Exhibit 10.1

Lease between

Sobrato Interests and Data Domain, Inc.

 

Section

   Page #

Parties

   1

Premises

   1

Definitions

   1

Description

   1

Use

   2

Permitted Uses

   2

Uses Prohibited

   2

Advertisements and Signs

   2

Covenants, Conditions and Restrictions

   2

Term and Rental

   2

Base Monthly Rent

   2

Late Charges

   3

Security Deposit

   3

Acceptance of Possession and Covenants to Surrender

   4

Delivery and Acceptance

   4

Early Access

   4

Condition Upon Surrender

   5

Failure to Surrender

   5

Alterations and Additions

   6

Tenant’s Alterations

   6

Work Allowance

   6

Free From Liens

   7

Compliance With Governmental Regulations

   7

Maintenance of Premises

   7

Landlord’s Obligations

   7

Tenant’s Obligations

   7

Landlord and Tenant’s Obligations Regarding Reimbursable Operating Costs

   7

Reimbursable Operating Costs

   7

Tenant’s Allocable Share

   9

Capital Improvements

   9

Waiver of Liability

   9

Hazard Insurance

   9

Tenant’s Use

   9

Landlord’s Insurance

   10

Tenant’s Insurance

   10

Waiver

   10

 

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Taxes

   11

Utilities

   11

Toxic Waste and Environmental Damage

   11

Use of Hazardous Material

   11

Tenant’s Indemnity Regarding Hazardous Material

   12

Notice of Release or Violation

   13

Remediation Obligations

   13

Environmental Monitoring

   14

Landlord Indemnification

   14

Tenant’s Default

   14

Remedies

   14

Right to Re-enter

   15

Continuation of Lease

   15

No Termination

   15

Non-Waiver

   16

Performance by Landlord

   16

Landlord’s Liability

   16

Limitation on Landlord’s Liability

   16

Limitation on Tenant’s Recourse

   17

Indemnification of Landlord

   17

Destruction of Premises

   17

Landlord’s Obligation to Restore

   17

Limitations on Landlord’s Restoration Obligation

   18

Condemnation

   18

Assignment or Sublease

   19

Consent by Landlord

   19

Assignment or Subletting Consideration

   20

No Release

   20

Reorganization of Tenant

   21

Permitted Transfers

   21

Effect of Default

   21

Effects of Conveyance

   22

Successors and Assigns

   22

Sublease Requirements

   22

Option to Extend the Lease Term

   22

Grant and Exercise of Option

   22

Determination of Fair Market Rental

   23

Resolution of a Disagreement over the Fair Market Rental

   23

Personal to Tenant

   24

General Provisions

   24

Attorney’s Fees

   24

Authority of Parties

   24

Brokers

   24

Choice of Law

   25

Dispute Resolution

   25

Entire Agreement

   25

Entry by Landlord

   25

Estoppel Certificates

   26

 

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Exhibits

   26

Interest

   26

Modifications Required by Lender

   26

No Presumption Against Drafter

   26

Notices

   27

Property Management

   27

Rent

   27

Representations

   27

Rights and Remedies

   27

Severability

   27

Submission of Lease

   27

Subordination

   27

Survival of Indemnities

   28

Time

   28

Transportation Demand Management Programs

   28

Waiver of Right to Jury Trial

   28

EXHIBIT A – Premises, Building & Project

   30

EXHIBIT B—HVAC Plan

   31

 

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1. PARTIES: THIS LEASE, is entered into on this 10th day of July, 2007
(“Effective Date”) between Sobrato Interests, a California Limited Partnership,
whose address is 10600 North De Anza Boulevard, Suite 200, Cupertino, CA 95014
and Data Domain, Inc., a Delaware Corporation, whose address is 2300 Central
Expressway, Santa Clara, California, 95050, hereinafter called respectively
Landlord and Tenant. Landlord and Tenant are collectively referred to in this
Lease as the “Parties”.

2. PREMISES:

A. Definitions.

i. Building 1. The term “Building 1” or “Building” shall mean that 2-story
building containing 100,113 rentable square feet and all improvements installed
therein, shown as Building 1 on Exhibit “A” and commonly known as 2421 Mission
College Boulevard, Santa Clara, California.

ii. Building 2. The term “Building 2” shall mean that 3-story building
containing 82,264 rentable square feet and all improvements installed therein,
shown as Building 2 on Exhibit “A” and commonly known as 2431 Mission College
Boulevard, Santa Clara, California.

iii. Building 3. The term “Building 3” shall mean that 2-story building
containing 100,272 rentable square feet and all improvements installed therein,
shown as Building 3 on Exhibit “A” and commonly known as 2441 Mission College
Boulevard, Santa Clara, California.

iv. Building 4. The term “Building 4” shall mean that 3-story building
containing 136,708 rentable square feet and all improvements installed therein,
shown as Building 4 on Exhibit “A” and commonly known as 2451 Mission College
Boulevard, Santa Clara, California.

v. Common Area. The term “Common Area” shall mean all that real property and the
improvements thereon surrounding Buildings 1, 2, 3 and 4, including all parking
areas and landscaped areas. Tenant shall have the non-exclusive right to use the
Common Area and shall have the non-exclusive right to 336 parking spaces, and
the exclusive right to 9 parking spaces which Tenant may designate adjacent to
the Building entry for visitor parking. Tenant shall be responsible for seeing
that the total number of vehicles parked in the Project by employees and
invitees of Tenant pursuant to this Lease does not exceed 345.

vi. Project. The term “Project” shall be that certain real property consisting
of approximately 20.38 acres along Mission College Boulevard in Santa Clara,
California, (APNs 104-41-030, 104-41-031 and 104-41-032) and all improvements
constructed thereon consisting of Buildings 1, 2, 3, 4 and the Common Area as
outlined in red on Exhibit “A”.

vii. Premises. The term “Premises” shall mean Building 1 and a non-exclusive
right to use the Common Area in accordance with the terms and conditions of this
Lease.

B. Grant: Landlord hereby leases the Premises to Tenant, and Tenant hires the
Premises from Landlord.

 

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3. USE:

A. Permitted Uses: Tenant shall use the Premises as permitted under applicable
zoning laws only for the following purposes and shall not change the use of the
Premises without the prior written consent of Landlord: Office, research and
development, labs, marketing, light manufacturing, ancillary storage and other
incidental uses. Tenant shall use only the number of parking spaces allocated to
Tenant under this Lease. All commercial trucks and delivery vehicles shall
(i) be parked at the rear of the Building, (ii) loaded and unloaded in a manner
which does not interfere with the businesses of other occupants of the Project,
and (iii) permitted to remain within the Project only so long as is reasonably
necessary to complete the loading and unloading. Landlord makes no
representation or warranty that any specific use of the Premises desired by
Tenant is permitted pursuant to any Laws.

B. Uses Prohibited: Tenant shall not commit or suffer to be committed on the
Premises any waste, nuisance, or other act or thing which may disturb the quiet
enjoyment of any other tenant in or around the Premises, nor allow any sale by
auction or any other use of the Premises for an unlawful purpose. Tenant shall
not (i) damage or overload the electrical, mechanical or plumbing systems of the
Premises, (ii) attach, hang or suspend anything from the ceiling, walls or
columns of the Building in excess of the load limits for which such ceiling,
walls or columns are designed, or set any load on the floor in excess of the
load limits for which such floors are designed, or (iii) generate dust, fumes or
waste products which create a fire or health hazard or damage the Premises or
any portion of the Project, including without limitation the soils or ground
water in or around the Project. 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 without
Landlord’s prior approval, which approval may be withheld in its sole
discretion.

C. Advertisements and Signs: Tenant will not place or permit to be placed, in,
upon or about the Premises any signs not approved by the city and other
governing authority having jurisdiction. 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, which consent will not be unreasonably withheld. Any sign placed on
the Premises shall be removed by Tenant, at its sole cost, prior to the
Expiration Date or promptly following the earlier termination of the Lease, and
Tenant shall repair, at its sole cost, any damage or injury to the Premises
caused thereby, and if not so removed, then Landlord may have same so removed at
Tenant’s expense. Landlord hereby agrees to allow Tenant to install signage on
the Building and monument signage subject to City approval and Landlord’s
reasonable approval as set forth above.

D. Covenants, Conditions and Restrictions: This Lease is subject to the effect
of (i) any covenants, conditions, restrictions, easements, mortgages or deeds of
trust, ground leases, rights of way of record and any other matters or documents
of record; and (ii) any zoning laws of the city, county and state where the
Building is situated (collectively referred to herein as “Restrictions”) and
Tenant will conform to and will not violate the terms of any such Restrictions.

4. TERM AND RENTAL:

A. Base Monthly Rent: The term (“Lease Term”) shall be for eighty four
(84) months, commencing on November 1, 2007 (“Commencement Date”) and ending
October 31, 2014, (“Expiration Date”). Notwithstanding the Parties agreement
that the Lease Term begins on the Commencement Date, this Lease and all of the
obligations of Landlord and Tenant shall be binding and in full force and effect
from and after the Effective 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 in accordance with the following schedule:

 

11/1/07—01/31/08:

   0

02/1/08—02/28/08:

   $100,113

03/1/08—10/31/08:

   $175,198.00 per month

11/1/08—10/31/09:

   $180,454.00 per month

11/1/09—10/31/10:

   $185,867.00 per month

11/1/10—10/31/11:

   $191,443.00 per month

11/1/11—10/31/12:

   $197,187.00 per month

11/1/12—10/31/13:

   $203,102.00 per month

11/1/13—10/31/14:

   $209,195.00 per month

 

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Base Monthly Rent shall be due in advance on or before the first day of each
calendar month during the Lease Term. All sums payable by Tenant under this
Lease shall be paid to Landlord in lawful money of the United States of America,
without offset or deduction and without prior notice or demand, at the address
specified in Section 1 of this Lease or at such place or places as may be
designated in writing by Landlord during the Lease Term. 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 Seventy Five Thousand One Hundred Ninety
Eight Dollars ($175,198.00) as a deposit to be applied on the Commencement Date
against the Base Monthly Rent due for the first month of the Lease Term and the
balance to be applied to the Base Monthly Rent due for the second month of the
Lease Term.

B. 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 is
extremely difficult to ascertain. Such costs include but are not limited to:
administrative, processing, accounting, 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
other sum due from Tenant shall not be received by Landlord or its designee
within five (5) days after written notice that rent is due, Tenant shall pay to
Landlord a late charge equal to five (5%) percent of such overdue amount, which
late charge shall be due and payable on the same date that the overdue amount
was due. The parties agree that such late charge represents a fair and
reasonable estimate of the costs Landlord will incur by reason of late payment
by Tenant, excluding interest and attorneys fees and costs. If any rent or other
sum due from Tenant remains delinquent for a period in excess of thirty
(30) days then, in addition to such late charge, Tenant shall pay to Landlord
interest on any rent that is not paid when due at the Agreed Interest Rate
specified in Section 19.J following the date such amount became due until paid.
Acceptance by Landlord of such late charge shall not 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 the Base Monthly Rent
shall automatically become due and payable quarterly in advance, rather than
monthly, notwithstanding any provision of this Lease to the contrary.

