Exhibit 10.63

 

 

10600 North De Anza Blvd.

408.446.0700

 

Suite 200

Facsimile: 408.446.0583

 

Cupertino, CA 95014-2075

www.sobrato.com

 

 

 

[ex1063image002.jpg]

 

 

 

SOBRATO
      DEVELOPMENT COMPANIES

 

Lease between

Sobrato Interests and Affymetrix

 

Section

 

 

 

 

PARTIES

 

 

 

 

PREMISES

 

 

 

 

USE

 

 

 

 

TERM AND RENTAL

 

 

 

 

LATE CHARGES

 

 

 

 

POSSESSION

 

 

 

 

ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER

 

 

 

 

USES PROHIBITED

 

 

 

 

ALTERATIONS AND ADDITIONS

 

 

 

 

MAINTENANCE OF PREMISES

 

 

 

 

 

Landlord and Tenant’s Obligations Regarding Common Area Costs

 

 

 

 

 

Common Area Costs

 

 

 

 

 

Tenant’s Allocable Share

 

 

 

 

 

Waiver of Liability

 

 

 

 

 

Tenant’s Obligations

 

 

 

 

HAZARD INSURANCE

 

 

 

 

 

Tenant’s Use

 

 

 

 

 

Landlord’s Insurance

 

 

 

 

 

Tenant’s Insurance

 

 

 

 

 

Waiver

 

 

 

 

TAXES

 

 

 

 

UTILITIES

 

 

 

 

ABANDONMENT

 

 

 

 

FREE FROM LIENS

 

 

 

 

COMPLIANCE WITH GOVERNMENTAL REGULATIONS

 

 

 

 

TOXIC WASTE AND ENVIRONMENTAL DAMAGE

 

 

 

 

 

Tenant’s Responsibility

 

 

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Tenant’s Indemnity Regarding Hazardous Materials

 

 

 

 

 

Landlord’s Indemnity Regarding Hazardous Materials

 

 

 

 

INDEMNITY

 

 

 

 

ADVERTISEMENTS AND SIGNS

 

 

 

 

ATTORNEY’S FEES

 

 

 

 

TENANT’S DEFAULT

 

 

 

 

 

Remedies

 

 

 

 

 

Right to Re-enter

 

 

 

 

 

Abandonment

 

 

 

 

 

No Termination

 

 

 

 

SURRENDER OF LEASE

 

 

 

HABITUAL DEFAULT

 

 

 

 

LANDLORD’S DEFAULT

 

 

 

 

NOTICES

 

 

 

 

ENTRY BY LANDLORD

 

 

 

 

DESTRUCTION OF PREMISES

 

 

 

 

 

Destruction by an Insured Casualty

 

 

 

 

 

Destruction by an Uninsured Casualty

 

 

 

 

 

Destruction by an Uninsured Casualty

 

 

 

 

ASSIGNMENT OR SUBLEASE

 

 

 

 

 

Consent by Landlord

 

 

 

 

 

Assignment or Subletting Consideration

 

 

 

 

 

No Release

 

 

 

 

 

Effect of Default

 

 

 

 

CONDEMNATION

 

 

 

 

EFFECTS OF CONVEYANCE

 

 

 

 

SUBORDINATION

 

 

 

 

WAIVER

 

 

 

 

HOLDING OVER

 

 

 

 

SUCCESSORS AND ASSIGNS

 

 

 

 

ESTOPPEL CERTIFICATES

 

 

 

 

OPTION TO EXTEND THE LEASE TERM

 

 

 

 

 

Grant and Exercise of Option

 

 

 

 

 

Determination of Fair Market Rental

 

 

 

 

 

Resolution of a Disagreement over the Fair Market Rental

 

 

 

 

OPTIONS

 

 

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QUIET ENJOYMENT

 

 

 

 

BROKERS

 

 

 

 

This section intentionally left blank

 

 

 

 

AUTHORITY OF PARTIES

 

 

 

 

MISCELLANEOUS PROVISIONS

 

 

 

 

 

Rent

 

 

 

 

 

Management Fee

 

 

 

 

 

Performance by Landlord

 

 

 

 

 

Interest

 

 

 

 

 

Rights and Remedies

 

 

 

 

 

Survival of Indemnities

 

 

 

 

 

Severability

 

 

 

 

 

Choice of Law

 

 

 

 

 

Time

 

 

 

 

 

Entire Agreement

 

 

 

 

 

Representations

 

 

 

 

 

Headings

 

 

 

 

EXHIBIT “A\

 

 

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10600 North De Anza Blvd.

408.446.0700

 

Suite 200

Facsimile: 408.446.0583

 

Cupertino, CA 95014-2075

www.sobrato.com

 

 

 

[ex1063image004.jpg]

 

 

SOBRATO
      DEVELOPMENT COMPANIES

 

1.        PARTIES:    THIS LEASE, is entered into on this 3RD day of July, 2002,
between Sobrato Interests, a California limited partnership, and Affymetrix,
Inc., a California corporation, hereinafter called respectively Landlord and
Tenant.

 

2.        PREMISES:    Landlord hereby leases to Tenant, and Tenant hires from
Landlord those certain premises (“Premises”) with the appurtenances, situated in
the City of Santa Clara, County of Santa Clara, State of California, and more
particularly described as follows, to-wit:

 

That certain real property commonly known and designated as 3420 Central
Expressway consisting of 108,720 rentable square feet (“Building”) and 370
parking stalls in a project consisting of a total of five (5) buildings,
including the Premises, totaling 412,171 square feet (“Project”) as outlined in
red on Exhibit “A”. The parking stalls shall be available for Tenant’s exclusive
use but shall not be designated or segregated from the balance of the parking
area.

 

3.        USE:    Tenant shall use the Premises only for the following purposes
and shall not change the use of the Premises without the prior written consent
of Landlord:  Office, research, development, testing, light manufacturing,
ancillary warehouse, and related legal uses.  Landlord makes no representation
or warranty that any specific use of the Premises desired by Tenant is permitted
pursuant to any Laws.

 

4.        TERM AND RENTAL:    The term (“Lease Term”) shall be for one hundred
eight (108) months, commencing on the 1st day of September 1, 2004
(“Commencement Date”), and ending on the 31st day of August, 2013, (“Expiration
Date”).  In addition to all other sums payable by Tenant under this Lease,
Tenant shall pay base monthly rent (“Base Monthly Rent”) for the Premises
according to the following schedule:

 

September 1, 2004 through August 31, 2006:

 

$152,208.00 per month

 

 

 

 

 

September 1, 2006 through August 31, 2008:

 

$168,516.00 per month

 

 

 

 

 

September 1, 2008 through August 31, 2013:

 

$183,737.00 per month

 

 

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Base Monthly Rent shall be due on or before the first day of each calendar month
during Lease Term. All sums payable by Tenant under this Lease shall be paid in
lawful money of the United States of America, without offset or deduction, and
shall be paid to Landlord at such place or places as may be designated from time
to time by Landlord. Base Monthly Rent for any period less than a calendar month
shall be a pro rata portion of the monthly installment. Concurrently with
Tenant’s execution of this Lease, Tenant shall pay to Landlord the sum of One
Hundred Fifty Seven Thousand Six Hundred Forty Four Dollars ($157,644.00) as
prepaid rent for the first month of the Lease Term.

 

Tenant shall be allowed a 4-month period of early access to the Premises
immediately prior to the Commencement Date (“Early Access Period”) for the
purpose of installing Initial Improvements (as defined in Section 7 below) and
otherwise preparing for its occupancy. Tenant shall be subject to all the terms
and conditions of the Lease during the Early Access Period except that no Base
Monthly Rent or other expenses or amounts shall be due or payable (excluding
utility charges incurred by Tenant).

 

5.        LATE CHARGES:    Tenant hereby acknowledges that late payment by
Tenant to Landlord of Base Monthly Rent and other sums due hereunder will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which will be extremely difficult to ascertain. Such costs include, but are not
limited to, administrative, processing, accounting charges, and late charges,
which may be imposed on Landlord by the terms of any contract, revolving credit,
mortgage or trust deed covering the Premises. Accordingly, if any installment of
Base Monthly Rent or any other sum due from Tenant shall not be received by
Landlord or Landlord’s designee within ten (10) days after Tenant’s receipt of
written notice from Landlord that such amount is due, Tenant shall pay to
Landlord a late charge equal to five (5%) percent of such overdue amount which
shall be due and payable with the payment then delinquent. Landlord agrees to
waive said late charge in the event the Base Monthly Rent or other sum due is
received within five (5) days after receipt by Tenant of Landlord’s written
notice. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Landlord will incur by reason of late payment
by Tenant. Acceptance of such late charge by Landlord shall in no event
constitute a waiver of Tenant’s default with respect to such overdue amount, nor
prevent Landlord from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Base Monthly Rent, then
rent shall automatically become due and payable quarterly in advance, rather
than monthly, notwithstanding any provision of this Lease to the contrary.

