand upon the
letter of credit. If Tenant provides Landlord with a letter of credit, within
thirty (30) days of the execution of this Lease, meeting the foregoing
requirements, one-half (1/2) of the cash Security Deposit (i.e., $83,277.28 of
the $166, 554.56 Security Deposit) shall be returned to Tenant by Landlord
inasmuch as the cash deposit remaining and the Letter of Credit equal the total
Security Deposit required in Lease Paragraph 4F. If Tenant defaults with respect
to any provisions of this Lease, including but not limited to provisions
relating to the payment of Rent, Landlord may (but shall not be required to)
draw down on the letter of credit for payment of any sum which Landlord may
spend or become obligated to spend by reason of Tenant’s default, or to
compensate Landlord for any loss or damage which Landlord may suffer by reason
of Tenant’s default. Landlord and Tenant acknowledge that such letter of credit
will be treated as if it were a cash security deposit, and such letter of credit
may be drawn down upon by Landlord upon demand and presentation of evidence of
the identity of Landlord to the issuer, in the event that Tenant defaults with
respect to any provision of this Lease and such default is not cured within any
applicable cure period. Notwithstanding anything to the contrary in this Lease,
Landlord shall not be obligated to furnish proof of default to such
institutional lender and Landlord is only required to give the institutional
lender written

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notification that Tenant is in default and upon receiving such written
notification from Landlord the institutional lender shall be obligated to
immediately deliver cash to Landlord equal to the amount Landlord may spend or
become obligated to spend by reason of Tenant’s default, or to compensate
Landlord for any loss or damage which Landlord may suffer by reason of Tenant’s
default up to 1/2 of the total Security Deposit. Landlord acknowledges that it
is not entitled to draw down such letter of credit unless Landlord would have
been entitled to draw upon the cash security deposit pursuant to the terms of
Paragraph 4F of the Lease. Concurrently with the delivery of the required
information to the issuer, Landlord shall deliver to Tenant written evidence of
the default upon which the draw down was based, together with evidence that
Landlord has provided to Tenant the written notice of such default which was
required under the applicable provision of the Lease, and evidence of the
failure of Tenant to cure such default within the applicable grace period
following receipt of such notice of default. Any proceeds received by Landlord
by drawing upon the letter of credit shall be applied in accordance with the
provisions governing the Security Deposit imposed by Lease Paragraph 4F and this
Paragraph 51. If Landlord draws upon the letter of credit, thereafter Tenant
shall once again have the right to post a letter of credit in place of one-half
(1/2) of a cash Security Deposit so long as Tenant is not then in default. In
any event Tenant will be obligated to replenish the amount drawn to restore the
Security Deposit to its original amount as provided for in Paragraph 4F. If any
portion of the letter of credit is used or applied pursuant hereto, Tenant
shall, within ten (10) days after receipt of a written demand therefor from
Landlord, restore and replace the value of such security by either
(i) depositing cash with Landlord in the amount equal to the sum drawn down
under the letter of credit, or (ii) increasing the letter of credit to its value
immediately prior to such application. Tenant’s failure to replace the value of
the security as provided in the preceding sentence shall be a material breach of
its obligation under this Lease.”
     13. REAL ESTATE TAXES: Effective as of the first day of the Third Option
Period, Lease Paragraph 54 (“Real Estate Taxes”) shall be deleted in its
entirety and replaced with the following:
          “54. REAL PROPERTY TAXES: Paragraph 9 is modified by the following:
          A. The term “Real Property Taxes” shall not include charges, levies or
fees directly related to the use, storage, disposal or release of Hazardous
Materials on the Premises unless directly related to Tenant’s Activities at this
site or on other sites leased and/or owned by Tenant; however, Tenant shall be
responsible for general or special tax and/or assessments (related to Hazardous
Materials and/or toxic waste) imposed on the Property provided said special tax
and/or assessment is not imposed due to on-site originated contamination on the
Property (by third parties not related to Tenant) prior to the Lease
Commencement Date. Subject to the terms and conditions stated herein, Tenant
shall be responsible for paying one hundred percent (100%) of said taxes and/or
assessments allocated to the Property.

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          B. If any assessments for public improvements are levied against the
Premises, Landlord may elect either to pay the assessment in full or to allow
the assessment to go to bond. If Landlord pays the assessment in full, Tenant
shall pay to Landlord or any assignee or purchaser of the Premises each time
payment of Real Property Taxes is made a sum equal to that which would have been
payable (as both principal and interest) had Landlord allowed the assessment to
go to bond.
          C. Tenant at its cost shall have the right, at any time, to seek a
reduction in the assessed valuation of the Premises or to contest any Real
Property Taxes that are to be paid by Tenant. If Tenant seeks a reduction or
contests such Real Property Taxes, the failure on Tenant’s part to pay such Real
Property Taxes being so contested shall not constitute a default so long as
Tenant complies with the provisions of this Paragraph. Landlord shall not be
required to join in any proceeding or contest brought by Tenant unless the
provisions of any law require that the proceeding or contest be brought by or in
the name of Landlord. In that case Landlord shall join in the proceedings or
contest or permit it to be brought in Landlord’s name as long as Landlord is not
required to bear any cost. Tenant, on final determination of the proceeding or
contest, shall immediately pay or discharge its share of any Real Property Taxes
determined by any decision or judgment rendered, together with all costs,
charges, interest, and penalties incidental to the decision or judgment. If
Tenant does not pay the Real Property Taxes when due pursuant to the Lease and
Tenant seeks a reduction or contests them as provided in this paragraph, before
the commencement of the proceeding or contest Tenant shall furnish to Landlord a
surety bond in form reasonably satisfactory to Landlord issued by an insurance
company qualified to do business in California. The amount of the bond shall
equal 125% of the total amount of Real Property Taxes in dispute and any such
bond shall be assignable to any lender or purchaser of the Premises. The bond
shall hold Landlord and the Premises harmless from any damage arising out of the
proceeding or contest and shall insure the payment of any judgment that may be
rendered.”
     14. PROPERTY INSURANCE: Effective as of the first day of the Third Option
Period, section B of Lease Paragraph 55 (“Property Insurance”) shall be deleted
in its entirety and be of no further force or effect.
     15. ASSIGNMENT AND SUBLETTING: Effective as of the first day of the Third
Option Period, Lease Paragraph 56 (“Assignment and Subletting”) shall be deleted
in its entirety and replaced with the following:
          “56. ASSIGNMENT AND SUBLETTING: The following modifications are made
to Paragraph 16:
          A. In the event that Tenant seeks to make any assignment or sublease,
then Landlord, by giving Tenant written notice of its election within fifteen
(15) days after Tenant’s notice of intent to assign or sublease has been given
to Landlord, shall have the right to elect (i) to withhold its consent to such

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assignment or sublease, as permitted pursuant to Paragraph 16, or (ii) to permit
Tenant to so assign the Lease or sublease such part of the Premises, in which
event Tenant may do so, but without being released of its liability for the
performance of all of its obligations under the Lease, and the following shall
apply (except the following shall not apply to a “Permitted Transfer” described
in Paragraph 57):
               1) If Tenant assigns its interest in this Lease, then in addition
to the rental provided for in this Lease, Tenant shall pay to Landlord fifty
percent (50%) of all Rent and other consideration received by Tenant over and
above (i) the assignee’s agreement to assume the obligations of Tenant under
this Lease and (ii) all “Permitted Transfer Costs” (as defined herein) related
to such assignment. As used herein, the term “Permitted Transfer Costs” shall
mean all reasonable leasing commissions paid to third parties not affiliated
with Tenant in order to obtain the assignment or sublease in question.
               2) If Tenant sublets all or part of the Premises, then Tenant
shall pay to Landlord in addition to the Rent provided for in this Lease fifty
percent (50%) of the positive difference, if any, between (i) all rent and other
consideration paid or provided to Tenant by the subtenant, less (ii) all Rent
paid by Tenant to Landlord pursuant to this Lease which is allocable to the area
so sublet and all Permitted Transfer Costs related to such sublease. After
Tenant has recovered all Permitted Transfer Costs Tenant shall pay to Landlord
the amount specified in the preceding sentence on the same basis, whether
periodic or in lump sum, that such rent and other consideration is paid to
Tenant by its subtenant, within seven (7) days after it is received by Tenant.
               3) Tenant’s obligations under this subparagraph shall survive any
assignment or sublease. At the time Tenant makes any payment to Landlord
required by this subparagraph, Tenant shall deliver an itemized statement of the
method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right to
inspect Tenant’s books and records relating to the payments due pursuant to this
subparagraph. Upon request therefor, Tenant shall deliver to Landlord copies of
all bills, invoices or other documents upon which its calculations are based.
               4) As used herein, the term “consideration” shall mean any
consideration of any kind received, or to be received (including, but not
limited to, services rendered and/or value received) by Tenant as a result of
the assignment or sublease, if such sums are paid or provided to Tenant for
Tenant’s interest in this Lease or in the Premises.
               5) This Paragraph 56.A does not apply to a “Permitted Transfer”,
as provided in Paragraph 57 hereof. The parties agree that if any of the
following transactions occur and do not qualify as “Permitted Transfers”, Tenant
must obtain Landlord’s consent to such transaction and if Landlord consents to
any of the following transactions which do not otherwise qualify as “Permitted

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Transfers”, then the provisions of this Paragraph 56.A shall not apply to the
following transactions: (i) a merger, consolidation or other reorganization in
which Tenant is not the surviving corporation so long as 95% of all assets and
liabilities of Tenant are permanently transferred to such assignee; and (ii) an
assignment of this Lease to a corporation which purchases or otherwise acquires
95% or more of the assets of Tenant so long as 95% of all assets and liabilities
of Tenant are permanently transferred to such assignee and Tenant remains liable
and responsible under the Lease to the extent Tenant continues in existence
following such transaction.”
     16. PERMITTED ASSIGNMENTS AND SUBLEASES: Effective as of the first day of
the Third Option Period, Lease Paragraph 57 (“Permitted Assignments and
Subleases”) shall be deleted in its entirety and replaced with the following:
          “57. PERMITTED ASSIGNMENTS AND SUBLEASES: Notwithstanding anything
contained in Paragraph 16, so long as Tenant otherwise complies with the
provisions of Paragraph 16 and the Permitted Transfer does not release Tenant
from its obligations hereunder, Tenant may enter into any of the following
transfers (a “Permitted Transfer”) without Landlord’s prior written consent, and
the provisions of Paragraph 56A shall not apply to any such Permitted Transfer:
          A. Tenant may sublease all or part of the Premises or assign its
interest in this Lease to any corporation which controls, is controlled by, or
is under common control with Tenant by means of an ownership interest of more
than fifty percent (50%) providing Tenant remains liable for the payment of Rent
and full performance of the Lease;
          B. Tenant may assign its interest in the Lease to a corporation which
results from a merger, consolidation or other reorganization in which Tenant is
not the surviving corporation so long as (i) 95% of all assets and liabilities
of Tenant are permanently transferred to such assignee, and (ii) immediately
prior to the merger, consolidation or other reorganization, the corporation into
which Tenant is to be merged has a net worth equal to or greater than the net
worth of Tenant at the time of Lease execution or at the time of such
assignment, merger, consolidation or reorganization (whichever is greater), or
if it does not, Landlord is provided a guaranty of the Lease (in a form
reasonably acceptable to Landlord) from a corporation (a) that is the parent of,
or is otherwise affiliated with, the corporation into which Tenant is to be
merged, and (b) which has a current net worth equal to or greater than the net
worth of Tenant at the time of Lease execution or at the time of such
assignment, merger, consolidation or reorganization (whichever is greater). In
the event there is not a permanent transfer of 95% or more of the assets and
liabilities from Tenant to a third party, and Tenant continues to exist as a
separate entity, both companies shall be jointly and severally liable for the
full terms and conditions of the Lease;

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          C. Tenant may assign this Lease to a corporation which purchases or
otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets and liabilities of Tenant are permanently transferred to such assignee
(in the event there is not a permanent transfer of 95% or more of the assets and
liabilities from Tenant to a third party and Tenant continues to exist as a
separate entity, both companies shall be jointly and severally liable for the
full terms and conditions of the Lease), and provided that immediately prior to
such assignment said corporation, has a net worth equal to or greater than the
net worth of Tenant (a) at the time of Lease execution or (b) at the time of
such assignment (whichever is greater), or if it does not, Landlord is provided
a guaranty of the Lease (in a form reasonably acceptable to Landlord) from a
corporation (a) that is the parent of, or is otherwise affiliated with, said
corporation and (b) which has a current net worth equal to or greater than the
net worth of Tenant at the time of Lease execution or at the time of such
assignment, (whichever is greater).”
     17. DESTRUCTION: Effective as of the first day of the Third Option Period,
Lease Paragraph 62 (“Destruction”) shall be deleted in its entirety and replaced
with the following:
          “62. DESTRUCTION: Paragraph 21 is modified by the following:
          A. Notwithstanding anything to the contrary within Paragraph 21,
Landlord may terminate this Lease in the event of an uninsured event or if
insurance proceeds, net of the deductible, are insufficient to cover one hundred
percent of the rebuilding costs; provided, however, Tenant shall have the right
to elect, in its discretion, to contribute such excess funds to permit Landlord
to repair the Premises.
          B. Except as provided in Paragraph 62C, Landlord may not terminate the
Lease if the Premises are damaged by a peril whereby the cost to replace and/or
repair is one hundred percent (100%) covered by the insurance carried by
Landlord pursuant to Paragraph 12, but instead shall restore the Premises in the
manner described by Paragraph 21.
          C. If the Premises are damaged by a peril covered by the insurance
carried by Landlord pursuant to Paragraph 12, Landlord shall have the option to
terminate the Lease if each of the following conditions is satisfied: (i) the
cost to repair or the damage exceeds thirty-three percent (33%) of the then
replacement cost of the Premises; and (ii) the damage occurs at a time when
there is less than five (5) years remaining in the term of the Lease.
          D. If Landlord fails to obtain insurance as required pursuant to
Paragraph 12, and said insurance would have been available to cover any damage
or destruction to the Premises, Landlord shall be required to rebuild, at its
cost, net of the deductible which would have been required under said insurance
policy (which deductible Tenant is required to pay).

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          E. If the Premises are damaged by any peril, then as soon as
reasonably practicable, Landlord shall furnish Tenant with the written opinion
of Landlord’s architect or construction consultant as to when the restoration
work required of Landlord may be completed. Tenant shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Landlord of a written notice of election to
terminate within seven (7) days after Tenant receives from Landlord the estimate
of the time needed to complete such restoration:
               1) The Premises are damaged by any peril (not caused by or
resulting from an action of Tenant or Tenant’s agents, employees, contractors or
invitees) and, in the reasonable opinion of Landlord’s architect or construction
consultant, the restoration of the Leased Premises cannot be substantially
completed within 180 days after the date of such damage (subject to force
majeure conditions); or
               2) The Premises are damaged by any peril (not caused by or
resulting from an action of Tenant or Tenant’s agents, employees, contractors or
invitees) within twelve (12) months of the last day of the Lease term, and, in
the reasonable opinion of Landlord’s architect or construction consultant, the
restoration of the Leased Premises cannot be substantially completed within
sixty (60) days after the date of such damage and Tenant has not exercised its
Option to Extend said Term (or Extended Term as the case may be).”
     18. LIABILITY INSURANCE: Effective as of the first day of the Third Option
Period, the first sentence of Lease Paragraph 10 (“Liability Insurance”) shall
be deleted and replaced with the following: “Tenant, at Tenant’s expense, agrees
to keep in force during the Term of this Lease a policy of commercial general
liability insurance with combined single limit coverage of not less than Two
Million Dollars ($2,000,000) per occurrence for bodily injury and property
damage occurring in, on or about the Premises, including parking and landscaped
areas.”
     19. LIMITATION OF LIABILITY: Effective as of the first day of the Third
Option Period, Lease Paragraph 36 (“Limitation of Liability”) shall be deleted
in its entirety and replaced with the following:
          “36. LIMITATION OF LIABILITY In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord:
(i) the sole and exclusive remedy shall be against Landlord’s interest in the
Premises leased herein;
(ii) no partner of Landlord shall be sued or named as a party in any suit or
action (except as may be necessary to secure jurisdiction of the partnership);

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(iii) no service of process shall be made against any partner of Landlord
(except as may be necessary to secure jurisdiction of the partnership);
(iv) no partner of Landlord shall be required to answer or otherwise plead to
any service of process;
(v) no judgment will be taken against any partner of Landlord;
(vi) any judgment taken against any partner of Landlord may be vacated and set
aside at any time without hearing;
(vii) no writ of execution will ever be levied against the assets of any partner
of Landlord;
(vii) these covenants and agreements are enforceable both by Landlord and also
by any partner of Landlord.
     Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or at common law.”
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said April 10, 1992 Lease Agreement shall remain in full force and effect.
(This Space Left Blank Intentionally)

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     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 1
to Lease as of the day and year last written below.

                  LANDLORD:       TENANT:
 
                JOHN ARRILLAGA SURVIVOR’S TRUST       QUANTUM CORPORATION      
      a Delaware corporation
 
                By        /s/ John Arrillaga       By        /s/ Andrew Kryder 
 
               
 
  John Arrillaga, Trustee         Andrew Kryder
 
              Date:   6/30/97       Andrew Kryder                          
Print or Type Name
 
                RICHARD T. PEERY       Title:  Finance & Corporate General
Council  SEPARATE PROPERTY TRUST        
 
                By        /s/ Richard Peery       Date: June 25, 1997
 
               
 
  Richard T. Peery, Trustee            
 
                Date:   6/26/97            

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AMENDMENT NO. 2
TO LEASE
     THIS AMENDMENT NO. 2 is made and entered into this 22nd day of March, 2001,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST) (previously known as the “John
Arrillaga Separate Property Trust”) as amended, and RICHARD T. PEERY, Trustee,
or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY
TRUST) as amended, collectively as LANDLORD, and MAXTOR CORPORATION, a Delaware
corporation, as “ASSIGNEE” OR “MAXTOR”.
RECITALS
     A. WHEREAS, by Lease Agreement dated April 10, 1992 Landlord leased to
QUANTUM CORPORATION, a Delaware corporation (the “ASSIGNOR” or “QUANTUM”) all of
that certain 60,128+ square foot building located at 900 Sumac Drive, Milpitas,
California (the “Premises”), the details of which are more particularly set
forth in said April 10, 1992 Lease Agreement, and
     B. WHEREAS, said Lease was amended by the Commencement Letter dated
April 2, 1993 which established the February 26, 1993 Lease Commencement Date,
and established the Termination Date of September 30, 2006, and,
     C. WHEREAS, said Lease was amended by Amendment No. 1 dated April 16, 1997,
which amended the Lease by (i) extending the Term for five years, changing the
Termination Date from September 30, 2006 to September 30, 2011, (ii) amending
the Basic Rent schedule and Aggregate Rent accordingly, (iii) adding a third
Five Year Option to Extend, (iv) replacing Paragraphs 41C (“Lease Terms
Co-extensive”) and 48 (“Cross Default”) and 53 (“Structural Capital Costs
Regulated by Governmental Agencies After the Commencement of this Lease not
Caused by Tenant or Tenant’s Uses or Remodeling of the Premises”), (v) amending
Lease Paragraph 12 (“Property Insurance”) and (vi) amending and/or replacing
certain provisions of the Lease commencing as of the commencement of the Third
Extended Term of said Lease , and
     D. WHEREAS, the Lease, together with those certain Amendments described
above in Recitals B and C shall hereinafter collectively be referred to as “the
Lease Agreement”, and
     E. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by (i) acknowledging Landlord’s consent to the assignment of said Lease from
“Quantum Corporation, a Delaware corporation” to “Maxtor Corporation, a Delaware
corporation”, and (ii) replacing Lease Paragraph 43 (“Second Five Year Option to
Extend”) and Paragraph 3 to Amendment No. 1 dated April 16, 1997 (“Third Five
Year Option to Extend”) as hereinafter set forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:

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     1. ASSIGNMENT OF TENANT’S INTEREST: Notwithstanding anything to the
contrary contained in the Lease Agreement, Landlord hereby understands that
based on Quantum’s notice to Landlord, Landlord hereby acknowledges that the
following transactions have occurred:
          A. Quantum has operated its business at the Premises through two
separate business groups: Quantum HDD, tracked by Quantum HDD common stock, and
Quantum DSS, tracked by Quantum DSS common stock.
          B. On or about, October 3, 2000, Quantum and Maxtor entered into that
certain an Amended and Restated Agreement and Plan of Merger and Reorganization,
dated as of October 3, 2000 (the “Merger Agreement”), wherein they agreed that:
               (i) Quantum will separate its Quantum HDD business from its
Quantum DSS and transfer the assets of Quantum HDD to a newly-formed subsidiary,
Insula Corporation, a Delaware corporation (“Insula”), in exchange for all of
Insula’s common stock and Insula’s agreement to be entirely responsible for all
of the Quantum HDD obligations and liabilities.
               (ii) Immediately after such separation, each currently
outstanding share of Quantum HDD common stock will be redeemed in return for a
share of Insula common stock, such that the holders of Quantum HDD common stock
shall own all of the common stock of Insula.
               (iii) Immediately after said redemption, Insula will merge into
Maxtor and each share of the Insula’s common stock will be converted into the
right to receive approximately 1.52 shares of Maxtor common stock, subject to
possible adjustment as described in the Merger Agreement.
          C. As part of the legal separation of the Quantum HDD business from
the Quantum DSS business, all of the right title and interest of Quantum in the
Lease will be assigned by Quantum to Insula and Insula will assume and agree to
be liable for all of the obligations of Quantum, as Tenant, under the Lease.
As a result of said merger transaction, as of April 2, 2001, the effective date
of the merger, Maxtor will become the Tenant under the Lease Agreement, and
Maxtor shall assume all obligations of Tenant under the Lease Agreement dated
April 10, 1992, as amended.
Landlord hereby consents to the foregoing transactions (“Landlord’s Consent”).
Except as expressly set forth below, Landlord’s Consent shall in no way void or
alter any of the terms of the Lease Agreement by and between Landlord and
Tenant, nor shall Landlord’s Consent alter or diminish in any way Tenant’s
obligations to Landlord.
Landlord has not reviewed the terms of any agreement between Quantum, Insula
and/or Maxtor, and Landlord shall not be bound by any agreement other than the
terms of the Lease Agreement between Landlord and Tenant. Landlord does not make
any warranties or representations as to the condition of the Leased Premises or
the terms of the Lease Agreement between Landlord and Quantum. Landlord’s
consent to the assignment shall in no way obligate Landlord to any further

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consents or agreements between Quantum and/or Assignee. So long as Quantum
continues to exist as a Delaware corporation, it is agreed that both Quantum and
Maxtor will be jointly and severally liable for all the terms and conditions of
the Lease and all Amendments thereto; provided, however, that so long as Quantum
remains liable for said Lease, no material amendment to the Lease Agreement
after the date hereof shall be binding upon Quantum without the prior written
consent of Quantum, which consent shall not be unreasonably withheld, and
Quantum’s approval shall not be required on transactions related to Landlord’s
Waivers, Landlord’s Consents to Sublease and/or Landlord’s Consents to
Alterations. The foregoing, however, shall not prevent Tenant and Landlord from
entering into any such modification or amendment between themselves.
It is further understood that the Security Deposit of Quantum is being
transferred to Maxtor.
     1. OPTIONS TO EXTEND: As consideration for the consent of Landlord herein
set forth, Lease Paragraph 43 (“Second Five Year Option to Extend”) and
Paragraph 3 to Amendment No. 1 dated April 16, 1997 (“Third Five Year Option to
Extend”) are hereby deleted in their entirety and shall be replaced with the
following:
     2. SECOND FIVE YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant an
option to extend this Lease Agreement (“Option to Extend” or the “Option”) for
an additional five years (“Second Extended Term”) upon the following terms and
conditions:
                    (1) Tenant shall give Landlord written notice of Tenant’s
exercise of this Option to Extend at least one hundred eighty (180) days prior
to the expiration of the Lease Term pursuant to Paragraph A hereof (not later
than April 3, 2011), in which event the Term of the Lease shall be considered
extended for an additional five (5) years, subject to the Basic Rent set forth
below and with: (i) the Basic Rent to be determined pursuant to Paragraph 2)
below; (ii) management fee and the terms and conditions subject to amendment by
Landlord (Landlord, in its sole and absolute discretion, may, but is not
required to, incorporate its then current Lease provisions that are standard in
Landlord’s leases for comparable buildings as of the date of Tenant’s exercise
of its Option to Extend); and (iii) this Paragraph 2.A thereafter deleted. In
the event that Tenant fails to timely exercise Tenant’s Option as set forth
herein in writing, Tenant shall have no further Option to Extend this Lease, and
the Lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 2.
                    (2) In the event Tenant timely exercises Tenant’s Option to
Extend as set forth herein, Landlord shall, within fifteen (15) days after
receipt of Tenant’s exercise of the Option, advise Tenant of any changes in the
management fee and the terms and conditions as referenced in Paragraph 2.A.1(ii)
above) and the Basic Rent (which shall not be less than the Basic Rent for the
fifth year of the current Term) required for the Extended Term of the Lease to
make the Basic Rent for the Premises comparable to the then current market
triple net basic rent for comparable properties either (i) then owned in whole
or in part by the above mentioned Landlord or by members of its immediate family
in the vicinity of the Premises or (ii) if not owned by Landlord or its family
as stated herein, other third party properties in the vicinity of the Premises.
Tenant shall have five (5) days after receipt from the Landlord of said new
terms and conditions and Basic Rent in which to accept said new terms and
conditions and Basic Rent and enter into written documentation confirming same.
In the event Tenant fails to execute

3

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said written documentation confirming said new terms and conditions and Basic
Rent for the Second Extended Term of Lease within said five (5) day period,
Tenant shall have no further Option to Extend this Lease, and this Lease shall
continue in full force and effect for the full remaining term hereof absent of
this Paragraph 2, with Landlord having no further responsibility or obligation
to Tenant with respect to Tenant’s Option to Extend.
                    (3) It is agreed that if Tenant is at any time prior to
exercising its Option to Extend in default of this Lease and has failed to cure
the default in the time period allowed, this Paragraph 2 shall be null and void
and Tenant will have no further rights under this Paragraph. It is further
agreed that if Tenant has exercised its Option to Extend and is subsequently in
default, and has failed to cure the default in the time period allowed by the
Lease at any time prior to, or at the time the lease commences on the Second
Extended Term, Landlord may at its sole and absolute discretion, cancel Tenant’s
Option to Extend, and this Lease will continue in full force and effect for the
full remaining Term hereof, absent of this Paragraph 2.
                    (4) The Option rights of Tenant under this Paragraph 2.A,
and the Second Extended Term thereunder, are granted for Tenant’s personal
benefit and may not be assigned or transferred by Tenant, except as provided for
in Lease Paragraph 57 (“Permitted Assignments and Subleases”), either
voluntarily or by operation of law, in any manner whatsoever.
                    (5) Notwithstanding anything to the contrary in this
Paragraph, this Option to Extend is automatically forfeited by Tenant (without
notice from Landlord) in the event Tenant is, at any time during the Term of
this Lease, in default of said Lease and if Tenant does not completely cure said
default within five days for a monetary default and thirty days for a
non-monetary default (or such longer time as permitted by cure in the Lease
Agreement). In the event said Option to Extend is forfeited as stated herein,
Tenant shall have no further Option to Extend this Lease.
     3. THIRD FIVE (5)-YEAR OPTION PERIOD: Provided Tenant has extended the
Lease for an additional five year period as set forth in Paragraph A above,
Landlord hereby grants to Tenant another Option to Extend the Lease Agreement
upon the following terms and conditions;
                    (1) Tenant shall give Landlord written notice of Tenant’s
exercise of this Option to Extend at least one hundred eighty (180) days prior
to the expiration of the Basic Term hereof (not later than April 3, 2016), in
which event the Term of the Lease shall be considered extended for an additional
five (5) years (“Third Extended Term”) subject to the Basic Rent set forth below
and with: (i) the Basic Rent to be determined pursuant to Paragraph 2) below;
(ii) the management fee and the terms and conditions subject to amendment by
Landlord (Landlord, in its sole and absolute discretion, may, but is not
required to, incorporate its then current Lease provisions that are standard in
Landlord’s leases for comparable buildings as of the date of Tenant’s exercise
of its Option to Extend); and (iii) this Paragraph 2.B thereafter deleted. In
the event that Tenant fails to timely exercise Tenant’s Option as set forth
herein in writing, Tenant shall have no further Option to Extend this Lease, and
the Lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 2.B.

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                    (2) In the event Tenant timely exercises Tenant’s Option to
Extend as set forth herein, Landlord shall, within fifteen (15) days after
receipt of Tenant’s exercise of option, advise Tenant of any changes in the
management fee and the terms and conditions as referenced in Paragraph 2.B.1(ii)
above and Basic Rent (which shall not be less than the Basic Rent for the fifth
year of the Second Extended Term) required for the Third Extended Term of the
Lease to make the Basic Rent for the Premises comparable to the then current
market triple net basic rent for comparable properties either (i) then owned in
whole or in part by the above mentioned Landlord or by members of its immediate
family in the vicinity of the Premises or (ii) if not owned by Landlord or its
family as stated herein, other third party properties in the vicinity of the
Premises. Tenant shall have five (5) days after receipt from the Landlord of
said new terms and conditions and Basic Rent in which to accept said new terms
and conditions and Basic Rent and enter into written documentation confirming
same. In the event Tenant fails to execute said written documentation confirming
said new terms and conditions and Basic Rent for the Third Extended Term of
Lease within said five (5) day period, Tenant shall have no further Option to
Extend this Lease, and this Lease shall continue in full force and effect for
the full remaining term hereof absent of this Paragraph 2.B, with Landlord
having no further responsibility or obligation to Tenant with respect to
Tenant’s Option to Extend.
                    (3) It is agreed that if Tenant is at any time prior to
exercising its Option to Extend in default of this Lease and has failed to cure
the default in the time period allowed, this Paragraph 2.B will be null and void
and Tenant will have no further rights under this Paragraph. It is further
agreed that if Tenant has exercised its Option to Extend and is subsequently in
default, and has failed to cure the default in the time period allowed by the
Lease at any time prior to, or at the scheduled Commencement Date of the Third
Extended Term, Landlord may at its sole and absolute discretion, cancel Tenant’s
Option to Extend, and this Lease will continue in full force and effect for the
full remaining Term hereof, absent of this Paragraph 2.B.
                    (4) The Option rights of Tenant under this Paragraph 2.B and
the Third Extended Term thereunder, are granted for Tenant’s personal benefit
and may not be assigned or transferred by Tenant, except as provided for in
Lease Paragraph 57 (“Permitted Assignments and Subleases”), either voluntarily
or by operation of law, in any manner whatsoever.
                    (5) Notwithstanding anything to the contrary in this
Paragraph 2.B, this Option to Extend is automatically forfeited by Tenant
(without notice from Landlord) in the event Tenant is, at any time during the
Term of this Lease, in default of said Lease and if Tenant does not completely
cure said default within five days for a monetary default and thirty days for a
non-monetary default (or such longer time as permitted by cure in the Lease
Agreement). In the event said Option to Extend is forfeited as stated herein,
Tenant shall have no further Option to Extend this Lease.
               EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and
conditions of said April 10, 1992 Lease Agreement shall remain in full force and
effect.

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     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 2
to Lease as of the day and year last written below.

                  LANDLORD:       ASSIGNEE/MAXTOR
 
                JOHN ARRILLAGA SURVIVOR’S TRUST       MAXTOR CORPORATION        
    a Delaware corporation
 
                By:   /s/ Richard Peery, his Attorney in Fact       By:   /s/
Glenn H. Stevens
 
               
 
  John Arrillaga, Trustee            

 
  John Arrillaga, Trustee       Glenn H. Stevens

 
         
 
          Print or Type Name Date:   3/30/01                                    
 
                RICHARD T. PEERY SEPARATE       Title:   V.P., General Counsel &
Secretary
 
                PROPERTY TRUST            
 
                By:   /s/ Richard Peery       Date:   4/1/01
 
               
 
  Richard T. Peery, Trustee            
 
                Date:   3/30/01       ASSIGNOR/QUANTUM
 
               
 
                            QUANTUM CORPORATION             a Delaware
corporation
 
                            By:   /s/ Signature Illegible
 
               
 
                                          Print or Type Name
 
                            Title:   VP Real Estate
 
               
 
                            Date:   3/30/01
 
               

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  LEASE 3
 
  Building 4
 
  Lot 4

LEASE AGREEMENT
     THIS LEASE, made this 17th day of September, 1990 between JOHN ARRILLAGA,
Trustee, or his Successor Trustee, UTA dated 7/20/77 (JOHN ARRILLAGA SEPARATE
PROPERTY TRUST) as amended, and RICHARD T. PEERY, Trustee, or his Successor
Trustee, UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY TRUST) as
amended, hereinafter called Landlord, and QUANTUM CORPORATION, a Delaware
corporation, hereinafter called Tenant.
WITNESSETH:
     Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord those certain premises (the “Premises”) outlined in red on Exhibit “A”,
attached hereto and incorporated herein by this reference thereto more
particularly described as follows:
All of that land containing approximately 6,749 ± acres and that certain
101,253+ square foot two-story building (“Building 4”) and parking appurtenant
thereto, to be constructed and landscaping to be installed by Landlord as shown
within the area outlined in Red (“Lot 4”) on Exhibit A to be located at 1000
Sumac Drive, Milpitas, California 95035. Said Premises is more particularly
shown within the area outlined in Red on Exhibit A attached hereto and
incorporated herein by this reference and Lot 4 is more particularly described
as Parcel 4 as shown on that certain parcel map recorded in the Official Records
of Santa Clara County in Book 616 of Maps, Page 20 on July 23, 1990. The
interior of the leased Premises shall be improved in the configuration as shown
in Red on Exhibit B to be attached hereto and incorporated herein by this
reference. The building shell shall be constructed in accordance with the shell
and site improvement specifications set forth on Exhibit A, and the general
building elevation net forth on Exhibit A.
SEE PARAGRAPH 48.
     The word “Premises” as used throughout this lease is hereby defined to
include the nonexclusive use of sidewalks and driveways in front of or adjacent
the Premises, and the nonexclusive use of the area directly underneath or over
such sidewalks and driveways. The gross leasable area of the building shall be
measured from outside of exterior walls to outside of exterior walls, and shall
include any atriums, covered entrances or egresses and covered loading areas.

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     Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth and Tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all of said terms,
covenants and conditions. This Lease is made upon the conditions of such
performance and observance.
     1. USE: Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances for the purpose of office,
sales, R&D, light manufacturing and related uses necessary for the use of Tenant
or any approved assignee or subtenant to conduct its business providing any and
all uses of the Premises shall be subject to and in conformance with all
governmental laws and ordinances and for no other purpose without Landlord’s
prior written consent, Tenant shall not do or permit to be done in or about the
Premises nor bring or keep or permit to be brought or kept in or about the
Premises anything which is prohibited by or will in any way increase the
existing rate of (or otherwise affect) fire or any insurance covering the
Premises or any part thereof, or any of its contents without the prior written
consent of Landlord, and provided Tenant bears any cost related to such
increased rate, or will cause a cancellation of any insurance covering the
Premises or any part thereof, or any of its contents. Tenant shall not do or
permit to be done anything in, on or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Premises or neighboring premises or injure or annoy them, or use or allow the
Premises to be used for any improper, immoral, unlawful or objectionable
purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about
the Premises. No sale by auction shall be permitted on the Premises. Tenant
shall not place any loads upon the floors, walls, or ceiling which endanger the
structure, or place any harmful fluids or other material in the drainage system
of the building, or overload existing electrical or other mechanical systems. No
waste materials or refuse shall be dumped upon or permitted to remain upon any
part of the Premises or outside of the building in which the Premises are a
part, except in trash containers placed inside exterior enclosures designated by
Landlord for that purpose or inside of the building proper where designated by
Landlord. No materials, supplies, equipment, finished products or semi-finished
products, raw materials or articles of any nature shall be stored upon or
permitted to remain outside the Premises. Tenant shall not place anything or
allow anything to be placed near the glass of any window, door partition or wall
which may appear unsightly from outside the Premises. No loudspeaker or other
device, system or apparatus which can be heard outside the Premises shall be
used in or at the Premises without the prior written consent of Landlord. Tenant
shall not commit or suffer to be committed any waste in or upon the Premises.
Tenant shall indemnify, defend and hold Landlord harmless against any loss,
expense, damage, reasonable attorneys’ fees, or liability arising out of failure
of Tenant to comply with any applicable law that governs Tenant use of the
Premises. Tenant shall comply with any covenant, condition, or restriction
(“CC&R’s”) affecting the Premises. The provisions of this paragraph are for the
benefit of Landlord only and shall not be construed to be for the benefit of any
tenant or occupant of the Premises.
     2. TERM: and Commencement Date of Lease: See Paragraph 40, 41 and 42 of
this Lease.
     3. POSSESSION: If Landlord, for any reason whatsoever, other than
Landlord’s default, cannot deliver possession of said premises to Tenant at the
commencement of the said term, as hereinbefore specified, this Lease shall not
be void or voidable; no obligation of Tenant

2

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shall be affected thereby; nor shall Landlord or Landlord’s agents be liable to
Tenant for any loss or damage resulting therefrom; but in that event the
commencement and termination dates of the Lease and all other dates affected
thereby shall be revised to conform to the date of Landlord’s delivery of
possession, as specified in Paragraph 2B, above; provided, however, it is agreed
that in no event shall the Lease commence sooner than December 20, 1991 unless
the parties agree in writing to an earlier date for the Lease to commence. The
above is, however, subject to the provision that the period of delay of delivery
of the Premises shall not exceed 180 days from the commencement date herein
(except those delays caused by Acts of God, strikes, war, utilities,
governmental bodies, weather, unavailable materials, and delays beyond
Landlord’s control shall be excluded in calculating such period) in which
instance Tenant, at its option, may, by written notice to Landlord, terminate
this Lease.
SEE PARAGRAPH 46
     4. RENT:
          A. Basic Rent. Tenant agrees to pay to Landlord at such place as
Landlord may designate without deduction, offset, prior notice, or demand, and
Landlord agrees to accept as Basic Rent for the leased Premises the total sum of
the amount to be calculated pursuant to Paragraph 39 Dollars ($) in lawful money
of the United States of America, payable as follows:
SEE PARAGRAPHS 39 THROUGH 42.
          B. Time for Payment. Full monthly rent is due in advance on the first
day of each calendar month. In the event that the term of this Lease commences
on a date other than the first day of a calendar month, on the date of
commencement of the term hereof Tenant shall pay to Landlord as rent for the
period from such date of commencement to the first day of the next succeeding
calendar month that proportion of the monthly rent hereunder which the number of
days between such date of commencement and the first day of the next succeeding
calendar month bears to thirty (30). In the event that the term of this Lease
for any reason ends on a date other than the last day of a calendar month, on
the first day of the last calendar month of the term hereof Tenant shall pay to
Landlord as rent for the period from said first day of said last calendar month
to and including the last day of the term hereof that proportion of the monthly
rent hereunder which the number of days between said first day of said last
calendar month and the last day of the term hereof bears to thirty (30).
          C. Late Charge. Notwithstanding any other provision of this Lease, it
Tenant is in default in the payment of rental as set forth in this Paragraph 4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to the
delinquent rental due, a late charge for each rental payment in default ten
(10) days. Said late charge shall equal five percent (5%) of each rental payment
so in default. See Paragraph 49.
          D. Additional Rent. Beginning with the commencement date of the term
of this Lease, Tenant shall pay to Landlord or to Landlord’s designated agent in
addition to the Basic Rent and as Additional Rent the following:
               (a) All Taxes relating to the Premises as set forth in
Paragraph 9, and

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               (b) All insurance premiums relating to the Premises, as set forth
in Paragraph 12, and
               (c) All charges, costs and expenses, which Tenant is required to
pay hereunder, together with all interest and penalties, costs and expenses
including reasonable attorneys’ fees and legal expenses, that may accrue thereto
in the event of Tenant’s failure to pay such amounts, and all damages,
reasonable costs and expenses which Landlord may incur by reason of default of
Tenant or failure on Tenant’s part to comply with the terms of this Lease. In
the event of nonpayment by Tenant of Additional Rent, Landlord shall have all
the rights and remedies with respect thereto as Landlord has for nonpayment of
rent.
     The Additional Rent due hereunder shall be paid to Landlord or Landlord’s
agent (i) within five days after presentation of invoice from Landlord or
Landlord’s agent setting forth such Additional Rent and/or (ii) at the option of
Landlord, Tenant shall pay to Landlord monthly, in advance, Tenant’s prorata
share of an amount estimated by Landlord to be Landlord’s approximate average
monthly expenditure for such Additional Rent items, which estimated amount shall
be reconciled at the end of each calendar year as compared to Landlord’s actual
expenditure for said Additional Rent items, with Tenant paying to Landlord, upon
demand, any amount of actual expenses expended by Landlord in excess of said
estimated amount, or Landlord refunding to Tenant (providing Tenant is not in
default in the performance of any of the terms, covenants and conditions of this
Lease in which case such amount shall be held by Landlord as a credit for
Tenant’s account until such default has been cured) any amount of estimated
payments made by Tenant in excess of Landlord’s actual expenditures for said
Additional Rent items.
     The respective obligations of Landlord and Tenant under this paragraph
shall survive the expiration or other termination of the term of this Lease, and
if the term hereof shall expire or shall otherwise terminate on a day other than
the last day of a calendar year, the actual Additional Rent incurred for the
calendar year in which the term hereof expires or otherwise terminates shall be
determined and settled on the basis of the statement of actual Additional Rent
for such calendar year and shall be prorated in the proportion which the number
of days in such calendar year preceding such expiration or termination bears to
365.
          E. Place of Payment of Rent and Additional Rent. All Basic Rent
hereunder and all payments hereunder for Additional Rent shall be paid to
Landlord at the office of Landlord at Peery/Arrillaga, File 1504, P.O. Box
60000, Sand Francisco, CA 4160 or to such other person or to such other place as
Landlord may from time to time designate in writing.
          F. Security Deposit. Concurrently with Tenant’s execution of this
Lease, Tenant shall deposit with Landlord the sum of TWO HUNDRED EIGHTY NINE
THOUSAND FIVE HUNDRED EIGHTY THREE AND 58/100 Dollars ($289, 583.58) Said sum
shall be held by Landlord as a Security Deposit for the faithful performance by
Tenant of all of the terms, covenants, and conditions of this Lease to be kept
and performed by Tenant during the term hereof. If Tenant defaults with respect
to any provision of this Lease, including, but not limited to, the provisions
relating to the payment of rent and any of the monetary sums due herewith.
Landlord may (but shall not be required to) use, apply or retain all or any part
of this Security Deposit for the payment of any other amount which Landlord may
spend by reason of Tenant’s

4

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default or to compensate Landlord for any other loss or damage which Landlord
may suffer by reason of Tenant’s default. If any portion of said Deposit is so
used or applied. Tenant shall, within ten (10) days after written demand
therefor, deposit cash with Landlord in the amount sufficient to restore the
Security Deposit to its original amount. Tenant’s failure to do so shall be a
material breach of this Lease. Landlord shall not be required to keep this
Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on such Deposit. If Tenant fully and faithfully performs
every provision of this Lease to be performed by it, the Security Deposit or any
balance thereof shall be returned to Tenant (or at Landlord’s option, to the
last assignee of Tenant’s interest hereunder) at the expiration of the Lease
term and after Tenant has vacated the Premises. In the event of termination of
Landlord’s interest in this Lease, Landlord shall transfer said Deposit to
Landlord’s successor in interest whereupon Tenant agrees to release Landlord
from liability for the return of such Deposit or the accounting therefore. SEE
PARAGRAPH 50.
     5. ACCEPTANCE AND SURRENDER OF PREMISES: By entry hereunder, Tenant accepts
the Premises as being in good and sanitary order, condition and repair and
accepts the building and improvements included in the Premises in their present
condition and without representation or warranty by Landlord as to the condition
of such building or as to the use or occupancy which may be made thereof. Any
exceptions to the foregoing must be by written agreement executed by Landlord
and Tenant. Tenant agrees on the last day of the Lease term, or on the sooner
termination of this Lease, to surrender the Premises promptly and peaceably to
Landlord in good condition and repair (damage by Acts of God, fire, normal wear
and tear excepted), with all interior walls cleaned so that they appear freshly
painted, and repaired and replaced, if damaged; all floors cleaned and waxed;
all carpets cleaned and shampooed: all broken, marred or nonconforming
acoustical ceiling tiles replaced; all windows washed; the air conditioning and
heating systems serviced by a reputable and licensed service firm and in good
operating condition and repair; the plumbing and electrical systems and lighting
in good order and repair, including replacement of any burned out or broken
light bulbs or ballasts; the lawn and shrubs in good condition including the
replacement of any dead or damaged plantings; the sidewalk, driveways and
parking areas in good order, condition and repair; together with all
alterations, additions, and improvements which may have been made in, to, or on
the Premises (except moveable trade fixtures installed at the expense of Tenant)
except that Tenant shall ascertain from Landlord within ninety (90) days before
the end of the term of this Lease whether Landlord desires to have the Premises
or any part or parts thereof restored to their condition and configuration as
when the Premises were delivered to Tenant and if Landlord shall so desire, then
Tenant shall restore said Premises or such part or parts thereof before the end
of this Lease at Tenant’s sole cost and expense. Tenant, on or before the end of
the term or sooner termination of this Lease, shall remove all of Tenant’s
personal property and trade fixtures from the Premises, and all property not so
removed on or before the end of the term or sooner termination of this Lease
shall be deemed abandoned by Tenant and title to same shall thereupon pass to
Landlord without compensation to Tenant. Landlord may, upon termination of this
Lease, remove all moveable furniture and equipment so abandoned by Tenant, at
Tenant’s sole cost, and repair any damage caused by such removal at Tenant’s
sole cost. If the Premises be not surrendered at the end of the term or sooner
termination of this Lease, Tenant shall indemnify Landlord against loss or
liability resulting from the delay by Tenant in so surrendering the Premises
including, without limitation, any claims made by any succeeding tenant founded
on such delay. Nothing contained herein shall be construed as an extension of
the term hereof or

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as a consent of Landlord to any holding over by Tenant. The voluntary or other
surrender of this Lease or the Premises by Tenant or a mutual cancellation of
this Lease shall not work as a merger and, at the option of Landlord, shall
either terminate all or any existing subleases or subtenancies or operate as an
assignment to Landlord of all or any such subleases or sub tenancies. SEE
PARAGRAPH 51.
     6. ALTERATIONS AND ADDITIONS: Tenant shall not make, or suffer to be made,
any alteration or addition to the Premises, or any part thereof, without the
written consent of Landlord first had and obtained by Tenant (such consent not
to be unreasonably withheld), but at the cost of Tenant, and any addition to, or
alteration of, the Premises, except moveable furniture and trade fixtures, shall
at once become a part of the Premises and belong to Landlord. Landlord reserves
the right to approve all contractors and mechanics proposed by Tenant to make
such alterations and additions. Tenant shall retain title to all moveable
furniture and trade fixtures placed in the Premises. All heating, lighting,
electrical, air conditioning, partitioning, drapery, carpeting, and floor
installations made by Tenant, together with alt property that has become an
integral part of the Premises, shall not be deemed trade fixtures. Tenant agrees
that it will not proceed to make such alteration or additions, without having
obtained consent from Landlord to do so, and until five (5) days from the
receipt of such consent, in order that Landlord may post appropriate notices to
avoid any liability to contractors or material suppliers for payment for
Tenant’s improvements. Tenant will at all times permit such notices to be posted
and to remain posted until the completion of work. Tenant shall, if required by
Landlord, secure at Tenant’s own cost and expense, a completion and lien
indemnity bond, satisfactory to Landlord, for such work. Tenant further
covenants and agrees that any mechanic’s lien filed against the Premises for
work claimed to have been done for, or materials claimed to have been furnished
to Tenant, will be discharged by Tenant, by bond or otherwise, within ten
(10) days after Tenant receives notice of the filing thereof, at the cost and
expense of Tenant. Any exceptions to the foregoing must be made in writing and
executed by both Landlord and Tenant. SEE PARAGRAPH 51.
     7. TENANT MAINTENANCE: Tenant shall, at its sole cost and expense, keep and
maintain the Premises (including appurtenances) and every part thereof in a high
standard of maintenance and repair, or replacement, and in good and sanitary
condition. Tenant’s maintenance and repair responsibilities herein referred to
include, but are not limited to, janitorization, all windows (interior and
exterior), window frames, plate glass and glazing (destroyed by accident or act
of third parties), truck doors, plumbing systems (such as water and drain lines,
sinks, toilets, faucets, drains, showers and water fountains), electrical
systems (such as panels, conduits, outlets, lighting fixtures, lamps, bulbs,
tubes and ballasts), heating and air conditioning systems (such as compressors,
fans, air handlers, ducts, mixing boxes, thermostats, time clocks, boilers,
heaters, supply and return grills), structural elements and exterior surfaces of
the building, store fronts, roofs, downspouts, all interior improvements within
the premises including but not limited to wall coverings, window coverings,
carpet, floor coverings, partitioning, ceilings, doors (both interior and
exterior), including closing mechanisms, latches, locks, skylights (if any),
automatic fire extinguishing systems, and elevators and all other interior
improvements of any nature whatsoever, and all exterior improvements including
but not limited to landscaping, sidewalks, driveways, parking lots including
striping and sealing, sprinkler systems, lighting, ponds, fountains, waterways,
and drains. Tenant agrees to provide carpet shields under all rolling chairs or
to otherwise be responsible for wear and tear of the carpet

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caused by such rolling chairs if such wear and tear exceeds that caused by
normal foot traffic in surrounding areas. Areas of excessive wear shall be
replaced at Tenant’s sole expense upon Lease termination. Tenant hereby waives
all rights under, and benefits of, Subsection 1 of Section 1932 and Section 1941
and 1942 of the California Civil Code and under any similar law, statute or
ordinance now or hereafter in effect. In the event any of the above maintenance
responsibilities apply to any other tenant(s) of Landlord where there is common
usage with other tenant(s), such maintenance responsibilities and charges shall
be allocated to the leased Premises by square footage or other equitable basis
as calculated and determined by Landlord. SEE PARAGRAPH 52.
     8. UTILITIES: Tenant shall pay promptly, as the same become due all charges
for water, gas, electricity, telephone, telex and other electronic communication
service, sewer service, waste pick-up and any other utilities, materials or
services furnished directly to or used by Tenant on or about the Premises during
the term of this Lease, including, without limitation, any temporary or
permanent utility surcharge or other exactions whether or not hereinafter
imposed. In the event the above charges apply to any other tenant(s) of Landlord
where there is common usage with other tenant(s), such charges shall be
allocated to the leased Premises by square footage or other equitable basis as
calculated and determined by Landlord.
     Landlord shall not be liable for and Tenant shall not be entitled to any
abatement or reduction of rent by reason of any interruption or failure of
utility services to the Premises when such interruption or failure is caused by
accident, breakage, repair, strikes, lockouts, or other labor disturbances or
labor disputes of any nature, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord.
     9. TAXES:
          A. Notwithstanding the following and pursuant to the terms of the
Option Agreement dated October 31, 1989 related to this Lease Tenant is
responsible for paying all real estate taxes and assessments assessed against
the Premises leased hereunder from the date Tenant exercised its option on said
Premises which date was August 27, 1990. As Additional Rent and in accordance
with Paragraph 4D of this Lease, Tenant shall pay to Landlord, or if Landlord so
directs, directly to the Tax Collector, all Real Property Taxes relating to the
Premises. In the event the Premises leased hereunder consist of only a portion
of the entire tax parcel. Tenant shall pay to Landlord Tenant’s proportionate
share of such real estate taxes allocated to the leased Premises by square
footage or other reasonable basis as calculated and determined by Landlord. It
the tax billing pertains 100% to the leased Premises, and Landlord chooses to
have Tenant pay said real estate taxes directly to the Tax Collector, than in
such event it shall be the responsibility of Tenant to obtain the tax and
assessment bills and pay, prior to delinquency, the applicable real property
taxes and assessments pertaining to the leased Premises, and failure to receive
a bill for taxes and or assessments shall not provide a basis for cancellation
of or nonresponsibility for payment of penalties for nonpayment or late payment
by Tenant. The term “Real Property Taxes” as used herein, shall mean (i) all
taxes, assessments, levies and other charges of any kind or nature whatsoever,
general and special, foreseen and unforeseen (including all installments of
principal and interest required to pay any general or special assessments for
public improvements and any increases resulting from reassessments caused by any
change in ownership of the Premises) now or hereafter imposed by any

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governmental or quasi-governmental authority or special district having the
direct or indirect power to tax or levy assessments, which are levied or
assessed against, or with respect to the value, occupancy or use of, all or any
portion of the Premises (as now constructed or as may at any time hereafter be
constructed, altered, or otherwise changed) or Landlord’s interest therein; any
improvements located within the Premises (regardless of ownership); the
fixtures, equipment and other property of Landlord, real or personal, that are
an integral part of and located in the Premises; or parking areas, public
utilities, or energy within the premises (ii) all charges, levies or fees
imposed by reason of environmental regulation or other governmental control of
the Premises: and (iii) costs and fees (including reasonable attorneys’ fees)
incurred by Landlord in reasonably contesting any Real Property Tax and in
negotiating with public authorities as to any Real Property Tax. If at any time
during the term of this Lease the taxation or assessment of the Premises
prevailing as of the commencement date of this Lease shall be altered so that in
lieu of or in addition to any Real Property Tax described above there shall be
levied, assessed or imposed (whether by reason of a change in the method of
taxation or assessment, creation of a new tax or charge, or any other cause) an
alternate or additional tax or charge (i) on the value, use or occupancy of the
Premises or Landlord’s interest therein or (ii) on or measured by the gross
receipts, income or rentals from the Premises, on Landlord’s business of leasing
the Premises, or computed in any manner with respect to the operation of the
Premises. Then any such tax or charge, however designated, shall be included
within the meaning of the term “Real Property Taxes” for purposes of this Lease.
If any Real Property Tax is based upon property or rents unrelated to the
Premises, than only that part of such Real Property Tax that is fairly allocable
to the Premises shall be included within the meaning of the term “Real Property
Taxes”. Notwithstanding the foregoing, the term “Real Property Taxes” shall not
include estate, inheritance, gift or franchise taxes of Landlord or the federal
or state net income tax imposed on Landlord’s income from all sources. SEE
PARAGRAPH 53.
          B. Taxes on Tenant’s Property Tenant shall be liable for and shall pay
ten days before delinquency, taxes levied against any personal property or trade
fixtures placed by Tenant in or about the Premises. If any such taxes on
Tenant’s personal property or trade fixtures are levied against Landlord or
Landlord’s property or if the assessed value of the Premises is increased by the
inclusion therein of a value placed upon such personal property or trade
fixtures of Tenant and if Landlord, after written notice to Tenant, pays the
taxes based on such increased assessment, which Landlord shall have the right to
do regardless of the validity thereof, but only under proper protest if
requested by Tenant, Tenant shall upon demand, as the case may be, repay to
Landlord the taxes so levied against Landlord, or the proportion of such taxes
resulting from such increase in the assessment; provided that in any such event
Tenant shall have the right, in the name of Landlord and with landlord’s full
cooperation, to bring suit in any court of competent jurisdiction to recover the
amount of such taxes so paid under protest, and any amount so recovered shall
belong to Tenant.
     10. LIABILITY INSURANCE: Tenant, at Tenant’s expense, agrees to keep in
force during the term of this Lease a policy of comprehensive general liability
insurance for bodily injury and property damage occurring in, on or about the
Premises, including parking and landscaped areas, in the amount of $2,000,000
combined single limit. Such insurance shall be primary and noncontributory as
respects any insurance carried by Landlord. The policy or policies effecting
such insurance shall name Landlord as additional insureds, and shall insure any
liability of Landlord, contingent or otherwise, as respects acts or omissions of
Tenant, its agents,

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employees or invitees or otherwise by any conduct or transactions of any of said
persons in or about or concerning the Premises, including any failure of Tenant
to observe or perform any of its obligations hereunder; shall be issued by an
insurance company admitted to transact business in the State of California; and
shall provide that the insurance effected thereby shall not be canceled, except
upon thirty (30) days’ prior written notice to Landlord. A copy of said policy
shall be delivered to Landlord. If, during the term of this Lease, in the
considered opinion of Landlord’s Lender, insurance advisor, or counsel, the
amount of insurance described in this Paragraph 10 is not adequate, Tenant
agrees to increase said coverage to such reasonable amount as Landlord’s Lender,
insurance advisor, or counsel shall deem adequate.
     11. TENANTS PERSONAL PROPERTY INSURANCE AND WORKMAN’S COMPENSATION
INSURANCE: Tenant shall maintain a policy or policies of fire and property
damage insurance in “all risk” form with a sprinkler leakage endorsement
insuring the personal property, inventory, trade fixtures, and leasehold
improvements within the leased Premises for the full replacement value thereof.
The proceeds from any of such policies shall be used for the repair or
replacement of such items so insured.
     Tenant shall also maintain a policy or policies of workman’s compensation
insurance and any other employee benefit insurance sufficient to comply with all
laws.
     12. PROPERTY INSURANCE: Landlord shall purchase and keep in force, and as
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord Tenant’s proportionate share (allocated to the leased Premises
by square footage or other equitable basis as calculated and determined by
Landlord) of the cost of, policy or policies of insurance covering loss or
damage to the Premises (excluding routine maintenance and repairs and incidental
damage or destruction caused by accidents or vandalism for which Tenant is
responsible under Paragraph 7) in the amount of the full replacement value
thereof, providing protection against those perils included within the
classification of “all risks” insurance and flood and/or earthquake insurance,
if available, plus a policy of rental income insurance in the amount of one
hundred (100%) percent of twelve (12) months Basic Rent, plus sums paid as
Additional Rent. If such insurance cost is increased due to Tenant’s use of the
Premises, Tenant agrees to pay to Landlord the full cost of such increase.
Tenant shall have no interest in nor any right to the proceeds of any insurance
procured by Landlord for the Premises.
     Landlord and Tenant do each hereby respectively release the other, to the
extent of insurance coverage of the releasing party, from any liability for loss
or damage caused by fire or any of the extended coverage casualties included in
the releasing party’s insurance policies, irrespective of the cause of such fire
or casualty: provided, however, that it the insurance policy of either releasing
party prohibits such waiver, then this waiver shall not take effect until
consent to such waiver is obtained. If such waiver is so prohibited, the insured
party affected shall promptly notify the other party thereof. SEE PARAGRAPH 54.
     13. INDEMNIFICATION: Landlord shall not be liable to Tenant and Tenant
hereby waives all claims against Landlord for any injury to or death of any
person or damage to or destruction of property in or about the Premises by or
from any cause whatsoever, including, without limitation, gas, fire, oil,
electricity or leakage of any character from the roof, walls, basement or other
portion of the Premises but excluding, however, the negligence of Landlord,

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its agents, servants, employees, invitees, or contractors of which negligence
landlord has knowledge and reasonable time to correct. Except as to injury to
persons or damage to property the principal cause of which is the negligence of
Landlord and subject to the last two sentences of Paragraph 12. Tenant shall
hold Landlord harmless from and defend Landlord against any and all expenses,
including reasonable attorneys’ fees, in connection therewith, arising out of
any injury to or death of any person or damage to or destruction of property
occurring in, on or about the Premises, or any part thereof, from any use
whatsoever.
     14. COMPLIANCE: Tenant, at its sole cost and expense, shall promptly comply
with all laws, statutes, ordinances and governmental rules, regulations or
requirements now or hereafter in effect; with the requirements of any board of
fire underwriters or other similar body now or hereafter constituted; and with
any direction or occupancy certificate issued pursuant to law by any public
officer; provided, however, that no such failure shall be deemed a breach of the
provisions if Tenant, immediately upon notification, commences to remedy or
rectify said failure. The judgment of any court of competent jurisdiction or the
admission of Tenant in any action against Tenant, whether Landlord be a party
thereto or not, that Tenant has violated any such law, statute, ordinance or
governmental rule, regulation, requirement, direction or provision, shall be
conclusive of that fact as between Landlord and Tenant. Tenant shall, at its
sole cost and expense, comply with any and all requirements pertaining to said
Premises, of any insurance organization or company, necessary for the
maintenance of reasonable fire and public liability insurance covering
requirements pertaining to said Premises, of any insurance organization or
company, necessary for the maintenance of reasonable fire and public liability
insurance covering the Premises. SEE PARAGRAPHS 44 AND 52.
     15. LIENS: Tenant shall keep the Premises free from any liens arising out
of any work performed, materials furnished or obligation incurred by Tenant. In
the event that Tenant shall not, within ten (10) days following Tenant’s receipt
of notice of the imposition of such lien, cause the same to be released of
record, Landlord shall have, in addition to all other remedies provided herein
and by law, the right, but no obligation, to cause the same to be released by
such means as it shall deem proper, including payment of the claim giving rise
to such lien. All sums paid by Landlord for such purpose, and all expenses
incurred by it in connection therewith, shall be payable to Landlord by Tenant
on demand with interest at the prime rate of interest as quoted by the Bank of
America.
     16. ASSIGNMENT AND SUBLETTING: Tenant shall not assign, transfer, or
hypothecate the leasehold estate under this Lease, or any interest therein, and
shall not sublet the Premises, or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person or entity to occupy or use the
Premises, or any portion thereof, without, in each case, the prior written
consent of Landlord which consent will not be unreasonably withheld. In the
event Tenant is allowed to assign, transfer or sublet the whole or any part of
the Premises, with the prior written consent of Landlord, no assignee,
transferee or subtenant shall assign or transfer this Lease, either in whole or
in part, or sublet the whole or any part of the Premises without also having
obtained the prior written consent of Landlord. A consent of Landlord to one
assignment, transfer, hypothecation, subletting, occupation or use by any other
person shall not release Tenant from any of Tenant’s obligations hereunder or be
deemed to be a consent to any subsequent similar or dissimilar assignment,
transfer, hypothecation, subletting, occupation or use by any other person. Any
such assignment, transfer, hypothecation, subletting, occupation or