C. Security Deposit: Concurrently with Tenant’s execution of this Lease, Tenant
shall provide Landlord a letter of credit (“Letter of Credit”) in the amount of
Two Hundred Nine Thousand Dollars ($209,000.00) and in a form reasonably
acceptable to Landlord (the Letter of Credit and all proceeds thereof being
referred to as the “Security “Deposit”). If Tenant defaults with respect to any
provisions of the Lease, including but not limited to the provisions relating to
payment of (i) Base Monthly Rent or other charges in default; or (ii) any other
amount which Landlord may spend or become obligated to spend by reason of
Tenant’s default, Landlord shall be entitled to draw the full amount of the
Letter of Credit at any time by certifying the occurrence of such default to the
issuer; thereafter, the Security Deposit shall be in the form of cash held by
Landlord. Landlord may, but shall not be obligated to, and without waiving or
releasing Tenant from any obligation under this Lease, use, apply or retain the
whole or any part of the Security Deposit reasonably necessary for the payment
of any amount which

 

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Landlord may spend by reason of Tenant’s default or as necessary to compensate
Landlord for any loss or damage which Landlord may suffer by reason of Tenant’s
default, including without limitation loss of future rents due under this Lease
upon termination of this Lease due to a default by Tenant and other damages
recoverable under California Civil Code Section 1951.2. Tenant shall keep the
Letter of Credit in effect during the entire Lease Term, as the same may be
extended, plus a period of four (4) weeks following the Expiration Date. At
least thirty (30) days prior to expiration of any Letter of Credit, the term
thereof shall be renewed or extended for a period of at least one (1) year.
Tenant’s failure to so renew or extend the Letter of Credit shall be a material
default of this Lease by Tenant. In the event Landlord draws against the Letter
of Credit and the Security Deposit reverts to a cash held by Landlord, Tenant
shall replenish the remaining Security Deposit such that the aggregate amount of
Security Deposit available to Landlord at all times during the Lease Term is the
amount of the Security Deposit originally required. If Tenant performs every
provision of this Lease to be performed by Tenant, the Letter of Credit shall be
returned to Tenant within thirty (30) days after the Expiration Date and
surrender of the Premises to Landlord, less any amount deducted in accordance
with this Section, together with Landlord’s written notice itemizing the amounts
and purposes for such deduction. Tenant hereby waives California Civil Code
Section 1950.7(except section 1950.7(b)), or any similar law now or hereafter in
effect which may have the effect of limiting the circumstances under which
Landlord would be allowed to use or apply the Security Deposit or amount that
could be so used or applied, or imposing a deadline for the return of the
Security Deposit. In the event of termination of Landlord’s interest in this
Lease, Landlord shall deliver the Letter of Credit to Landlord’s successor in
interest in the Premises and thereupon be relieved of further responsibility
with respect to the Letter of Credit.

5. This section intentionally left blank.

6. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER:

A. Delivery and Acceptance: On the Commencement Date, Landlord shall deliver the
Premises in good operating condition and repair including existing plumbing,
electrical (including panels and outlets), elevator (as evidenced by an elevator
inspection to be performed within twenty-one (21) days of the Effective Date),
sprinklers, structural elements, and Building foundation (Including the
Building’s HVAC system, as Landlord is providing Tenant new HVAC units/systems
pursuant to Section 7.B. below). Landlord shall provide a standard contractor’s
warranty with respect to the above items for six (6) months from the Effective
Date (provided, however, that the benefit of HVAC warranties associated with the
new units shall be assigned to Tenant and shall be for a minimum of one year).
Such warranty shall exclude (i) routine maintenance and repairs, (ii) damage
caused by the negligence or misuse by Tenant and (iii) acts of God. Any work
required by governmental agencies to make the Premises (in their current
condition) comply with ADA shall be performed by Landlord at its sole cost and
expense; however, any costs for ADA work that may be required as part of
Tenant’s Initial Improvements shall be borne by Tenant. On the Commencement
Date, Landlord shall deliver and Tenant shall accept possession of the Premises
and enter into occupancy of the Premises on the Commencement Date. By accepting
possession, Tenant acknowledges that it has had an opportunity to conduct, and
has conducted, such inspections of the Premises as it deems necessary to
evaluate its condition. Except as otherwise specifically provided herein, Tenant
agrees to accept possession of the Premises in its then existing condition,
subject to all Restrictions and without representation or warranty by Landlord.

B. Early Access: Tenant shall be allowed early access and full use and occupancy
of the Premises from execution of the Lease until the Commencement Date (“Early
Access Period”). 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 shall be due or payable.

 

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C. Condition Upon Surrender: Tenant further agrees on the Expiration Date or on
the sooner termination of this Lease, to surrender the Premises to Landlord in
good condition and repair, normal wear and tear excepted. In this regard,
“normal wear and tear” shall be construed to mean wear and tear caused to the
Premises by the natural aging process which occurs in spite of prudent
application of the best standards for maintenance, repair replacement, and
janitorial practices, and does not include items of neglected or deferred
maintenance. In any event, Tenant shall cause the following to be done prior to
the Expiration Date or sooner termination of this Lease: (i) all interior walls
shall be cleaned, patched, and otherwise made ‘paint-ready’, (ii) all tiled
floors shall be cleaned and waxed, (iii) all carpets shall be cleaned and
shampooed, (iv) all broken, marred, stained or nonconforming acoustical ceiling
tiles shall be replaced, (v) all cabling placed above the ceiling by Tenant or
Tenant’s contractors shall be removed, (vi) all windows shall be washed;
(vii) the HVAC system shall be serviced by a reputable and licensed service firm
and left in “good operating condition and repair” as so certified by such firm,
(viii) the plumbing and electrical systems and lighting shall be placed in good
order and repair including replacement of any burned out, discolored or broken
light bulbs, ballasts, or lenses. On or before the Expiration Date or sooner
termination of this Lease, Tenant shall remove all its personal property and
trade fixtures from the Premises. All property and fixtures not so removed shall
be deemed as abandoned by Tenant. Tenant shall ascertain from Landlord at least
ninety (90) days before the Expiration Date whether Landlord desires to have any
Alterations made by Tenant as defined in Section 7 (excluding Initial
Alterations) removed and the Premises or any parts thereof restored to a
standard open office plan with materials and finishes consistent with the other
open office areas of the Premises, or to cause Tenant to surrender all
Alterations in place to Landlord. The foregoing shall not apply to Alterations
that Landlord has agreed may remain at Lease expiration. If Landlord shall so
desire, Tenant shall, at Tenant’s sole cost and expense, remove such Alterations
as Landlord requires and shall repair and restore said Premises or such parts
thereof before the Expiration Date. Such repair and restoration shall include
causing the Premises to be brought into compliance with all applicable building
codes and laws in effect at the time of the removal to the extent such
compliance is necessitated by the repair and restoration work.

D. Failure to Surrender: If the Premises are not surrendered at the Expiration
Date or sooner termination of this Lease in the condition required by this
Section 6 (acceptance of such condition to be verified by substantial completion
of any restoration work but excluding punch-list items), Tenant shall be deemed
in a holdover tenancy pursuant to this Section 6.C and Tenant shall indemnify,
defend, and hold Landlord harmless 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 to the extent
Landlord is obligated to pay such claims, and costs incurred by Landlord in
returning the Premises to the required condition, plus interest at the Agreed
Interest Rate. If Tenant remains in possession of the Premises after the
Expiration Date or sooner termination of this Lease without Landlord’s consent,
Tenant’s continued possession shall be on the basis of a tenancy at sufferance
and Tenant shall pay as rent during the holdover period an amount equal to one
hundred fifty percent (150%) of the Base Monthly Rent due in the month preceding
the earlier termination or Expiration Date, as applicable, plus all other
amounts payable by Tenant under this Lease. Any holding over shall otherwise be
on the terms and conditions herein 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. This provision shall survive termination or
expiration of the Lease.

E. Expansion Option: In the event Landlord and Tenant execute a new lease of at
least 175,000 square feet for another property owned by Landlord on terms
acceptable to both parties in their sole and absolute discretion,, this lease
shall be terminated in consideration of execution of the new lease.

 

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7. ALTERATIONS AND ADDITIONS:

A. Tenant’s Alterations: Tenant shall not make, or suffer to be made, any
alteration or addition to the Premises (“Alterations”), or any part thereof,
without obtaining Landlord’s prior written consent (which consent shall not be
unreasonably withheld) and delivering to Landlord the proposed architectural and
structural plans for all such Alterations at least fifteen (15) days prior to
the start of construction. If such Alterations affect the structure of the
Building, Tenant additionally agrees to reimburse Landlord its reasonable
out-of-pocket costs incurred in reviewing Tenant’s plans. After obtaining
Landlord’s consent, which consent shall state whether or not Landlord will
require Tenant to remove such Alteration at the expiration or earlier
termination of this Lease, Tenant shall not proceed to make such Alterations
until Tenant has obtained all required governmental approvals and permits.
Tenant agrees to provide Landlord (i) written notice of the anticipated and
actual start-date of the work, (ii) a complete set of half-size (15” X 21”)
vellum as-built drawings, and (iii) a certificate of occupancy for the work upon
completion of the Alterations. All Alterations shall be constructed by a
licensed general contractor in compliance with all applicable building codes and
laws including, without limitation, the Americans with Disabilities Act of 1990
as amended from time to time. Upon the Expiration Date, all Alterations, except
movable furniture and trade fixtures, shall become a part of the realty and
belong to Landlord but shall nevertheless be subject to removal by Tenant
(excluding Initial Alterations as defined below) as provided in Section 6 above.
Alterations which are not deemed as trade fixtures include heating, lighting,
electrical systems, air conditioning, walls, carpeting, or any other
installation which has become an integral part of the Premises. All Alterations
shall be maintained, replaced or repaired by Tenant at its sole cost and
expense.

Notwithstanding the foregoing, Tenant shall be entitled, without obtaining
Landlord’s consent, to make Alterations which do not affect the Building
structure or mechanical systems and which do not cost more than Seventy Five
Thousand Dollars ($75,000.00) per Alteration (“Permitted Alterations”);
provided, however, that: (i) Tenant shall still be required to comply with all
other provisions of this paragraph; and (ii) Landlord may elect to have Tenant
remove such Permitted Alterations at the expiration or earlier termination of
the Lease, unless Tenant has notified Landlord of such Permitted Alterations
prior to commencing construction and received approval from Landlord that such
Permitted Alterations will not be required to be removed at the expiration of
the Lease.

The parties acknowledge that Tenant will make certain improvements to the
Premises (“Initial Alterations”) prior to August 31, 2008, such Initial
Alterations generally described as (but not limited to) the addition and/or
alteration of interior offices, labs, cosmetic improvements, and installation of
necessary equipment to service the foregoing. Landlord hereby consents to such
Initial Alterations and waives any right to have such Initial Alterations
removed at the expiration or sooner termination of this Lease provided Tenant
complies with all provisions of this Section 7.A. In addition to Landlord’s
payment of the Work Allowance as set forth in Section 7.B. below, Landlord
agrees to pay for the cost charged to Tenant by an architect for two preliminary
space planning meetings associated with Tenant’s Initial Alterations.