 

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IT IS FURTHER MUTUALLY AGREED BETWEEN THE PARTIES AS FOLLOWS:

 

6.        POSSESSION:    If Landlord, for any reason whatsoever, cannot deliver
possession of the said Premises to Tenant at the Commencement Date, as
hereinbefore specified, this Lease shall not be void or voidable, nor shall
Landlord 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, and Tenant shall in all cases retain its right to the
Early Access Period as defined in Section 4 above, so that the commencement Date
shall in no event occur until the expiration of the Early Access Period.  The
above is however, subject to the provision that the period of delay of delivery
of the Premises shall not exceed 120 days from the scheduled Commencement Date.
If the period of delay of delivery exceeds the foregoing, Tenant, at its option,
may cancel this Lease on written notice to Landlord within seven (7) business
days thereafter and declare it null and void.  Notwithstanding the foregoing,
Landlord agrees avail itself of all legal remedies to evict the current occupant
of the Premises if it does not vacate by the expiration date of its lease.

 

7.        ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER:    On the date
Landlord tenders possession for the commencement of the Early Access Period,
Landlord shall deliver the keys to the Premises to Tenant and Tenant shall
accept possession from Landlord. Landlord shall reimburse Tenant for the costs
incurred by Tenant to put the HVAC system in good condition and repair, as
detailed in an inspection report to be issued by Therma Mechanical within 150
days prior to the Commencement Date. During the first year of the Lease Term,
Tenant intends to make certain modifications (“Initial Improvements”) to the
Premises.  Tenant shall comply with the provisions of Lease paragraph 9 in its
construction of the Initial Improvements.  The Tenant agrees on the Expiration
Date, or on the sooner termination of this Lease, to surrender the Premises to
Landlord in good condition and repair, reasonable wear and tear excepted.  “Good
condition” shall mean that the interior walls, floors, suspended ceilings, and
carpeting within the Premises will be cleaned to the same condition as existed
at completion of the Initial Improvements, normal wear and tear excepted. Tenant
agrees, at its sole cost, to remove all phone and data cabling installed by
Tenant from the suspended ceiling and repair or replace broken ceiling tiles,
and relevel the ceiling if required, but otherwise Tenant shall have no
obligation to remove the Initial Improvements. Tenant shall ascertain from
Landlord within thirty (30) days before the Expiration Date whether Landlord
desires to have the Premises or any part or parts thereof restored to their
condition as of the completion of the Initial Improvements or to cause Tenant to
surrender all Alterations in place to

 

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Landlord. If Landlord shall so desire, then Tenant shall remove such Alterations
as Landlord may require and shall repair and restore said Premises or such part
or parts thereof before the Expiration Date at Tenant’s sole cost and expense.
Tenant on or before the Expiration Date or sooner termination of this Lease,
shall remove all its personal property and trade fixtures from the Premises, and
all property and fixtures not so removed shall be deemed to be abandoned by
Tenant. If the Premises are not surrendered at the Expiration Date or sooner
termination of this Lease in the condition required by this paragraph, Tenant
shall indemnify, defend, and hold harmless Landlord against loss or liability
resulting from delay by Tenant in so surrendering the Premises including,
without limitation, any claims made by any succeeding tenant founded on such
delay.

 

Notwithstanding the provisions of this paragraph 7, Landlord shall at its sole
expense repair all latent defects respecting the Premises. Landlord’s
obligations with respect to the correction of such defects shall be limited to
the cost to correct the defective work and Landlord shall not be liable for any
consequential damages or other loss or damage incurred by Tenant.

 

8.        USES PROHIBITED:    Tenant shall not commit, or suffer to be
committed, any waste upon the said Premises, or any nuisance, or other act or
thing which may disturb the quiet enjoyment of any other tenant in or around the
Building or allow any sale by auction upon the Premises, or allow the Premises
to be used for any unlawful or objectionable purpose, or place any loads upon
the floor, walls, or ceiling which endanger the structure, or use any machinery
or apparatus which will in any manner vibrate or shake the Building, or place
any harmful liquids, waste materials, or hazardous materials in the drainage
system of, or upon or in the soils surrounding the Building.  No materials,
supplies, equipment, finished products or semi-finished products, raw materials
or articles of any nature or any waste materials, refuse, scrap or debris shall
be stored upon or permitted to remain on any portion of the Premises outside of
the Building proper without Landlord’s prior approval, which approval may be
withheld in its sole discretion.

 

9.        ALTERATIONS AND ADDITIONS:    Tenant shall not make, or suffer to be
made, any alteration or addition to the said Premises (“Alterations”), or any
part thereof, without (i) the written consent of Landlord first had and
obtained, which consent shall not be unreasonably withheld or delayed, and (ii)
delivering to Landlord the proposed architectural and structural plans for all
such Alterations.  Any Alterations, except movable furniture and trade fixtures,
shall become at once a part of the realty and belong to Landlord. Alterations
which are not to be deemed as trade fixtures shall include heating, lighting,
electrical systems, air conditioning, partitioning, carpeting, or any other
installation which has become an integral part of the Premises.   After having
obtained

 

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Landlord’s consent, Tenant agrees that it will not proceed to make such
Alterations until (i) Tenant has obtained all required governmental approvals
and permits, and (ii) Tenant has provided Landlord reasonable security, in form
reasonably requested by Landlord, to protect Landlord against mechanics’ lien
claims. Tenant further agrees to provide Landlord (i) written notice of the
anticipated start date and actual start date of the work, and (ii) a complete
set of half-size (15” X 21”) vellum as-built drawings. All Alterations shall be
constructed in compliance with applicable buildings codes and laws, including
Title 24 and ADA, and shall be maintained, replaced or repaired at Tenant’s sole
cost and expense.

 

Notwithstanding the foregoing, Tenant shall be entitled without obtaining
Landlord’s consent to make any Alteration to the Premises which does not affect
the structure of the Building, provided that each such Alteration costs no more
than $50,000, and all such Alterations in any twelve (12) month period do not
exceed an aggregate of $100,000.

 

10.     MAINTENANCE OF PREMISES:

 

A.       Landlord and Tenant’s Obligations Regarding Common Area Costs:  
 Landlord shall, at its sole cost and expense, maintain in good condition,
order, and repair, and replace as and when necessary, the foundation, exterior
load bearing walls and roof structure of the Building shell. Landlord agrees to
perform the maintenance, repair and replacement of those items defined in
paragraph 10(B) below for which Common Area Costs are incurred.  Tenant agrees
to reimburse Landlord for the expenses resulting from Landlord’s payment of
Common Area Costs as defined in paragraph 10(B) incurred by Landlord because the
cost is not directly allocable to or payable by a single tenant in the Building
or the Project. Tenant agrees to pay Tenant’s Allocable Share as defined in
paragraph 10(C) of the Common Area Costs, as additional rental, within thirty
(30) days of written invoice from Landlord.

 

B.       Common Area Costs:    For purposes of calculating Tenant’s Allocable
Share of Building and of Project Costs, the term “Common Area Costs” shall mean
all costs and expenses of the nature hereinafter described which are incurred in
connection with ownership, maintenance and operation of the Building or the
Project in which the Premises are located, as the case may be not directly
allocable to or payable by a single tenant in the Building or the Project,
together with such additional facilities as may be determined by Landlord to be
reasonably desirable or necessary to the ownership and operation of the Building
and/or Project. All costs and expenses shall be determined in accordance with
generally accepted accounting principles which shall be consistently applied

 

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(with accruals appropriate to Landlord’s business), including but not limited
to, the following: (i) common area utilities, including water and power and
lighting to the extent not separately metered; (ii) common area maintenance and
service agreements for the Building or the Project and the equipment therein
including, without limitation, common area janitorial services, alarm and
security services, exterior window cleaning, and maintenance of sidewalks,
landscaping, waterscape, parking areas, and driveways; (iii) insurance premiums
and costs, including without limitation, the premiums and cost of fire, casualty
and liability coverage and rental abatement and earthquake (if commercially
available) insurance applicable to the Building or Project; (iv) repairs,
replacements and general maintenance (excluding repairs and general maintenance
paid by proceeds of insurance or by Tenant or other third parties, and repairs
or alterations attributable solely to tenants of the Building or Project other
than Tenant); and (v) all real estate taxes, special assessments, service
payments in lieu of taxes, excises, transit charges, housing fund assessment,
levies, fees or charges and including any substitutes or additions thereto which
may occur during the Lease Term (and Renewal Terms, if any) of this Lease which
are assessed, or imposed by any public authority upon the Building or Project,
the act of entering this Lease, the occupancy by Tenant, the rent provided for
in this Lease and including real estate tax increases due to a sale or transfer
of the Building or the Project, in which the Premises are located, as such taxes
are levied or appear on the City and County tax bills and assessment rolls. All
special assessments shall be paid over the longest period allowed by the taxing
authority. This shall be a net lease and the Base Monthly Rent shall be paid to
Landlord absolutely net of all costs and expenses, except as otherwise
specifically provided in this Lease. The provision for payment of Common Area
Costs by means of periodic payment of Tenant’s Allocable Share of Building
and/or Project Costs are intended to pass on to Tenant and reimburse Landlord
for all costs of operating and managing the Building and/or Project.