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use without such consent shall be void and shall constitute a breach of this
lease by Tenant and shall, at the option of Landlord exercised by written notice
to Tenant, terminate this Lease. The leasehold estate wider this Lease shall
not, nor shall any interest therein, be assignable for any purpose by operation
of law without the written consent of landlord. As a condition to its consent,
Landlord may require Tenant to pay all reasonable expenses in connection with
the assignment, and Landlord may require Tenant’s assignee or transferee (or
other assignees or transferees) to assume in writing all of the obligations
under this Lease and for Tenant to remain liable to Landlord under the Lease.
SEE PARAGRAPHS 55 AND 56.
     17. SUBORDINATION AND MORTGAGES: In the event Landlord’s title or leasehold
interest is now or hereafter encumbered by a deed of trust, upon the interest of
Landlord in the land and buildings in which the demised Premises are located, to
secure a loan from a lender (hereinafter referred to as “Lender”) to Landlord,
Tenant shall, at the request of Landlord or Lender, execute in writing an
agreement subordinating its rights under this Lease to the lien of such deed of
trust, or, if so requested, agreeing that the lien of Lender’s deed of trust
shall be or remain subject and subordinate to the rights of Tenant under this
Lease. Notwithstanding any such subordination, Tenant’s possession under this
Lease shall not be disturbed if Tenant is not in default and so long as Tenant
shall pay all rent and observe and perform all of the provisions set forth in
this Lease. SEE PARAGRAPH 57
     18. ENTRY BY LANDLORD: Landlord reserves, and shall at all reasonable times
have, the right to enter the Premises to inspect them; to perform any services
to be provided by Landlord hereunder; to make repairs or provide any services to
a contiguous tenant(s); to submit the Premises to prospective purchasers,
mortgagers or tenants; to post notices of nonresponsibility; and to alter,
improve or repair the Premises or other parts of the building, all without
abatement of rent, and may erect scaffolding and other necessary structures in
or through the Premises where reasonably required by the character of the work
to be performed; provided, however that the business of Tenant shall be
interfered with to the least extent that is reasonably practical. Any entry to
the Premises by Landlord for the purposes provided for herein 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, actual or constructive, of Tenant
from the Premises or any portion thereof. SEE PARAGRAPH 59.
     19. BANKRUPTCY AND DEFAULT: The commencement of a bankruptcy action or
liquidation action or reorganization action or insolvency action or an
assignment of or by Tenant for the benefit of creditors, or any similar action
undertaken by Tenant, or the insolvency of Tenant, shall, at Landlord’s option,
constitute a breach of this Lease by Tenant. If the trustee or receiver
appointed to serve during a bankruptcy, liquidation, reorganization, insolvency
or similar action elects to reject Tenant’s unexpired Lease, the trustee or
receiver shall notify Landlord in writing of its election within thirty
(30) days after an order for relief in a liquidation action or within thirty
(30) days after the commencement of any action.
     Within thirty (30) days after court approval of the assumption of this
Lease, the trustee or receiver shall cure (or provide adequate assurance to the
reasonable satisfaction of Landlord that the trustee or receiver shall cure) any
and all previous defaults under the unexpired Lease and shall compensate
Landlord for all actual pecuniary loss and shall provide adequate assurance of
future performance under said Lease to the reasonable satisfaction of Landlord.
Adequate

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assurance of future performance, as used herein, includes, but shall not be
limited to: (i) assurance of source and payment of rent, and other consideration
due under this Lease; (ii) assurance that the assumption or assignment of this
Lease will not breach substantially any provision; such as radius, location,
use, or exclusivity provision, in any agreement relating to the above described
Premises.
     Nothing contained in this section shall affect the existing right of
Landlord to refuse to accept an assignment upon commencement of or in connection
with a bankruptcy, liquidation, reorganization or insolvency action or an
assignment of Tenant for the benefit of creditors or other similar act. Nothing
contained in this Lease shall be construed as giving or granting or creating an
equity in the demised Premises to Tenant. In no event shall the leasehold estate
under this Lease, or any interest therein, be assigned by voluntary or
involuntary bankruptcy proceeding without the prior written consent of Landlord.
In no event shall this Lease or any rights or privileges hereunder be an asset
of Tenant under any bankruptcy, insolvency or reorganization proceedings.
     The failure to perform or honor any covenant, condition or representation
made under this Lease shall constitute a default hereunder by Tenant upon
expiration of the appropriate grace period hereinafter provided. Tenant shall
have a period of [Illegible] days from the date of written notice from Landlord
within which to cure any default in the payment of rental or adjustment thereto.
Tenant shall have a period of [Illegible] days from the date of written notice
from Landlord within which to cure any other default under this Lease. Upon an
uncured default of this Lease by Tenant, Landlord shall have the following
rights and remedies in addition to any other rights or remedies available to
Landlord at law or in equity:
               (a) The rights and remedies provided for by California Civil Code
Section 1951.2, including but not limited to, recovery of the worth at the time
of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of rental loss for the same period
that Tenant proves could be reasonably avoided, as computed pursuant to
subsection (b) of said Section 1951.2.
               (b) The rights and remedies provided by California Civil Code
Section which allows Landlord to continue the Lease in effect and to enforce all
of its rights and remedies under this Lease, including the right to recover rent
as it becomes due, for so long as Landlord does not terminate Tenant’s right to
possession; acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver upon Landlord’s initiative to protect its
interest under this Lease shall not constitute a termination of Tenant’s right
to possession.
               (c) The right to terminate this Lease by giving notice to Tenant
in accordance with applicable law.
               (d) The right and power, after compliance with all statutory
requirements and in any event on not less than three (3) business days prior
written notice, to enter the Premises and remove therefrom all persons and
property, to store such property in a public warehouse or elsewhere at the cost
of and for the account of Tenant, and to sell such property and apply such
proceeds therefrom pursuant to applicable California law. Landlord,

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may from time to time sublet the Premises or any part thereof for such term or
terms (which may extend beyond the term of this Lease) and at such rent and such
other terms as Landlord in its reasonable sole discretion may deem advisable,
with the right to make alterations and repairs to the Premises. Upon each
subletting, (i) Tenant shall be immediately liable to pay Landlord, in addition
to indebtedness other than rent due hereunder, the reasonable cost of such
subletting, including, but not limited to, reasonable attorneys’ fees, and any
real estate commissions actually paid, and the cost of such reasonable
alterations and repairs incurred by landlord and the amount, if any, by which
the rent hereunder for the period of such subletting (to the extent such period
does not exceed the term hereof) exceeds the amount to be paid as rent for the
Premises for such period or (ii) at the option of Landlord, rents received from
such subletting shall be applied first to payment of indebtedness other than
rent due hereunder from Tenant to Landlord; second, to the payment of any costs
of such subletting and of such alterations and repairs; third to payment of rent
due and unpaid hereunder; and the residue, if any, shall be held by Landlord and
applied in payment of future rent as the same becomes due hereunder. If Tenant
has been credited with any rent to be received by such subletting under option
(i) and such rent shall not be promptly paid to Landlord by the subtenant(s), or
if such rentals received from such subletting under option (ii) during any month
be less than that to be paid during that month by tenant hereunder, Tenant shall
pay any such deficiency to Landlord. Such deficiency shall be calculated and
paid monthly. No taking possession of the Premises by Landlord shall be
construed as an election on its part to terminate this Lease unless a written
notice of such intention be given to Tenant. Notwithstanding any such subletting
without termination. Landlord may at any time hereafter elect to terminate this
Lease for such previous breach.
               (e) The right to have a receiver appointed for Tenant upon
application by Landlord, to take possession of the Premises and to apply any
rental collected from the Premises and to exercise all other rights and remedies
granted to Landlord pursuant to subparagraph d above. SEE PARAGRAPH 59.
     20. ABANDONMENT: Tenant shall not vacate or abandon the Premises at any
time during the term of this Lease; and if Tenant shall abandon, vacate or
surrender said Premises, or be dispossessed by the process of law, or otherwise,
any personal property belonging to Tenant and left on the Premises shall be
deemed to be abandoned, at the option of Landlord, except such property as may
be mortgaged to Landlord. SEE PARAGRAPH 60.
     21. DESTRUCTION: In the event the Premises are destroyed in whole or in
part from any cause, except for routine maintenance and repairs and incidental
damage and destruction caused from vandalism and accidents for which Tenant is
responsible under Paragraph 7. Landlord may at its option:
               (a) Rebuild or restore the Premises to their condition prior to
the damage or destruction, or
               (b) Terminate this Lease.
     If Landlord does not give Tenant notice in writing within thirty (30) days
from the destruction of the Premises of its election to either rebuild and
restore them, or to terminate this Lease. Landlord shall be deemed to have
elected to rebuild or restore them, in which event

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Landlord agrees, at its expense, promptly to rebuild or restore the Premises to
their condition prior to the damage or destruction. Tenant shall be entitled to
a reduction in rent while such repair is being made in the proportion that the
area of the Premises rendered untenantable by such damage bears to the total
area of the Premises. If Landlord does not complete the rebuilding or
restoration within one hundred eighty (180) days following the date of
destruction (such period of time to be extended for delays caused by the fault
or neglect of Tenant or because of Acts of God, acts of public agencies, labor
disputes, strikes, fires, freight embargos, rainy or stormy weather, inability
to obtain materials, supplies or fuels, acts of contractors or subcontractors,
or delay of the contractors or subcontractors due to such causes of other
contingencies beyond the control of Landlord), then Tenant shall have the right
to terminate this Lease by giving fifteen (15) days prior written notice to
Landlord. Notwithstanding anything herein to the contrary, Landlord’s obligation
to rebuild or restore shall be limited to the building and interior improvements
constructed by Landlord as they existed as of the commencement date of the Lease
and shall not include restoration of Tenant’s trade fixtures, equipment,
merchandise, or any improvements, alterations or additions made by Tenant to the
Premises, which Tenant shall forthwith replace or fully repair at Tenant’s sole
cost and expense provided this Lease is not cancelled according to the
provisions above.
     Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect. Tenant hereby expressly waives the
provisions of Section 1932, Subdivision 2, in Section 1933, Subdivision 4 of the
California Civil Code.
     In the event that the building in which the Premises are situated is
damaged or destroyed to the extent of not less than 33 1/3% of the replacement
cost thereof, Landlord may elect to terminate this Lease, whether the Premises
be injured or not. In the event the destruction of the Premises is caused by
Tenant, Tenant shall pay the deductible portion of Landlord’s insurance
proceeds. SEE PARAGRAPH 61.
     22. EMINENT DOMAIN: If all or any part of the Premises shall be taken by
any public or quasi-public authority under the power of eminent domain or
conveyance in lieu thereof, this Lease shall terminate as to any portion of the
Premises so taken or conveyed on the date when title vests in the condemnor, and
Landlord shall be entitled to any and all payment, income, rent, award, or any
interest therein whatsoever which may be paid or made in connection with such
taking or conveyance, and Tenant shall have no claim against Landlord or
otherwise for the value of any unexpired term of this Lease. Notwithstanding the
foregoing paragraph, any compensation specifically awarded Tenant for loss of
business, Tenant’s personal property, moving cost or loss of goodwill, shall be
and remain the property of Tenant.
     If any action or proceeding is commenced for such taking of the Premises or
any part thereof, or if Landlord is advised in writing by any entity or body
having the right or power of condemnation of its intention to condemn the
premises or any portion thereof, then Landlord shall have the right to terminate
this Lease by giving Tenant written notice thereof within sixty (60) days of the
date of receipt of said written advice, or commencement of said action or
proceeding, or taking conveyance, which termination shall take place as of the
first to occur of the last day of the calendar month next following the month in
which such notice is given or the date on which title to the Premises shall vest
in the condemnor.

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     In the event of such a partial taking or conveyance of the Premises, if the
portion of the Premises taken or conveyed is so substantial that the Tenant can
no longer reasonably conduct its business, Tenant shall have the privilege of
terminating this Lease within sixty (60) days from the date of such taking or
conveyance, upon written notice to Landlord of its intention so to do, and upon
giving of such notice this Lease shall terminate on the last day of the calendar
month next following the month in which such notice is given, upon payment by
Tenant of the rent from the date of such taking or conveyance to the date of
termination.
     If a portion of the Premises be taken by condemnation or conveyance in lieu
thereof and neither Landlord nor Tenant shall terminate this Lease as provided
herein, this Lease shall continue in full force and effect as to the part of the
Premises not so taken or conveyed, and the rent herein shall be apportioned as
of the date of such taking or conveyance so that thereafter the rent to be paid
by Tenant shall be in the ratio that the area of the portion of the Premises not
so taken or conveyed bears to the total area of the Premises prior to such
taking. SEE PARAGRAPH 62.
     23. SALE OR CONVEYANCE BY LANDLORD: In the event of a sale or conveyance of
the Premises or any interest therein, by any owner of the reversion then
constituting Landlord, the transferor shall thereby be released from any further
liability upon any of the terms, covenants or conditions (express or implied)
herein contained in favor of Tenant, and in such event, insofar as such transfer
is concerned, Tenant agrees to look solely to the responsibility of the
successor in interest of such transferor in and to the Premises and this Lease.
This Lease shaft not be affected by any such sale or conveyance, and Tenant
agrees to attorn to the successor in interest of such transferor. SEE PARAGRAPH
63.
     24. ATTORNMENT TO LENDER OR THIRD PARTY: In the event the interest of
Landlord in the land and buildings in which the leased Premises are located
(whether such interest of Landlord is a fee title interest or a leasehold
interest) is encumbered by deed of trust, and such interest is acquired by the
lender or any third party through judicial foreclosure or by exercise of a power
of sale at private trustee’s foreclosure sale, Tenant hereby agrees to attorn to
the purchaser at any such foreclosure sale and to recognize such purchaser as
the Landlord under this Lease. In the event the lien of the deed of trust
secunng the loan from a Lender to Landlord is prior and paramount to the Lease,
this Lease shall nonetheless continue in full force and effect for the remainder
of the unexpired term hereof, at the same rental herein reserved and upon all
the other terms, conditions and covenants herein contained.
     25. HOLDING OVER: Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in this Lease. Any holding over after the expiration or other termination of the
term of this Lease, with the consent of Landlord, shall be construed to be a
tenancy from month to month, on the same terms and conditions herein specified
insofar as applicable except that the monthly Basic Rent shall be increased to
an amount equal to one hundred twenty five (125%) percent of the monthly Basic
Rent required during the last month of the Lease term.

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     26. CERTIFICATE OF ESTOPPEL: Either party shall at any time upon not less
than ten (10) days prior written notice from the other party execute,
acknowledge and deliver to the requesting party 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) and the date to which the
rent and other charges are paid in advance, if any, and (ii) acknowledging that
there are not, to the best of such party’s knowledge, any uncured defaults on
the part of the other party hereunder, or specifying such defaults, if any, are
claimed. Any such statement may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises. A party’s failure to deliver such
statement within such time shall be conclusive upon the party receiving such
request that this Lease is in full force and effect, without modification except
as may be represented by Landlord that there are no uncured defaults in the
requesting party’s performance, and that not more than one month’s rent has been
paid in advance.
     27. CONSTRUCTION CHANGES: It is understood that the description of the
Premises and the location of ductwork, plumbing and other facilities therein are
subject to such minor changes as Landlord or Landlord’s architect determines to
be desirable in the course of construction of the Premises, and no such changes
shall affect this Lease or entitle Tenant to any reduction of rent hereunder or
result in any liability of Landlord to Tenant. Landlord does not guarantee the
accuracy of any drawings supplied to Tenant and verification of the accuracy of
such drawings rests with Tenant.
     28. RIGHT OF LANDLORD TO PERFORM: All terms, covenants and conditions of
this Lease to be performed or observed by Tenant shall be performed or observed
by Tenant at Tenant’s sole cost and expense and without any reduction of rent.
If Tenant shall fail to pay any sum of money, or other rent, required to be paid
by it hereunder or shall fail to perform any other term or covenant hereunder on
its part to be performed, and such failure shall continue for five (5) days
after written notice thereof by Landlord, Landlord without waiving or releasing
Tenant from any obligation of Tenant hereunder, may, but shall not be obliged
to, make any such payment or perform any such other term or covenant on Tenant’s
part to be performed. All sums so paid by Landlord and all necessary costs of
such performance by Landlord together with interest thereon at the rate of the
prime rate of interest per annum as quoted by the Bank of America from the date
of such payment on performance by Landlord, shall be paid (and Tenant covenants
to make such payment) to Landlord on demand by Landlord, and Landlord shall have
(in addition to any other right or remedy of Landlord) the same rights and
remedies in the event of nonpayment by Tenant as in the case of failure by
Tenant in the payment of rent hereunder.
     29. ATTORNEYS’ FEES:
          A. In the event that either Landlord or Tenant should bring suit for
the possession of the Premises, for the recovery of any sum due under this, or
because of the breach of any provision of this Lease, or for any other relief
against the other party hereunder, then all costs and expenses, including
reasonable attorneys fees incurred by the prevailing party therein shall be paid
by the other party, which obligation on the part of the other party shall be
deemed to have accrued on the date of the commencement of such action and shall
be enforceable whether or not the action is prosecuted to judgment.

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          B. Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant’s occupancy hereunder, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including a
reasonable attorney’s fee.
     30. WAIVER: The waiver by either party of the other party’s failure to
perform or observe any term, covenant or condition herein contained to be
performed or observed by such waiving party shall not be deemed to be a waiver
of such term, covenant or condition or of any subsequent failure of the party
failing to perform or observe the same or any other such term, covenant or
condition therein contained and no custom or practice which may develop between
the parties hereto during the term hereof shall be deemed a waiver of, or in
anyway affect, the right of either party to insist upon performance and
observance by the other party in strict accordance with the terms hereof.
     31. NOTICES: All notices, demands, requests, advices or designations which
may be or are required to be given by either party to the other hereunder shall
be in writing. All notices, demands, requests, advises or designations by
Landlord to Tenant shall be sufficiently given, made or delivered if personally
served on Tenant by leaving the same at the Premises of it sent by United Stated
certified or registered mail, postage prepaid, addressed to Tenant at the
Premises. All notices, demands, requests, advises or designations by Tenant to
Landlord shall be sent by United States certified or registered mail, postage
prepaid, addressed to Landlord at its offices at Peery/Arrillage, 2560 Mission
College Blvd., Suite 101, Santa Clara, CA 95054. Each notice, request, demand,
advice or designation referred to in this paragraph shall be deemed received on
the date of the personal service or mailing thereof in the manner herein
provided, as the case may be.
     32. EXAMINATION OF LEASE: Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease
and this instrument is not effective as a lease or otherwise until its execution
and delivery by both Landlord and Tenant.
     33. DEFAULT BY LANDLORD: Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but
in no event earlier than (30) days after written notice by Tenant to Landlord
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have heretofore been furnished to Tenant in
writing, specifying wherein Landlord has failed to perform such obligations;
provided, however, that it the nature of Landlord’s obligations is such that
more than thirty (30) days are required for performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
     34. CORPORATE AUTHORITY: If Tenant is a corporation (or a partnership),
each individual executing this Lease on behalf of said corporation (or
partnership) represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of said corporation (or partnership) in accordance
with the by-laws of said corporation (or partnership in accordance with the
partnership agreement) and that this Lease is binding upon said corporation (a
partnership) in accordance with its terms. If Tenant is a corporation, Tenant
shall, within thirty

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(30) days after execution of this Lease, deliver to Landlord a certified copy of
the resolution of the Board of Directors of said corporation authorizing or
ratifying the execution of this Lease.
     35. INTENTIONALLY LEFT BLANK
     36. LIMITATION OF LIABILITY: In consideration of the benefits accruing
hereunder. Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord:
               (a) the sole and exclusive remedy shall be against Landlord and
Landlord’s assets;
               (b) no partner of Landlord shall be sued or named as a party in
any suit or action (except as may be necessary to secure jurisdiction of the
partnership);
               (c) no service of process shall be made against any partner of
Landlord (except as maybe necessary to secure jurisdiction of the partnership);
               (d) no partner of Landlord shall be required to answer or
otherwise plead to any service of process:
               (e) no judgment will be taken against any partner of Landlord;
               (f) any judgment taken against any partner of Landlord maybe
vacated and set aside at any time without hearing;
               (g) no writ of execution will ever by levied against the assets
of any partner of Landlord:
               (h) these covenants and agreements are enforceable both by
Landlord and also by any partner of Landlord.
     Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or at common law.
     37. SIGNS: No sign, placard, picture, advertisement, name or notice shall
be inscribed, displayed or printed or affixed on or to any part of the outside
of the Premises or any exterior windows of the Premises without the written
consent of Landlord first had and obtained and Landlord shall have the right to
remove any such sign, placard, picture, advertisement, name or notice without
notice to and at the expense of Tenant. If Tenant is allowed to print or affix
or in any way place a sign in, on, or about the Premises, upon expiration or
other sooner termination of this Lease. Tenant at Tenant’s sole cost and expense
shall both remove such sign and repair all damage in such a manner as to restore
all aspects of the appearance of the Premises to the condition prior to the
placement of said sign.
     All approved signs or lettering on outside doors shall be printed. painted,
affixed or inscribed at the expense of Tenant by a person reasonably approved of
by Landlord. Tenant

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shall not place anything or allow anything to be placed near the glass of any
window, door partition or wall which may appear unsightly from outside the
Premises.
     38. MISCELLANEOUS AND GENERAL PROVISIONS:
          A. Use of Building Name. Tenant shall not, without the written consent
of Landlord, use the name of the building for any purpose other than as the
address of the business conducted by Tenant in the Premises.
          B. Choice of Law; Severability. This Lease shall in all respects be
governed by and construed in accordance with the laws of the State of
California. If any provision of this Lease shall be invalid, unenforceable or
ineffective for any reason whatsoever, all other provisions hereof shall be and
remain in full force and effect.
          C. Definition of Terms. The term “Premises” includes the space leased
hereby and any improvements now or hereafter installed therein or attached
thereto. The term “Landlord” or any pronoun used in place thereof includes the
plural as well as the singular and the successors and assigns of Landlord. The
term “Tenant” or any pronoun used in place thereof includes the plural as well
as the singular and individuals, firms, associations, partnerships and
corporations, and their and each of their respective heirs, executors,
administrators, successors and permitted assigns, according to the context
hereof, and the provisions of this Lease shall inure to the benefit of and bind
such heirs, executors, administrators, successors and permitted assigns. The
term “person” includes the plural as well as the singular and individuals,
firms, associations, partnerships and corporations. Words used in any gender
include other genders. If there be more than one Tenant the obligations of
Tenant hereunder are joint and several. The paragraph headings of this Lease are
for convenience of reference only and shall have no effect upon the construction
or interpretation of any provision hereof.
          D. Time of Essence. Time is of the essence of this Lease and of each
and all of its provisions.
          E. Quitclaim. At the expiration or earlier termination of this Lease,
Tenant shall execute, acknowledge and deliver to Landlord, within ten (10) days
after written demand from Landlord to Tenant, any quitclaim deed or other
document required by any reputable title company, licensed to operate in the
State of California, to remove the cloud or encumbrance created by this Lease
from the real property of which Tenant’s Premises are a part.
          F. Incorporation of Prior Agreements; Amendments. This agreement and
the exhibits and attachments may be altered, amended or revoked only by an
instrument in writing signed by both Landlord and Tenant. Landlord and Tenant
agree hereby that all prior or contemporaneous oral agreements between and among
themselves and their agents or representatives relative to the leasing of the
Premises are merged in or revoked by this agreement.
          G. Recording. Landlord and Tenant shall record a short form memorandum
hereof in the form attached hereto as Exhibit D.

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          H. Amendments for Financing. Tenant further agrees to execute any
amendments reasonably required by a lender to enable Landlord to obtain
financing, so long as Tenant’s rights hereunder are not materially and adversely
affected and there is no change in the Basic Options to Renew, Lease Term or
Construction obligations of Landlord.
          I. Additional Paragraphs. Paragraphs 39 through 64 are added hereto
and are included as a part of this lease.
          J. Clauses, Plats and Riders. Clauses, plats and riders, if any,
signed by Landlord and Tenant and endorsed on or affixed to this Lease are a
part hereof.
          K. Diminution of Light, Air or View. Tenant covenants and agrees that
no diminution or shutting off of light, air or view by any structure which may
be hereafter erected (whether or not by Landlord) shall in any way affect his
Lease, entitle Tenant to any reduction of rent hereunder or result in any
liability of Landlord to Tenant.
     IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year first above written.

              LANDLORD:   TENANT: JOHN ARRILLAGA SEPARATE PROPERTY TRUST  
QUANTUM CORPORATION,         a Delaware corporation
 
           
By
  /s/ John Arrillaga   By   /s/ Joseph Shepela
 
           
 
  John Arrillaga, Trustee        
 
           
 
      Title   VP Human Resources
 
           
 
            RICHARD T. PEERY SEPARATE PROPERTY TRUST        
 
           
By
  /s/ Richard Peery        
 
           
 
  Richard T. Peery, Trustee        

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Paragraphs 39 through 64 to Lease Agreement dated September 17, 1990. By and
Between JOHN ARRILLAGA AND RICHARD T. PEERY SEPARATE PROPERTY TRUSTS, as
Landlord, and QUANTUM CORPORATION, a Delaware corporation, as Tenant for 101,253
± Square Feet of Space Located at 1000 Sumac Drive, Milpitas, California.
     39. BASIC RENT: In accordance with Paragraph 4A, subject to the provisions
of Paragraph 40, Basic Rent shall be payable as follows during the indicated
months of the term of the Lease based upon the gross leasable area within the
building that is part of the Premises:

          Period   Monthly Basic Rent  
Months 1-12 (plus the partial calendar month, if any, following the Commencement
Date)
  $1.08/sf
 
       
Months 13-24
  $1.13/sf
 
       
Months 25-36
  $1.18/sf
 
       
Months 37-48
  $1.23/sf
 
       
Months 49-60
  $1.28/sf
 
       
Months 61-72
  $1.33/sf
 
       
Months 73-84
  $1.38/sf
 
       
Months 85-96
  $1.43/sf
 
       
Months 97-108
  $1.48/sf
 
       
Months 109-120
  $1.53/sf
 
       
Months 121-132
  $1.58/sf
 
       
Months 133-144
  $1.63/sf
 
       
Months 145-156
  $1.68/sf
 
       
Months 157-168
  $1.73/sf
 
       
Months 169-176
  $1.78/sf

     Example of calculation of Basic Rent per month for the period commencing
with the first through the twelfth months of said Lease:

         
Square footage of Building
    101,253  
Per square foot Basic Monthly Rent
    x$1.08  
 
     
Basic Rent per Month
  $ 109,353.24  
 
     

     40. LEASE TERM AND COMMENCEMENT DATE: The following provisions relate to
the commencement and duration of the term of this Lease:

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          A. Lease Term: The term of this Lease shall commence on the
“Commencement Date” (as defined herein) and shall continue for a period of
fourteen years and eight months, plus the partial calendar month, if any, in
which the Commencement Date occurs, subject to (i) earlier termination in
accordance with the provisions of this Lease, and (ii) extension pursuant to the
options to renew granted by Paragraphs 41 and 42. By way of example only, if the
Commencement Date occurs on December 20, 1991, the term of the Lease shall
continue until August 31, 2006 (i.e., a period of 14 years and 8 calendar
months, plus the partial calendar month following December 20, 1991 until
December 31, 1991).
          B. Commencement Date Defined: As used herein, the term “Commencement
Date” shall mean the later to occur of the following: (i) the date upon which
the “Improvements” are “Substantially Completed”; or (ii) December 20, 1991;
provided, however, that if prior to the later of such dates Tenant’s operating
personnel enter into occupancy of the Premises and commence the operation of
Tenant’s business within the Premises, the Commencement Date shall be the date
such personnel of Tenant so enter into occupancy of the Premises. The term
“Substantially Completed” and/or “Substantial Completion” shall mean the date
when all of the following have occurred with respect to the Improvements in
question: (i) the construction of the Improvements in question has been
substantially completed in accordance with the approved plans therefor except
for punch list items which do not prevent Tenant from reasonably using the
Premises to conduct Tenant’s business; (ii) Landlord has executed a certificate
or statement representing that the Improvements in question have been
substantially completed in accordance with the plans and specifications therefor
except for the punch list items which do not prevent Tenant from reasonably
using the Premises to conduct Tenant’s business; and (iii) the Building
Department of the City of Milpitas has completed its final inspection of such
Improvements and has “signed off” the building inspection card approving such
work as complete except for punch list items which do not prevent Tenant from
reasonably using the Premises to conduct Tenant’s business. Notwithstanding the
foregoing, Substantial Completion of the Interior Improvements shall not be
deemed to have occurred until Landlord has obtained final or conditional
approval from the Fire Department of the City of Milpitas that the Improvements
have been completed in accordance with such department’s requirements (subject
only to conditions that do not prevent Tenant from occupying the Improvements).
          C. Lease Terms Co-extensive: It is acknowledged that (i) Landlord and
Tenant have previously executed two separate leases dated October 31, 1989
(hereinafter referred to as the 1989 Leases) for Premises located at 1130 Bellew
Drive and 490 McCarthy Blvd., Milpitas, California, affecting property upon
which two separate buildings are being constructed for Tenant’s use. The parties
to said 1989 Leases have agreed that the 1989 Leases will commence on the later
of April 1, 1991 or the date the “Improvements” are “Substantially Completed”
(as that term is defined in Amendment No. 1 dated April 29, 1990 to the 1989
Leases between Landlord and Tenant), and (ii) it is the intention of the parties
that the term of this Lease be co-extensive with the term of the 1989 Leases,
such that the terms of all three leases expire on the same date. To that end, in
the event that following the date upon which the Commencement Date of this Lease
and the commencement dates for the 1989 Leases become established as dates
certain following completion of improvements and satisfaction of any other
conditions related to determining such dates, the term of this Lease may be
reduced or extended to coincide with the term of the 1989 Leases, however, in no
event will the term of this Lease be for a period of less than ten (10) years.
It is acknowledged that the implementation of this

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paragraph may result in an extension of the term of this Lease, in which event
Tenant shall continue to pay rent at the rate applicable for the period
immediately prior to the adjusted lease term expiration date. As soon as the
parties are able to implement the provisions of this paragraph because the
Commencement Date of this Lease and the commencement dates of the 1989 Leases
have been determined following completion of improvements and satisfaction of
other appropriate conditions, the parties shall execute an amendment to this
Lease establishing the applicable Commencement Date and the expiration date of
the term of this Lease in accordance with the foregoing provisions of this
Paragraph 40C, the actual rent based upon the measurements of the completed
building covered by this Lease as certified prior to the Commencement Date by an
architect or general contractor reasonably approved by the parties, and the
actual date for each rent adjustment provided for in this Lease, based upon the
actual Lease Commencement Date.
     41. FIRST FIVE-YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant an
option to extend the term of this Lease for an additional five (5) year period
upon the following terms and conditions)
          A. If Tenant elects to exercise the option to extend, Tenant shall
give Landlord written notice of Tenant’s exercise of this option to extend at
lease one hundred eighty (180) days prior to the expiration of the Basic Term
hereof, in which event the Lease shall be considered extended for an additional
five (5) year period upon the same terms and conditions as this Lease, absent
this Paragraph 41 and subject to the rental as set forth below. In the event
that Tenant fails to timely exercise Tenant’s option as set forth herein in
writing, Tenant shall have no further option to extend this Lease, and this
Lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 41.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

      Period   Monthly Basic Rent
Months 1-12
  $1.83/sf
Months 13-24
  $1.88/sf
Months 25-36
  $1.93/sf
Months 37-48
  $1.98/s£
Months 49-60
  $2.03/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to renew granted by this Paragraph 41 at any time that Tenant is in
material default of its obligations under this Lease, if Tenant has received
written notice from Landlord that Tenant is in default, and such default has not
been timely cured within the time period provided for in this Lease; provided,
however, that if such default of Tenant is not for money due under this Lease
and cannot be cured, and if Landlord does not elect to terminate this Lease as a
result of such non-curable default by Tenant, Tenant may exercise the option to
extend granted by this Paragraph 41 notwithstanding such non-curable default.
     42. SECOND FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the
Lease for an additional five (5) year period as set forth in Paragraph 41,
Landlord

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hereby grants to Tenant an option to extend the term of this Lease for an
additional five (5) year period upon the following terms and conditions:
          A. Tenant shall give Landlord written notice of Tenant’s exercise of
this option to extend at least one hundred eighty (180) days prior to the
expiration of the Lease term as extended pursuant to Paragraph 41, in which
event the Lease shall be considered extended for an additional five (5) year
period upon the same terms and conditions as this Lease, absent this
Paragraph 42A and subject to the rental as set forth below. In the event that
Tenant fails to timely exercise Tenant’s option as set forth herein in writing,
Tenant shall have no further option to extend this Lease, and this Lease shall
continue in full force and effect for the full remaining term hereof, absent
this Paragraph 42.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

                  Period           Monthly Basic Rent  
Months 1-12
          $2.08/sf
Months 13-24
          $2.13/sf
Months 25-36
          $2.18/sf
Months 37-48
          $2.23/sf
Months 49-60
          $2.28/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to extend granted by this Paragraph 42 at any time that Tenant is in
material default of its obligations under this Lease, if Tenant has received
written notice from Landlord that Tenant is in default, and such default has not
been timely cured within the time period provided for in this Lease; provided;
however, that if such default of Tenant is not for money due under this Lease/
and cannot be cured, and if Landlord does not elect to terminate this Lease as a
result of such non-curable default by Tenant, Tenant may exercise the option to
extend granted by this Paragraph 42 notwithstanding such non-curable default.
     43. ASSESSMENT CREDITS: The demised property herein is subject to a special
assessment levied by the City of Milpitas in Improvement District No. 12. As a
part of said special assessment proceedings, additional bonds were sold and
assessments levied to provide for construction contingencies and reserve funds.
Interest will be earned on such funds created for contingencies and on reserve
funds which will be credited for the benefit of said assessment district. To the
extent surpluses are created in said district through unused contingency funds,
interest earnings or reserve funds, such surpluses shall be deemed the property
of Landlord. Notwithstanding that such surpluses may be credited on assessments
otherwise due against the demised premises, Tenant shall pay to Landlord, as
additional rent if, and at the time of any such credit of surpluses, an amount
equal to all such surpluses so credited.
     44. HAZARDOUS MATERIALS: The parties agree as follows with respect to the
existence or the use of hazardous material on the Premises:
          A. Tenant shall have no obligations to “clean up”, to comply with any
law regarding, or to reimburse, release, indemnify, or defend Landlord with
respect to any hazardous

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materials or wastes which Tenant or other parties on the Premises did not store,
dispose, or transport in, use, or cause to be on the Premises in violation of
applicable law during the term of this Lease. Any handling, transportation,
storage, treatment, disposal or use of hazardous materials by Tenant or other
parties in or about the Premises during the term of this Lease shall strictly
comply with all applicable laws and regulations. Tenant will be 100 percent
liable and responsible for any and all “clean up” of said toxic waste and/or
hazardous materials contamination which Tenant, its agents, or future
subtenants, if any, does store, dispose, or transport in, use or cause to be on
the Premises in violation of applicable law or governing agency(s) or which
originate on Premises, during the term of this Lease from any manner whatsoever,
including but not limited to, dumping by others, (or which originate on the
surface of the Premises any time after October 28, 1989, the date the Option
Agreement dated October 31, 1989 related to said Lease was executed by all
parties, and before the Commencement Date of this Lease, but excluding Hazardous
Materials on the Premises prior to the Lease Commencement Date because of the
storage, use, disposal, or transportation of such materials or waste by any of
Landlord’s contractors or otherwise arising out of construction work performed
by or under the direction of Landlord on the Premises and Landlord shall be
responsible for all required actions with respect to such materials or wastes),
and will indemnify Landlord and hold Landlord harmless from any liabilities,
demands, costs, expenses and damages, including attorney fees incurred as a
result of any claims resulting from such contamination, or from any claims for
personal injury or property damage or diminution in the value of the Premises
caused by the use, storage, disposal or transportation of hazardous materials on
the Premises by Tenant or other parties during the term of this Lease. It is
agreed that the Tenant’s responsibilities related to toxic waste and hazardous
materials will survive the termination date of the Lease. Tenant agrees to
complete compliance with governmental regulations regarding use or removal or
remediation of Hazardous Materials used, stored, disposed, transported or caused
to be on the Premises by Tenant or its agents or subtenants, or which originate
on the Premises during the term of this Lease, and prior to the termination of
said Lease Tenant agrees to follow the proper closure procedures and will obtain
a clearance from the local fire department and/or the appropriate city agency.
Tenant also agrees to install such toxic waste and/or hazardous materials
monitoring devices as Landlord reasonably deems necessary to monitor any use of
hazardous materials by Tenant, its agents or subtenants, originating from the
Premises during the Lease term, if recommended by a qualified environmental
consulting firm.
          B. Landlord hereby makes the following representations to Tenant, each
of which is made only to the best of Landlord’s knowledge as of the date
Landlord executes this Lease, without any inquiry or investigation having been
made or required by Landlord regarding this subject, nor does Landlord have any
obligation to investigate or make inquiry regarding the subject:
                    (1) The soil and ground water on or under the Premises does
not contain hazardous materials in amounts which violate any laws to the extent
that any governmental entity could require either Landlord or Tenant to take any
remedial action with respect to such hazardous materials.
                    (2) During the time that Landlord has owned the Premises,
Landlord has received no notice of (i) any violation, or alleged violation, of
any law that has not been corrected to the satisfaction of the appropriate
authority, (ii) any pending claims relating to

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the presence of hazardous material on the Premises, or (iii) any pending
investigation by any governmental agency concerning the Premises relating to
hazardous materials.
          C. Landlord and Tenant shall each give written notice to the other as
soon as reasonably practicable of (i) any communication received from any
governmental authority concerning hazardous materials which relates to the
Premises, and (ii) any contamination of the Premises by hazardous materials
which constitutes a violation of any law. Attached as Exhibit “C” hereto is a
list of hazardous materials that Tenant intends to use at the Premises. If
during the Lease term Tenant proposes to use other hazardous materials at the
Premises, Tenant shall inform Landlord of such use, identifying the hazardous
materials and the manner of their use, storage and disposal, and shall agree
(i) to use, store and dispose of such materials strictly in compliance with all
laws and (ii) that the indemnity set forth in Paragraph 44A shall be applicable
to Tenant’s use of such material.
          D. Landlord or Tenant may, at any time, cause testing wells to be
installed on the Premises, and may cause the ground water to be tested to detect
the presence of hazardous material by the use of such tests as are then
customarily used for such purposes. Testing wells installed by Tenant shall be
paid for by Tenant. If tests conducted by Landlord disclose that Tenant has
violated any hazardous materials laws, or Tenant or parties on the Premises
during the term of this Lease have contaminated the Premises as determined by
regulatory agencies pursuant to hazardous materials laws, or that Tenant has
liability to Landlord pursuant to Paragraph 44A, then Tenant shall pay for
100 percent of the cost of the test and all related expense. Prior to the
expiration of the Lease term, Tenant shall remove any testing wells it has
installed at the Premises, and return the Premises to the condition existing
prior to the installation of such wells, unless Landlord requests in writing
that Tenant leave all or some of the testing wells in which instance the wells
requested to be left shall not be removed.
          E. If any tests performed by Tenant or Landlord prior to the
Commencement Date disclose hazardous materials at the Premises, Landlord at its
expense will promptly take all reasonable action required by law with respect to
the existence of such materials at the Premises. The Commencement Date shall not
be delayed because of such action by Landlord unless occupation of the Premises
is prohibited by law.
          F. The obligations of Landlord and Tenant under this Paragraph 44
shall survive the expiration or earlier termination of the term of this Lease.
The rights and obligations of Landlord and Tenant with respect to issues
relating to hazardous materials are exclusively established by this
Paragraph 44.
     45. APPROVALS: Whenever this Lease requires the approval or consent of
either Landlord or Tenant before an action maybe taken, such approval or consent
shall not be unreasonably withheld or delayed.
     46. LANDLORD’S RIGHT TO TERMINATE: It is understood that the Premises to be
leased by Tenant are to be constructed by Landlord, and that Landlord is
required to obtain the necessary building permits for the building shell before
construction of said Premises can commence. Therefore, it is agreed that in the
event Landlord cannot obtain all the necessary building permits for the building
shell by April 1, 1991, then either Landlord or Tenant can

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terminate this Lease by written notice to the other party given within thirty
(30) days thereafter, without any liability to the other party of any type
whatsoever, and that this Lease Agreement shall be null and void as of the date
of receipt of such notice. Landlord agrees to use its best efforts to obtain the
required permits by April 1, 1991.
     47. CROSS DEFAULT: As set forth in Paragraph 40C, Landlord and Tenant have
entered into other leases dated October 31, 1989 referred to herein as the “1989
Leases”. As a material part of the consideration for the execution of this Lease
by Landlord, it is agreed between Landlord and Tenant that a default under this
Lease, or a default under said 1989 Leases may, at the option of Landlord, be
considered a default under all leases, in which event Landlord shall be entitled
(but in no event required) to apply all rights and remedies of Landlord under
the terms of one lease to all Leases including, but not limited to, the right to
terminate one, two or all of said leases by reason of a default under said 1989
Leases or hereunder.
     48. SUBDIVISION: With respect to the development of the Premises:
     Landlord and Tenant agree that the Premises and all of Parcels 1, 2, 3 and
5 shown on that certain parcel map, recorded on July 23, 1990 in Book 616 of
Maps, Page 20 (the “Larger Parcel”) during (and limited to) the term of this
Lease shall be developed and used only in accordance with a master plan,
developed by Landlord. The parties have mutually agreed to a Master Plan for the
general development of the Premises and the Larger Parcel which is attached
hereto as Exhibit “Al” and entitled “Master Site Plan”. Said Master Site Plan
sets forth the buildings and land to be leased under this Lease (Building 4 on
Lot 4) and the 1989 Leases (Buildings 1 and 2 on Lots 1 and 2), and the
buildings and land proposed to be developed on the remainder of the property
(Buildings 3 and 5 to be constructed on Lots 3 and 5 respectively) as well as
the general location of the parking and landscaping pertaining thereto. The
parties agree that the Master Site Plan may be modified provided that (i) a
perimeter driveway is developed in front of each building which generally runs
near and parallel with the street surrounding the 37+ acre site, (ii) a
landscape and recreation area at the rear of lot 4 (as shown on the Site Plan)
is developed when a building is constructed on lot 4, (iii) all buildings will
be similar and generally architecturally compatible, and (iv) a landscape area
is developed along the frontage of all streets between the street and parking
area closest to the street. The parties agree that (i) Landlord may change the
Master Plan, shape and sizes of the buildings, parking and landscaping as long
as the general development concept set forth above is generally followed by
Landlord, and (ii) any successor or assign of Landlord or Tenant shall be
required to consent and agree to develop the Premises and the Larger Parcel in
accordance with the foregoing, and shall be deemed to have assumed the
obligation to so develop such property by acceptance of a deed, assignment or
other means of transfer of Landlord’s or Tenant’s interest in such property or
any portion thereof, as the case may be. Further, the memorandum of lease to be
recorded by Landlord and Tenant pursuant to Paragraph 38G shall contain the
following statement:
“The Lease provides that from and after the commencement date of the 1989 Leases
(as defined in the Lease) and continuing for a period of fifteen (15) years, or
the date of termination of the Lease, whichever first occurs, the Premises and
the larger 37.096 acre parcel in which the Premises were originally included,
and which is described on the attached Exhibit “A”, incorporated herein by

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this reference, shall be developed by—Landlord and Tenant or their successors or
assigns, as more particularly set forth in the Lease, so that (i) a perimeter
driveway is developed in front of each building which generally runs near and
parallel with the street surrounding the 37 ± acre site. (ii) a landscape areas
is developed along the frontage of all streets between the street and parking
area closest to the street. (iii) a landscape and recreation area at the rear of
Lot 4 (as shown on the Site Plan identified in the Lease) is developed when a
building is constructed on Lot 4, and (iv) all buildings will be similar and
generally architecturally compatible, it being agreed that Landlord may change
the shape and sizes of the buildings, parking, and landscaping as long as the
general development concept set forth above and in the Lease is generally
followed by Landlord. If a Public Agency requires modifications to the lot lines
as shown on the Master Plan, the parties agree to reasonable lot line
modifications.”
49. LIMITATION ON IMPOSITION OF LATE CHARGE: Notwithstanding anything contained
in Paragraph 4C, if Tenant is delinquent in the payment of Basic Rent or
Additional Rent and is subject to a late charge, Landlord agrees to waive the
late charge if the Basic Rent or Additional Rent due is paid within five days of
Landlord’s written notice to Tenant of the delinquent amount owed and provided
Tenant has not been delinquent in its payment of Basic Rent or Additional Rent
owed under said Lease during the twelve (12) month period preceding the rent
delinquency in question.
50. SECURITY DEPOSIT: The following provisions shall modify Paragraph 4F:
     A. Within thirty (30) days after the expiration or earlier termination of
the Lease term and after Tenant has vacated the Premises, Landlord shall return
to Tenant the entire Security Deposit except for amounts that Landlord has
deducted therefrom that are needed by Landlord to cure defaults of Tenant under
the Lease or compensate Landlord for damages for which Tenant is liable pursuant
to this Lease. The use or disposition of the Security Deposit shall be subject
to the provisions of California Civil Code Section 1950.7.
     B. Tenant shall have the option of satisfying its obligation with respect
to an amount equal to one-half (1/2) of the Security Deposit by providing to
Landlord, at Tenant’s sole cost, a letter of credit which (i) is drawn upon an
institutional lender reasonably acceptable to Landlord, (ii) is in the amount of
one-half (1/2) of the Security Deposit, (iii) is for a term of at lease twelve
(12) months, (iv) with respect to any letter of credit in effect within the six
month period immediately prior to the expiration of the Lease term, shall
provide that the term of such letter of credit shall extend at least thirty
(30) days past the Lease expiration date, (v) may be drawn upon by Landlord upon
submission of a declaration of Landlord that Tenant is in default (as defined in
Paragraph 19 and as modified by Paragraph 59). Landlord shall not be obligated
to furnish proof of default to such institutional lender, and Landlord shall
only be required to give the institutional lender written notification that
Tenant is in default and upon receiving such written notification from Landlord
the institutional lender shall be obligated to immediately deliver cash to
Landlord equal to the amount Landlord may spend or become obligated to spend by
reason of

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Tenant’s default or to compensate Landlord for any loss or damage which Landlord
may suffer by reason of Tenant’s default up to 1/2 of the total Security
Deposit, (vi) shall provide that if the letter of credit is not renewed,
replaced or extended within twenty (20) days of its expiration date the issuer
of the credit shall automatically make payment of the amount of the letter of
credit directly to Landlord after the date which is twenty (20) days before the
expiration date, and no later than the expiration date, without Landlord being
required to make demand upon the letter of credit, and (vii) is otherwise in
form and content reasonably satisfactory to landlord. If Tenant provides
Landlord with a letter of credit meeting the foregoing requirements, one-half
(1/2) of the cash Security Deposit (i.e., $136,691.55 of the $273,383.10
Deposit) shall be returned to Tenant by Landlord inasmuch as the cash deposit
remaining and the Letter of Credit equal the total Security Deposit required in
Paragraph 4F. If Tenant defaults with respect to any provisions of this Lease,
including but not limited to provisions relating to the payment of rent,
Landlord may (but shall not be required to) draw down on the letter of credit
for payment of any sum which Landlord may spend or become obligated to spend by
reason of Tenant’s default, or to compensate Landlord for any loss or damage
which Landlord may suffer by reason of Tenant’s default. Landlord and Tenant
acknowledge that such letter of credit will be treated as if it were a cash
security deposit, and such letter of credit may be drawn down upon by Landlord
upon demand and presentation of evidence of the identity of Landlord to the
issuer, in the event that Tenant defaults with respect to any provision of this
Lease and such default is not cured within any applicable cure period.
Notwithstanding anything to the contrary in this Lease, Landlord shall not be
obligated to furnish proof of default to such institutional lender and Landlord
is only required to give the institutional lender written notification that
Tenant is in default and upon receiving such written notification from Landlord
the institutional lender shall be obligated to immediately deliver cash to
Landlord equal to the amount Landlord may spend or become obligated to spend by
reason of Tenant’s default, or to compensate Landlord for any loss or damage
which Landlord may suffer by reason of Tenant’s default up to 1/2 of the total
Security Deposit. Landlord acknowledges that it is not entitled to draw down
such letter of credit unless Landlord would have been entitled to draw upon the
cash security deposit pursuant to the terms of Paragraph 4F of the Lease.
Concurrently with the delivery of the required information to the issuer,
Landlord shall deliver to Tenant written evidence of the default upon which the
draw down was based, together with evidence that Landlord has provided to Tenant
the written notice of such default which was required under the applicable
provision of the Lease, and evidence of the failure of Tenant to cure such
default within the applicable grace period following receipt of such notice of
default. Any proceeds received by Landlord by drawing upon the letter of credit
shall be applied in accordance with the provisions governing the Security
Deposit imposed by Paragraph 4F and this Paragraph 50. If Landlord draws upon
the letter of credit, thereafter Tenant shall once again shall have the right to
post a letter of credit in place of one-half (1/2) of a cash Security Deposit so
long as Tenant is not then in default. In any event Tenant will be obligated to
replenish the amount drawn to restore the Security Deposit to its original
amount as provided for in Paragraph 4F. If any portion of the letter of credit
is used or applied pursuant hereto, Tenant shall, within ten (10) days after
receipt of a written demand therefor from Landlord, restore and replace the
value of such security by either (i) depositing cash with Landlord in the amount
equal to the sum drawn down under the letter of credit, or (ii) increasing the
letter of credit to its value immediately prior to such application. Tenant’s
failure to replace the value of the security as provided in the preceding
sentence shall be a material breach of its obligation under this Lease.

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51. ALTERATIONS MADE BY TENANT: The provisions of this Paragraph 51 shall modify
Paragraphs 5 and 6:
     A. As used herein, the term “Alteration” shall mean any alteration,
addition or improvement made by Tenant to the Premises during the term of the
Lease, but shall not include Tenant’s trade fixtures so long as such trade
fixtures are not installed in such a manner that they have become an integral
part of the building.
     B. Tenant shall not construct any Alterations or otherwise alter the
Premises without Landlord’s prior written approval if the total cost of such
Alterations exceeds $20,000 per the scope of any single remodeling job to the
Premises, or if such Alteration is structural in nature. Any other
non-structural Alteration of less than $20,000 for the total cost of the
remodeling job may be undertaken by Tenant without Landlord’s prior written
approval but with the understanding that Tenant shall be obligated to restore
the Premises as set forth in Paragraph 5 at the termination of this Lease,
except as otherwise provided in Paragraph 51.D.
Notwithstanding the foregoing, Tenant shall have the right to reconfigure
modular freestanding walls and partitions without Landlord’s prior consent,
which have been installed by Tenant and paid for by Tenant.
     C. At all times during the Lease Term (i) Tenant shall maintain and keep up
dated “as-built” plans for all Alterations constructed by Tenant, and
(ii) Tenant shall provide to Landlord copies of such “as-built” plans as such
Alterations are made.
     D. Tenant shall have the right to remove at any time during the Lease term
or prior to the expiration thereof any (i) process equipment such as clean
hoods, thermal cycling chambers, freon piping, high temperature furnaces, air
handlers and special air-conditioning, and (ii) process systems such as
compressed air or processed exhaust systems and (iii) the clean room modules and
all related process equipment which are paid for 100% by Tenant (excluding
building standard HVAC, electrical, plumbing and other building standard systems
which are an integral part of the building not related to Tenant’s clean room
modules or other special purpose process equipment or systems), which systems,
equipment and modules the parties agree for the purposes of this Lease shall be
deemed to be trade fixtures, so long as Tenant repairs all damage caused by the
installation and/or removal thereof, returns the Premises prior to the
termination of the Lease to the condition existing prior to the installation of
such item, and repairs and restores any so-called “doughnuts” or gaps in the
roof and/or floor tiles and/or ceiling and lighting resulting from such removal.
At the time Tenant requests the consent of Landlord to approve the installation
of an Alteration requiring the consent of Landlord, Tenant shall seek from
Landlord a written statement of whether or not Landlord will require Tenant to
remove such Alteration and restore all or part of the Premises as required by
Landlord in accordance with this paragraph and Paragraph 5 at the expiration or
earlier termination of the term of the Lease. If Tenant does not obtain-from
Landlord a statement in writing that Landlord will not require such Alteration
to be removed, then at the expiration or sooner termination of the term of the
Lease, it is agreed that Tenant may be required to remove all or part of such
Alterations, and return the Premises to the condition existing prior to the
installation of such Alterations as provided for in Paragraph 5 above. In
addition, if Tenant has installed Alterations without Landlord’s consent, if
Landlord so

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requires, Tenant shall also remove all or part of such Alterations so installed
without Landlord’s consent as Landlord may designate and return the Premises to
the condition existing prior to the installation of such Alteration. Alterations
for which Landlord has given its written consent to Tenant that such Alteration
need not be removed, shall not be removed by Tenant at the expiration or earlier
termination of the term of the Lease.
     E. At all times during the term of the Lease, Tenant shall have the right
to install and remove trade fixtures as defined in the Lease and installed and
paid for by Tenant, so long as Tenant repairs all damage caused by the
installation thereof and returns the Premises to the condition existing prior to
the installation of such fixtures and repairs and restores any so called
“doughnuts” or gaps in the roof and/or floor (including floor structure,
sub-floor and appropriate floor covering for said area) and/or floor tiles
and/or ceiling tiles and lighting resulting from such removal.
52. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: The provisions of this Paragraph 52 shall modify Paragraphs 7
and 14:
     A. If during the last five (5) years of the term of the Lease if Tenant has
not extended the Lease as provided for in Paragraphs 41 and 42, or during either
of the five (5) year extension periods permitted by Paragraphs 41 and 42, it
becomes necessary (due to any governmental requirement for continued occupancy
of the Premises) to make structural improvements required by laws enacted or
legal requirements imposed by governmental agency(s) after the Commencement
Date, and the cost for each required work or improvements exceeds $100,000, then
if such legal requirement is not imposed because of Tenant’s specific use of the
Premises and is not “triggered” by Tenant’s Alterations or Tenant’s application
for a building permit or any other governmental approval (in which instance
Tenant shall be responsible for 100% of the cost of such improvements), Landlord
shall be responsible for paying the cost of such improvement and constructing
such improvement, subject to a cash contribution from Tenant of a portion of the
cost thereof as provided for and calculated in Paragraph 52B.
     B. When Landlord makes an improvement pursuant to Paragraph 52A, and as a
condition to Landlord’s obligation to construct such improvement, Tenant shall
make the following contribution in cash to Landlord for the cost thereof prior
to the commencement of the work by Landlord. It is agreed that Tenant shall pay
to Landlord 100% of the cost of the first $100,000.00 worth of each improvement.
After the first $100,000.00, all costs above $100,000.00 shall be divided by 15
and multiplied by the time period remaining in the last five years of the Lease
term from the date work on such improvement commences.
     For example, if the cost of such improvement was $400,000 and there was one
year and six months remaining in the Lease term when the work commenced, then
Tenant would be responsible for reimbursing Landlord in cash $130,000.00
computed as follows:

         
Total Cost of Work
  $ 400,000.00  
Tenant Responsible for 1st $100,000
    -100,000.00  
 
     
Total Amount To Be Amortized
  $ 300,000.00  
 
       
$300,000.00/15 = $20,000.00/yr. x 1.5 yrs =
  $ 30,000.00  
 
       
Tenant responsible for $100,000 + $30,000.00 =
  $ 130,000.00  

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     C. If Landlord has made improvements, for which Tenant has reimbursed
Landlord for the cost thereof pursuant to Paragraph 52B, and the term of this
Lease is subsequently extended pursuant to the exercise by Tenant of an option
to renew pursuant to Paragraph 41, or 42, upon the exercise of any such option
by Tenant, Tenant shall pay to Landlord an additional sum equal to the total
amount of said improvement less the amount previously paid for by Tenant. Using
the example in Paragraph 52B above, Tenant would owe Landlord the additional
amount of $270,000.00 ($400,000.00 — $130,000.00 = $270,000.00).
53. REAL PROPERTY TAXES: Paragraph 9 is modified by the following:
     A. The term “Real Property Taxes” shall not include charges, levies or fees
directly related to the use, storage, disposal or release of hazardous materials
on the Premises unless directly related to Tenant’s activities, which subject is
exclusively governed by Paragraph 45.
     B. If any assessments for public improvements are levied against the
Premises, Landlord may elect either to pay the assessment in full or to allow
the assessment to go to bond. If Landlord pays the assessment in full, Tenant
shall pay to Landlord or any assignee or purchaser of the Premises each time
payment of Real Property Taxes is made a sum equal to that which would have been
payable (as both principal and interest) had Landlord allowed the assessment to
go to bond.
     C. Tenant at its cost shall have the right, at any time, to seek a
reduction in the assessed valuation of the Premises or to contest any Real
Property Taxes that are to be paid by Tenant. If Tenant seeks a reduction or
contests such Real Property Taxes, the failure on Tenant’s part to pay such Real
Property Taxes being so contested shall not constitute a default so long as
Tenant complies with the provisions of this Paragraph. Landlord shall not be
required to join in any proceeding or contest brought by Tenant unless the
provisions of any law require that the proceeding or contest be brought by or in
the name of Landlord. In that case Landlord shall join in the proceedings or
contest or permit it to be brought in Landlord’s name as long as Landlord is not
required to bear any cost. Tenant, on final determination of the proceeding or
contest, shall immediately pay or discharge its share of any Real Property Taxes
determined by any decision or judgment rendered, together with all costs,
charges, interest, and penalties incidental to the decision or judgment. If
Tenant does not pay the Real Property Taxes when due pursuant to the Lease and
Tenant seeks a reduction or contests them as provided in this paragraph, before
the commencement of the proceeding or contest Tenant shall furnish to Landlord a
surety bond in form reasonably satisfactory to Landlord issued by an insurance
company qualified to do business in California. The amount of the bond shall
equal 125% of the total amount of Real Property Taxes in dispute and any such
bond shall be assignable to any lender or purchaser of the Premises. The bond
shall hold Landlord and the Premises harmless from any damage arising out of the
proceeding or contest and shall insure the payment of any judgment that may be
rendered.

