Exhibit 10.1

OFFICE LEASE

BY AND BETWEEN

WCP BORDEAUX CENTRE LLC,

a Delaware limited liability company

as Landlord

and

PMC–SIERRA, INC.

a Delaware corporation

as Tenant

August 23, 2010

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OFFICE LEASE

THIS OFFICE LEASE (this “Lease”), dated August 23, 2010 for reference purposes
only, is made by and between WCP BORDEAUX CENTRE LLC, a Delaware limited
liability company (“Landlord”) and PMC-SIERRA, INC., a Delaware corporation
(“Tenant”), to be effective and binding upon the parties as of the date the last
of the designated signatories to this Lease shall have executed this Lease (the
“Effective Date of this Lease”).

ARTICLE 1

REFERENCE PROVISIONS

1.1 References. All references in this Lease to the following terms shall have
the following meaning or refer to the respective information as below set forth:

 

Tenant’s Address for Notice

    

Prior to Commencement Date:

     PMC-Sierra, Inc.      3975 Freedom Circle, Suite 300      Santa Clara, CA
95054      Attn: General Counsel      with a copy to:      PMC-Sierra      8555
Baxter Place      Burnaby, BC, V5A 4V7, Canada      Attn: Director, Worldwide
Facilities

Tenant’s Address for Notice

    

After Commencement Date:

     PMC-Sierra, Inc.      1380 Bordeaux Drive      Sunnyvale, California 94089
     Attn: General Counsel      With a copy to:      PMC-Sierra      8555 Baxter
Place      Burnaby, BC, V5A 4V7, Canada      Attn: Director, Worldwide
Facilities

Landlord’s Address for Notices:

     WCP Bordeaux Centre LLC      c/o Wrightwood Capital      2 North LaSalle
Street, 9th Floor      Chicago, Illinois 60602      Attn: General Counsel     
With a copy to:      WCP Bordeaux Centre LLC      c/o Wrightwood Capital      2
North LaSalle Street, 9th Floor      Chicago, Illinois 60602      Attn: Director
of Portfolio Management

Commencement Date:

    

The later of (i) the date Landlord tenders possession of the Leased Premises to
Tenant in the condition required under this Lease with the Improvement Work
substantially completed or (ii) January 1, 2011.

Term of the Lease:

    

Approximately One Hundred Twenty (120) months

Expiration Date:

    

The last day of the calendar month that is One Hundred Twenty (120) full
calendar months after the Commencement Date (including any partial month in the
event the Commencement Date occurs on a day other than the first day of a
calendar month), unless earlier terminated or extended in accordance with the
terms of this Lease.

Option to Renew:

     One option to renew, for a term of sixty (60) months.

Prepaid Rent:

     $121,365.16, to be applied to the payment of Base Monthly Rent as set forth
in Paragraph 3.6 of this Lease.

Security Deposit:

     $148,591.66

 

2.

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Tenant’s Broker:

    

Cornish and Carey Commercial

Property:

    

That certain real property situated in the City of Sunnyvale, County of Santa
Clara, State of California, as presently improved with two (2) buildings, which
real property is legally described on Exhibit “A” and is commonly known as
Bordeaux Centre, including the Building and that certain other building commonly
known as 1376 Bordeaux Drive, Sunnyvale, California (the “Adjacent Building”).

Building:

    

That certain building on the Property in which the Leased Premises are located
commonly known as 1380 Bordeaux Drive, Sunnyvale, California (the “Building”),
which Building is shown outlined on Exhibit “A” hereto.

Outside Areas:

    

The “Outside Areas” shall mean all areas of the Property which are located
outside the Building and the Adjacent Building, such as pedestrian walkways,
parking areas, landscaped area, open areas and enclosed trash disposal areas,
but excluding the roof areas of the Building and the Adjacent Building.

Leased Premises:

    

All the interior space within the Building, including stairwells, connecting
walkways, and atriums, consisting of approximately 61,921 rentable square feet
and, for purposes of this Lease, agreed to contain said number of rentable
square feet.