 

C.      Tenant’s Allocable Share:    For purposes of prorating Common Area Costs
which Tenant shall pay, Tenant’s Allocable Share of Building Costs is computed
by multiplying the total Common Area Costs for services shared by the Building
by a fraction, the numerator of which is the rentable square footage of the
Premises and the denominator of which is the total rentable square footage of
the Building (excluding common areas). Tenant’s Allocable Share of Project Costs
shall be computed on a shared service by service basis, by multiplying the total
Common Area Costs for services shared by the Building and one or more buildings
in the Project by a fraction, the numerator of which is the rentable square
footage of the Premises and the denominator of which is the total rentable
square footage of the Buildings in the Project which share the services. It is
understood and agreed by Landlord and Tenant that Tenant’s Allocable Share of
Building Costs is 100.00% and of Project Costs is 26.4%. It is understood and
agreed that Tenant’s obligation to share in Common

 

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Area Costs shall be adjusted to reflect the commencement and termination dates
of the Lease Term and are subject to recalculation in the event of expansion of
the Building or Project.

 

D.       Waiver of Liability:    Failure by Landlord to perform any defined
services, or any cessation thereof, when such failure is caused by accident,
breakage, repairs, strikes, lockout or other labor disturbances or labor
disputes of any character, or by any other cause, similar or dissimilar, beyond
the reasonable control of Landlord, shall not render Landlord liable in any
respect for damages to either person or property, nor be construed as an
eviction of Tenant, nor cause an abatement of rent nor relieve Tenant from
fulfillment of any covenant or agreement hereof. Should any of the equipment or
machinery utilized in supplying the services listed herein break down, or for
any cause cease to function properly, upon receipt of written notice from Tenant
of any deficiency or failure of any defined services, Landlord shall use
reasonable diligence to repair the same promptly, but Tenant shall have no right
to terminate this Lease, and shall have no claim for rebate of rent or damages,
on account of any interruptions in service occasioned thereby or resulting
therefrom. Tenant waives the provisions of California Civil Code Sections 1941
and 1942 concerning the Landlord’s obligation of tenantability and Tenant’s
right to make repairs and deduct the cost of such repairs from the rent. 
Landlord shall not be liable for a loss of or injury to property, however
occurring, through or in connection with or incidental to furnishing or its
failure to furnish any of the foregoing, unless such loss or injury is due to
the negligence or willful misconduct of Landlord, or Landlord’s breach of its
obligations under this Lease.

 

E.       Tenant’s Obligations:    Except as provided in section 10(A) above,
Tenant shall, at its sole cost, keep and maintain, repair and replace, said
Premises and appurtenances and every part hereof, including but not limited to,
exterior walls, roof membrane, glazing, plumbing, electrical and HVAC systems,
and all the Initial Improvements and Alterations in good and sanitary order,
condition, and repair; normal wear and tear and damage by casualty excepted.
Tenant shall provide Landlord with a copy of a service contract between Tenant
and a licensed air-conditioning and heating contractor which contract shall
provide for bi-monthly maintenance of all air conditioning and heating equipment
at the Premises. Tenant shall pay the cost of all air-conditioning and heating
equipment repairs or replacements which are either excluded from such service
contract or any existing equipment warranties. All wall surfaces and floor tile
are to be maintained in an as good a condition as when Tenant took possession
free of holes, gouges, or defacements. Tenant agrees to limit attachments to
vinyl demountable wall surfaces exclusively to V-joints.

 

Tenant shall also be responsible for the preventive maintenance of the membrane
of the roof, which

 

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responsibility shall be deemed properly discharged if (i) Tenant contracts with
a licensed roof contractor who is reasonably satisfactory to both Tenant and
Landlord, at Tenant’s sole cost, to inspect the roof membrane at least every six
(6) months, with the first inspection due the sixth (6th) month after the
Commencement Date, and (ii) Tenant performs, at Tenant’s sole cost, all
preventive maintenance recommendations made by such contractor within a
reasonable time after such recommendations are made. Such preventive maintenance
might include acts such as clearing storm gutters and drains, removing debris
from the roof membrane, trimming trees overhanging the roof membrane, applying
coating materials to seal roof penetrations, repairing blisters, and other
routine measures. Tenant shall provide to Landlord a copy of such preventive
maintenance contract and paid invoices for the recommended work.

 

Notwithstanding the provisions of this Section 10, in the event a replacement
under Sec 10.B. or 10.E: (i) would be properly be capitalized under generally
accepted accounting principles; and (ii) costs in excess of $7,500, Tenant shall
only be required to pay that portion of the cost equal to the product of such
total cost multiplied by a fraction, the numerator of which is the number of
years remaining in the Lease Term, the denominator of which is the useful life
(in years) of the replacement.

 

11.     HAZARD INSURANCE:

 

A.       Tenant’s Use:    Tenant shall not use, or permit said Premises, or any
part thereof, to be used, for any purpose other than that for which the said
Premises are hereby leased; and no use shall be made or permitted to be made of
the said Premises, nor acts done, which will cause an increase in premiums or a
cancellation of any insurance policy covering said Building, or any part
thereof, nor shall Tenant sell or permit to be kept, used or sold, in or about
said Premises, any article which may be prohibited by the standard form of fire
insurance policies. 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 said Building and appurtenances.

 

B.       Landlord’s Insurance:    Landlord agrees to purchase and keep in force
fire and extended coverage, earthquake (at Landlord’s election and at a
commercially reasonable rate), and 12 month rental loss insurance covering the
Premises in amounts not to exceed the actual insurable value of the Building as
determined by Landlord’s insurance company’s appraisers. Tenant agrees to pay to
Landlord as additional rent, on demand, the full cost of said insurance as
evidenced by insurance billings to Landlord, and in the event of damage covered
by said insurance, the amount of

 

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any deductible under such policy. Payment shall be due to Landlord within thirty
(30) days after written invoice to Tenant. Tenant consents to Landlord’s current
insurance deductible of $5,000.00 and shall have the right to approve any future
change in the deductible amount in its sole and reasonable discretion. It is
understood and agreed that Tenant’s obligation under this paragraph will be
prorated to reflect the commencement and termination dates of this Lease.

 

C.       Tenant’s Insurance:    Tenant, at its sole cost, agrees to insure its
personal property, Initial Improvements and Alterations for amounts not to
exceed their actual insurable value and to obtain worker’s compensation and
public liability and property damage insurance for occurrences within the
Premises with a $5,000,000.00 combined single limit for bodily injury and
property damage. Tenant shall name Landlord and Landlord’s lender as an
additional insured, shall deliver a copy of the policies and renewal
certificates to Landlord.  All such policies shall provide for thirty (30) days’
prior written notice to Landlord of any cancellation, termination, or reduction
in coverage. Notwithstanding the above, Landlord retains the right to have
Tenant provide other forms of insurance which may be reasonably required to
cover future risks, provided such insurance is generally obtained by prudent
property owners of comparable buildings in the Santa Clara area.

 

D.       Waiver:    Landlord and Tenant hereby waive any and all rights each may
have against the other on account of any loss or damage occasioned to the
Landlord or the Tenant as the case may be, or to the Premises or its contents,
and which may arise from any risk covered by their respective insurance
policies, as set forth above.  The parties shall use their reasonable efforts to
obtain from their respective insurance companies a waiver of any right of
subrogation which said insurance company may have against the Landlord or the
Tenant, as the case may be.