B. Work Allowance: As an inducement to Tenant to enter into this Lease, Landlord
agrees to: (i) provide Tenant a work allowance to offset Tenant’s cost of
Initial Alterations (“Work Allowance”) equal to the sum of Six Hundred Fifty
Thousand Seven Hundred Thirty Five Dollars ($650,735.00); and (ii) install a new
HVAC system to service the Building as a standard office building, such system
outlined on Exhibit ‘B’ attached. Tenant shall pay all costs associated with the
Initial Alterations; provided, however, that Tenant may submit to Landlord for
payment of the Work Allowance once such costs have been incurred by Tenant in
connection with its construction of Initial Alterations.

 

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C. Free From Liens: Tenant shall keep the Premises free from all liens arising
out of 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 twenty (20) days after receiving notice of the
filing, Landlord shall immediately be entitled to discharge the lien at Tenant’s
expense and all resulting costs incurred by Landlord, including attorney’s fees
shall be due immediately from Tenant as additional rent.

D. Compliance With Governmental Regulations: The term Laws or Governmental
Regulations shall include all federal, state, county, city or governmental
agency laws, statutes, ordinances, standards, rules, requirements, or orders now
in force or hereafter enacted, promulgated, or issued. The term also includes
government measures regulating or enforcing public access, traffic mitigation,
occupational, health, or safety standards for employers, employees, landlords,
or tenants. Tenant, at Tenant’s sole expense will comply with all such
Governmental Regulations applicable to the Premises or the Tenant’s use of the
Premises and shall make all repairs, replacements, alterations, or improvements
necessary to comply with said Governmental Regulations. 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 law, regulation or other requirement in its use of
the Premises shall be conclusive of that fact as between Landlord and Tenant.

8. MAINTENANCE OF PREMISES:

A. Landlord’s Obligations: Landlord at its sole cost and expense, shall maintain
in good condition, order, and repair, and replace as and when necessary, the
structural components of the Building including the foundation, exterior load
bearing walls and roof structure.

B. Tenant’s Obligations: Tenant shall clean, maintain, repair and replace when
necessary the Premises and every part thereof through regular inspections and
servicing, including but not limited to: (i) all plumbing and sewage facilities,
(ii) all heating ventilating and air conditioning facilities and equipment,
(iii) all fixtures, interior walls floors, carpets and ceilings, (iv) all
windows, door entrances, plate glass and glazing systems including caulking, and
skylights, (v) all electrical facilities and equipment, (vi) all automatic fire
extinguisher equipment, (vii) all underground utility facilities servicing the
Premises, (viii) all elevator equipment, and (ix) the roof membrane system. 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. With respect
to items (ii), (viii) and (ix) above, Tenant shall provide Landlord a copy of a
service contract between Tenant and a licensed service contractor providing for
periodic maintenance of all such systems or equipment in conformance with the
manufacturer’s recommendations. Tenant shall provide Landlord a copy of such
preventive maintenance contracts and paid invoices for the recommended work if
requested by Landlord.

C. Landlord and Tenant’s Obligations Regarding Reimbursable Operating Costs: In
addition to the direct payment by Tenant of expenses as provided in Sections
8.B, 9, 10 and 11 of this Lease, Tenant agrees to reimburse Landlord for
Tenant’s Allocable Share (as defined in Section 8.E below) of Reimbursable
Operating Costs (as defined in Section 8.D below) resulting from Landlord
payment of expenses related to the Building or Project which are not otherwise
paid by Tenant directly. Tenant agrees to pay its Allocable Share of the
Reimbursable Operating Costs as additional rental within thirty (30) days of
written invoice from Landlord.

D. Reimbursable Operating Costs: For purposes of calculating Tenant’s Allocable
Share of Building and Project Costs, the term “Reimbursable Operating Costs” is
defined as all costs and expenses of the nature hereinafter described which are
incurred by Landlord in

 

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connection with ownership and operation of the Building or the Project in which
the Premises are located, 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 (with accruals appropriate to Landlord’s
business), including but not limited to the following: (i) common area
utilities, including water, power, telephone, heating, lighting, air
conditioning, ventilating, and Building utilities to the extent not separately
metered; (ii) common area maintenance and service agreements for the Building
and/or Project and the equipment therein, including without limitation, common
area janitorial services, alarm and security services, exterior window cleaning,
and maintenance of the sidewalks, landscaping, waterscape, parking areas,
driveways, service areas, and the building exterior; (iii) insurance premiums
and costs, including without limitation, the premiums and cost of fire, casualty
and liability coverage and rental abatement and, if elected by Landlord,
earthquake 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 and assessment installments or other
impositions or charges which may be levied on the Building or Project, upon the
occupancy of the Building or Project 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, transfer or other change of ownership
of the Building or Project, as such taxes are levied or appear on the City and
County tax bills and assessment rolls. Landlord shall have no obligation to
provide guard services or other security measures for the benefit of the
Project. Tenant assumes all responsibility for the protection of Tenant and
Tenant’s Agents from acts of third parties; provided, however, that nothing
contained herein shall prevent Landlord, at its sole option, from providing
security measures for the Project. This is a “Net” Lease, meaning that Base
Monthly Rent is paid to Landlord absolutely net of all costs and expenses,
except as specifically provided for in this Lease. The provision for payment of
Reimbursable Operating Costs by means of periodic payment of Tenant’s Allocable
Share of Building and/or Project Costs is intended to pass on to Tenant and
reimburse Landlord for all costs of operating and managing (such management
reimbursement pursuant to Section 20.N. below) the Building and/or Project.

Tenant shall have the right, at Tenant’s sole cost and expense, provided Tenant
utilizes a Certified Public Accountant (the “CPA”), upon at least thirty
(30) days prior notice to Landlord at any time during regular business hours,
and no more frequently than once per calendar year, to audit Landlord’s records
pertaining to Operating Expenses for the immediately previous calendar year
only, which shall be maintained in the State of California. Any disputes between
Landlord and Tenant concerning Landlord’s accounting of Additional Rent shall be
resolved using generally accepted accounting principles (“GAAP”). If it is
determined from Tenant’s audit of such operating expenses that Tenant was
overcharged by more than three percent (3%), such overcharge shall entitle
Tenant to credit against its next payment of Reimbursable Operations Costs the
amount of the overcharge and the costs associated with the audit (and, if such
credit occurs following the expiration of the Term, Landlord shall pay the
amount of such credit to Tenant within thirty (30) days after Landlord’s receipt
of an invoice from Tenant). If the audit determines that the Tenant was
overcharged less than three percent (3%), such overcharge shall entitle Tenant
to credit against its next payment of Reimbursable Operations Costs the amount
of the overcharge and Tenant shall pay for all costs associated with the audit.
If the audit shall determine that Tenant was undercharged for the Reimbursable
Operations Costs, Tenant shall promptly pay the amount of such undercharge to
Landlord and Tenant shall pay for all costs associated with the

 

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audit. Permitted Assignees of Tenant may only audit periods for which they
occupy the Leased Premises and subtenants of Tenant are not entitled to any
audit rights. Tenant agrees to keep all information thereby obtained by Tenant
confidential.

E. Tenant’s Allocable Share: For purposes of prorating Reimbursable Operating
Costs which Tenant shall pay, Tenant’s Allocable Share of Reimbursable Operating
Costs shall be computed by multiplying the Reimbursable Operating Costs by a
fraction, the numerator of which is the rentable square footage of the Premises
and the denominator of which is either the total rentable square footage of the
Building if the service or cost is allocable only to the Building, or the total
square footage of the Project if the service or cost is allocable to the entire
Project. Tenant’s obligation to share in Reimbursable Operating Costs shall be
adjusted to reflect the Lease Commencement and Expiration dates and is subject
to recalculation in the event of expansion of the Building or Project.

F. Capital Improvements: If as a part of Tenant’s fulfillment of its maintenance
obligations under this Section 8, a capital improvement or replacement to the
Premises is paid for by Tenant which costs in excess of Twenty Thousand Dollars
($20,000.00), Landlord shall reimburse Tenant for the cost of the replacement
less the sum of (i) Twenty Thousand Dollars ($20,000.00) plus (ii) that portion
of the remaining 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,
as reasonably determined in accordance with generally accepted accounting
principles. If the capital improvement is made during the initial Lease Term,
Tenant’s share shall initially be based on the initial Lease Term and if Tenant
thereafter exercises its renewal option, then upon the commencement of the
Option term, an adjustment shall be made so that during the Option Term Tenant
shall reimburse Landlord an amount determined by multiplying the cost of the
capital improvement by a fraction, the numerator of which is the sum of the
Lease Term remaining at the time the capital expenditure was made and the Option
Term and the denominator of which is the useful life of the capital improvement.

G. 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, shall not render
Landlord liable to Tenant in any respect, including 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 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 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 person or
property, however occurring, through or in connection with or incidental to
furnishing, or its failure to furnish, any of the foregoing.

9. HAZARD INSURANCE:

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

 

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prohibited by the standard form of fire insurance policies. Tenant shall, at its
sole cost, comply with all requirements of any insurance company or organization
necessary for the maintenance of reasonable fire and public liability insurance
covering the Premises and appurtenances.

B. Landlord’s Insurance: Landlord agrees to purchase and keep in force All Risk
and fire insurance in an amount equal to the replacement cost of the Building
(not including any Tenant Improvements or Alterations paid for by Tenant from
sources other than the Work Allowance) as determined by Landlord’s insurance
company’s appraisers. At Landlord’s election, such fire and property damage
insurance may be endorsed to cover loss caused by such additional perils against
which Landlord may elect to insure, including earthquake, flood or terrorist
acts, and shall contain reasonable deductibles. Additionally Landlord may
maintain a policy of (i) commercial general liability insurance insuring
Landlord (and such others designated by Landlord) against liability for personal
injury, bodily injury, death and damage to property occurring or resulting from
an occurrence in, on or about the Premises or Project in an amount as Landlord
determines is reasonably necessary for its protection, and (ii) rental loss
insurance covering a twelve (12) month period. Tenant agrees to pay 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 any deductible under such policy; provided, however,
that Tenant’s responsibility to pay premiums for earthquake insurance shall be
capped at a sum equal to four times the premium amount for Landlords “All Risk”
and fire insurance policy. Further, the deductible payable by Tenant for
earthquake insurance shall be treated as a Capital Expenditure as defined in
Section 8.F. above. Payment shall be due to Landlord within thirty (30) days
after written invoice to Tenant. It is understood and agreed that Tenant’s
obligation under this Section will be prorated to reflect the Lease Commencement
and Expiration Dates.

C. Tenant’s Insurance: Tenant agrees, at its sole cost, to insure its personal
property, Tenant Improvements (for which it has paid from sources other than the
Work Allowance), and Alterations against damage for their full replacement value
(without depreciation). Said insurance shall provide All Risk and fire coverage
equal to the replacement cost of said property. The property casualty insurance
provided by Tenant as required by this paragraph shall be carried in favor of
Landlord and Tenant as their respective interests may appear and shall provide
that any loss to Tenant Improvements shall be adjusted with and be payable to
both Landlord and Tenant. Tenant shall deliver a copy of the policy and renewal
certificate to Landlord. Tenant agrees, at its sole cost, and to obtain worker’s
compensation and Commercial General Liability insurance for occurrences within
the Premises with a combined single limit of not less than Five Million Dollars
($5,000,000.00). Tenant’s liability insurance shall be primary insurance
containing a cross-liability endorsement, and shall provide coverage on an
“occurrence” rather than on a “claims made” basis. All such insurance shall
provide for severability of interests; shall provide that an act or omission of
one of the named (additional) insureds shall not reduce or avoid coverage to the
other named (additional insureds). Tenant shall name Landlord and Landlord’s
lender as an additional insured and shall deliver a copy of the policies and
renewal certificates to Landlord. All insurance policies required under this
section 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.