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54. PROPERTY INSURANCE: Paragraph 12 is modified by the following:
     A. If Tenant so elects, Tenant may obtain from a third party insurance
company the insurance required to be carried by Landlord pursuant to
Paragraph 12 so long as each of the following conditions is satisfied: (i) the
Landlord is not the John Arrillaga and Richard T. Peery Separate Property Trusts
or an affiliated entity; (ii) the insurance to be carried by Tenant to satisfy
this requirement strictly complies with all of the provisions of Paragraph 12;
(iii) such insurance shall name Landlord as the insured and provide that it is
to be payable to Landlord in the same manner as if such insurance had been
carried by Landlord pursuant to Paragraph 12 (subject to the rights of any
lender holding a mortgage or deed of trust encumbering the Premises); (iv) each
lender holding a mortgage or deed of trust encumbering the Premises shall have
given its written consent to Tenant carrying such insurance and such insurance
shall comply with the requirements of any such lender; (v) Tenant must notify
Landlord, by certified mail, no later than one hundred eighty (180) days prior
to the expiration date of Landlord’s insurance policy (which expiration date is
currently 3/13/xx of a given year and is subject to change), that Tenant will
directly obtain the required insurance coverage for the insurance year
commencing 3/14/XX through 3/13/XX and each insurance year through the
termination date of this Lease, or until Tenant is no longer able to comply with
all of the provisions of this Paragraph 54; (vi) the annual premium must be paid
in full at the commencement of the policy; (vii) the insurance policy must be
issued for a one-year period following the expiration date of Landlord’s
insurance policy (i.e., from 3/14/XX to 3/13/XX; (viii) any and all deductibles
required under the policy will be paid entirely by Tenant; (ix) the terms of the
coverage must be broad form and cover all items to be covered as set forth in
Paragraph 12 of this Lease; (x) the Building and Premises must be insured for
their full replacement cost; (xi) the insurance policy containing the required
coverage in accordance with the provisions of this paragraph must be sent to
Landlord for retention within thirty (30) days prior to the expiration date of
Landlord’s insurance policy, and may not be terminated or altered without thirty
(30) days written notice to Landlord by the company providing such insurance (it
is agreed that if the insurance policy is cancelled or altered, Landlord will
have the right to obtain the property insurance coverage on said building, and
Landlord will bill the Tenant for the related insurance premium); and (xii) at
all times while Tenant is so carrying such insurance, Tenant is Quantum
Corporation or a successor entity and the then net worth of such corporation is
substantially the same as the net worth of Quantum corporation as of the date of
this Lease is executed by Landlord and Tenant. Tenant shall provide such
evidence as is required by Landlord and any lender to establish that the
insurance that Tenant carries pursuant to this Paragraph 54 has been obtained
and meets the requirement of this Paragraph 54. Such insurance carried by Tenant
shall be in form and provided by an insurance company that is reasonably
acceptable to Landlord, which must be rated “A plus” or better by Best’s
Insurance Service (or an equivalent rating from another rating agency should
Best’s no longer provide such service). A copy of any such policy shall be
delivered to Landlord. If Tenant elects to insure and such insurance provided by
Tenant does not satisfy the requirements of Paragraph 12, in the event of a
subsequent casualty, Tenant shall be responsible for and shall pay for that
portion of the restoration cost, in excess of the insurance proceeds actually
available, that would have been covered by insurance satisfying the requirements
of Paragraph 12.
     B. Tenant shall not be obligated to contribute to the cost of earthquake
insurance more than an amount equal to six (6) times the then annual cost of
fire and “all risk” insurance

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per year. For example, if the 1993 annual premium for fire and “all risk”
insurance is $9,000, then Tenant’s share of the cost of any premium for
earthquake insurance for the following year (1994) shall be limited to $54,000
($9,000 x 6). Tenant shall have the right to require earthquake insurance
providing it is available if Tenant agrees to pay full cost thereof.
55. ASSIGNMENT AND SUBLETTING: The following modifications are made to
Paragraph 16:
     A. In the event that Tenant seeks to make any assignment or sublease, then
Landlord, by giving Tenant written notice of its election within fifteen
(15) days after Tenant’s notice of intent to assign or sublease has been given
to Landlord, shall have the right to elect (i) to withhold its consent to such
assignment or sublease, as permitted pursuant to Paragraph 16, or (ii) to permit
Tenant to so assign the Lease or sublease such part of the Premises, in which
event Tenant may do so, but without being released of its liability for the
performance of all of its obligations under the Lease, and the following shall
apply (except the following shall not apply to a “Permitted Transfer” described
in Paragraph 56):
          (1) If Tenant assigns its interest in this Lease, then in addition to
the rental provided for in this Lease, Tenant shall pay to Landlord fifty
percent (50%) of all consideration received by Tenant over and above (i) the
assignee’s agreement to assume the obligations of Tenant under this Lease and
(ii) all “Permitted Transfer Costs” (as defined herein) related to such
assignment. As used herein, the term “Permitted Transfer Costs” shall mean all
reasonable leasing commissions paid to third parties not affiliated with Tenant
in order to obtain the assignment or sublease in question.
               (b) If Tenant sublets all or part of the Premises, then Tenant
shall pay to Landlord in addition to the rental provided for in this Lease fifty
percent (50%) of the positive difference, if any, between (i) all rent and other
consideration paid by the subtenant to Tenant, less (ii) all rent paid by Tenant
to Landlord pursuant to this Lease which is allocable to the area so sublet and
all Permitted Transfer Costs related to such sublease. After Tenant has
recovered all Permitted Transfer Costs Tenant shall pay to Landlord the amount
specified in the preceding sentence on the same basis, whether periodic or in
lump sum, that such rent and other consideration is paid to Tenant by its
subtenant, within seven (7) days after it is received by Tenant.
          (1) Tenant’s obligations under this subparagraph shall survive any
assignment or sublease. At the time Tenant makes any payment to Landlord
required by this subparagraph, Tenant shall deliver an itemized statement of the
method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right to
inspect Tenant’s books and records relating to the payments due pursuant to this
subparagraph. Upon request therefor, Tenant shall deliver to Landlord copies of
all bills, invoices or other documents upon which its calculations are based.
          (2) As used herein, the term “consideration” shall mean any
consideration of any kind received, or to be received, by Tenant as a result of
the assignment or sublease, if such sums are paid for Tenant’s interest in this
Lease or in the Premises.

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56. PERMITTED ASSIGNMENTS AND SUBLEASES: Notwithstanding anything contained in
Paragraph 16, so long as Tenant otherwise complies with the provisions of
Paragraph 16 and the Permitted Transfer does not release Tenant from its
obligations hereunder, Tenant may enter into any of the following transfers (a
“Permitted Transfer”) without Landlord’s prior written consent, and the
provisions of Paragraph 56A shall not apply to any such Permitted Transfer:
     A. Tenant may sublease all or part of the Premises or assign its interest
in this Lease to any corporation which controls, is controlled by, or is under
common control with Tenant by means of an ownership interest of more than fifty
percent (50%) providing Tenant remains liable for the payment of rent and full
performance of the lease;
     B. Tenant may assign its interest in the Lease to a corporation which
results from a merger, consolidation or other reorganization in which Tenant is
not the surviving corporation so long as 95% of all assets of Tenant are
permanently transferred to such assignee. In the event there is not a permanent
transfer of 95% or more of the assets and liabilities from Tenant to a third
party, and Tenant continues to exist as a separate entity, both companies shall
be jointly and severally liable for the full terms and conditions of the Lease;
     C. Tenant may assign this Lease to a corporation which purchases or
otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets of Tenant are permanently transferred to such assignee (in the event
there is not a permanent transfer of 95% or more of the assets and liabilities
from Tenant to a third party and Tenant continues to exist as a separate entity,
both companies shall be jointly and severally liable for the full terms and
conditions of the Lease).
57. SUBORDINATION AND MORTGAGES: Paragraph 17 is modified to provide that this
Lease shall not be subordinate to a mortgage or deed of trust unless the Lender
holding such mortgage or deed of trust enters into a written subordination,
non-disturbance and attornment agreement in which the Lender agrees that
notwithstanding any subordination of this Lease to such Lender’s mortgage or
deed of trust, (i) such Lender shall recognize all of Tenant’s rights under this
Lease, and (ii) in the event of a foreclosure this Lease shall not be terminated
so long as Tenant is not in material default of its obligations under this
Lease, but shall continue in effect and Tenant and such Lender (or any party
acquiring the Premises through such foreclosure) shall each be bound to perform
the respective obligations of Tenant and Landlord with respect to the Premises
arising after such foreclosure.
58. LANDLORD’S RIGHT TO ENTER: Notwithstanding the provisions of Paragraph 18,
(i) except in the event of an emergency, Landlord shall give Tenant twenty-four
(24) hours notice prior to entering the Premises, agrees to comply with any
reasonably safety and/or security regulations imposed by Tenant with respect to
such entry, and shall only enter the Premises when accompanied by Tenant or its
agent (so long as Tenant makes itself reasonably available for this purpose),
and (ii) Landlord may install “for lease” signs relating to the Premises only
during the last 150 days of the Lease term. Landlord agrees to use its
reasonable, good faith efforts such that any entry by Landlord, and Landlord’s
agents, employees, contractors and invitees shall be performed in a manner with
as minimal interference as possible with Tenant’s business at the Premises.
Subject to the foregoing, Tenant agrees to cooperate with Landlord and
Landlord’s

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agents, employees and contractors so that responsibilities of Landlord under the
Lease can be fulfilled in a reasonable manner during normal business hours so
that no extraordinary costs are incurred by Landlord.
59. BANKRUPTCY AND DEFAULT: Paragraph 19 is modified to provide that with
respect to non-monetary defaults not involving Tenant’s failure to pay Basic
Rent or Additional Rent, Tenant shall not be in default of any non-monetary
obligation if (i) more than thirty (30) days is required to cure such
non-monetary default, and (ii) Tenant commences cure of such default as soon as
reasonably practicable after receiving written notice of such default from
Landlord and thereafter continuously and with due diligence prosecutes such cure
to completion.
60. ABANDONMENT: Paragraph 20 is modified to provide that Tenant shall not be in
default under the Lease if it leaves all or any part of Premises vacant so long
as (i) Tenant is performing all of its other obligations under the Lease
including the obligation to pay Basic Rent and Additional Rent (ii) Tenant
provides on-site security during normal business hours for those parts of the
Premises left vacant, (iii) such vacancy does not materially and adversely
affect the validity or coverage of any policy of insurance carried by Landlord
with respect to the Premises, and (iv) the utilities and heating and ventilation
system are operated to the extent necessary to prevent damage to the Premises or
its systems.
61. DESTRUCTION: Paragraph 21 is modified by the following:
     A. Except as provided in Paragraph 61B, Landlord may not terminate the
Lease if the Premises are damaged by a peril that is covered by the insurance
carried by Landlord pursuant to Paragraph 12, but instead shall restore the
Premises in the manner described by Paragraph 21.
     B. If the Premises are damaged by a peril covered by the insurance carried
by Landlord pursuant to Paragraph 12, Landlord shall have the option to
terminate the Lease if each of the following conditions is satisfied: (i) the
cost to repair or the damage exceeds thirty-three percent (33%) of the then
replacement cost of the Premises; and (ii) the damage occurs at a time when
there is less than five (5) years remaining in the term of the Lease.
Notwithstanding the foregoing, if such damage occurs at a time when there is
less than five (5) years remaining in the term of the Lease and Landlord
notifies Tenant of Landlord’s election to terminate the Lease pursuant to the
provisions of this Paragraph 61B, if Tenant has the right to extend the term of
this Lease pursuant to either Paragraph 41 or 42 such that the remaining term of
the Lease (including the option period) will be more than five (5) years
following the date of such damage, this Lease shall not terminate if Tenant
notifies Landlord in writing of Tenant’s exercise of an option to extend granted
to Tenant by either Paragraph 41 or 42. In such event, this Lease shall not
terminate, the term shall be so extended, and Landlord shall restore the
Premises in the manner provided in Paragraph 21.
     C. If the Premises are damaged by any peril, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord’s architect or construction consultant as to when the restoration work
required of Landlord may be completed. Tenant shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Landlord of a written notice of election to
terminate within

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seven (7) days after Tenant receives from Landlord the estimate of the time
needed to complete such restoration:
          (1) The Premises are damaged by any peril and, in the reasonable
opinion of Landlord’s architect or construction consultant, the restoration of
the Leased Premises cannot be substantially completed within 180 days after the
date of such damage; or
          (2) The Premises are damaged by any peril within twelve (12) months of
the last day of the Lease term and provided Tenant has not exercised an option
to renew pursuant to the provisions of Paragraph 41 or 42, and, in the
reasonable opinion of Landlord’s architect or construction consultant, the
restoration of the Leased Premises cannot be substantially completed within
sixty (60) days after the date of such damage.
62. EMINENT DOMAIN: Paragraph 22 is modified by the following:
     Landlord may not terminate the Lease if less than 1/3 of the building is
taken by condemnation or if a taking by condemnation is only threatened.
63. TRANSFER BY LANDLORD: The provisions of Paragraph 23 of the Lease to the
contrary notwithstanding, Landlord shall not be relieved of its obligations
under the Lease which may accrue after the date of a sale or other transfer
unless and until (i) the transferee agrees to assume and be bound by the terms
of this Lease and to perform all obligations of the Landlord under the Lease
which may accrue after the date of such transfer, and (ii) Landlord transfers
the Security Deposit to its successor in interest (transferee) in accordance
with the provisions of California Civil Code Section 1950.7, as amended or
recodified.
64. LANDLORD’S LIEN WAIVER: Landlord, within thirty (30) days after demand from
Tenant, shall execute and deliver such lien waiver documents that are reasonably
required by any supplier, lessor, or lender in connection with the installation
in the Premises of the Tenant’s personal property or trade fixtures providing
Landlord approves the form of any such waiver and Landlord’s rights under this
Lease are not materially and adversely affected.

                  QUANTUM CORPORATION,   JOHN ARRILLAGA     a Delaware
corporation   SEPARATE PROPERTY TRUST    
 
               
By
  /s/ Joseph C. Shepela   By   /s/ John Arrillaga    
 
               
 
          John Arrillaga, Trustee    
 
                Title Vice President Human Resources   RICHARD T. PEERY        
    SEPARATE PROPERTY TRUST    
 
               
 
      By   /s/ Richard Peery    
 
               
 
          Richard T. Peery, Trustee    

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AMENDMENT NO. 1
TO LEASE
     THIS AMENDMENT NO. l is made and entered into this 16th day of April, 1997,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST) (previously known as the “John
Arrillaga Separate Property Trust”) as amended, and RICHARD T. PEERY, Trustee,
or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY
TRUST) as amended, collectively as LANDLORD, and QUANTUM CORPORATION, a Delaware
corporation, as TENANT.
RECITALS
     A. WHEREAS, by Lease Agreement dated September 17, 1990 Landlord leased to
Tenant all of that certain 101,253 ± square foot building located at 1000 Sumac
Drive, Milpitas, California, the details of which are more particularly set
forth in said September 17, 1990 Lease Agreement, and
     B. WHEREAS, said Lease was amended by the Commencement Letter dated
December 6, 1991 which established the December 6, 1991 Lease Commencement Date,
and established the Termination Date of September 30, 2006, and,
     C. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by (i) extending the Term for five years, changing the Termination Date from
September 30, 2006 to September 30, 2011, (ii) amending the Basic Rent schedule
and Aggregate Rent accordingly, (iii) adding a third Five Year Option to Extend,
(iv) replacing Paragraphs 40C (“Lease Terms Co-extensive”) and 47 (“Cross
Default”) and 52 (“Structural Capital Costs Regulated by Governmental Agencies
After the Commencement of this Lease not Caused by Tenant or Tenant’s Uses or
Remodeling of the Premises”), (v) amending Lease Paragraph 12 (“Property
Insurance”) and (vi) amending and/or replacing certain provisions of the Lease
commencing as of the commencement of the Third Extended Term of said Lease as
hereinafter set forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. TERM OF LEASE: It is agreed between the parties that Tenant has
exercised its First Five-Year Option to Extend the lease term of that certain
lease agreement dated March 23, 1994 for premises located at 1101 Sumac Drive,
Milpitas, California (the “Building 5 Lease”), as detailed in Paragraph 41 of
said Building 5 Lease. Paragraph 40C of said Building 5 Lease provides that in
the event the term of said Building 5 Lease is extended for any reason
whatsoever, the terms of the Existing Leases (i.e. two of said leases dated
October 31, 1989 are for Premises located at 1140 Technology Drive and 500
McCarthy Blvd., Milpitas, California (the “1989 Leases”); one of said leases
dated September 17, 1990 is for Premises located at 1000 Sumac Drive, Milpitas,
California, and one of said leases dated April 10, 1992 is for Premises located
at 900 Sumac Drive, Milpitas, California) shall also be extended so that all
five Leases

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expire on the same date; therefore, it is agreed between the parties that by
exercising its Option to Extend the Building 5 Lease, Tenant has in effect
exercised its Option to Extend under Lease Paragraph 41 (“First Five-Year Option
to Extend”), and that pursuant to said Lease Paragraph 41, the Term of this
Lease Agreement shall be extended for an additional five (5) year period, and
the Lease Termination Date shall be changed from September 30, 2006 to
September 30, 2011.
     2. BASIC RENTAL FOR FIRST EXTENDED TERM OF LEASE: The monthly Basic Rental
for the First Extended Term of Lease shall be as follows:
     On October 1, 2006, the sum of ONE HUNDRED EIGHTY FIVE THOUSAND TWO HUNDRED
NINETY TWO AND 99/100 DOLLARS ($185,292.99) shall be due, and a like sum due on
the first day of each month thereafter through and including September 1, 2007.
     On October 1, 2007, the sum of ONE HUNDRED NINETY THOUSAND THREE HUNDRED
FIFTY FIVE AND 64/100 DOLLARS ($190,355.64) shall be due, and a like sum due on
the first day of each month thereafter through and including September 1, 2008.
     On October 1, 2008, the sum of ONE HUNDRED NINETY FIVE THOUSAND FOUR
HUNDRED EIGHTEEN AND 29/100 DOLLARS ($195,418.29) shall be due, and a like sum
due on the first day of each month thereafter through and including September 1,
2009.
     On October 1, 2009, the sum of TWO HUNDRED THOUSAND FOUR HUNDRED EIGHTY AND
94/100 DOLLARS ($200,480.94) shall be due, and a like sum due on the first day
of each month thereafter through and including September I, 2010.
     On October 1, 2010, the sum of TWO HUNDRED FIVE THOUSAND FIVE HUNDRED FORTY
THREE AND 59/100 DOLLARS ($205,543.59) shall be due, and a like sum due on the
first day of each month thereafter through and including September 1, 2011.
     The Aggregate Basic Rent for the Lease shall be increased by $11,725,097.40
or from $25,686,182.83 to $37,411,280.23.
     3. THIRD FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the Lease
for an additional five (5) year period pursuant to Lease Paragraph 42 (“Second
Five Year Option To Extend”), Landlord hereby grants to Tenant a third option to
extend the Term of this Lease for an additional five (5) year period upon the
following terms and conditions:
          A. Tenant shall give Landlord written notice of Tenant’s exercise of
this option to extend at least one hundred eighty (180) days prior to the
expiration of the Lease Term as extended pursuant to Lease Paragraph 42 (“Second
Five Year Option To Extend”), in which event the Lease shall be considered
extended for an additional five (5) year period upon the same terms and
conditions as this Lease, absent this Paragraph 3 and subject to the Rental as
set forth below. In the event that Tenant fails to timely exercise Tenant’s
option as set forth herein in writing, Tenant shall have no further option to
extend this Lease or the Other Leases, and this Lease shall continue in full
force and effect for the full remaining term hereof, absent this Paragraph 3.

2

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          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

      Period   Monthly Basic Rent
Months 1-12
  $2.33/sf
Months 13-24
  $2.38/sf
Months 25-36
  $2.43/sf
Months 37-48
  $2.48/sf
Months 49-60
  $2.53/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to extend granted by this Paragraph 3 at any time that Tenant is in
default (default for monetary and material default for non-monetary) of its
obligations under this Lease, if Tenant has received written notice from
Landlord that Tenant is in default, and such default has not been timely cured
within the time period provided for in this Lease; provided, however, that if
such default of Tenant is not for money due under this Lease and cannot be
cured, and if Landlord does not elect to terminate this Lease as a result of
such non-curable default by Tenant, Tenant may exercise the option to extend
granted by this Paragraph 3 notwithstanding such non-curable default.
     4. LEASE TERMS CO-EXTENSIVE: Lease Paragraph 40C (“Lease Terms
Co-extensive”) is hereby deleted in its entirety and replaced with the
following:
“40C. LEASE TERMS CO-EXTENSIVE: It is acknowledged that (i) Landlord and Tenant
have previously executed four separate leases in addition to this Lease: one of
said leases dated October 31, 1989 is for Premises located at 1140 Technology
Drive, Milpitas, California (the “Building One Lease”); one of said leases dated
October 31, 1989 is for Premises located at 500 McCarthy Blvd., Milpitas,
California (the “Building Two Lease”); one of said leases dated April 10, 1992
is for Premises located at 900 Sumac Drive, Milpitas, California (the “Building
3 Lease”); and one of said leases dated March 23, 1994 is for premises located
at 1101 Sumac Drive, Milpitas, California (the “Building 5 Lease”) (hereinafter
collectively referred to as the “Other Leases”); and (ii) it is the intention of
the parties that the term of this Lease be co-extensive with the term of the
Other Leases, such that the terms of all five leases (“the Leases”) expire on
the same date. The provisions of this Paragraph 40C also requires the terms of
all the Leases to be extended accordingly if Tenant exercises its Option to
Extend under any of the Leases. The monthly Basic Rent during the extended term
under each of the Leases shall be increased by $.05 per square foot on the
commencement date of the extended term and thereafter on each and every
anniversary of the respective lease’s commencement date of the extended term.”
     5. CROSS DEFAULT: Lease Paragraph 47 (“Cross Default”) is hereby deleted in
its entirety and replaced with the following:

3

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     “47. CROSS DEFAULT: It is agreed between Landlord and Tenant that a default
under this Lease, or a default under any of the Other Leases may, at the option
of Landlord, be considered a default under all Leases, in which event Landlord
shall be entitled (but in no event required) to apply all rights and remedies of
Landlord under the terms of one lease to all the Leases including, but not
limited to, the right to terminate any or all of the aforementioned Other Leases
or this Lease by reason of a default under the Leases or hereunder.
     Notwithstanding the above, Landlord shall have the option of considering a
default under this Lease or a default under any of the Other Leases to be a
default under all such leases, only with respect to such leases under which
Landlord is also the ‘Landlord’ at the time such default occurs. By way of
example, if at the time a default of Tenant occurs under this Lease, Landlord
has sold the premises described in any of the Other Leases and is no longer the
‘Landlord’ thereunder, then a default under this Lease shall not constitute a
default under any of such Other Leases so sold by Landlord (unless the premises
leased under this Lease and the Other Leases are sold to the same entity), and a
default by Tenant under any of such Other Leases so sold by Landlord shall not
constitute a default under this Lease or any other of the Other Leases then
remaining between Landlord and Tenant. However, if the Landlord under this Lease
and the Other Leases is one in the same at the time of said default, said cross
default provisions shall apply.”
     6. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: Lease Paragraph 52 (“Structural Capital Costs Regulated by
Governmental Agencies after the Commencement of this Lease Not Caused by Tenant
or Tenant’s Uses or Remodeling of the Premises”) is hereby deleted and replaced
with the following:
     “52. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL. AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: The provisions of this Paragraph 52 shall modify Paragraphs 7
and 14:
     A. If (i) during the last five (5) years of the First Extended Term of the
Lease if said Lease has not been extended as provided for in Lease Paragraph 42
“Second Five Year Option To Extend”) or in Paragraph 3 (“Third Five Year Option
to Extend”) or Paragraph 4 (“Lease Terms Co-Extensive”) above, or (ii) during
either of the five (5) year extension periods permitted by Lease Paragraph 42 or
Paragraph 3, or Paragraph 4 above, it becomes necessary (due to any governmental
requirement for continued occupancy of the Premises) to make structural
improvements required by laws enacted or legal requirements imposed by
governmental agency(s) after the Commencement Date, and the cost for each
required work or improvements exceeds $100,000, then if such legal requirement
is not imposed because of Tenant’s specific use of the Premises and is not

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“triggered” by Tenant’s Alterations or Tenant’s application for a building
permit or any other governmental approval (collectively “Tenant’s Actions”) in
which instance Tenant shall be responsible for 100% of the cost of such
improvements, Landlord shall be responsible for paying the cost of such
improvement and constructing such improvement, subject to a cash contribution
from Tenant of a portion of the cost thereof as provided for and calculated in
Paragraph 52B.
     B. When Landlord makes an improvement pursuant to Paragraph 52A, and as a
condition to Landlord’s obligation to construct such improvement, Tenant shall
make the following contribution in cash to Landlord for the cost thereof prior
to the commencement of the work by Landlord. It is agreed that Tenant shall pay
to Landlord 100% of the cost of the first $100,000.00 worth of each improvement.
After the first $100,000.00, all costs above $100,000.00 shall be divided by 15
and multiplied by the time period remaining in the last five years of the Lease
Term from the date work on such improvement commences.
     For example, if the improvement is not required as a result of Tenant’s
Actions and if the cost of such improvement was $400,000 and there was one year
and six months remaining in the Lease term when the work commenced, then Tenant
would be responsible for reimbursing Landlord in cash $130,000.00 computed as
follows:

         
Total Cost of Work
  $ 400,000.00  
Tenant Responsible for1st $100,000
    -100.000.00  
 
     
Total Amount To Be Amortized
  $ 300,000.00  
 
       
$300,000.00/15 = $20,000.00/yr. x 1.5 yrs =
  $ 30,000.00    
Tenant responsible for $100,000 + $30,000.00 =
  $ 130,000.00  

     C. If Landlord has made improvements, for which Tenant has reimbursed
Landlord for the cost thereof pursuant to Paragraph 52B, and the term of this
Lease is subsequently extended pursuant to the exercise by Tenant of an option
to renew pursuant to Lease Paragraph 42 or Paragraph 3 above, upon the exercise
of any such option by Tenant, Tenant shall pay to Landlord an additional sum
equal to the total amount of said improvement less the amount previously paid
for by Tenant. Using the example in Paragraph 52B above, Tenant would owe
Landlord the additional amount of $270,000.00 ($400,000.00 — $130,000.00 =
$270,000.00).”
     7. PROPERTY INSURANCE: Lease Paragraph 12 (“Property Insurance”) is hereby
amended to include the following: “Tenant acknowledges that as part of the cost
of insurance policies for the Premises, Tenant is responsible for the payment of
insurance deductibles on insurance claims as they relate to the Premises subject
to the limitations provided in Lease Paragraph 54 (“Property Insurance”) which
limitations are applicable only during the initial Lease Term and the First
Lease Extension Period and the Second Lease Extension Period.

5

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Said limitation provided for in Lease Paragraph 54 are null and void at the
commencement of the Third Lease Extended Term”.
     8. THIRD OPTION PERIOD — LEASE PROVISION CHANGES: In the event Tenant
exercises its Third Option to Extend as provided for in Paragraph 3 above, the
following amendments (contained within Paragraphs 9 through 19) are herein made
to the Lease to be effective upon the commencement of the third option period
(“Third Option Period”), or during any period following the expiration of the
Lease Term or expiration of the Lease when Tenant is in possession of the
Premises.
     9. LATE CHARGE: Effective as of the first day of the Third Option Period,
the Late Charge referenced in Lease Paragraph 4.D (“Late Charge”) shall be
changed from five percent (5%) to ten percent (10%), and Lease Paragraph 49
(“Limitation on Late Charge”) shall be deleted in its entirety and of no further
force or effect.
     10. MANAGEMENT FEE: Notwithstanding anything to the contrary in the Lease,
effective as of the first day of the Third Option Period, and on the first day
of each month thereafter, Tenant shall pay to Landlord, in addition to the Basic
Rent and Additional Rent, a fixed monthly management fee (“Management Fee”)
equal to one percent (1%) of the Basic Rent due for each month during the Lease
Term.
     11. HAZARDOUS MATERIALS: Effective as of the first day of the Third Option
Period, Lease Paragraph 44 (“Hazardous Materials”) shall be deleted in its
entirety and replaced with the following:
     “44. HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with respect
to the existence or use of “Hazardous Materials” (as defined herein) on, in,
under or about the Premises and real property located beneath said Premises,
which includes the entire parcel of land on which the Premises are located as
shown in Green on Exhibit A to the Lease (hereinafter collectively referred to
as the “Property”):
     A. As used herein, the term “Hazardous Materials” shall mean any material,
waste, chemical, mixture or byproduct which is or hereafter is defined, listed
or designated under Environmental Laws (defined below) as a pollutant, or as a
contaminant, or as a toxic or hazardous substance, waste or material, or any
other unwholesome, hazardous, toxic, biohazardous, or radioactive material,
waste, chemical, mixture or byproduct, or which is listed, regulated or
restricted by any Environmental Law (including, without limitation, petroleum
hydrocarbons or any distillates or derivatives or fractions thereof,
polychlorinated biphenyls, or asbestos). As used herein, the term “Environmental
Laws” shall mean any applicable Federal, State of California or local government
law (including common law), statute, regulation, rule, ordinance, permit,
license, order, requirement, agreement, or approval, or any determination,
judgment, directive, or order of any executive or judicial authority at any
level of Federal, State of California or local government (whether now existing
or subsequently

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adopted or promulgated) relating to pollution or the protection of the
environment, ecology, natural resources, or public health and safety.
     B. Tenant shall notify Landlord prior to the occurrence of any Tenant’s
Hazardous Materials Activities (defined below). Landlord acknowledges that
Tenant shall use, in compliance with applicable Environmental Laws, customary
household and office supplies (Tenant shall first provide Landlord with a list
of said materials use), such as mild cleaners, lubricants and copier toner. Any
and all of Tenant’s Hazardous Materials Activities shall be conducted in
conformity with this Paragraph 44, Paragraph 14 of this Lease, and in compliance
with all Environmental Laws and regulations. As used herein, the term “Tenant’s
Hazardous Materials Activities” shall mean any and all use, handling,
generation, storage, disposal, treatment, transportation, release, discharge, or
emission of any Hazardous Materials on, in, beneath, to, from, at or about the
Property, in connection with Tenant’s use of the Property, or by Tenant or by
any of Tenant’s agents, employees, contractors, vendors, invitees, visitors or
its future subtenants or assignees or other third parties (including “dumping”
by others) (or which Hazardous Materials originate on the surface of the
Premises any time on or after the Commencement Date of this Lease, but excluding
Hazardous Materials on the Premises prior to the Lease Commencement Date because
of the storage, use, disposal, or transportation of such materials or waste by
any of Landlord’s contractors or otherwise arising out of construction work
performed by or under the direction of Landlord on the Premises and Landlord
shall be responsible for all required actions with respect to such materials or
wastes). Tenant agrees to provide Landlord with prompt written notice of any
spill or release of Hazardous Materials at the Property during the term of the
Lease of which Tenant becomes aware, and further agrees to provide Landlord with
prompt written notice of any violation of Environmental Laws in connection with
Tenant’s Hazardous Materials Activities of which Tenant becomes aware. If
Tenant’s Hazardous Materials Activities involve Hazardous Materials other than
normal use of customary household and office supplies, Tenant also agrees at
Tenant’s expense: (i) to install such Hazardous Materials monitoring, storage
and containment devices as may be required by Environmental Laws, regulations
and/or governing agencies; (ii) to provide Landlord with a written inventory of
such Hazardous Materials, including an update of same each year upon the
anniversary date of the Commencement Date of the Lease (“Anniversary Date”); and
(iii) on each Anniversary Date to provide to Landlord copies of all
documentation and records, required by applicable Environmental Laws to be
prepared and submitted to governmental authorities, relating to use at the
Property of Hazardous Materials or to Tenant’s Hazardous Materials Activities,
if any. If upon completion of Landlord’s review of said documentation and
records, Landlord reasonably questions if Tenant is in compliance with all
applicable Environmental Laws with respect to Tenant’s Hazardous Materials
Activities, Tenant agrees within thirty (30) days following receipt of written
notice from Landlord, to retain a qualified environmental consultant, acceptable
to Landlord, to evaluate whether Tenant is in compliance with all applicable
Environmental Laws with respect to Tenant’s Hazardous Materials Activities.
Tenant, at its expense, shall submit to Landlord a

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report from such environmental consultant which discusses the environmental
consultant’s findings within two (2) months of each Anniversary Date. Tenant, at
its expense, shall promptly undertake and complete any and all steps necessary,
and in full compliance with applicable Environmental Laws, to fully correct any
and all problems or deficiencies identified by the environmental consultant, and
promptly provide Landlord with documentation of all such corrections.
     C. Prior to termination or expiration of the Lease, Tenant, at its expense,
shall (i) properly remove from the Property all Hazardous Materials which come
to be located at the Property in connection with Tenant’s Hazardous Materials
Activities, and (ii) fully comply with and complete all facility closure
requirements of applicable Environmental Laws regarding Tenant’s Hazardous
Materials Activities, including but not limited to (x) properly restoring and
repairing the Property to the extent damaged by such closure activities, and
(y) obtaining from the local Fire Department or other appropriate governmental
authority with any legal or regulatory jurisdiction a written concurrence that
closure has been completed in compliance with applicable Environmental Laws.
Tenant shall promptly provide Landlord with copies of any claims, notices, work
plans, data and reports prepared, received or submitted in connection with any
such closure activities.
     D. If Landlord, upon consultation with Tenant, reasonably concludes that
the Property has become contaminated as a result of Tenant’s Hazardous Materials
Activities, Landlord in addition to any other rights it may have under this
Lease or under Environmental Laws or other laws, may enter upon the Property and
conduct inspection, sampling and analysis, including but not limited to
obtaining and analyzing samples of soil and groundwater, for the purpose of
determining the nature and extent of such contamination except to the extent
that such activities may be inconsistent with Tenant’s compliance with
Environmental Laws. Tenant shall promptly reimburse Landlord for the costs of
such an investigation, including but not limited to reasonable attorneys’ fees
Landlord incurs with respect to such investigation to the extent, and only to
the extent, that it that discloses Hazardous Materials contamination for which
Tenant is liable under this Lease. Except as may be required of Tenant by
applicable Environmental Laws, Tenant shall not perform any sampling, testing,
or drilling to identify the presence of any Hazardous Materials at the Property,
without Landlord’s prior written consent which shall not be unreasonably
withheld. Tenant shall promptly provide Landlord with copies of any claims,
notices, work plans, data and reports’ prepared, received or submitted in
connection with any sampling, testing or drilling performed pursuant to the
preceding sentence.
     E. Tenant shall indemnify, defend (with legal counsel acceptable to
Landlord, whose consent shall not unreasonably be withheld) and hold harmless
Landlord, its employees, assigns, successors, successors-in-interest, agents and
representatives from and against any and all claims (including but not limited
to third party claims from a private party or a government authority),
liabilities, obligations, losses, causes of action, demands, governmental
proceedings or

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directives, fines, penalties, expenses, costs (including but not limited to
reasonable attorneys’, consultants’ and other experts’ fees and costs), and
damages, which arise from or relate to: (i) Tenant’s Hazardous Materials
Activities; (ii) any Hazardous Materials contamination caused by Tenant prior to
the Commencement Date of the Lease; or (iii) the breach of any obligation of
Tenant under this Paragraph 44 (collectively, “Tenant’s Environmental
Indemnification”). Tenant’s Environmental Indemnification shall include but is
not limited to the obligation to promptly and fully reimburse Landlord for
losses in or reductions to rental income, and diminution in fair market value of
the Property. Tenant’s Environmental Indemnification shall further include but
is not limited to the obligation to diligently and properly implement to
completion, at Tenant’s expense, any and all environmental investigation,
removal, remediation, monitoring, reporting, closure activities, or other
environmental response action as may be required by applicable Environmental
Laws, regulations or governing agencies (collectively, “Response Actions”).
Tenant shall promptly provide Landlord with copies of any claims, notices, work
plans, data and reports prepared, received or submitted in connection with any
Response Actions.
     F. Landlord hereby makes the following representations to Tenant, each of
which is made only to the best of Landlord’s knowledge as of the date Landlord
executes this Lease, without any inquiry or investigation having been made or
required by Landlord regarding this subject, nor does Landlord have any
obligation to investigate or make inquiry regarding the subject:
          (1) The soil and ground water on or under the Premises does not
contain Hazardous Materials in amounts which violate any laws to the extent that
any governmental entity could require either Landlord or Tenant to take any
remedial action with respect to such Hazardous Materials.
          (2) During the time that Landlord has owned the Premises, Landlord has
received no notice of (i) any violation, or alleged violation, of any law that
has not been corrected to the satisfaction of the appropriate authority,
(ii) any pending claims relating to the presence of Hazardous Material on the
Premises, or (iii) any pending investigation by any governmental agency
concerning the Premises relating to Hazardous Materials.
     G. Landlord and Tenant shall each give written notice to the other as soon
as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Premises, and (ii) any contamination of the Premises by Hazardous Materials
which constitutes a violation of any law. Attached as Exhibit “C” to the Lease
is a list of Hazardous Materials that Tenant intends to use at the Premises. If
during the Lease Term Tenant proposes to use other Hazardous Materials at the
Premises, Tenant shall inform Landlord of such use, identifying the Hazardous
Materials and the manner of their use, storage and disposal, and shall agree
(i) to use, store and dispose of such Hazardous Materials strictly in compliance
with all

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laws, regulations and governing agencies and (ii) that the indemnity set forth
in Paragraph 44 shall be applicable to Tenant’s use of such Hazardous Material.
     H. Landlord or Tenant may, at any time, cause testing wells to be installed
on the Premises, and may cause the ground water to be tested to detect the
presence of Hazardous Material by the use of such tests as are then customarily
used for such purposes. Testing wells installed by Tenant shall be paid for by
Tenant. If tests conducted by Landlord disclose that Tenant has violated any
Hazardous Materials laws, or Tenant or parties on the Premises during the Term
of this Lease have contaminated the Premises as determined by regulatory
agencies pursuant to Hazardous Materials laws, or that Tenant has liability to
Landlord pursuant to Paragraph 44A, then Tenant shall pay for 100 percent of the
cost of the test and all related expense. Prior to the expiration of the Lease
Term, Tenant shall remove any testing wells it has installed at the Premises,
and return the Premises to the condition existing prior to the installation of
such wells, unless Landlord requests in writing that Tenant leave all or some of
the testing wells in which instance the wells requested to be left shall not be
removed.
     I. If any tests performed by Tenant or Landlord prior to the Commencement
Date disclose Hazardous Materials at the Premises, Landlord at its expense will
promptly take all reasonable action required by law with respect to the
existence of such Hazardous Materials at the Premises. The Commencement Date
shall not be delayed because of such action by Landlord unless occupation of the
Premises is prohibited by law.
     J. The obligations of Landlord and Tenant under this Paragraph 44 shall
survive the expiration or earlier termination of the Term of this Lease. The
rights and obligations of Landlord and Tenant with respect to issues relating to
Hazardous Materials are exclusively established by this Paragraph 44.”
     12. SECURITY DEPOSIT: Effective as of the first day of the Third Option
Period, Lease Paragraph 50 (“Security Deposit”) shall be deleted in its entirety
and replaced with the following:
     “50. SECURITY DEPOSIT: The following provisions shall modify Lease
Paragraph 4F:
     A. Within thirty (30) days after the expiration or earlier termination of
the Lease term and after Tenant has vacated the Premises, Landlord shall return
to Tenant the entire Security Deposit except for amounts that Landlord has
deducted therefrom that are needed by Landlord to cure defaults of Tenant under
the Lease or compensate Landlord for damages for which Tenant is liable pursuant
to this Lease. The use or disposition of the Security Deposit shall be subject
to the provisions of California Civil Code Section 1950.7.

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     B. During the first thirty (30) days following Tenant’s exercise of its
Third Option to Extend, and only during said thirty day period, Tenant shall
have the one-time option of satisfying its obligation with respect to an amount
equal to one-half (1/2) ($136,691.55) of the $273,383.10 Security Deposit
required under Lease Paragraph 4F by providing to Landlord, at Tenant’s sole
cost, a letter of credit which: (i) is drawn upon an institutional lender
reasonably acceptable and accessible to Landlord in form and content reasonably
satisfactory to Landlord; (ii) is in the amount of one-half (1/2) of the
Security Deposit; (iii) is for a term of at lease twelve (12) months; (iv) with
respect to any letter of credit in effect within the six month period
immediately prior to the expiration of the Lease term, shall provide that the
term of such letter of credit shall extend at least forty five (45) days past
the Lease expiration date (including any extensions thereof); and (v) may be
drawn upon by Landlord upon submission of a declaration of Landlord that Tenant
is in default (as defined in Paragraph 19 and as modified by Paragraph 59).
Landlord shall not be obligated to furnish proof of default to such
institutional lender, and Landlord shall only be required to give the
institutional lender written notification that Tenant is in default and upon
receiving such written notification from Landlord the institutional lender shall
be obligated to immediately deliver cash to Landlord equal to the amount
Landlord may spend or become obligated to spend by reason of Tenant’s default or
to compensate Landlord for any loss or damage which Landlord may suffer by
reason of Tenant’s default up to 1/2 of the total Security Deposit required
under Lease Paragraph 4F. Said letter of credit shall provide that if the letter
of credit is not renewed, replaced or extended within twenty (20) days prior to
its expiration date the issuer of the credit shall automatically issue a
cashiers check payable to Landlord in the amount of the letter of credit after
the date which is twenty (20) days before the expiration date, and no later than
the expiration date, without Landlord being required to make demand upon the
letter of credit. If Tenant provides Landlord with a letter of credit, within
thirty (30) day of the execution of this Lease, meeting the foregoing
requirements, one-half (1/2) of the cash Security Deposit (i.e. $136.691.55 of
the $273.383.10 Security Deposit) shall be returned to Tenant by Landlord
inasmuch as the cash deposit remaining and the Letter of Credit equal the total
Security Deposit required in Lease Paragraph 4F. If Tenant defaults with respect
to any provisions of this Lease, including but not limited to provisions
relating to the payment of Rent, Landlord may (but shall not be required to)
draw down on the letter of credit for payment of any sum which Landlord may
spend or become obligated to spend by reason of Tenant’s default, or to
compensate Landlord for any loss or damage which Landlord may suffer by reason
of Tenant’s default. Landlord and Tenant acknowledge that such letter of credit
will be treated as if it were a cash security deposit, and such letter of credit
may be drawn down upon by Landlord upon demand and presentation of evidence of
the identity of Landlord to the issuer, in the event that Tenant defaults with
respect to any provision of this Lease and such default is not cured within any
applicable cure period. Notwithstanding anything to the contrary in this Lease,
Landlord shall not be obligated to furnish proof of default to such
institutional lender and Landlord is only required to give the institutional
lender written

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notification that Tenant is in default and upon receiving such written
notification from Landlord the institutional lender shall be obligated to
immediately deliver cash to Landlord equal to the amount Landlord may spend or
become obligated to spend by reason of Tenant’s default, or to compensate
Landlord for any loss or damage which Landlord may suffer by reason of Tenant’s
default up to 1/2 of the total Security Deposit. Landlord acknowledges that it
is not entitled to draw down such letter of credit unless Landlord would have
been entitled to draw upon the cash security deposit pursuant to the terms of
Paragraph 4F of the Lease. Concurrently with the delivery of the required
information to the issuer, Landlord shall deliver to Tenant written evidence of
the default upon which the draw down was based, together with evidence that
Landlord has provided to Tenant the written notice of such default which was
required under the applicable provision of the Lease, and evidence of the
failure of Tenant to cure such default within the applicable grace period
following receipt of such notice of default. Any proceeds received by Landlord
by drawing upon the letter of credit shall be applied in accordance with the
provisions governing the Security Deposit imposed by Lease Paragraph 4F and this
Paragraph 50. If Landlord draws upon the letter of credit, thereafter Tenant
shall once again have the right to post a letter of credit in place of one-half
(1/2) of a cash Security Deposit so long as Tenant is not then in default. In
any event Tenant will be obligated to replenish the amount drawn to restore the
Security Deposit to its original amount as provided for in Paragraph 4F. If any
portion of the letter of credit is used or applied pursuant hereto, Tenant
shall, within ten (10) days after receipt of a written demand therefor from
Landlord, restore and replace the value of such security by either
(i) depositing cash with Landlord in the amount equal to the sum drawn down
under the letter of credit, or (ii) increasing the letter of credit to its value
immediately prior to such application. Tenant’s failure to replace the value of
the security as provided in the preceding sentence shall be a material breach of
its obligation under this Lease.”
     13. REAL ESTATE TAXES: Effective as of the first day of the Third Option
Period, Lease Paragraph 53 (“Real Estate Taxes”) shall be deleted in its
entirety and replaced with the following:
     “53. REAL PROPERTY TAXES: Paragraph 9 is modified by the following:
     A. The term “Real Property Taxes” shall not include charges, levies or fees
directly related to the use, storage, disposal or release of Hazardous Materials
on the Premises unless directly related to Tenant’s Activities at this site or
on other sites leased and/or owned by Tenant; however, Tenant shall be
responsible for general or special tax and/or assessments (related to Hazardous
Materials and/or toxic waste) imposed on the Property provided said special tax
and/or assessment is not imposed due to on-site originated contamination on the
Property (by third parties not related to Tenant) prior to the Lease
Commencement Date. Subject to the terms and conditions stated herein, Tenant
shall be responsible for paying one hundred percent (100%) of said taxes and/or
assessments allocated to the Property.

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     B. If any assessments for public improvements are levied against the
Premises, Landlord may elect either to pay the assessment in full or to allow
the assessment to go to bond. If Landlord pays the assessment in full, Tenant
shall pay to Landlord or any assignee or purchaser of the Premises each time
payment of Real Property Taxes is made a sum equal to that which would have been
payable (as both principal and interest) had Landlord allowed the assessment to
go to bond.
     C. Tenant at its cost shall have the right, at any time, to seek a
reduction in the assessed valuation of the Premises or to contest any Real
Property Taxes that are to be paid by Tenant. If Tenant seeks a reduction or
contests such Real Property Taxes, the failure on Tenant’s part to pay such Real
Property Taxes being so contested shall not constitute a default so long as
Tenant complies with the provisions of this Paragraph. Landlord shall not be
required to join in any proceeding or contest brought by Tenant unless the
provisions of any law require that the proceeding or contest be brought by or in
the name of Landlord. In that case Landlord shall join in the proceedings or
contest or permit it to be brought in Landlord’s name as long as Landlord is not
required to bear any cost. Tenant, on final determination of the proceeding or
contest, shall immediately pay or discharge its share of any Real Property Taxes
determined by any decision or judgment rendered, together with all costs,
charges, interest, and penalties incidental to the decision or judgment. If
Tenant does not pay the Real Property Taxes when due pursuant to the Lease and
Tenant seeks a reduction or contests them as provided in this paragraph, before
the commencement of the proceeding or contest Tenant shall furnish to Landlord a
surety bond in form reasonably satisfactory to Landlord issued by an insurance
company qualified to do business in California. The amount of the bond shall
equal 125% of the total amount of Real Property Taxes in dispute and any such
bond shall be assignable to any lender or purchaser of the Premises. The bond
shall hold Landlord and the Premises harmless from any damage arising out of the
proceeding or contest and shall insure the payment of any judgment that may be
rendered.”
     14. PROPERTY INSURANCE: Effective as of the first day of the Third Option
Period, section B of Lease Paragraph 54 (“Property Insurance”) shall be deleted
in its entirety and be of no further force or effect.
     15. ASSIGNMENT AND SUBLETTING: Effective as of the first day of the Third
Option Period, Lease Paragraph 55 (“Assignment and Subletting”) shall be deleted
in its entirety and replaced with the following:
     “55. ASSIGNMENT AND SUBLETTING: The following modifications are made to
Paragraph 16:
     A. In the event that Tenant seeks to make any assignment or sublease, then
Landlord, by giving Tenant written notice of its election within fifteen
(15) days after Tenant’s notice of intent to assign or sublease has been given
to Landlord, shall have the right to elect (i) to withhold its consent to such

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assignment or sublease, as permitted pursuant to Paragraph 16, or (ii) to permit
Tenant to so assign the Lease or sublease such part of the Premises, in which
event Tenant may do so, but without being released of its liability for the
performance of all of its obligations under the Lease, and the following shall
apply (except the following shall not apply to a “Permitted Transfer” described
in Paragraph 56):
          (1) If Tenant assigns its interest in this Lease, then in addition to
the rental provided for in this Lease, Tenant shall pay to Landlord fifty
percent (50%) of all Rent and other consideration received by Tenant over and
above (i) the assignee’s agreement to assume the obligations of Tenant under
this Lease and (ii) all “Permitted Transfer Costs” (as defined herein) related
to such assignment. As used herein, the term “Permitted Transfer Costs” shall
mean all reasonable leasing commissions paid to third parties not affiliated
with Tenant in order to obtain the assignment or sublease in question.
          (2) If Tenant sublets all or part of the Premises, then Tenant shall
pay to Landlord in addition to the Rent provided for in this Lease fifty percent
(50%) of the positive difference, if any, between (i) all rent and other
consideration paid or provided to Tenant by the subtenant, less (ii) all Rent
paid by Tenant to Landlord pursuant to this Lease which is allocable to the area
so sublet and all Permitted Transfer Costs related to such sublease. After
Tenant has recovered all Permitted Transfer Costs Tenant shall pay to Landlord
the amount specified in the preceding sentence on the same basis, whether
periodic or in lump sum, that such rent and other consideration is paid to
Tenant by its subtenant, within seven (7) days after it is received by Tenant.
          (3) Tenant’s obligations under this subparagraph shall survive any
assignment or sublease. At the time Tenant makes any payment to Landlord
required by this subparagraph, Tenant shall deliver an itemized statement of the
method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right to
inspect Tenant’s books and records relating to the payments due pursuant to this
subparagraph. Upon request therefor, Tenant shall deliver to Landlord copies of
all bills, invoices or other documents upon which its calculations are based.
          (4) As used herein, the term “consideration” shall mean any
consideration of any kind received, or to be received (including, but not
limited to, services rendered and/or value received) by Tenant as a result of
the assignment or sublease, if such sums are paid or provided to Tenant for
Tenant’s interest in this Lease or in the Premises.
          (5) This Paragraph 55.A does not apply to a “Permitted Transfer”, as
provided in Paragraph 56 hereof. The parties agree that if any of the following
transactions occur and do not qualify as “Permitted

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Transfers”, Tenant must obtain Landlord’s consent to such transaction and if
Landlord consents to any of the following transactions which do not otherwise
qualify as “Permitted Transfers”, then the provisions of this Paragraph 55.A
shall not apply to the following transactions: (i) a merger, consolidation or
other reorganization in which Tenant is not the surviving corporation so long as
95% of all assets and liabilities of Tenant are permanently transferred to such
assignee; and (ii) an assignment of this Lease to a corporation which purchases
or otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets and liabilities of Tenant are permanently transferred to such assignee
and Tenant remains liable and responsible under the Lease to the extent Tenant
continues in existence following such transaction.”
     16. PERMITTED ASSIGNMENTS AND SUBLEASES: Effective as of the first day of
the Third Option Period, Lease Paragraph 56 (“Permitted Assignments and
Subleases”) shall be deleted in its entirety and replaced with the following:
     “56. PERMITTED ASSIGNMENTS AND SUBLEASES: Notwithstanding anything
contained in Paragraph 16, so long as Tenant otherwise complies with the
provisions of Paragraph 16 and the Permitted Transfer does not release Tenant
from its obligations hereunder, Tenant may enter into any of the following
transfers (a “Permitted Transfer”) without Landlord’s prior written consent, and
the provisions of Paragraph 55A shall not apply to any such Permitted Transfer:
     A. Tenant may sublease all or part of the Premises or assign its interest
in this Lease to any corporation which controls, is controlled by, or is under
common control with Tenant by means of an ownership interest of more than fifty
percent (50%) providing Tenant remains liable for the payment of Rent and full
performance of the Lease;
     B. Tenant may assign its interact in the Lease to a corporation which
results from a merger, consolidation or other reorganization in which Tenant is
not the surviving corporation so long as (i) 95% of all assets and liabilities
of Tenant are permanently transferred to such assignee, and (ii) immediately
prior to the merger, consolidation or other reorganization, the corporation into
which Tenant is to be merged has a net worth equal to or greater than the net
worth of Tenant at the time of Lease execution or at the time of such
assignment, merger, consolidation or reorganization (whichever is greater), or
if it does not, Landlord is provided a guaranty of the Lease (in a form
reasonably acceptable to Landlord) from a corporation (a) that is the parent of,
or is otherwise affiliated with, the corporation into which Tenant is to be
merged, and (b) which has a current net worth equal to or greater than the net
worth of Tenant at the time of Lease execution or at the time of such
assignment, merger, consolidation or reorganization (whichever is greater). In
the event there is not a permanent transfer of 95% or more of the assets and
liabilities from Tenant to a third party, and Tenant continues to exist as a
separate entity, both companies shall be jointly and severally liable for the
full terms and conditions of the Lease;

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     C. Tenant may assign this Lease to a corporation which purchases or
otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets and liabilities of Tenant are permanently transferred to such assignee
(in the event there is not a permanent transfer of 95% or more of the assets and
liabilities from Tenant to a third party and Tenant continues to exist as a
separate entity, both companies shall be jointly and severally liable for the
full terms and conditions of the Lease), and provided that immediately prior to
such assignment said corporation, has a net worth equal to or greater than the
net worth of Tenant (a) at the time of Lease execution or (b) at the time of
such assignment (whichever is greater), or if it does not, Landlord is provided
a guaranty of the Lease (in a form reasonably acceptable to Landlord) from a
corporation (a) that is the parent of, or is otherwise affiliated with, said
corporation and (b) which has a current net worth equal to or greater than the
net worth of Tenant at the time of Lease execution or at the time of such
assignment, (whichever is greater).”
     17. DESTRUCTION: Effective as of the first day of the Third Option Period,
Lease Paragraph 61 (“Destruction”) shall be deleted in its entirety and replaced
with the following:
     “61. DESTRUCTION: Paragraph 21 is modified by the following:
     A. Notwithstanding anything to the contrary within Paragraph 21, Landlord
may terminate this Lease in the event of an uninsured event or if insurance
proceeds, net of the deductible, are insufficient to cover one hundred percent
of the rebuilding costs; provided, however, Tenant shall have the right to
elect, in its discretion, to contribute such excess funds to permit Landlord to
repair the Premises.
     B. Except as provided in Paragraph 61C, Landlord may not terminate the
Lease if the Premises are damaged by a peril whereby the cost to replace and/or
repair is one hundred percent (100%) covered by the insurance carried by
Landlord pursuant to Paragraph 12, but instead shall restore the Premises in the
manner described by Paragraph 21.
     C. If the Premises are damaged by a peril covered by the insurance carried
by Landlord pursuant to Paragraph 12, Landlord shall have the option to
terminate the Lease if each of the following conditions is satisfied: (i) the
cost to repair or the damage exceeds thirty-three percent (33%) of the then
replacement cost of the Premises; and (ii) the damage occurs at a time when
there is less than five (5) years remaining in the term of the Lease.
     D. If Landlord fails to obtain insurance as required pursuant to
Paragraph 12, and said insurance would have been available to cover any damage
or destruction to the Premises, Landlord shall be required to rebuild, at its
cost, net of the deductible which would have been required under said insurance
policy (which deductible Tenant is required to pay).

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     E. If the Premises are damaged by any peril, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord’s architect or construction consultant as to when the restoration work
required of Landlord may be completed. Tenant shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Landlord of a written notice of election to
terminate within seven (7) days after Tenant receives from Landlord the estimate
of the time needed to complete such restoration:
          (1) The Premises are damaged by any peril (not caused by or resulting
from an action of Tenant or Tenant’s agents, employees, contractors or invitees)
and, in the reasonable opinion of Landlord’s architect or construction
consultant, the restoration of the Leased Premises cannot be substantially
completed within 180 days after the date of such damage (subject to force
majeure conditions); or
          (2) The Premises are damaged by any peril (not caused by or resulting
from an action of Tenant or Tenant’s agents, employees, contractors or invitees)
within twelve (12) months of the last day of the Lease term, and, in the
reasonable opinion of Landlord’s architect or construction consultant, the
restoration of the Leased Premises cannot be substantially completed within
sixty (60) days after the date of such damage and Tenant has not exercised its
Option to Extend said Term (or Extended Term as the case may be).”
     18. LIABILITY INSURANCE: Effective as of the first day of the Third Option
Period, the first sentence of Lease Paragraph 10 (“Liability Insurance”) shall
be deleted and replaced with the following: “Tenant, at Tenant’s expense, agrees
to keep in force during the Term of this Lease a policy of commercial general
liability insurance with combined single limit coverage of not less than Two
Million Dollars ($2,000,000) per occurrence for bodily injury and property
damage occurring in, on or about the Premises, including parking and landscaped
areas.”
     19. LIMITATION OF LIABILITY: Effective as of the first day of the Third
Option Period, Lease Paragraph 36 (“Limitation of Liability”) shall be deleted
in its entirety and replaced with the following:
     “36. LIMITATION OF LIABILITY In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord:
(i) the sole and exclusive remedy shall be against Landlord’s interest in the
Premises leased herein;
(ii) no partner of Landlord shall be sued or named as a party in any suit or
action (except as may be necessary to secure jurisdiction of the partnership);
(iii) no service of process shall be made against any partner of Landlord
(except as may be necessary to secure jurisdiction of the partnership);

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(iv) no partner of Landlord shall be required to answer or otherwise plead to
any service of process;
(v) no judgment will be taken against any partner of Landlord;
(vi) any judgment taken against any partner of Landlord may be vacated and set
aside at any time without hearing;
(vii) no writ of execution will ever be levied against the assets of any partner
of Landlord;
(viii) these covenants and agreements are enforceable both by Landlord and also
by any partner of Landlord.
     Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or at common law.”
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said September 17, 1990 Lease Agreement shall remain in full force and effect.
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 1
to Lease as of the day and year last written below.

                  LANDLORD:       TENANT:
 
                JOHN ARRILLAGA SURVIVOR’S TRUST       QUANTUM CORPORATION,      
a Delaware corporation
 
               
By
  /s/ John Arrillaga
 
      By   /s/ Andrew Kryder
 
 
  John Arrillaga, Trustee                         Andrew Kryder
 
                          Date   6/30/97
 
      Print or Type Name
 
                RICHARD T. PEERY SEPARATE             PROPERTY TRUST       Title
  VP Finance and Corp. General Counsel
 
 
             
 
               
By
  /s/ Richard Peery       Date   6/25/97
 
 
               
 
  Richard T. Peery, Trustee            
 
               
Date
  6/26/97
 
           

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AMENDMENT NO. 2
TO LEASE
     THIS AMENDMENT NO. 2 is made and entered into this 26th day of March, 2001,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST) (previously known as the “John
Arrillaga Separate Property Trust”) as amended, and RICHARD T. PEERY, Trustee,
or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY
TRUST) as amended, collectively as LANDLORD, and MAXTOR CORPORATION, a Delaware
corporation, as “ASSIGNEE” OR “MAXTOR”.
RECITALS
     A. WHEREAS, by Lease Agreement dated September 17, 1990 Landlord leased to
QUANTUM CORPORATION, a Delaware corporation (the “ASSIGNOR” or “QUANTUM”) all of
that certain 101,253+ square foot building located at 1000 Sumac Drive,
Milpitas, California, the details of which are more particularly set forth in
said September 17, 1990 Lease Agreement, and
     B. WHEREAS, said Lease was amended by the Commencement Letter dated
December 6, 1991 which established the December 6, 1991 Lease Commencement Date,
and established the Termination Date of September 30, 2006, and,
     C. WHEREAS, said Lease was amended by Amendment No. 1 dated April 16, 1997,
which amended the Lease by (i) extending the Term for five years, changing the
Termination Date from September 30, 2006 to September 30, 2011, (ii) amending
the Basic Rent schedule and Aggregate Rent accordingly, (iii) adding a third
Five Year Option to Extend, (iv) replacing Paragraphs 40C (“Lease Terms
Co-extensive”) and 47 (“Cross Default”) and 52 (“Structural Capital Costs
Regulated by Governmental Agencies After the Commencement of this Lease not
Caused by Tenant or Tenant’s Uses or Remodeling of the Premises”), (v) amending
Lease Paragraph 12 (“Property Insurance”) and (vi) amending and/or replacing
certain provisions of the Lease commencing as of the commencement of the Third
Extended Term of said Lease, and
     D. WHEREAS, the Lease, together with those certain Amendments described
above in Recitals B and C shall hereinafter collectively be referred to as “the
Lease Agreement”, and
     E. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by (i) acknowledging Landlord’s consent to the assignment of said Lease from
“Quantum Corporation, a Delaware corporation” to “Maxtor Corporation, a Delaware
corporation”, and (ii) replacing Lease Paragraph 42 (“Second Five Year Option to
Extend”) and Paragraph 3 to Amendment No. 1 dated April 16, 1997 (“Third Five
Year Option to Extend”) as hereinafter set forth.