 

12.     TAXES:    Tenant shall be liable and shall pay prior to delinquency all
taxes and assessments levied against personal property and trade or business
fixtures, and agrees to pay, as additional rental, all real estate taxes and
assessment installments (special or general) or other impositions or charges
which may be levied on the Premises, upon the occupancy of the Premises and
including any substitute or additional charges which may be imposed during, or
applicable to the Lease Term including real estate tax increases due to a sale
or other transfer of the Premises, as they appear on the City and County tax
bills during the Lease Term, and as they become due. It is understood and agreed
that Tenant’s obligation under this paragraph will be prorated to reflect the
commencement and termination dates of this Lease. In any time during the Lease
Term a tax, excise on rents, business license tax, or any other tax, however
described, is levied or assessed against Landlord, as a substitute in whole or
in part for taxes assessed or imposed on land or Buildings,

 

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Tenant shall pay and discharge its pro rata share of such tax or excise on rents
or other tax before it becomes delinquent, except that this provision is not
intended to cover net income taxes, inheritance, gift or estate tax imposed upon
Landlord. In the event that a tax is placed, levied, or assessed against
Landlord and the taxing authority takes the position that the Tenant cannot pay
and discharge its pro rata share of such tax on behalf of Landlord, then at the
sole election of Landlord, Landlord may increase the rental charged hereunder by
the exact amount of such tax and Tenant shall pay such increase as additional
rent hereunder.

 

13.     UTILITIES:    Tenant shall pay directly to the providing utility all
water, gas, heat, light, power, telephone and other utilities supplied to the
Premises. Landlord shall not be liable for a loss of or injury to property,
however occurring, through or in connection with or incidental to furnishing or
failure to furnish any of utilities to the Premises and Tenant shall not be
entitled to abatement or reduction of any portion of the Base Monthly Rent so
long as any failure to provide and furnish the utilities to the Premises due to
any cause beyond Landlord’s reasonable control.

 

14.     ABANDONMENT:    Tenant shall not abandon the Premises at any time during
the Lease Term; and if Tenant shall abandon or surrender said Premises, or be
dispossessed by 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.
Notwithstanding the foregoing, Tenant shall be entitled to suspend its
operations on the Premises and vacate the Premises provided that Tenant
continues to timely pay rent and perform all other obligations of Tenant under
this Lease, and further provided that Tenant provides a security guard or other
reasonable security protection for the Premises.

 

15.     FREE FROM LIENS:    Tenant shall keep the Premises and the Building free
from any liens arising out of any work performed, materials furnished, or
obligations incurred by Tenant or claimed to have been performed for Tenant.  In
the event Tenant fails to discharge any such lien within ten (10) days after
receiving notice of the filing, Landlord shall be entitled to discharge such
lien at Tenant’s expense and all resulting costs incurred by Landlord, including
attorney’s fees shall be due from Tenant as additional rent.

 

Notwithstanding the provisions of this paragraph 15, Tenant shall have the right
to contest such liens if Tenant obtains a bond equal to 150% of the amount of
such lien to prevent enforcement of the lien during such contest or otherwise
makes adequate provision to prevent enforcement of the lien during such contest.

 

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16.     COMPLIANCE WITH GOVERNMENTAL REGULATIONS:    Tenant shall, at its sole
cost and expense, comply with all of the requirements of all Municipal, State
and Federal authorities now in force, or which may hereafter be in force,
pertaining to the said Premises, and shall faithfully observe in the use of the
Premises all Municipal ordinances and State and Federal statutes now in force or
which may hereafter be in force. The judgment of any court of competent
jurisdiction, or the admission of Tenant in any action or proceeding against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
such ordinance or statute in the use of the Premises, shall be conclusive of
that fact as between Landlord and Tenant.

 

Notwithstanding the provisions of this paragraph 16 and excepting Title 24 and
ADA work for which Tenant is responsible due to Tenant’s Initial Improvements or
Alterations, if any improvement or alteration to the Premises is required as a
result of any laws or regulations affecting the Premises not related to Tenant’s
specific use of the Premises, and provided further said improvement or
alteration is not required because of Alterations to the Premises made by
Tenant, Tenant shall notify Landlord and Landlord shall perform such improvement
or alteration and the cost thereof shall be allocated between Landlord and
Tenant such that Tenant shall pay to Landlord upon completion of such
improvement, the portion of the cost thereof equal to the remaining number of
years in the Lease Term divided by the anticipated useful life of such
improvement. Landlord represents and warrants, to the best of its knowledge,
that the Building shell complies with all building codes that were applicable as
of the date of its construction.

 

17.     TOXIC WASTE AND ENVIRONMENTAL DAMAGE:

 

A. Tenant’s Responsibility:    Without the prior written consent of Landlord,
Tenant shall not bring, use, or permit upon the Premises, or generate, emit, or
dispose from the Premises any chemicals, toxic or hazardous gaseous, liquid or
solid materials or waste, including without limitation, material or substance
having characteristics of ignitability, corrosivity, reactivity, or toxicity or
substances or materials which are listed on any of the Environmental Protection
Agency’s lists of hazardous wastes or which are identified in Sections 66680
through 66685 of Title 22 of the California Administrative Code as the same may
be amended from time to time (“Hazardous Materials”). In order to obtain
consent, Tenant shall deliver to Landlord its written proposal describing the
toxic material to be brought onto the Premises, measures to be taken for storage
and disposal thereof, safety measures to be employed to prevent pollution of the
air, ground, surface and ground water. Landlord consents to Tenant’s use of
Hazardous Materials on the Premises on the

 

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condition that Tenant represents and warrants that Tenant will (i) adhere to all
reporting and inspection requirements imposed by Federal, State, County or
Municipal laws, ordinances or regulations and will provide Landlord a copy of
any such reports or agency inspections, (ii) obtain and provide Landlord copies
of all necessary permits required for the use and handling Hazardous Materials
on the Premises, (iii) enforce Hazardous Materials handling and disposal
practices consistent with industry standards, and (iv) properly close the
facility with regard to Hazardous Materials including the removal or
decontamination of any process piping, mechanical ducting, storage tanks,
containers, or trenches which have come into contact with Hazardous Materials
and obtain a closure certificate from the local administering agency prior to
the Expiration Date. Landlord may employ an independent engineer or consultant
to periodically inspect Tenant’s operations to verify that Tenant is complying
with its obligations under this paragraph. In the event it is determined by
Landlord’s consultant that Tenant is in material violation with respect to its
obligations under this paragraph and such violation has not previously been
reported by Tenant or has not been cured, then Tenant shall pay the reasonable
future expense of employing Landlord’s independent engineer or consultant to
periodically inspect Tenant’s operations. The forgoing right of inspection shall
be exercised by Landlord only if Landlord believes it may be subject to
liability because of Tenant’s handling of hazardous materials.

 

B.       Tenant’s Indemnity Regarding Hazardous Materials:    Tenant shall
comply, at its sole cost, with all laws pertaining to, and shall indemnify and
hold Landlord harmless from any claims, liabilities, costs or expenses incurred
or suffered by Landlord, except through Landlord’s negligence or willful
misconduct, arising from such bringing, using, permitting, generating, emitting
or disposing of Hazardous Materials.  Tenant’s indemnification and hold harmless
obligations include, without limitation, (i) claims, liability, costs or
expenses resulting from or based upon administrative, judicial (civil or
criminal) or other action, legal or equitable, brought by any private or public
person under common law or under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (“CERCLA”), the Resource Conservation and
Recovery Act of 1980 (“RCRA”) or any other Federal, State, County or Municipal
law, ordinance or regulation, (ii) claims, liabilities, costs or expenses
pertaining to the identification, monitoring, cleanup, containment, or removal
of Hazardous Materials from soils, riverbeds or aquifers including the provision
of an alternative public drinking water source, and (iii) all costs of defending
such claims.

 

C.       Landlord’s Indemnity Regarding Hazardous Materials:    Landlord shall
indemnify and hold Tenant harmless from any claims, liabilities, costs or
expenses incurred or suffered by Tenant related to the removal, investigation,
monitoring or remediation of Hazardous Materials

 

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which are present or which come to be present on the Premises through no fault
of Tenant. Landlord’s indemnification and hold harmless obligations include,
without limitation, (i) claims, liability, costs or expenses resulting from or
based upon administrative, judicial (civil or criminal) or other action, legal
or equitable, brought by any private or public person under common law or under
the Comprehensive Environmental Response, Compensation and Liability Act of 1980
(“CERCLA”), the Resource Conservation and Recovery Act of 1980 (“RCRA”) or any
other Federal, State, County or Municipal law, ordinance or regulation, (ii)
claims, liabilities, costs or expenses pertaining to the identification,
monitoring, cleanup, containment, or removal of Hazardous Materials from soils,
riverbeds or aquifers including the provision of an alternative public drinking
water source, and (iii) all costs of defending such claims. In no event shall
Landlord be liable for any consequential damages suffered or incurred by Tenant
as a result of any such contamination.