D. Waiver: Landlord and Tenant hereby waive all tort, contract or other rights
each may have against the other on account of any loss or damage sustained by
Landlord or Tenant, as the case may be, or to the Premises or its contents,
which may arise from any risk covered by their respective insurance policies (or
which would have been covered had such insurance policies been maintained in
accordance with this Lease)

 

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as set forth above. The Parties shall each obtain from their respective
insurance companies a waiver of any right of subrogation which said insurance
company may have against Landlord or Tenant, as the case may be.

10. TAXES: Tenant shall be liable for and shall pay as additional rental, prior
to delinquency, the following: (i) all taxes and assessments levied against
Tenant’s personal property and trade or business fixtures; (ii) all real estate
taxes and assessment installments or other impositions or charges which may be
levied on the Premises or upon the occupancy of the Premises, including any
substitute or additional charges which may be imposed applicable to the Lease
Term; and (iii) real estate tax increases due to an increase in assessed value
resulting from a sale, transfer or other change of ownership of the Premises as
it appears on the City and County tax bills during the Lease Term. All real
estate taxes shall be prorated to reflect the Lease Commencement and Expiration
Dates. If, at 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 or addition, in whole or in part, for taxes assessed or
imposed on land or Buildings, 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
Tenant cannot pay and discharge its pro rata share of such tax on behalf of
Landlord, then at Landlord’s sole election, Landlord may increase the Base
Monthly Rent by the exact amount of such tax and Tenant shall pay such increase.
If by virtue of any application or proceeding brought by Landlord, there results
a reduction in the assessed value of the Premises during the Lease Term, Tenant
agrees to pay Landlord a fee consistent with the fees charged by a third party
appeal firm for such services. 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. Landlord shall
not be required to join in any such proceeding or contest unless the provisions
of any law require that the proceeding or contest be brought by or in the name
of the owner of the Premises. In such event, Landlord shall join in the
proceeding or contest or permit it to be brought in Landlord’s name, provided
that Landlord is not required to bear any cost in connection therewith.

11. UTILITIES: Tenant shall pay directly to the providing utility all water,
gas, electric, telephone, and other utilities supplied to the Premises. Landlord
shall not be liable for loss of or injury to person or property, however
occurring, through or in connection with or incidental to furnishing or the
utility company’s failure to furnish utilities to the Premises, and in such
event Tenant shall not be entitled to abatement or reduction of any portion of
Base Monthly Rent or any other amount payable under this Lease.

12. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:

A. Use of Hazardous Material: Without the prior written consent of Landlord,
Tenant or Tenant’s agents, employees, contractors, subtenants or invitees
(“Tenant’s Agents”) shall not cause or permit any Hazardous Material, as defined
below, to be generated, brought onto, used, stored, created, released or
disposed of in or about the Premises, except that Tenant may use and store small
quantities of common household cleaners and office supplies on the Premises
provided such use and storage is in strict compliance with all Environmental
Laws, as defined below. As used herein, the term “Hazardous Material” shall mean
any substance, material or waste (whether liquid, solid or gaseous), which is a
pollutant or contaminant, or which is hazardous, toxic, ignitable, reactive,
corrosive, dangerous, harmful or injurious, or which presents a risk to public
health or the environment, or which is or may become regulated by or under the
authority of any Environmental Laws, as defined below, including, without
limitation, asbestos or asbestos containing materials, petroleum products,
pesticides, polychlorinated biphenyls,

 

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flammable explosives, radioactive materials and urea formaldehyde. As used
herein, the term “Environmental Laws” shall mean any present or future federal,
state or local law, whether common law, statute, rule, regulation or ordinance,
judgment, order, or other governmental restriction, guideline, listing or
requirement, relating to the environment or any Hazardous Material, including
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. §9601 et seq., the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. §6901 et seq., and applicable provisions of the
California Health and Safety Code and the California Water Code, all as
heretofore or hereafter may be amended from time to time. In order to obtain
consent, Tenant shall deliver to Landlord its written proposal describing the
Hazardous Material to be brought onto the Premises, measures to be taken for
storage and disposal thereof, and safety measures to be employed to prevent
pollution or contamination of the air, soil, surface and ground water.
Landlord’s approval may be withheld in its reasonable judgment. In the event
Landlord consents to Tenant’s use of Hazardous Materials on the Premises or such
consent is not required, Tenant represents and warrants that it shall comply
with all Governmental Regulations applicable to Hazardous Material including
doing the following: (i) adhere to all reporting and inspection requirements
imposed by Federal, State, County or Municipal laws, ordinances or regulations
and 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 of Hazardous Material on the Premises; (iii) enforce
Hazardous Material handling and disposal practices consistent with industry
standards; (iv) surrender the Premises free from any Hazardous Materials arising
from Tenant’s generating, bringing, using, storing, creating, releasing, or
disposing of Hazardous Material; and (v) properly close the facility with regard
to Hazardous Material including the removal or decontamination of any process
piping, mechanical ducting, storage tanks, containers, or trenches which have
come into contact with Hazardous Material and obtaining a closure certificate
from the local administering agency prior to the Expiration Date.

B. Tenant’s Indemnity Regarding Hazardous Material: Tenant shall, at its sole
cost and expense and with counsel reasonably acceptable to Landlord, indemnify,
defend and hold harmless Landlord and Landlord’s trustees, shareholders,
directors, officers, employees, partners, affiliates, agents, successors and
assigns from, and against any and all claims, liabilities, obligations,
penalties, fines, actions, costs or expenses incurred or suffered arising from
generating, bringing, using, storing, creating, releasing or disposing of
Hazardous Material by Tenant or Tenant’s Agents in or about the Premises, or the
violation of any Governmental Regulation or Environmental Laws by Tenant or
Tenant’s Agents. This indemnification applies whether or not the concentrations
of any such Hazardous Material exceed applicable maximum contaminant or action
levels or any governmental agency has issued a cleanup order. Tenant’s
indemnification, defense, and hold harmless obligations include, without
limitation, the following: (i) claims, liabilities, 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 present or
future laws, including Environmental Laws; (ii) claims, liabilities, costs or
expenses pertaining to the assessment and identification, monitoring, cleanup,
containment, or removal of Hazardous Material from soils, riverbeds or aquifers
including the provision of an alternative public drinking water source;
(iii) losses attributable to diminution in the value of the Premises or the
Building (iv) loss or restriction of use of rentable space in the Building;
(v) adverse effect on the marketing of any space in the Building; and (vi) all
other liabilities, obligations, penalties, fines, claims, actions (including
remedial or enforcement actions of any kind and administrative or judicial
proceedings, orders or judgments), damages (including consequential and punitive
damages), and costs (including attorney, consultant, and expert fees and
expenses) resulting from the release or violation. This Section 12.B shall
survive the expiration or termination o this Lease.

 

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C. Notice of Release or Violation: If, during the Lease Term (including any
extensions), Tenant becomes aware of (i) any actual or threatened release of a
Hazardous Material on, under or about the Premises or (ii) any inquiry,
investigation, proceeding, claim, notice or order by any private or public
person or entity regarding the presence of Hazardous Material on, under or about
the Premises, including alleged violations of Environmental Laws by Tenant or
Tenant’s Agents. Tenant shall give Landlord written notice of the release or
investigation within five (5) days after learning of it and shall simultaneously
and thereafter furnish Landlord with copies of any claims, notices of violation,
reports, or other writings received by Tenant concerning the release or
investigation. In the event of an actual release of Hazardous Materials, Tenant
shall also give Landlord immediate verbal notice of such release.

In the event of any release on or into the Premises or into the soil or ground
water under the Premises, the Building or the Project of any Hazardous Materials
used, treated, stored or disposed of by Tenant or Tenant’s Agents, Tenant agrees
to comply, at its sole cost, with all laws, regulations, ordinances and orders
of any federal, state or local agency relating to the monitoring or remediation
of such Hazardous Materials. In the event of any such release of Hazardous
Materials Tenant shall immediately give verbal and follow-up written notice of
the release to Landlord, and Tenant agrees to meet and confer with Landlord and
its Lender to attempt to eliminate and mitigate any financial exposure to such
Lender and resultant exposure to Landlord under California Code of Civil
Procedure Section 736(b) as a result of such release, and promptly to take
reasonable monitoring, cleanup and remedial steps given, inter alia, the
historical uses to which the Property has and continues to be used, the risks to
public health posed by the release, the then available technology and the costs
of remediation, cleanup and monitoring, consistent with acceptable customary
practices for the type and severity of such contamination and all applicable
laws. Nothing in the preceding sentence shall eliminate, modify or reduce the
obligation of Tenant under 12.B of this Lease to indemnify, defend and hold
Landlord harmless from any claims liabilities, costs or expenses incurred or
suffered by Landlord. Tenant shall provide Landlord prompt written notice of
Tenant’s monitoring, cleanup and remedial steps.

In the absence of an order of any federal, state or local governmental or
quasi-governmental agency relating to the cleanup, remediation or other response
action required by applicable law, any dispute arising between Landlord and
Tenant concerning Tenant’s obligation to Landlord under this Section 12.C
concerning the level, method, and manner of cleanup, remediation or response
action required in connection with such a release of Hazardous Materials shall
be resolved by mediation and/or arbitration pursuant to this Lease.

D. Remediation Obligations: In the event of any release on, under or about the
Premises of any Hazardous Material generated, brought onto, used, stored,
created or disposed of by Tenant or Tenant’s Agents, Tenant shall, at its sole
cost, promptly take all necessary and appropriate actions, in compliance with
applicable Environmental Laws, to remove or remediate such Hazardous Material,
whether or not any governmental agency has issued a cleanup order, so as to
return the Premises to the condition that existed before the introduction of
such Hazardous Material. Tenant shall obtain Landlord’s written consent prior to
implementing any proposed removal or remedial action, provided, however, that
Tenant shall be entitled to respond immediately to an emergency without first
obtaining Landlord’s written consent. Nothing in the preceding sentence shall in
any way eliminate, modify or reduce the obligation of Tenant under 12.B of this
Lease to indemnify, defend and hold Landlord harmless from any claims,
liabilities, costs or expenses incurred or suffered by Landlord.

 

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E. Environmental Monitoring: Landlord and its agents shall have the right to
inspect, investigate, sample and monitor the Premises, including any air, soil,
water, ground water, or to conduct any other sampling or testing, digging,
drilling or analysis, to determine whether Tenant is complying with the terms of
this Section 12. If Landlord discovers that Tenant is not in compliance with the
terms of this Section 12, any costs incurred by Landlord in determining Tenant’s
non-compliance, including attorneys’, consultants’ and experts’ fees, shall be
due and payable by Tenant to Landlord within five (5) days following Landlord’s
written demand therefor.