Tenant’s Expense Share:

    

The term “Tenant’s Expense Share” shall mean the percentage obtained by dividing
the rentable square footage of the Leased Premises at the time of calculation by
the rentable square footage of all buildings located on the Property at the time
of calculation. Such percentage is currently 50%. In the event that any portion
of the Property is sold by Landlord, or the rentable square footage of the
Leased Premises or the Property is otherwise changed, Tenant’s Expense Share
shall be recalculated to equal the percentage described in the first sentence of
this paragraph.

Base Monthly Rent:

    

The term “Base Monthly Rent” shall mean the following:

       

Period

  

Base Rent

Per Month

    

*Commencement Date - 48th Full Calendar Month

   $121,365.16     

49th - 60th Full Calendar Months

   $128,176.47     

61st - 72nd Full Calendar Months

   $132,021.76     

73rd - 84th Full Calendar Months

   $135,982.42     

85th - 96th Full Calendar Months

   $140,061.89     

97th - 108th Full Calendar Months

   $144,263.75     

109th Full Calendar Month - Expiration Date

   $148,591.66     

*Subject to rent abatement as set forth in Section 3.1 of this Lease.

Permitted Use:

    

Executive and general office use (including, without limitation, server room)
and prototype manufacturing consistent with semiconductor research and
development (including, without limitation, semiconductor test lab).

Exhibits:

    

The term “Exhibits” shall mean the Exhibits of this Lease which are described as
follows:

    

Exhibit “A” – Legal Description of the Property and site plan delineating the
Building in which the Leased Premises are located.

    

Exhibit “B” – Work Letter

    

Exhibit “C” – Form of Commencement Certificate

    

Exhibit “D” – Form of SNDA

ARTICLE 2

LEASED PREMISES, TERM AND POSSESSION

2.1 Demise Of Leased Premises. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord for Tenant’s own use in the conduct of Tenant’s
business and not for purposes of speculating in real estate, for the Lease Term
and upon the terms and subject to the conditions of this Lease, that certain
interior space described in Article 1 as the Leased Premises. Tenant’s lease of
the Leased Premises, together with the appurtenant right to use the Outside
Areas as described in Paragraph 2.2 below, shall be conditioned upon and be
subject to the continuing

 

3.

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compliance by Tenant with (i) all the terms and conditions of this Lease,
(ii) all Laws governing the use of the Leased Premises and the Property,
(iii) all Private Restrictions, easements and other matters of public record
respecting the use of the Leased Premises and the Property, and (iv) all
reasonable rules and regulations from time to time established by Landlord.

2.2 Right To Use Outside Areas. As an appurtenant right to Tenant’s right to the
use and occupancy of the Leased Premises, Tenant shall have the right to use the
Outside Areas in conjunction with its use of the Leased Premises solely for the
purposes for which they were designated and intended and for no other purposes
whatsoever, conditioned upon and be subject to the continuing compliance by
Tenant with (i) all the terms and conditions of this Lease, (ii) all Laws
governing the use of the Outside Areas and the Property, (iii) all Private
Restrictions, easements and other matters of public record respecting the use of
the Outside Areas and Property, and (iv) all reasonable rules and regulations
from time to time established by Landlord. Tenant’s right to so use the Outside
Areas shall terminate concurrently with any termination of this Lease. Landlord
reserves the right to install, use, maintain, repair, alter or relocate, expand
and replace any of the Outside Areas and, subject to the requirements of
Paragraph 4.5 (“Parking”), to designate from time to time certain portions of
the Outside Areas as exclusively for the benefit of other tenants of the
Property.

2.3 Commencement Date And Lease Term. Subject to Paragraph 2.4 below, the term
of this Lease shall begin on the Commencement Date and end on the Expiration
Date (as set forth in Article 1). The Lease Term shall be that period of time
commencing on the Commencement Date and ending on the Expiration Date (the
“Lease Term”). Once the Commencement Date is determined, Landlord shall deliver
to Tenant a notice in the form as set forth in Exhibit C, attached hereto, as a
confirmation only of the information set forth therein, which Tenant shall
execute and return to Landlord within ten (10) business days of receipt thereof;
provided, however, Tenant’s failure to execute and return such notice to
Landlord within such time shall be conclusive upon Tenant that the information
set forth in such notice is as specified therein.