 

18.     INDEMNITY:    As a material part of the consideration to be rendered to
Landlord, Tenant hereby waives all claims against Landlord for damages to goods,
wares and merchandise, and all other personal property in, upon or about said
Building, for injuries to persons in or about said Building, or for injuries or
claims by Tenant’s agents or invitees in or about the Project, from any cause
arising at any time except due to the negligence or willful misconduct of
Landlord, or Landlord’s breach of its obligations under this Lease, and Tenant
will hold Landlord exempt and harmless from any damage or injury to any person,
or to the goods, wares and merchandise and all other personal property of any
person, arising from the use of the Premises by Tenant, or from the failure of
Tenant to keep the Building in good condition and repair, as herein provided.
Further, in the event Landlord is made party to any litigation due to the acts
or omissions of Tenant covered by this indemnity, Tenant will indemnify and hold
Landlord harmless from any such claim or liability including Landlord’s costs
and expenses and reasonable attorney’s fees incurred in defending such claims.

 

19.     ADVERTISEMENTS AND SIGNS:    Tenant will not place or permit to be
placed, in, upon or about the said Premises any unusual or extraordinary signs,
or any signs not approved by the city or other governing authority.  The Tenant
will not place, or permit to be placed, upon the Premises, any signs,
advertisements or notices without the written consent of Landlord as to type,
size, design, lettering, coloring and location, and such consent will not be
unreasonably withheld. Any sign so placed on the Premises shall be removed by
Tenant, at its expense, prior to the Expiration Date or promptly following the
earlier termination of the lease and Tenant shall repair any damage or injury to
the Premises caused thereby, and if not so removed by Tenant then Landlord may
have same so removed at Tenant’s expense.

 

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20.     ATTORNEY’S FEES:    In case suit should be brought for the possession of
the Premises, for the recovery of any sum due hereunder, or because of the
breach of any other covenant herein, the losing party shall pay to the
prevailing party a reasonable attorney’s fee as part of its costs which shall be
deemed to have accrued on the commencement of such action.

 

21.     TENANT’S DEFAULT:    The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant: a) Any failure
by Tenant to pay the rental or to make any other payment required to be made by
Tenant hereunder provided however, that Tenant may cure such default by payment
to Landlord of the Base Monthly Rent or other sum due within ten (10) days after
receipt by Tenant of written notice specifying Landlord has failed to receive
the amount in question; b) The abandonment of the Premises by Tenant; c) A
failure by Tenant to observe and perform any other provision of this Lease to be
observed or performed by Tenant, where such failure continues for thirty (30)
days after written notice thereof by Landlord to Tenant; provided, however, that
if the nature of such default is such that the same cannot reasonably be cured
within such thirty (30) day period Tenant shall not be deemed to be in default
if Tenant shall within such period commence such cure and thereafter diligently
prosecute the same to completion; d) The making by Tenant of any general
assignment for the benefit of creditors; the filing by or against Tenant of a
petition to have Tenant adjudged a bankrupt or of a petition for reorganization
or arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against Tenant, the same is dismissed after the filing); the
appointment of a trustee or receiver to take possession of substantially all of
Tenant’s assets located at the Premises or of Tenant’s interest in this Lease,
where possession is not restored to Tenant within thirty (30) days; or the
attachment, execution or other judicial seizure of substantially all of Tenant’s
assets located at the Premises or of Tenant’s interest in this Lease, where such
seizure is not discharged within thirty (30) days.  The notice requirements set
forth herein are in lieu of and not in addition to the notices required by
California Code of Civil Procedure Section 1161.

 

A.      Remedies:    In the event of any such default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder by giving written notice of such intention to terminate. In
the event that Landlord shall elect to so terminate this Lease then Landlord may
recover from Tenant: a) the worth at the time of award of any unpaid rent which
had been earned at the time of such termination; plus b) the worth at the time
of award of the amount by which the unpaid rent would have been earned after
termination until the time of award exceeds the amount of such rental

 

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loss Tenant proves could have been reasonably avoided; plus c) the worth at the
time of award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; plus d) any other amount necessary to
compensate Landlord for all the detriment directly and foreseeably caused by
Tenant’s failure to perform his obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, and e) at
Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable California law.
The term “rent”, as used herein, shall be deemed to be and to mean the minimum
monthly installments of Base Monthly Rent and all other sums required to be paid
by Tenant pursuant to the terms of this Lease, all other such sums being deemed
to be additional rent due hereunder. As used in (a) and (b) above, the “worth at
the time of award” to be computed by allowing interest at the rate of the
discount rate of the Federal Reserve Bank of San Francisco plus five (5%)
percent per annum. As used in (c) above, the “worth at the time of award” to be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one (1%) percent.

 

B.       Right to Re-enter:    In the event of any such default by Tenant,
Landlord shall also have the right, with or without terminating this Lease, to
re-enter the Premises and remove all persons and property from the Premises
(subject to compliance with California law); such property may be removed and
stored in a public warehouse or elsewhere at the cost of and for the account of
Tenant and disposed of by Landlord in any manner permitted by law.

 

C.       Abandonment:    In the event of the abandonment of the Premises by
Tenant or in the event that Landlord shall elect to re-enter as provided in
paragraph 21(B) above or shall take possession of the Premises pursuant to legal
proceeding or pursuant to any notice provided by law, then if Landlord does not
elect to terminate this Lease as provided in paragraph 21(A) above, then the
provisions of California Civil Code Section 1951.4, as amended from time to
time, shall apply and Landlord may from time to time, without terminating this
Lease, either recover all rental as it becomes due or relet the Premises or any
part thereof for such term or terms and at such rental or rentals and upon such
other terms and conditions as Landlord in its sole discretion may deem advisable
with the right to make alterations and repairs to the Premises. In the event
that Landlord shall elect to so relet, then rentals received by Landlord from
such reletting shall be applied: first, to the payment of any indebtedness other
than Base Monthly Rent due hereunder from Tenant to Landlord; second, to the
payment of any cost of such reletting; third, to the payment of the cost of any
reasonable alterations and repairs to the Premises; fourth, to the payment of
Base Monthly Rent due and unpaid hereunder; and the residue, if any, shall be
held by Landlord and applied in

 

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payment of future Base Monthly Rent as the same may become due and payable
hereunder. Should that portion of such rentals received from such reletting
during any month, which is applied by the payment of rent hereunder, be less
than the rent payable during that month by Tenant hereunder, then Tenant shall
pay such deficiency to Landlord immediately upon demand therefor by Landlord.
Such deficiency shall be calculated and paid monthly. Tenant shall also pay to
Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.

 

D.      No Termination:    No re-entry or taking possession of the Premises by
Landlord pursuant to 21(B) or 21(C) of this Article 22 shall be construed as an
election to terminate this Lease unless a written notice of such intention be
given to Tenant or unless the termination thereof be decreed by a court of
competent jurisdiction. Notwithstanding any reletting without termination by
Landlord because of any default by Tenant, Landlord may at any time after such
reletting elect to terminate this Lease for any such default.

 

22.     SURRENDER OF LEASE:    The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not automatically effect a
merger of the Lease with Landlord’s ownership of the Building or Premises.
Instead, at the option of Landlord, Tenant’s surrender may terminate all or any
existing sublease or subtenancies, or may operate as an assignment to Landlord
of any or all such subleases or subtenancies, thereby creating a direct
Landlord-Tenant relationship between Landlord and any subtenants.

 

23.     HABITUAL DEFAULT:    Notwithstanding anything to the contrary contained
in paragraph 21, 21 (A) (B) (C) and (D), the parties hereto agree that if the
Tenant shall have defaulted in the performance of any (but not necessarily the
same) term or condition of this Lease for three or more times during any twelve
month period during the Lease Term hereof, and such default has not been cured
within any applicable cure period, then such conduct shall, at the election of
the Landlord, represent a separate event of default which cannot be cured by the
Tenant.  Tenant acknowledges that the purpose of this provision is to prevent
repetitive defaults by the Tenant under the Lease, which work a hardship upon
the Landlord, and deprive the Landlord of the timely performance by the Tenant
hereunder.