F. Landlord Indemnification: Landlord shall indemnify and hold Tenant harmless
from any claims, liabilities, costs or expenses (including, without limitation,
all litigation costs, expert witness fees and reasonable attorneys’ fees)
incurred or suffered by Tenant related to the removal, investigation, monitoring
or remediation of Hazardous Materials which are present as of the Effective Date
or which come to be present on the Premises as a result of Landlord’s actions
after the Effective Date. 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. To the
best of Landlord’s knowledge, there are no Hazardous Materials on the Premises.

13. TENANT’S DEFAULT: The occurrence of any of the following shall constitute a
material default and breach of this Lease by Tenant: (i) Tenant’s failure to pay
the Base Monthly Rent including additional rent or any other payment due under
this Lease by the date such amount is due where such failure continues for three
(3) business days after Tenants receipt of Landlord’s notice that Rent was not
received, (ii) the abandonment of the Premises by Tenant; (iii) Tenant’s failure
to observe and perform any other required provision of this Lease, where such
failure continues for thirty (30) days after written notice from Landlord;
(iv) Tenant’s making of any general assignment for the benefit of creditors;
(v) 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); (vi) 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; (vii) 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; or (viii) the occurrence of any other event
described as a default elsewhere in this Lease or any amendment thereto
regardless of whether such event is defined as a material default and breach of
this Lease in this Paragraph 13.

A. Remedies: In the event of any such default by Tenant, then in addition to
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 Landlord
elects to so terminate this Lease, Landlord may recover from Tenant all the
following: (i) the worth at time of award of any unpaid rent which had been
earned at the time of such termination; (ii) the worth at time of award of the
amount by which the unpaid rent

 

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which would have been earned after termination until the time of award exceeds
the amount of such rental loss for the same period that Tenant proves could have
been reasonably avoided; (iii) the worth at 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; (iv) any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant’s failure to perform its obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom; including the following: (x) expenses for repairing, altering
or remodeling the Premises for purposes of reletting, (y) broker’s fees,
advertising costs or other expenses of reletting the Premises, and (z) costs of
carrying the Premises such as taxes, insurance premiums, utilities and security
precautions; and (v) at Landlord’s election, such other amounts in addition to
or in lieu of the foregoing as may be permitted by applicable California law.
The term “rent”, as used herein, is defined as the minimum monthly installments
of Base Monthly Rent and all other sums required to be paid by Tenant pursuant
to this Lease, all such other sums being deemed as additional rent due
hereunder. As used in (i) and (ii) above, “worth at the time of award” shall be
computed by allowing interest at a rate equal to the discount rate of the
Federal Reserve Bank of San Francisco plus five (5%) percent per annum. As used
in (iii) above, “worth at the time of award” shall 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
have the right, after terminating this Lease, to re-enter the Premises and
remove all persons and property. 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. Continuation of Lease: If Landlord does not elect to terminate this Lease as
provided in Section 13.A or 13.B above, then the provisions of California Civil
Code Section 1951.4, (Landlord may continue the lease in effect after Tenant’s
breach and abandonment and recover rent as it becomes due if Tenant has a right
to sublet and assign, subject only to reasonable limitations) 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 elects to so relet, rentals received by
Landlord from such reletting shall be applied in the following order to: (i) the
payment of any indebtedness other than Base Monthly Rent due hereunder from
Tenant to Landlord; (ii) the payment of any cost of such reletting; (iii) the
payment of the cost of any alterations and repairs to the Premises; and (iv) the
payment of Base Monthly Rent and other sums due and unpaid hereunder. The
residual rentals, if any, shall be held by Landlord and applied in payment of
future Base Monthly Rent as the same may become due and payable hereunder.
Landlord shall the obligation to market the space but shall have no obligation
to relet the Premises following a default if Landlord has other comparable
available space within the Building or Project. In the event the portion of
rentals received from such reletting which is applied to the payment of rent
hereunder during any month be less than the rent payable during that month by
Tenant hereunder, then Tenant shall pay such deficiency to Landlord immediately
upon demand. 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: Landlord’s re-entry or taking possession of the Premises
pursuant to 13.B or 13.C shall not be construed as an election to terminate this
Lease unless written notice of

 

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such intention is given to Tenant or unless the termination is 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.

E. Non-Waiver: Landlord may accept Tenant’s payments without waiving any rights
under this Lease, including rights under a previously served notice of default.
No payment by Tenant or receipt by Landlord of a lesser amount than any
installment of rent due shall be deemed as other than payment on account of the
amount due. If Landlord accepts payments after serving a notice of default,
Landlord may nevertheless commence and pursue an action to enforce rights and
remedies under the previously served notice of default without giving Tenant any
further notice or demand. Furthermore, the Landlord’s acceptance of rent from
the Tenant when the Tenant is holding over without express written consent does
not convert Tenant’s Tenancy from a tenancy at sufferance to a month to month
tenancy. No waiver of any provision of this Lease shall be implied by any
failure of Landlord to enforce any remedy for the violation of that provision,
even if that violation continues or is repeated. Any waiver by Landlord of any
provision of this Lease must be in writing. Such waiver shall affect only the
provision specified and only for the time and in the manner stated in the
writing. 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. Only written notice from
Landlord to Tenant of acceptance shall constitute such acceptance of surrender
of the Premises. Landlord’s consent to or approval of any act by Tenant which
requires 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.

F. Performance by Landlord: If Tenant fails to perform any obligation required
under this Lease or by law or governmental regulation, Landlord in its sole
discretion may, with due notice, without waiving any rights or remedies and
without releasing Tenant from its obligations hereunder, perform such
obligation, in which event Tenant shall pay Landlord as additional rent all sums
paid by Landlord in connection with such substitute performance, including
interest at the Agreed Interest Rate (as defined in Section 19.J) within ten
(10) days of Landlord’s written notice for such payment.

14. LANDLORD’S LIABILITY:

A. Limitation on Landlord’s Liability: 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
to cure or commence to cure such failure prior to any claim for breach or
resultant damages, provided, however, that if the nature of the default is such
that it cannot reasonably be cured within the 30-day period, Landlord shall not
be deemed in default if it commences within such period to cure, and thereafter
diligently prosecutes the same to completion. 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
Mortgagee a reasonable opportunity to cure such failure, including such time 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 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 Mortgagee or any purchaser at a foreclosure sale of
Mortgagee’s interest unless Mortgagee or such purchaser shall have actually
received and not refunded the applicable payment or deposit. Tenant further
waives any right to terminate this

 

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Lease and to vacate the Premises on Landlord’s default under this Lease.
Tenant’s sole remedy on Landlord’s default is an action for damages or
injunctive or declaratory relief; provided, however, Landlord and its partners,
trustees, beneficiaries and employees shall not be liable to Tenant for any
consequential damages suffered or incurred by Tenant on account of Landlord’s
default including, without limitation, on account of lost profits or the
interruption of Tenant’s business. Tenant hereby agrees that Landlord shall not
be liable for injury to Tenant’s business or any loss of income therefrom or for
damage to the goods, wares, merchandise, or other property of Tenant, Tenant’s
employees, invitees, customers, or any other person in or about the Premises or
the Project, nor shall Landlord be liable for injury to the person of Tenant,
Tenant’s employees, agents, or contractors, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water, or rain, or from
the breakage, leakage, obstruction, or other defects of pipes, sprinklers,
wires, appliances, plumbing, air conditioning, or lighting fixtures, or from any
other cause, whether said damage or injury results from conditions arising upon
the Premises or upon other portions of the Project or from other sources or
places and regardless of whether the cause of such damage or injury or the means
of repairing the same is inaccessible to Tenant. Landlord shall not be liable
for any damages arising from any act or neglect or any other tenant, occupant,
or user of the Project, nor from the failure of Landlord to enforce the
provisions of any other lease of the Project.

B. Limitation on Tenant’s Recourse: If Landlord is a corporation, trust,
partnership, joint venture, unincorporated association or other form of business
entity, then (i) the obligations of Landlord shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals or representatives except to
the extent of their property interest in the Premises. Tenant shall have
recourse only to the interest of Landlord in the Premises for the satisfaction
of the obligations of Landlord and shall not have recourse to any other assets
of Landlord for the satisfaction of such obligations.

C. Indemnification of Landlord: Except to the extent due to the negligence or
willful misconduct of Landlord, as a material part of the consideration 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 Premises and for injuries to persons in or about said Premises, from any
cause arising at any time to the fullest extent permitted by law, and Tenant
shall indemnify, defend with counsel reasonably acceptable to Landlord and hold
Landlord, and their shareholders, directors, officers, trustees, employees,
partners, affiliates and agents from any claims, liabilities, costs or expenses
incurred or suffered arising from the use or occupancy of the Premises or any
part of the Project by Tenant or Tenant’s Agents, the acts or omissions of
Tenant or Tenant’s Agents, Tenant’s breach of this Lease, or any damage or
injury to person or property from any cause, including but not limited to the
use or occupancy of the Premises or any part of the project by Tenant or
Tenant’s Agents, the acts or omissions of Tenant or Tenant’s Agents, Tenant’s
breach of this Lease or from the failure of Tenant to keep the Premises in good
condition and repair as herein provided. Further, in the event Landlord is made
party to any litigation due to the acts or omission of Tenant or Tenant’s
Agents, Tenant will indemnify, defend (with counsel reasonably acceptable to
Landlord) 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.

15. DESTRUCTION OF PREMISES:

A. Landlord’s Obligation to Restore: In the event of a destruction of the
Premises during the Lease Term, Landlord and Tenant, to the extent of Tenant’s
Alterations, shall repair the same to a similar condition to that which existed
prior to such destruction. Such destruction shall not annul or void this Lease;
however, Tenant shall be entitled to a proportionate reduction of

 

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Base Monthly Rent while repairs are being made, such proportionate reduction to
be based upon the extent to which the repairs interfere with Tenant’s business
in the Premises, as reasonably determined by Landlord. In no event shall
Landlord be required to replace or restore Initial Alteration, Alterations, or
Tenant’s fixtures or personal property. Tenant shall be obligated to replace and
restore all Initial Alterations and Alterations.

B. Limitations on Landlord’s Restoration Obligation: Notwithstanding the
provisions of Section 15.A, Landlord shall have no obligation to repair, or
restore the Premises if any of the following occur: (i) if the repairs cannot be
made in one hundred eighty (180) days from the date of receipt of all
governmental approvals necessary under the laws and regulations of State,
Federal, County or Municipal authorities, as reasonably determined by Landlord,
(ii) if the holder of the first deed of trust or mortgage encumbering the
Building elects not to permit the insurance proceeds payable upon damage or
destruction to be used for such repair or restoration (unless Tenant, within 45
days after the casualty, agrees in writing to pay all costs associated with
rebuilding), (iii) the damage or destruction is not fully covered by the
insurance maintained by Landlord (excluding any deductible amounts) unless
Tenant, within 45 days after the casualty, agrees in writing to pay all costs
associated with rebuilding, (iv) the damage or destruction occurs in the last
twenty four (24) months of the Lease Term (unless Tenant agrees to immediately
exercise the Option to extend the Lease pursuant to Section 18 below),
(v) Tenant is in default pursuant to the provisions of Section 13, or
(vi) Tenant has vacated the Premises for more than ninety (90) days immediately
prior to the date of destruction. In any such event Landlord may elect either to
(i) complete the repair or restoration, or (ii) terminate this Lease by
providing Tenant written notice of its election within sixty (60) days following
the damage or destruction. If Landlord elects to repair or restore, this Lease
shall continue in full force and effect. Tenant shall also have the right to
terminate this Lease in the event of item (i) or (iv) above by providing
Landlord with written notice of its election within ten (10) days after
Landlord’s notice of the time period required for repair or restoration. Tenant
hereby waives the benefits and rights provided to Tenant by the provisions of
Civil Code Sections 1932 and 1933.