2.4 Delivery Of Possession.

(a) Landlord shall deliver to Tenant possession of the Leased Premises at such
time as the Improvement Work (as defined in Paragraph 2.5 below) is
substantially completed pursuant to the Work Letter. If Landlord is unable to so
deliver possession of the Leased Premises to Tenant with the Improvement Work
substantially completed on or before January 1, 2011, Landlord shall not be in
default under this Lease, nor shall this Lease be void, voidable or cancelable
by Tenant until the lapse of two hundred eighty five (285) days from the date of
this Lease plus one day for each day of Tenant Delay and one half of one day for
each day of Force Majeure (excluding permit delays) (the “Delivery Grace
Period”). If Landlord is unable to deliver possession of the Leased Premises to
Tenant with the Improvement Work substantially completed within the Delivery
Grace Period, then Tenant’s sole remedy, except as expressly set forth herein,
shall be to terminate this Lease, and in no event shall Landlord be liable in
damages to Tenant for such delay. Tenant may not terminate this Lease at any
time after Substantial Completion (as defined in the attached Work Letter) of
the Improvement Work. Notwithstanding the foregoing, in the event Landlord is
unable to deliver possession of the Leased Premises to Tenant with the
Improvement Work substantially completed for any reason on or before March 15,
2011 (as extended by one day for each day of Tenant Delay and one-half of one
day for each day of Force Majeure (excluding permit delays), then the Abatement
Period and the Abated Rent Amount as set forth in Section 3.1 below shall each
be increased by one (1) additional day of Base Monthly Rent for each day that
such delivery is delayed beyond March 15, 2011.

(b) Tenant shall have the right, for a period not to exceed sixty (60) days
prior to the Commencement Date (the “Early Entry Period”), to enter the Leased
Premises for purposes of planning, constructing and installing Tenant’s
furnishings and equipment and wiring in the Leased Premises, provided that in
connection with any such early entry (a) such early entry is in compliance with
all construction contracts in effect with respect to the Improvement Work,
(b) Landlord reasonably determines that such entry would not impede or interfere
with Landlord’s construction of the Improvement Work or the schedule therefore,
nor impede Landlord’s contractor’s use of elevators, loading docks or other
areas necessary for the conduct of the Improvement Work, (c) Tenant delivers
written evidence to Landlord that all insurance required to be carried by Tenant
pursuant to the terms of this Lease is then in effect, and (d) Tenant’s entry
shall be subject to such safety procedures and restrictions as Landlord’s
contractor may reasonably impose. With respect to Tenant’s installation of
wiring in the Leased Premises, Landlord shall coordinate with Tenant’s vendors
regarding the same so that the same may be installed during the normal course of
construction according to industry custom.

2.5 Performance Of Improvement Work; Acceptance Of Possession. Landlord shall,
pursuant to the work letter attached hereto as Exhibit B (the “Work Letter”),
perform the work and make the installations in the Leased Premises as set forth
in the Work Letter (such work and installations hereinafter referred to as the
“Improvement Work”). Without limiting the foregoing, Landlord agrees to deliver
in good working order and in compliance with all Laws the roof surface and roof
structure of the Building and the Leased Premises, including all existing
plumbing, lighting, heating, ventilating and air conditioning systems within the
Leased Premises and shall warrant such good working order for a period of one
year from the date of Substantial Completion of the Improvement Work. If any
dispute arises as to whether the Leased Premises are substantially completed and
ready for Tenant’s occupancy, a certificate furnished by the Construction
Manager (as defined in the Work Letter) certifying the date of substantial
completion accompanied by a certificate of occupancy issued on or before such
date of substantial completion shall be conclusive of that fact and date and
binding upon Landlord and Tenant. It is agreed that by occupying, except during
any Early Entry Period, the Leased Premises for beneficial use, Tenant formally
accepts same and acknowledges that the Leased Premises are in the condition
called for hereunder, subject to correction of normal punchlist items and patent
defects specified by Tenant to Landlord in writing within thirty (30) days after
Landlord notifies Tenant of substantial completion of the Improvement Work, and
subject to correction of latent defects not visually discoverable by Tenant upon
a walk through and which are identified in writing to Landlord within twelve
(12) months following the Commencement Date.