 

24.     LANDLORD’S DEFAULT:    In the event of Landlord’s failure to perform any
of its covenants or agreements under this Lease, Tenant shall give Landlord
written notice of such failure and shall give Landlord thirty (30) days or such
other reasonable opportunity to cure or to

 

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commence to cure such failure prior to any claim for breach or for damages
resulting from such failure; provided that in the event of an emergency,
Landlord shall use best efforts to respond on an expedited basis. Without
limiting any other remedies available under this Lease or at law, if Tenant is
prevented from operating its business in the Premises for a period of three (3)
business days due to Landlord’s default under this Lease, then for each
additional day that Tenant is unable to operate, Base Monthly Rent shall be
abated. In addition, upon any such failure by Landlord, Tenant shall give notice
by registered or certified mail to any person or entity with a security interest
in the Premises (“Mortgagee”) that has provided Tenant with notice of its
interest in the Premises, and shall provide such Mortgagee a reasonable
opportunity to cure such failure, including such time as is necessary to obtain
possession of the Premises by power of sale or judicial foreclosure, if such
should prove necessary to effectuate a cure. Tenant agrees that each of the
Mortgagees to whom this Lease has been assigned is an expressed third party
beneficiary hereof. Tenant shall not make any prepayment of rent more than one
(1) month in advance without the prior written consent of such Mortgagee. Tenant
waives any right under California Civil Code Section 1950.7 or any other present
or future law to the collection of any payment or deposit from such Mortgagee or
any purchaser at a foreclosure sale of such Mortgagee’s interest unless such
Mortgagee or such purchaser shall have actually received and not refunded the
applicable payment or deposit.

 

25.      NOTICES:    All notices, demands, requests, or consents required to be
given under this Lease shall be sent in writing by U.S. certified mail, return
receipt requested, or by personal delivery addressed to the party to be notified
at the address for such party specified in paragraph 1 of this Lease, or to such
other place as the party to be notified may from time to time designate by at
least fifteen (15) days prior notice to the notifying party.

 

26.      ENTRY BY LANDLORD:    Tenant shall permit Landlord and his agents to
enter into and upon said Premises at all reasonable times, upon reasonable
notice, and subject to any security regulations of Tenant for the purpose of
inspecting the same or for the purpose of maintaining the Premises or for the
purpose of making repairs, alterations or additions to any other portion of said
Premises or for the purpose of erecting additional building(s) and improvements
on the land where the Premises are situated, or on adjacent land owned by
Landlord, including the erection and maintenance of such scaffolding, canopies,
fences and props as may be required without any abatement or reduction of Base
Monthly Rent or without any liability to Tenant for any loss of occupation or
quiet enjoyment of the Premises thereby occasioned, except as provided in the
last sentence of this paragraph; and Tenant shall permit Landlord and his
agents, at any time within one hundred eighty (180) days prior to the Expiration
Date (or at any time during the Lease if Tenant is

 

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in default hereunder), to place upon the Premises any “For Sale” or “For Lease”
signs and exhibit the Premises to real estate brokers and prospective tenants at
reasonable hours. Landlord shall comply with Tenant’s security procedures
applicable to the Premises and shall not unreasonably interfere with Tenant’s
use or access of the Premises.

 

27.     DESTRUCTION OF PREMISES:

 

A.       Destruction by an Insured Casualty:    In the event of a partial
destruction of the Premises by a casualty for which Landlord has received
insurance proceeds sufficient to repair the damage or destruction during the
Lease Term from any cause, Landlord shall forthwith repair the same, provided
such repairs can be made within one hundred eighty (180) days from the date of
receipt of all necessary governmental approvals necessary under the laws and
regulations of State, Federal, County or Municipal authorities, such partial
destruction shall in no way annul or void this Lease, except that Tenant shall
be entitled to a proportionate reduction of Base Monthly Rent while such repairs
are being made, such proportionate reduction to be based upon the extent to
which the making of such repairs shall interfere with the business carried on by
Tenant in the Premises. For purposes of this paragraph “partial destruction”
shall mean destruction of no greater than one-third (1/3) of the replacement
cost of the Premises, including the replacement cost of the Tenant Improvements
paid for by Landlord. In the event the Premises are more than partially
destroyed, or in the event the repairs cannot be made in one hundred eighty
(180) days, Landlord or Tenant may elect to terminate this Lease.  Landlord
shall not be required to restore Initial Improvements, Alterations or replace
Tenant’s fixtures or personal property.  In respect to any partial destruction
which Landlord is obligated to repair or may elect to repair under the terms of
this paragraph, the provision of Section 1932, Subdivision 2, and of Section
1933, Subdivision 4, of the Civil Code of the State of California and any other
similarly enacted statue are waived by Tenant and the provisions of
this paragraph 28 shall govern in the case of such destruction.

 

B.       Destruction by an Uninsured Casualty:    In the event of a total or
partial destruction of the Premises by an uninsured casualty, the Lease shall
automatically terminate, unless Landlord elects to rebuild. In the event of a
destruction by an uninsured casualty (i) of greater than one-third (1/3) of the
replacement cost of the Premises, or (ii) that can not be repaired within one
hundred eighty (180) days from the date of receipt of all necessary governmental
approvals necessary under the laws and regulations of State, Federal, County or
Municipal authorities, Tenant may elect to terminate this Lease.

 

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C.      Destruction at End of Term:    In the event of a casualty damaging more
than one-third (1/3) of the Premises during the last year of the Term, either
Tenant or Landlord shall have the right to terminate this Lease upon written
notice to the other party.

 

28.     ASSIGNMENT OR SUBLEASE:

 

A. Consent by Landlord:    In the event Tenant desires to assign this Lease or
any interest therein including, without limitation, a pledge, mortgage or other
hypothecation, or sublet the Premises or any part thereof, Tenant shall deliver
to Landlord substantially complete forms of any such agreement and of all
ancillary agreements with the proposed assignee or subtenant, financial
statements, and any additional information as reasonably required to determine
whether it will consent to the proposed assignment or sublease. The notice shall
give the name and current address of the proposed assignee/subtenant, proposed
use of the Premises, rental rate and current financial statement; and upon
request to Tenant, Landlord shall be given additional information as reasonably
required to determine whether it will consent to the proposed assignment or
sublease. Landlord shall then have a period of ten (10) days following receipt
of such notice within which to notify Tenant in writing that Landlord elects:
(i) to permit Tenant to assign or sublet such space to the named
assignee/subtenant on the terms and conditions set forth in the notice, or (ii)
to refuse consent. If Landlord should fail to notify Tenant in writing of such
election within said ten (10) day period, Landlord shall be deemed to have
elected option (i) above. Landlord’s consent (which must be in writing and in
form reasonably satisfactory to Landlord) to the proposed assignment or sublease
shall not be unreasonably withheld or delayed, provided and upon condition that:
(i) The proposed assignee or subtenant is engaged in a business that is limited
to the use expressly permitted under this Lease; (ii) The proposed sublease
shall be in form reasonably satisfactory to Landlord; (iii) Tenant shall
reimburse Landlord on demand for any reasonable costs that may be incurred by
Landlord in connection with said assignment or sublease, including the costs of
making investigations as to the acceptability of the proposed assignee or
subtenant and legal costs incurred in connection with the granting of any
requested consent; and (iv) Tenant shall not have advertised or publicized in
any way the availability of the Premises without prior notice to Landlord.

 

Notwithstanding the provisions of this paragraph 28, Tenant may, without
Landlord’s prior written consent and without Landlord’s participation in
subleasing profits, sublet the Premises or assign the Lease to: (i) a
subsidiary, affiliate, division or corporation controlled or under common
control with Tenant; (ii) a successor corporation related to Tenant by merger,
consolidation, non-bankruptcy reorganization, or government action; or (iii) a
purchaser of substantially all of Tenant’s assets. For

 

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the purpose of this Lease, sale of Tenant’s capital stock through any public
exchange shall not be deemed an assignment, subletting, or any other transfer of
the Lease or the Premises.

 

B.       Assignment or Subletting Consideration:    Any rent or other economic
consideration realized by Tenant under any such sublease and assignment in
excess of the rent payable hereunder (including an allocation of the purchase
price attributable to Tenant’s leasehold interest in the event of a sale of the
Tenant’s business), after the net unamortized cost of the Tenant Improvements
for which Tenant has itself paid, and reasonable subletting and assignment
costs, shall be divided and paid fifty percent (50%) to Landlord and fifty
percent (50%) to Tenant. Tenant’s obligation to pay over Landlord’s portion of
the consideration shall constitute an obligation for additional rent hereunder.
The above provisions relating to Landlord’s right to terminate the Lease and
relating to the allocation of bonus rent are independently negotiated terms of
the Lease, constitute a material inducement for the Landlord to enter into the
Lease, and are agreed as between the parties to be commercially reasonable.  No
assignment or subletting by Tenant shall relieve Tenant of any obligation under
this Lease.  Any assignment or subletting which conflicts with the provisions
hereof shall be void.