16. 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 only a part thereof remains which is susceptible
of occupation hereunder, this Lease shall, as to the part so taken, terminate as
of the day before title vests in the condemnor or purchaser (“Vesting Date”) and
Base Monthly Rent payable hereunder shall be adjusted so that Tenant is required
to pay for the remainder of the Lease Term only such portion of Base Monthly
Rent as the value of the part remaining after such taking bears to the value of
the entire Premises prior to such taking. Further, in the event of such partial
taking, Landlord shall have the option to terminate this Lease as of the Vesting
Date. If all of the Premises or such part thereof be taken so that there does
not remain a portion susceptible for occupation hereunder, this Lease shall
terminate on the Vesting Date. If part or all of the Premises be taken, all
compensation awarded upon such taking shall go to Landlord, and Tenant shall
have no claim thereto; except Landlord shall cooperate with Tenant, without cost
to Landlord, to recover compensation for damage to or taking of any Alterations,
Tenant Improvements paid for by Tenant from sources other than the Work
Allowance, 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, and the provisions of this Section 16 shall govern in the case
of a taking.

Notwithstanding anything to the contrary in this Lease, if there is a taking
under the power of eminent domain (or a transfer in lieu thereof), Tenant shall
have the right to terminate the Lease if there is a taking of more than 25% of
the Buildings or more than 12% of the parking area. If any part of the Premises
is taken and this Lease is not terminated, then Landlord shall, to the extent
not prohibited by Law, repair any damage occasioned thereby to the remainder
thereof to a condition reasonably suitable for Tenant’s continued operations.

 

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17. ASSIGNMENT OR SUBLEASE:

A. Consent by Landlord: Except as specifically provided in Section 17.E, Tenant
may not voluntarily, involuntarily or by operation of law, assign, sell or
otherwise transfer all or any part of Tenant’s interest in this Lease or in the
Premises, cause or permit any part of the Premises to be sublet, occupied or
used by anyone other than Tenant, or permit any person to succeed to any
interest in this Lease or the Premises (all of the foregoing being a “Transfer”)
without the express written consent of Landlord. In the event Tenant desires to
effectuate a Transfer, Tenant shall deliver to Landlord (i) executed
counterparts of any agreement and of all ancillary agreements with the proposed
transferee, (ii) current financial statements of the transferee covering the
preceding three years, (iii) the nature of the proposed transferee’s business to
be carried on in the Premises, (iv) a statement outlining all consideration to
be given on account of the Transfer, and (v) a current financial statement of
Tenant. Landlord may condition its approval of any Transfer on receipt of a
certification from both Tenant and the proposed transferee of all consideration
to be paid to Tenant in connection with such Transfer. At Landlord’s request,
Tenant shall also provide additional information reasonably required by Landlord
to determine whether it will consent to the proposed Transfer. Landlord shall
have a fifteen (15) day period following receipt of all the foregoing within
which to notify Tenant in writing that Landlord elects to: (i) terminate this
Lease if an assignment, or sublease of substantially the entire Premises for
substantially the remaining term of the Lease; (ii) permit Tenant to Transfer
such space to the named transferee on the terms and conditions set forth in the
notice; or (iii) refuse consent. If Landlord should fail to notify Tenant in
writing of such election within the 15-day period, Landlord shall be deemed to
have elected option (ii) above. In the event Landlord elects option (i) above,
this Lease shall expire on the date upon which the proposed Transfer was to
commence. In the event Landlord does not elect option (i) above, Landlord’s
consent to the proposed Transfer shall not be unreasonably withheld, provided
and upon the condition that: (i) the proposed transferee is engaged in a
business that is limited to the use expressly permitted under this Lease;
(ii) the proposed transfer agreement, if it is a sublease, conforms to the
requirements of subsection 17.I (Sublease Requirements) or if it is an
assignment, is in a form reasonably satisfactory to Landlord; (iii) the proposed
Transfer will not result in there being greater than three (3) subtenants or
other occupants (not including employees) within the Premises at any time during
the Lease Term; (iv) Tenant reimburses Landlord on demand for any reasonable
costs that may be incurred by Landlord in connection with said Transfer,
including the costs of making investigations as to the acceptability of the
proposed transferee and legal costs incurred in connection with the granting or
denial of any requested consent; and (v) Tenant shall not have advertised or
publicized in any way the availability of the Premises without prior notice to
Landlord. In the event all or any one of the foregoing conditions are not
satisfied (without limiting other factors that may be considered or conditions
that may be imposed by Landlord in connection with a requested Transfer),
Landlord shall be considered to have acted reasonably if it withholds its
consent. Tenant shall not hypothecate, mortgage, pledge or otherwise encumber
Tenant’s interest in this Lease or the Premises or otherwise use the Lease as a
security device in any manner without the consent of Landlord, (all of the
foregoing being an “Hypothecation”) which consent Landlord may withhold in its
sole discretion. Tenant shall reimburse Landlord on demand for any costs that
may be incurred by Landlord in connection with an Hypothecation, including legal
costs incurred in connection with the granting or denial of any requested
consent. Landlord’s consent to one or more Transfers or Hypothecations shall not
operate to waive Tenant’s obligation to obtain Landlord’s consent to other
Transfers or Hypothecations nor constitute consent to an assignment or other
Transfer following foreclosure of any permitted lien, mortgage or other
encumbrance. If Tenant

 

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is a corporation, limited liability company, unincorporated association,
partnership or other legal entity, the sale, assignment, transfer or
hypothecation of any stock, membership or other ownership interest in such
entity (whether occurring at one time or over a period of time) in the aggregate
of more than fifty percent (50%) (determined cumulatively) shall be deemed an
assignment of this Lease; in the case of a partnership, any withdrawal or
substitution (whether occurring at one time or over a period of time) of any
partners owning fifty percent (50%) or more (cumulatively) of the partnership,
or the dissolution of the partnership shall be deemed an assignment of this
Lease; provided that, subject to Section 17.D below, the foregoing provisions of
this sentence shall not apply to a transfer of stock in a corporation whose
stock is publicly traded on a public stock exchange. If Tenant is a corporation
whose stock is not publicly traded on a public stock exchange, any dissolution,
merger, consolidation or reorganization of Tenant shall be deemed a Transfer.

B. Assignment or Subletting Consideration: Landlord and Tenant hereby agree that
fifty percent (50%) of any rent or other economic consideration (including
without limitation, payments for trade fixtures and personal property in excess
of the fair market value thereof, stock, warrants, and options), less
adjustments for operating costs for the sublease Premises, in excess of the Base
Monthly Rent payable hereunder (after deducting therefrom Reasonable Transfer
Costs (defined below) (i) realized by Tenant in connection with any Transfer by
Tenant, and/or (ii) realized by a subtenant or any other person or entity (other
than Tenant) (any such subtenant, person or entity being a “Subsequent
Transferor”) in connection with a sublease, assignment or other Transfer by such
Subsequent Transferor, shall be paid by Tenant to Landlord promptly after such
amounts are paid to Tenant or a Subsequent Transferor, regardless of the amount
of subrent the Subsequent Transferor pays to Tenant or any prior Subsequent
Transferor. As used in this Section 17.B, “Reasonable Transfer Costs” shall mean
the following costs, to the extent reasonably incurred in connection with the
Transfer in question: (i) advertising costs, brokerage commissions and attorneys
fees payable to unaffiliated third parties, and (ii) tenant improvement costs
incurred solely in connection with such Transfer. Tenant’s obligation to pay
over Landlord’s portion of the consideration constitutes an obligation for
additional rent hereunder. The above provisions relating to Landlord’s right to
terminate the Lease and relating to the allocation of excess rent are
independently negotiated terms of the Lease which constitute a material
inducement for the Landlord to enter into the Lease, and are agreed by the
Parties to be commercially reasonable. No Transfer by Tenant shall relieve it of
any obligation under this Lease. Any Transfer which conflicts with the
provisions of this Lease shall be void.

C. No Release: Any Transfer shall be made only if and shall not be effective
until the transferee shall execute, acknowledge, and deliver to Landlord an
agreement, in form and substance satisfactory to Landlord, whereby the
transferee shall assume all the obligations of this Lease on the part of Tenant
to be performed or observed to the extent of the interest being transferred and
shall be subject to all the covenants, agreements, terms, provisions and
conditions in this Lease to the extent applicable to the interest being
transferred. Notwithstanding any Transfer and the acceptance of rent or other
sums by Landlord from any transferee, Tenant and any guarantor shall remain
fully liable for the payment of Base Monthly Rent and additional rent due, and
to become due hereunder, for the performance of all 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 transferee or any other
person claiming under or through any transferee that shall be in violation of
any of the terms and conditions of this Lease, and any such violation shall be
deemed a violation by Tenant. Tenant shall indemnify, defend and hold Landlord
harmless from and against all losses, liabilities, damages, costs and expenses
(including reasonable attorney fees) resulting from any claims that may be made
against Landlord by

 

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the proposed transferee or by any real estate brokers or other persons claiming
compensation in connection with the proposed Transfer.

D. Reorganization of Tenant: Reorganization of Tenant. Notwithstanding any other
provision of this Lease, the provisions of this Paragraph 17.D shall apply if
Tenant is a publicly-held corporation and: (i) there is a dissolution, merger,
consolidation, or other reorganization of or affecting Tenant, where Tenant is
not the surviving corporation, or there is a sale of all or substantially all of
the assets of Tenant, or (ii) there is a sale, cancellation, surrender,
exchange, conversion or any other transfer of stock involving or consisting of
more than fifty percent (50%) of the total combined voting power of all classes
of Tenant’s capital stock issued, outstanding and entitled to vote for the
election of directors, or there is any merger, consolidation or other
reorganization of or affecting Tenant, whether the foregoing occurs in a single
transaction or in multiple steps, and after any one or more of such events
Tenant’s stock is no longer publicly traded. In a transaction under clause (i),
the surviving or acquiring corporation or entity (“Surviving Entity”) shall
promptly execute and deliver to Landlord an agreement in form reasonably
satisfactory to Landlord under which the Surviving Entity assumes the
obligations of Tenant hereunder. In a transaction or series of transactions
under clause (ii) of this Paragraph, the entities which as a result of such
transaction(s) own a greater than fifty percent (50%) interest in Tenant
(including, without limitation as a result of a verse triangular merger or a
triangular merger) (collectively the “Acquiring Entity”) shall promptly execute
and deliver to Landlord a guaranty of lease in form reasonably satisfactory to
Landlord under which the Acquiring Entity guarantees the full payment and
performance of the obligations of Tenant under the Lease (“Lease Guaranty”). The
foregoing notwithstanding, in the event the Surviving Entity or Acquiring Entity
is itself not a publicly-traded corporation, but is instead the subsidiary of a
publicly-traded corporation (or a subsidiary of a subsidiary of a
publicly-traded corporation, or a subsidiary in a chain of entities in which one
or more parent corporations are publicly traded), then each publicly-traded
parent corporation in such chain shall be required to execute and deliver to
Landlord the Lease Guaranty. In addition, in the event that after such
acquisition Tenant no longer prepares audited financial statements, then in
addition to the financial statements required to be delivered by Tenant
hereunder, the entity required to execute the Lease Guaranty shall provide
Landlord its audited financial statements at the times and in the manner
required of Tenant hereunder. It is the intent of the parties that after such
any transaction or series of transactions described in this Paragraph 17.D
above, Landlord shall be entitled to rely on the creditworthiness of
publicly-traded corporations and to receive audited financial information from
publicly-traded corporations.