 

4.

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ARTICLE 3

RENT, LATE CHARGES AND SECURITY DEPOSITS

3.1 Base Monthly Rent. Commencing on the Commencement Date and continuing
throughout the Lease Term, Tenant shall pay to Landlord, without prior demand
therefor, in advance on the first day of each calendar month, the amount set
forth as “Base Monthly Rent” in Article 1 (the “Base Monthly Rent”). During the
period beginning on the Commencement Date and ending on the last day of the
twelfth (12th) full calendar month following the Commencement Date (the
“Abatement Period”), Tenant shall be entitled to a rent abatement credit in the
amount of One Million Four Hundred Fifty Six Thousand Three Hundred Eighty One
and 90/100 Dollars ($1,456,381.90) (the “Abated Rent Amount”) to be applied
against Base Monthly Rent due hereunder beginning on the first day of first full
calendar month immediately following the Commencement Date (or beginning on the
Commencement Date if it is the first day of the month) and continuing until such
rent abatement credit is exhausted. During the Abatement Period, Tenant shall
remain responsible for the payment of all of its other monetary obligations
under this Lease.

3.2 Additional Rent. Commencing on the Commencement Date and continuing
throughout the Lease Term (and subject to final reconciliation after expiration
or sooner termination of the Lease Term), in addition to the Base Monthly Rent,
Tenant shall pay to Landlord as additional rent (the “Additional Rent”) the
following amounts:

(a) An amount equal to all Property Operating Expenses (as defined in Article
13). Payment shall be made by whichever of the following methods (or combination
of methods) is (are) from time to time designated by Landlord:

(i) Landlord may forward invoices or bills for such expenses to Tenant, and
Tenant shall pay the same within thirty (30) days after receipt and in each case
upon request, Tenant shall deliver satisfactory evidence of such payment to
Landlord, and/or

(ii) Landlord may bill to Tenant, on a periodic basis not more frequently than
monthly, the amount of such expenses (or group of expenses) as paid or incurred
by Landlord, and Tenant shall pay to Landlord the amount of such expenses within
thirty (30) days after receipt of a written bill therefor from Landlord, and/or

(iii) Landlord may deliver to Tenant Landlord’s reasonable estimate of any given
expense (such as Landlord’s Insurance Costs or Real Property Taxes), or group of
expenses, which it anticipates will be paid or incurred for the ensuing calendar
or fiscal year, as Landlord may determine, and Tenant shall pay to Landlord an
amount equal to the estimated amount of such expenses for such year in equal
monthly installments during such year with the installments of Base Monthly
Rent.

Landlord reserves the right to change from time to time the methods of billing
Tenant for any given expense or group of expenses or the periodic basis on which
such expenses are billed.

(b) Landlord’s share of the consideration received by Tenant upon certain
assignments and sublettings as required by Article 7.

(c) Any legal fees and costs that Tenant is obligated to pay or reimburse to
Landlord pursuant to Article 13; and

(d) Any other charges or reimbursements due Landlord from Tenant pursuant to the
terms of this Lease.

Notwithstanding the foregoing, Landlord may elect by written notice to Tenant to
have Tenant pay Real Property Taxes or any portion thereof directly to the
applicable taxing authority, in which case Tenant shall make such payments
within the later of ten (10) days before such Real Property Taxes become
delinquent or thirty (30) days after receipt of the invoice or bill for the
same.