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AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. ASSIGNMENT OF TENANT’S INTEREST: Notwithstanding anything to the
contrary contained in the Lease Agreement, Landlord hereby understands that
based on Quantum’s notice to Landlord, Landlord hereby acknowledges that the
following transactions have occurred:
     A. Quantum has operated its business at the Premises through two separate
business groups: Quantum HDD, tracked by Quantum HDD common stock, and Quantum
DSS, tracked by Quantum DSS common stock.
     B. On or about, October 3, 2000, Quantum and Maxtor entered into that
certain an Amended and Restated Agreement and Plan of Merger and Reorganization,
dated as of October 3, 2000 (the “Merger Agreement’), wherein they agreed that:
                    (i) Quantum will separate its Quantum HDD business from its
Quantum DSS and transfer the assets of Quantum HDD to a newly-formed subsidiary,
Insula Corporation, a Delaware corporation (“Insula”), in exchange for all of
Insula’s common stock and Insula’s agreement to be entirely responsible for all
of the Quantum HDD obligations and liabilities.
                    (ii) Immediately after such separation, each currently
outstanding share of Quantum HDD common stock will be redeemed in return for a
share of Insula common stock, such that the holders of Quantum HDD common stock
shall own all of the common stock of Insula.
                    (iii) Immediately after said redemption, Insula will merge
into Maxtor and each share of the Insula’s common stock will be converted into
the right to receive approximately 1.52 shares of Maxtor common stock, subject
to possible adjustment as described in the Merger Agreement.
     C. As part of the legal separation of the Quantum HDD business from the
Quantum DSS business, all of the right title and interest of Quantum in the
Lease will be assigned by Quantum to Insula and Insula will assume and agree to
be liable for all of the obligations of Quantum, as Tenant, under the Lease.
     As a result of said merger transaction, as of April 2, 2001, the effective
date of the merger, Maxtor will become the Tenant under the Lease Agreement, and
Maxtor shall assume all obligations of Tenant under the Lease Agreement dated
September 17, 1990, as amended.
     Landlord hereby consents to the foregoing transactions (“Landlord’s
Consent”). Except as expressly set forth below, Landlord’s Consent shall in no
way void or alter any of the terms of

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the Lease Agreement by and between Landlord and Tenant, nor shall Landlord’s
Consent alter or diminish in any way Tenant’s obligations to Landlord.
     Landlord has not reviewed the terms of any agreement between Quantum,
Insula and/or Maxtor, and Landlord shall not be bound by any agreement other
than the terms of the Lease Agreement between Landlord and Tenant. Landlord does
not make any warranties or representations as to the condition of the Leased
Premises or the terms of the Lease Agreement between Landlord and Quantum.
Landlord’s consent to the assignment shall in no way obligate Landlord to any
further consents or agreements between Quantum and/or Assignee. So long as
Quantum continues to exist as a Delaware corporation, it is agreed that both
Quantum and Maxtor will be jointly and severally liable for all the terms and
conditions of the Lease and all Amendments thereto; provided, however, that so
long as Quantum remains liable for said Lease, no material amendment to the
Lease Agreement after the date hereof shall be binding upon Quantum without the
prior written consent of Quantum, which consent shall not be unreasonably
withheld, and Quantum’s approval shall not be required on transactions related
to Landlord’s Waivers, Landlord’s Consents to Sublease and/or Landlord’s
Consents to Alterations. The foregoing, however, shall not prevent Tenant and
Landlord from entering into any such modification or amendment between
themselves.
     It is further understood that the Security Deposit of Quantum is being
transferred to Maxtor.
     2. OPTIONS TO EXTEND: As consideration for the consent of Landlord herein
set forth, Lease Paragraph 42 (“Second Five Year Option to Extend”) and
Paragraph 3 to Amendment No. I dated April 16, 1997 (“Third Five Year Option to
Extend”) are hereby deleted in their entirety and shall be replaced with the
following:
     A. SECOND FIVE YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant an
option to extend this Lease Agreement (“Option to Extend” or the “Option”) for
an additional five years (“Second Extended Term”) upon the following terms and
conditions:***
          1) Tenant shall give Landlord written notice of Tenant’s exercise of
this Option to Extend at least one hundred eighty (180) days prior to the
expiration of the Lease Term pursuant to Paragraph A hereof (not later than
April 3, 2011), in which event the Term of the Lease shall be considered
extended for an additional five (5) years, subject to the Basic Rent set forth
below and with: (i) the Basic Rent to be determined pursuant to Paragraph 2)
below; (ii) management fee and the terms and conditions subject to amendment by
Landlord (Landlord, in its sole and absolute discretion, may, but is not
required to, incorporate its then current Lease provisions that are standard in
Landlord’s leases for comparable buildings as of the date of Tenant’s exercise
of its Option to Extend); and (iii) this Paragraph 2.A thereafter deleted. In
the event that Tenant fails to timely exercise Tenant’s Option as set forth
herein in writing, Tenant shall have no further Option to Extend this Lease, and
the Lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 2.
     2) In the event Tenant timely exercises Tenant’s Option to Extend as set
forth herein, Landlord shall, within fifteen (15) days after receipt of Tenant’s
exercise of the Option, advise Tenant of any changes in the management fee and
the terms and conditions as referenced

3

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in Paragraph 2.A.1(ii) above) and the Basic Rent (which shall not be less than
the Basic Rent for the fifth year of the current Term) required for the Extended
Term of the Lease to make the Basic Rent for the Premises comparable to the then
current market triple net basic rent for comparable properties either (i) then
owned in whole or in part by the above mentioned Landlord or by members of its
immediate family in the vicinity of the Premises or (ii) if not owned by
Landlord or its family as stated herein, other third party properties in the
vicinity of the Premises. Tenant shall have five (5) days after receipt from the
Landlord of said new terms and conditions and Basic Rent in which to accept said
new terms and conditions and Basic Rent and enter into written documentation
confirming same. In the event Tenant fails to execute said written documentation
confirming said new terms and conditions and Basic Rent for the Second Extended
Term of Lease within said five (5) day period, Tenant shall have no further
Option to Extend this Lease, and this Lease shall continue in full force and
effect for the full remaining term hereof absent of this Paragraph 2, with
Landlord having no further responsibility or obligation to Tenant with respect
to Tenant’s Option to Extend.
     3) It is agreed that if Tenant is at any time prior to exercising its
Option to Extend in default of this Lease and has failed to cure the default in
the time period allowed, this Paragraph 2 shall be null and void and Tenant will
have no further rights under this Paragraph. It is further agreed that if Tenant
has exercised its Option to Extend and is subsequently in default, and has
failed to cure the default in the time period allowed by the Lease at any time
prior to, or at the time the lease commences on the Second Extended Term,
Landlord may at its sole and absolute discretion, cancel Tenant’s Option to
Extend, and this Lease will continue in full force and effect for the full
remaining Term hereof, absent of this Paragraph 2.
     4) The Option rights of Tenant under this Paragraph 2.A, and the Second
Extended Term thereunder, are granted for Tenant’s personal benefit and may not
be assigned or transferred by Tenant, except as provided for in Lease
Paragraph 56 (“Permitted Assignments and Subleases”), either voluntarily or by
operation of law, in any manner whatsoever.
     5) Notwithstanding anything to the contrary in this Paragraph, this Option
to Extend is automatically forfeited by Tenant (without notice from Landlord) in
the event Tenant is, at any time during the Term of this Lease, in default of
said Lease and if Tenant does not completely cure said default within five days
for a monetary default and thirty days for a non-monetary default (or such
longer time as permitted by cure in the Lease Agreement). In the event said
Option to Extend is forfeited as stated herein, Tenant shall have no further
Option to Extend this Lease.
     B. THIRD FIVE (5)-YEAR OPTION PERIOD: Provided Tenant has extended the
Lease for an additional five year period as set forth in Paragraph A above,
Landlord hereby grants to Tenant another Option to Extend the Lease Agreement
upon the following terms and conditions;
          1) Tenant shall give Landlord written notice of Tenant’s exercise of
this Option to Extend at least one hundred eighty (180) days prior to the
expiration of the Basic Term hereof (not later than April 3, 2016), in which
event the Term of the Lease shall be considered extended for an additional five
(5) years (“Third Extended Term”) subject to the Basic Rent set

4

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forth below and with: (i) the Basic Rent to be determined pursuant to
Paragraph 2) below; (ii) the management fee and the terms and conditions subject
to amendment by Landlord (Landlord, in its sole and absolute discretion, may,
but is not required to, incorporate its then current Lease provisions that are
standard in Landlord’s leases for comparable buildings as of the date of
Tenant’s exercise of its Option to Extend); and (iii) this Paragraph 2.B
thereafter deleted. In the event that Tenant fails to timely exercise Tenant’s
Option as set forth herein in writing, Tenant shall have no further Option to
Extend this Lease, and the Lease shall continue in full force and effect for the
full remaining term hereof, absent this Paragraph 2.B.
          2) In the event Tenant timely exercises Tenant’s Option to Extend as
set forth herein, Landlord shall, within fifteen (15) days after receipt of
Tenant’s exercise of option, advise Tenant of any changes in the management fee
and the terms and conditions as referenced in Paragraph 2.B.1 (ii) above and
Basic Rent (which shall not be less than the Basic Rent for the fifth year of
the Second Extended Term) required for the Third Extended Term of the Lease to
make the Basic Rent for the Premises comparable to the then current market
triple net basic rent for comparable properties either (i) then owned in whole
or in part by the above mentioned Landlord or by members of its immediate family
in the vicinity of the Premises or (ii) if not owned by Landlord or its family
as stated herein, other third party properties in the vicinity of the Premises.
Tenant shall have five (5) days after receipt from the Landlord of said new
terms and conditions and Basic Rent in which to accept said new terms and
conditions and Basic Rent and enter into written documentation confirming same.
In the event Tenant fails to execute said written documentation confirming said
new terms and conditions and Basic Rent for the Third Extended Term of Lease
within said five (5) day period, Tenant shall have no further Option to Extend
this Lease, and this Lease shall continue in full force and effect for the full
remaining term hereof absent of this Paragraph 2.B, with Landlord having no
further responsibility or obligation to Tenant with respect to Tenant’s Option
to Extend.
          3) It is agreed that if Tenant is at any time prior to exercising its
Option to Extend in default of this Lease and has failed to cure the default in
the time period allowed, this Paragraph 2.B will be null and void and Tenant
will have no further rights under this Paragraph. It is further agreed that if
Tenant has exercised its Option to Extend and is subsequently in default, and
has failed to cure the default in the time period allowed by the Lease at any
time prior to, or at the scheduled Commencement Date of the Third Extended Term,
Landlord may at its sole and absolute discretion, cancel Tenant’s Option to
Extend, and this Lease will continue in full force and effect for the full
remaining Term hereof, absent of this Paragraph 2.B.
          4) The Option rights of Tenant under this Paragraph 2.B and the Third
Extended Term thereunder, are granted for Tenant’s personal benefit and may not
be assigned or transferred by Tenant, except as provided for in Lease
Paragraph 56 (“Permitted Assignments and Subleases”), either voluntarily or by
operation of law, in any manner whatsoever.
          5) Notwithstanding anything to the contrary in this Paragraph 2.B,
this Option to Extend is automatically forfeited by Tenant (without notice from
Landlord) in the event Tenant is, at any time during the Term of this Lease, in
default of said Lease and if Tenant does not completely cure said default within
five days for a monetary default and thirty days for a non-monetary default (or
such longer time as permitted by cure in the Lease Agreement). In

5

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the event said Option to Extend is forfeited as stated herein, Tenant shall have
no further Option to Extend this Lease.
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said September 17, 1990 Lease Agreement, as heretofore amended, shall remain in
full force and effect.IN WITNESS WHEREOF, Landlord and Tenant have executed this
Amendment No. 2 to Lease as of the day and year last written below.

6

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LANDLORD:
  ASSIGNEE/MAXTOR:
 
   
JOHN ARRILLAGA SURVIVOR’S TRUST
  MAXTOR CORPORATION,
a Delaware corporation

              By:   /s/ John Arrillaga by attorney-in-fact, Richard Peery  
  By:   /s/ Glenn Stevens                   John Arrillaga, Trustee        

                  Glen H. Stevens           Date:   3/30/01   Print or Type Name
         

          RICHARD T. PEERY SEPARATE         PROPERTY TRUST    Title:   V.P.
General Counsel & Secretary          

              By:   /s/ Richard Peery                           Richard T.
Peery, Trustee   Date:   4/1/01              

          Date:   3/30/01   ASSIGNOR/QUANTUM          

            QUANTUM CORPORATION
a Delaware corporation
      By:  /s/ Norm Claus       Norm Claus         Print or Type Name      

              Title:   V.P. Real Estate          

               Date:   3/30/01          

7

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LEASE AGREEMENT
     THIS LEASE, made this 23rd day of March, 1994 between JOHN ARRILLAGA,
Trustee, or his Successor Trustee, UTA dated 7/20/77 (JOHN ARRILLAGA SEPARATE
PROPERTY TRUST) as amended, and RICHARD T. PEERY Trustee, or his Successor
Trustee, UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY TRUST) as
amended, hereinafter called Landlord and QUANTUM CORPORATION, a Delaware
corporation, hereinafter called Tenant.
WITNESSETH:
     Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord those certain premises (the “Premises”) outlined in red on Exhibit “A”,
attached hereto and incorporated herein by this reference thereto more
particularly described as follows:
All of that land containing approximately 5.131± acres and that certain 94,484±
square foot two-story building (“Building 5”) and parking appurtenant thereto,
to be constructed and installed by Landlord as shown within the area outlined in
Red (“Lot 5”) on Exhibit A to be located at 1100 Sumac Drive, Milpitas,
California, 95035. Said Premises is more particularly shown within the area
outlined in Red on Exhibit A attached hereto and incorporated herein by this
reference. The interior of the Leased Premises shall be improved in the
configuration as shown in Red on Exhibit B to be attached hereto and
incorporated herein by this reference. The building shell shall be constructed
in accordance with the shell and site improvement specifications set forth on
Exhibit A, and the general building elevation set forth on Exhibit A. SEE
PARAGRAPH 48.
     The word “Premises” as used throughout this lease is hereby defined to
include the nonexclusive use of sidewalks and driveways in front of or adjacent
to the Premises, and the nonexclusive use of the area directly underneath or
over such sidewalks and driveways. The gross leasable area of the building shall
be measured from outside of exterior walls to outside of exterior walls, and
shall include any atriums, covered entrances or egresses and covered loading
areas.
     Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth and Tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all of said terms,
covenants and conditions. This Lease is made upon the conditions of such
performance and observance.
     1. USE: Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances for the purpose of office,
sales and R&D and related uses necessary for the use of Tenant or any approved
assignee or subtenant to conduct its business providing any and all uses of the
Premises shall be subject to and in conformance with all governmental laws and
ordinances and for no other purpose without Landlord’s prior written consent.
Tenant shall not do or permit to be done in or about the Premises nor bring or
keep or permit to be brought or kept in or about the Premises anything which is
prohibited by or will in any way increase the existing rate of (or otherwise
affect) fire or

1

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any insurance covering the Premises or any part thereof, or any of its contents
without the prior written consent of Landlord, and provided Tenant bears any
cost related to such increased rate, or will cause a cancellation of any
insurance covering the Premises or any part thereof, or any of its contents.
Tenant shall not do or permit to be done anything in, on or about the Premises
which will in any way obstruct or interfere with the rights of other tenants or
occupants of the Premises or neighboring premises or injure or annoy them, or
use or allow the Premises to be used for any improper, immoral, unlawful or
objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance
in, on or about the Premises. No sale by auction shall be permitted on the
Premises. Tenant shall not place any loads upon the floors, walls, or ceiling
which endanger the structure, or place any harmful fluids or other materials in
the drainage system of the building, or overload existing electrical or other
mechanical systems. No waste materials or refuse shall be dumped upon or
permitted to remain upon any part of the Premises or outside of the building in
which the Premises are a part, except in trash containers placed inside exterior
enclosures designated by Landlord for that purpose or inside of the building
proper where designated by Landlord. No materials, supplies, equipment, finished
products or semi-finished products, raw materials or articles of any nature
shall be stored upon or permitted to remain outside the Premises. Tenant shall
not place anything or allow anything to be placed near the glass of any window,
door partition or wall which may appear unsightly from outside the Premises. No
loudspeaker or other device, system or apparatus which can be heard outside the
Premises shall be used in or at the Premises without the prior written consent
of Landlord. Tenant shall not commit or suffer to be committed any waste in or
upon the Premises. Tenant shall indemnify, defend and hold Landlord harmless
against any loss, expense, damage, reasonable attorneys’ fees, or liability
arising out of failure of Tenant to comply with any applicable law that governs
Tenant use of the Premises. Tenant shall comply with any covenant, condition or
restriction (“CC&R’s”) affecting the Premises. The provisions of this paragraph
are for the benefit of Landlord only and shall not be construed to be for the
benefit of any tenant or occupant of the Premises.
     2. TERM AND COMMENCEMENT DATE OF LEASE: See Paragraphs 40, 41 and 42 of
this Lease.
     3. POSSESSION: If Landlord, for any reason whatsoever other than Landlord’s
default cannot deliver possession of said premises to Tenant at the commencement
of the said term, as hereinbefore specified, this Lease shall not be void or
voidable; no obligation of Tenant shall be affected thereby; nor shall Landlord
or Landlord’s agents be liable to Tenant for any loss or damage resulting
therefrom, but in that event the commencement and termination dates of the
Lease, and all other dates affected thereby shall be revised to conform to the
date of Landlord’s delivery of possession, as specified in Paragraph 2B, above;
provided, however, it is agreed that in no event shall the Lease commence sooner
than January 1, 1995 unless the parties agree in writing to an earlier date for
the Lease to commence. The above is, however, subject to the provision that the
period of delay of delivery of the Premises shall not exceed 180 days from the
commencement date herein (except those delays caused by Acts of God, strikes,
war, utilities, governmental bodies, weather, unavailable materials, and delays
beyond Landlord’s control shall be excluded in calculating such period) in which
instance Tenant, at its option, may, by written notice to Landlord, terminate
this lease. SEE PARAGRAPH 46.

2

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     4. RENT:
          A. Basic Rent: Tenant agrees to pay to Landlord at such place as
Landlord may designate without deduction, offset, prior notice, or demand, and
Landlord agrees to accept as Basic Rent for the leased Premises the total sum of
the amount to be calculated pursuant to Paragraph 39 in lawful money of the
United States of America, payable as follows: See Paragraphs 39 through 42.
          B. Time for Payment: Full monthly rent is due in advance on the first
day of each calendar month. In the event that the term of this Lease commences
on a date other than the first day of a calendar month, on the date of
commencement of the term hereof Tenant shall pay to Landlord as rent for the
period from such date of commencement to the first day of the next succeeding
calendar month that proportion of the monthly rent hereunder which the number of
days between such date of commencement and the first day of the next succeeding
calendar month bears to thirty (30). In the event that the term of this Lease
for any reason ends on a date other than the last day of a calendar month, on
the first day of the last calendar moth of the term hereof Tenant shall pay to
Landlord as rent for the period from said first day of said last calendar month
to and including the last day of the term hereof that proportion of the monthly
rent hereunder which the number of days between said first day and said last
calendar month and the last day of the term hereof bears to thirty (30).
          C. Late Charge: Notwithstanding any other provision of this Lease, if
Tenant is in default in the payment of rental as set forth in this Paragraph 4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to the
delinquent rental due, a late charge for each rental payment in default ten
(10) days. Said late charge shall equal five percent (5%) of each rental payment
so in default. See Paragraph 49.
          D. Additional Rent: Beginning with the commencement date of the term
of this Lease, Tenant shall pay to Landlord or to Landlord’s designated agent in
addition to the Basic Rent and as Additional Rent the following:
               (a) All Taxes relating to the Premises as set forth in
Paragraph 9, and
               (b) All insurance premiums relating to the Premises, as set forth
in Paragraph 12, and
               (c) All charges, costs and expenses, which Tenant is required to
pay hereunder, together with all interest and penalties, costs and expenses
including reasonable attorneys’ fees and legal expenses, that may accrue thereto
in the event of Tenant’s failure to pay such amounts, and all damages,
reasonable costs and expenses which Landlord may incur by reason of default of
Tenant or failure on Tenant’s part to comply with the terms of this Lease. In
the event of nonpayment by Tenant of Additional Rent, Landlord shall have all
the rights and remedies with respect thereto as Landlord has for nonpayment of
rent.
     The Additional Rent due hereunder shall be paid to Landlord or Landlord’s
agent (i) within five days after presentation of invoice from Landlord or
Landlord’s agent setting forth such Additional Rent and/or (ii) at the option of
Landlord, Tenant shall pay to Landlord monthly,

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in advance. Tenant’s prorata share of an amount estimated by Landlord to be
Landlord’s approximate average monthly expenditure for such Additional Rent
items, which estimated amount shall be reconciled at the end of each calendar
year as compared to Landlord’s actual expenditure for said Additional Rent
items, with Tenant paying to Landlord, upon demand, any amount of actual
expenses expended by Landlord in excess of said estimated amount, or Landlord
refunding to Tenant (providing Tenant is not in default in the performance of
any of the terms, covenants and conditions of this Lease in which case such
amount shall be held by Landlord as a credit for Tenant’s account until such
default has been cured any amount of estimated payments made by Tenant in excess
of Landlord’s actual expenditures for said Additional Rent Items.
     The respective obligations of Landlord and Tenant under this paragraph
shall survive the expiration or other termination of the term of this Lease, and
if the term hereof shall expire or shall otherwise terminate on a day other than
the last day of a calendar year, the actual Additional Rent incurred for the
calendar year in which the term hereof expires or otherwise terminates shall be
determined and settled on the basis of the statement of actual Additional Rent
for such calendar year and shall be prorated in the proportion which the number
of days in such calendar year preceding such expiration or termination bears to
365.
          E. Place of Payment of Rent and Additional Rent: All Basic Rent
hereunder and all payments hereunder for Additional Rent shall be paid to
Landlord at the office of Landlord at Peery/Arrillaga, File 1504, P.O. Box
60000, San Francisco, CA 94160 or to such other person or to such other place as
Landlord may from time to time designate in writing.
          F. Security Deposit: Concurrently with Tenant’s execution of this
Lease, Tenant shall deposit with Landlord the sum of THREE HUNDRED SIX THOUSAND
ONE HUNDRED TWENTY EIGHT AND 16/100 Dollars ($306,128.16). Said sum shall be
held by Landlord as the Security Deposit for the faithful performance by Tenant
of all of the terms, covenants, and conditions of this Lease to be kept and
performed by Tenant during the term hereof. If Tenant defaults with respect to
any provision of this Lease including, but not limited to, the provisions
relating to the payment of rent and any of the monetary sums due herewith.
Landlord may (but shall not be required to) use, apply or retain all or any part
of this Security Deposit for the payment of any other amount which Landlord may
spend by reason of Tenant’s default or to compensate Landlord for any other loss
or damage which Landlord may suffer by reason of Tenant’s default. If any
portion of said Deposit is so used or applied, Tenant shall, within ten
(10) days after written demand therefore, deposit cash with Landlord in the
amount sufficient to restore the Security Deposit to its original amount.
Tenant’s failure to do so shall be a material breach of this Lease. Landlord
shall not be required to keep this Security Deposit separate from its general
funds, and Tenant shall not be entitled to interest on such Deposit. If Tenant
fully and faithfully performs every provision of this Lease to be performed by
it, the Security Deposit or any balance thereof shall be returned to Tenant (or
at Landlord’s option, to the last assignee of Tenant’s interest hereunder) at
the expiration of the Lease term and after Tenant has vacated the Premises. In
the event of termination of Landlord’s interest in this Lease, Landlord shall
transfer said Deposit to Landlord’s successor in interest whereupon Tenant
agrees to release Landlord from liability for the return of such Deposit or the
accounting therefor. SEE PARAGRAPH 50.

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     5. ACCEPTANCE AND SURRENDER OF PREMISES: By entry hereunder, Tenant accepts
the Premises as being in good and sanitary order, condition and repair and
accepts the building and improvements included in the Premises in their present
condition and without representation or warranty by Landlord as to the condition
of such building or as to the use or occupancy which may be made thereof. Any
exceptions to the foregoing must be by written agreement executed by Landlord
and Tenant. Tenant agrees on the last day of the Lease term, or on the sooner
termination of this Lease, to surrender the Premises promptly and peaceably to
Landlord in good condition and repair (damage by Acts of God, fire, normal wear
and tear excepted), with all interior walls cleaned so that they appear freshly
painted, and repaired and replaced, if damaged; all floors cleaned and waxed;
all carpets cleaned and shampooed; all broken, marred or nonconforming
acoustical ceiling tiles replaced; all windows washed; the airconditioning and
heating systems serviced by a reputable and licensed service firm and in good
operating condition and repair; the plumbing and electrical systems and lighting
in good order and repair, including replacement of any burned out or broken
light bulbs or ballasts; the lawn and shrubs in good condition including the
replacement of any dead or damaged plantings; the sidewalk, driveways and
parking areas in good order, condition and repair; together with all
alterations, additions, and improvements which may have been made in, to, or on
the Premises (except moveable trade fixtures installed at the expense of Tenant)
except that Tenant shall ascertain from Landlord within ninety (90) days before
the end of the term of this Lease whether Landlord desires to have the Premises
or any part or parts thereof restored to their condition and configuration as
when the Premises were delivered to Tenant and if Landlord shall so desire, then
Tenant shall restore said Premises or such part or parts thereof before the end
of this Lease at Tenant’s sole cost and expense. Tenant, on or before the end of
the term or sooner termination of this Lease, shall remove all of Tenant’s
personal property and trade fixtures from the Premises, and all property not so
removed on or before the end of the term or sooner termination of this Lease
shall be deemed abandoned by Tenant and title to same shall thereupon pass to
Landlord without compensation to Tenant. Landlord may, upon termination of this
Lease, remove all moveable furniture and equipment so abandoned by Tenant, at
Tenant’s sole cost, and repair any damage caused by such removal at Tenant’s
sole cost. If the Premises be not surrendered at the end of the term or sooner
termination of this Lease, Tenant shall indemnify Landlord against loss or
liability resulting from the delay by Tenant in so surrendering the Premises
including, without limitation, any claims made by any succeeding tenant founded
on such delay. Nothing contained herein shall be construed as an extension of
the term hereof or as a consent of Landlord to any holding over by Tenant. The
voluntary or other surrender of this Lease or the Premises by Tenant or a mutual
cancellation of this Lease shall not work as a merger and, at the option of
Landlord, shall either terminate all or any existing subleases or subtenancies
or operate as an assignment to Landlord of all or any such subleases or
subtenancies. SEE PARAGRAPH 51.
     6. ALTERATIONS AND ADDITIONS: Tenant shall not make, or suffer to be made,
any alteration or addition to the Premises, or any part thereof, without the
written consent of Landlord first had and obtained by Tenant (such consent not
to be unreasonably withheld), but at the cost of Tenant, and any addition to, or
alteration of, the Premises, except moveable furniture and trade fixtures, shall
at once become a part of the Premises and belong to Landlord. Landlord reserves
the right to approve all contractors and mechanics proposed by Tenant to make
such alterations and additions. Tenant shall retain title to all moveable
furniture and trade

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fixtures placed in the Premises. All heating, lighting, electrical
airconditioning, partitioning, drapery, carpeting, and floor installations made
by Tenant, together with all property that has become an integral part of the
Premises, shall not be deemed trade fixtures. Tenant agrees that it will not
proceed to make such alteration or additions, without having obtained consent
from Landlord to do so, and until five (5) days from the receipt of such
consent, in order that Landlord may post appropriate notices to avoid any
liability to contractors or material suppliers for payment for Tenant’s
improvements. Tenant will at all times permit such notices to be posted and to
remain posted until the completion of work. Tenant shall, if required by
Landlord, secure at Tenant’s own cost and expense, a completion and lien
indemnity bond, satisfactory to Landlord, for such work. Tenant further
covenants and agrees that any mechanic’s lien filed against the Premises for
work claimed to have been done for, or materials claimed to have been furnished
to Tenant, will be discharged by Tenant, by bond or otherwise, within ten
(10) days after the filing thereof, at the cost and expense of Tenant. Any
exceptions to the foregoing must be made in writing and executed by both
Landlord and Tenant. Tenant receives notice of SEE PARAGRAPH 51.
     7. TENANT MAINTENANCE: Tenant shall, at its sole cost and expense, keep and
maintain the Premises (including appurtenances) and every part thereof in a high
standard of maintenance and repair, or replacement, and in good sanitary
condition. Tenant’s maintenance and repair responsibilities herein referred to
include, but are not limited to, janitorization, all windows (interior and
exterior), window frames, plate glass and glazing (destroyed by accident or act
of third parties), truck doors, plumbing systems (such as water and drain lines,
sinks, toilets, faucets, drains, showers and water fountains), electrical
systems (such as panels, conduits, outlets, lighting fixtures, lamps, bulbs,
tubes and ballasts), heating and airconditioning systems (such as compressors,
fans, air handlers, ducts, mixing boxes, thermostats, time clocks, boilers,
heaters, supply and return grills), structural elements and exterior surfaces of
the floor coverings, partitioning, ceilings, doors (both interior and exterior),
including closing mechanisms, latches, locks, skylights (if any), automatic fire
extinguishing systems, and elevators and all other interior improvements of any
nature whatsoever, and all exterior improvements including but not limited to
landscaping, sidewalks, driveways, parking lots including striping and sealing,
sprinkler systems, lighting, ponds, fountains, waterways, and drains. Tenant
agrees to provide carpet shields under all rolling chairs or to otherwise be
responsible for wear and tear of the carpet caused by such rolling chairs if
such wear and tear exceeds that caused by normal foot traffic in surrounding
areas. Areas of excessive wear shall be replaced at Tenant’s sole expense upon
Lease termination. Tenant hereby waives all rights under, and benefits of,
Subsection 1 of Section 1932 and Section 1941 and 1942 of the California Civil
Code and under any similar law, statute or ordinance now or hereafter in effect.
In the event any of the above maintenance responsibilities apply to any other
tenants(s) of Landlord where there is common usage with other tenant(s), such
maintenance responsibilities and charges shall be allocated to the leased
Premises by square footage or other equitable basis as calculated and determined
by Landlord. SEE PARAGRAPH 52.
     8. UTILITIES: Tenant shall pay promptly, as the same become due, all
charges for water, gas, electricity, telephone, telex and other electronic
communication service, sewer service, waste pick-up and any other utilities,
materials or services furnished directly to or used by Tenant on or about the
Premises during the term of this Lease, including, without limitation,

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any temporary or permanent utility surcharge or other exactions whether or not
hereinafter imposed. In the event the above charges apply to any other tenant(s)
of Landlord where there is common usage with other tenant(s), such charges shall
be allocated to the leased Premises by square footage or other equitable basis
as calculated and determined by Landlord.
     Landlord shall not be liable for and Tenant shall not be entitled to any
abatement or reduction of rent by reason of any interruption or failure of
utility services to the Premises when such interruption or failure is caused by
accident, breakage, repair, strikes, lockouts, or other labor disturbances or
labor disputes of any nature, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord.
     9. TAXES:
     A. Notwithstanding the following and pursuant to the terms of the Option
Agreement dated October 31, 1989 related to this Lease Tenant is responsible for
paying all real estate taxes and assessments assessed against the Premises
leased hereunder from August 27, 1990, the date Tenant exercised its first
option under the Option Agreement dated October 31, 1989. As Additional Rent and
in accordance with Paragraph 4D of this Lease, Tenant shall pay to Landlord, or
if Landlord so directs, directly to the Tax Collector, all Real Property Taxes
relating to the Premises. In the event the Premises leased hereunder consist of
only a portion of the entire tax parcel, Tenant shall pay to Landlord Tenant’s
proportionate share of such real estate taxes allocated to the leased Premises
by square footage or other reasonable basis as calculated and determined by
Landlord. If the tax billing pertains 100% to the leased Premises, and Landlord
chooses to have Tenant pay said real estate taxes directly to the Tax Collector,
then in such event it shall be the responsibility of Tenant to obtain the tax
and assessment bills and pay, prior to delinquency, the applicable real property
taxes and assessments pertaining to the leased Premises, and failure to receive
a bill for taxes and/or assessments shall not provide a basis for cancellation
of or nonresponsiblity for payment of penalties for nonpayment or late payment
by Tenant. The term “Real Property Taxes”, as used herein, shall mean (i) all
taxes, assessments, levies and other charges of any kind or nature whatsoever,
general and special, foreseen and unforeseen (including all installments of
principal and interest required to pay any general or special assessments for
public improvements and any increases resulting from reassessments caused by any
change in ownership of the Premises) now or hereafter imposed by any
governmental or quasi-governmental authority or special district having the
direct or indirect power to tax or levy assessments, which are levied or
assessed against, or with respect to the value, occupancy or use of, all or any
portion of the Premises (as now constructed or as may at any time hereafter be
constructed, altered or otherwise changed) or Landlord’s interest therein; any
improvements located within the Premises (regardless of ownership); the
fixtures, equipment and other property of Landlord, real or personal, that are
an integral part of and located in the Premises; or parking areas, public
utilities, or energy within the Premises; (ii) all charges, levies or fees
imposed by reason of environmental regulation or other governmental control of
the Premises; and (iii) all costs and fees (including reasonable attorneys’
fees) incurred by Landlord in reasonably contesting any Real Property Tax and in
negotiating with public authorities as to any Real Property Tax. If at any time
during the term of this Lease the taxation or assessment of the Premises
prevailing as of the commencement date of this Lease shall be altered so that in
lieu of or in addition to any Real Property Tax described above there shall be
levied, assessed or

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imposed (whether by reason of a change in the method of taxation or assessment,
creation of a new tax or charge, or any other cause) an alternate or additional
tax or charge (i) on the value, use or occupancy of the Premises or Landlord’s
interest therein or (ii) on or measured by the gross receipts, income or rentals
from the Premises, on Landlord’s business of leasing the Premises, or computed
in any manner with respect to the operation of the Premises, then any such tax
or charge, however designated, shall be included within the meaning of the term
“Real Property Taxes” for purposes of this Lease. If any Real Property Tax is
based upon property or rents unrelated to the Premises, then only that part of
such Real Property Tax that is fairly allocable to the Premises shall be
included within the meaning of the term “Real Property Taxes”. Notwithstanding
the foregoing, the term “Real Property Taxes” shall not include estate,
inheritance, gift or franchise taxes of Landlord or the federal or state net
income tax imposed on Landlord’s income from all sources. SEE PARAGRAPH 53.
          B. Taxes on Tenant’s Property: Tenant shall be liable for and shall
pay ten days before delinquency, taxes levied against any personal property or
trade fixtures placed by Tenant in or about the Premises. If any such taxes on
Tenant’s personal property or trade fixtures are levied against Landlord or
Landlord’s property or if the assessed value of the Premises is increased by the
inclusion therein of a value placed upon such personal property or trade
fixtures of Tenant and if Landlord, after written notice to Tenant, pays the
taxes based on such increased assessment, which Landlord shall have the right to
do regardless of the validity thereof, but only under proper protest if
requested by Tenant, Tenant shall upon demand, as the case may be, repay to
Landlord the taxes so levied against Landlord, or the proportion of such taxes
resulting from such increase in the assessment; provided that in any such event
Tenant shall have the right, in the name of Landlord and with Landlord’s full
cooperation, to bring suit in any court of competent jurisdiction to recover the
amount of such taxes so paid under protest, and any amount so recovered shall
belong to Tenant.
     10. LIABILITY INSURANCE: Tenant, at Tenant’s expense, agrees to keep in
force during the term of this Lease a policy of comprehensive general liability
insurance for bodily injury and property damage occurring in, on or about the
Premises, including parking and landscaped areas, in the amount of $2,000,000
combined single limit. Such insurance shall be primary and on noncontributory as
respects any insurance carried by Landlord. The policy or policies effecting
such insurance shall name Landlord as additional insureds, and shall insure any
liability of Landlord, contingent or otherwise, as respects acts or omissions of
Tenant, its agents, employees or invitees or otherwise by any conduct or
transactions of any of said persons in or about or concerning the Premises,
including any failure of Tenant to observe or perform any of its obligations
hereunder; shall be issued by an insurance company admitted to transact business
in the State of California; and shall provide that the insurance effected
thereby shall not be canceled, except upon thirty (30) days’ prior written
notice to Landlord. A copy of said policy shall be delivered to Landlord. If,
during the term of this Lease, in the considered opinion of Landlord’s Lender,
insurance advisor, or counsel, the amount of insurance described in this
Paragraph 10 is not adequate, Tenant agrees to increase said coverage to such
reasonable amount as Landlord’s Lender, insurance advisor, or counsel shall deem
adequate.
     11. TENANT’S PERSONAL PROPERTY INSURANCE AND WORKMAN’S COMPENSATION
INSURANCE: Tenant shall maintain a policy or policies of fire and

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property damage insurance in “all risk” form with a sprinkler leakage
endorsement insuring the personal property, inventory, trade fixtures, and
leasehold improvements within the leased Premises for the full replacement value
thereof. The proceeds from any of such policies shall be used for the repair or
replacement of such items so insured.
     Tenant shall also maintain a policy or policies of workman’s compensation
insurance and any other employee benefit insurance sufficient to comply with all
laws.
     12. PROPERTY INSURANCE: Landlord shall purchase and keep in force, and as
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord Tenant’s proportionate share (allocated to the leased Premises
by square footage or other equitable basis as calculated and determined by
Landlord) of the cost of, policy or policies or insurance covering loss or
damage to the Premises (excluding routine maintenance and repairs and incidental
damage or destruction caused by accidents or vandalism for which Tenant is
responsible under Paragraph 7) in the amount of the full replacement value
thereof, providing protection against those perils included within the
classification of “all risks” insurance and flood and/or earthquake insurance,
if available, plus a policy of rental income insurance in the amount of one
hundred (100%) percent of twelve (12) months Basic Rent, plus sums paid as
Additional Rent. If such insurance cost is increased due to Tenant’s use of the
Premises, Tenant agrees to pay to Landlord the full cost of such increase.
Tenant shall have no interest in nor any right to the proceeds of any insurance
procured by Landlord for the Premises.
     Landlord and Tenant do each hereby respectively release the other, to the
extent of insurance coverage of the releasing party, from any liability for loss
or damage caused by fire or any of the extended coverage casualties included in
the releasing party’s insurance policies, irrespective of the cause of such fire
or casualty; provided, however, that if the insurance policy of either releasing
party prohibits such waiver, then this waiver shall not take effect until
consent to such waiver is obtained. If such waiver is so prohibited, the insured
party affected shall promptly notify the other party thereof. SEE PARAGRAPH 54.
     13. INDEMNIFICATION: Landlord shall not be liable to Tenant and Tenant
hereby waives all claims against landlord for any injury to or death of any
person or damage to or destruction of property in or about the Premises by or
from any cause whatsoever, including, without limitation, gas, fire, oil,
electricity or leakage of any charter from the roof, walls, basement or other
portion of the Premises but excluding, however, the negligence of Landlord, its
agents, servants, employees, invitees, or contractors of which negligence
Landlord has knowledge and reasonable time to correct. Except as to injury to
persons or damage to property the principal cause of which is the negligence of
Landlord, and subject to the last two sentences of Paragraph 12, Tenant shall
hold Landlord harmless from and defend Landlord against any and all expenses,
including reasonable attorneys’ fees, in connection therewith, arising out of
any injury to or death of any person or damage to or destruction of property
occurring in, on or about the Premises, or any part thereof, from any cause
whatsoever.
     14. COMPLIANCE: Tenant, at its sole cost and expense, shall promptly comply
with all laws, statutes, ordinances and governmental rules, regulations or
requirements now or hereafter in effect; with the requirements of any board of
fire underwriters or other similar body

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now or hereafter constituted; and with any direction or occupancy certificate
issued pursuant to law by any public officer; provided, however, that no such
failure shall be deemed a breach of the provisions if Tenant, immediately upon
notification, commences to remedy or rectify said failure. The judgment of any
court of competent jurisdiction or the admission of Tenant in any action against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
such law, statute, ordinance or governmental rule, regulation, requirement,
direction or provision, shall be conclusive of that fact as between Landlord and
Tenant. Tenant shall, at its sole cost and expense, comply with any and all
requirements pertaining to said Premises, of any insurance organization or
company, necessary for the maintenance of reasonable fire and public liability
insurance covering requirements pertaining to said Premises, of any insurance
organization or company, necessary for the maintenance of reasonable fire and
public liability insurance covering the Premises. SEE PARAGRAPHS 44 AND 52.
     15. LIENS: Tenant shall keep the Premises free from any liens arising out
of any work performed, materials furnished or obligation incurred by Tenant. In
the event that Tenant shall not, within ten (10) days following Tenant’s receipt
of notice of the imposition of such lien, cause the same to be released of
record, Landlord shall have, in addition to all other remedies provided herein
and by law, the right, but no obligation, to cause the same to be released by
such means as it shall deem proper, including payment of the claim giving rise
to such lien. All sums paid by Landlord for such purpose, and all expenses
incurred by it in connection therewith, shall be payable to Landlord by Tenant
on demand with interest at the prime rate of interest as quoted by the Bank of
America.
     16. ASSIGNMENT AND SUBLETING: Tenant shall not assign, transfer, or
hypothecate the leasehold estate under this Lease, or any interest therein, and
shall not sublet the Premises, or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person or entity to occupy or sue the
Premises, or any portion thereof, without, in each case, the prior written
consent of Landlord which consent will not be unreasonably withheld. In the
event Tenant is allowed to assign, transfer or sublet the whole or any part of
the Premises, with the prior written consent of Landlord, no assignee,
transferee or subtenant shall assign or transfer this Lease, either in whole or
in part, or sublet the whole or any part of the Premises, without also having
obtained the prior written consent of Landlord. A consent of Landlord to one
assignment, transfer, hypothecation, subletting, occupation or use by any other
person shall not release Tenant from any of Tenant’s obligations hereunder or be
deemed to be a consent to any subsequent similar or dissimilar assignment,
transfer, hypothecation, subletting, occupation or use by any other person. Any
such assignment, transfer, hypothecation, subletting, occupation or use without
such consent shall be void and shall constitute a breach of this Lease by Tenant
and shall, at the option of Landlord exercised by written notice to Tenant,
terminate this Lease. The leasehold estate under this Lease shall not, nor shall
any interest therein, be assignable for any purpose by operation of law without
the written consent of Landlord. As a condition to its consent, Landlord may
require Tenant to pay all reasonable expenses in connection with the assignment,
and Landlord may require Tenant’s assignee or transferee (or other assignees or
transferees) to assume in writing all of the obligations under this Lease and
for Tenant to remain liable to Landlord under this Lease. SEE PARAGRAPHS 55 AND
56.

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     17. SUBORDINATION AND MORTGAGES: In the event Landlord’s title or leasehold
interest is now or hereafter encumbered by a deed of trust, upon the interest of
Landlord in the land and buildings in which the demised Premises are located, to
secure a loan from a lender (hereinafter referred to as “Lender”) to Landlord,
Tenant shall, at the request of Landlord or Lender, execute in writing an
agreement subordinating its rights under this Lease to the lien of such deed of
trust, or, if so requested, agreeing that the lien of Lender’s deed of trust
shall be or remain subject and subordinate to the rights of Tenant under this
Lease. Notwithstanding any such subordination, Tenant’s possession under this
Lease shall not be disturbed if Tenant is not in default and so long as Tenant
shall pay all rent and observe and perform all of the provisions set forth in
this Lease. SEE PARAGRAPH 57.
     18. ENTRY BY LANDLORD: Landlord reserves, and shall at all reasonable times
have, the right to enter the Premises to inspect them; to perform any services
to be provided by Landlord hereunder; to make repairs or provide any services to
a contiguous tenant(s); to submit the Premises to prospective purchasers,
mortgagers or tenants; to post notices of nonresponsibility; and to alter,
improve or repair the Premises or other parts of the building, all without
abatement of rent, and may erect scaffolding and other necessary structures in
or through the Premises where reasonably required by the character of the work
to be performed; provided, however that the business of Tenant shall be
interfered with to the least extent that is reasonably practical. Any entry to
the Premises by Landlord for the purposes provided for herein 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, actual or constructive, of Tenant
from the Premises or any portion thereof. SEE PARAGRAPH 58.
     19. BANKRUPTCY AND DEFAULT: The commencement of a bankruptcy action or
liquidation action or reorganization action or insolvency action or an
assignment of or by Tenant for the benefit of creditors, or any similar action
undertaken by Tenant, or the insolvency of Tenant, shall, at Landlord’s option,
constitute a breach of this Lease by Tenant. If the trustee or receiver
appointed to serve during a bankruptcy, liquidation, reorganization, insolvency
or similar action elects to reject Tenant’s unexpired Lease, the trustee or
receiver shall notify Landlord in writing of its election within thirty
(30) days after an order for relief in a liquidation action or within thirty
(30) days after the commencement of any action.
     Within thirty (30) days after court approval of the assumption of this
Lease, the trustee or receiver shall cure (or provide adequate assurance to the
reasonable satisfaction of Landlord that the trustee or receiver shall cure) any
and all previous defaults under the unexpired Lease and shall compensate
Landlord for all actual pecuniary loss and shall provide adequate assurance of
future performance under said Lease to the reasonable satisfaction of Landlord.
Adequate assurance of future performance, as used therein, includes, but shall
not be limited to: (i) assurance of source and payment of rent, and other
consideration due under this Lease; (ii) assurance that the assumption or
assignment of this Lease will not breach substantially any provision, such as
radius, location, use, or exclusivity provision, in any agreement relating to
the above described Premises.
     Nothing contained in this section shall affect the existing right of
Landlord to refuse to accept an assignment upon commencement of or in connection
with a bankruptcy, liquidation,

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reorganization or insolvency action or an assignment of Tenant for the benefit
of creditors or other similar act. Nothing contained in this Lease shall be
construed as giving or granting or creating an equity in the demised Premises to
Tenant. In no event shall the leasehold estate under this Lease, or any interest
therein, be assigned by voluntary or involuntary bankruptcy proceeding without
the prior written consent of Landlord. In no event shall this Lease or any
rights or privileges hereunder be an asset of Tenant under any bankruptcy,
insolvency or reorganization proceedings.
     The failure to perform or honor any covenant, condition or representation
made under this Lease shall constitute a default hereunder by Tenant upon
expiration of the appropriate grace period hereinafter provided. Tenant shall
have a period of ten (10) days from the date of written notice from Landlord
within which to cure any default in the payment of rental or adjustment thereto.
Tenant shall have a period of thirty (30) days from the date of written notice
from Landlord within which to cure any other default under this Lease. Upon an
uncured default of this Lease by Tenant, Landlord shall have the following
rights and remedies in addition to any other rights or remedies available to
Landlord at law or in equity:
               (a)The rights and remedies provided for by California Civil Code
Section 1951.2, including but not limited to, recovery of the worth at the time
of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of rental loss for the same period
that Tenant proves could be reasonably avoided, as computed pursuant to
subsection (b) of said Section 1951.2.
               (b)The rights and remedies provided by California Civil Code
Section which allows Landlord to continue the Lease in effect and to enforce all
of its rights and remedies under this Lease, including the right to recover rent
as it becomes due, for so long as Landlord does not terminate Tenant’s right to
possession; acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver upon Landlord’s initiative to protect its
interest under this Lease shall not constitute a termination of Tenant’s right
to possession.
               (c)The right to terminate this Lease by giving notice to Tenant
in accordance with applicable law.
               (d)The right and power, after compliance with all statutory
requirements and in any event on not less than three (3) business days prior
written notice, to enter the Premises and remove therefrom all persons and
property, to store such property in a public warehouse or elsewhere at the cost
of and for the account of Tenant, and to sell such property and apply such
proceeds therefrom pursuant to applicable California law. Landlord, may from
time to time sublet the Premises or any part thereof for such term or terms
(which may extend beyond the term of this Lease) and at such rent and such other
terms as Landlord in its reasonable sole discretion may deem advisable, with the
right to make alterations and repairs to the Premises. Upon each subletting,
(i) Tenant shall be immediately liable to pay Landlord, in addition to
indebtedness other than rent due hereunder, the reasonable cost of such
subletting, including, but not limited to, reasonable attorneys’ fees, and any
real estate commissions actually paid, and the cost of such reasonable
alterations and repairs incurred by Landlord and the

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amount, if any, by which the rent hereunder for the period of such subletting
(to the extent such period does not exceed the term hereof) exceeds the amount
to be paid as rent for the Premises for such period or (ii) at the option of
Landlord, rents received from such subletting shall be applied first to payment
of indebtedness other than rent due hereunder from Tenant to Landlord; second,
to the payment of any costs of such subletting and or such alterations and
repairs; third to payment of rent due and unpaid hereunder; and the residue, if
any, shall be held by Landlord and applied in payment of future rent as the same
becomes due hereunder. If Tenant has been credited with any rent to be received
by such subletting under option (i) and such rent shall not be promptly paid to
Landlord by the subtenant(s), or if such rentals received from such subletting
under option (ii) during any month be less than that to be paid during that
month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord.
Such deficiency shall be calculated and paid monthly. No taking possession of
the Premises by Landlord, shall be construed as an election on its part to
terminate this Lease unless a written notice of such intention be given to
Tenant. Notwithstanding any such subletting without termination, Landlord may at
any time hereafter elect to terminate this Lease for such previous breach.
               (e)The right to have a receiver appointed for Tenant upon
application by Landlord, to take possession of the Premises and to apply any
rental collected from the Premises and to exercise all other rights and remedies
granted to Landlord pursuant to subparagraph d above. SEE PARAGRAPH 59.
     20. ABANDONMENT: Tenant shall not vacate or abandon the Premises at any
time during the term of this Lease; and if Tenant shall abandon, vacate or
surrender said Premises, or be dispossessed by the process of law, or otherwise,
any personal property belonging to Tenant and left on the Premises shall be
deemed to be abandoned, at the option of Landlord, except such property as may
be mortgaged to Landlord. SEE PARAGRAPH 60.
     21. DESTRUCTION: In the event the Premises are destroyed in whole or in
part from any cause, except for routine maintenance and repairs and incidental
damage and destruction caused from vandalism and accidents for which Tenant is
responsible, under Paragraph 7 Landlord may, at its option:
               (a)Rebuild or restore the Premises to their condition prior to
the damage or destruction, or
               (b)Terminate this Lease.
     If Landlord does not give Tenant notice in writing within thirty (30) days
from the destruction of the Premises of its election to either rebuild and
restore them, or to terminate this Lease, Landlord shall be deemed to have
elected to rebuild or restore them, in which event Landlord agrees, at its
expense, promptly to rebuild or restore the Premises to their condition prior to
the damage or destruction. Tenant shall be entitled to a reduction in rent while
such repair is being made in the proportion that the area of the Premises
rendered untenantable by such damage bears to the total area of the Premises. If
Landlord does not complete the rebuilding or restoration within one hundred
eighty (180) days following the date of destruction (such period of time to be
extended for delays caused by the fault or neglect of Tenant or because of Acts
of God, acts of public agencies, labor disputes, strikes, fires, freight
embargos, rainy or

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stormy weather, inability to obtain materials, supplies or fuels, acts of
contractors or subcontractors, or delay of the contractors or subcontractors due
to such causes or other contingencies beyond the control of landlord), then
Tenant shall have the right to terminate this Lease by giving fifteen (15) days
prior written notice to Landlord. Notwithstanding anything herein to the
contrary, Landlord’s obligation to rebuild or restore shall be limited to the
building and interior improvements constructed by Landlord as they existed as of
the commencement date of the Lease and shall not include restoration of Tenant’s
trade fixtures, equipment, merchandise, or any improvements, alterations or
additions made by Tenant to the Premises, which Tenant shall forthwith replace
or fully repair at Tenant’s sole cost and expense provided this Lease is not
cancelled according to the provisions above.
     Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect. Tenant hereby expressly waives the
provisions of Section 1932, Subdivision 2, in Section 1933, Subdivision 4 of the
California Civil Code.
     In the event that the building in which the Premises are situated is
damaged or destroyed to the extent of not less than 331/3% of the replacement
cost thereof, Landlord may elect to terminate this Lease, whether the Premises
be injured or not. In the event the destruction of the Premises is caused by
Tenant. Tenant shall pay the deductible portion of Landlord’s insurance
proceeds. SEE PARAGRAPH 61.
     22. EMINENT DOMAIN: If all or any part of the Premises shall be taken by
any public or quasi-public authority under the power of eminent domain or
conveyance in lieu thereof, this Lease shall terminate as to any portion of the
Premises so taken or conveyed on the date when title vests in the condemnor, and
Landlord shall be entitled to any and all payment, income, rent, award, or any
interest therein whatsoever which may be paid or made in connection with such
taking or conveyance, and Tenant shall have no claim against Landlord or
otherwise for the value of any unexpired term of this Lease. Notwithstanding the
foregoing paragraph, any compensation specifically awarded Tenant for loss of
business, Tenant’s personal property, moving cost or loss of goodwill shall be
and remain the property of Tenant.
     If any action or proceeding is commenced for such taking of the Premises or
any part thereof, of it Landlord is advised in writing by any entity or body
having the right or power of condemnation of its intention to condemn the
premises or any portion thereof, then Landlord shall have the right to terminate
this Lease by giving Tenant written notice thereof within sixty (60) days of the
date of receipt of said written advice, or commencement of said action or
proceeding, or taking conveyance, which termination shall take place as of the
first to occur of the last day of the calendar month next following the month in
which such notice is given or the date on which title to the Premises shall vest
in the condemnor.
     In the event of such a partial taking or conveyance of the Premises, if the
portion of the Premises taken or conveyed is so substantial that the Tenant can
no longer reasonably conduct its business, Tenant shall have the privilege of
terminating this Lease within sixty (60) days from the date of such taking or
conveyance, upon written notice to Landlord of its intention so to do, and upon
giving of such notice this Lease shall terminate on the last day of the calendar
month

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next following the month in which such notice is given, upon payment by Tenant
of the rent from the date of such taking or conveyance to the date of
termination.
     If a portion of the Premises be taken by condemnation or conveyance in lieu
thereof and neither Landlord nor Tenant shall terminate this Lease as provided
herein, this Lease shall continue in full force and effect as to the part of the
Premises not so taken or conveyed, and the rent herein shall be apportioned as
of the date of such taking or conveyance so that thereafter the rent to be paid
by Tenant shall be in the ratio that the area of the portion of the Premises not
so taken or conveyed bears to the total area of the Premises prior to such
taking. SEE PARAGRAPH 62.
     23. SALE OF CONVEYANCE BY LANDLORD: In the event of a sale or conveyance of
the Premises or any interest therein, by any owner of the reversion then
constituting Landlord, the transferor shall thereby be released from any further
liability upon any of the terms, covenants or conditions (express or implied)
herein contained in favor of Tenant, and in such event, insofar as such transfer
is concerned. Tenant agrees to look solely to the responsibility of the
successor in interest of such transferor in and to the Premises and this Lease.
This Lease shall not be affected by any such sale or conveyance, and Tenant
agrees to attorn to the successor in interest of such transferor. SEE PARAGRAPH
63.
     24. ATTORNMENT TO LENDER OR THIRD PARTY: In the event the interest of
Landlord in the land and buildings in which the leased Premises are located
(whether such interest of Landlord is a fee title interest or a leasehold
interest) is encumbered by deed of trust, and such interest is acquired by the
lender or any third party through judicial foreclosure or by exercise of a power
of sale at private trustee’s foreclosure sale. Tenant hereby agrees to attorn to
the purchaser at any such foreclosure sale and to recognize such purchaser as
the Landlord under this Lease. In the event the lien of the deed of trust
securing the loan from a Lender to Landlord is prior and paramount to the Lease,
this Lease shall nonetheless continue in full force and effect for the remainder
of the unexpired term hereof, at the same rental herein reserved and upon all
the other terms, conditions and covenants herein contained.
     25. HOLDING OVER: Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in this Lease. Any holding over after the expiration or other termination of the
term of this Lease, with the consent of Landlord, shall be construed to be a
tenancy from month to month, on the same terms and conditions herein specified
insofar as applicable except that the monthly Basic Rent shall be increased to
an amount equal to one hundred twenty five (125%) percent of the monthly Basic
Rent required during the last month of the Lease term.
     26. CERTIFICATE OF ESTOPPEL: Either party shall at any time upon not less
than ten (10) days prior written notice from the other party execute,
acknowledge and deliver to the requesting party 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) and the date to which the
rent and other charges

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are paid in advance, if any, and (ii) acknowledging that there are not, to the
best of such party’s knowledge, any uncured defaults on the part of the other
party hereunder, or specifying such defaults, if any, are claimed. Any such
statement may be conclusively relied upon by any prospective purchaser or
encumbrancer of the Premises. A party’s failure to deliver such statement within
such time shall be conclusive upon the party receiving such request that this
Lease is in full force and effect, without modification except as may be
represented by Landlord; that there are no uncured defaults in the requesting
party’s performance, and that not more than one month’s rent has been paid in
advance.
     27. CONSTRUCTION CHANGES: It is understood that the description of the
Premises and the location of ductwork, plumbing and other facilities therein are
subject to such minor changes as Landlord or Landlord’s architect determines to
be desirable in the course of construction of the Premises, and no such changes
shall affect this Lease or entitle Tenant to any reduction of rent hereunder or
result in any liability of Landlord to Tenant. Landlord does not guarantee the
accuracy of any drawings supplied to Tenant and verification of the accuracy of
such drawing resists with Tenant.
     28. RIGHT OF LANDLORD TO PERFORM: All terms, covenants and conditions of
this Lease to be performed or observed by Tenant shall be performed or observed
by Tenant at Tenant’s sole cost and expense and without any reduction of rent.
If Tenant shall fail to pay any sum of money, or other rent, required to be paid
by it hereunder or shall fail to perform any other term or covenant hereunder on
its part to be performed, and such failure shall continue for five (5) days
after written notice thereof by Landlord, Landlord, without waiving or releasing
Tenant from any obligation of Tenant hereunder, may, but shall not be obliged
to, make any such payment or perform any such other term or covenant on Tenant’s
part to be performed. All sums so paid by Landlord and all necessary costs of
such performance by Landlord together with interest thereon at the rate of the
prime rate of interest per annum as quoted by the Bank of America from the date
of such payment on performance by Landlord, shall be paid (and Tenant covenants
to make such payment) to Landlord on demand by Landlord, and Landlord shall have
(in addition to any other right or remedy of Landlord) the same rights and
remedies in the event of nonpayment by Tenant as in the case of failure by
Tenant in the payment of rent hereunder.
29. ATTORNEYS’ FEES:
          A. In the event that either Landlord or Tenant should bring suit for
the possession of the Premises, for the recovery of any sum due under this
Lease, or because of the breach of any provision of this Lease, or for any other
relief against the other party hereunder, then all costs and expenses, including
reasonable attorneys’ fees, incurred by the prevailing party therein shall be
paid by the other party, which obligation on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action and
shall be enforceable whether or not the action is prosecuted to judgment.
          B. Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant’s occupancy hereunder, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including a
reasonable attorney’s fee.

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     30. WAIVER: The waiver by either party of the other party’s failure to
perform or observe any term, covenant or condition herein contained to be
performed or observed by such waiving party shall not be deemed to be a waiver
of such term, covenant or condition or of any subsequent failure of the party
failing to perform or observe the same or any other such term, covenant or
condition therein contained, and no custom or practice which may develop between
the parties hereto during the term hereof shall be deemed a waiver of, or in any
way affect, the right of either party to insist upon performance and observance
by the other party in strict accordance with the terms hereof.
     31. NOTICES: All notices, demands, requests, advices or designations which
may be or are required to be given by either party to the other hereunder shall
be in writing. All notices, demands, requests, advices or designations by
Landlord to Tenant shall be sufficiently given, made or delivered if personally
served on Tenant by leaving the same at the Premises of if sent by United Stated
certified or registered mail, postage prepaid, addressed to Tenant at the
Premises. All notices, demands, requests, advices or designations by Tenant to
Landlord shall be sent by United States certified or registered mail, postage
prepaid, addressed to Landlord at its offices at Peery/Arrillaga, 2560 Mission
College Blvd., Suite 101, Santa Clara, CA 95054. Each notice, request, demand,
advice or designation referred to in this paragraph shall be deemed received on
the date of the personal service or mailing thereof in the manner herein
provided, as the case may be.
     32. EXAMINATION OF LEASE: Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument is not effective as a lease or otherwise until its execution
and delivery by both Landlord and Tenant.
     33. DEFAULT BY LANDLORD: Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but
in no event earlier than (30) days after written notice by Tenant to Landlord
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have heretofore been furnished to Tenant in
writing, specifying wherein Landlord has failed to perform such obligations;
provided, however, that if the nature of Landlord’s obligations is such that
more than thirty (30) days are required for performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
     34. CORPORATE AUTHORITY: If Tenant is a corporation (or a partnership),
each individual executing this Lease on behalf of said corporation (or
partnership) represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of said corporation (or partnership) in accordance
with the by-laws of said corporation (or partnership in accordance with the
partnership agreement) and that this Lease is binding upon said corporation (or
partnership) in accordance with its terms. If Tenant is a corporation, Tenant
shall, within thirty (30) days after execution of this Lease, deliver to
Landlord a certified copy of the resolution of the Board of Directors of said
corporation authorizing or ratifying the execution of this Lease.
     35. INTENTIONALLY LEFT BLANK

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     36. LIMITATION OF LIABILITY: In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord:
               (a) the sole and exclusive remedy shall be against Landlord and
Landlord’s assets;
               (b) no partner of Landlord shall be sued or named as a party in
any suit or action (except as may be necessary to secure jurisdiction of the
partnership);
               (c) no service of process shall be made against any partner of
Landlord (except as may be necessary to secure jurisdiction of the partnership);
               (d) no partner of Landlord shall be required to answer or
otherwise plead to any service of process;
               (e) no judgment will be taken against any partner of Landlord;
               (f) any judgment taken against any partner of Landlord may be
vacated and set aside at any time without hearing;
               (g) no writ of execution will every be levied against the assets
of any partner of Landlord;
               (h) these covenants and agreements are enforceable both by
Landlord and also by any partner of Landlord.
     Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or at common law.
     37. SIGNS: No sign, placard, picture, advertisement, name or notice shall
be inscribed, displayed or printed or affixed on or to any part of the outside
of the Premises or any exterior windows of the Premises without the written
consent of Landlord first had and obtained and Landlord shall have the right to
remove any such sign, placard, picture, advertisement, name or notice without
notice to and at the expense of Tenant. If Tenant is allowed to print or affix
or in any way place a sign in, on, or about the Premises, upon expiration or
other sooner termination of this Lease, Tenant at Tenant’s sole cost and expense
shall both remove such sign and repair all damage in such a manner as to restore
all aspects of the appearance of the Premises to the condition prior to the
placement of said sign.
     All approved signs or lettering on outside doors shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person reasonably approved of
by Landlord.
     Tenant shall not place anything or allow anything to be placed near the
glass of any window, door partition or wall which may appear unsightly from
outside the Premises.