E. Permitted Transfers: Notwithstanding anything contained in this Section 17,
so long as Tenant otherwise complies with the provisions of this Section 17,
Tenant may enter into any of the following Transfers (a “Permitted Transfer”)
without Landlord’s prior consent, and Landlord shall not be entitled to
terminate the Lease or to receive any part of any subrent resulting therefrom
that would otherwise be due pursuant to Sections 17.A and 17.B. Tenant may
sublease all or part of the Premises or assign its interest in this Lease to
(i) any entity which controls, is controlled by, or is under common control with
the original Tenant to this Lease by means of an ownership interest of more than
fifty percent (50%); (ii) an entity which results from a merger, consolidation
or other reorganization in which Tenant is not the surviving entity, so long as
the surviving entity has a net worth at the time of such assignment or sublease
that is equal to or greater than the net worth of Tenant immediately prior to
such transaction; and (iii) an entity which purchases or otherwise acquires all
or substantially all of the assets of Tenant so long as such acquiring entity
has a net worth at the time of such assignment or sublease that is equal to or
greater than the net worth of Tenant immediately prior to such transaction.

F. Effect of Default: In the event of Tenant’s default, Tenant hereby assigns
all

 

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amounts due to Tenant from any Transfer as security for performance of Tenant’s
obligations under this Lease, and Landlord may collect such amounts as Tenant’s
Attorney-in-Fact, except that Tenant may collect such amounts unless a default
occurs as described in Section 13 above. A termination of the Lease due to
Tenant’s default shall not automatically terminate a Transfer then in existence;
rather at Landlord’s election (1) such Transfer shall survive the Lease
termination, (2) the transferee shall attorn to Landlord, and (3) Landlord shall
undertake the obligations of Tenant under the transfer agreement; except that
Landlord shall not be liable for prepaid rent, security deposits or other
defaults of Tenant to the transferee, or for any acts or omissions of Tenant and
Tenant’s Agents.

G. Conveyance by Landlord: In the event of any transfer of Landlord’s interest
in this Lease, the Landlord herein named (and in case of any subsequent
transfer, the then transferor) shall be automatically freed and relieved from
and after the date of such transfer of all liability for the performance of any
covenants or obligations on the part of Landlord contained in this Lease
thereafter to be performed; provided, however, that any funds in the hands of
Landlord or the then transferor at the time of such transfer, in which Tenant
has an interest shall be turned over to the transferee and any amount then due
and payable to Tenant by Landlord or the then transferor under any provision of
this Lease shall be paid to Tenant; and provided, further, that upon any such
transfer, the transferee shall be deemed to have assumed, subject to the
limitations of this Section 17, all of the agreements, covenants and conditions
in this Lease to be performed on the part of Landlord, it being intended hereby
that the covenants and obligations contained in this Lease to be performed on
the part of Landlord shall, subject as aforesaid, be binding on each Landlord,
its successors and assigns, only during its period of ownership.

H. Successors and Assigns: Subject to the provisions this Section 17, the
covenants and conditions of this Lease shall apply to and bind the heirs,
successors, executors, administrators and assigns of all Parties hereto; and all
parties hereto comprising Tenant shall be jointly and severally liable
hereunder.

I. Sublease Requirements: If Landlord consents to any sublet of the premises by
Tenant to an approved Subtenant (“Subtenant”), every sublet transaction shall be
evidenced by a written sublease between Tenant and Subtenant (the “Sublease”).
The Sublease shall comply with the following requirements: (i) The form of the
Sublease and the terms and conditions thereof shall be subject to Landlord’s
approval which shall not be withheld unreasonably; (ii) The Sublease shall
provide that the Subtenant shall have no right to exercise any option or other
right granted to Tenant in this Lease; (iii) The Sublease shall contain a waiver
of subrogation against Landlord and shall require Subtenant’s insurance policies
to acknowledge such waiver of subrogation; (iv) The Sublease shall provide that
all requirements of the Lease applicable to subleases shall be applicable to
sub-subleases; (v) The Sublease shall require Subtenant, acting through Tenant,
to obtain Landlord’s prior written approval, to any alteration to the Premises
to the same extent Tenant is required by this Lease to obtain such consent;
(vii) The Sublease shall require Subtenant to send Landlord copies of any and
all notices concerning the Premises that Subtenant is obligated to provide to
Tenant and Tenant to send Landlord copies of any and all notices concerning the
Premises that Tenant is obligated to provide to Subtenant; and (viii) The
Sublease shall provide that, at Landlord’s option, the Sublease shall not
terminate in the event that this Lease terminates and shall require Subtenant to
execute an attornment agreement if Landlord, in its sole and absolute
discretion, shall elect to have the Sublease continue beyond the date of
termination of this Lease.

18. OPTION TO EXTEND THE LEASE TERM:

A. Grant and Exercise of Option: Landlord grants to Tenant, subject to the terms
and conditions set forth in this Section 18.A, an option ( “Option”) to extend
the Lease Term for an additional term (the “Option Term”). The

 

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Option Term shall be for a period of five (5) years and shall be exercised, if
at all, by written notice to Landlord no earlier than fifteen (15) months prior
to the date the Lease Term would expire but for such exercise but no later than
nine (9) months prior to the date the Lease Term would expire but for such
exercise (unless such Option is exercised earlier pursuant to Section 15.B.
above), time being of the essence for the giving of such notice. If Tenant
exercises the Option, all of the terms, covenants and conditions of this Lease
shall apply except for the grant of additional Options pursuant to this Section,
provided that Base Monthly Rent for the Premises payable by Tenant during the
Option Term shall be the greater of (i) $1.75 per square foot, or (ii) ninety
five percent (95%) of the Fair Market Rental as hereinafter defined.
Notwithstanding anything herein to the contrary, 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, then 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 Lease Term shall not be extended pursuant to this Section 18.A. As
used herein, the term “Fair Market Rental” is defined as the rental and all
other monetary payments, including any escalations and adjustments thereto
(including without limitation Consumer Price Indexing) that Landlord could
obtain during the Option Term from a third party desiring to lease the Premises,
based upon the (i) current use and other potential uses of the Premises, as
determined by the rents then obtainable for new leases of space comparable in
age and quality to the Premises in the same real estate submarket as the
Building and (ii) the credit standing and financial stature of the Tenant. The
appraisers shall be instructed that the foregoing five percent (5.0%) discount
is intended to offset comparable rents that include the following costs which
Landlord will not incur in the event Tenant exercises its option (i) brokerage
commissions, (ii) tenant improvement or relocation allowances, (iii) vacancy
costs, or (iv) other concessions or inducements.

B. Determination of Fair Market Rental: If Tenant exercises the Option, Landlord
shall send Tenant a notice setting forth the Fair Market Rental for the Option
Term within thirty (30) days following the Exercise Date. If Tenant disputes
Landlord’s determination of Fair Market Rental for the Option Term, Tenant
shall, within thirty (30) days after the date of Landlord’s notice setting forth
Fair Market Rental for the Option Term, send to Landlord a notice stating that
Tenant either 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
that Tenant disagrees with Landlord’s determination of Fair Market Rental for
the Option Term and elects to resolve the disagreement as provided in
Section 18.C below. If Tenant does not send Landlord a notice as provided in the
previous sentence, Landlord’s determination of Fair Market Rental shall be the
Base Monthly Rent payable by Tenant during the Option Term. If Tenant elects to
resolve the disagreement as provided in Section 18.C and such procedures are not
concluded prior to the commencement date of the Option Term, Tenant shall pay to
Landlord as Base Monthly Rent the Fair Market Rental as determined by Landlord
in the manner provided above. If the Fair Market Rental as finally determined
pursuant to Section 18.C is greater than Landlord’s determination, Tenant shall
pay Landlord the difference between the amount paid by Tenant and the Fair
Market Rental as so determined in Section 18.C within thirty (30) days after
such determination. If the Fair Market Rental as finally determined in
Section 18.C is less than Landlord’s determination, the difference between the
amount paid by Tenant and the Fair Market Rental as so determined in
Section 18.C shall be credited against the next installments of Base Monthly
Rent due from Tenant to Landlord hereunder.

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

1. Within thirty (30) days after Tenant’s response to Landlord’s notice setting
forth the Fair Market Rental, Landlord and Tenant shall meet at a mutually
agreeable time and place, in an attempt to resolve the disagreement.

 

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

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

4. All appraisers specified pursuant to this Section 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.

D. Personal to Tenant: All Options provided to Tenant in this Lease are personal
and granted to Data Domain, Inc. 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 and absolute discretion. In the event Tenant has
multiple options to extend this Lease, a later option to extend the Lease cannot
be exercised unless the prior option has been properly exercised.

19. GENERAL PROVISIONS:

A. Attorney’s Fees: In the event a suit or alternative form of dispute
resolution is brought for the possession of the Premises, for the recovery of
any sum due hereunder, to interpret the Lease, or because of the breach of any
other covenant herein; then the losing party shall pay to the prevailing party
reasonable attorney’s fees including the expense of expert witnesses,
depositions and court testimony as part of its costs which shall be deemed to
have accrued on the commencement of such action. The prevailing party shall also
be entitled to recover all costs and expenses including reasonable attorney’s
fees incurred in enforcing any judgment or award against the other party. The
foregoing provision relating to post-judgment costs is severable from all other
provisions of this Lease.

B. Authority of Parties: Tenant represents and warrants that it is duly formed
and in good standing, and is duly authorized to execute and deliver this Lease
on behalf of said 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. At Landlord’s request, Tenant shall provide Landlord
with corporate resolutions or other proof in a form acceptable to Landlord,
authorizing the execution of the Lease.

C. Brokers: Tenant represents it has not utilized or contacted a real estate
broker or finder with respect to this Lease other than Colliers International
and Tenant agrees to indemnify, defend and hold Landlord harmless against any
claim, cost, liability or cause of action asserted by any other broker or finder
claiming through Tenant.

 

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D. Choice of Law: This Lease shall be governed by and construed in accordance
with California law. Except as provided in Section 19.E, venue shall be Santa
Clara County.