3.3 Year-End Adjustments. If Landlord shall have elected to bill Tenant for the
Property Operating Expenses (or any group of such expenses) on an estimated
basis in accordance with the provisions of Paragraph 3.2(a)(iii) above, Landlord
shall furnish to Tenant within four (4) months following the end of the
applicable calendar or fiscal year, as the case may be, or as soon thereafter as
is reasonably possible a statement setting forth (i) the amount of such expenses
paid or incurred during the just ended calendar or fiscal year and Tenant’s
Expense Share thereof, as appropriate, and (ii) the amount that Tenant has paid
to Landlord for credit against such expenses for such period. Each statement
sent to Tenant shall be conclusively binding upon Tenant unless Tenant (i) pays
to Landlord when due the amount set forth in such statement, without prejudice
to Tenant’s right to dispute such statement, and (ii) within one hundred twenty
(120) days after such statement is sent, sends a notice to Landlord objecting to
such statement and specifying the reasons therefor. If the parties are unable to
resolve any dispute as to the correctness of such Statement within thirty
(30) days following such notice of objection, either party may refer the issues
raised to one of the nationally recognized public accounting firms mutually
agreed upon by Landlord and Tenant, and the decision of such accountants shall
be conclusively binding upon Landlord and Tenant. In connection therewith,
Tenant and such accountants shall execute and deliver to Landlord a
confidentiality agreement, in form and substance reasonably satisfactory to
Landlord, whereby such parties agree not to disclose to any third party any of
the information obtained in connection with such review. Tenant shall pay the
fees and expenses relating to such procedure, unless such accountants determine
that Landlord overstated Property Operating Expenses by more than five percent
(5)%, in which case Landlord shall pay such fees and expenses. Tenant agrees
that Tenant will not employ, in connection with any dispute under this Lease,
any person or entity who is to be compensated, in whole or in part, on a
contingency fee basis. Except as provided in this Paragraph 3.3, Tenant shall
have no right whatsoever to dispute, by judicial proceeding or otherwise, the
accuracy of any Statement. If Tenant shall have paid more than

 

5.

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its obligation for such expenses for the stated period, Landlord shall, at its
election, either (i) credit the amount of such overpayment toward the next
ensuing payment or payments of Additional Rent that would otherwise be due or
(ii) refund in cash to Tenant the amount of such overpayment. If such year-end
statement shall show that Tenant did not pay its obligation for such expenses in
full, then Tenant shall pay to Landlord the amount of such underpayment within
thirty (30) days from Landlord’s billing of same to Tenant. Landlord shall make
the final determination of Additional Rent for the calendar year in which this
Lease terminates as soon as possible, but no later than 120 days, after the end
of such calendar year. Tenant shall remain liable for payment of any amount due
to Landlord in excess of the estimated Additional Rent previously paid by the
Tenant, and, Landlord shall return to Tenant any overpayment within thirty
(30) days after calculation thereof. Failure of Landlord to submit statements as
called for herein or delay in submission thereof shall not be deemed a waiver of
Tenant’s obligation to pay Additional Rent as herein provided. The provisions of
this Paragraph shall survive the expiration or sooner termination of this Lease.

3.4 Late Charge, And Interest On Rent In Default. Tenant acknowledges that the
late payment by Tenant of any monthly installment of Base Monthly Rent or any
Additional Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix. Such costs and expenses will include without
limitation, administration and collection costs and processing and accounting
expenses. Therefore, if any installment of Base Monthly Rent is not received by
Landlord from Tenant within ten calendar days after the same becomes due, Tenant
shall immediately pay to Landlord a late charge in an amount equal to five
percent (5%) of the Delinquent Amount and if any Additional Rent is not received
by Landlord within ten calendar days after same becomes due, Tenant shall
immediately pay to Landlord a late charge in an amount equal to five percent
(5%) of the Additional Rent not so paid. Landlord and Tenant agree that this
late charge represents a reasonable estimate of such costs and expenses and is
fair compensation to Landlord for the anticipated loss Landlord would suffer by
reason of Tenant’s failure to make timely payment. In no event shall this
provision for a late charge be deemed to grant to Tenant a grace period or
extension of time within which to pay any rental installment or prevent Landlord
from exercising any right or remedy available to Landlord upon Tenant’s failure
to pay each rental installment due under this Lease when due, including the
right to terminate this Lease. If any rent remains delinquent for a period in
excess of 10 calendar days, then, in addition to such late charge, Tenant shall
pay to Landlord interest on any rent that is not so paid from said tenth day at
the lesser of 10% per annum or the then maximum rate of interest not prohibited
or made usurious by Law until paid. Notwithstanding the foregoing, before
assessing a late charge or later interest the first time in calendar year,
Landlord shall provide Tenant written notice of the delinquency, and shall waive
such late charge or interest if Tenant pays such delinquency within five
(5) days thereafter.