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     38. MISCELLANEOUS AND GENERAL PROVISIONS
          A. Use of Building Name: Tenant shall not, without the written consent
of Landlord, use the name of the building for any purpose other than as the
address of the business conducted by Tenant in the Premises.
          B. Choice of Law; Severability: This Lease shall in all respects be
governed by and construed in accordance with the laws of the State of
California. If any provision of this Lease shall be invalid, unenforceable or
ineffective for any reason whatsoever, all other provisions hereof shall be and
remain in full force and effect.
          C. Definition of Terms: The term “Premises” includes the space leased
hereby and any improvements now or hereafter installed therein or attached
thereto. The term “Landlord” or any pronoun used in place thereof includes the
plural as well as the singular and the successors and assigns of Landlord. The
term “Tenant” or any pronoun used in place thereof includes the plural as well
as the singular and individuals, firms, associations, partnerships and
corporations, and their and each of their respective heirs, executors,
administrators, successors and permitted assigns, according to the context
hereof and the provisions of this Lease shall inure to the benefit of and bind
such heirs, executors, administrators, successors and permitted assigns.
     The term “person” includes the plural as well as the singular and
individuals, firms, associations, partnerships and corporations. Words used in
any gender include other genders. If there be more than one Tenant the
obligations of Tenant hereunder are joint and several. The paragraph headings of
this Lease are for convenience of reference only and shall have no effect upon
the construction or interpretation of any provision hereof.
          D. Time of Essence: Time is of the essence of this Lease and of each
and all of its provisions.
          E. Quitclaim: At the expiration or earlier termination of this Lease,
Tenant shall execute, acknowledge and deliver to Landlord, within ten (10) days
after written demand from Landlord to Tenant, any quitclaim deed or other
document required by any reputable title company, licensed to operate in the
State of California, to remove the cloud or encumbrance created by this Lease
from the real property of which Tenant’s Premises are a part.
          F. Incorporation of Prior Agreements; Amendments: This agreement and
the exhibits and attachments may be altered, amended or revoked only by an
instrument in writing signed by both Landlord and Tenant. Landlord and Tenant
agree hereby that all prior or contemporaneous oral agreements between and among
themselves and their agents or representatives relative to the leasing of the
Premises are merged in or revoked by this agreement.
          G. Recording: Landlord and Tenant shall record a short form memorandum
hereof in the form attached hereto as Exhibit D.
          H. Amendments for Financing: Tenant further agrees to execute any
amendments reasonably required by a lender to enable Landlord to obtain
financing, so long as

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Tenant’s rights hereunder are not materially and adversely affected and there is
no change in the Basic Rent, Options to Renew, Lease Term or Construction
obligations of Landlord.
          I. Additional Paragraphs: Paragraphs 39 through 64 are added hereto
and are included as a part of this lease.
          J. Clauses, Plats and Riders: Clauses, plats and riders, if any,
signed by Landlord and Tenant and endorsed on or affixed to this Lease are a
part hereof.
          K. Diminution of Light, Air or View: Tenant covenants and agrees that
no diminution or shutting off of light, air or view by any structure which may
be hereafter erected (whether or not by Landlord) shall in any way affect his
Lease, entitle Tenant to any reduction of rent hereunder or result in any
liability of Landlord to Tenant.
     IN WITNESS THEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year first above written.

                      LANDLORD:       TENANT:    
 
                    JOHN ARRILLAGA SEPARATE       QUANTUM CORPORATION    
PROPERTY TRUST       a Delaware corporation    
 
                   
By
  /s/ John Arrillaga       By   /s/ Deborah E. Barber    
 
                   
 
  John Arrillaga, Trustee                
 
                   
 
          Title   Vice President, Human Resources    
 
                   
 
                    RICHARD T. PEERY SEPARATE                 PROPERTY TRUST    
           
 
                   
By
  /s/ Richard T. Peery                
 
                   
 
  Richard T. Peery, Trustee                

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Paragraphs 39 through 64 to Lease Agreement dated March 23, 1994, By and Between
JOHN ARRILLAGA AND RICHARD T. PEERY SEPARATE PROPERTY TRUSTS, as Landlord, and
QUANTUM CORPORATION, a Delaware corporation, as Tenant for 94,484 ± Square Feet
of Space Located at 1100 Sumac Drive, Milpitas, California.
     39. BASIC RENT: In accordance with Paragraph 4A, subject to the provisions
of Paragraphs 40 and 41, Basic Rent shall be payable as follows during the
indicated months of the term of the Lease based upon the gross leasable area
within the building that is part of the Premises:

      Period   Monthly Basic Rent
Months 1-12 (plus the partial calendar month, if any, following the
Commencement Date)
  $1.32/sf
 
   
Months 13-24
  $1.37/sf
 
   
Months 25-36
  $1.42/sf
 
   
Months 37-48
  $1.47/sf
 
   
Months 49-60
  $1.52/sf
 
   
Months 61-72
  $1.57/sf
 
   
Months 73-84
  $1.62/sf
 
   
Months 85-96
  $1.67/sf
 
   
Months 97-108
  $1.72/sf
 
   
Months 109-120
  $1.77/sf
 
   
Months 121-132
  $1.82/sf
 
   
Months 133-141
  $1.87/sf

     Example of calculation of Basic Rent per month for the period commencing
with the first through the twelfth months of said Lease:

         
Square footage of Building
    94,484  
Per square foot Basic Monthly Rent
    x $1.32  
 
     
Basic Rent per Month
  $ 124,718.88  
 
     

 
*   In the event this Lease commences on June 1, 1995 or thereafter, the Basic
Rent schedule shown above may be amended in accordance with Article I.F.2.(b)(1)
entitled “Basic Monthly Rental” of Option Agreement dated October 31, 1989
between the parties.

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     40. LEASE TERM AND COMMENCEMENT DATE: The following provisions relate to
the commencement and duration of the term of this Lease:
          A. Lease Term: The term of this Lease shall commence on the
“Commencement Date” (as defined herein) which is projected to be January 1,
1995, and shall continue for a period of eleven years nine months plus the
partial calendar month, if any, in which the Commencement Date occurs, subject
to the terms of this Lease and subject to (i) earlier termination rights of
Landlord in accordance with the provisions of this Lease, and (ii) extension
pursuant to the options to renew granted by Paragraphs 41 and 42, and the
provisions of this Paragraph 40.C.
          B. Commencement Date Defined: As used herein, the term “Commencement
Date” shall mean the later to occur of the following: (i) the date upon which
the “Improvements” are “Substantially Completed”; or (ii) January I, 1995;
provided, however, that if prior to the later of such dates Tenant’s operating
personnel enter into occupancy of the Premises and commence the operation of
Tenant’s business within the Premises, the Commencement Date shall be the date
such personnel of Tenant so enter into occupancy of the Premises. The term
“Substantially Completed” and/or “Substantial Completion” shall mean the date
when all of the following have occurred with respect to the Improvements in
question: (i) the construction of the Improvements in question has been
substantially completed in accordance with the approved plans therefor except
for punch list items which do not prevent Tenant from reasonably using the
Premises to conduct Tenant’s business; (ii) Landlord has executed a certificate
or statement representing that the Improvements in question have been
substantially completed in accordance with the plans and specifications therefor
except for the punch list items which do not prevent Tenant from reasonably
using the Premises to conduct Tenant’s business; and (iii) the Building
Department of the City of Milpitas has completed its final inspection of such
Improvements and has “signed off” the building inspection card approving such
work as complete except for punch list items which do not prevent Tenant from
reasonably using the Premises to conduct Tenant’s business. Notwithstanding the
foregoing, Substantial Completion of the Interior Improvements shall not be
deemed to have occurred until Landlord has obtained final or conditional
approval from the Fire Department of the City of Milpitas that the Improvements
have been completed in accordance with such department’s requirements (subject
only to conditions that do not prevent Tenant from occupying the Improvements).
          C. Lease Terms Co-extensive: It is acknowledged that (i) Landlord and
Tenant have previously executed four separate leases. Two of said leases dated
October 31, 1989 are for Premises located at 1130 Bellew Drive and 490 McCarthy
Blvd., Milpitas, California (the “1989 Leases”; one of said leases dated
September 17, 1990 is for Premises located at 1000 Sumac Drive, Milpitas,
California, and one of said leases dated April 10, 1992 is for Premises located
at 900 Sumac Drive, Milpitas, California (hereinafter collectively referred to
as the “Existing Leases”), and (ii) it is the intention of the parties that the
term of this Lease be co-extensive with the term of the Existing Leases, such
that the terms of all five leases (“the Leases”) expire on the same date. It is
hereby agreed that following the date upon which the Commencement Date of this
Lease becomes established as a date certain following completion of improvements
and satisfaction of any other conditions related to determining such date, the
term of this Lease may be extended to coincide with the termination dates of the
Existing Leases,

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however, in no event will the term of this Lease be for a period of less than
ten (10) years nor will the termination dates of the Existing Leases be prior to
the termination date of this Lease. As soon as the parties are able to implement
the provisions of this Paragraph because the Commencement Date of this Lease has
been determined following completion of improvements and satisfaction of other
appropriate conditions, the parties shall execute an amendment to (i) this Lease
establishing the applicable Commencement Date in accordance with the foregoing
provisions of this Paragraph 40C, the actual rent based upon the measurements of
the completed building covered by this Lease as certified prior to the
Commencement Date by an architect or general contractor reasonably approved by
the parties, and the actual date for each rent adjustment provided for in this
Lease, based upon the actual Lease Commencement Date. The provisions of this
Paragraph 40C also requires the terms of all the Leases to be extended
accordingly if Tenant exercises its Option to Extend under any of the Leases.
The monthly Basic Rent during the extended term under each of the Leases shall
be increased by $.05 per square foot on the commencement date of the extended
term and thereafter on each and every anniversary of the respective lease
Commencement Date.
     41. FIRST FIVE-YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant an
option to extend the term of this Lease for an additional five (5) year period
upon the following terms and conditions:
          A. If Tenant elects to exercise the option to extend, Tenant shall
give Landlord written notice of Tenant’s exercise of this option to extend at
lease one hundred eighty (180) days prior to the expiration of the Basic Term
hereof, in which event the Lease shall be considered extended for an additional
five (5) year period upon the same terms and conditions as this Lease, absent
this Paragraph 41 and subject to the rental as set forth below. In the event
that Tenant fails to timely exercise Tenant’s option as set forth herein in
writing, Tenant shall have no further option to extend this Lease, and this
Lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 41.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

      Period   Monthly Basic Rent
Months 1-12
  $1.92/sf
Months 13-24
  $1.97/sf
Months 25-36
  $2.02/sf
Months 37-48
  $2.07/sf
Months 49-60
  $2.12/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to renew granted by this Paragraph 41 at any time that Tenant is in
material default of its obligations under this Lease, if Tenant has received
written notice from Landlord that Tenant is in default, and such default has not
been timely cured within the time period provided for in this Lease; provided,
however, that if such default of Tenant is not for money due under this Lease
and cannot be cured, and if Landlord does not elect to terminate this Lease as a
result of such non-curable default by Tenant, Tenant may exercise the option to
extend granted by this Paragraph 41 notwithstanding such non-curable default.

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     42. SECOND FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the
Lease for an additional five (5) year period as set forth in Paragraph 41,
Landlord hereby grants to Tenant an option to extend the term of this Lease for
an additional five (5) year period upon the following terms and conditions:
          A. Tenant shall give Landlord written notice of Tenant’s exercise of
this option to extend at least one hundred eighty (180) days prior to the
expiration of the Lease term as extended pursuant to Paragraph 41, in which
event the Lease shall be considered extended for an additional five (5) year
period upon the same terms and conditions as this Lease, absent this
Paragraph 42.A and subject to the rental as set forth below. In the event that
Tenant fails to timely exercise Tenant’s option as set forth herein in writing,
Tenant shall have no further option to extend this Lease, and this Lease shall
continue in full force and effect for the full remaining term hereof, absent
this Paragraph 42.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

      Period   Monthly Basic Rent
Months 1-12
  $2.17/sf
Months 13-24
  $2.22/sf
Months 25-36
  $2.27/sf
Months 37-48
  $2.32/sf
Months 49-60
  $2.37/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to extend granted by this Paragraph 42 at any time that Tenant is in
material default of its obligations under this Lease, if Tenant has received
written notice from Landlord that Tenant is in default, and such default has not
been timely cured within the time period provided for in this Lease; provided,
however, that if such default of Tenant is not for money due under this Lease
and cannot be cured, and if Landlord does not elect to terminate this Lease as a
result of such non-curable default by Tenant, Tenant may exercise the option to
extend granted by this Paragraph 42 notwithstanding such non-curable default.
     43. ASSESSMENT CREDITS: The demised property herein is subject to a special
assessment levied by the City of Milpitas in Improvement District No. 12. As a
part of said special assessment proceedings, additional bonds were sold and
assessments levied to provide for construction contingencies and reserve funds.
Interest will be earned on such funds created for contingencies and on reserve
funds which will be credited for the benefit of said assessment district. To the
extent surpluses are created in said district through unused contingency funds,
interest earnings or reserve funds, such surpluses shall be deemed the property
of Landlord. Notwithstanding that such surpluses may be credited on assessments
otherwise due against the demised premises, Tenant shall pay to Landlord, as
additional rent if, and at the time of any such credit of surpluses, an amount
equal to all such surpluses so credited
     44. HAZARDOUS MATERIALS: The parties agree as follows with respect to the
existence or the use of hazardous material on the Premises:

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          A. Tenant shall have no obligations to “clean up”, to comply with any
law regarding, or to reimburse, release, indemnify, or defend Landlord with
respect to any hazardous materials or wastes which Tenant or other parties on
the Premises did not store, dispose, or transport in, use, or cause to be on the
Premises in violation of applicable law during the term of this Lease. Any
handling, transportation, storage, treatment, disposal or use of hazardous
materials by Tenant or other parties in or about the Premises during the term of
this Lease shall strictly comply with all applicable laws and regulations.
Tenant will be 100 percent liable and responsible for any and all “clean up” of
said toxic waste and/or hazardous materials contamination which Tenant, its
agents, or future subtenants, if any, does store, dispose, or transport in, use
or cause to be on the Premises in violation of applicable law or governing
agency(s) or which originate on Premises, during the term of this Lease from any
manner whatsoever, including but not limited to, dumping by others, (or which
originate on the surface of the Premises any time after October 28, 1989, the
date the Option Agreement dated October 31, 1989 related to said Lease was
executed by all parties, and before the Commencement Date of this Lease, but
excluding Hazardous Materials on the Premises prior to the Lease Commencement
Date because of the storage, use, disposal, or transportation of such materials
or waste by any of Landlord’s contractors or otherwise arising out of
construction work performed by or under the direction of Landlord on the
Premises and Landlord shall be responsible for all required actions with respect
to such materials or wastes), and will indemnify Landlord and hold Landlord
harmless from any liabilities, demands, costs, expenses and damages, including
attorney fees incurred as a result of any claims resulting from such
contamination, or from any claims for personal injury or property damage or
diminution in the value of the Premises caused by the use, storage, disposal or
transportation of hazardous materials on the Premises by Tenant or other parties
during the term of this Lease. It is agreed that the Tenant’s responsibilities
related to toxic waste and hazardous materials will survive the termination date
of the Lease. Tenant agrees to complete compliance with governmental regulations
regarding use or removal or remediation of Hazardous Materials used, stored,
disposed, transported or caused to be on the Premises by Tenant or its agents or
subtenants, or which originate on the Premises during the term of this Lease,
and prior to the termination of said Lease Tenant agrees to follow the proper
closure procedures and will obtain a clearance from the local fire department
and/or the appropriate city agency. Tenant also agrees to install such toxic
waste and/or hazardous materials monitoring devices as Landlord reasonably deems
necessary to monitor any use of hazardous materials by Tenant, its agents or
subtenants, originating from the Premises during the Lease term, if recommended
by a qualified environmental consulting firm.
          B. Landlord hereby makes the following representations to Tenant, each
of which is made only to the best of Landlord’s knowledge as of the date
Landlord executes this Lease, without any inquiry or investigation having been
made or required by Landlord regarding this subject, nor does Landlord have any
obligation to investigate or make inquiry regarding the subject:
               (1) The soil and ground water on or under the Premises does not
contain hazardous materials in amounts which violate any laws to the extent that
any governmental entity could require either Landlord or Tenant to take any
remedial action with respect to such hazardous materials.

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               (2) During the time that Landlord has owned the Premises,
Landlord has received no notice of (i) any violation, or alleged violation, of
any law that has not been corrected to the satisfaction of the appropriate
authority, (ii) any pending claims relating to the presence of hazardous
material on the Premises, or (iii) any pending investigation by any governmental
agency concerning the Premises relating to hazardous materials.
          C. Landlord and Tenant shall each give written notice to the other as
soon as reasonably practicable of (i) any communication received from any
governmental authority concerning hazardous materials which relates to the
Premises, and (ii) any contamination of the Premises by hazardous materials
which constitutes a violation of any law. If during the Lease term Tenant
proposes to use other hazardous materials at the Premises, Tenant shall inform
Landlord of such use, identifying the hazardous materials and the manner of
their use, storage and disposal, and shall agree (i) to use, store and dispose
of such materials strictly in compliance with all laws and (ii) that the
indemnity set forth in Paragraph 44A shall be applicable to Tenant’s use of such
material.
          D. Landlord or Tenant may, at any time, cause testing wells to be
installed on the Premises, and may cause the ground water to be tested to detect
the presence of hazardous material by the use of such tests as are then
customarily used for such purposes. Testing wells installed by Tenant shall be
paid by Tenant. If tests conducted by Landlord disclose that Tenant has violated
any hazard materials laws, or Tenant or parties on the Premises during the term
of this Lease have contaminated the Premises as determine by regulatory agencies
pursuant to hazardous materials laws, or that Tenant has liability to Landlord
pursuant to Paragraph 44A, then Tenant shall pay for 100 percent of the cost of
the test and all related expense. Prior to the expiration of the Lease term,
Tenant shall remove any testing wells it has installed at the Premises, and
return the Premises to the condition existing prior to the installation of such
wells, unless Landlord requests in writing that Tenant leave all or some of the
testing wells in which instance the wells requested to be left shall not be
removed.
          E. If any tests performed by Tenant or Landlord prior to the
Commencement Date disclose hazardous materials at the Premises, Landlord at its
expense will promptly take all reasonable action required by law with respect to
the existence of such materials at the Premises. The Commencement Date shall not
be delayed because of such action by Landlord unless occupation of the Premises
is prohibited by law.
          F. The obligations of Landlord and Tenant under this Paragraph 45
shall survive the expiration or earlier termination of the term of this Lease.
The rights and obligations of Landlord and Tenant with respect to issues
relating to hazardous materials are exclusively established by this
Paragraph 44.
     45. APPROVALS: Whenever this Lease requires the approval or consent of
either Landlord or Tenant before an action may be taken, such approval or
consent shall not be unreasonably withheld or delayed.
     46. LANDLORD’S RIGHT TO TERMINATE: It is understood that the Premises to be
leased by Tenant are to be constructed by Landlord, and that Landlord is
required to obtain the necessary building permits for the building shell before
construction of said Premises can

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commence. Therefore, it is agreed that in the event Landlord cannot obtain all
the necessary building permits for the building shell by June 1, 1994, then
either Landlord or Tenant can terminate this Lease by written notice to the
other party given within thirty (30) days thereafter, without any liability to
the other party of any type whatsoever, and that this Lease Agreement shall be
null and void as of the date of receipt of such notice. Landlord agrees to use
its best efforts to obtain the required permits by June 1, 1994.
     47. CROSS DEFAULT: As set forth in Paragraph 40C, Landlord and Tenant have
entered into other leases referred to herein as the “Existing Leases”. As a
material part of the consideration for the execution of this Lease by Landlord,
it is agreed between Landlord and Tenant that a default under this Lease, or a
default under any of the Existing Leases may, at the option of Landlord, be
considered a default under all leases, in which event Landlord shall be entitled
(but in no event required) to apply all rights and remedies of Landlord under
the terms of one lease to all the Leases including, but not limited to, the
right to terminate any or all of the aforementioned Existing Leases or this
Lease by reason of a default under the Leases or hereunder.
     48. SUBDIVISION: With respect to the development of the Premises:
     Landlord and Tenant agree that the Premises and all of Parcels 1, 2, 3, 4,
and 5 shown on that certain parcel map, recorded on July 23, 1990 in Book 616 of
Maps, Page 20 (the “Larger Parcel”) during (and limited to) the term of this
Lease shall be developed and used only in accordance with a master plan,
developed by Landlord. The parties have mutually agreed to a Master Plan for the
general development of the Premises and the Larger Parcel which is attached
hereto as Exhibit “Al” and entitled “Master Site Plan”. Said Master Site Plan
sets forth the buildings and land to be leased under this Lease (Building 5 on
Lot 5), the 1989 Leases (Buildings 1 and 2 on Lots 1 and 2, respectively), the
1990 Lease (Building 4 on Lot 4) and the 1992 Lease (Building 3 on Lot 3) as
well as the general location of the parking and landscaping pertaining thereto.
The parties agree that the Master Site Plan may be modified provided that (i) a
perimeter driveway is developed in front of each building which generally runs
near and parallel with the street surrounding the 37 ¹ acre site, (ii) all
buildings will be similar and generally architecturally compatible, (iii) a
landscape area is developed along the frontage of all streets between the street
and parking area closest to the street and (iv) a landscape and recreation area
at the rear of Lot 4 (as shown on the Site Plan) is developed when a building is
constructed on Lot 4. The parties agree that (i) Landlord may change the Master
Plan, shape and sizes of the buildings, parking and landscaping as long as the
general development concept set forth above is generally followed by Landlord,
and (ii) any successor or assign of Landlord or Tenant shall be required to
consent and agree to develop the Premises and the Larger Parcel in accordance
with the foregoing, and shall be deemed to have assumed the obligation to so
develop such property by acceptance of a deed, assignment or other means of
transfer of Landlord’s or Tenant’s interest in such property or any portion
thereof, as the case may be. Further, the memorandum of lease to be recorded by
Landlord and Tenant pursuant to Paragraph 38G shall contain the following
statement:

    “The Lease provides that from and after the commencement date of the 1989
Leases (as defined in the Lease) and continuing for a period of fifteen
(15) years, or the date of termination of the Lease, whichever first occurs, the
Premises and

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    the larger 37.096 acre parcel which the Premises were originally included,
and which is described on the attached Exhibit “A”, incorporated herein by this
reference, shall be developed by Landlord and Tenant or their successors or
assigns, as more particularly set forth in the Lease, so that (i) a perimeter
driveway is developed in front of each building which generally runs near and
parallel with the street surrounding the 37? acre site, (ii) a landscape area is
developed along the frontage of all streets between the street and parking area
closest to the street, (iii) a landscape and recreation area at the rear of Lot
4 (as shown on the Site Plan identified in the Lease) is developed when a
building is constructed on Lot 4, and (iv) all buildings will be similar and
generally architecturally compatible, it being agreed that Landlord may change
the shape and sizes of the buildings, parking and landscaping as long as the
general development concept set forth above and in the Lease is generally
followed by Landlord. If a Public Agency requires modifications to the lot lines
as shown on the Master Plan, the parties agree to reasonable lot line
modifications.”

     49. LIMITATION ON IMPOSITION OF LATE CHARGE: Notwithstanding anything
contained in Paragraph 4C, if Tenant is delinquent in the payment of Basic Rent
or Additional Rent and is subject to a late charge, Landlord agrees to waive the
late charge if the Basic Rent or Additional Rent due is paid within five days of
Landlord’s written notice to Tenant of the delinquent amount owed and provided
Tenant has not been delinquent in its payment of Basic Rent or Additional Rent
owed under the Lease or the Existing Leases during the twelve (12) month period
preceding the rent delinquency in question.
     50. SECURITY DEPOSIT: The following provisions shall modify Paragraph 4F:
          A. Within thirty (30) days after the expiration or earlier termination
of the Lease term and after Tenant has vacated the Premises, Landlord shall
return to Tenant the entire Security Deposit except for amounts that Landlord
has deducted therefrom that are needed by Landlord to cure defaults of Tenant
under the Lease or compensate Landlord for damages for which Tenant is liable
pursuant to this Lease. The use or disposition of the Security Deposit shall be
subject to the provisions of California Civil Code Section 1950.7.
          B. During the first thirty (30) days following execution of this Lease
Agreement, Tenant shall have the one-time option of satisfying its obligation
with respect to an amount equal to one-half (1/2) ($153,064.08) of the
$306,128.16 Security Deposit required under Paragraph 4.C. by providing to
Landlord, at Tenant’s sole cost, a letter of credit which (i) is drawn upon an
institutional lender reasonably acceptable to Landlord, (ii) is in the amount of
one-half (1/2) of the Security Deposit, (iii) is for a term of at lease twelve
(12) months, (iv) with respect to any letter of credit in effect within the six
month period immediately prior to the expiration of the Lease term, shall
provide that the term of such letter of credit shall extend at least thirty
(30) days past the Lease expiration date, (v) may be drawn upon by Landlord upon
submission of a declaration of Landlord that Tenant is in default (as defined in
Paragraph 19 and as modified by Paragraph 59). Landlord shall not be obligated
to furnish proof of default to such institutional lender, and Landlord shall
only be required to give the institutional lender written notification that
Tenant is in default and upon receiving such written notification from Landlord
the institutional lender shall be obligated to immediately deliver cash to
Landlord equal to the

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amount Landlord may spend or become obligated to spend by reason of Tenant’s
default or to compensate Landlord for any loss or damage which Landlord may
suffer by reason of Tenant’s default up to 1/2 of the total Security Deposit
required under Paragraph 4.f., (vi) shall provide that if the letter of credit
is not renewed, replaced or extended within twenty (20) days of its expiration
date the issuer of the credit shall automatically make payment of the amount of
the letter of credit directly to Landlord after the date which is twenty
(20) days before the expiration date, and no later than the expiration date,
without Landlord being required to make demand upon the letter of credit, and
(vii) is otherwise in form and content reasonably satisfactory to Landlord. If
Tenant provides Landlord with a letter of credit, within thirty (30) days of the
execution of this Lease, meeting the foregoing requirements, one-half (1/2) of
the cash Security Deposit (i.e., $153,064.08 of the $306,128.16 Deposit) shall
be returned to Tenant by Landlord inasmuch as the cash deposit remaining and the
Letter of Credit equal the total Security Deposit required in Paragraph 4F. If
Tenant defaults with respect to any provisions of this Lease, including but not
limited to provisions relating to the payment of rent, Landlord may (but shall
not be required to) draw down on the letter of credit for payment of any sum
which Landlord may spend or become obligated to spend by reason of Tenant’s
default, or to compensate Landlord for any loss or damage which Landlord may
suffer by reason of Tenant’s default. Landlord and Tenant acknowledge that such
letter of credit will be treated as if it were a cash security deposit, and such
letter of credit may be drawn down upon by Landlord upon demand and presentation
of evidence of the identity of Landlord to the issuer, in the event that Tenant
defaults with respect to any provision of this Lease and such default is not
cured within any applicable cure period. Notwithstanding anything to the
contrary in this Lease, Landlord shall not be obligated to furnish proof of
default to such institutional lender and Landlord is only required to give the
institutional lender written notification that Tenant is in default and upon
receiving such written notification from Landlord the institutional lender shall
be obligated to immediately deliver cash to Landlord equal to the amount
Landlord may spend or become obligated to spend by reason of Tenant’s default,
or to compensate Landlord for any loss or damage which Landlord may suffer by
reason of Tenant’s default up to 1/2 of the total Security Deposit. Landlord
acknowledges that it is not entitled to draw down such letter of credit unless
Landlord would have been entitled to draw upon the cash security deposit
pursuant to the terms of Paragraph 4F of the Lease. Concurrently with the
delivery of the required information to the issuer, Landlord shall deliver to
Tenant written evidence of the default upon which the draw down was based,
together with evidence that Landlord has provided to Tenant the written notice
of such default which was required under the applicable provision of the Lease,
and evidence of the failure of Tenant to cure such default within the applicable
grace period following receipt of such notice of default. Any proceeds received
by Landlord by drawing upon the letter of credit shall be applied in accordance
with the provisions governing the Security Deposit imposed by Paragraph 4F and
this Paragraph 50. If Landlord draws upon the letter of credit, thereafter
Tenant shall once again shall have the right to post a letter of credit in place
of one-half (1/2) of a cash Security Deposit so long as Tenant is not then in
default. In any event Tenant will be obligated to replenish the amount drawn to
restore the Security Deposit to its original amount as provided for in
Paragraph 4F. If any portion of the letter of credit is used or applied pursuant
hereto, Tenant shall, within ten (10) days after receipt of a written demand
therefor from Landlord, restore and replace the value of such security by either
(i) depositing cash with Landlord in the amount equal to the sum drawn down
under the letter of credit, or (ii) increasing the letter of credit to its value
immediately prior to such application. Tenant’s failure to replace

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the value of the security as provided in the preceding sentence shall be a
material breach of its obligation under this Lease.
     51. ALTERATIONS MADE BY TENANT: The provisions of this Paragraph 51 shall
modify Paragraphs 5 and 6:
          A. As used herein, the term “Alteration” shall mean any alteration,
addition or improvement made by Tenant to the Premises during the term of the
Lease, but shall not include Tenant’s trade fixtures so long as such trade
fixtures are not installed in such a manner that they have become an integral
part of the building.
          B. Tenant shall not construct any Alterations or otherwise alter the
Premises without Landlord’s prior written approval: (i) if Tenant is in default
under this Lease or any of the Existing Leases, or (ii) if Tenant is not in
default under this Lease or any of the Existing Leases and if the total cost of
such Alterations exceeds $20,000 per the scope of any single remodeling job to
the Premises, or if such Alteration is structural in nature. Any other
non-structural Alteration of less than $20,000 for the total cost of the
remodeling job may be undertaken by Tenant without Landlord’s prior written
approval but with the understanding that Tenant shall be obligated to restore
the Premises as set forth in Paragraph 5 at the termination of this Lease,
except as otherwise provided in Paragraph 51.D. Notwithstanding the foregoing,
Tenant shall have the right to reconfigure modular freestanding walls and
partitions without Landlord’s prior consent, which have been installed by Tenant
and paid for by Tenant.
          C. At all times during the Lease Term (i) Tenant shall maintain and
keep up dated “as-built” plans for all Alterations constructed by Tenant, and
(ii) Tenant shall provide to Landlord copies of such “as-built” plans as such
Alterations are made.
          D. Provided Tenant is not in default under this Lease or under any of
the Existing Leases, Tenant shall have the right to remove at any time during
the Lease term or prior to the expiration thereof any (i) process equipment such
as clean hoods, thermal cycling chambers, freon piping, high temperature
furnaces, air handlers and special air-conditioning, and (ii) process systems
such as compressed air or processed exhaust systems and (iii) the clean room
modules and all related process equipment which are paid for 100% by Tenant
(excluding building standard HVAC, electrical, plumbing and other building
standard systems which are an integral part of the building not related to
Tenant’s clean room modules or other special purpose process equipment or
systems), which systems, equipment and modules the parties agree for the
purposes of this Lease shall be deemed to be trade fixtures, so long as Tenant
repairs all damage caused by the installation and/or removal thereof, returns
the Premises prior to the termination of the Lease to the condition existing
prior to the installation of such item, and repairs and restores any so-called
“doughnuts” or gaps in the roof and/or floor tiles and/or ceiling and lighting
resulting from such removal. At the time Tenant requests the consent of Landlord
to approve the installation of an Alteration requiring the consent of Landlord,
Tenant shall seek from Landlord a written statement of whether or not Landlord
will require Tenant to remove such Alteration and restore all or part of the
Premises as required by Landlord in accordance with this paragraph and
Paragraph 5 at the expiration or earlier termination of the term of the Lease.
If Tenant does not obtain from Landlord a statement in writing that Landlord
will not require such Alteration to be removed, then at the expiration or sooner
termination of the term of the Lease, it is agreed that

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Tenant may be required to remove all or part of such Alterations, and return the
Premises to the condition existing prior to the Installation of such Alterations
as provided for in Paragraph 5 above. In addition, if Tenant has installed
Alterations without Landlord’s consent, if Landlord so requires, Tenant shall
also remove all or part of such Alterations so installed without Landlord’s
consent as Landlord may designate and return the Premises to the condition
existing prior to the installation of such Alteration. Alterations for which
Landlord has given its written consent to Tenant that such Alteration need not
be removed, shall not be removed by Tenant at the expiration or earlier
termination of the term of the Lease.
          E. At all times during the term of the Lease, Tenant shall have the
right to install and remove trade fixtures as defined in the Lease and installed
and paid for by Tenant, so long as Tenant repairs all damage caused by the
installation thereof and returns the Premises to the condition existing prior to
the installation of such fixtures and repairs and restores any so called
“doughnuts” or gaps in the roof and/or floor (including floor structure,
sub-floor and appropriate floor covering for said area) and/or floor tiles
and/or ceiling tiles and lighting resulting from such removal.
     52. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: The provisions of this Paragraph 53 shall modify Paragraphs 7
and 14:
          A. If during the last five (5) years of the term of the Lease if
Tenant has not extended the Lease as provided for in Paragraphs 41 and 42, or
during either of the five (5) year extension periods permitted by Paragraphs 41
and 42 or Paragraph 40.C., it becomes necessary (due to any governmental
requirement for continued occupancy of the Premises) to make structural
improvements required by laws enacted or legal requirements imposed by
governmental agency(s) after the Commencement Date, and the cost for each
required work or improvements exceeds $100,000, then if such legal requirement
is not imposed because of Tenant’s specific use of the Premises and is not
“triggered” by Tenant’s Alterations or Tenant’s application for a building
permit or any other governmental approval (in which instance Tenant shall be
responsible for 100% of the cost of such improvements), Landlord shall be
responsible for paying the cost of such improvement and constructing such
improvement, subject to a cash contribution from Tenant of a portion of the cost
thereof as provided for and calculated in Paragraph 52B.
          B. When Landlord makes an improvement pursuant to Paragraph 52A, and
as a condition to Landlord’s obligation to construct such improvement, Tenant
shall make the following contribution in cash to Landlord for the cost thereof
prior to the commencement of the work by Landlord. It is agreed that Tenant
shall pay to Landlord 100% of the cost of the first $100,000.00 worth of each
improvement. After the first $100,000.00, all costs above $100,000.00 shall be
divided by 15 and multiplied by the time period remaining in the last five years
of the Lease term from the date work on such improvement commences.
     For example, if the cost of such improvement was $400,000 and there was one
year and six months remaining in the Lease term when the work commenced, then
Tenant would be responsible for reimbursing Landlord in cash $130,000.00
computed as follows:

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Total Cost of Work
  $ 400,000.00  
Tenant Responsible for 1st $100,000
    -100.000.00  
 
     
Total Amount To Be Amortized
  $ 300,000.00  
 
       
$300,000.00/15 = $20,000.00/yr. x 1.5 yrs =
  $ 30,000.00  
 
       
Tenant responsible for $100,000 + $30,000.00 =
  $ 130,000.00  

          C. If Landlord has made improvements, for which Tenant has reimbursed
Landlord for the cost thereof pursuant to Paragraph 52B, and the term of this
Lease is subsequently extended pursuant to the exercise by Tenant of an option
to renew pursuant to Paragraph 41, or 42, upon the exercise of any such option
by Tenant, Tenant shall pay to Landlord an additional sum equal to the total
amount of said improvement less the amount previously paid for by Tenant. Using
the example in Paragraph 52B above, Tenant would owe Landlord the additional
amount of $270,000.00 ($400,000.00 - $130,000.00 = $270,000.00).
     53. REAL PROPERTY TAXES: Paragraph 9 is modified by the following:
          A. The term “Real Property Taxes” shall not include charges, levies or
fees directly related to the use, storage, disposal or release of hazardous
materials on the Premises unless directly related to Tenant’s activities, which
subject is exclusively governed by Paragraph 44.
          B. If any assessments for public improvements are levied against the
Premises, Landlord may elect either to pay the assessment in full or to allow
the assessment to go to bond If Landlord pays the assessment in full, Tenant
shall pay to Landlord or any assignee or purchaser of the Premises each time
payment of Real Property Taxes is made a sum equal to that which would have been
payable (as both principal and interest) had Landlord allowed the assessment to
go to bond.
          C. Tenant at its cost shall have the right, at any time, to seek a
reduction in the assessed valuation of the Premises or to contest any Real
Property Taxes that are to be paid by Tenant. If Tenant seeks a reduction or
contests such Real Property Taxes, the failure on Tenant’s part to pay such Real
Property Taxes being so contested shall not constitute a default so long as
Tenant complies with the provisions of this Paragraph. Landlord shall not be
required to join in any proceeding or contest brought by Tenant unless the
provisions of any law require that the proceeding or contest be brought by or in
the name of Landlord. In that case Landlord shall join in the proceedings or
contest or permit it to be brought in Landlord’s name as long as Landlord is not
required to bear any cost. Tenant, on final determination of the proceeding or
contest, shall immediately pay or discharge its share of any Real Property Taxes
determined by any decision or judgment rendered, together with all costs,
charges, interest, and penalties incidental to the decision or judgment. If
Tenant does not pay the Real Property Taxes when due pursuant to the Lease and
Tenant seeks a reduction or contests them as provided in this paragraph, before
the commencement of the proceeding or contest Tenant shall furnish to Landlord a
surety bond in form reasonably satisfactory to Landlord issued by an insurance
company qualified to do business in California. The amount of the bond shall
equal 125% of the

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total amount of Real Property Taxes in dispute and any such bond shall be
assignable to any lender or purchaser of the Premises. The bond shall hold
Landlord and the Premises harmless from any damage arising out of the proceeding
or contest and shall insure the payment of any judgment that may be rendered.
     54. PROPERTY INSURANCE: Paragraph 12 is modified by the following:
          A. If Tenant so elects, Tenant may obtain from a third party insurance
company the insurance required to be carried by Landlord pursuant to
Paragraph 12 so long as each of the following conditions is satisfied: (i) the
Landlord is not the John Arrillaga and Richard T. Peery Separate Property Trusts
or an affiliated entity; (ii) the insurance to be carried by Tenant to satisfy
this requirement strictly complies with all of the provisions of Paragraph 12;
(iii) such insurance shall name Landlord as the insured and provide that it is
to be payable to Landlord in the same manner as if such insurance had been
carried by Landlord pursuant to Paragraph 12 (subject to the rights of any
lender holding a mortgage or deed of trust encumbering the Premises); (iv) each
lender holding a mortgage or deed of trust encumbering the Premises shall have
given its written consent to Tenant carrying such insurance and such insurance
shall comply with the requirements of any such lender; (v) Tenant must notify
Landlord, by certified mail, no later than one hundred eighty (180) days prior
to the expiration date of Landlord’s insurance policy (which expiration date is
currently 3/13/xx of a given year and is subject to change; Landlord shall
notify Tenant in the event Landlord’s insurance year changes) that Tenant will
directly obtain the required insurance coverage for the insurance year
commencing 3/14/XX through 3/13/XX and each insurance year through the
termination date of this Lease, or until Tenant is no longer able to comply with
all of the provisions of this paragraph 55; (vi) the annual premium must be paid
in full at the commencement of the policy; (vii) the insurance policy must be
issued for a one-year period following the expiration date of Landlord’s
insurance policy (i.e., from 3/14/XX to 3/13/XX; (viii) any and all deductibles
required under the policy will be paid entirely by Tenant; (ix) the terms of the
coverage must be broad form and cover all items to be covered as set forth in
Paragraph 12 of this Lease; (x) the Building and Premises must be insured for
their full replacement cost; (xi) the insurance policy containing the required
coverage in accordance with the provisions of this paragraph must be sent to
Landlord for retention within thirty (30) days prior to the expiration date of
Landlord’s insurance policy, and may not be terminated or altered without thirty
(30) days written notice to Landlord by the company providing such insurance (it
is agreed that if the insurance policy is cancelled or altered, Landlord will
have the right to obtain the property insurance coverage on said building, and
Landlord will bill the Tenant for the related insurance premium); and (xii) at
all times while Tenant is so carrying such insurance, Tenant is Quantum
Corporation or a successor entity and the then net worth of such corporation is
substantially the same as the net worth of Quantum corporation as of the date of
this Lease is executed by Landlord and Tenant. Tenant shall provide such
evidence as is required by Landlord and any lender to establish that the
insurance that Tenant carries pursuant to this Paragraph 54 has been obtained
and meets the requirement of this Paragraph 54. Such insurance carried by Tenant
shall be in form and provided by an insurance company that is reasonably
acceptable to Landlord, which must be rated “A plus” or better by Best’s
Insurance Service (or an equivalent rating from another rating agency should
Best’s no longer provide such service). A copy of any such policy shall be
delivered to Landlord. If Tenant elects to insure and such insurance provided by
Tenant does not

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satisfy the requirements of Paragraph 12, in the event of a subsequent casualty,
Tenant shall be responsible for and shall pay for that portion of the
restoration cost, in excess of the insurance proceeds actually available that
would have been covered by insurance satisfying the requirements of
Paragraph 12.
          B. Tenant shall not be obligated to contribute to the cost of
earthquake insurance more than an amount equal to six (6) times the then annual
cost of fire and “all risk” insurance per year. For example, if the 1994 annual
premium for fire and “all risk” insurance is $9,000, then Tenant’s share of the
cost of any premium for earthquake insurance for the following year (1995) shall
be limited to $54,000 ($9,000 x 6). Tenant shall have the right to require
earthquake insurance providing it is available if Tenant agrees to pay full cost
thereof.
     55. ASSIGNMENT AND SUBLETTING: The following modifications are made to
Paragraph 16:
          A. In the event that Tenant seeks to make any assignment or sublease,
then Landlord, by giving Tenant written notice of its election within fifteen
(15) days after Tenant’s notice of intent to assign or sublease has been given
to Landlord, shall have the right to elect (i) to withhold its consent to such
assignment or sublease, as permitted pursuant to Paragraph 1, or (ii) to permit
Tenant to so assign the Lease or sublease such part of the Premises, in which
event Tenant may do so, but without being released of its liability for the
performance of all of its obligations under the Lease, and the following shalt
apply (except the following shall not apply to a “Permitted Transfer” described
in Paragraph 56):
               (1) If Tenant assigns its interest in this Lease, then in
addition to the rental provided for in this Lease, Tenant shall pay to Landlord
fifty percent (50%) of all consideration received by Tenant over and above
(i) the assignee’s agreement to assume the obligations of Tenant under this
Lease and (ii) all “Permitted Transfer Costs” (as defined herein) related to
such assignment. As used herein, the term “Permitted Transfer Costs” shall mean
all reasonable leasing commissions paid to third parties not affiliated with
Tenant in order to obtain the assignment or sublease in question.
               (2) If Tenant sublets all or part of the Premises, then Tenant
shall pay to Landlord in addition to the rental provided for in this Lease fifty
percent (50%) of the positive difference, if any, between (i) all rent and other
consideration paid by the subtenant to Tenant, less (ii) all rent paid by Tenant
to Landlord pursuant to this Lease which is allocable to the area so sublet and
all Permitted Transfer Costs related to such sublease. After Tenant has
recovered all Permitted Transfer Costs Tenant shall pay to Landlord the amount
specified in the preceding sentence on the same basis, whether periodic or in
lump sum, that such rent and other consideration is paid to Tenant by its
subtenant, within seven (7) days after it is received by Tenant.
               (3) Tenant’s obligations under this subparagraph shall survive
any assignment or sublease. At the time Tenant makes any payment to Landlord
required by this subparagraph, Tenant shall deliver an itemized statement of the
method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right to
inspect Tenant’s books and records relating to the payments due pursuant to this

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subparagraph. Upon request therefor, Tenant shall deliver to Landlord copies of
all bills, invoices or other documents upon which its calculations are based.
               (4) As used herein, the term “consideration” shall mean any
consideration of any kind received, or to be received, by Tenant as a result of
the assignment or sublease, if such sums are paid for Tenant’s interest in this
Lease or in the Premises.
     56. PERMITTED ASSIGNMENTS AND SUBLEASES: Notwithstanding anything contained
in Paragraph 1, so long as Tenant otherwise complies with the provisions of
Paragraph 1 and the Permitted Transfer does not release Tenant from its
obligations hereunder, Tenant may enter into any of the following transfers (a
“Permitted Transfer”) without Landlord’s prior written consent, and the
provisions of Paragraph 55A shall not apply to any such Permitted Transfer:
          A. Tenant may sublease all or part of the Premises or assign its
interest in this Lease to any corporation which controls, is controlled by, or
is under common control with Tenant by means of an ownership interest of more
than fifty percent (50%) providing Tenant remains liable for the payment of rent
and full performance of the lease;
          B. Tenant may assign its interest in the Lease to a corporation which
results from a merger, consolidation or other reorganization in which Tenant is
not the surviving corporation so long as 95% of all assets of Tenant are
permanently transferred to such assignee. In the event there is not a permanent
transfer of 95% or more of the assets and liabilities from Tenant to a third
party, and Tenant continues to exist as a separate entity, both companies shall
be jointly and severally liable for the full terms and conditions of the Lease;
          C. Tenant may assign this Lease to a corporation which purchases or
otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets of Tenant are permanently transferred to such assignee (in the event
there is not a permanent transfer of 95% or more of the assets and liabilities
from Tenant to a third party and Tenant continues to exist as a separate entity,
both companies shall be jointly and severally liable for the full terms and
conditions of the Lease).
     57. SUBORDINATION AND MORTGAGES: Paragraph 17 is modified to provide that
this Lease shall not be subordinate to a mortgage or deed of trust unless the
Lender holding such mortgage or deed of trust enters into a written
subordination, non-disturbance and attornment agreement in which the Lender
agrees that notwithstanding any subordination of this Lease to such Lender’s
mortgage or deed of trust, (i) such Lender shall recognize all of Tenant’s
rights under this Lease, and (ii) in the event of a foreclosure this Lease shall
not be terminated so long as Tenant is not in material default of its
obligations under this Lease, but shall continue in effect and Tenant and such
Lender (or any party acquiring the Premises through such foreclosure) shall each
be bound to perform the respective obligations of Tenant and Landlord with
respect to the Premises arising after such foreclosure.
     58. LANDLORD’S RIGHT TO ENTER: Notwithstanding the provisions of
Paragraph 18, (i) except in the event of an emergency, Landlord shall give
Tenant twenty-four (24) hours notice prior to entering the Premises, agrees to
comply with any reasonably safety

35

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and/or security regulations imposed by Tenant with respect to such entry, and
shall only enter the Premises when accompanied by Tenant or its agent (so long
as Tenant makes itself reasonably available for this purpose), and (ii) Landlord
may install “for lease” signs relating to the Premises only during the last
150 days of the Lease term. Landlord agrees to use its reasonable, good faith
efforts such that any entry by Landlord, and Landlord’s agents, employees,
contractors and invitees shall be performed in a manner with as minimal
interference as possible with Tenant’s business at the Premises. Subject to the
foregoing, Tenant agrees to cooperate with Landlord and Landlord’s agents,
employees and contractors so that responsibilities of Landlord under the Lease
can be fulfilled in a reasonable manner during normal business hours so that no
extraordinary costs are incurred by Landlord.
     59. BANKRUPTCY AND DEFAULT: Paragraph 19 is modified to provide that with
respect to non-monetary defaults not involving Tenant’s failure to pay Basic
Rent or Additional Rent, Tenant shall not be in default of any non-monetary
obligation if (i) more than thirty (30) days is required to cure such
non-monetary default, and (ii) Tenant commences cure of such default as soon as
reasonably practicable after receiving written notice of such default from
Landlord and thereafter continuously and with due diligence prosecutes such cure
to completion.
     60. ABANDONMENT: Paragraph 20 is modified to provide that Tenant shall not
be in default under the Lease if it leaves all or any part of Premises vacant so
long as (i) Tenant is performing all of its other obligations under the Lease
including the obligation to pay Basic Rent and Additional Rent (ii) Tenant
provides on-site security during normal business hours for those parts of the
Premises left vacant, (iii) such vacancy does not materially and adversely
affect the validity or coverage of any policy of insurance carried by Landlord
with respect to the Premises, and (iv) the utilities and heating and ventilation
system are operated to the extent necessary to prevent damage to the Premises or
its systems.
     61. DESTRUCTION: Paragraph 21 is modified by the following:
          A. Except as provided in Paragraph 61B, Landlord may not terminate the
Lease if the Premises are damaged by a peril that is covered by the insurance
carried by Landlord pursuant to Paragraph 12, but instead shall restore the
Premises in the manner described by Paragraph 21.
          B. If the Premises are damaged by a peril covered by the insurance
carried by Landlord pursuant to Paragraph 12, Landlord shall have the option to
terminate the Lease if each of the following conditions is satisfied: (i) the
cost to repair or the damage exceeds thirty-three percent (33%) of the then
replacement cost of the Premises; and (ii) the damage occurs at a time when
there is less than five (5) years remaining in the term of the Lease.
Notwithstanding the foregoing, if such damage occurs at a time when there is
less than five (5) years remaining in the term of the Lease and Landlord
notifies Tenant of Landlord’s election to terminate the Lease pursuant to the
provisions of this Paragraph 61B, if Tenant has the right to extend the term of
this Lease pursuant to either Paragraph 41 or 42 such that the remaining term of
the Lease (including the option period) will be more than five (5) years
following the date of such damage, this Lease shall not terminate if Tenant
notifies Landlord in writing of Tenant’s exercise of an option to extend granted
to Tenant by either Paragraph 41 or 42. In such event, this Lease shall not

36

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terminate, the term shall be so extended, and Landlord shall restore the
Premises in the manner provided in Paragraph 21.
          C. If the Premises are damaged by any peril, then as soon as
reasonably practicable, Landlord shall furnish Tenant with the written opinion
of Landlord’s architect or construction consultant as to when the restoration
work required of Landlord may be completed. Tenant shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Landlord of a written notice of election to
terminate within seven (7) days after Tenant receives from Landlord the estimate
of the time needed to complete such restoration:
               (1) The Premises are damaged by any peril and, in the reasonable
opinion of Landlord’s architect or construction consultant, the restoration of
the Leased Premises cannot be substantially completed within 180 days after the
date of such damage; or
               (2) The Premises are damaged by any peril within twelve
(12) months of the last day of the Lease term and provided Tenant has not
exercised an option to renew pursuant to the provisions of Paragraph 41 or 42,
and, in the reasonable opinion of Landlord’s architect or construction
consultant, the restoration of the Leased Premises cannot be substantially
completed within sixty (60) days after the date of such damage.
     62. EMINENT DOMAIN: Paragraph 22 is modified by the following:
     Landlord may not terminate the Lease if less than one third (1/3) of the
building is taken by condemnation or if a taking by condemnation is only
threatened.
     63. TRANSFER BY LANDLORD: The provisions of Paragraph 23 of the Lease to
the contrary notwithstanding, Landlord shall not be relieved of its obligations
under the Lease which may accrue after the date of a sale or other transfer
unless and until (i) the transferee agrees to assume and be bound by the terms
of this Lease and to perform all obligations of the Landlord under the Lease
which may accrue after the date of such transfer, and (ii) Landlord transfers
the Security Deposit to its successor in interest (transferee) in accordance
with the provisions of California Civil Code Section 1950.7, as amended or
recodified.
     64. LANDLORD’S LIEN WAIVER: Landlord, within thirty (30) days after demand
from Tenant, shall execute and deliver such lien waiver documents that are
reasonably required by any supplier, lessor, or lender in connection with the
installation in the Premises of the Tenant’s personal property or trade fixtures
providing Landlord approves the form of any such waiver and Landlord’s rights
under this Lease are not materially and adversely affected.

37

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                      QUANTUM CORPORATION,       JOHN ARRILLAGA SEPARATE     a
Delaware corporation       PROPERTY TRUST    
 
                   
By
  /s/ Deborah E. Barber       By   /s/ John Arrillaga    
 
                   
 
              John Arrillaga, Trustee    
 
                    Title   Vice President, Human Resources       RICHARD T.
PEERY SEPARATE    
 
                                PROPERTY TRUST    
 
                   
 
          By   /s/ Richard T. Peery    
 
                   
 
              Richard T. Peery, Trustee    

38

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Quantum 5
AMENDMENT NO. 1
TO LEASE
     THIS AMENDMENT NO. 1 is made and entered into this 16th day of April, 1997,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST) (previously known as the “John
Arrillaga Separate Property Trust”) as amended, and RICHARD T. PEERY, Trustee,
or his Successor Trustee UTA dated 7/2/77 (RICHARD T. PEERY SEPARATE PROPERTY
TRUST) as amended, collectively as LANDLORD and QUANTUM CORPORATION, a Delaware
corporation, as TENANT.
RECITALS
     A. WHEREAS, by Lease Agreement dated March 23, 1994 Landlord leased to
Tenant all o that certain 94,484 ± square foot building located at 1101 Sumac
Drive, Milpitas, California, the details of which are more particularly set
forth in said March 23, 1994 Lease Agreement, and
     B. WHEREAS, said Lease was amended by the Commencement Letter dated
December I5, 1994 which established the January 1, 1995 Commencement Date of the
Lease, and the Termination Date of September 30, 2006, and,
     C. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by (i) extending, the Term for five (5) years pursuant to Lease Paragraph 41
(“First Five-Year Option to Extend”), (ii) amending the Basic Rent schedule and
Aggregate Rent, (iii) adding a Third Option to Extend, (vi) amending Paragraphs
47 (“Cross Default”) and 12 (“Property Insurance”), (v) replacing Lease
Paragraph 52 (“Structural Capital Costs Regulated by Governmental Agencies After
the Commencement of this Lease not Caused by Tenant or Tenant’s Uses or
Remodeling of the Premises”) and (vi) amending and/or replacing certain
provisions of the Lease commencing as of the commencement of the Third Extended
Term of said Lease Agreement as hereinafter set forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. TERM OF LEASE: It is agreed between the parties that Tenant has
exercised its First Five-Year Option to Extend said Lease as detailed in Lease
Paragraph 41. Pursuant to the terms of said Paragraph 41, the Term of said Lease
Agreement shall be extended for an additional five (5) year period from the
schedule Lease Termination Date of September 30, 2006; therefore the Lease
Termination Date shall be changed from September 30, 2006 to September 30, 2011.
     2. CONCURRENT EXERCISE OF OPTION TO EXTEND: Pursuant to Lease Paragraph 40C
(“Lease Terms Co-Extensive”), it is understood between the parties that if
Tenant exercises its Option to Extend this Lease, the terms of the Building 1,
Building 2, Building 3 and

1

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

 

Quantum 5
Building 4 Leases (the “Existing Leases”) are to be extended accordingly. The
monthly Basic Rent during the extended term under each of the Leases shall be
increased by $.05 per square foot on the commencement date of the extended term
and thereafter on each and every anniversary of the respective lease
commencement date; therefore, concurrently with the execution of this Amendment
No. 1, Landlord and Tenant shall execute amendments to the Existing Leases,
extending the terms of each of the Existing Leases for five years pursuant to
said lease’s respective First Five-Year Option to Extend. It is also understood
that in the event Tenant (i) exercises any of its Options to Extend this Lease,
or if Tenant exercises any of its Options to Extend any of the Existing Leases,
each of the five Leases shall be extended accordingly.
     3. BASIC RENTAL FOR EXTENDED TERM OF LEASE: The monthly Basic Rental for
the Extended Term of Lease shall be as follows:
     On October 1, 2006, the sum of ONE HUNDRED EIGHTY ONE THOUSAND FOUR HUNDRED
NINE AND 28/100 DOLLARS ($181,409.28) shall be due, and a like sum due on the
first day of each month thereafter through and including September 1, 2007.
     On October 1, 2007, the sum of ONE HUNDRED EIGHTY SIX THOUSAND ONE HUNDRED
THIRTY THREE AND 48/100 DOLLARS ($186,133.48) shall be due, and a like sum due
on the first day of each month thereafter through and including September 1,
2008.
     On October 1, 2008, the sum of ONE HUNDRED NINETY THOUSAND EIGHT HUNDRED
FIFTY SEVEN AND 68/100 DOLLARS ($190,857,68) shall be due, and a like sum due on
the first day of each month thereafter through and including September 1, 2009.
     On October 1, 2009, the sum of ONE HUNDRED NINETY FIVE THOUSAND FIVE
HUNDRED EIGHTY ONE AND 88/100 DOLLARS ($195,581.88) shall be due, and a like sum
due on the first day of each month thereafter through and including September 1,
2010.
     On October 1, 2010, the sum of TWO HUNDRED THOUSAND THREE HUNDRED SIX AND
08/100 DOLLARS ($200,306.08) shall be due, and a like sum due on the first day
of each month thereafter through and including September 1, 2011.
     The Aggregate Basic Rent for the Lease shall be increased by $11,451,460.80
or from $21,171,029.88 to $32,622,490.68.
     4. THIRD FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the Lease
for an additional five (5) year period pursuant to Lease Paragraph 42 (“Second
Five Year Option To Extend”), Landlord hereby grants to Tenant a third option to
extend the Term of this Lease for an additional five (5) year period upon the
following terms and conditions:
          A. Tenant shall give Landlord written notice of Tenant’s exercise of
this option to extend at least one hundred eighty (180) days prior to the
expiration of the Lease Term as extended pursuant to Lease Paragraph 42 (“Second
Five Year Option To Extend”), in which event the Lease shall be considered
extended for an additional five (5) year period upon the same terms and
conditions as this Lease, absent this Paragraph 4 and subject to the Rental as
set forth below. In the event that Tenant fails to timely exercise Tenant’s
option as set forth herein in

2

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Quantum 5
writing, Tenant shall have no further option to extend this Lease or the Other
Leases, and this Lease shall continue in full force and effect for the full
remaining term hereof, absent this Paragraph 4.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

      Period   Monthly Basic Rent
Months 1-12
  $2.42/sf
Months 13-24
  $2.47/sf
Months 25-36
  $2.52/sf
Months 37-48
  $2.57/sf
Months 49-60
  $2.62/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to extend granted by this Paragraph 4 at any time that Tenant is in
default (default for monetary and material default for non-monetary) of its
obligations under this Lease, if Tenant has received written notice from
Landlord that Tenant is in default, and such default has not been timely cured
within the time period provided for in this Lease; provided, however, that if
such default of Tenant is not for money due under this Lease and cannot be
cured, and if Landlord does not elect to terminate this Lease as a result of
such non-curable default by Tenant, Tenant may exercise the option to extend
granted by this Paragraph 4 notwithstanding such non-curable default.
     5. CROSS DEFAULT: Notwithstanding anything to the contrary in Paragraph 47
of this Lease, said Paragraph 47 is hereby amended to include the following:
“Landlord shall have the option of considering a default under this Lease or a
default under any of the Existing Leases (i.e. The Leases for Building 1,
Building 2, Building 3 and Building 4) to be a default under all such leases,
only with respect to such leases under which Landlord is also the ‘Landlord’ at
the time such default occurs. By way of example, if at the time a default of
Tenant occurs under this Lease, Landlord has sold the premises described in any
of the Existing Leases and is no longer the ‘Landlord’ thereunder, then a
default under this Lease shall not constitute a default under any of such
Existing Leases so sold by Landlord (unless the premises leased under this Lease
and the Existing Leases are sold to the same entity), and a default by Tenant
under any of such Existing Leases so sold by Landlord shall not constitute a
default under this Lease or any other of the Existing Leases then remaining
between Landlord and Tenant. However, if the Landlord under this Lease and the
Existing Leases is one in the same at the time of said default, said cross
default provisions shall apply.”
     6. PROPERTY INSURANCE: Lease Paragraph 12 (“Property Insurance”) is hereby
amended to include the following: “Tenant acknowledges that as part of the cost
of insurance policies for the Premises, Tenant is responsible for the payment of
insurance deductibles on insurance claims as they relate to the Premises subject
to the limitations provided in Lease Paragraph 54 (“Property Insurance”) which
limitations are applicable only during the

3

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Quantum 5
initial Lease Term and the First Lease Extension Period and the Second Lease
Extension Period. Said limitation provided for in Lease Paragraph 54 are null
and void at the commencement of the Third Lease Extended Term”.
     7. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: Lease Paragraph 52 (“Structural Capital Costs Regulated by
Governmental Agencies after the Commencement of this Lease Not Caused by Tenant
or Tenant’s Uses or Remodeling of the Premises”) is hereby deleted and replaced
with the following:
     “52. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: The provisions of this Paragraph 52 shall modify Paragraphs 7
and 14:
     A. If (i) during the last five (5) years of the First Extended Term of the
Lease if said Lease has not been extended as provided for in Lease Paragraph 42
(“Second Five Year Option To Extend”) or in Paragraph 4 (“Third Five Year Option
to Extend”) above or Lease Paragraph 40C (“Lease Terms Co-Extensive”), or
(ii) during either of the five (5) year extension periods permitted by Lease
Paragraph 42 or Paragraph 4 above, or Lease Paragraph 40C above, it becomes
necessary (due to any governmental requirement for continued occupancy of the
Premises) to make structural improvements required by laws enacted or legal
requirements imposed by governmental agency(s) after the Commencement Date, and
the cost for each required work or improvements exceeds $100,000, then if such
legal requirement is not imposed because of Tenant’s specific use of the
Premises and is not “triggered” by Tenant’s Alterations or Tenant’s application
for a building permit or any other governmental approval (collectively “Tenant’s
Actions”) in which instance Tenant shall be responsible for 100% of the cost of
such improvements, Landlord shall be responsible for paying the cost of such
improvement and constructing such improvement, subject to a cash contribution
from Tenant of a portion of the cost thereof as provided for and calculated in
Paragraph 52B.
     B. When Landlord makes an improvement pursuant to Paragraph 52A, and as a
condition to Landlord’s obligation to construct such improvement, Tenant shall
make the following contribution in cash to Landlord for the cost thereof prior
to the commencement of the work by Landlord. It is agreed that Tenant shall pay
to Landlord 100% of the cost of the first $100,000.00 worth of each improvement.
After the first $100,000.00, all costs above $100,000.00 shall be divided by 15
and multiplied by the time period remaining in the last five years of the Lease
Term from the date work on such improvement commences.