E. Dispute Resolution: Landlord and Tenant and any other party that may become a
party to this Lease or be deemed a party to this Lease including any subtenants
agree that, except for any claim by Landlord for (i) unlawful detainer,
(ii) Tenant’s failure to pay the Base Monthly Rent, or (iii) within the
jurisdiction of the small claims court (which small claims court shall be the
sole court of competent jurisdiction), any controversy, dispute, or claim of
whatever nature arising out of, in connection with or in relation to the
interpretation, performance or breach of this Lease, including any claim based
on contract, tort, or statute, shall be resolved at the request of any party to
this agreement through dispute resolution process administered by J.A.M.S. or
another judicial mediation service mutually acceptable to the parties located in
Santa Clara County, California. The dispute resolution process shall consist of
a final and binding arbitration administered by and in accordance with the then
existing rules and practices of J.A.M.S. or other judicial mediation service
selected in accordance with the then existing rules and practices of J.A.M.S. or
the other judicial and mediation service selected, and judgment upon any award
rendered by the arbitrator(s) may be entered by any state or federal court
having jurisdiction thereof as provided by California Code of Civil Procedure
section 1280 et. seq, as said statutes then appear, including any amendments to
said statutes or successors to said statutes or amended statutes, except that in
no event shall the parties be entitled to propound interrogatories or request
for admissions during the arbitration process. The arbitrator shall be a retired
judge or a licensed California attorney. The venue for any such arbitration or
mediation shall be in Santa Clara County, California.

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

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THIS DISPUTE RESOLUTION PROVISION TO NEUTRAL
ARBITRATION.

 

Landlord:

 

/s/ JMS     

    Tenant:  

/s/ MS     

F. Entire Agreement: This Lease and the exhibits attached hereto contain all of
the agreements and conditions made between the Parties hereto and may not be
modified orally or in any other manner other than by written agreement signed by
all parties hereto or their respective successors in interest. This Lease
supersedes and revokes all previous negotiations, letters of intent, lease
proposals, brochures, agreements, representations, promises, warranties, and
understandings, whether oral or in writing, between the parties or their
respective representatives or any other person purporting to represent Landlord
or Tenant.

G. Entry by Landlord: Upon prior notice to Tenant and subject to Tenant’s
reasonable security regulations, Tenant shall permit Landlord and his agents to
enter into and upon the Premises at all reasonable times, and without any rent
abatement or reduction or any liability to Tenant for any loss of occupation or
quiet enjoyment of the Premises thereby

 

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occasioned, for the following purposes: (i) inspecting and maintaining the
Premises; (ii) making repairs, alterations or additions to the Premises;
(iii) erecting additional building(s) and improvements on the land where the
Premises are situated or on adjacent land owned by Landlord; (iv) performing any
obligations of Landlord under the Lease including remediation of Hazardous
Materials if determined to be the responsibility of Landlord, (v) posting and
keeping posted thereon notices of non-responsibility for any construction,
alteration or repair thereof, as required or permitted by any law, and
(vi) showing the Premises to Landlord’s or the Master Landlord’s existing or
potential successors, purchaser, tenants and lenders. Tenant shall permit
Landlord and his agents, at any time within nine (9) months prior to the
Expiration Date (or at any time during the Lease if Tenant is in default
hereunder), to place upon the Premises “For Lease” signs and exhibit the
Premises to real estate brokers and prospective tenants at reasonable hours.

H. Estoppel Certificates: At any time during the Lease Term, Tenant shall,
within ten (10) business days following written notice from Landlord, execute
and deliver to Landlord a written statement certifying, if true, the following:
(i) that this Lease is unmodified and in full force and effect (or, if modified,
stating the nature of such modification); (ii) the date to which rent and other
charges are paid in advance, if any; (iii) acknowledging that there are not, to
Tenant’s knowledge, any uncured defaults on Landlord’s part hereunder (or
specifying such defaults if they are claimed); and (iv) such other information
as Landlord may reasonably request. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of Landlord’s interest
in the Premises. Tenant’s failure to deliver such statement within such time
shall be conclusive upon the Tenant that this Lease is in full force and effect
without modification, except as may be represented by Landlord, and that there
are no uncured defaults in Landlord’s performance. Tenant agrees to provide,
within five (5) days of Landlord’s request, Tenant’s most recent three (3) years
of audited financial statements for Landlord’s use in financing or sale of the
Premises or Landlord’s interest therein.

I. Exhibits: All exhibits referred to are attached to this Lease and
incorporated by reference.

J. Interest: All rent due hereunder, if not paid when due, shall bear interest
at the rate of the Reference Rate published by Bank of America, San Francisco
Branch, plus two percent (2%) per annum from that date until paid in full
(“Agreed Interest Rate”). This provision shall survive the expiration or sooner
termination of the Lease. Despite any other provision of this Lease, the total
liability for interest payments shall not exceed the limits, if any, imposed by
the usury laws of the State of California. Any interest paid in excess of those
limits shall be refunded to Tenant by application of the amount of excess
interest paid against any sums outstanding in any order that Landlord requires.
If the amount of excess interest paid exceeds the sums outstanding, the portion
exceeding those sums shall be refunded in cash to Tenant by Landlord. To
ascertain whether any interest payable exceeds the limits imposed, any
non-principal payment (including late charges) shall be considered to the extent
permitted by law to be an expense or a fee, premium, or penalty rather than
interest.

K. Modifications Required by Lender: If any lender of Landlord or ground lessor
of the Premises requires a modification of this Lease that will not increase
Tenant’s cost or expense or materially or adversely change Tenant’s rights and
obligations, this Lease shall be so modified and Tenant shall execute whatever
documents are required and deliver them to Landlord within ten (10) days after
the request.

L. No Presumption Against Drafter: Landlord and Tenant understand, agree and
acknowledge that this Lease has been freely negotiated by both Parties; and that
in any controversy, dispute, or contest over the meaning, interpretation,
validity, or enforceability of this Lease or any of its terms or conditions,
there shall be no inference,

 

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presumption, or conclusion drawn whatsoever against either party by virtue of
that party having drafted this Lease or any portion thereof.

M. 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, overnight commercial courier, or personal delivery addressed to the
party to be notified at the address for such party specified in Section 1 of
this Lease (immediately upon commencement all notice’s to Tenant shall be at the
Premises), 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. When this Lease requires service of a notice, that notice shall replace
rather than supplement any equivalent or similar statutory notice, including any
notices required by Code of Civil Procedure Section 1161 or any similar or
successor statute.

N. Property Management: In addition, Tenant agrees to pay Landlord along with
the expenses to be reimbursed by Tenant a monthly fee for management services
rendered by either Landlord or a third party manager engaged by Landlord (which
may be a party affiliated with Landlord), in the amount of three percent (3%) of
the Base Monthly Rent.

O. Rent: All monetary sums due from Tenant to Landlord under this Lease,
including, without limitation those referred to as “additional rent”, shall be
deemed as rent.

P. Representations: Except for the provisions of this Lease, Tenant acknowledges
that neither Landlord nor any of its employees or agents have made any
agreements, representations, warranties or promises with respect to the Premises
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 employees or agents for that purpose.

Q. Rights and Remedies: Subject to Section 14 above, 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.

R. 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.

S. Submission of Lease: Submission of this document for examination or signature
by the parties does not constitute an option or offer to lease the Premises on
the terms in this document or a reservation of the Premises in favor of Tenant.
This document is not effective as a lease or otherwise until executed and
delivered by both Landlord and Tenant.

T. Subordination: This Lease is subject and subordinate to ground and underlying
leases, mortgages and deeds of trust (collectively “Encumbrances”) which may now
affect the Premises, to any covenants, conditions or restrictions of record, and
to all renewals, modifications, consolidations, replacements and extensions
thereof; provided, however, if the holder or holders of any such Encumbrance
(“Holder”) require that this Lease be prior and superior thereto, within seven
(7) days after written request of Landlord to Tenant, Tenant shall execute, have
acknowledged and deliver all documents or instruments, in the form presented to
Tenant, which Landlord or Holder deems necessary or desirable for such purposes.
Landlord shall have the right to cause this Lease to be and become and remain
subject and subordinate to any and all Encumbrances which are now or may
hereafter be executed covering the Premises or any renewals, modifications,
consolidations, replacements or extensions thereof, for the full amount of all
advances made or to be made thereunder and without regard to the time or
character of such advances, together with interest thereon and subject to all
the terms and provisions thereof; provided only, that in the event of
termination of any such lease or upon the foreclosure of any such mortgage or
deed of trust, Holder agrees to recognize

 

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Tenant’s rights under this Lease as long as Tenant is not then in default and
continues to pay Base Monthly Rent and additional rent and observes and performs
all required provisions of this Lease. Within ten (10) business days after
Landlord’s written request, Tenant shall execute any documents required by
Landlord or the Holder to make this Lease subordinate to any lien of the
Encumbrance. If Tenant fails to do so, then in addition to such failure
constituting a default by Tenant, it shall be deemed that this Lease is so
subordinated to such Encumbrance. Notwithstanding anything to the contrary in
this Section, Tenant hereby attorns and agrees to attorn to any entity
purchasing or otherwise acquiring the Premises at any sale or other proceeding
or pursuant to the exercise of any other rights, powers or remedies under such
encumbrance.

Within forty five (45) days of the execution hereof, as a condition precedent to
Tenant’s obligations under this Lease, Landlord shall deliver to Tenant
notarized nondisturbance agreements or other evidence acceptable to Tenant (each
a “Nondisturbance Agreement”) in writing from all lessors under all Underlying
Leases and from all beneficiaries under all Encumbrances affecting the Premises,
stating that so long as Tenant is not in default under any of the terms,
covenants, conditions, or agreements of this Lease, this Lease and all of the
terms, provisions, and conditions of this Lease, shall remain in full force and
effect, and neither this Lease, nor Tenant’s rights nor Tenant’s possession of
the Premises will be disturbed during the Lease Term or any extension thereof.
In the event Landlord does not deliver the required Nondisturbance Agreement(s)
within the aforementioned 60-day period, Tenant may terminate this Lease and be
released of all obligations hereunder by giving ten (10) days’ written notice to
Landlord, which termination shall be Tenant’s sole remedy.

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

V. Time: Time is of the essence hereunder.

W. Transportation Demand Management Programs: Should a government agency or
municipality require Landlord to institute TDM (Transportation Demand
Management) facilities and/or programs, Tenant agrees that the cost of TDM
imposed facilities and programs required on the Premises, including but not
limited to employee showers, lockers, cafeteria, or lunchroom facilities, shall
be paid by Tenant. Further, any ongoing costs or expenses associated with a TDM
program which are required for the Premises and not provided by Tenant, such as
an on-site TDM coordinator, shall be provided by Landlord with such costs being
included as additional rent and reimbursed to Landlord by Tenant within thirty
(30) days after demand. If TDM facilities and programs are instituted on a
Project wide basis, Tenant shall pay its proportionate share of such costs in
accordance with Section 8 above.

X. Waiver of Right to Jury Trial: To the extent then authorized by law as of the
time of any actual litigation between them and to the extent not already
encompassed within the various agreements to arbitrate otherwise contained
herein, and as an alternative to arbitration should arbitration for any reason
not be enforced, Landlord and Tenant waive their respective rights to trial by
jury of any contract or tort claim, counterclaim, cross-complaint, or cause of
action in any action, proceeding, or hearing brought by either party against the
other on any matter arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, or Tenant’s use or occupancy of the
Premises, including any claim of injury or damage or the enforcement of any
remedy under any current or future law, statute, regulation, code, or ordinance.

 

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

 

Landlord: Sobrato Interests,

a California Limited Partnership

   

Tenant: Data Domain, Inc,

a Delaware Corporation

By:  

/s/ John M. Sobrato

    By:  

/s/ Michael P. Scarpelli

Its:  

General Partner

    Its:  

CFO

 

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EXHIBIT “A” – Premises & Building

 

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EXHIBIT “B” – HVAC Specifications

 

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