Tenant’s Initials /s/    GSL

3.5 Payment Of Rent. Except as specifically provided otherwise in this Lease,
all rent shall be paid in lawful money of the United States, without any
abatement, reduction or offset for any reason whatsoever, to Landlord at such
address as Landlord may designate from time to time. Tenant’s obligation to pay
Base Monthly Rent and all Additional Rent shall be appropriately prorated at the
commencement and expiration of the Lease Term. The failure by Tenant to pay any
Additional Rent as required pursuant to this Lease when due shall be treated the
same as a failure by Tenant to pay Base Monthly Rent when due, and Landlord
shall have the same rights and remedies against Tenant as Landlord would have
had Tenant failed to pay the Base Monthly Rent when due.

3.6 Prepaid Rent; First Partial Month. Tenant shall, upon execution of this
Lease, pay to Landlord the amount set forth in Article 1 as “Prepaid Rent” as
prepayment of rent for credit against the payment of Base Monthly Rent due
hereunder as set forth in this Paragraph 3.6. If the Commencement Date occurs on
a day other than the first day of the month, Base Monthly Rent for the calendar
month in which the Commencement Date occurs shall be pro rated on a per diem
basis, based on the number of days from and including the Commencement Date to
and including the last day of the calendar month in which the Commencement Date
occurs. The amount of the Prepaid Rent shall be first credited against Base
Monthly Rent for such first partial month, if any and next to the Base Monthly
Rent next due hereunder.

3.7 Security Deposit. Tenant has deposited with Landlord the amount set forth in
Article 1 as the “Security Deposit” as security for the performance by Tenant of
the terms of this Lease to be performed by Tenant, and not as prepayment of
rent. Landlord may apply such portion or portions of the Security Deposit as are
reasonably necessary for the following purposes: (i) to remedy any default by
Tenant in the payment of Base Monthly Rent or Additional Rent or a late charge
or interest on defaulted rent, or any other monetary payment obligation of
Tenant under this Lease; (ii) to repair damage to the Leased Premises, the
Building or the Outside Areas caused or permitted to occur by Tenant; (iii) to
clean and restore and repair the Leased Premises, the Building or the Outside
Areas following their surrender to Landlord if not surrendered in the condition
required pursuant to the provisions of Article 2, and (iv) to remedy any other
default of Tenant to the extent permitted by Law including, without limitation,
paying in full on Tenant’s behalf any sums claimed by materialmen or contractors
of Tenant to be owing to them by Tenant for work done or improvements made at
Tenant’s request to the Leased Premises. In this regard, Tenant hereby waives
any restriction on the uses to which the Security Deposit may be applied as
contained in Section 1950.7(c) of the California Civil Code and/or any successor
statute. Landlord shall not be deemed a trustee of the Security Deposit.
Landlord may use the Security Deposit in Landlord’s ordinary business and shall
not be required to segregate it from Landlord’s general accounts. Tenant shall
not be entitled to any interest on the Security Deposit. If Landlord transfers
the Building or the Property during the Lease Term, Landlord shall pay the
Security Deposit to the subsequent owner in conformity with the provisions of
Section 1950.7 of the California Civil Code and/or any successor statute, in
which event the transferring landlord shall be released from all liability for
the return of the Security Deposit. Tenant specifically grants to Landlord (and
Tenant hereby waives the provisions of California Civil Code Section 1950.7 to
the contrary) a period of ninety days following a surrender of the Leased
Premises by Tenant to Landlord within which to inspect the Leased Premises, make
required restoration and repairs, receive and verify workmen’s billings
therefore, and prepare a final accounting with respect to the Security Deposit.
In no event shall the Security Deposit or any portion thereof, be considered
prepaid rent.

 

6.