4

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quantum 5
     For example, if the improvement is not required as a result of Tenant’s
Actions and if the cost of such improvement was $400,000 and there was one year
and six months remaining in the Lease term when the work commenced, then Tenant
would be responsible for reimbursing Landlord in cash $130,000.00 computed as
follows:

         
Total Cost of Work
  $ 400,000.00  
Tenant Responsible for 1st $100,000
    -100.000.00  
 
     
Total Amount To Be Amortized
  $ 300,000.00  
 
       
$300,000.00/15 = $20,000.00/yr. x 1.5 yrs =
  $ 30,000.00  
 
       
Tenant responsible for $100,000 + $30,000.00 =
  $ 130,000.00  

     C. If Landlord has made improvements, for which Tenant has reimbursed
Landlord for the cost thereof pursuant to Paragraph 52B, and the term of this
Lease is subsequently extended pursuant to the exercise by Tenant of an option
to renew pursuant to Lease Paragraph 42 or Paragraph 4 above, upon the exercise
of any such option by Tenant, Tenant shall pay to Landlord an additional sum
equal to the total amount of said improvement less the amount previously paid
for by Tenant. Using the example in Paragraph 52B above, Tenant would owe
Landlord the additional amount of $270,000.00 ($400,000.00 — $130,000.00 =
$270,000.00).”
     8. THIRD OPTION PERIOD — LEASE PROVISION CHANGES: In the event Tenant
exercises its Third Option to Extend as provided for in Paragraph 4 above, the
following amendments (contained within Paragraphs 9 through 18) are herein made
to the Lease to be effective upon the commencement of the third option period
(“Third Option Period”), or during any period following the expiration of the
Lease Term or expiration of the Lease when Tenant is in possession of the
Premises.
     9. LATE CHARGE: Effective as of the first day of the Third Option Period,
the Late Charge referenced in Lease Paragraph 4.D (“Late Charge”) shall be
changed from five percent (5%) to ten percent (10%), and Lease Paragraph 49
(“Limitation on Late Charge”) shall be deleted in its entirety and of no further
force or effect.
     10. MANAGEMENT FEE: Notwithstanding anything to the contrary in the Lease,
effective as of the first day of the Third Option Period, and on the first day
of each month thereafter, Tenant shall pay to Landlord, in addition to the Basic
Rent and Additional Rent, a fixed monthly management fee (“Management Fee”)
equal to one percent (1%) of the Basic Rent due for each month during the Lease
Term.
     11. HAZARDOUS MATERIALS: Effective as of the first day of the Third Option
Period, Lease Paragraph 44 (“Hazardous Materials”) shall be deleted in its
entirety and replaced with the following:

5

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Quantum 5
     ”44. HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with respect
to the existence or use of “Hazardous Materials” (as defined herein) on, in,
under or about the Premises and real property located beneath said Premises,
which includes the entire parcel of land on which the Premises are located as
shown in Green on Exhibit A to the Lease (hereinafter collectively referred to
as the “Property”):
     A. As used herein, the term “Hazardous Materials” shall mean any material,
waste, chemical, mixture or byproduct which is or hereafter is defined, listed
or designated under Environmental Laws (defined below) as a pollutant, or as a
contaminant, or as a toxic or hazardous substance, waste or material, or any
other unwholesome, hazardous, toxic, biohazardous, or radioactive material,
waste, chemical, mixture or byproduct, or which is listed, regulated or
restricted by any Environmental Law (including, without limitation, petroleum
hydrocarbons or any distillates or derivatives or fractions thereof,
polychlorinated biphenyls, or asbestos). As used herein, the term “Environmental
Laws” shall mean any applicable Federal State of California or local government
law (including common law), statute, regulation, rule, ordinance, permit,
license, order, requirement, agreement, or approval, or any determination,
judgment, directive, or order of any executive or judicial authority at any
level of Federal, State of California or local government (whether now existing
or subsequently adopted or promulgated) relating to pollution or the protection
of the environment, ecology, natural resources, or public health and safety.
     B. Tenant shall notify Landlord prior to the occurrence of any Tenant’s
Hazardous Materials Activities (defined below). Landlord acknowledges that
Tenant shall use, in compliance with applicable Environmental Laws, customary
household and office supplies (Tenant shall first provide Landlord with a list
of said materials use), such as mild cleaners, lubricants and copier toner. Any
and all of Tenant’s Hazardous Materials Activities shall be conducted in
conformity with this Paragraph 44, Paragraph 14 of this Lease, and in compliance
with all Environmental Laws and regulations. As used herein, the term “Tenant’s
Hazardous Materials Activities” shall mean any and all use, handling,
generation, storage, disposal, treatment, transportation, release, discharge, or
emission of any Hazardous Materials on, in, beneath, to, from, at or about the
Property, in connection with Tenant’s use of the Property, or by Tenant or by
any of Tenant’s agents, employees, contractors, vendors, invitees, visitors or
its future subtenants or assignees or other third parties (including “dumping”
by others) (or which Hazardous Materials originate on the surface of the
Premises any time on or after the Commencement Date of this Lease, but excluding
Hazardous Materials on the Premises prior to the Lease Commencement Date because
of the storage, use, disposal, or transportation of such materials or waste by
any of Landlord’s contractors or otherwise arising out of construction work
performed by or under the direction of Landlord on the Premises and Landlord
shall be responsible for all required actions with respect to such materials or
wastes). Tenant agrees to provide Landlord with prompt written notice of any
spill or release of Hazardous Materials at the Property during the term of the

6

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Quantum 5
Lease of which Tenant becomes aware, and further agrees to provide Landlord with
prompt written notice of any violation of Environmental Laws in connection with
Tenant’s Hazardous Materials Activities of which Tenant becomes aware. If
Tenant’s Hazardous Materials Activities involve Hazardous Materials other than
normal use of customary household and office supplies, Tenant also agrees at
Tenant’s expense: (i) to install such Hazardous Materials monitoring, storage
and containment devices as may be required by Environmental Laws, regulations
and/or governing agencies; (ii) to provide Landlord with a written inventory of
such Hazardous Materials, including an update of same each year upon the
anniversary date of the Commencement Date of the Lease (“Anniversary Date”); and
(iii) on each Anniversary Date to provide to Landlord copies of all
documentation and records, required by applicable Environmental Laws to be
prepared and submitted to governmental authorities, relating to use at the
Property of Hazardous Materials or to Tenant’s Hazardous Materials Activities,
if any. If upon completion of Landlord’s review of said documentation and
records, Landlord reasonably questions if Tenant is in compliance with all
applicable Environmental Laws with respect to Tenant’s Hazardous Materials
Activities, Tenant agrees within thirty (30) days following receipt of written
notice from Landlord, to retain a qualified environmental consultant, acceptable
to Landlord, to evaluate whether Tenant is in compliance with all applicable
Environmental Laws with respect to Tenant’s Hazardous Materials Activities.
Tenant, at its expense, shall submit to Landlord a report from such
environmental consultant which discusses the environmental consultant’s findings
within two (2) months of each Anniversary Date. Tenant, at its expense, shall
promptly undertake and complete any and all steps necessary, and in full
compliance with applicable Environmental Laws, to fully correct any and all
problems or deficiencies identified by the environmental consultant, and
promptly provide Landlord with documentation of all such corrections.
     C. Prior to termination or expiration of the Lease, Tenant, at its expense,
shall (i) properly remove from the Property all Hazardous Materials which come
to be located at the Property in connection with Tenant’s Hazardous Materials
Activities, and (ii) fully comply with and complete all facility closure
requirements of applicable Environmental Laws regarding Tenant’s Hazardous
Materials Activities, including but not limited to (x) properly restoring and
repairing the Property to the extent damaged by such closure activities, and
(y) obtaining from the local Fire Department or other appropriate governmental
authority with any legal or regulatory jurisdiction a written concurrence that
closure has been completed in compliance with applicable Environmental Laws.
Tenant shall promptly provide Landlord with copies of any claims, notices, work
plans, data and reports prepared, received or submitted in connection with any
such closure activities.
     D. If Landlord, upon consultation with Tenant, reasonably concludes that
the Property has become contaminated as a result of Tenant’s Hazardous Materials
Activities, Landlord in addition to any other rights it may have under this
Lease or under Environmental Laws or other laws, may enter upon the

7

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Quantum 5
Property and conduct inspection, sampling and analysis, including but not
limited to obtaining and analyzing samples of soil and groundwater, for the
purpose of determining the nature and extent of such contamination except to the
extent that such activities may be inconsistent with Tenant’s compliance with
Environmental Laws. Tenant shall promptly reimburse Landlord for the costs of
such an investigation, including but not limited to reasonable attorneys’ fees
Landlord incurs with respect to such investigation to the extent, and only to
the extent, that it that discloses Hazardous Materials contamination for which
Tenant is liable under this Lease. Except as may be required of Tenant by
applicable Environmental Laws, Tenant shall not perform any sampling, testing,
or drilling to identify the presence of any Hazardous Materials at the Property,
without Landlord’s prior written consent which shall not be unreasonably
withheld. Tenant shall promptly provide Landlord with copies of any claims,
notices, work plans, data and reports prepared, received or submitted in
connection with any sampling, testing or drilling performed pursuant to the
preceding sentence.
     E. Tenant shall indemnify, defend (with legal counsel acceptable to
Landlord, whose consent shall not unreasonably be withheld) and hold harmless
Landlord, its employees, assigns, successors, successors-in-interest, agents and
representatives from and against any and all claims (including but not limited
to third party claims from a private party or a government authority),
liabilities, obligations, losses, causes of action, demands, governmental
proceedings or directives, fines, penalties, expenses, costs (including but not
limited to reasonable attorneys’, consultants’ and other experts’ fees and
costs), and damages, which arise from or relate to: (i) Tenant’s Hazardous
Materials Activities; (ii) any Hazardous Materials contamination caused by
Tenant prior to the Commencement Date of the Lease; or (iii) the breach of any
obligation of Tenant under this Paragraph 44 (collectively, “Tenant’s
Environmental Indemnification”). Tenant’s Environmental Indemnification shall
include but is not limited to the obligation to promptly and fully reimburse
Landlord for losses in or reductions to rental income, and diminution in fair
market value of the Property. Tenant’s Environmental Indemnification shall
further include but is not limited to the obligation to diligently and properly
implement to completion, at Tenant’s expense, any and all environmental
investigation, removal, remediation, monitoring, reporting, closure activities,
or other environmental response action as may be required by applicable
Environmental Laws, regulations or governing agencies (collectively, “Response
Actions”). Tenant shall promptly provide Landlord with copies of any claims,
notices, work plans, data and reports prepared, received or submitted in
connection with any Response Actions.
     F. Landlord hereby makes the following representations to Tenant, each of
which is made only to the best of Landlord’s knowledge as of the date Landlord
executes this Lease, without any inquiry or investigation having been made or
required by Landlord regarding this subject, nor does Landlord have any
obligation to investigate or make inquiry regarding the subject:

8

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Quantum 5
          (1) The soil and ground water on or under the Premises does not
contain Hazardous Materials in amounts which violate any laws to the extent that
any governmental entity could require either Landlord or Tenant to take any
remedial action with respect to such Hazardous Materials.
          (2) During the time that Landlord has owned the Premises, Landlord has
received no notice of (i) any violation, or alleged violation, of any law that
has not been corrected to the satisfaction of the appropriate authority (ii) any
pending claims relating to the presence of Hazardous Material on the Premises,
or (iii) any pending investigation by any governmental agency concerning the
Premises relating to Hazardous Materials.
     G. Landlord and Tenant shall each give written notice to the other as soon
as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Premises, and (ii) any contamination of the Premises by Hazardous Materials
which constitutes a violation of any law. Attached as Exhibit “C” to the Lease
is a list of Hazardous Materials that Tenant intends to use at the Premises. If
during the Lease Term Tenant proposes to use other Hazardous Materials at the
Premises, Tenant shall inform Landlord of such use, identifying the Hazardous
Materials and the manner of their use, storage and disposal, and shall agree
(i) to use, store and dispose of such Hazardous Materials strictly in compliance
with all laws, regulations and governing agencies and (ii) that the indemnity
set forth in Paragraph 44 shall be applicable to Tenant’s use of such Hazardous
Material.
     H. Landlord or Tenant may, at any time, cause testing wells to be installed
on the Premises, and may cause the ground water to be tested to detect the
presence of Hazardous Material by the use of such tests as are then customarily
used for such purposes. Testing wells installed by Tenant shall be paid for by
Tenant. If tests conducted by Landlord disclose that Tenant has violated any
Hazardous Materials laws, or Tenant or parties on the Premises during the Term
of this Lease have contaminated the Premises as determined by regulatory
agencies pursuant to Hazardous Materials laws, or that Tenant has liability to
Landlord pursuant to Paragraph 44A, then Tenant shall pay for 100 percent of the
cost of the test and all related expense. Prior to the expiration of the Lease
Term, Tenant shall remove any testing wells it has installed at the Premises,
and return the Premises to the condition existing prior to the installation of
such wells, unless Landlord requests in writing that Tenant leave all or some of
the testing wells in which instance the wells requested to be left shall not be
removed.
     I. If any tests performed by Tenant or Landlord prior to the Commencement
Date disclose Hazardous Materials at the Premises, Landlord at its expense will
promptly take all reasonable action required by law with respect to the
existence of such Hazardous Materials at the Premises. The Commencement Date
shall not be delayed because of such action by Landlord unless occupation of the
Premises is prohibited by law.

9

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Quantum 5
     J. The obligations of Landlord and Tenant under this Paragraph 44 shall
survive the expiration or earlier termination of the Term of this Lease. The
rights and obligations of Landlord and Tenant with respect to issues relating to
Hazardous Materials are exclusively established by this Paragraph 44.”
     12. REAL ESTATE TAXES: Effective as of the first day of the Third Option
Period, Lease Paragraph 53 (“Real Estate Taxes”) shall be deleted in its
entirety and replaced with the following:
     ”53. REAL PROPERTY TAXES: Paragraph 9 is modified by the following:
     A. The term “Real Property Taxes” shall not include charges, levies or fees
directly related to the use, storage, disposal or release of Hazardous Materials
on the Premises unless directly related to Tenant’s Activities at this site or
on other sites leased and/or owned by Tenant; however, Tenant shall be
responsible for general or special tax and/or assessments (related to Hazardous
Materials and/or toxic waste) imposed on the Property provided said special tax
and/or assessment is not imposed due to on-site originated contamination on the
Property (by third parties not related to Tenant) prior to the Lease
Commencement Date. Subject to the terms and conditions stated herein, Tenant
shall be responsible for paying one hundred percent (100%) of said taxes and/or
assessments allocated to the Property.
     B. If any assessments for public improvements are levied against the
Premises, Landlord may elect either to pay the assessment in full or to allow
the assessment to go to bond. If Landlord pays the assessment in full, Tenant
shall pay to landlord or any assignee or purchaser of the Premises each time
payment of Real Property Taxes is made a sum equal to that which would have been
payable (as both principal and interest) had Landlord allowed the assessment to
go to bond.
     C. Tenant at its cost shall have the right, at any time, to seek a
reduction in the assessed valuation of the Premises or to contest any Real
Property Taxes that are to be paid by Tenant. If Tenant seeks a reduction or
contests such Real Property Taxes, the failure on Tenant’s part to pay such Real
Property Taxes being so contested shall not constitute a default so long as
Tenant complies with the provisions of this Paragraph. Landlord shall not be
required to join in any proceeding or contest brought by Tenant unless the
provisions of any law require that the proceeding or contest be brought by or in
the name of Landlord. In that case Landlord shall join in the proceedings or
contest or permit it to be brought in Landlord’s name as long as Landlord is not
required to bear any cost. Tenant, on final determination of the proceeding or
contest, shall immediately pay or discharge its share of any Real Property Taxes
determined by any decision or judgment rendered, together with all costs,
charges, interest, and penalties incidental to the decision or judgment. If
Tenant does not pay the Real Property Taxes when due pursuant to the Lease and
Tenant seeks a reduction or contests

10

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Quantum 5
them as provided in this paragraph, before the commencement of the proceeding or
contest Tenant shall furnish to Landlord a surety bond in form reasonably
satisfactory to Landlord issued by an insurance company qualified to do business
in California. The amount of the bond shall equal 125% of the total amount of
Real Property Taxes in dispute and any such bond shall be assignable to any
lender or purchaser of the Premises. The bond shall hold Landlord and the
Premises harmless from any damage arising out of the proceeding or contest and
shall insure the payment of any judgment that may be rendered.”
     13. PROPERTY INSURANCE: Effective as of the first day of the Third Option
Period, section B of Lease Paragraph 54 (“Property Insurance”) shall be deleted
in its entirety and be of no further force or effect.
     14. ASSIGNMENT AND SUBLETTING: Effective as of the first day of the Third
Option Period, Lease Paragraph 55 (“Assignment and Subletting”) shall be deleted
in its entirety and replaced with the following:
     ”55. ASSIGNMENT AND SUBLETTING: The following modifications are made to
Paragraph 16:
     In the event that Tenant seeks to make any assignment or sublease, then
Landlord, by giving Tenant written notice of its election within fifteen
(15) days after Tenant’s notice of intent to assign or sublease has been given
to Landlord, shall have the right to elect (i) to withhold its consent to such
assignment or sublease, as permitted pursuant to Paragraph 16, or (ii) to permit
Tenant to so assign the Lease or sublease such part of the Premises, in which
event Tenant may do so, but without being released of its liability for the
performance of all of its obligations under the Lease, and the following shall
apply (except the following shall not apply to a “Permitted Transfer” described
in Paragraph 56):
          (1) If Tenant assigns its interest in this Lease, then in addition to
the rental provided for in this Lease, Tenant shall pay to Landlord fifty
percent (50%) of all Rent and other consideration received by Tenant over and
above (i) the assignee’s agreement to assume the obligations of Tenant under
this Lease and (ii) all “Permitted Transfer Costs” (as defined herein) related
to such assignment. As used herein, the term “Permitted Transfer Costs” shall
mean all reasonable leasing commissions paid to third parties not affiliated
with Tenant in order to obtain the assignment or sublease in question.
          (2) If Tenant sublets all or part of the Premises, then Tenant shall
pay to Landlord in addition to the Rent provided for in this Lease fifty percent
(50%) of the positive difference, if any, between (i) all rent and other
consideration paid or provided to Tenant by the subtenant, less (ii) all Rent
paid by Tenant to Landlord pursuant to this Lease which is allocable to the area
so sublet and all Permitted Transfer Costs related to such sublease. After
Tenant has recovered all Permitted Transfer Costs Tenant shall pay to Landlord
the amount specified in the preceding sentence on the same basis, whether
periodic or in lump

11

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Quantum 5
sum, that such rent and other consideration is paid to Tenant by its subtenant,
within seven (7) days after it is received by Tenant.
          (3) Tenant’s obligations under this subparagraph shall survive any
assignment or sublease. At the time Tenant makes any payment to Landlord
required by this subparagraph, Tenant shall deliver an itemized statement of the
method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right to
inspect Tenant’s books and records relating to the payments due pursuant to this
subparagraph. Upon request therefor, Tenant shall deliver to Landlord copies of
all bills, invoices or other documents upon which its calculations are based.
          (4) As used herein, the term “consideration” shall mean any
consideration of any kind received, or to be received (including, but not
limited to, services rendered and/or value received) by Tenant as a result of
the assignment or sublease, if such sums are paid or provided to Tenant for
Tenant’s interest in this Lease or in the Premises.
          (5) This Paragraph 55. A does not apply to a “Permitted Transfer”, as
provided in Paragraph 56 hereof. The parties agree that if any of the following
transactions occur and do not qualify as “Permitted Transfers”, Tenant must
obtain Landlord’s consent to such transaction and if Landlord consents to any of
the following transactions which do not otherwise qualify as “Permitted
Transfers”, then the provisions of this Paragraph 55.A shall not apply to the
following transactions: (i) a merger, consolidation or other reorganization in
which Tenant is not the surviving corporation so long as 95% of all assets and
liabilities of Tenant are permanently transferred to such assignee; and (ii) an
assignment of this Lease to a corporation which purchases or otherwise acquires
95% or more of the assets of Tenant so long as 95% of all assets and liabilities
of Tenant are permanently transferred to such assignee and Tenant remains liable
and responsible under the Lease to the extent Tenant continues in existence
following such transaction.”
     15. PERMITTED ASSIGNMENTS AND SUBLEASES: Effective as of the first day of
the Third Option Period, Lease Paragraph 56 (“Permitted Assignments and
Subleases”) shall be deleted in its entirety and replaced with the following:
     ”56. PERMITTED ASSIGNMENTS AND SUBLEASES: Notwithstanding anything
contained in Paragraph 16, so long as Tenant otherwise complies with the
provisions of Paragraph 16 and the Permitted Transfer does not release Tenant
from its obligations hereunder, Tenant may enter into any of the following
transfers (a “Permitted Transfer”) without Landlord’s prior written consent, and
the provisions of Paragraph 55A shall not apply to any such Permitted Transfer:
     A. Tenant may sublease all or part of the Premises or assign its interest
in this Lease to any corporation which controls, is controlled by, or is

12

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Quantum 5
under common control with Tenant by means of an ownership interest of more than
fifty percent (50%) providing Tenant remains liable for the payment of Rent and
full performance of the Lease;
     B. Tenant may assign its interest in the Lease to a corporation which
results from a merger, consolidation or other reorganization in which Tenant is
not the surviving corporation so long as (i) 95% of all assets and liabilities
of Tenant are permanently transferred to such assignee, and (ii) immediately
prior to the merger, consolidation or other reorganization, the corporation into
which Tenant is be merged has a net worth equal to or greater than the net worth
of Tenant at the time of Lease execution or at the time of such assignment,
merger, consolidation or reorganization (whichever is greater), or if it does
not, Landlord is provided guaranty of the Lease (in a form reasonably acceptable
to Landlord) from a corporation (a) that is the parent of, or is otherwise
affiliated with, the corporation into which Tenant is to be merged, and
(b) which has a current net worth equal to or greater than the net worth of
Tenant at the time of Lease execution or at the time of such assignment, merger,
consolidation or reorganization (whichever is greater). In the event there is
not a permanent transfer of 95% or more of the assets and liabilities from
Tenant to a third party, and Tenant continues to exist as a separate entity,
both companies shall be jointly and severally liable for the full terms and
conditions of the Lease;
     C. Tenant may assign this Lease to a corporation which purchases or
otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets and liabilities of Tenant are permanently transferred to such assignee
(in the event there is not a permanent transfer of 95% or more of the assets and
liabilities from Tenant to a third party and Tenant continues to exist as a
separate entity, both companies shall be jointly and severally liable for the
full terms and conditions of the Lease), and provided that immediately prior to
such assignment said corporation, has a net worth equal to or greater than the
net worth of Tenant (a) at the time of Lease execution or (b) at the time of
such assignment (whichever is greater), or if it does not, Landlord is provided
a guaranty of the Lease (in a form reasonably acceptable to Landlord) from a
corporation (a) that is the parent of, or is otherwise affiliated with, said
corporation and (b) which has a current net worth equal to or greater than the
net worth of Tenant at the time of Lease execution or at the time of such
assignment, (whichever is greater).”
     16. DESTRUCTION: Effective as of the first day of the Third Option Period,
Lease Paragraph 61 (“Destruction”) shall be deleted in its entirety and replaced
with the following:
     ”61. DESTRUCTION: Paragraph 21 is modified by the following:
     A. Notwithstanding anything to the contrary within Paragraph 21, Landlord
may terminate this Lease in the event of an uninsured event or if insurance
proceeds, net of the deductible, are insufficient to cover one hundred percent
of the rebuilding costs; provided, however, Tenant shall have the right to

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Quantum 5
elect, in its discretion, to contribute such excess funds to permit Landlord to
repair the Premises.
     B. Except as provided in Paragraph 61C, Landlord may not terminate the
Lease if the Premises are damaged by a peril whereby the cost to replace and/or
repair is one hundred percent (100%) covered by the insurance carried by
Landlord pursuant to Paragraph 12, but instead shall restore the Premises in the
manner described by Paragraph 21.
     C. If the Premises are damaged by a peril covered by the insurance carried
by Landlord pursuant to Paragraph 12, Landlord shall have the option to
terminate the Lease if each of the following conditions is satisfied: (i) the
cost to repair or the damage exceeds thirty-three percent (33%) of the then
replacement cost of the Premises; and (ii) the damage occurs at a time when
there is less than five (5) years remaining in the term of the Lease.
     D. If Landlord fails to obtain insurance as required pursuant to
Paragraph 12, and said insurance would have been available to cover any damage
or destruction to the Premises, Landlord shall be required to rebuild, at its
cost, net of the deductible which would have been required under said insurance
policy (which deductible Tenant is required to pay).
     E. If the Premises are damaged by any peril, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord’s architect or construction consultant as to when the restoration work
required of Landlord may be completed. Tenant shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Landlord of a written notice of election to
terminate within seven (7) days after Tenant receives from Landlord the estimate
of the time needed to compete such restoration:
          (1) The Premises are damaged by any peril (not caused by or resulting
from an action of Tenant or Tenant’s agents, employees, contractors or invitees)
and, in the reasonable opinion of Landlord’s architect or construction
consultant, the restoration of the Leased Premises cannot be substantially
completed within 180 days after the date of such damage (subject to force
majeure conditions); or
          (2) The Premises are damaged by any peril (not caused by or resulting
from an action of Tenant or Tenant’s agents, employees, contractors or invitees)
within twelve (12) months of the last day of the Lease term, and, in the
reasonable opinion of Landlord’s architect or construction consultant, the
restoration of the Leased Premises cannot be substantially completed within
sixty (60) days after the date of such damage and Tenant has not exercised its
Option to Extend said Term (or Extended Term as the case may be).”

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Quantum 5
     17. LIABILITY INSURANCE: Effective as of the first day of the Third Option
Period, the first sentence of Lease Paragraph 10 (“Liability Insurance”) shall
be deleted and replaced with the following: ‘Tenant, at Tenant’s expense, agrees
to keep in force during the Term of this Lease a policy of commercial general
liability insurance with combined single limit coverage of not less than Two
Million Dollars ($2,000,000) per occurrence for bodily injury and property
damage occurring in, on or about the Premises, including parking and landscaped
areas.”
     18. LIMITATION OF LIABILITY: Effective as of the first day of the Third
Option Period, Lease Paragraph 36 (“Limitation of Liability”) shall be deleted
in its entirety and replaced with the following:
     ”36. LIMITATION OF LIABILITY: In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord:
(i) the sole and exclusive remedy shall be against Landlord’s interest in the
Premises leased herein;
(ii) no partner of Landlord shall be sued or named as a party in any suit or
action (except as may be necessary to secure jurisdiction of the partnership);
(iii) no service of process shall be made against any partner of Landlord
(except as may be necessary to secure jurisdiction of the partnership);
(iv) no partner of Landlord shall be required to answer or otherwise plead to
any service of process;
(v) no judgment will be taken against any partner of Landlord;
(vi) any judgment taken against any partner of Landlord may be vacated and set
aside at any time without hearing;
(vii) no writ of execution will ever be levied against the assets of any partner
of Landlord;
(viii) these covenants and agreements are enforceable both by Landlord and also
by any partner of Landlord.
     Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or at common law.”
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said March 23, 1994 Lease Agreement shall remain in full force and effect.
(This Space Left Blank Intentionally)

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     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 1
to Lease as of the day and year last written below.

                      LANDLORD:       TENANT:    
 
                    JOHN ARRILLAGA SURVIVOR’S TRUST       QUANTUM CORPORATION  
              a Delaware corporation    
 
                   
By
  /s/ John Arrillaga       By   /s/ Andrew Kryder    
 
                   
 
  John Arrillaga, Trustee                   Date:   June 30, 1997       Andrew
Kryder                      
 
                          Print or Type Name    
 
                    RICHARD T. PEERY SEPARATE       Title:   Vice President
Finance and Corp.    
 
                    PROPERTY TRUST           General Counsel    
 
                   
 
          Date:   June 25, 1997    
 
                   
 
                   
By
  /s/ Richard T. Peery                
 
                   
 
  Richard T. Peery, Trustee                
 
                   
Date:
  June 26, 1997                
 
                   

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Quantum 5
AMENDMENT NO. 2
TO LEASE
     THIS AMENDMENT NO. 2 is made and entered into this 22nd day of March, 2001,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST) (previously known as the “John
Arrillaga Separate Property Trust”) as amended, and RICHARD T. PEERY, Trustee,
or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY
TRUST) as amended, collectively as LANDLORD, and MAXTOR CORPORATION, a Delaware
corporation, as “ASSIGNEE” or “MAXTOR”.
RECITALS
     A. WHEREAS, by Lease Agreement dated March 23, 1994 Landlord leased to
QUANTUM CORPORATION, a Delaware corporation (“ASSIGNOR” or “QUANTUM”) all of
that certain 94,484 ± square foot building located at 1101 Sumac Drive,
Milpitas, California, the details of which are more particularly set forth in
said March 23, 1994 Lease Agreement, and
     B. WHEREAS, said Lease was amended by the Commencement Letter dated
December 15, 1994 which established the January 1, 1995 Commencement Date of the
Lease, and the Termination Date of September 30, 2006, and,
     C. WHEREAS, said Lease was amended by Amendment No. 1 dated April 16, 1997,
which amended the Lease by (i) extending the Term for five (5) years pursuant to
Lease Paragraph 41 (“First Five-Year Option to Extend”), (ii) amending the Basic
Rent schedule and Aggregate Rent, (iii) adding a Third Option to Extend,
(vi) amending Paragraphs 47 (“Cross Default”) and 12 (“Property Insurance”), (v)
replacing Lease Paragraph 52 (“Structural Capital Costs Regulated by
Governmental Agencies After the Commencement of this Lease not Caused by Tenant
or Tenant’s Uses or Remodeling of the Premises”), and (vi) amending and/or
replacing certain provisions of the Lease commencing as of the commencement of
the Third Extended Term, and
     D. WHEREAS, the Lease, together with those certain Amendments described
above in Recitals B and C shall hereinafter collectively be referred to as “the
Lease Agreement”, and
     E. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by (i) acknowledging Landlord’s consent to the assignment of said Lease from
“Quantum Corporation, a Delaware corporation” to “Maxtor Corporation, a Delaware
corporation”, and (ii) replacing Lease Paragraph 42 (“Second Five Year Option to
Extend”) and Paragraph 4 to Amendment No. 1 dated April 16, 1997 (“Third Five
Year Option to Extend”) as hereinafter set forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:

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Quantum 5
     1. ASSIGNMENT OF TENANT’S INTEREST: Notwithstanding anything to the
contrary contained in the Lease Agreement, Landlord hereby understands that
based on Quantum’s notice to Landlord, Landlord hereby acknowledges that the
following transactions have occurred:
          A. Quantum has operated its business at the Premises through two
separate business groups: Quantum HDD, tracked by Quantum HDD common stock, and
Quantum DSS, tracked by Quantum DSS common stock.
          B. On or about, October 3, 2000, Quantum and Maxtor entered into that
certain an Amended and Restated Agreement and Plan of Merger and Reorganization,
dated as of October 3, 2000 (the “Merger Agreement’), wherein they agreed that:
               (i) Quantum will separate its Quantum HDD business from its
Quantum DSS and transfer the assets of Quantum HDD to a newly-formed subsidiary,
Insula Corporation, a Delaware corporation (“Insula”), in exchange for all of
Insula’s common stock and Insula’s agreement to be entirely responsible for all
of the Quantum HDD obligations and liabilities.
               (ii) Immediately after such separation, each currently
outstanding share of Quantum HDD common stock will be redeemed in return for a
share of Insula common stock, such that the holders of Quantum HDD common stock
shall own all of the common stock of Insula.
               (iii) Immediately after said redemption, Insula will merge into
Maxtor and each share of the Insula’s common stock will be converted into the
right to receive approximately 1.52 shares of Maxtor common stock, subject to
possible adjustment as described in the Merger Agreement.
          C. As part of the legal separation of the Quantum HDD business from
the Quantum DSS business, all of the right title and interest of Quantum in the
Lease will be assigned by Quantum to Insula and Insula will assume and agree to
be liable for all of the obligations of Quantum, as Tenant, under the Lease.
     As a result of said merger transaction, as of April 2, 2001, the effective
date of the merger, Maxtor will become the Tenant under the Lease Agreement, and
Maxtor shall assume all obligations of Tenant under the Lease Agreement dated
March 23, 1994, as amended.
     Landlord hereby consents to the foregoing transactions (“Landlord’s
Consent”). Except as expressly set forth below, Landlord’s Consent shall in no
way void or alter any of the terms of the Lease Agreement by and between
Landlord and Tenant, nor shall Landlord’s Consent alter or diminish in any way
Tenant’s obligations to Landlord.
     Landlord has not reviewed the terms of any agreement between Quantum,
Insula and/or Maxtor, and Landlord shall not be bound by any agreement other
than the terms of the Lease Agreement between Landlord and Tenant. Landlord does
not make any warranties or representations as to the condition of the Leased
Premises or the terms of the Lease Agreement between Landlord and Quantum.
Landlord’s consent to the assignment shall in no way obligate

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Quantum 5
Landlord to any further consents or agreements between Quantum and/or Assignee.
So long as Quantum continues to exist as a Delaware corporation, it is agreed
that both Quantum and Maxtor will be jointly and severally liable for all the
terms and conditions of the Lease and all Amendments thereto; provided, however,
that so long as Quantum remains liable for said Lease, no material amendment to
the Lease Agreement after the date hereof shall be binding upon Quantum without
the prior written consent of Quantum, which consent shall not be unreasonably
withheld, and Quantum’s approval shall not be required on transactions related
to Landlord’s Waivers, Landlord’s Consents to Sublease and/or Landlord’s
Consents to Alterations. The foregoing, however, shall not prevent Tenant and
Landlord from entering into any such modification or amendment between
themselves.
     It is further understood that the Security Deposit of Quantum is being
transferred to Maxtor.
     2. OPTIONS TO EXTEND: As consideration for the consent of Landlord herein
set forth, Lease Paragraph 42 (“Second Five Year Option to Extend”) and
Paragraph 4 to Amendment No. 1 dated April 16, 1997 (“Third Five Year Option to
Extend”) are hereby deleted in their entirety and shall be replaced with the
following:
          A. SECOND FIVE YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant
an option to extend this Lease Agreement (“Option to Extend” or the “Option”)
for an additional five years (“Second Extended Term”) upon the following terms
and conditions:
               1) Tenant shall give Landlord written notice of Tenant’s exercise
of this Option to Extend at least one hundred eighty (180) days prior to the
expiration of the Lease Term pursuant to Paragraph A hereof (not later than
April 3, 2011), in which event the Term of the Lease shall be considered
extended for an additional five (5) years, subject to the Basic Rent set forth
below and with: (i) the Basic Rent to be determined pursuant to Paragraph 2)
below; (ii) management fee and the terms and conditions subject to amendment by
Landlord (Landlord, in its sole and absolute discretion, may, but is not
required to, incorporate its then current Lease provisions that are standard in
Landlord’s leases for comparable buildings as of the date of Tenant’s exercise
of its Option to Extend); and (iii) this Paragraph 2.A thereafter deleted. In
the event that Tenant fails to timely exercise Tenant’s Option as set forth
herein in writing, Tenant shall have no further Option to Extend this Lease, and
the Lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 2.
               2) In the event Tenant timely exercises Tenant’s Option to Extend
as set forth herein, Landlord shall, within fifteen (15) days after receipt of
Tenant’s exercise of the Option, advise Tenant of any changes in the management
fee and the terms and conditions as referenced in Paragraph 2.A.1(ii) above) and
the Basic Rent (which shall not be less than the Basic Rent for the fifth year
the current Term) required for the Extended Term of the Lease to make the Basic
Rent for the Premises comparable to the then current market triple net basic
rent for comparable properties either (i) then owned in whole or in part by the
above mentioned Landlord or by members of its immediate family in the vicinity
of the Premises or (ii) if not owned by Landlord or its family as stated herein,
other third party properties in the vicinity of the Premises. Tenant shall have
five (5) days after receipt from the Landlord of said new terms and conditions
and Basic Rent in which to accept said new terms and conditions and Basic Rent
and

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Quantum 5
enter into written documentation confirming same. In the event Tenant fails to
execute said written documentation confirming said new terms and conditions and
Basic Rent for the Second Extended Term of Lease within said five (5) day
period, Tenant shall have no further Option to Extend this Lease, and this Lease
shall continue in full force and effect for the full remaining term hereof
absent of this Paragraph 2, with Landlord having no further responsibility or
obligation to Tenant with respect to Tenant’s Option to Extend.
               3) It is agreed that if Tenant is at any time prior to exercising
its Option to Extend in default of this Lease and has failed to cure the default
in the time period allowed, this Paragraph 2 shall be null and void and Tenant
will have no further rights under this Paragraph. It is further agreed that if
Tenant has exercised its Option to Extend and is subsequently in default, and
has failed to cure the default in the time period allowed by the Lease at any
time prior to, or at the time the lease commences on the Second Extended Term,
Landlord may at its sole and absolute discretion, cancel Tenant’s Option to
Extend, and this Lease will continue in full force and effect for the full
remaining Term hereof, absent of this Paragraph 2.
               4) The Option rights of Tenant under this Paragraph 2.A, and the
Second Extended Term thereunder, are granted for Tenant’s personal benefit and
may not be assigned or transferred by Tenant: except as provided for in Lease
Paragraph 56 (“Permitted Assignments and Subleases”), either voluntarily or by
operation of law, in any manner whatsoever.
               5) Notwithstanding anything to the contrary in this Paragraph,
this Option to Extend is automatically forfeited by Tenant (without notice from
Landlord) in the event Tenant is, at any time during the Term of this Lease, in
default of said Lease and if Tenant does not completely cure said default within
five days for a monetary default and thirty days for a non-monetary default (or
such longer time as permitted by cure in the Lease Agreement). In the event said
Option to Extend is forfeited as stated herein, Tenant shall have no further
Option to Extend this Lease.
          B. THIRD FIVE (5)-YEAR OPTION PERIOD: Provided Tenant has extended the
Lease for an additional five year period as set forth in Paragraph A above,
Landlord hereby grants to Tenant another Option to Extend the Lease Agreement
upon the following terms and conditions;
               1) Tenant shall give Landlord written notice of Tenant’s exercise
of this Option to Extend at least one hundred eighty (180) days prior to the
expiration of the Basic Term hereof (not later than April 3, 2016), in which
event the Term of the Lease shall be considered extended for an additional five
(5) years (“Third Extended Term”) subject to the Basic Rent set forth below and
with: (i) the Basic Rent to be determined pursuant to Paragraph 2) below;
(ii) the management fee and the terms and conditions subject to amendment by
Landlord (Landlord, in its sole and absolute discretion, may, but is not
required to, incorporate its then current Lease provisions that are standard in
Landlord’s leases for comparable buildings as of the date of Tenant’s exercise
of its Option to Extend); and (iii) this Paragraph 2.B thereafter deleted. In
the event that Tenant fails to timely exercise Tenant’s Option as set forth
herein in writing, Tenant shall have no further Option to Extend this Lease,

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Quantum 5
and the Lease shall continue in full force and effect for the full remaining
term hereof, absent this Paragraph 2.B.
               2) In the event Tenant timely exercises Tenant’s Option to Extend
as set forth herein, Landlord shall, within fifteen (15) days after receipt of
Tenant’s exercise of option, advise Tenant of any changes in the management fee
and the terms and conditions as referenced in Paragraph 2.B.1(ii) above and
Basic Rent (which shall not be less than the Basic Rent for the fifth year of
the Second Extended Term) required for the Third Extended Term of the Lease to
make the Basic Rent for the Premises comparable to the then current market
triple net basic rent for comparable properties either (i) then owned in whole
or in part by the above mentioned Landlord or by members of its immediate family
in the vicinity of the Premises or (ii) if not owned by Landlord or its family
as stated herein, other third party properties in the vicinity of the Premises.
Tenant shall have five (5) days after receipt from the Landlord of said new
terms and conditions and Basic Rent in which to accept said new terms and
conditions and Basic Rent and enter into written documentation confirming same.
In the event Tenant fails to execute said written documentation confirming said
new terms and conditions and Basic Rent for the Third Extended Term of Lease
within said five (5) day period, Tenant shall have no further Option to Extend
this Lease, and this Lease shall continue in full force and effect for the full
remaining term hereof absent of this Paragraph 2.B, with Landlord having no
further responsibility or obligation to Tenant with respect to Tenant’s Option
to Extend.
               3) It is agreed that if Tenant is at any time prior to exercising
its Option to Extend in default of this Lease and has failed to cure the default
in the time period allowed, this Paragraph 2.B will be null and void and Tenant
will have no further rights under this Paragraph. It is further agreed that if
Tenant has exercised its Option to Extend and is subsequently in default, and
has failed to cure the default in the time period allowed by the Lease at any
time prior to, or at the scheduled Commencement Date of the Third Extended Term,
Landlord may at its sole and absolute discretion, cancel Tenant’s Option to
Extend, and this Lease will continue in full force and effect for the full
remaining Term hereof, absent of this Paragraph 2.B.
               4) The Option rights of Tenant under this Paragraph 2.B and the
Third Extended Term thereunder, are granted for Tenant’s personal benefit and
may not be assigned or transferred by Tenant, except as provided for in Lease
Paragraph 56 (“Permitted Assignments and Subleases”), either voluntarily or by
operation of law, in any manner whatsoever.
               5) Notwithstanding anything to the contrary in this
Paragraph 2.B, this Option to Extend is automatically forfeited by Tenant
(without notice from Landlord) in the event Tenant is, at any time during the
Term of this Lease, in default of said Lease and if Tenant does not completely
cure said default within five days for a monetary default and thirty days for a
non-monetary default (or such longer time as permitted by cure in the Lease
Agreement). In the event said Option to Extend is forfeited as stated herein,
Tenant shall have no further Option to Extend this Lease.
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said March 23, 1994 Lease Agreement shall remain in full force and effect.

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Quantum 5
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 2
to Lease as of the day and year last written below.

                  LANDLORD:       ASSIGNE   E/MAXTOR:
 
                JOHN ARRILLAGA SURVIVOR’S TRUST       MAXTOR CORPORATION        
    a Delaware corporation
 
               
By
  /s/ John Arrillaga by Richard T. Peery his attorney in fact       By   /s/
Glenn H. Stevens
 
               
 
  John Arrillaga, Trustee            
 
                Date:   March 30, 2001           Glenn H. Stevens
 
                                Print or Type Name
 
                RICHARD T. PEERY SEPARATE       Title:   V.P., General Counsel
and Secretary
 
                   
PROPERTY TRUST
         
 
          Date:   April 1, 2001
 
                   
By
  /s/ Richard T. Peery            
 
               
 
  Richard T. Peery, Trustee            
 
                Date:   March 30, 2001       ASSIGNOR/QUANTUM:
 
                   
 
                            QUANTUM CORPORATION             a Delaware
corporation
 
               
 
          By   /s/ Norm Claus
 
               
 
                         
 
                        Print or Type Name
 
               
 
          Title:   V.P. Real Estate
 
                     
 
          Date:   March 30, 2001
 
                   

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Quantum 2
LEASE AGREEMENT
     THIS LEASE, made this 16th day of April, 1997 between JOHN ARRILLAGA,
Trustee, or his Successor Trustee, UTA dated 7/20/77 (JOHN ARRILLAGA SURVIVOR’S
TRUST) as amended, and RICHARD T. PERRY, Trustee, or his Successor Trustee, UTA
dated 7/20/77 (RICHARD T. PERRY SEPARATE PROPERTY TRUST) as amended, hereinafter
called Landlord and QUANTIM CORPORATION, a Delaware corporation, hereinafter
called Tenant.
WITNESSETH:
     Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord those certain premises (the “Premises”) outlined in red on Exhibit “A”,
attached hereto and incorporated herein by this reference thereto more
particularly described as follows:
All of that land containing approximately 9,656 ± acres and that certain 182,355
± square foot two-story building (“Building 6”) and parking appurtenant thereto,
to be constructed and installed by Landlord as shown within the area outlined in
Green on Exhibit A to be located on Sumac Drive, Milpitas, California, 95035.
Said Premises is more particularly shown within the area outlined in Red on
Exhibit A attached hereto and incorporated herein by this reference. The
interior of the Leased Premises shall be improved by Landlord in the
configuration as shown in Red on Exhibit B to be attached hereto and
incorporated herein by this reference. The building shell shall be constructed
in accordance with the shell and site improvement specifications set forth on
Exhibit A, and the general building elevation set forth on Exhibit A.
     The word “Premises” as used throughout this lease is hereby defined to
include the Hetch-Hetchy Land as described in Paragraph 49, the nonexclusive use
of landscaped areas, sidewalks and driveways in front of or adjacent to the
Premises, and the nonexclusive use of the area directly underneath or over such
sidewalks and driveways. The gross leasable area of the building shall be
measured from outside of exterior walls, and shall include any atriums, covered
entrances or egresses and covered loading areas.
     Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth and Tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all of said terms,
covenants and conditions. This Lease is made upon the conditions of such
performance and observance.
     1. USE: Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances for the purpose of office,
sales and R&D, and related uses necessary for the use of Tenant or any approved
assignee or subtenant to conduct its business providing any and all uses of the
Premises shall be subject to and in conformance with all governmental laws and
ordinances, and for no other purpose without Landlord’s prior written consent,
Tenant shall not do or permit to be done in or about the Premises nor bring or
keep or permit to be brought or kept in or about the Premises anything which is
prohibited by or will in any way increase the existing rate of (or otherwise
affect) fire or any insurance covering the Premises or any part thereof, or any
of its contents without the prior

 

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written consent of Landlord, and provided Tenant bears any cost related to such
increased rate or will cause a cancellation of any insurance covering the
Premises or any part thereof, or any of its contents. Tenant shall not do or
permit to be done anything in, on or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Premises or neighboring premises or injure or annoy them, or use or allow the
Premises to be used for any improper, immoral, unlawful or objectionable
purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about
the Premises. No sale by auction shall be permitted on the Premises. Tenant
shall not place any loads upon the floors, walls, or ceiling which endanger the
structure, or place any harmful fluids or other materials in the drainage system
of the building or overload existing electrical or other mechanical systems. No
waste materials or refuse shall be dumped upon or permitted to remain upon any
part of the Premises or outside of the building in which the Premises are a part
except on trash containers placed inside exterior enclosures designated by
Landlord for that purpose or inside of the building proper where designated by
Landlord. No materials, supplies, equipment, finished products or semi finished
products, raw materials or articles of any nature shall be stored upon or
permitted to remain outside the Premises. Tenant shall not place anything or
allow anything to be placed near the glass of any window, door partition or wall
which may appear unsightly from outside the Premises. No loudspeaker or other
device, system or apparatus which can be heard outside the Premises shall be
used in or at the Premises without the prior written consent of landlord. Tenant
shall not commit or suffer to be committed any waste in or upon the Premises.
Tenant shall indemnity, defend and hold landlord harmless against any loss,
expense, damage, reasonable attorneys’ fees, or liability arising out of failure
of Tenant to comply with any applicable law that governs Tenant’s use of the
Premises. Tenant shall comply with any covenant, condition, or restriction
(“CC&R’s”) affecting the Premises. The Provisions of this paragraph are for the
benefit of Landlord only and shall not be construed to be for the benefit of any
tenant or occupant of the Premises.
     2. TERM AND COMMENCEMENT DATE OF LEASE: See Paragraph 40, 41 and 42 of this
Lease.
     3. POSSESSION: If Landlord, for any reason whatsoever other than Landlord’s
default cannot deliver possession of said premises to Tenant at the commencement
of the said term, as hereinbefore specified, this Lease shall not be void or
voidable; no obligation of Tenant shall be affected thereby; nor shall Landlord
or Landlord’s agents be liable to Tenant for any loss or damage resulting
therefrom; but in that event the commencement and termination dales of the
Lease, and all other dates affected thereby shall be revised to conform to the
date of Landlord’s delivery of possession, as specified in Paragraph 2B, above.
The above is, however, subject to the provision that the period of delay of
delivery of the Premises shall not exceed 180 days from the commencement date
herein (except those delays caused by Acts of God, strikes, war, utilities,
governmental bodies, weather, unavailable materials, and delays beyond
Landlord’s control shall be excluded in calculating such period) in which
instance Tenant, at its option, may, by written notice to Landlord, terminate
this Lease.
     4. RENT:
          A. Basic Rent: Tenant agrees to pay to Landlord at such place as
Landlord may designate without deduction, offset, prior notice, or demand, and
Landlord agrees to accept

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as Basic Rent for the leased premises the total sum of the amount for the
original Lease Term to be calculated pursuant to Paragraph 39.
          B. Time for Payment: Full monthly rent is due in advance on the first
day of each calendar month. In the event that the term of this Lease commences a
date other than the first day of a calendar month, on the date of commencement
of the term hereof Tenant shall pay to Landlord as rent for the period from such
date of commencement to the first day of the next succeeding calendar month that
proportion of the monthly rent hereunder which the number of days between such
date of commencement and the first day of the next succeeding calendar month
bears to thirty (30). In the event that the term of this Lease for any reason
ends on a date other than the last day of a calendar month, on the first day of
the last calendar month of the term hereof Tenant shall pay to Landlord as rent
for the period from said first day of said last calendar month to and including
the last day of the term hereof that proportion of the monthly rent hereunder
which the number of days between said first day of said last calendar month and
the last day of the term hereof bears to thirty (30).
          C. Late Charge: Notwithstanding any other provision of this Lease, if
Tenant is in default in the payment of rental as set forth in this Paragraph 4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to the
delinquent rental due, a late charge for each rental payment in default ten
(10) days. Said late charge shall equal ten percent (10%) of each rental payment
so in default.
          D. Additional Rent: Beginning with the commencement data of the term
of this Lease. Tenant shall pay to Landlord or to Landlord’s designated agent in
addition to the Basic Rent and as Additional Rent the following;
               (a) All Taxes relating to the Premises as set forth in
Paragraph 9, and
               (b) All insurance premiums relating to the Premises, as set forth
in Paragraph 12, and
               (c) All charges, costs and expenses, which Tenant is required to
pay hereunder, together with all interest and penalties, costs and expenses
including reasonable attorneys’ fees and legal expenses, that may accrue thereto
in the event of Tenant’s failure to pay such amounts, and all damages,
reasonable costs and expenses which Landlord may incur by reason of default of
Tenant or failure on Tenant’s part to comply with the terms of this Lease. In
the event of nonpayment by Tenant of Additional Rent landlord shall have all the
rights and remedies with respect to thereto as Landlord has for nonpayment of
rent.
     The Additional Rent due hereunder shall be paid to Landlord or Landlord’s
agent (i) within five days for taxes and insurance and within thirty (30) days
for all other Additional Rent items after presentation of invoice from Landlord
or Landlord’s agent setting forth such Additional Rent and/or (ii) at the option
of Landlord. Tenant shall pay to Landlord monthly, in advance, Tenant’s prorata
share of an amount estimated by Landlord to be landlord’s approximate average
monthly expenditure for such Additional Rent items, which estimated amount shall
be reconciled within 180 days of the end of each calendar year or more
frequently if Landlord elects to do so at Landlord’s sole and absolute
discretion as compared to Landlord’s

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actual expenditure for said Additional Rent items, with Tenant paying to
Landlord, upon demand, any amount of actual expenses expended by Landlord in
excess of said estimated amount, or Landlord crediting to Tenant’s account
(providing Tenant is not in default in the performance of any of the terms,
covenants and conditions of this Lease, in which case such amount shall be held
by Landlord as a credit for Tenant’s account until such default has been cured)
any amount of estimated payments made by Tenant in excess of Landlord’s actual
expenditures for said Additional Rent items.
          E. Fixed Management Fee: Beginning with the Commencement Date of the
Term of this Lease, Tenant shall pay to Landlord, in addition to the Basic Rent,
a fixed monthly management fee (“Management Fee”) equal to 1% of the Basic Rent
due for each month during the Lease Term.
     The respective Obligations of Landlord and Tenant under this paragraph
shall survive the expiration or other termination of the term of this Lease,
and; if the term hereof shall expire or shall otherwise terminate on a day other
than the last day of a calendar year, the actual Additional Rent incurred for
the calendar year in which the term hereof expires or otherwise terminates shall
be determined and settled on the basis of the statement of actual Additional
Rent for such calendar year and shall be prorated in the proportion which the
number of days in such calendar year preceding such expiration or termination
bears to 365.
          F. Place of Payment of Rent and Additional Rent: All Basic Rent
hereunder and all payments hereunder for Additional Rent shall be paid to
Landlord at the office of Landlord at Peery/Arrillaga, File 1504, P.O. Box
60000, San Francisco, CA 94160 or to such other person or to such other place as
Landlord may from time to time designate in writing.
          G. Security Deposit: Concurrently with Tenant’s execution of this
Lease, Tenant shall deposit with Landlord the sum of SEVEN HUNDRED ELEVEN
THOUSAND ONE HUNDRED EIGHTY FOUR AND 50/100 Dollars ($711,184.50). Said sum
shall be held by Landlord as a Security Deposit for the faithful performance by
Tenant of all of the terms, covenants, and conditions of this Lease to be kept
and performed by Tenant during the term hereof. If Tenant defaults with respect
to any provision of this Lease, including, but not limited to, the provisions
relating to the payment of rent and any of the monetary sums due herewith,
Landlord may (but shall not be required to) use, apply or retain all or any part
of this Security Deposit for the payment of any other amount which Landlord may
spend by reason of Tenant’s default or to compensate Landlord for any other loss
or damage which Landlord may suffer by reason of Tenant’s default. If any
portion of said Deposit is so used or applied, Tenant shall, within ten
(10) days after written demand therefor, deposit cash with Landlord in the
amount sufficient to restore the Security Deposit to its original amount.
Tenant’s failure to do so shall be a material breach of this Lease. Landlord
shall not be required to keep this Security Deposit separate from its general
funds, and Tenant shall not be entitled to interest on such Deposit. If Tenant
fully and faithfully performs every provision of this Lease to be performed by
it, the Security Deposit or any balance thereof shall be returned to Tenant (or
at Landlord’s option, to the last assignee of Tenant’s interest hereunder) at
the expiration of the Lease term and after Tenant has vacated the Premises. In
the event of termination of Landlord’s interest in this Lease, Landlord shaft
transfer said Deposit to Landlord’s successor in interest whereupon Tenant
agrees

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     to release Landlord from liability for the return of such Deposit or the
accounting therefor. See Paragraph 50
     5. ACCEPTANCE AND SURRENDER OF PREMISES: By entry hereunder, Tenant accepts
the Premises as being in good and sanitary order, condition and repair and
accepts the building and improvements included in the Premises in their present
condition and without representation or warranty by Landlord as to the condition
of such building or as to the use or occupancy which may be made thereof. Any
exceptions to the foregoing must be by written agreement executed by Landlord
and Tenant. Tenant agrees on the last day of the Lease term, or on the sooner
termination of this Lease, to surrender the Premises promptly and peaceably to
Landlord in good condition and repair (damage by Acts of God, fire, normal wear
and tear excepted), with all interior walls cleaned so that they appear freshly
painted, and repaired and replaced, if damaged; all floors cleaned and waxed;
all carpets cleaned and shampooed; all broken, marred or nonconforming
accoustical ceiling tiles replaced; all windows washed; the airconditioning and
heating systems serviced by a reputable and licensed service firm and in good
operating condition and repair; the plumbing and electrical systems and lighting
in good order and repair, including replacement of any burned out or broken
light bulbs or ballasts; the lawn and shrubs in good condition including the
replacement of any dead or damaged plantings; the sidewalk, driveways and
parking areas in good order, condition and repair; together with all
alterations, additions, and improvements which may have been made in to, or on
the Premises (except moveable trade fixtures installed at the expense of Tenant)
except that Tenant shall ascertain from Landlord within ninety (90) days before
the end of the term of this Lease whether Landlord desires to have the Premises
or any part or parts thereof restored to their condition and configuration as
when the Premises were delivered to Tenant and if Landlord shall so desire, then
Tenant shall restore said Premises or such part or parts thereof before the end
of this Lease at Tenant’s sole cost and expense. Tenant, on or before the end of
the term or sooner termination of this Lease, shall remove all of Tenant’s
personal property and trade fixtures from the Premises, and all property not so
removed on or before the end of the term or sooner termination of this Lease
shall be deemed abandoned by Tenant and title to same shall thereupon pass to
Landlord without compensation to Tenant. Landlord may upon termination of this
Lease, remove all moveable furniture and equipment so abandoned by Tenant, at
Tenant’s sole cost, and repair any damage caused by such removal at Tenant’s
sole cost. It the Premises be not surrendered at the end of the term or sooner
termination of this Lease, Tenant shall indemnify Landlord against loss or
liability resulting from the delay by Tenant in so surrendering the Premises
including, without limitation, any claims made by any succeeding tenant founded
on such delay. Nothing contained herein shall be construed as an extension of
the term hereof or as a consent of Landlord to any holding over by Tenant. The
voluntary or other surrender of this Lease or the Premises by Tenant or a mutual
cancellation of this Lease shall not work as a merger and, at the option of
Landlord, shall either terminate all or any existing subleases or subtenancies
or operate as an assignment to Landlord of all or any such subleases or
subtenancies. See Paragraph 51
     6. ALTERATIONS AND ADDITIONS: Tenant shall not make, or suffer to be made,
any alteration or addition to the Premises, or any part thereof, without the
written consent of Landlord first had and obtained by Tenant (such consent not
to be unreasonably withheld), but at the cost of Tenant, and any addition to, or
alteration of, the Premises, except moveable furniture and trade fixtures, shall
at once become a part of the Premises and belong to Landlord.