 

C.       No Release:    Any assignment or sublease shall be made only if and
shall not be effective until the assignee or subtenant shall execute,
acknowledge and deliver to Landlord an agreement, in form and substance
satisfactory to Landlord, whereby the assignee or subtenant shall assume all of
the obligations of this Lease on the part of Tenant to be performed or observed
and shall be subject to all of the covenants, agreements, terms, provisions and
conditions contained in this Lease.  Notwithstanding any such sublease or
assignment and the acceptance of rent or additional rent by Landlord from any
subtenant or assignee, Tenant or any guarantor shall and will remain fully
liable for the payment of the rent and additional rent due, and to become due
hereunder, for the performance of all of the covenants, agreements, terms,
provisions and conditions contained in this Lease on the part of Tenant to be
performed and for all acts and omissions of any licensee, subtenant, assignee or
any other person claiming under or through any subtenant that shall be in
violation of any of the terms and conditions of this Lease, and any such
violation shall be deemed to be a violation by Tenant.   Tenant shall further
indemnify, defend and hold Landlord harmless from and against any and all
losses, liabilities, damages, costs and expenses (including reasonable attorney
fees) resulting from any claims that may be made against Landlord by the
proposed assignee or subtenant or by any real estate brokers or other persons
claiming a commission or similar compensation in connection with the proposed
assignment or sublease.

 

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D.      Effect of Default:    In the event of Tenant’s default, Tenant hereby
assigns all rents due from any assignment or subletting to Landlord as security
for performance of its obligations under this Lease and Landlord may collect
such rents as Tenant’s Attorney-in-Fact, except that Tenant may collect such
rents unless a default occurs as described in paragraph 21 above.  The
termination of this Lease due to Tenant’s default shall not automatically
terminate any assignment or sublease then in existence.  At the election of
Landlord, the assignee or subtenant shall attorn to Landlord and Landlord shall
undertake the obligations of the Tenant under the sublease or assignment;
provided the Landlord shall not be liable for prepaid rent, security deposits or
other defaults of the Tenant to the subtenant or assignee, or any acts or
omissions of Tenant, its agents, employees or invitees.

 

29.      CONDEMNATION:    If any part of the Premises shall be taken for any
public or quasi-public use, under any statute or by right of eminent domain or
private purchase in lieu thereof, and a part thereof remains which in Tenant’s
reasonable opinion is sufficient for continued occupation hereunder, this Lease
shall as to the part so taken, terminate as of the date title shall vest in the
condemnor or purchaser, and the Base Monthly Rent payable hereunder shall be
adjusted so that the Tenant shall be required to pay for the remainder of the
Lease Term only such portion of such rent as the value of the part remaining
after such taking bears to the value of the entire Premises prior to such
taking.  If all of the Premises, or such part thereof be taken so that there
does not remain a portion reasonably sufficient for occupation hereunder, this
Lease shall thereupon terminate.  If a part or all of the Premises be taken, all
compensation awarded upon such taking shall go to the Landlord and the Tenant
shall have no claim thereto but Landlord shall cooperate with Tenant to recover
compensation for damage to or taking of any Alterations or for Tenant’s moving
costs. Tenant hereby waives the provisions of California Code of Civil
Procedures Section 1265.130 and any other similarly enacted statue are waived by
Tenant and the provisions of this paragraph 29 shall govern in the case of such
destruction.

 

30.      EFFECTS OF CONVEYANCE:    The term Landlord as used in this Lease,
means only the owner for the time being of the land and Building, containing the
Premises, so that, in the event of any sale or other conveyance of said land or
Building, or in the event of a master Lease of the Building, the Landlord shall
be and hereby is entirely freed and relieved of all covenants and obligations of
the Landlord hereunder, and it shall be deemed and construed, without further
agreement between the parties and the purchaser at any such sale, or the master
tenant of the Building, that the purchaser or master tenant of the Building has
assumed and agreed to carry out any and all covenants and obligations of the
Landlord hereunder.  Landlord shall transfer and

 

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deliver Tenant’s security deposit, to the purchaser at any such sale or the
master tenant of the Building, and thereupon the Landlord shall be discharged
from any further liability in reference thereto.

 

31.     SUBORDINATION:    In the event Landlord notifies Tenant in writing, this
Lease shall be subordinate to any ground lease, deed of trust, or other
hypothecation for security now or hereafter placed upon the real property of
which the Premises are a part and to any and all advances made on the security
thereof and to renewals, modifications, replacements and extensions thereof. 
Tenant agrees to promptly execute and deliver any documents which may be
required to effectuate such subordination.  Notwithstanding such subordination,
Tenant’s right to quiet possession of the Premises shall not be disturbed if
Tenant is not in default and so long as Tenant shall pay the rent and observe
and perform all of the provisions of this Lease.  At the request of any lender,
Tenant agrees to execute and deliver any reasonable modifications of this Lease
which do not materially adversely affect Tenant’s rights hereunder.

 

32.     WAIVER:    The waiver by Landlord of any breach of any term, covenant or
condition, herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained.  The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular rental so accepted, regardless of
Landlord’s knowledge of such preceding breach at the time of acceptance of such
rent. No delay or omission in the exercise of any right or remedy by Landlord
shall impair such right or remedy or be construed as a waiver thereof by
Landlord. No act or conduct of Landlord, including, without limitation, the
acceptance of keys to the Premises shall constitute acceptance of the surrender
of the Premises by Tenant before the Expiration Date. Landlord’s consent to or
approval of any act by Tenant which require Landlord’s consent or approvals
shall not be deemed to waive or render unnecessary Landlord’s consent to or
approval of any subsequent act by Tenant.

 

33.     HOLDING OVER:    Any holding over after the termination or Expiration
Date, shall be construed to be a tenancy from month to month terminable on
thirty (30) days written notice from either party and Tenant shall pay Base
Monthly Rent to Landlord at a rate equal to the greater of (i) one hundred fifty
percent (150%) of the Base Monthly Rent due in the month preceding the
termination or Expiration Date or (ii) one hundred fifty percent (150%) of the
Fair Market Rental (as defined in paragraph 36). Any holding over shall
otherwise be on the terms and conditions herein

 

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specified, except those provisions relating to the Lease Term and any options to
extend or renew, which provisions shall be of no further force and effect
following the expiration of the applicable exercise period. Tenant shall
indemnify, defend, and hold Landlord harmless from all loss or liability
(including, without limitation, any loss or liability resulted from any claim
against Landlord made by any succeeding tenant) founded on or resulting from
Tenant’s failure to surrender the Premises and losses to Landlord due to lost
opportunities to lease the Premises to succeeding tenants, unless Landlord has
consented to such holding over.

 

34.     SUCCESSORS AND ASSIGNS:    The covenants and conditions herein contained
shall, subject to the provisions of paragraph 27, apply to and bind the heirs,
successors, executors, administrators and assigns of all the parties hereto; and
all of the parties hereto shall be jointly and severally liable hereunder.

 

35.     ESTOPPEL CERTIFICATES:    Tenant shall at any time during the Lease
Term, within ten (10) business days following written notice from Landlord,
execute and deliver to Landlord a statement in writing certifying that this
Lease is unmodified and in full force and effect (or, if modified, stating the
nature of such modification) and the date to which the rent and other charges
are paid in advance, if any, and acknowledging that there are not, to Tenant’s
knowledge, any uncured defaults on the part of Landlord hereunder or specifying
such defaults if they 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 Tenant that:   (i) this Lease is in full force and effect, without
modification except as may be represented by Landlord; (ii) there are not
uncured defaults in Landlord’s performance.  Tenant also agrees to provide the
most current three (3) years of audited financial statements within ten (10)
business days of a request by Landlord for Landlord’s use in financing the
Premises with commercial lenders.

 

36.     OPTION TO EXTEND THE LEASE TERM:

 

A.      Grant and Exercise of Option:    Landlord hereby grants to Tenant, upon
and subject to the terms and conditions set forth in this paragraph, the option
(the “Option”) to extend the Lease Term for an additional term (the “Option
Term”), which Option Term shall be a period of thirty-six (36) months.  The
Option Term shall be exercised, if at all, by written notice to Landlord on or
before the date that is nine (9) months prior to the Expiration Date.  If Tenant
exercises the Option, each of the terms, covenants and conditions of this Lease
except this paragraph shall apply during the

 

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Option Term as though the expiration date of the Option Term was the date
originally set forth herein as the Expiration Date, provided that the Base
Monthly Rent to be paid shall be the greater of (i) the Base Monthly Rent
applicable to the period immediately prior to the commencement of the Option
Term, or (ii) the Fair Market Rental, as hereinafter defined, for the Premises
for the Option Term. Anything contained herein to the contrary notwithstanding,
if Tenant is in monetary or material non-monetary default under any of the
terms, covenants or conditions of this Lease either at the time Tenant exercises
the Option or at any time thereafter prior to the commencement date of the
Option Term, Landlord shall have, in addition to all of Landlord’s other rights
and remedies provided in this Lease, the right to terminate the Option upon
notice to Tenant, in which event the expiration date of this Lease shall be and
remain the Expiration Date.  As used herein, the term “Fair Market Rental” for
the Premises shall mean the rental and all other monetary payments including any
escalations and adjustments thereto (including without limitation Consumer Price
Indexing) then being obtained for new leases of space comparable in age and
quality to the Premises in the locality of the Building that Landlord could
obtain during the Option Term from a third party desiring to lease the Premises
for the Option Term.  Fair Market Rental shall further take into account that
(i) that Tenant is in occupancy of the Premises and making functional use of the
space in its then existing condition, and (ii) that no brokerage commission is
payable.