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ARTICLE 4

USE OF LEASED PREMISES AND OUTSIDE AREA

4.1 Permitted Use. Tenant shall be entitled to use the Leased Premises solely
for the “Permitted Use” as set forth in Article 1 and for no other purpose
whatsoever. Tenant shall have the right to use the Outside Areas in conjunction
with its Permitted Use of the Leased Premises solely for the purposes for which
they were designed and intended and for no other purposes whatsoever.

4.2 General Limitations On Use. Tenant shall not do or permit anything to be
done in or about the Leased Premises, the Building, the Outside Areas or the
Property which does or could (i) jeopardize the structural integrity of the
Building or the Building Systems (ii) cause damage to any part of the Leased
Premises, the Building, the Outside Areas or the Property. Tenant shall not
operate any equipment within the Leased Premises which does or could (i) injure,
vibrate or shake the Leased Premises or the Building, or (ii) jeopardize the
operating integrity of, or damage, overload or impair the efficient operation of
any Building Systems or other electrical, plumbing, heating, ventilating or air
conditioning systems servicing the Outside Areas or the Property. Tenant shall
not be liable under this Section 4.2 with respect to any of the foregoing
arising in connection with the design and construction of the Tenant
Improvements by Landlord. Except in compliance with Article 6, Tenant shall not
install any equipment or antennas on or make any penetrations of the exterior
walls or roof of the Building and shall not affix any equipment to or make any
penetrations or cuts in the floor, ceiling, walls or roof of the Leased
Premises. Tenant shall not place any loads upon the floors, walls, ceiling or
roof systems which could endanger the structural integrity of the Building or
damage its floors, foundations or supporting structural components. Tenant shall
not place any explosive, flammable or harmful fluids or other waste materials in
the drainage systems of the Leased Premises, the Building, the Outside Areas or
the Property. Tenant shall not drain or discharge any fluids in the landscaped
areas or across the paved areas of the Property. Tenant shall not use any of the
Outside Areas for the storage of its materials, supplies, inventory or equipment
and all such materials, supplies, inventory or equipment shall at all times be
stored within the Leased Premises. Tenant shall not commit nor permit to be
committed any waste in or about the Leased Premises, the Building, the Outside
Areas or the Property.

4.3 Noise And Emissions. All noise generated by Tenant in its use of the Leased
Premises shall be confined or muffled so that it does not interfere with the
businesses of or annoy the occupants and/or users of adjacent properties or the
general public. All dust, fumes, odors and other emissions generated by Tenant’s
use of the Leased Premises shall be sufficiently dissipated in accordance with
sound environmental practice and exhausted from the Leased Premises in such a
manner so as not to interfere with the businesses of or annoy the occupants
and/or users of adjacent properties or the general public, or cause any damage
to the Leased Premises, the Building, the Outside Areas or the Property or any
component part thereof or the property of adjacent property owners.

4.4 Trash Disposal. Tenant shall provide trash bins or other adequate garbage
disposal facilities within the trash enclosure areas provided or permitted by
Landlord outside the Leased Premises sufficient for the interim disposal of all
of its trash, garbage and waste. All such trash, garbage and waste temporarily
stored in such areas shall be stored in such a manner so that it is not visible
from outside of such areas, and Tenant shall cause such trash, garbage and waste
to be regularly removed from the Property in a clean, safe and neat condition
free and clear of all trash, garbage, waste and/or boxes, pallets and containers
containing same at all times.