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Landlord reserves the right to approve all contractors and mechanics proposed by
Tenant to make such alterations and additions. Tenant shall retain title to all
moveable furniture and trade fixtures placed in the Premises. All heating,
lighting, electrical, airconditioning, floor to ceiling partitioning, drapery,
carpeting, and floor installations made by Tenant, together with all property
that has become an integral part of the Premises, shall not be deemed trade
fixtures. Tenant agrees that it will not proceed to make such alteration or
additions, without having obtained consent from Landlord to do so, and until
five (5) days from the receipt of such consent, in order that Landlord may post
appropriate notices to avoid any liability to contractors or material suppliers
for payment for Tenant’s improvements. Tenant will at all times permit such
notices to be posted and to remain posted until the completion of work. Tenant
shall, if required by Landlord, secure at Tenant’s own cost and expense, a
completion and lien indemnity bond, satisfactory to Landlord, for such work.
Tenant further covenants and agrees that any mechanic’s lien filed against the
Premises for work claimed to have been done for, or materials claimed to have
been furnished to Tenant, will be discharged by Tenant, by bond or otherwise,
within ten (10) days after Tenant receives notice of the filing thereof, at the
cost and expense of Tenant. Any exceptions to the foregoing must be made in
writing and executed by both Landlord and Tenant. See Paragraph 51.
     7. TENANT MAINTENANCE: Tenant shall, at its sole cost and expense, keep and
maintain the Premises (including appurtenances) and every part thereof in a high
standard of maintenance and repair, or replacement, and in good and sanitary
condition. Tenant’s maintenance and repair responsibilities herein referred to
include, but are not limited to, janitorization, all windows (interior and
exterior), window frames, plate glass and glazing (destroyed by accident or act
of third parties), truck doors, plumbing systems (such as water and drain lines,
sinks, toilets, faucets, drains, showers and water fountains), electrical
systems (such as panels, conduits, outlets, lighting fixtures, lamps, bulbs,
tubes and ballasts), heating and airconditioning systems (such as compressors,
fans, air handlers, ducts, mixing boxes, thermostats, time clocks, boilers,
heaters, supply and return grills), structural elements and exterior surfaces of
the building, store fronts, roofs, downspouts, all interior improvements within
the premises including but not limited to wall coverings, window coverings,
carpet, floor coverings, partitioning, ceilings, doors (both interior and
exterior), including closing mechanisms, latches, locks, skylights (if any),
automatic fire extinguishing systems, and elevators and all other interior
improvements of any nature whatsoever, and all exterior improvements including
but not limited to landscaping, sidewalks, driveways, parking lots including
striping and sealing, sprinkler systems, lighting, ponds, fountains, waterways,
and drains. Tenant agrees to provide carpet shields under all rolling chairs or
to otherwise be responsible for wear and tear of the carpet caused by such
rolling chairs if such wear and tear exceeds that caused by normal foot traffic
in surrounding areas. Areas of excessive wear shall be replaced at Tenant’s sole
expense upon Lease termination. Tenant hereby waives all rights under, and
benefits of, Subsection 1 of Section 1932 and Section 1941 and 1942 of the
California Civil Code and under any similar law, statute or ordinance now or
hereafter in effect. In the event any of the above maintenance responsibilities
apply to any other tenant(s) of Landlord where there is common usage with other
tenant(s), such maintenance responsibilities and charges shall be allocated to
the leased Premises by square footage or other equitable basis as calculated and
determined by Landlord. See Paragraph 52

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     8. UTILITIES: Tenant shall pay promptly, as the same become due, all
charges for water, gas, electricity, telephone, telex and other electronic
communication service, sewer service, waste pick-up and any other utilities,
materials or services furnished directly to or used by Tenant on or about the
Premises during the term of this Lease, including, without limitation, any
temporary or permanent utility surcharge or other exactions whether or not
hereinafter imposed. In the event the above charges apply to any other tenant(s)
of Landlord where there is common usage with other tenant(s), such charges shall
be allocated to the leased Premises by square footage or other equitable basis
as calculated and determined by Landlord.
     Landlord shall not be liable for and Tenant shall not be entitled to any
abatement or reduction of rent by reason of any interruption or failure of
utility services to the Premises when such interruption or failure is caused by
accident, breakage, repair, strikes, lockouts, or other labor disturbances or
labor disputes of any nature, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord.
     9. TAXES:
          A. Notwithstanding the following, Tenant is responsible for paying all
real estate taxes and assessments assessed on the Premises leased hereunder from
November 1, 1995. As Additional Rent and in accordance with Paragraph 4D of this
Lease, Tenant shall pay to Landlord, or if Landlord so directs, directly to the
Tax Collector, all Real Property Taxes relating to the Premises. In the event
the Premises leased hereunder consist of only a portion of the entire tax
parcel, Tenant shall pay to Landlord Tenant’s proportionate share of such real
estate taxes allocated to the leased Premises by square footage or other
reasonable basis as calculated and determined by Landlord. If the tax billing
pertains 100% to the leased Premises, and Landlord chooses to have Tenant pay
said real estate taxes directly to the Tax Collector, then in such event it
shall be the responsibility of Tenant to obtain the tax and assessment bills and
pay, prior to delinquency, the applicable real property taxes and assessments
pertaining to the leased Premises, and failure to receive a bill for taxes
and/or assessments shall not provide a basis for cancellation of or
nonresponsibility for payment of penalties for nonpayment or late payment by
Tenant. The term “Real Property Taxes,” as used herein, shall mean (i) all
taxes, assessments, levies and other charges of any kind or nature whatsoever,
general and special, foreseen and unforeseen (including all installments of
principal and interest required to pay any general or special assessments for
public improvements and any increases resulting from reassessments caused by any
change in ownership of the Premises) now or hereafter imposed by any
governmental or quasi-governmental authority or special district having the
direct or indirect power to tax or levy assessments, which are levied or
assessed against, or with respect to the value, occupancy or use of, all or any
portion of the Premises (as now constructed or as may at any time hereafter be
constructed, altered or otherwise changed) or Landlord’s interest therein; any
improvements located within the Premises (regardless of ownership); the
fixtures, equipment and other property of Landlord, real or personal, that are
an integral part of and located in the Premises; or parking areas, public
utilities, or energy within the Premises; (ii) all charges, levies or fees
imposed by reason of environmental regulation or other governmental control of
the Premises; and (iii) all costs and fees (including reasonable attorneys’
fees) incurred by Landlord in reasonably contesting any Real Property Tax and in
negotiating with public authorities as to any Real Property Tax. If at any time
during the term of this Lease the taxation or assessment of the Premises
prevailing as of the commencement dale of this Lease shall be altered so that in
lieu

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of or in addition to any Real Property Tax described above there shall be
levied, assessed or imposed (whether by reason of a change in the method of
taxation or assessment, creation of a new tax or charge, or any other cause) an
alternate or additional tax or charge (i) on the value, use or occupancy of the
Premises or Landlord’s interest therein or (ii) on or measured by the gross
receipts, income or rentals from the Premises, on Landlord’s business of leasing
the Premises, or computed in any manner with respect to the operation of the
Premises, then any such tax or charge, however designated, shall be included
within the meaning of the term “Real Property Taxes” for purposes of this Lease.
If any Real Property Tax is based upon property or rents unrelated to the
Premises, than only that part of such Real Property Tax that is fairy allocable
to the Premises shall be Included within the meaning of the term “Real Property
Taxes”, Notwithstanding the foregoing, the term “Real Property Taxes” shall not
include estate, inheritance, gift or franchise taxes of Landlord or the federal
or state net Income tax imposed on Landlord’s income from all sources. See
Paragraph 53.
          B. Taxes on Tenant’s Property: Tenant shall be liable for and shall
pay ten days before delinquency, taxes levied against any personal property or
trade fixtures placed by Tenant in or about the Premises. If any such taxes on
Tenant’s personal property or trade fixtures are levied against Landlord or
Landlord’s property or if the assessed value of the Premises is increased by the
inclusion therein of a value placed upon such personal property or trade
fixtures of Tenant and if Landlord, after written notice to Tenant, pays the
taxes based on such increased assessment, which landlord shall have the right to
do regardless of the validity thereof, but only under proper protest if
requested by Tenant, Tenant shall upon demand, as the case may be, repay to
Landlord the taxes so levied against Landlord, or the proportion of such taxes
resulting from such increase in the assessment; provided that in any such event
Tenant shall have the right in the name of Landlord and with Landlord’s full
cooperation, to bring suit in any court of competent jurisdiction to recover the
amount of such taxes so paid under protest, and any amount so recovered shall
belong to Tenant.
     10. LIABILITY INSURANCE: Tenant, at Tenant’s expense, agrees to keep in
force during the term of this Lease a policy of commercial general liability
insurance with combined single limit coverage of not less than Two Million
Dollars ($2,000,000) per occurrence for bodily injury and property damage
occurring in, on or about the Premises, including parking and landscaped areas.
Such insurance shall be primary and noncontributory as respects any insurance
carried by Landlord. The policy or policies effecting such insurance shall name
Landlord as additional insureds, and shall insure any liability of Landlord,
contingent or otherwise, as respects acts or omissions of Tenant, its agents,
employees or invitees or otherwise by any conduct or transactions of any of said
persons in or about or concerning the Premises, including any failure of Tenant
to observe or perform any of its obligations hereunder; shall be issued by an
insurance company admitted to transact business in the State of California; and
shall provide that the insurance effected thereby shall not be canceled, except
upon thirty (30) days’ prior written notice to Landlord. A certificate of
insurance of said policy shall be delivered to Landlord. If, during the term of
this Lease, in the considered opinion of Landlord’s Lender, insurance advisor,
or counsel, the amount of insurance described in this Paragraph 10 is not
adequate, Tenant agrees to increase said coverage to such reasonable amount as
Landlord’s Lender, insurance advisor, or counsel shall deem adequate.

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     11. TENANT’S PERSONAL PROPERTY INSURANCE AND WORKMAN’S COMPENSATION
INSURANCE: Tenant shall maintain a policy or policies of fire and property
damage insurance in “all risk” form with a sprinkler leakage endorsement
insuring the personal property, inventory, trade fixtures, and leasehold
improvements within the leased Premises for the full replacement value thereof.
The proceeds from any of such policies shall be used for the repair or
replacement of such items so insured.
     Tenant shall also maintain a policy or policies of workman’s compensation
insurance and any other employee benefit insurance sufficient to comply with all
laws.
     12. PROPERTY INSURANCE: Landlord shall purchase and keep in force, and as
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord (or Landlord’s agent if so directed by Landlord) Tenant’s
proportionate share (allocated to the leased Premises by square footage or other
equitable basis as calculated and determined by Landlord) of the deductibles on
insurance claims and the cost of, policy or policies of insurance covering loss
or damage to the Premises (excluding routine maintenance and repairs and
incidental damage or destruction caused by accidents or vandalism for which
Tenant is responsible under Paragraph 7) in the amount of the full replacement
value thereof, providing protection against those perils included within the
classification of “all risks” insurance and flood and/or earthquake insurance,
if available, plus a policy of rental income insurance in the amount of one
hundred (100%) percent of twelve (12) months Basic Rent, plus sums paid as
Additional Rent. If such insurance cost is increased due to Tenant’s use of the
Premises, Tenant agrees to pay to Landlord the full cost of such increase.
Tenant shall have no interest in nor any right to the proceeds of any insurance
procured by Landlord for the Premises.
     Landlord and Tenant do each hereby respectively release the other, to the
extent of insurance coverage of the releasing party, from any liability for loss
or damage caused by fire or any of the extended coverage casualties included in
the releasing party’s insurance policies, irrespective of the cause of such fire
or casualty; provided, however, that if the Insurance policy of either releasing
party prohibits such waiver, than this waiver shall not take effect until
consent to such waiver is obtained. If such waiver is so prohibited, the insured
party affected shall promptly notify the other party thereof.
     13. INDEMNIFICATION: Landlord shall not be liable to Tenant and Tenant
hereby waives all claims against Landlord or any injury to or death of any
person or damage to or destruction of property in or about the Premises by or
from any cause whatsoever, including, without limitation, gas, fire, oil,
electricity or leakage of any character from the roof, walls, basement or other
portion of the Premises but excluding, however, the willful misconduct or
negligence of Landlord, its agents, servants employees, invitees, or contractors
of which negligence Landlord has knowledge and reasonable time to correct.
Except as to injury to persons or damage to property to the extent arising from
the willful misconduct or the negligence of Landlord, its agents, servants,
employees, invitees or contractors, and subject to the last two sentences of
Paragraph 12, Tenant shall hold Landlord harmless from and defend Landlord
against any and all expenses, including reasonable attorneys’ fees, in
connection therewith, arising out of any injury to or death of any person or
damage to or destruction of property occurring in, on or about the Premises, or
any part thereof, from any cause whatsoever.

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     14. COMPLIANCE: Tenant, at its sole cost and expense, shall promptly comply
with all Laws, statutes, ordinances and governmental rules, regulations of
requirements now or hereafter in effect; with the requirements of any board of
fire underwriters or other similar body now or hereafter constituted; and with
any direction or occupancy certificate issued pursuant to law by any public
officer; provided, however, that no such failure shall be deemed a breach of the
provisions if Tenant, immediately upon notification, commences to remedy or
rectify said failure. The judgment of any court of competent jurisdiction or the
admission of Tenant in any action against Tenant, whether landlord be a party
thereto or not, that Tenant has violated any such law, statute, ordinance or
governmental rule, regulation, requirement, direction or provision, shall be
conclusive of that fact as between Landlord and Tenant. Tenant shall, at its
sole cost and expense, comply with any and all requirements pertaining to said
Premises, of any insurance organization or company, necessary for the
maintenance of reasonable fire and public liability insurance covering
requirements pertaining to said Premises, of any insurance organization or
company, necessary for the maintenance of reasonable fire and public liability
insurance covering the Premises. See Paragraphs 44 and 52
     15. LIENS: Tenant shall keep the Premises free from any liens arising out
of any work performed, materials furnished or obligation incurred by Tenant. In
the event that Tenant shall not, within ten (10) days following Tenant’s receipt
of notice of the imposition of such lien, cause the same to be released of
record, Landlord shall have, in addition to all other remedies provided herein
and by law, the right, but no obligation, to cause the same to be released by
such means as it shall deem proper, including payment of the claim giving rise
to such lien. All sums paid by Landlord for such purpose, and all expenses
incurred by it in connection therewith shall be payable to Landlord by Tenant on
demand with interest at the prime rate of interest as quoted by the Bank of
America.
     16. ASSIGNMENT AND SUBLETTING: Tenant shall not assign, transfer, or
hypothecate the leasehold estate under this Lease, or any interest therein, and
shall not sublet the Premises, or any part thereof, or any right, or privilege
appurtenant thereto or suffer any other person or entity to occupy or use the
Premises, or any portion thereof, without, in each case, the prior written
consent of Landlord which consent will not be unreasonably withheld. In the
event Tenant is allowed to assign, transfer or sublet the whole or any part of
the Premises, with the prior written consent of Landlord no assignee, transferee
or subtenant shall assign or transfer this Lease, either in whole or in part, or
sublet the whole or any part of the Premises, without also having obtained the
prior written consent of Landlord. A consent of Landlord to one assignment,
transfer, hypothecation, subletting, occupation or use by any other person shall
not release Tenant from any of Tenant’s obligations hereunder or be deemed to be
a consent to any subsequent similar or dissimilar assignment, transfer,
hypothecation, subletting, occupation or use by any other person. Any such
assignment, transfer, hypothecation, subletting, occupation or use without such
consent shall be void and shall constitute a breach of this Lease by Tenant and
shall, at the option of Landlord exercised by written notice to Tenant,
terminate this Lease. The leasehold estate under this Lease shall not, nor shall
any interest therein, be assignable for any purpose by operation of law without
the written consent of Landlord. As a condition to its consent, Landlord shall
require Tenant to pay all reasonable expenses in connection with the assignment
and Landlord shall require Tenant’s assignee or transferee (or other assignees
or transferees) to assume in writing all of the obligations under this Lease and
for Tenant to remain liable to Landlord under the Lease. See Paragraphs 55 and
56

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     17. SUBORDINATION AND MORTGAGES: In the event Landlord’s title or leasehold
interest is now or hereafter encumbered by a deed of trust, upon the Interest of
Landlord in the land and buildings in which the demised Premises are located, to
secure a loan from a lender (hereinafter referred to as “Lender”) to Landlord.
Tenant shall, at the request of Landlord or Lender, execute in writing an
agreement subordinating its rights under this Lease to the lien of such deed of
trust, or, if so requested, agreeing that the lien of Lender’s deed of trust
shall be or remain subject and subordinate to the rights of Tenant under this
Lease. Notwithstanding any such subordination, Tenant’s possession under this
Lease shall not be disturbed if Tenant is not in default and so long as Tenant
shall pay all rent and observe and perform all of the provisions set forth in
this Lease. See Paragraph 57.
     18. ENTRY BY LANDLORD: Landlord reserves, and shall at all reasonable times
have, the right to enter the Premises to inspect them; to perform any services
to be provided by Landlord hereunder; to make repairs or provide any services to
a contiguous tenant(s); to submit the Premises to prospective purchasers,
mortgagors or tenants; to post notices of nonresponsibility; and to alter,
improve or repair the Premises or other parts of the building, all without
abatement of rent, and may erect scaffolding and other necessary structures in
or through the Premises where reasonably required by the character of the work
to be performed; provided, however that the business of Tenant shall be
interfered with to the least extent that is reasonably practical. Any entry to
the Premises by Landlord for the purposes provided for herein 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, actual or constructive, of Tenant
from the Premises or any portion thereof. See Paragraph 58
     19. BANKRUPTCY AND DEFAULT: The commencement of a bankruptcy action or
liquidation action or reorganization action or insolvency action or an
assignment of or by Tenant for the benefit of creditors, or any similar action
undertaken by Tenant, or the insolvency of Tenant, shall, at Landlord’s option,
constitute a breach of this Lease by Tenant, if the trustee or receiver
appointed to serve during a bankruptcy, liquidation, reorganization, insolvency
or similar action elects to reject Tenant’s unexpired Lease, the trustee or
receiver shall notify Landlord in writing of its election within thirty
(30) days after an order for relief in a liquidation action or within thirty
(30) days after the commencement of any action.
     Within thirty (30) days after court approval of the assumption of this
Lease, the trustee or receiver shall cure (or provide adequate assurance to the
reasonable satisfaction of Landlord that the trustee or receiver shall cure) any
and all previous defaults under the unexpired Lease and shall compensate
Landlord for all actual pecuniary loss and shall provide adequate assurance of
future performance under said Lease to the reasonable satisfaction of Landlord.
Adequate assurance of future performance, as used herein, includes, but shall
not be limited to: (i) assurance of source and payment of rent, and other
consideration due under this Lease; (ii) assurance that the assumption or
assignment of this Lease will not breach substantially any provision, such as
radius, location, use, or exclusivity provision, in any agreement relating to
the above described Premises.
     Nothing contained in this section shall affect the existing right of
Landlord to refuse to accept an assignment upon commencement of or in connection
with a bankruptcy, liquidation, reorganization or insolvency action or an
assignment of Tenant for the benefit of creditors or

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other similar act. Nothing contained in this Lease shall be construed as giving
or granting or creating an equity in the demised Premises to Tenant. In no event
shall the leasehold estate under this Lease, or any interest therein, be
assigned by voluntary or involuntary bankruptcy proceeding without the prior
written consent of Landlord. In no event shall this Lease or any rights or
privileges hereunder be an asset of Tenant under any bankruptcy, insolvency or
reorganization proceedings.
     The failure to perform or honor any covenant, condition or representation
made under this Lease shall constitute a default hereunder by Tenant upon
expiration of the appropriate grace period hereinafter provided. Tenant shall
have a period of ten (10) days from the date of written notice from Landlord
within which to cure any default in the payment of rental or adjustment thereto.
Tenant shall have a period of thirty (30) days from the date of written notice
from Landlord within which to cure any other default under this Lease. Upon an
uncured default of this Lease by Tenant, Landlord shall have the following
rights and remedies in addition to any other rights or remedies available to
Landlord at law or in equity:
               (a) The rights and remedies provided for by California Civil Code
Section 1951.2, including but not limited to, recovery of the worth at the time
of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of rental loss for the same period
that Tenant proves could be reasonably avoided, as computed pursuant to
subsection (b) of said Section 1951.2.
               (b) The rights and remedies provided by California Civil Code
Section which allows Landlord to continue the Lease in effect and to enforce all
of its rights and remedies under this Lease, including the right to recover rent
as it becomes due, for so long as Landlord does not terminate Tenant’s right to
possession; acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver upon Landlord’s initiative to protect its
interest under this Lease shall not constitute a termination of Tenant’s right
to possession.
               (c) The right to terminate this Lease by giving notice to Tenant
in accordance with applicable law.
               (d) To the extent permitted by law, the right and power, after
compliance with all statutory requirements and in any event on not less than
three (3) business days prior written notice, to enter the Premises and remove
therefrom all persons and property, to store such property in a public warehouse
or elsewhere at the cost of and for the account of Tenant, and to sell such
property and apply such proceeds therefrom pursuant to applicable California
law. Landlord may, from time to time, sublet the Premises or any part thereof
for such term or terms (which may extend beyond the term of this Lease) and at
such rent and such other terms as Landlord in its reasonable sole discretion may
deem advisable, with the right to make alterations and repairs to the Premises.
Upon each subletting, (i) Tenant shall be immediately liable to pay Landlord, in
addition to indebtedness other than rent due hereunder, the reasonable cost of
such subletting, including, but not limited to, reasonable attorneys’ fees, and
any real estate commissions actually paid, and the cost of such reasonable
alterations and repairs incurred by Landlord and the amount, if any, by which
the rent hereunder for the period of such subletting (to the extent such period
does not exceed the term hereof) exceeds the amount

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to be paid as rent for the Premises for such period or (ii) at the option of
Landlord, rents received from such subletting shall be applied first to payment
of indebtedness other than rent due hereunder from Tenant to Landlord; second,
to the payment of any costs of such subletting and of such alterations and
repairs; third to payment of rent due and unpaid hereunder; and the residue, if
any, shall be held by Landlord and applied in payment of future rent as the same
becomes due hereunder. If Tenant has been credited with any rent to be received
by such subletting under option (i) end such rent shall not be promptly paid to
Landlord by the subtenant(s), or if such rentals received from such subletting
under option (ii) during any month be less than that to be paid during that
month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord.
Such deficiency shall be calculated and paid monthly. No taking possession of
the Premises by Landlord, shall be construed as an election on its part to
terminate this Lease unless a written notice of such intention be given to
Tenant. Notwithstanding any such subletting without termination Landlord may at
anytime hereafter elect to terminate this Lease for such previous breach.
               (e) The right to have a receiver appointed for Tenant upon
application by Landlord to take possession of the Premises and to apply any
rental collected from the Premises and to exercise all other rights and remedies
granted to Landlord pursuant to subparagraph d. above. See Paragraph 59
     20. ABANDONMENT: Tenant shall not vacate or abandon the Premises at any
time during the term of this Lease; and if Tenant shall abandon, vacate or
surrender said Premises, or be dispossessed by the process of law, or otherwise,
any personal property belonging to Tenant and left on the Premises shall be
deemed to be abandoned, at the option of Landlord, except such property as may
be mortgaged to Landlord. See Paragraph 60.
     21. DESTRUCTION: In the event the Premises are destroyed in whole or in
part from any cause, except for routine maintenance and repairs and incidental
damage and destruction caused from vandalism and accidents for which Tenant is
responsible under Paragraph 7, Landlord may, at its option:
               (a) Rebuild or restore the Premises to their condition prior to
the damage or destruction, or
               (b) Terminate this Lease.
     If Landlord does not give Tenant notice in writing within thirty (30) days
from the destruction of the Premises of its election to either rebuild and
restore them, or to terminate this Lease, Landlord shall be deemed to have
elected to rebuild or restore them, in which event Landlord agrees, at its
expense, promptly to rebuild or restore the Premises to their condition prior to
the damage or destruction. Tenant shall be entitled to a reduction in rent while
such repair is being made in the proportion that the area of the Premises
rendered untenantable by such damage bears to the total area of the Premises. If
Landlord does not complete the rebuilding or restoration within one hundred
eighty (180) days following the date of destruction (such period of time to be
extended for delays caused by the fault or neglect of Tenant or because of Acts
of God, acts of public agencies, labor disputes, strikes, fires, freight
embargo, rainy or stormy weather, inability to obtain materials, supplies or
fuels, acts of contractors or

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subcontractors, or delay of the contractors or subcontractors due to such causes
or other contingencies beyond the control of Landlord), then Tenant shall have
the right to terminate this Lease by giving fifteen (15) days prior written
notice to Landlord. Notwithstanding anything herein to the contrary, Landlord’s
obligation to rebuild or restore shall be limited to the building and interior
improvements constructed by Landlord as they existed as of the commencement date
of the Lease and shall not include restoration of Tenant’s trade fixtures,
equipment, merchandise, or any improvements, alterations or additions made by
Tenant to the Premises, which Tenant shall forthwith replace or fully repair at
Tenant’s sole cost and expense provided this Lease is not cancelled according to
the provisions above.
     Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect. Tenant hereby expressly waives the
provisions of Section 1932, Subdivision 2, in Section 1933, Subdivision 4 of the
California Civil Code.
     In the event that the building in which the Premises are situated is
damaged or destroyed to the extent of not less than 33 1/3% of the replacement
cost thereof, Landlord may elect to terminate this Lease, whether the Premises
be injured or not. See Paragraph 61
     22. EMINENT DOMAIN: If all or any part of the Premises shall be taken by
any public or quasi-public authority under the power of eminent domain or
conveyance in lieu thereof, this Lease shall terminate as to any portion of the
Premises so taken or conveyed on the date when title vests in the condemnor, and
Landlord shall be entitled to any and all payment, income, rent, award, or any
interest therein whatsoever which may be paid or made in connection with such
taking or conveyance, and Tenant shall have no claim against Landlord or
otherwise for the value of any unexpired term of this Lease. Notwithstanding the
foregoing paragraph, any compensation specifically awarded Tenant for loss of
business, Tenant’s personal property, moving cost or loss of goodwill, shall be
and remain the property of Tenant.
     If any action or proceeding is commenced for such taking of the Premises or
any part thereof, or if Landlord is advised in writing by any entity or body
having the right or power of condemnation of its intention to condemn the
premises or any portion thereof, then Landlord shall have the right to terminate
this Lease by giving Tenant written notice thereof within sixty (60) days of the
date of receipt of said written advice, or commencement of said action or
proceeding, or taking conveyance, which termination shall take place as of the
first to occur of the last day of the calendar month next following the month in
which such notice is given or the date on which title to the Premises shall vest
in the condemnor.
     In the event of such a partial taking or conveyance of the Premises, if the
portion of the Premises taken or conveyed is so substantial that the Tenant can
no longer reasonably conduct its business, Tenant shall have the privilege of
terminating this Lease within sixty (60) days from the date of such taking or
conveyance, upon written notice to Landlord of its intention so to do, and upon
giving of such notice this Lease shall terminate on the last day of the calendar
month next following the month in which such notice is given, upon payment by
Tenant of the rent from the date of such taking or conveyance to the date of
termination.
     If a portion of the Premises be taken by condemnation or conveyance in lieu
thereof and neither Landlord nor Tenant shall terminate this Lease as provided
herein, this Lease shall

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continue in full force and effect as to the part of the Premises not so taken or
conveyed, and the rent herein shall be apportioned as of the data of such taking
or conveyance so that thereafter the rent to be paid by Tenant shall be in the
ratio that the area of the portion of the Premises not so taken or conveyed
bears to the total area of the Premises prior to such taking. See Paragraph 62
     23. SALE OR CONVEYANCE BY LANDLORD: In the event of a sale or conveyance of
the Premises or any interest therein, by any owner of the reversion then
constituting Landlord, the transferor shall thereby be released from any further
liability upon any of the terms, covenants or conditions (express or implied)
herein contained in favor of Tenant and in such event, insofar as such transfer
is concerned. Tenant agrees to look solely to the responsibility of the
successor in interest of such transferor in and to the Premises and this Lease.
This Lease shall not be affected by any such sale or conveyance, and Tenant
agrees to attorn to the successor in interest of such transferor. See
Paragraph 63
     24. ATTORNMENT TO LENDER OR THIRD PARTY: In the event the interest of
Landlord in the land and buildings in which the leased Premises are located
(whether such interest of Landlord is a tee title Interest or a leasehold
interest) is encumbered by deed of trust, and such interest is acquired by the
lender or any third party through judicial foreclosure or by exercise of a power
of sale at private trustee’s foreclosure sale. Tenant hereby agrees to attorn to
the purchaser at any such foreclosure sale and to recognize such purchaser as
the Landlord under this Lease. In the event the lien of the deed of trust
securing the loan from a Lender to Landlord is prior and paramount to the Lease,
this Lease shall nonetheless continue in full force and effect for the remainder
of the unexpired term hereof, at the same rental herein reserved and upon all
the other terms, conditions and covenants herein contained.
     25. HOLDING OVER: Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in this Lease. Any holding over after the expiration or other termination of the
term of this Lease, with the consent of Landlord, shall be construed to be a
tenancy from month to month, on the same terms and conditions herein specified
insofar as applicable except that the monthly Basic Rent shall be increased to
an amount equal to one hundred twenty five (125%) percent of the monthly Basis
Rent required during the last month of the Lease term.
     26. CERTIFICATE OF ESTOPPEL: Either party shall at any time upon not less
than ten (10) days prior written notice from the other party execute,
acknowledge and deliver to the requesting party 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) and the date to which the
rent and other charges are paid in advance, if any, and (ii) acknowledging that
there are not, to the best of such party’s knowledge, any uncured defaults on
the part of the other party hereunder, or specifying such defaults, if any, are
claimed. Any such statement may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises. A party’s failure to deliver such
statement within such time shall be conclusive upon the party receiving such
request that this Lease is in full force and effect, without modification except
as may be represented by Landlord;

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that there are no uncured defaults in the requesting party’s performance, and
that not more than one month’s rent has been paid in advance.
     27. CONSTRUCTION CHANGES: It is understood that the description of the
Premises and the location of ductwork, plumbing and other facilities therein are
subject to such minor changes as Landlord or Landlord’s architect determines to
be desirable in the course of construction of the Premises, and no such changes
shall affect this Lease or entitle Tenant to any reduction of rent hereunder or
result in any liability of Landlord to Tenant. Landlord does not guarantee the
accuracy of any drawings supplied to Tenant and verification of the accuracy of
such drawings rests with Tenant.
     28. RIGHT OF LANDLORD TO PERFORM: All terms, covenants and conditions of
this Lease to be performed or observed by the Tenant shall be performed or
observed by the Tenant at Tenant’s sole cost and expense and without any
reduction of rent. If Tenant shall fail to pay any sum of money, or other rent,
required to be paid by it hereunder and such failure shall continue for five
(5) days after written notice thereof by Landlord, or shall fail to perform any
other term or covenant hereunder on its part to be performed and such failure
shall continue for thirty (30) days after written notice thereof by Landlord,
Landlord, without waiving or releasing Tenant from any obligation of Tenant
hereunder, may, but shall not be obliged to, make any such payment or perform
any such other term or covenant on Tenant’s part to be performed. All sums so
paid by Landlord and all necessary costs of such performance by Landlord
together with interest thereon at the rate of the prime rate of interest per
annum as quoted by the Bank of America from the date of such payment on
performance by Landlord, shall be paid (and Tenant covenants to make such
payment) to Landlord on demand by Landlord, and Landlord shall have (in addition
to any other right or remedy of Landlord) the same rights and remedies in the
event of nonpayment by Tenant as in the case of failure by Tenant in the payment
of rent hereunder.
     29. ATTORNEYS’ FEES:
          A. In the event that either Landlord or Tenant should bring suit for
the possession of the Premises, for the recovery of any sum due under this
Lease, or because of the breach of any provision of this Lease, or for any other
relief against the other party hereunder, then all costs and expenses including
reasonable attorneys’ fees incurred by the prevailing party therein shall be
paid by the other party, which obligation on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action and
shall be enforceable whether or not the action is prosecuted to judgment.
          B. Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant’s occupancy hereunder, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including a
reasonable attorney’s fee.
     30. WAIVER: The waiver by either party of the other party’s failure to
perform or observe any term, covenant or condition herein contained to be
performed or observed by such waiving party shall not be deemed to be a waiver
of such term, covenant or condition or of any subsequent failure of the party
failing to perform or observe the same or any other such term, covenant or
condition therein contained, and no custom or practice which may develop between

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the parties hereto during the term hereof shall be deemed a waiver of, or in any
way affect, the right of either party to insist upon performance and observance
by the other party in strict accordance with the terms hereof.
     31. NOTICES: All notices, demands, requests, advices or designations which
may be or are required to be given by either party to the other hereunder shall
be in writing. All notices, demands, requests, advices or designations by
Landlord to Tenant shall be sufficiently given, made or delivered if personally
served on Tenant by leaving the same at the Premises of if sent by United Stated
certified or registered mail, postage prepaid, addressed to Tenant at the
Premises. All notices, demands, requests, advices or designations by Tenant to
Landlord shall be sent by United States certified, or registered mail, postage
prepaid, addressed to Landlord at its offices at Peery/Arrillaga, 2560 Mission
College Blvd., Suite 101, Santa Clara, CA 95054. Each notice, request, demand,
advice or designation referred to in this paragraph shall be deemed received on
the date of the personal service or mailing thereof in the manner herein
provided, as the case may be.
     32. EXAMINATION OF LEASE: Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument is not effective as a lease or otherwise until its execution
and delivery by both Landlord and Tenant.
     33. DEFAULT BY LANDLORD: Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but
in no event earlier than (30) days after written notice by Tenant to Landlord
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have heretofore been furnished to Tenant in
writing, specifying wherein Landlord has failed to perform such obligations;
provided, however, that if the nature of Landlord’s obligations is such that
more than thirty (30) days are required for performance, then Landlord shall not
be in default If Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
     34. CORPORATE AUTHORITY: If Tenant is a corporation (or a partnership),
each individual executing this Lease on behalf of said corporation (or
partnership) represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of said corporation (or partnership) in accordance
with the by-laws of said corporation (or partnership in accordance with the
partnership agreement) and that this Lease is binding upon said corporation (or
partnership) in accordance with its terms. If Tenant is a corporation, Tenant
shall, within thirty (30) days after execution of this Lease, deliver to
Landlord a certified copy of the resolution of the Board of Directors of said
corporation authorizing or ratifying the execution of this Lease.
     35. INTENTIONALLY LEFT BLANK
     36. LIMITATION OF LIABILITY: In consideration of the benefits accruing
hereunder. Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord:

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               (a) the sole and exclusive remedy shall be against Landlord’s
interest in the Premises leased herein;
               (b) no partner of Landlord shall be sued or named as a party in
any suit or action (except as may be necessary to secure jurisdiction of the
partnership);
               (c) no service of process shall be made against any partner of
Landlord (except as maybe necessary to secure jurisdiction of the partnership);
               (d) no partner of Landlord shall be required to answer or
otherwise plead to any service of process
               (e) no judgment will be taken against any partner of Landlord;
               (f) any judgment taken against any partner of Landlord may be
vacated and set aside at any lime without hearing;
               (g) no writ of execution will ever by levied against the assets
of any partner of Landlord;
               (h) these covenants and agreements are enforceable both by
Landlord and also by any partner of Landlord.
     Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or at common law.
     37. SIGNS: No sign, placard, picture, advertisement, name or notice shall
be inscribed, displayed or printed or affixed on or to any part of the outside
of the Premises or any exterior windows of the Premises without the written
consent of Landlord first had and obtained and Landlord shall have the right to
remove any such sign, placard, picture, advertisement, name or notice without
notice to and at the expense of Tenant. If Tenant is allowed to print or affix
or in any was place a sign in, on, or about the Premises, upon expiration or
other sooner termination of this Lease, Tenant at Tenant’s sole cost and expense
shall both remove such sign and repair all damage in such a manner as to restore
all aspects of the appearance of the Premises to the condition prior to the
placement of said sign.
     All approved signs or lettering on outside doors shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person reasonably approved of
by Landlord.
     Tenant shall not place anything or allow anything to be placed near the
glass of any window, door partition or wall which may appear unsightly from
outside the Premises.
     38. MISCELLANEOUS AND GENERAL PROVISIONS:
           A. Use of Building Name: Tenant shall not, without the written
consent of Landlord, use the name of the building for any purpose other than as
the address of the business conducted by Tenant in the Premises.

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           B. Choice of Law; Severability: This Lease shall in all respects be
governed by and construed in accordance with the laws of the State of
California. If any provision of this Lease shall be invalid, unenforceable or
ineffective for any reason whatsoever, all other provisions hereof shall be and
remain in full force and effect.
           C. Definition of Terms: The term “Premises” includes the space leased
hereby and any improvements now or hereafter installed therein or attached
thereto. The term “Landlord” or any pronoun used in place thereof includes the
plural as well as the singular and the successors and assigns of Landlord. The
term “Tenant” or any pronoun used in place thereof includes the plural as well
as the singular and individuals firms, associations, partnerships and
corporations, and their and each of their respective heirs, executors,
administrators, successors and permitted assigns, according to the context
hereof, and the provisions of this Lease shall inure to the benefit of and bind
such heirs, executors, administrators, successors and permitted assigns.
     The term “person” includes the plural as well as the singular and
individuals, firms, associations, partnerships and corporations. Words used in
any gender include other genders. If there be more than one Tenant the
obligations of Tenant hereunder are joint and several. The paragraph headings of
this Lease are for convenience of reference only and shall have no effect upon
the construction or interpretation of any provision hereof.
           D. Time of Essence: Time is of the essence of this Lease and of each
and all of its provisions.
           E. Quitclaim: At the expiration or earlier termination of this Lease,
Tenant shall execute, acknowledge and deliver to Landlord, within ten (10) days
after written demand from Landlord to Tenant, any quitclaim dead or other
document required by any reputable title company, licensed to operate in the
State of California, to remove the cloud or encumbrance created by this Lease
from the real property of which Tenant’s Premises are a part.
           F. Incorporation of Prior Agreements; Amendments: This instrument
along with any exhibits and attachments hereto constitutes the entire agreement
between Landlord and Tenant relative to the Premises and this agreement and the
exhibits and attachments may be altered, amended or revoked only by an
instrument in writing signed by both Landlord and Tenant. Landlord and Tenant
agree hereby that all prior or contemporaneous oral agreements between and among
themselves and their agents or representatives relative to the leasing of the
Premises are merged in or revoked by this agreement.
           G. Recording: Landlord and Tenant shall record a short form
memorandum hereof in the form attached hereto as Exhibit C.
           H. Amendments for Financing: Tenant further agrees to execute any
reasonable amendments required by a lender to enable Landlord to obtain
financing, so long as Tenant’s rights hereunder are not materially affected and
there is no change in the Basic Rent, Options to Renew, Lease Term or
Construction obligations of Landlord.
           I. Additional Paragraphs: Paragraphs 39 through 65 are added hereto
and are included as a part of this lease.

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           J. Clauses, Plats and Riders: Clauses, plats and riders, if any,
signed by Landlord and Tenant and endorsed on or affixed to this Lease are a
part hereof.
           K. Diminution of Light, Air or View: Tenant covenants and agrees that
no diminution or shutting off of light, air or view by any structure which may
be hereafter erected (whether or not by Landlord) shall in any way affect his
Lease, entitle Tenant to any reduction of rent hereunder or result in any
liability of Landlord to Tenant

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     IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year last written below.

                  LANDLORD:   TENANT:    
 
                JOHN ARRILLAGA SURVIVOR’S TRUST   QUANTUM CORPORATION
a Delaware corporation    
 
               
By
  /s/ John Arrillaga   By   /s/ Andrew Kryder    
 
               
 
  John Arrillaga, Trustee       Andrew Kryder, Vice President Finance and
Corporate General Counsel    
 
               
Date:
  June 30, 1997   Date:   June 25, 1997    
 
               
 
                RICHARD T. PEERY SEPARATE PROPERTY TRUST        
 
               
By
  /s/ Richard T. Peery   By   /s/ Norm Claus    
 
               
 
  Richard T. Peery, Trustee       Norm Claus, Vice President Real Estate and
Corporate Services    
 
               
Date:
  June 26, 1997   Date:   June 25, 1997    
 
               

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Paragraphs 39 through 65 to Lease Agreement dated April 16, 1997, By and Between
THE JOHN ARRILLAGA SURVIVOR’S TRUST AND THE RICHARD T. PEERY SEPARATE PROPERTY,
as Landlord, and QUANTUM CORPORATION, a Delaware corporation, as Tenant for
182,355+ Square Feet of Space Located on Sumac Drive, Milpitas, California.
     39. BASIC RENT: In accordance with Paragraph 4A, and subject to the
provisions of Paragraphs 40 and 41, Basic Rent shall be payable as follows
during the indicated months of the term of the Lease based upon the gross
leasable area within the building that is part of the Premises:

      Period   Monthly Basic Rent
Months 1-12 (plus the partial calendar month, if any, following the Commencement
Date *)
  $1.60/sf
Months 13-24
  $1.65/sf
Months 25-36
  $1.70/sf
Months 37-48
  $1.75/sf
Months 49-60
  $1.80/sf
Months 61-72
  $1.85/sf
Months 73-84
  $1.90/sf
Months 85-96
  $1.95/sf
Months 97-108
  $2.00/sf
Months 109-120
  $2.05/sf
Months 121-132
  $2.10/sf
Months 133-144
  $2.15/sf
Months 145-156
  $2.20/sf
Months 157-168
  $2.25/sf
Months 169-180
  $2.30/sf

     Example of calculation of Basic Rent per month for the period commencing
with the first through the twelfth months of said Lease:

         
Square footage of Building
    182,355  
Per square foot Basic Monthly Rent
    x $1.60  
 
     
Basic Rent per Month
  $ 291,768.00  
 
     

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     It is agreed in the event said Lease commences on a date other than the
first day of the month the Term of the Lease will be extended to account for the
number of days in the partial month. The Basic Rent during the resulting partial
month will be pro-rated (for the number of days in the partial month) at the
Basis Rent rate scheduled for the projected Commencement Date as shown above.
     40. LEASE TEEM AND COMMENCEMENT DATE: The following provisions relate to
the commencement and duration of the term of this Lease:
          A. Lease Term: The term of this Lease shall commence on the
“Commencement Date” (as defined herein) which is projected to be May 1, 1998,
and shall continue for a period of fifteen (15) years plus the partial calendar
month, if any, in which the Commencement Date occurs, subject to the terms of
this Lease and subject to (i) earlier termination rights of Landlord in
accordance with the provisions of this Lease, and (ii) extension pursuant to the
options to renew granted by Paragraphs 41 and 42 and the provisions of this
Paragraph 40.C.
          B. Commencement Date Defined: As used herein, the term “Commencement
Date” shall mean the later to occur of the following: (i) the date upon which
the “Improvements” are “Substantially Completed” or (ii) May 1, 1998, subject to
(a) delays caused by Tenant and/or Tenant’s agents and (b) provided, however,
that if prior to the later of such dates Tenant’s operating personnel enter into
occupancy of the Premises and commence the operation of Tenant’s business within
the Premises, the Commencement Date shall be the date such personnel of Tenant
so enter into occupancy of the Premises. The term “Substantially Completed”
and/or “Substantial Completion” shall mean the date when all of the following
have occurred with respect to the Improvements in question: (i) the construction
of the Improvements in question has been substantially completed in accordance
with the approved plans therefor except for punch list items which do not
prevent Tenant from reasonably using the Premises to conduct Tenant’s business;
(ii) Landlord has executed a certificate or statement representing that the
Improvements in question, for which Landlord is responsible, have been
substantially completed in accordance with the plans and specifications therefor
except for the punch list items which do not prevent Tenant from reasonably
using the Premises to conduct Tenant’s business; and (iii) the Building
Department of the City of Milpitas has completed its final inspection of such
Improvements and has “signed off” the building inspection card approving such
work as complete except for punch list items which do not prevent Tenant from
reasonably using the Premises to conduct Tenant’s business. Notwithstanding the
foregoing, Substantial Completion of the Interior Improvements shall not be
deemed to have occurred until Landlord has obtained final or conditional
approval from the Fire Department of the City of Milpitas that the Improvements
have been completed in accordance with such department’s requirements (subject
only to conditions that do not prevent Tenant from occupying the Improvements).
          C. Lease Terms Co-extensive: It is acknowledged that (i) Landlord has
granted Tenant, pursuant to a separate Option Agreement of even date herewith,
an Option to Lease an additional building on the parcel adjacent to the Premises
( the “Building 7 Lease”), and (ii) it is the intention of the parties that the
Term of this Lease be co-extensive with the term of the Building 7 Lease, such
that the terms of both leases (“the Leases”) expire on the same date. In the
event Tenant exercises its Option to Lease Building 7 (pursuant to the terms and

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conditions of the Option Agreement), it is hereby agreed that following the date
upon which the Commencement Date of the Building 7 Lease becomes established as
a date certain following completion of improvements and satisfaction of any
other conditions related to determining such date, the Term of this Lease shall
be extended such that the scheduled Termination Date of this Lease coincides
with the scheduled termination date of the Building 7 Lease. As soon as the
parties are able to implement the provisions of this Paragraph because the
Commencement Date of the Building 7 Lease has been determined following
completion of improvements and satisfaction of other appropriate conditions, the
parties shall execute an amendment to this Lease (i) extending the initial Term
of this Lease (if necessary) to be co-terminous with the initial termination
date of the Building 7 Lease and (ii) adjusting the Options to Extend
accordingly. The monthly Basic Rent on this Lease during the Extension Period
shall be increased by $.05 per square foot on the commencement date of said
Extension Period. For example, if the Building 7 Lease commences on May 1, 2004,
and this Lease commences the scheduled Commencement Date of May 1, 1998, the
initial Term of this Lease shall be extended by one year and the per square foot
monthly Basic Rent during the Extension Period shall be $[Illegible].35 per
square foot. The provisions of this Paragraph 40C also requires the terms of
both of the Leases to be extended accordingly if Tenant exercises its Option to
Extend under either of the Leases. The monthly Basic Rent during the extended
term under each of the Leases shall be increased by $.05 per square foot on the
commencement date of the extended term and thereafter on each and every
anniversary of the respective lease Commencement Date.
     41. FIRST FIVE-YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant an
option to extend the term of this Lease for an additional five (5) year period
upon the following terms and conditions:
          A. If Tenant elects to exercise the option to extend, Tenant shall
give Landlord written notice of Tenant’s exercise of this option to extend at
least one hundred eighty (180) days prior to the expiration of the Basic Term
hereof, in which event the Lease shall be considered extended for an additional
five (5) year period upon the same terms and conditions as this Lease, absent
this Paragraph 41 and subject to the rental as set forth below. In the event
that Tenant fails to timely exercise Tenant’s option as set forth herein in
writing, Tenant shall have no further option to extend this Lease or the
Building 7 Lease, and this Lease shall continue in full force and effect for the
full remaining term hereof, absent this Paragraph 41.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

      Period   Monthly Basic Rent
Months 1-12
  $2.35/sf
Months 13-24
  $2.40/sf
Months 25-36
  $2.45/sf
Months 37-48
  $2.50/sf
Months 49-60
  $2.55/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to renew granted by this Paragraph 41 at any time that Tenant is in
default (default for monetary and material default for non-monetary) of its
obligations under this Lease, if Tenant

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has received written notice from Landlord that Tenant is in default, and such
default has not been timely cured within the time period provided for in this
Lease; provided, however, that if such default of Tenant is not for money due
under this Lease and cannot be cured, and if Landlord does not elect to
terminate this Lease as a result of such non-curable default by Tenant, Tenant
may exercise the option to extend granted by this Paragraph 41 notwithstanding
such non-curable default.
     42. SECOND FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the
Lease for an additional five (5) year period as set forth in Paragraph 41,
Landlord hereby grants to Tenant an option to extend the Term of this Lease for
an additional five (5) year period upon the following terms and conditions:
          A. Tenant shall give Landlord written notice of Tenant’s exercise of
this option to extend at least one hundred eighty (180) days prior to the
expiration of the Lease term as extended pursuant to Paragraph 41, in which
event the Lease shall be considered extended for an additional five (5) year
period upon the same terms and conditions as this Lease, absent this
Paragraph 42.A and subject to the Rental as set forth below. In the event that
Tenant fails to timely exercise Tenant’s option as set forth herein in writing,
Tenant shall have no further option to extend this Lease or the Building 7
Lease, and this Lease shall continue in full force and effect for the full
remaining term hereof, absent this Paragraph 42.
          B. The monthly Basic Rent for the option period shall be as follows in
the event the option is exercised:

      Period   Monthly Basic Rent
Months 1-12
  $2.60/sf
Months 13-24
  $2.65/sf
Months 25-36
  $2.70/sf
Months 37-48
  $2.75/sf
Months 49-60
  $2.80/sf

          C. Notwithstanding anything contained herein, Tenant may not exercise
the option to extend granted by this Paragraph 42 at any time that Tenant is in
default (default for monetary and material default for non-monetary) of its
obligations under this Lease, if Tenant has received written notice from
Landlord that Tenant is in default, and such default has not been timely cured
within the time period provided for in this Lease; provided, however, that if
such default of Tenant is not for money due under this Lease and cannot be
cured, and if Landlord does not elect to terminate this Lease as a result of
such non-curable default by Tenant, Tenant may exercise the option to extend
granted by this Paragraph 42 notwithstanding such non-curable default.
     43. ASSESSMENT CREDITS: The demised property herein is subject to a special
assessment levied by the City of Milpitas in Improvement District No. 12. As a
part of said special assessment proceedings, additional bonds were sold and
assessments levied to provide for construction contingencies and reserve funds.
Interest will be earned on such funds created for contingencies and on reserve
funds which will be credited for the benefit of said assessment district. To the
extent surpluses are created in said district through unused contingency funds,

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interest earnings or reserve funds, such surpluses shall be deemed the property
of Landlord. Notwithstanding that such surpluses may be credited on assessments
otherwise due against the demised premises, Tenant shall pay to Landlord, as
additional rent if, and at the time of any such credit of surpluses, an amount
equal to all such surpluses so credited.
     44. HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with respect
to the existence or use of “Hazardous Materials” (as defined herein) on, in,
under or about the Premises and real property located beneath said Premises,
which includes the entire parcel of land on which the Premises are located as
shown in Green on Exhibit A attached hereto (hereinafter collectively referred
to as the “Property”):
          A. As used herein, the term “Hazardous Materials” shall mean any
material, waste, chemical, mixture or byproduct which is or hereafter is
defined, listed or designated under Environmental Laws (defined below) as a
pollutant, or as a contaminant, or as a toxic or hazardous substance, waste or
material, or any other unwholesome, hazardous, toxic, biohazardous, or
radioactive material, waste, chemical, mixture or byproduct, or which is listed,
regulated or restricted by any Environmental Law (including, without limitation,
petroleum hydrocarbons or any distillates or derivatives or fractions thereof,
polychlorinated biphenyls, or asbestos). As used herein, the term “Environmental
Laws” shall mean any applicable Federal, State of California or local government
law (including common law), statute, regulation, rule, ordinance, permit,
license, order, requirement, agreement, or approval, or any determination,
judgment, directive, or order of any executive or judicial authority at any
level of Federal, State of California or local government (whether now existing
or subsequently adopted or promulgated) relating to pollution or the protection
of the environment, ecology, natural resources, or public health and safety.
          B. Tenant shall notify Landlord prior to the occurrence of any
Tenant’s Hazardous Materials Activities (defined below). Landlord acknowledges
that Tenant shall use, in compliance with applicable Environmental Laws,
customary household and office supplies (Tenant shall first provide Landlord
with a list of said materials use), such as mild cleaners, lubricants and copier
toner. Any and all of Tenant’s Hazardous Materials Activities shall be conducted
in conformity with this Paragraph 44, Paragraph 14 of this Lease, and in
compliance with all Environmental Laws and regulations. As used herein, the term
“Tenant’s Hazardous Materials Activities” shall mean any and all use, handling,
generation, storage, disposal, treatment, transportation, release, discharge, or
emission of any Hazardous Materials on, in, beneath, to, from, at or about the
Property, in connection with Tenant’s use of the Property, or by Tenant or by
any of Tenant’s agents, employees, contractors, vendors, invitees, visitors or
its future subtenants or assignees or other third parties (including “dumping”
by others) (or which Hazardous Materials originate from on the surface of the
Premises any time after November 1, 1995, the date of the Option Agreement
related to said Lease, and before the Commencement Date of this Lease, but
excluding Hazardous Materials on the Premises prior to the Lease Commencement
Date because of the storage, use, disposal, or transportation of such materials
or waste by any of Landlord’s contractors or otherwise arising out of
construction work performed by or under the direction of Landlord on the
Premises and Landlord shall be responsible for all required actions with respect
to such materials or wastes). Tenant agrees to provide Landlord with prompt
written notice of any spill or release of Hazardous Materials at the Property
during the term of the Lease of which Tenant becomes aware, and further agrees
to provide Landlord

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with prompt written notice of any violation of Environmental Laws in connection
with Tenant’s Hazardous Materials Activities of which Tenant becomes aware. If
Tenant’s Hazardous Materials Activities involve Hazardous Materials other than
normal use of customary household and office supplies, Tenant also agrees at
Tenant’s expense: (i) to install such Hazardous Materials monitoring, storage
and containment devices as may be required by Environmental Laws, regulations
and/or governing agencies; (ii) to provide Landlord with a written inventory of
such Hazardous Materials, including an update of same each year upon the
anniversary date of the Commencement Date of the Lease (“Anniversary Date”); and
(iii) on each Anniversary Date to provide to Landlord copies of all
documentation and records, required by applicable Environmental Laws to be
prepared and submitted to governmental authorities, relating to use at the
Property of Hazardous Materials or to Tenant’s Hazardous Materials Activities,
if any. If upon completion of Landlord’s review of said documentation and
records, Landlord reasonably questions if Tenant is in compliance with all
applicable Environmental Laws with respect to Tenant’s Hazardous Materials
Activities, Tenant agrees within thirty (30) days following receipt of written
notice from Landlord, to retain a qualified environmental consultant, acceptable
to Landlord, to evaluate whether Tenant is in compliance with all applicable
Environmental Laws with respect to Tenant’s Hazardous Materials Activities.
Tenant, at its expense, shall submit to Landlord a report from such
environmental consultant which discusses the environmental consultant’s findings
within two (2) months of each Anniversary Date. Tenant, at its expense, shall
promptly undertake and complete any and all steps necessary, and in full
compliance with applicable Environmental Laws, to fully correct any and all
problems or deficiencies identified by the environmental consultant, and
promptly provide Landlord with documentation of all such corrections.
          C. Prior to termination or expiration of the Lease, Tenant, at its
expense, shall (i) properly remove from the Property all Hazardous Materials
which come to be located at the Property in connection with Tenant’s Hazardous
Materials Activities, and (ii) fully comply with and complete all facility
closure requirements of applicable Environmental Laws regarding Tenant’s
Hazardous Materials Activities, including but not limited to (x) properly
restoring and repairing the Property to the extent damaged by such closure
activities, and (y) obtaining from the local Fire Department or other
appropriate governmental authority with any legal or regulatory jurisdiction a
written concurrence that closure has been completed in compliance with
applicable Environmental Laws. Tenant shall promptly provide Landlord with
copies of any claims, notices, work plans, data and reports prepared, received
or submitted in connection with any such closure activities.
          D. If Landlord, upon consultation with Tenant, reasonably concludes
that the Property has become contaminated as a result of Tenant’s Hazardous
Materials Activities, Landlord in addition to any other rights it may have under
this Lease or under Environmental Laws or other laws, may enter upon the
Property and conduct inspection, sampling and analysis, including but not
limited to obtaining and analyzing samples of soil and groundwater, for the
purpose of determining the nature and extent of such contamination except to the
extent that such activities may be inconsistent with Tenant’s compliance with
Environmental Laws. Tenant shall promptly reimburse Landlord for the costs of
such an investigation, including but not limited to reasonable attorneys’ fees
Landlord incurs with respect to such investigation to the extent, and only to
the extent,-that it that discloses Hazardous Materials contamination for which
Tenant is liable under this Lease. Except as may be required of Tenant by
applicable Environmental Laws,

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Tenant shall, not perform any sampling, testing, or drilling to identify the
presence of any Hazardous Materials at the Property, without Landlord’s prior
written consent which shall not be unreasonably withheld. Tenant shall promptly
provide Landlord with copies of any claims, notices, work plans, data and
reports prepared, received or submitted in connection with any sampling, testing
or drilling performed pursuant to the preceding sentence.
          E. Tenant shall indemnify, defend (with legal counsel acceptable to
Landlord, whose consent shall not unreasonably be withheld) and hold harmless
Landlord, its employees, assigns, successors, [Illegible], and representatives
from and against any and all claims (including but not limited to third party
claims from a private party or a government authority), liabilities,
obligations, losses, causes of action, demands, governmental proceedings or
directives, fines, penalties, expenses, costs (including but not limited to
reasonable attorneys’, consultants’ and other experts’ fees and costs), and
damages, which arise from or relate to: (i) Tenant’s Hazardous Materials
Activities; (ii) any Hazardous Materials contamination caused by Tenant prior to
the Commencement Date of the Lease; or (iii) the breach of any obligation of
Tenant under this Paragraph 44 (collectively, “Tenant’s Environmental
Indemnification”). Tenant’s Environmental Indemnification shall include but is
not limited to the obligation to promptly and fully reimburse Landlord for
losses in or reductions to rental income, and diminution in fair market value of
the Property. Tenant’s Environmental Indemnification shall further include but
is not limited to the obligation to diligently and properly implement to
completion, at Tenant’s expense, any and all environmental investigation,
removal, remediation, monitoring, reporting, closure activities, or other
environmental response action as may be required by applicable Environmental
Laws, regulations or governing agencies (collectively, “Response Actions”).
Tenant shall promptly provide Landlord with copies of any claims, notices, work
plans, data and reports prepared, received or submitted in connection with any
Response Actions.
          F. Landlord hereby makes the following representations to Tenant, each
of which is made only to the best of Landlord’s knowledge as of the date
Landlord executes this Lease, without any inquiry or investigation having been
made or required by Landlord regarding this subject, nor does Landlord have any
obligation to investigate or make inquiry regarding the subject:
               (1) The soil and ground water on or under the Premises does not
contain Hazardous Materials in amounts which violate any laws to the extent that
any governmental entity could require either Landlord or Tenant to take any
remedial action with respect to such Hazardous Materials.
               (2) During the time that Landlord has owned the Premises,
Landlord has received no notice of (i) any violation, or alleged violation, of
any law that has not been corrected to the satisfaction of the appropriate
authority, (ii) any pending claims relating to the presence of Hazardous
Material on the Premises, or (iii) any pending investigation by any governmental
agency concerning the Premises relating to Hazardous Materials.
          G. Landlord and Tenant shall each give written notice to the other as
soon as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Premises, and (ii) any contamination of the

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Premises by Hazardous Materials which constitutes a violation of any law.
Attached as Exhibit “D” hereto is a list of Hazardous Materials that Tenant
intends to use at the Premises. If during the Lease Term Tenant proposes to use
other Hazardous Materials at the Premises, Tenant shall inform Landlord of such
use, identifying the Hazardous Materials and the manner of their use, storage
and disposal, and shall agree (i) to use, store and dispose of such Hazardous
Materials strictly in compliance with all laws, regulations and governing
agencies and (ii) that the indemnity set forth in Paragraph 44 shall be
applicable to Tenant’s use of such Hazardous Material.
          H. Landlord or Tenant may, at any time, cause testing wells to be
installed on the Premises, and may cause the ground water to be tested to detect
the presence of Hazardous Material by the use of such tests as are then
customarily used for such purposes. Testing wells installed by Tenant shall be
paid for by Tenant. If tests conducted by Landlord disclose that Tenant has
violated any Hazardous Materials laws, or Tenant or parties on the Premises
during the Term of this Lease have contaminated the Premises as determined by
regulatory agencies pursuant to Hazardous Materials laws, or that Tenant has
liability to Landlord pursuant to Paragraph 44A, then Tenant shall pay for
100 percent of the cost of the test and all related expense. Prior to the
expiration of the Lease Term, Tenant shall remove any testing wells it has
installed at the Premises, and return the Premises to the condition existing
prior to the installation of such wells, unless Landlord requests in writing
that Tenant leave all or some of the testing wells in which instance the wells
requested to be left shall not be removed.
          I. If any tests performed by Tenant or Landlord prior to the
Commencement Date disclose Hazardous Materials at the Premises, Landlord at its
expense will promptly take all reasonable action required by law with respect to
the existence of such Hazardous Materials at the Premises. The Commencement Date
shall not be delayed because of such action by Landlord unless occupation of the
Premises is prohibited by law.
          J. The obligations of Landlord and Tenant under this Paragraph 44
shall survive the expiration or earlier termination of the Term of this Lease.
The rights and obligation of Landlord and Tenant with respect to issues relating
to Hazardous Materials are exclusively established by this Paragraph 44.
     45. APPROVALS: Whenever this Lease requires the approval or consent of
either Landlord or Tenant before an action may be taken, such approval or
consent shall not be unreasonably withheld or delayed.
     46. LANDLORD’S RIGHT TO TERMINATE: It is understood that the Premises to be
leased by Tenant are to be constructed by Landlord, and that Landlord is
required to obtain the necessary building permits for the building shell before
construction of said Premises can commence. Therefore, it is agreed that in the
event Landlord cannot obtain all the necessary building permits for the building
shell by December 31, 1997, then either Landlord or Tenant can terminate this
Lease by written notice to the other party given within thirty (30) days
thereafter, without any liability to the other party of any type whatsoever, and
that this Lease Agreement shall be null and void as of the date of receipt of
such notice. Landlord agrees to use its best efforts to obtain the required
permits by December 31, 1997.