 

B.      Determination of Fair Market Rental:    If Tenant exercises the Option,
Landlord shall send to Tenant a notice setting forth the Fair Market Rental for
the Premises for the Option Term, on or before the date that is one hundred
fifty (150) days prior to the Expiration Date. If Tenant disputes Landlord’s
determination of the Fair Market Rental for the Option Term, Tenant shall,
within thirty (30) days after the date of Landlord’s notice setting forth the
Fair Market Rental for the Option Term, send to Landlord a notice stating that
Tenant either (i) elects to terminate its exercise of the Option, in which event
the Option shall lapse and this Lease shall terminate on the Expiration Date, or
(ii) disagrees with Landlord’s determination of Fair Market Rental for the
Option Term and elects to resolve the disagreement as provided in paragraph
36(C) below.  If Tenant does not send to Landlord a notice as provided in the
previous sentence, Landlord’s determination of the Fair Market Rental shall be
the basis for determining the Base Monthly Rent to be paid by Tenant hereunder
during the Option Term.  If Tenant elects to resolve the disagreement as
provided in paragraph 36(C) below and such procedures shall not have been
concluded prior to the commencement date of the Option Term, Tenant shall pay
Base Monthly Rent to Landlord hereunder adjusted to reflect the Fair Market
Rental as determined by Landlord in the manner provided above.  If the amount of
Fair Market Rental as finally determined pursuant to in paragraph 36(C) below is
greater than Landlord’s determination, Tenant shall pay to Landlord the
difference

 

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between the amount paid by Tenant and the Fair Market Rental as so determined in
paragraph 36(C) below within thirty (30) days after the determination.  If the
Fair Market Rental as finally determined in paragraph 36(C) below is less than
Landlord’s determination, the difference between the amount paid by Tenant and
the Fair Market Rental as so determined in paragraph 36(C) below shall be
credited against the next installments of rent due from Tenant to Landlord
hereunder.

 

C.      Resolution of a Disagreement over the Fair Market Rental:   Any
disagreement regarding the Fair Market Rental shall be resolved as follows:

 

1.        Within thirty (30) days after Tenant’s response to Landlord’s notice
to Tenant of the Fair Market Rental, Landlord and Tenant shall meet no less than
two (2) times, at a mutually agreeable time and place, to attempt to resolve any
such disagreement.

 

2.        If within the thirty (30) day period referred to in (i) above,
Landlord and Tenant can not reach agreement as to the Fair Market Rental, they
shall each select one appraiser to determine the Fair Market Rental.  Each such
appraiser shall arrive at a determination of the Fair Market Rental and submit
their conclusions to Landlord and Tenant within thirty (30) days after the
expiration of the thirty (30) day consultation period described in (i) above.

 

3.        If only one appraisal is submitted within the requisite time period,
it shall be deemed to be the Fair Market Rental. If both appraisals are
submitted within such time period, and if the two appraisals so submitted differ
by less than ten percent (10%) of the higher of the two, the average of the two
shall be the Fair Market Rental.  If the two appraisals differ by more than ten
percent (10%) of the higher of the two, then the two appraisers shall
immediately select a third appraiser who shall within thirty (30) days after his
or her selection make a determination of the Fair Market Rental and submit such
determination to Landlord and Tenant. This third appraisal will then be averaged
with the closer of the two previous appraisals and the result shall be the Fair
Market Rental.

 

4.        All appraisers specified pursuant to this paragraph shall be members
of the American Institute of Real Estate Appraisers with not less than ten (10)
years experience appraising office and industrial properties in the Santa Clara
Valley.  Each party shall pay the cost of the appraiser selected by such party
and one-half of the cost of the third appraiser plus one-half of any other costs
incurred in resolving the dispute pursuant to this paragraph.

 

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37.     OPTIONS:    All Options provided Tenant in this Lease are personal and
granted to original Tenant or its affiliates and are not exercisable by any
third party should Tenant assign or sublet all or a portion of its rights under
this Lease, unless Landlord consents to permit exercise of any option by any
assignee or subtenant, in Landlord’s sole discretion.   In the event that Tenant
hereunder has any multiple options to extend this Lease, a later option to
extend the Lease cannot be exercised unless the prior option has been so
exercised.

 

38.     QUIET ENJOYMENT:    Upon Tenant’s faithful and timely performance of all
the terms and covenants of the Lease, Tenant shall quietly have and hold the
Premises for the Lease Term and any extensions thereof.

 

39.     BROKERS:    Tenant represents it has not utilized or contacted a real
estate broker or finder with respect to this Lease other than CRESA Partners
(“Broker”) and Tenant agrees to indemnify and hold Landlord harmless against any
claim, cost, liability or cause of action asserted by any other broker or finder
claiming through Tenant.  Landlord shall be responsible for payment of a real
estate commission to Broker pursuant to a separate agreement between Landlord
and Broker.

 

40.     This section intentionally left blank

 

41.     AUTHORITY OF PARTIES:    Each individual executing this Lease on behalf
of Tenant represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of the corporation, in accordance with a duly
adopted resolution of the Board of Directors of said corporation or in
accordance with the by-laws of said corporation, and that this Lease is binding
upon said corporation in accordance with its terms.  Each individual executing
this Lease on behalf of Landlord represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of the limited
partnership and that this Lease is binding upon said limited partnership in
accordance with its terms.

 

42.     MISCELLANEOUS PROVISIONS:

 

A.       Rent:    All monetary sums due from Tenant to Landlord under this Lease
shall be deemed to be rent.

 

B.       Management Fee:    All maintenance and utility services administered by
Landlord

 

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and subject to reimbursement by Tenant shall include a property management fee
to Landlord of fifteen percent (15%).

 

C.       Performance by Landlord:    If Tenant fails to perform any obligation
required under this Lease or by law or governmental regulation after the
expiration of any applicable notice and cure period, Landlord in its sole
discretion may without notice perform such obligation, in which event Tenant
shall pay Landlord as additional rent all sums paid by Landlord in connection
with such substitute performance within ten (10) days following receipt of
Landlord’s written invoice for such payment.

 

D.       Interest:    All sums due hereunder, including rent and additional
rent, if not paid when due, shall bear interest at the maximum rate permitted
under California law accruing from the date due until the date paid to Landlord.

 

E.        Rights and Remedies:    All rights and remedies hereunder are
cumulative and not alternative to the extent permitted by law and are in
addition to all other rights and remedies in law and in equity.

 

F.        Survival of Indemnities:    All indemnification, defense, and hold
harmless obligations of Landlord and Tenant under the Lease shall survive the
expiration or sooner termination of the Lease.

 

G.       Severability:    If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the remainder of
the Lease shall not be invalidated thereby but shall be enforceable in
accordance with its terms, omitting the invalid or unenforceable term.

 

H.      Choice of Law:    This Lease shall be governed by and construed in
accordance with California law.

 

I.        Time:    Time is of the essence hereunder.

 

J.       Entire Agreement:    This instrument contains all of the agreements and
conditions made between the parties hereto and may not be modified orally or in
any other manner than by an agreement in writing signed by all of the parties
hereto or their respective successors in interest.

 

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K.      Representations:    Tenant acknowledges that neither Landlord or its
affiliates or agents have made any agreements, representations, warranties or
promises with respect to the demised Premises or the Building of which they are
a part, or with respect to present or future rents, expenses, operations,
tenancies or any other matter. Except as herein expressly set forth herein,
Tenant relied on no statement of Landlord or its agents for that purpose.

 

L.      Headings:    The headings or titles to the paragraphs of this Lease are
not a part of this Lease and shall have no effect upon the construction or
interpretation of any part thereof.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed these presents, the day
and year first above written.

 

LANDLORD: Sobrato Interests,

TENANT: Affymetrix, Inc.

a California limited partnership

a California corporation

 

 

 

 

BY:

/s/ John M. Sobrato

 

BY:

/s/ Barbara A. Caulfield

 

 

 

ITS:

GENERAL PARTNER

 

ITS:

Barbara A. Caulfield
Exec. V.P. and General Counsel

 

 

 

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EXHIBIT “A”
Premises

 

[BUILDING MAP]

 

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