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     47. CROSS DEFAULT: As set forth in Paragraph 40C, Landlord and Tenant have
entered an Option Agreement related to Building 7. In the event Tenant exercises
its option to lease Building 7, and as a material part of the consideration for
the execution of this Lease by Landlord, it is agreed between Landlord and
Tenant that a default under this Lease, or a default under the Building 7 Lease
may, at the option of Landlord, be considered a default under both leases, in
which event Landlord shall be entitled (but in no event required) to apply all
rights and remedies of Landlord under the terms of one lease to both of the
Leases including, but not limited to, the right to terminate the Building 7
Lease or this Lease by reason of a default under the Building 7 Lease or
hereunder.
     48. ADDRESS FOR LEASED PREMISES: It is understood that the address for the
Premises will be assigned by the City of Milpitas (the “City”) upon issuance of
a building permit for the Interior Improvements. Once the address has been
assigned to the Premises by the City, this Lease shall thereafter be amended to
reflect the assigned address for the Premises leased hereunder.
     49. HETCH-HETCHY LAND: Landlord hereby assigns to Tenant during the Term of
this Lease, all of Landlord’s right, title, and interest, in and to the property
owned by the City and County of San Francisco shown in Orange on Exhibit A
attached hereto, and Tenant hereby assumes all responsibilities and liabilities
(including, but not limited to a fee and/or tax for the right to use said
property including any use provided for in the Deed attached hereto as
Exhibit E) that may be imposed by the City and County of San Francisco
pertaining to their property and Tenant’s use and occupancy thereof. Tenant’s
right to use the area outlined in Orange will continue until this right to use
said property is revoked or terminated by the City and County of San Francisco,
at which time said property outlined in Orange belonging to the City and County
of San Francisco will no longer be available for Tenant’s use, and this lease
will continue in full force and effect excluding Tenant’s right to use the
property outlined in Orange on Exhibit A attached hereto.
     Tenant’s use of the property owned by the City and County of San Francisco
shall be governed by the terms and conditions of the Deed dated February 5, 1951
between Chinn Oyama Takeda and George Shoji Takeda, as Grantors, and the City
and County of San Francisco, as Grantee (the ‘Deed”). Said Deed is attached
hereto as Exhibit E. Among the provisions of said Deed is the restriction that
the property shall not be used for parking, and Tenant understands that at no
time during the Term of the Lease shall Tenant be allowed to use said property
for parking.
     Notwithstanding the foregoing Tenant may use the Hetch-Hetchy Land for such
additional uses as may not be permissible to the [Illegible] provided Tenant
(i) obtains written permission from the City and County of San Francisco to do
so in form reasonably acceptable to landlord, (ii) removes the “bridge” which is
contemplated to go over said Hetch-Hetchy Land if requested by the City and
County of San Francisco and/or if Landlord requires said “bridge” to be removed
by the Lease Termination Date, (iii) pays all costs and expenses imposed by the
City and County of San Francisco in connection with such permission and use, and
(iv) Tenant indemnifies and holds harmless Landlord from any loss, expense,
cost, claim, or liability arising in connection with such permission or any use
pursuant to such permission of the Hetch-Hetchy Land undertaken by Tenant, its
agents, employees, contractors, invitees, visitors, subtenants

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and/or assignees. Landlord and Tenant agree that if the City of Milpitas will
not issue a building permit for Building 6 in the configuration and location for
which it is designed as of the date of this Lease because of the proximity to
the Hetch-Hetchy Land or for any other reason, then Tenant shall have the option
to cause Building 6 to be relocated on the land and redesigned in a new
configuration acceptable to the City, Landlord and Tenant, provided the square
footage of the relocated and redesigned building is no less than approximately
182,355 square feet and the parking allocation is not reduced due to said
redesign and/or relocation.
     50. SECURITY DEPOSIT: The following provisions shall modify Paragraph 4G:
          A. Within thirty (30) days after the expiration or earlier termination
of the Lease term and after Tenant has vacated the Premises, Landlord shall
return to Tenant the entire Security Deposit except for amounts that Landlord
has deducted therefrom that are needed by Landlord to cure defaults of Tenant
under the Lease or compensate Landlord for damages for which Tenant is liable
pursuant to this Lease. The use or disposition of the Security Deposit shall be
subject to the provisions of California Civil Code Section 1950.7.
          B. During the first thirty (30) days following execution of this Lease
Agreement, and only during said thirty day period, Tenant shall have the
one-time option of satisfying its obligation with respect to an amount equal to
one-half (1/2) ($355,592.25) of the $711,184.50 Security Deposit required under
Paragraph 4.G. by providing to Landlord, at Tenant’s sole cost, a letter of
credit which: (i) is drawn upon an institutional lender reasonably acceptable
and accessible to Landlord in form and content reasonably satisfactory to
Landlord; (ii) is in the amount of one-half (1/2) of the Security Deposit;
(iii) is for a term of at lease twelve (12) months; (iv) with respect to any
letter of credit in effect within the six month period immediately prior to the
expiration of the Lease term, shall provide that the term of such letter of
credit shall extend at least forty five (45) days past the Lease expiration date
(including any extensions thereof); and (v) may be drawn upon by Landlord upon
submission of a declaration of Landlord that Tenant is in default (as defined in
Paragraph 19 and as modified by Paragraph 59). Landlord shall not be obligated
to furnish proof of default to such institutional lender, and Landlord shall
only be required to give the institutional lender written notification that
Tenant is in default and upon receiving such written notification from Landlord
the institutional lender shall be obligated to immediately deliver cash to
Landlord equal to the amount Landlord may spend or become obligated to spend by
reason of Tenant’s default or to compensate Landlord for any loss or damage
which Landlord may suffer by reason of Tenant’s default up to 1/2 of the total
Security Deposit required under Paragraph 4.G. Said letter of credit shall
provide that if the letter of credit is not renewed, replaced or extended within
twenty (20) days prior to its expiration date the issuer of the credit shall
automatically issue a cashiers check payable to Landlord in the amount of the
letter of credit after the date which is twenty (20) days before the expiration
date, and no later than the expiration date, without Landlord being required to
make demand upon the letter of credit. If Tenant provides Landlord with a letter
of credit, within thirty (30) days of the execution of this Lease, meeting the
foregoing requirements, one-half (1/2) of the cash Security Deposit (i.e.,
$355.592.25 of the $711,184.50 Security Deposit) shall be returned to Tenant by
Landlord inasmuch as the cash deposit remaining and the Letter of Credit equal
the total Security Deposit required in Paragraph 4G. If Tenant defaults with
respect to any provisions of this Lease, including but not limited to provisions
relating to the payment of Rent, Landlord may (but shall not be required to)
draw down on the letter of credit for payment of any

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sum which Landlord may spend or become obligated to spend by reason of Tenant’s
default, or to compensate Landlord for any loss or damage which Landlord may
suffer by reason of Tenant’s default. Landlord and Tenant acknowledge that such
letter of credit will be treated as if it were a cash security deposit, and such
letter of credit may be drawn down upon by Landlord upon demand and presentation
of evidence of the identity of Landlord to the issuer, in the event that Tenant
defaults with respect to any provisions of the Lease and such default is not
cured within any applicable cure period. Notwithstanding anything to the
contrary in this Lease, Landlord shall not be obligated to furnish proof of
default to such institutional lender and Landlord is only required to give the
institutional lender written notification that Tenant is in default and upon
receiving such written notification from Landlord the institutional lender shall
be obligated to immediately deliver cash to Landlord equal to the amount
Landlord may spend or become obligated to spend by reason of Tenant’s default,
or to compensate Landlord for any loss or damage which Landlord may suffer by
reason of Tenant’s default up to 1/2 of the total Security Deposit. Landlord
acknowledges that it is not entitled to draw down such letter of credit unless
Landlord would have been entitled to draw upon the cash security deposit
pursuant to the terms of Paragraph 4G of the Lease. Concurrently with the
delivery of the required information to the issuer, Landlord shall deliver to
Tenant written evidence of the default upon which the draw down was based,
together with evidence that Landlord has provided to Tenant the written notice
of such default which was required under the applicable provision of the Lease,
and evidence of the failure of Tenant to cure such default within the applicable
grace period following receipt of such notice of default. Any proceeds received
by Landlord by drawing upon the letter of credit shall be applied in accordance
with the provisions governing the Security Deposit imposed by Paragraph 4G and
this Paragraph 50. If Landlord draws upon the letter of credit, thereafter
Tenant shall once again have the right to post a letter of credit in place of
one-half (1/2) of a cash Security Deposit so long as Tenant is not then in
default. In any event Tenant will be obligated to replenish the amount drawn to
restore the Security Deposit to its original amount as provided for in
Paragraph 4G. If any portion of the letter of credit is used or applied pursuant
hereto, Tenant shall, within ten (10) days after receipt of a written demand
therefor from Landlord, restore and replace the value of such security by either
(i) depositing cash with Landlord in the amount equal to the sum drawn down
under the letter of credit, or (ii) increasing the letter of credit to its value
immediately prior to such application. Tenant’s failure to replace the value of
the security as provided in the preceding sentence shall be a material breach of
its obligation under this Lease.
     51. ALTERATIONS MADE BY TENANT: The provisions of this Paragraph 51 shall
modify Paragraphs 5 and 6:
          A. As used herein, the term “Alteration” shall mean any alteration,
addition or improvement made by Tenant to the Premises during the term of the
Lease, but shall not include Tenant’s trade fixtures so long as such trade
fixtures are not installed in such a manner that they have become an integral
part of the building.
          B. Tenant shall not construct any Alterations or otherwise alter the
Premises without Landlord’s prior written approval: (i) if Tenant is in default
under this Lease or any of the Existing Leases, or (ii) if Tenant is not in
default under this Lease or the Building 7 Lease (if Tenant has exercised its
Option to lease Building 7) and if the total cost of such Alterations exceeds
$20,000 per the scope of any single remodeling job to the Premises, or if such
Alteration

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is structural in nature and provided Tenant gives Landlord notice of the planned
alterations and a 1/8” scale sepia reflecting said alterations ten (10) business
days prior to the commencement of construction of said alterations. Any other
non-structural Alteration of less than $20,000 for the total cost of the
remodeling job may be undertaken by Tenant without Landlord’s prior written
approval, except as noted herein, but with the understanding that Tenant shall
be obligated to restore the Premises as set forth in Paragraph 5 at the
termination of this Lease, except as otherwise provided in Paragraph 51.D.
Notwithstanding the foregoing, Tenant shall have the right to reconfigure
modular freestanding walls and partitions without Landlord’s prior consent,
which are not part of the original Interior Improvements shown on Exhibit B and
which have been installed by Tenant and paid for by Tenant. Notwithstanding the
above, Tenant shall not have the right, without Landlord’s prior written
consent, to remove any floor-to-ceiling partitions within the Premises.
          C. At all times during the Lease Term (i) Tenant shall maintain and
keep up dated “as-built” plans for all Alterations constructed by Tenant, and
(ii) Tenant shall provide to Landlord copies of such “as-built” plans as such
Alterations are made.
          D. Provided Tenant is not in default under this Lease or under any of
the Existing Leases, Tenant shall have the right to remove at any time during
the Lease term or prior to the expiration thereof any process equipment such as
clean hoods, thermal cycling chambers, freon piping, high temperature furnaces,
air handlers, which equipment the parties agree for the purposes of this Lease
shall be deemed to be trade fixtures, so long as Tenant repairs all damages
caused by the insulation and/or removal thereof, returns the Premises prior to
the termination of the Lease to the condition existing prior to the installation
of such item, and repairs and restores any so-called “doughnuts” or gaps in the
roof and/or floor tiles and/or ceiling and lighting resulting from such
installation and/or removal. At the time Tenant requests the consent of Landlord
to approve the installation of an Alteration requiring the consent of Landlord,
Tenant shall seek from Landlord a written statement of whether or not Landlord
will require Tenant to remove such Alteration and restore all or part of the
Premises as required by Landlord in accordance with this paragraph and
Paragraph 5 at the expiration or earlier termination of the term of the Lease.
If Tenant does not obtain from Landlord a statement in writing that Landlord
will not require such Alteration to be removed, then at the expiration or sooner
termination of the term of the Lease, it is agreed that Tenant may be required
by Landlord to remove all or part of such Alterations, and return the Premises
to the condition existing prior to the installation of such Alterations as
provided for in Paragraph 5 above. In addition, if Tenant has installed
Alterations without Landlord’s consent, if Landlord so requires, Tenant shall
also remove all or part of such Alterations so installed without Landlord’s
consent as Landlord may designate and return the Premises to the condition
existing prior to the installation of such Alteration. Alterations for which
Landlord has given its written consent to Tenant that such Alteration need not
be removed, shall not be removed by Tenant at the expiration or earlier
termination of the term of the Lease.
          E. At all times during the term of the Lease, Tenant shall have the
right to install and remove trade fixtures as defined in the Lease and installed
and paid for by Tenant, so long as Tenant repairs all damage caused by the
installation and removal thereof and returns the Premises to the condition
existing prior to the installation of such fixtures and repairs and restores any
so called “doughnuts” or gaps in the roof and/or floor (including floor
structure, sub-

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floor and appropriate floor covering for said area) and/or floor tiles, and/or
ceiling tiles, wall damage and lighting resulting from such removal.
          F. Notwithstanding anything to the contrary herein, Tenant shalt be
one hundred percent (100%) responsible and liable for obtaining any and all
permits (and the cost related thereto) required by the governing agencies for
any and all alterations and/or modifications Tenant makes to the Leased
Premises.
     52. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE
COMMENCEMENT OF THIS LEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING
OF THE PREMISES: The provisions of this Paragraph 53 shall modify Paragraphs 7
and 14:
          A. If during the last five (5) years of the term of the Lease if
Tenant has not extended the Lease as provided for in Paragraphs 41 and 42, or
during either of the five (5) year extension periods permitted by Paragraphs 41
and 42 or Paragraph 40.C., it becomes necessary (due to any governmental
requirement for continued occupancy of the Premises) to make structural
improvements required by laws enacted or legal requirements imposed by
governmental agency(s) after the Commencement Date, and the cost for each
required work or improvements exceeds $100,000, then if such legal requirement
is not imposed because of Tenant’s specific use of the Premises and is not
“triggered” by Tenant’s Alterations or Tenant’s application for a building
permit or any other governmental approval (collectively “Tenant’s Actions”) in
which instance Tenant shall be responsible for 100% of the cost of such
improvements, Landlord shall be responsible for paying the cost of such
improvement and constructing such improvement, subject to a cash contribution
from Tenant of a portion of the cost thereof as provided for and calculated in
Paragraph 52B.
          B. When Landlord makes an improvement pursuant to Paragraph 52A, and
as a condition to Landlord’s obligation to construct such improvement, Tenant
shall make the following contribution in cash to Landlord for the cost thereof
prior to the commencement of the work by Landlord. It is agreed that Tenant
shall pay to Landlord 100% of the cost of the first $100,000.00 worth of each
improvement. After the first $100,000.00, all costs above $100,000.00 shall be
divided by 15 and multiplied by the time period remaining in the last five years
of the Lease term from the date work on such improvement commences. [Illegible]
          For example, if the improvement is not required as a result of
Tenant’s Actions and if the cost of such improvement was $400,000 and there was
one year and six months remaining in the Lease term when the work commenced,
then Tenant would be responsible for reimbursing Landlord in cash $130,000.00
computed as follows:

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Total Cost of Work
  $ 400,000.00  
Tenant Responsible for 1st $100,000
    -100.000.00  
 
     
Total Amount To Be Amortized
  $ 300,000.00  
 
       
$300,000.00/15 = $20,000.00/yr. x 1.5 yrs =
  $ 30,000.00  
 
       
Tenant responsible for $100,000 + $30,000.00 =
  $ 130,000.00  

          C. If Landlord has made improvements, for which Tenant has reimbursed
Landlord for the cost thereof pursuant to Paragraph 52B, and the term of this
Lease is subsequently extended pursuant to the exercise by Tenant of an option
to renew pursuant to Paragraph 41, or 42, upon the exercise of any such option
by Tenant, Tenant shall pay to Landlord an additional sum equal to the total
amount of said improvement less the amount previously paid for by Tenant. Using
the example in Paragraph 52B above, Tenant would owe Landlord the additional
amount of $270,000.00 ($400,000.00 - $130,000.00 = $270,000.00).
     53. REAL PROPERTY TAXES: Paragraph 9 is modified by the following:
          A. The term “Real Property Taxes” shall not include charges, levies or
fees directly related to the use, storage, disposal or release of Hazardous
Materials on the Premises unless directly related to Tenant’s Activities at this
site or on other sites leased and/or owned by Tenant; however, Tenant shall be
responsible for general or special tax and/or assessments (related to Hazardous
Materials and/or toxic waste) imposed on the Property provided said special tax
and/or assessment is not imposed due to on-site originated contamination on the
Property (by third parties not related to Tenant) prior to the Lease
Commencement Date. Subject to the terms and conditions stated herein, Tenant
shall be responsible for paying one hundred percent (100%) of said taxes and/or
assessments allocated to the Property.
          B. If any assessments for public improvements are levied against the
Premises, Landlord may elect either to pay the assessment in full or to allow
the assessment to go to bond. If Landlord pays the assessment in full, Tenant
shall pay to Landlord or any assignee or purchaser of the Premises each time
payment of Real Property Taxes is made a sum equal to that which would have been
payable (as both principal and interest) had Landlord allowed the assessment to
go to bond.
          C. Tenant at its cost shall have the right, at any time, to seek a
reduction in the assessed valuation of the Premises or to contest any Real
Property Taxes that are to be paid by Tenant. If Tenant seeks a reduction or
contests such Real Property Taxes, the failure on Tenant’s part to pay such Real
Property Taxes being so contested shall not constitute a default so long as
Tenant complies with the provisions of this Paragraph. Landlord shall not be
required to join in any proceeding or contest brought by Tenant unless the
provisions of any law require that the proceeding or contest be brought by or in
the name of Landlord. In that case Landlord shall join in the proceedings or
contest or permit it to be brought in Landlord’s name as long as Landlord is not
required to bear any cost. Tenant, on final determination of the proceeding or
contest, shall immediately pay or discharge its share of any Real Property Taxes
determined by any decision or judgment rendered, together with all costs,
charges, interest, and penalties

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incidental to the decision or judgment. If Tenant does not pay the Real Property
Taxes when due pursuant to the Lease and Tenant seeks a reduction or contests
them as provided in this paragraph, before the commencement of the proceeding or
contest Tenant shall furnish to Landlord a surety bond in form reasonably
satisfactory to Landlord issued by an insurance company qualified to do business
in California. The amount of the bond shall equal 125% of the total amount of
Real Property Taxes in dispute and any such bond shall be assignable to any
lender or purchaser of the Premises. The bond shall hold Landlord and the
Premises harmless from any damage arising out of the proceeding or contest and
shall insure the payment of any judgment that may be rendered.
     54. PROPERTY INSURANCE: Paragraph 12 is modified by the following:
          A. If Tenant so elects, Tenant may obtain from a third party insurance
company the insurance required to be carried by Landlord pursuant to
Paragraph 12 so long as each of the following conditions is satisfied: (i) the
Landlord is not the John Arrillaga Survivor’s Trust and/or the Richard T. Peery
Separate Property Trust or an affiliated entity or entities as the case may be;
(ii) the insurance to be carried by Tenant to satisfy this requirement strictly
complies with all of the provisions of Paragraph 12; (iii) such insurance shall
name Landlord as the insured and provide that it is to be payable to Landlord in
the same manner as if such insurance had been carried by Landlord pursuant to
Paragraph 12 (subject to the rights of any lender holding a mortgage or deed of
trust encumbering the Premises); (iv) each lender holding a mortgage or deed of
trust encumbering the Premises shall have given its written consent to Tenant
carrying such insurance and such insurance shall comply with the requirements of
any such lender; (v) Tenant must notify Landlord, by certified mail, no later
than one hundred eighty (180) days prior to the expiration date of Landlord’s
insurance policy (which expiration date is currently 3/13/xx of a given year and
is subject to change; Landlord shall notify Tenant in the event Landlord’s
insurance year changes) that Tenant will directly obtain the required insurance
coverage for the insurance year commencing 3/14/XX through 3/13/XX and each
insurance year through the termination date of this Lease, including any
extensions thereof, or until Tenant is no longer able to comply with all of the
provisions of this paragraph 55; (vi) the annual premium must be paid in full at
the commencement of the policy; (vii) the insurance policy must be issued for a
one-year period following the expiration date of Landlord’s insurance policy
(i.e., from 3/14/XX to 3/13/XX; (viii) any and all deductibles required under
the policy will be paid entirely by Tenant; (ix) the terms of the coverage must
be broad form and cover all items to be covered as set forth in Paragraph 12 of
this Lease; (x) the Building and Premises must be insured for their full
replacement cost; (xi) the insurance policy containing the required coverage in
accordance with the provisions of this paragraph must be sent to Landlord for
retention within thirty (30) days prior to the expiration date of Landlord’s
insurance policy, and may not be terminated or altered without thirty (30) days
written notice to Landlord by the company providing such insurance (it is agreed
that if the insurance policy is canceled or altered, Landlord will have the
right to obtain the property insurance coverage on said building, and Landlord
will bill the Tenant for the related insurance premium); and (xii) at all times
while Tenant is so carrying such insurance, Tenant is Quantum Corporation or a
successor entity and the then net worth of such corporation is equal to or
greater than the net worth of Quantum corporation as of the date of this Lease
is executed by Landlord and Tenant. Tenant shall provide such evidence as is
required by Landlord and any lender to establish that the insurance that Tenant
carries pursuant to this Paragraph 54 has been obtained and meets the
requirement of this Paragraph 54. Such insurance

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carried by Tenant shall be in form and provided by an insurance company that is
reasonably acceptable to Landlord, which must be rated “A plus” or better by
Best’s Insurance Service (or an equivalent rating from another rating agency
should Best’s no longer provide such service). A copy of any such policy shall
be delivered to Landlord. If Tenant elects to insure and such insurance provided
by Tenant does not satisfy the requirements of Paragraph 12, in the event of a
subsequent casualty, Tenant shall be responsible for and shall pay for that
portion of the restoration cost, in excess of the insurance proceeds actually
available, that would have been covered by insurance satisfying the requirements
of Paragraph 12.
     55. ASSIGNMENT AND SUBLETTING: The following modifications are made to
Paragraph 16:
          A. In the event that Tenant seeks to make any assignment or sublease,
then Landlord, by giving Tenant written notice of its election within fifteen
(15) days after Tenant’s notice of intent to assign or sublease has been given
to Landlord, shall have the right to elect (i) to withhold its consent to such
assignment or sublease, as permitted pursuant to Paragraph I, or (ii) to permit
Tenant to so assign the Lease or sublease such part of the Premises, in which
event Tenant may do so, but without being released of its liability for the
performance of all of its obligations under the Lease, and the following shall
apply (except the following shall not apply to a “Permitted Transfer” described
in Paragraph 56):
                    (1) If Tenant assigns its interest in this Lease, then in
addition to the rental provided for in this Lease, Tenant shall pay to Landlord
fifty percent (50%) of all Rent and other consideration received by Tenant over
and above (i) the assignee’s agreement to assume the obligations of Tenant under
this Lease and (ii) all “Permitted Transfer Costs” (as defined herein) related
to such assignment. As used herein, the term “Permitted Transfer Costs” shall
mean all reasonable leasing commissions paid to third parties not affiliated
with Tenant in order to obtain the assignment or sublease in question.
                    (2) If Tenant sublets all or part of the Premises, then
Tenant shall pay to Landlord in addition to the Rent provided for in this Lease
fifty percent (50%) of the positive difference, if any, between (i) all rent and
other consideration paid or provided to Tenant by the subtenant, less (ii) all
Rent paid by Tenant to Landlord pursuant to this Lease which is allocable to the
area so sublet and all Permitted Transfer Costs related to such sublease. After
Tenant has recovered all Permitted Transfer Costs Tenant shall pay to Landlord
the amount specified in the preceding sentence on the same basis, whether
periodic or in lump sum, that such rent and other consideration is paid to
Tenant by its subtenant, within seven (7) days after it is received by Tenant.
                    (3) Tenant’s obligations under this subparagraph shall
survive any assignment or sublease. At the time Tenant makes any payment to
Landlord required by this subparagraph, Tenant shall deliver an itemized
statement of the method by which the amount to which Landlord is entitled was
calculated, certified by Tenant as true and correct. Landlord shall have the
right to inspect Tenant’s books and records relating to the payments due
pursuant to this subparagraph. Upon request therefor, Tenant shall deliver to
Landlord copies of all bills, invoices or other documents upon which its
calculations are based.

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                    (4) As used herein, the term “consideration shall mean any
consideration of any kind received, or to be received (including, but not
limited to, services rendered and/or value received) by Tenant as a result of
the assignment or sublease, if such sums are paid or provided to Tenant for
Tenant’s interest in this Lease or in the Premises.
                    (5) This Paragraph 55.A does not apply to a “Permitted
Transfer”, as provided in Paragraph 56 hereof. The parties agree that if any of
the following transactions occur and do not qualify as “Permitted Transfers”,
Tenant must obtain Landlord’s consent to such transaction and if Landlord
consents to any of the following transactions which do not otherwise qualify as
“Permitted Transfers”, then the provisions of this Paragraph 55.A shall not
apply to the following transactions: (i) a merger, consolidation or other
reorganization in which Tenant is not the surviving corporation so long as 95%
of all assets and liabilities of Tenant are permanently transferred to such
assignee; and (ii) an assignment of this Lease to a corporation which purchases
or otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets and liabilities of Tenant are permanently transferred to such assignee
and Tenant remains liable and responsible under the Lease to the extent Tenant
continues in existence following such transaction.
     56. PERMITTED ASSIGNMENTS AND SUBLEASES: Notwithstanding anything contained
in Paragraph 16, so long as Tenant otherwise complies with the provisions of
Paragraph 16 and the Permitted Transfer does not release Tenant from its
obligations hereunder, Tenant may enter into any of the following transfers (a
“Permitted Transfer”) without Landlord’s prior written consent, and the
provisions of Paragraph 55A shall not apply to any such Permitted Transfer:
          A. Tenant may sublease all or part of the Premises or assign its
interest in this Lease to any corporation which controls, is controlled by, or
is under common control with Tenant by means of an ownership interest of more
than fifty percent (50%) providing Tenant remains liable for the payment of Rent
and full performance of the Lease;
          B. Tenant may assign its interest in the Lease to a corporation which
results from a merger, consolidation or other reorganization in which Tenant is
not the surviving corporation so long as (i) 95% of all assets and liabilities
of Tenant are permanently transferred to such assignee, and (ii) immediately
prior to the merger, consolidation or other reorganization, the corporation into
which Tenant is to be merged [Illegible] the net worth of the Tenant at the time
of lease execution or [Illegible] whichever is greater), or if it does not,
Landlord is provided a guaranty of the Lease (in a form reasonably acceptable to
Landlord) from a corporation (a) that is the parent of, or is otherwise
affiliated with, the corporation into which Tenant is to be merged, and
(b) which has a current net worth equal to or greater than the net worth of
Tenant at the time of Lease execution or at the time of such assignment, merger,
consolidation or reorganization (whichever is greater). In the event there is
not a permanent transfer of 95% or more of the assets and liabilities from
Tenant to a third party, and Tenant continues to exist as a separate entity,
both companies shall be jointly and severally liable for the full terms and
conditions of the Lease;
          C. Tenant may assign this Lease to a corporation which purchases or
otherwise acquires 95% or more of the assets of Tenant so long as 95% of all
assets and

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liabilities of Tenant are permanently transferred to such assignee (in the event
there is not a permanent transfer of 95% or more of the assets and liabilities
from Tenant to a third party and Tenant continues to exist as a separate entity,
both companies shall be jointly and severally liable for the full terms and
conditions of the Lease), and provided that immediately prior to such assignment
said corporation, has a net worth equal to or greater than the net worth of
Tenant (a) at the time of Lease execution or (b) at the time of such assignment
(whichever is greater), or if it does not, Landlord is provided a guaranty of
the Lease (in a form reasonably acceptable to Landlord) from a corporation
(a) that is the parent of, or is otherwise affiliated with, said corporation and
(b) which has a current net worth equal to or greater than the net worth of
Tenant at the time of Lease execution or at the time of such assignment,
(whichever is greater).
     57. SUBORDINATION AND MORTGAGES: Paragraph 17 is modified to provide that
this Lease shall not be subordinate to a mortgage or deed of trust unless the
Lender holding such mortgage or deed of trust enters into a written
subordination, non-disturbance and attornment agreement in which the Lender
agrees that notwithstanding any subordination of this Lease to such Lender’s
mortgage or deed of trust, (i) such Lender shall recognize all of Tenant’s
rights under this Lease, and (ii) in the event of a foreclosure this Lease shall
not be terminated so long as Tenant is not in material default of its
obligations under this Lease, but shall continue in effect and Tenant and such
Lender (or any party acquiring the Premises through such foreclosure) shall each
be bound to perform the respective obligations of Tenant and Landlord with
respect to the Premises arising after such foreclosure.
     58. LANDLORD’S RIGHT TO ENTER: Notwithstanding the provisions of
Paragraph 18, (1) except in the event of an emergency, Landlord shall give
Tenant twenty-four (24) hours notice prior to entering the Premises, agrees to
comply with any reasonably safety and/or security regulations imposed by Tenant
with respect to such entry, and shall only enter the Premises when accompanied
by Tenant or its agent (so long as Tenant makes itself reasonably available for
this purpose), and (ii) Landlord may install “for lease” signs relating to the
Premises only during the last 150 days of the Lease term. Landlord agrees to use
its reasonable, good faith efforts such that any entry by Landlord, and
Landlord’s agents, employees, contractors and invitees shall be performed in a
manner with as minimal interference as possible with Tenant’s business at the
Premises. Subject to the foregoing, Tenant agrees to cooperate with Landlord and
Landlord’s agents, employees and contractors so that responsibilities of
Landlord under the Lease can be fulfilled in a reasonable manner during normal
business hours so that no extraordinary costs are incurred by Landlord.
     59. BANKRUPTCY AND DEFAULT: Paragraph 19 is modified to provide that with
respect to non-monetary defaults not involving Tenant’s failure to pay Basic
Rent or Additional Rent, Tenant shall not be in default of any non-monetary
obligation if (i) more than thirty (30) days is required to cure such
non-monetary default, and (ii) Tenant commences cure of such default as soon as
reasonably practicable after receiving written notice of such default from
Landlord and thereafter continuously and with due diligence prosecutes such cure
to completion.
     60. ABANDONMENT: Paragraph 20 is modified to provide that Tenant shall not
be in default under the Lease if it leaves all or any part of Premises vacant so
long as (i) Tenant is performing all of its other obligations under the Lease
including the obligation to pay Basic Rent

39

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and Additional Rent, (ii) Tenant provides on-site security during normal
business hours for those parts of the Premises left vacant, (iii) such vacancy
does not materially and adversely affect the validity or coverage of any policy
of insurance carried by Landlord with respect to the Premises, and (iv) the
utilities and heating and ventilation system are operated to the extent
necessary to prevent damage to the Premises or its systems.
     61. DESTRUCTION: Paragraph 21 is modified by the following:
          A. Notwithstanding anything to the contrary within Paragraph 21,
Landlord may terminate this Lease in the event of an uninsured event or if
insurance proceeds, net of the deductible, are insufficient to cover one hundred
percent of the rebuilding costs; provided, however, Tenant shall have the right
to elect, in its discretion, to contribute such excess funds to permit Landlord
to repair the Premises.
          B. Except as provided in Paragraph 61C, Landlord may not terminate the
Lease if the Premises are damaged by a peril whereby the cost to replace and/or
repair is one hundred percent (100%) covered by the insurance carried by
Landlord pursuant to Paragraph 12, but instead shall restore the Premises in the
manner described by Paragraph 21.
          C. If the Premises are damaged by a peril covered by the insurance
carried by Landlord pursuant to Paragraph 12, Landlord shall have the option to
terminate the Lease if each of the following conditions is satisfied: (i) the
cost to repair or the damage exceeds thirty-three percent (33%) of the then
replacement cost of the Premises; and (ii) the damage occurs at a time when
there is less than five (5) years remaining in the term of the Lease.
Notwithstanding the foregoing, if such damage occurs at a time when there is
less than five (5) years remaining in the term of the Lease and Landlord
notifies Tenant of Landlord’s election to terminate the Lease pursuant to the
provisions of this Paragraph 61B, if Tenant has the right to extend the term of
this Lease pursuant to either Paragraph 41 or 42 such that the remaining term of
the Lease (including the option period) will be more than five (5) years
following the date of such damage, this Lease shall not terminate if Tenant
notifies Landlord in writing of Tenant’s exercise of an option to extend granted
to Tenant by either Paragraph 41 or 42. In such event, this Lease shall not
terminate, the term shall be so extended, and Landlord shall restore the
Premises in the manner provided in Paragraph 21.
     D. If Landlord fails to obtain insurance as required pursuant to
Paragraph 12, and said insurance would have been available to cover any damage
or destruction to the Premises, Landlord shall be required to rebuild, at its
cost, net of the deductible which would have been required under said insurance
policy (which deductible Tenant is required to pay).
     E. If the Premises are damaged by any peril, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord’s architect or construction consultant as to when the restoration work
required of Landlord may be completed. Tenant shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Landlord of a written notice of election to
terminate within seven (7) days after Tenant receives from Landlord the estimate
of the time needed to complete such restoration:

40

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                    (1) The Premises are damaged by any peril (not caused by or
resulting from an action of Tenant or Tenant’s agents, employees, contractors or
invitees) and, in the reasonable opinion of Landlord’s architect or construction
consultant, the restoration of the Leased Premises cannot be substantially
completed within 180 days after the date of such damage (subject to force
majeure conditions); or
                    (2) The Premises are damaged by any peril (not caused by or
resulting from an action of Tenant or Tenant’s agents, employees, contractors or
invitees) within twelve (12) months of the last day of the Lease term and
provided Tenant has not exercised an option to renew pursuant to the provisions
of Paragraph 41 or 42, and, in the reasonable opinion of Landlord’s architect or
construction consultant, the restoration of the Leased Premises cannot be
substantially completed within sixty (60) days after the date of such damage and
Tenant has not exercised its Option to Extend said Term (or Extended Term as the
case may be).
     62. EMINENT DOMAIN: Paragraph 22 is modified by the following:
     Landlord may not terminate the Lease if less than one third (1/3) of the
building is taken by condemnation or if a taking by condemnation is only
threatened.
     63. TRANSFER BY LANDLORD: The provisions of Paragraph 23 of the Lease to
the contrary notwithstanding, Landlord shall not be relieved of its obligations
under the Lease which may accrue after the date of a sale or other transfer
unless and until (i) the transferee agrees to assume and be bound by the terms
of this Lease and to perform all obligations of the Landlord under the Lease
which may accrue after the date of such transfer, and (ii) Landlord transfers
the cash balance of the Security Deposit (net of any offsets used to cure
defaults under the Lease) to its successor in interest (transferee) in
accordance with the provisions of California Civil Code Section 1950.7, as
amended or recodified.
     64. LANDLORD’S LIEN WAIVER: Landlord, within thirty (30) days after demand
from Tenant, shall execute and deliver such lien waiver documents that are
reasonably required by any supplier, lessor, or lender in connection with the
installation in the Premises of the Tenant’s personal property or trade fixtures
providing Landlord approves the form of any such waiver and Landlord’s rights
under this Lease are not materially and adversely affected.
     65. AUTHORITY TO EXECUTE: The parties executing this Lease Agreement hereby
warrant and represent that they are properly authorized to execute this Lease
Agreement and bind the parties on behalf of whom they execute this Lease
Agreement and to all of the terms, covenants and conditions of this Lease
Agreement as they relate to the respective parties hereto.

41

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

 

                  QUANTUM CORPORATION,
a Delaware corporation   JOHN ARRILLAGA SURVIVOR’S
TRUST    
 
               
By
  /s/ Andrew Kryder   By   /s/ John Arrillaga    
 
               
 
  Andrew Kryder, Vice President Finance and Corporate General Counsel       John
Arrillaga, Trustee    
 
               
Date:
  June 25, 1997   Date:   June 30, 1997    
 
               
 
                        RICHARD T. PEERY SEPARATE PROPERTY TRUST    
 
               
By
  /s/ Norm Claus   By   /s/ Richard T. Peery    
 
               
 
  Norm Claus, Vice President Real Estate and Corporate Services       Richard T.
Peery, Trustee    
 
               
Date:
  June 25, 1997   Date:   June 26, 1997    
 
               

42

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Quantum 6
AMENDMENT NO. 1
TO LEASE
     THIS AMENDMENT NO. 1 is made and entered into this 15th day of April, 1998,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST) as amended, and RICHARD T. PEERY,
Trustee, or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE
PROPERTY TRUST) as amended, collectively as LANDLORD, and QUANTUM CORPORATION, a
Delaware corporation, as TENANT.
RECITALS
     A. WHEREAS, by Lease Agreement dated April 16, 1997 and the related
Construction Agreement of even date therewith, Landlord leased to Tenant all of
that certain 182,355 ± square foot building to be constructed by Landlord for
Tenant and to be located on Sumac Drive in Milpitas, California, the details of
which are more particularly set forth in said April 16, 1997 Lease Agreement,
and
     B. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by: (i) changing the square footage of the Leased Premises pursuant to the
Architect’s final measurement; (ii) setting a fixed Commencement Date for the
Lease; (iii) establishing the Basic Rent Schedule and Aggregate Rent under said
Lease Agreement; (iv) increasing the Security Deposit requirement under the
Lease pursuant to the change in the square footage of the Premises; and
(v) amending Lease Paragraphs 41 (“First Five-Year Option to Extend”) and 42
(“Second Five-Year Option to Extend”) as hereinafter set forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. LEASED PREMISES SQUARE FOOTAGE: The parties hereto agree, that upon
final approval of the Definitive Shell Plans (as defined in Section 3.A. of the
Construction Agreement) the actual square footage of the Premises, as measured
by the Architect in accordance with said Section 3.A of the Construction
Agreement, shall be 187,134 square feet. This square footage shall be the basis
for calculating the Basic Rent due under the Lease, the Security Deposit
required under the Lease and Landlord’s Tenant Improvement Allowance as provided
for in the Construction Agreement.
     2. COMMENCEMENT DATE: The parties hereto agree that the Commencement Date
of the Lease shall be June 1, 1998, regardless of the status of the construction
of the Interior Improvements. Said June 1, 1998, is the date on which the
Interior Improvements would have been completed, absent changes requested by
Tenant to the Interior Improvements which have caused delays in the
construction.
     3. BASIC RENT SCHEDULE: The Basic Rent schedule for the Initial Lease Term
shall be as follows:

1

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

 

Quantum 6
     On June 1, 1998, the sum of TWO HUNDRED NINETY NINE THOUSAND FOUR HUNDRED
FOURTEEN AND 40/100 DOLLARS ($299,414.40) shall be due, and a like sum due on
the first day of each month thereafter, through and including May 1, 1999.
     On June 1, 1999, the sum of THREE HUNDRED EIGHT THOUSAND SEVEN HUNDRED
SEVENTY ONE AND 10/100 DOLLARS ($308,771.10) shall be due, and a like sum due on
the first day of each month thereafter, through and including May 1,2000.
     On June 1, 2000, the sum of THREE HUNDRED EIGHTEEN THOUSAND ONE HUNDRED
TWENTY SEVEN AND 80/100 DOLLARS ($318,127.80) shall be due, and a like sum due
on the first day of each month thereafter, through and including May 1, 2001.
     On June 1, 2001, the sum of THREE HUNDRED TWENTY SEVEN THOUSAND FOUR
HUNDRED EIGHTY FOUR AND 50/100 DOLLARS ($327,484.50) shall be due, and a like
sum due on the first day of each month thereafter, through and including May 1,
2002.
     On June 1, 2002, the sum of THREE HUNDRED THIRTY SIX THOUSAND EIGHT HUNDRED
FORTY ONE AND 20/100 DOLLARS ($336,841.20) shall be due, and a like sum due on
the first day of each month thereafter, through and including May 1, 2003.
     On June 1, 2003, the sum of THREE HUNDRED FORTY SIX THOUSAND ONE HUNDRED
NINETY SEVEN AND 90/100 DOLLARS ($346,197.90) shall be due, and a like sum due
on the first day of each month thereafter, through and including May 1, 2004.
     On June 1, 2004, the sum of THREE HUNDRED FIFTY FIVE THOUSAND FIVE HUNDRED
FIFTY FOUR AND 60/100 DOLLARS ($355,554.60) shall be due, and a like sum due on
the first day of each month thereafter, through and including May 1, 2005.
     On June 1, 2005, the sum of THREE HUNDRED SIXTY FOUR THOUSAND NINE HUNDRED
ELEVEN AND 30/100 DOLLARS ($364,911.30) shall be due and a like sum due on the
first day of each month thereafter, through and including May 1, 2006.
     On June 1, 2006, the sum of THREE HUNDRED SEVENTY FOUR THOUSAND TWO HUNDRED
SIXTY EIGHT AND NO/100 DOLLARS ($374,268.00) shall be due, and a like sum, due
on the first day of each month thereafter, through and including May 1, 2007.
     On June 1, 2007, the sum of THREE HUNDRED EIGHTY THREE THOUSAND SIX HUNDRED
TWENTY FOUR AND 70/100 DOLLARS ($383,624.70) shall be due, and a like sum due on
the first day of each month thereafter, through and including May 1, 2008.
     On June 1, 2008, the sum of THREE HUNDRED NINETY TWO THOUSAND NINE HUNDRED
EIGHTY ONE AND 40/100 DOLLARS ($392,981.40) shall be due, and a like sum due on
the first day of each month thereafter, through and including May 1, 2009.
     On June 1, 2009, the sum of FOUR HUNDRED TWO THOUSAND THREE HUNDRED THIRTY
EIGHT AND 10/100 DOLLARS ($402,338.10) shall be due, and a like sum due on the
first day of each month thereafter, through and including May 1, 2010.

2

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

 

Quantum 6
     On June 1, 2010, the sum of FOUR HUNDRED ELEVEN THOUSAND SIX HUNDRED NINETY
FOUR AND 80/100 DOLLARS ($411,6194.80) shall be due, and a like sum due on the
first day of each month thereafter, through and including May 1, 2011.
     On June 1, 2011, the sum of FOUR HUNDRED TWENTY ONE THOUSAND FIFTY ONE AND
50/100 DOLLARS ($421,051.50) shall be due, and a like sum due on the first day
of each month thereafter, through and including May 1, 2012.
     On June 1, 2012, the sum of FOUR HUNDRED THIRTY THOUSAND FOUR HUNDRED EIGHT
AND 20/100 DOLLARS ($430,408.20) shall be due, and a like sum due on the first
day of each month thereafter, through and including May 1, 2013.
     The Aggregate Basic Rent for the Initial Lease Term shall be
$65,684,034.00.
     4. SECURITY DEPOSIT: Due to the increase in the total square footage of the
Premises, the Security Deposit required under the Lease shall be increased by
$18,638.10, or from $711,184.50 to $729,822.60, payable upon Tenant’s execution
of this Amendment No. 1.
     5. FIRST FIVE-YEAR OPTION TO EXTEND: Subject to the terms of Lease
Paragraph 41, the latest date Tenant may exercise its First Five-Year Option to
Extend, as provided for in Lease Paragraph 41, shall be December 2, 2012. In the
event Tenant timely exercises its First Five-Year Option to Extend, the monthly
Basic Rent for the First Option Period shall be as follows:

                  Period   Rate PSF   Monthly Basic Rent
06/01/13-05/31/14
  $ 2.35     $ 439,764.90  
06/01/14-05/31/15
  $ 2.40     $ 449,121.60  
06/01/15-05/31/16
  $ 2.45     $ 458,478.30  
06/01/16-05/31/17
  $ 2.50     $ 467,835.00  
06/01/17-05/31/18
  $ 2.55     $ 477,191.70  

     6. SECOND FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the
Lease for an additional five year period as set forth in Lease Paragraph 41 (as
amended above), and subject to the terms of Lease Paragraph 42, the latest date
Tenant may exercise its Second Five-Year Option to Extend, as provided for in
Lease Paragraph 42, shall be December 2, 2017. In the event Tenant timely
exercises its Second Five-Year Option to Extend, the monthly Basic Rent for the
Second Option Period shall be as follows:

                  Period   Rate PSF   Monthly Basic Rent
06/01/18-05/31/19
  $ 2.60     $ 486,548.40  
06/01/19-05/31/20
  $ 2.65     $ 495,905.10  
06/01/20-05/31/21
  $ 2.70     $ 505,261.80  
06/01/21-05/31122
  $ 2.75     $ 514,618.50  
06/01/22-05/31/23
  $ 2.80     $ 523,975.20  

     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said April 16, 1997 Lease Agreement shall remain in full force and effect.

3

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Quantum 6
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 1
to Lease as of the day and year last written below.

                  LANDLORD:   TENANT:    
 
                JOHN ARRILLAGA SURVIVOR’S
TRUST   QUANTUM CORPORATION
a Delaware corporation    
 
               
By
  /s/ John Arrillaga   By   /s/ Andrew Kryder    
 
                    John Arrillaga, Trustee        
 
      Andrew Kryder                               Print or Type Name    
 
               
Date:
  May 15, 1998   Title:   General Counsel      
 
               
 
                RICHARD T. PEERY SEPARATE             PROPERTY TRUST            
 
               
 
               
By
  /s/ Richard T. Peery   Date:   May 13, 1998    
 
               
 
               
 
  Richard T. Peery, Trustee            
 
               
Date:
  May 14, 1998            
 
               
 
                        /s/ Norm Claus                  
 
                        May 13, 1998                  

4

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

 

Quantum 6
AMENDMENT NO. 2
TO LEASE
     THIS AMENDMENT NO. 2 is made and entered into this 22nd day of March, 2001,
by and between JOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST) as amended, and RICHARD T. PEERY,
Trustee, or his Successor Trustee UTA dated 7/20/77 (RICHARD T. PEERY SEPARATE
PROPERTY TRUST) as amended, collectively as LANDLORD, and MAXTOR CORPORATION, a
Delaware corporation, as “ASSIGNEE” or “MAXTOR”.
RECITALS
     A. WHEREAS, by Lease Agreement dated April 16, 1997 and the related
Construction Agreement of even date therewith, Landlord leased to QUANTUM
CORPORATION, a Delaware corporation (the “ASSIGNOR or “QUANTUM”) all of that
certain 182,355+ square foot building to be constructed by Landlord for Tenant
and to be located on Sumac Drive in Milpitas, California, (also to be identified
as 601 McCarthy Boulevard, Milpitas, CA) the details of which are more
particularly set forth in said April 16, 1997 Lease Agreement, and
     B. WHEREAS, said Lease was amended by Amendment No. 1 dated April 15, 1998,
which amended the Lease by: (i) changing the square footage of the Leased
Premises pursuant to the Architect’s final measurement; (ii) setting a fixed
Commencement Date of June 1, 1998 and a Termination Date of May 31, 2012 for the
Lease; (iii) establishing the Basic Rent Schedule and Aggregate Rent under said
Lease Agreement; (iv) increasing the Security Deposit requirement under the
Lease pursuant to the change in the square footage of the Premises; and
(v) amending Lease Paragraphs 41 (“First Five-Year Option to Extend”) and 42
(“Second Five-Year Option to Extend”), and
     C. WHEREAS, the Lease, together with those certain Amendments described
above in Recital B shall hereinafter collectively be referred to as “the Lease
Agreement”, and
     D. WHEREAS, it is now the desire of the parties hereto to amend the Lease
by (i) acknowledging Landlord’s consent to the assignment of said Lease from
“Quantum Corporation, a Delaware corporation” to “Maxtor Corporation, a Delaware
corporation”, and (ii) replacing Lease Paragraphs 41 (“First Five Year Option to
Extend”) and 42 (“Second Five Year Option to Extend”) as hereinafter set forth.
AGREEMENT
     NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the hereinafter mutual promises, the
parties hereto do agree as follows:
     1. ASSIGNMENT OF TENANT’S INTEREST: Notwithstanding anything to the
contrary contained in the Lease Agreement, Landlord hereby understands that
based on Quantum’s notice to Landlord, Landlord hereby acknowledges that the
following transactions have occurred:

1

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Quantum 6
          A. Quantum has operated its business at the Premises through two
separate business groups: Quantum HDD, tracked by Quantum HDD common stock, and
Quantum DSS, tracked by Quantum DSS common stock.
          B. On or about, October 3, 2000, Quantum and Maxtor entered into that
certain an Amended and Restated Agreement and Plan of Merger and Reorganization,
dated as of October 3, 2000 (the “Merger Agreement’), wherein they agreed that:
               (i) Quantum will separate its Quantum HDD business from its
Quantum DSS and transfer the assets of Quantum HDD to a newly-formed subsidiary,
Insula Corporation, a Delaware corporation (“Insula”), in exchange for all of
Insula’s common stock and Insula’s agreement to be entirely responsible for all
of the Quantum HDD obligations and liabilities.
               (ii) Immediately after such separation, each currently
outstanding share of Quantum HDD common stock will be redeemed in return for a
share of Insula common stock such that the holders of Quantum HDD common stock
shall own all of the common stock of Insula.
               (iii) Immediately after said redemption, Insula will merge into
Maxtor and each share of the Insula’s common stock will be converted into the
right to receive approximately 1.52 shares of Maxtor common stock, subject to
possible adjustment as described in the Merger Agreement.
          C. As part of the legal separation of the Quantum HDD business from
the Quantum DSS business, all of the right title and interest of Quantum in the
Lease will be assigned by Quantum to Insula and Insula will assume and agree to
be liable for all of the obligations of Quantum, as Tenant, under the Lease.
          D. Because the actual physical separation of the Quantum HDD business
from the Quantum DSS business cannot be completed prior to the closing of the
foregoing transactions described above, Insula has agreed to provide to Quantum
with a limited license for the use of the premises subject to the Leases,
identified as “License Back” Leases in attached Exhibit A for a period of time
not exceeding the number of months specified in attached Exhibit A.
     As a result of said merger transaction, as of April 2, 2001, the effective
date of the merger, Maxtor will become the Tenant under the Lease Agreement, and
Maxtor shall assume all obligations of Tenant under the Lease Agreement dated
April 16, 1997, as amended.
     Landlord hereby consents to the foregoing transactions (“Landlord’s
Consent”). Except as expressly set forth below, Landlord’s Consent shall in no
way void or alter any of the terms of the Lease Agreement by and between
Landlord and Tenant, nor shall Landlord’s Consent alter or diminish in any way
Tenant’s obligations to Landlord.
     Landlord has not reviewed the terms of any agreement between Quantum,
Insula and/or Maxtor, and Landlord shall not be bound by any agreement other
than the terms of the Lease Agreement between Landlord and Tenant. Landlord does
not make any warranties or

2

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

 

Quantum 6
representations as to the condition of the Leased Premises or the terms of the
Lease Agreement between Landlord and Quantum. Landlord’s consent to the
assignment shall in no way obligate Landlord to any further consents or
agreements between Quantum and/or Assignee. So long as Quantum continues to
exist as a Delaware corporation, it is agreed that both Quantum and Maxtor will
be jointly and severally liable for all the terms and conditions of the Lease
and all Amendments thereto; provided, however, that so long as Quantum remains
liable for said Lease, no material amendment to the Lease Agreement after the
date hereof shall be binding upon Quantum without the prior written consent of
Quantum, which consent shall not be unreasonably withheld, and Quantum’s
approval shall not be required on transactions related to Landlord’s Waivers,
Landlord’s Consents to Sublease and/or Landlord’s Consents to Alterations. The
foregoing, however, shall not prevent Tenant and Landlord from entering into any
such modification or amendment between themselves.
     It is further understood that the Security Deposit of Quantum is being
transferred to Maxtor.
     2. OPTIONS TO EXTEND: As consideration for the consent of Landlord herein
set forth, Lease Paragraph 41 (“First Five Year Option to Extend”), as amended
by Paragraph 6 to Amendment No. 1, and Lease Paragraph 42 (“Second Five Year
Option to Extend”), as amended by Paragraph 7 to Amendment No. 1, are hereby
deleted in their entirety and shall be replaced with the following:
          A. FIRST FIVE YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant
an option to extend this Lease Agreement (“Option to Extend” or the “Option”)
for an additional five years (“First Extended Term”) upon the following terms
and conditions:
                    (1) Tenant shall give Landlord written notice of Tenant’s
exercise of this Option to Extend at least one hundred eighty (180) days prior
to the expiration of the Lease Term pursuant to Paragraph A hereof (not later
than December 3, 2011), in which event the Term of the Lease shall be considered
extended for an additional five (5) years, subject to the Basic Rent set forth
below and with: (i) the Basic Rent to be determined pursuant to Paragraph 2)
below; (ii) management fee and the terms and conditions subject to amendment by
Landlord (Landlord, in its sole and absolute discretion, may, but is not
required to, incorporate its then current Lease provisions that are standard in
Landlord’s leases for comparable buildings as of the date of Tenant’s exercise
of its Option to Extend); and (iii) this Paragraph 2.A thereafter deleted. In
the event that Tenant fails to timely exercise Tenant’s Option as set forth
herein in writing, Tenant shall have no further Option to Extend this Lease, and
the Lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 2.
                    (2) In the event Tenant timely exercises Tenant’s Option to
Extend as set forth herein, Landlord shall, within fifteen (15) days after
receipt of Tenant’s exercise of the Option, advise Tenant of any changes in the
management fee and the terms and conditions as referenced in Paragraph 2.A.1(ii)
above) and the Basic Rent (which shall not be less than the Basic Rent for the
fifth year of the current Term) required for the Extended Term of the Lease to
make the Basic Rent for the Premises comparable to the then current market
triple net basic rent for comparable properties either (i) then owned in whole
or in part by the above mentioned Landlord or by members of its immediate family
in the vicinity of the Premises or (ii)

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Quantum 6
if not owned by Landlord or its family as stated herein, other third party
properties in the vicinity of the Premises. Tenant shall have five (5) days
after receipt from the Landlord of said new terms and conditions and Basic Rent
in which to accept said new terms and conditions and Basic Rent and enter into
written documentation confirming same. In the event Tenant fails to execute said
written documentation confirming said new terms and conditions and Basic Rent
for the Second Extended Term of Lease within said five (5) day period, Tenant
shall have no further Option to Extend this Lease, and this Lease shall continue
in full force and effect for the full remaining term hereof absent of this
Paragraph 2, with Landlord having no further responsibility or obligation to
Tenant with respect to Tenant’s Option to Extend.
                    (3) It is agreed that if Tenant is at any time prior to
exercising its Option to Extend in default of this Lease and has failed to cure
the default in the time period allowed, this Paragraph 2 shall be null and void
and Tenant will have no further rights under this Paragraph. It is further
agreed that if Tenant has exercised its Option to Extend and is subsequently in
default, and has failed to cure the default in the time period allowed by the
Lease at any time prior to, or at the time the lease commences on the Second
Extended Term, Landlord may at its sole and absolute discretion, cancel Tenant’s
Option to Extend, and this Lease will continue in full force and effect for the
full remaining Term hereof, absent of this Paragraph 2.
                    (4) The Option rights of Tenant under this Paragraph 2.A,
and the First Extended Term thereunder, are granted for Tenant’s personal
benefit and may not be assigned or transferred by Tenant, except as provided for
in Lease Paragraph 56 (“Permitted Assignments and Subleases”), either
voluntarily or by operation of law, in any manner whatsoever.
                    (5) Notwithstanding anything to the contrary in this
Paragraph, this Option to Extend is automatically forfeited by Tenant (without
notice from Landlord) in the event Tenant is, at any time during the Term of
this Lease, in default of said Lease and if Tenant does not completely cure said
default within five days for a monetary default and thirty days for a
non-monetary default (or such longer time as permitted by cure in the Lease
Agreement). In the event said Option to Extend is forfeited as stated herein,
Tenant shall have no further Option to Extend this Lease.
          B. SECOND FIVE (5)-YEAR OPTION PERIOD: Provided Tenant has extended
the Lease for an additional five year period as set forth in Paragraph A above,
Landlord hereby grants to Tenant another Option to Extend the Lease Agreement
upon the following terms and conditions;
                    (1) Tenant shall give Landlord written notice of Tenant’s
exercise of this Option to Extend at least one hundred eighty (180) days prior
to the expiration of the Basic Term hereof (not later than December 3, 2016), in
which event the Term of the Lease shall be considered extended for an additional
five (5) years (“Second Extended Term”) subject to the Basic Rent set forth
below and with: (i) the Basic Rent to be determined pursuant to Paragraph 2)
below; (ii) the management fee and the terms and conditions subject to amendment
by Landlord (Landlord, in its sole and absolute discretion, may, but is not
required to, incorporate its then current Lease provisions that are standard in
Landlord’s leases for comparable buildings as of the date of Tenant’s exercise
of its Option to Extend); and (iii) this

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Quantum 6
Paragraph 2.B thereafter deleted. In the event that Tenant fails to timely
exercise Tenant’s Option as set forth herein in writing, Tenant shall have no
further Option to Extend the Lease, and the Lease shall continue in full force
and effect for the full remaining term hereof, absent this Paragraph 2.B.
                    (2) In the event Tenant timely exercises Tenant’s Option to
Extend as set forth herein, Landlord shall, within fifteen (15) days after
receipt of Tenant’s exercise of option, advise Tenant of any changes in the
management fee and the terms and conditions as referenced in Paragraph 2.B.1(ii)
above and Basic Rent (which shall not be less than the Basic Rent for the fifth
year of the First Extended Term) required for the Second Extended Term of the
Lease to make the Basic Rent for the Premises comparable to the then current
market triple net basic rent for comparable properties either (i) then owned in
whole or in part by the above mentioned Landlord or by members of its immediate
family in the vicinity of the Premises or (ii) if not owned by Landlord or its
family as stated herein, other third party properties in the vicinity of the
Premises. Tenant shall have five (5) days after receipt from the Landlord of
said new terms and conditions and Basic Rent in which to accept said new terms
and conditions and Basic Rent and enter into written documentation confirming
same. In the event Tenant fails to execute said written documentation confirming
said new terms and conditions and Basic Rent for the Third Extended Term of
Lease within said five (5) day period, Tenant shall have no further Option to
Extend this Lease, and this Lease shall continue in full force and effect for
the full remaining term hereof absent of this Paragraph 2.B, with Landlord
having no further responsibility or obligation to Tenant with respect to
Tenant’s Option to Extend.
                    (3) It is agreed that if Tenant is at any time prior to
exercising its Option to Extend in default of this Lease and has failed to cure
the default in the time period allowed, this Paragraph 2.B will be null and void
and Tenant will have no further rights under this Paragraph. It is further
agreed that if Tenant has exercised its Option to Extend and is subsequently in
default, and has failed to cure the default in the time period allowed by the
Lease at any time prior to, or at the scheduled Commencement Date of the Third
Extended Term, Landlord may at its sole and absolute discretion, cancel Tenant’s
Option to Extend, and this Lease will continue in full force and effect for the
full remaining Term hereof, absent of this Paragraph 2.B.
                    (4) The Option rights of Tenant under this Paragraph 2.B and
the Second Extended Term thereunder, are granted for Tenant’s personal benefit
and may not be assigned or transferred by Tenant, except as provided for in
Lease Paragraph 56 (“Permitted Assignments and Subleases”), either voluntarily
or by operation of law, in any manner whatsoever.
                    (5) Notwithstanding anything to the contrary in this
Paragraph 2.B, this Option to Extend is automatically forfeited by Tenant
(without notice from Landlord) in the event Tenant is, at any time during the
Term of this Lease, in default of said Lease and if Tenant does not completely
cure said default within five days for a monetary default and thirty days for a
non-monetary default (or such longer time as permitted by cure in the Lease
Agreement). In the event said Option to Extend is forfeited as stated herein,
Tenant shall have no further Option to Extend this Lease.

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Quantum 6
     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of
said April 16, 1997 Lease Agreement shall remain in full force and effect.
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 2
to Lease as of the day and year last written below.

                  LANDLORD:   ASSIGNEE/MAXTOR:    
 
                JOHN ARRILLAGA SURVIVOR’S
TRUST   MAXTOR CORPORATION
a Delaware corporation    
 
               
By
  /s/ John Arrillaga by Richard T. Peery   By   /s/ Glenn H. Stevens    
 
               
 
  his attorney in fact            
 
                    John Arrillaga, Trustee   Glenn H. Stevens                  
 
Date:    
March 30, 2001   Print or Type Name    
 
                RICHARD T. PEERY SEPARATE PROPERTY TRUST   Title:   Vice
President, General Counsel and Secretary    
 
               
By
  /s/ Richard T. Peery   Date:   April 1, 2001    
 
               
 
  Richard T. Peery, Trustee            
 
               
Date:
  March 30, 2001            
 
               
 
                        ASSIGNEE/QUANTUM:    
 
                        QUANTUM CORPORATION
a Delaware corporation    
 
               
 
      By   /s/ Norm Claus    
 
                                      Print or Type Name    
 
               
 
      Title:   V.P. Real Estate      
 
      Date:   March 30, 2001    

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