4.5 Parking. Tenant shall have the right to use, at no additional rent, on a
non-exclusive basis, up to 3.45 parking spaces in the Project Parking Facilities
for each one thousand (1,000) rentable square feet of the Leased Premises.
“Project Parking Facilities” shall mean and collectively refer to the surface
parking lot located on the Property and any other parking facilities that may be
constructed or installed at the Property. Tenant shall be responsible for the
full amount of any taxes imposed by any governmental authority in connection
with the use of the Project Parking Facilities by Tenant or its employees,
officers, directors, agents, contractors or visitors. Tenant’s continued right
to use the Project Parking Facilities is conditioned upon Tenant abiding by all
rules and regulations which are reasonably prescribed from time to time for the
orderly operation and use of the Project Parking Facilities, including any
sticker or other identification system established by Landlord and Tenant’s
cooperation in seeing that Tenant’s employees, officers, directors, agents,
contractors and visitors also comply with such rules and regulations. Landlord
specifically reserves the right to change the size, configuration, design,
layout and all other aspects of the Project Parking Facilities at any time so
long as the same does not permanently reduce the number of parking spaces
allocated to Tenant or otherwise materially interfere with Tenant’s parking
rights hereunder and Tenant acknowledges and agrees that Landlord may, without
incurring any liability to Tenant and without any abatement of Rent under this
Lease, from time to time, temporarily close-off or restrict access to the
Project Parking Facilities for purposes of permitting or facilitating any such
construction, alteration or improvements, provided, however, if 50% or more of
the Project Parking Facilities is restricted, Landlord shall provide Tenant with
alternative parking reasonably near the Property that satisfies the requirements
under this Paragraph. Landlord may delegate its responsibilities hereunder to a
parking operator in which case such parking operator shall have all the rights
of control attributed hereby to the Landlord. The parking privileges granted to
Tenant pursuant to this Section are provided to Tenant solely for use by
Tenant’s own personnel and Tenant’s visitors and invitees and such rights may
not be transferred, assigned, subleased or otherwise alienated by Tenant except
in connection with an assignment of the Lease or a sublease of the Leased
Premises. Tenant shall not use or suffer or permit the Project Parking
Facilities to be used for any of the following purposes: automobile repairs,
windshield replacements, car washing facilities, barbeques, parties, storage, or
parking of recreational vehicles, trucks larger than standard passenger pickup
trucks (other than in connection with the reasonable use of the loading dock
area), trailers or inoperative vehicles.

4.6 Signs. (a) Subject to the provisions of subparagraph (b) below, (i) Tenant
shall have the right to one (1) identification panel on the monument sign for
the Property, and (ii) Tenant shall have the right to two (2) signs on the
exterior of the Building in prominent locations on the exterior of the top floor
of the Building not extending above the rooftop (such signs are referred to
herein collectively as the “Initial Signage”). The Initial Signage shall be

 

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subject to prior approval by Landlord, which shall not be unreasonably withheld,
and the City of Sunnyvale, compliance with all applicable Laws and the
provisions of this Lease. In addition, the size, design, color, materials,
fabrication, installations and all other aspects of the Initial Signage shall
comply with all applicable Laws and shall be subject to Landlord’s prior written
approval, which shall not be unreasonably withheld. The fabrication and
installation of the monument sign shall be performed by Landlord at Tenant’s
expense and the fabrication and installation of the exterior building sign shall
be performed by Tenant at Tenant’s expense. Tenant shall, at Tenant’s expense,
maintain the Initial Signage in first-class condition; provided, however, if
Tenant’s failure to maintain the same continues for ten (10) days after Landlord
provides Tenant written notice of such failure, Landlord may elect to maintain
the Initial Signage at Tenant’s sole cost and expense. Landlord may remove the
Initial Signage at Tenant’s sole cost and expense by the end of the Lease Term
or, if earlier, at such time as Tenant no longer has the right to maintain the
Initial Signage pursuant to subparagraph (b) below or applicable Law, and
Landlord may in connection with such removal restore the monument sign and
façade of the Building at the sign location to like new condition at Tenant’s
expense.

(b) the signage rights set forth in subparagraph (a) are personal to PMC-Sierra,
Inc. and any Permitted Transferee (and not any other assignee, sublessee or
transferee of such entity), and such rights may be exercised and shall be
maintained only provided and on condition that, and for so long as, PMC-Sierra,
Inc. has not assigned or sublet more than 50% of the Leased Premises (except to
a Permitted Transferee):

(c) Except with respect to the Initial Signage, Tenant shall not place or
install on or within any portion of the Leased Premises, the exterior of the
Building, the Outside Areas or the Property any sign, advertisement, banner,
placard, or picture which is visible from the exterior of the Leased Premises.
Tenant shall not place or install on or within any portion of the Leased
Premises, the exterior of the Building, the Outside Areas or the Property any
business identification sign which is visible from the exterior of the Leased
Premises until Landlord shall have approved in writing and in its sole
discretion the location, size, content, design, method of attachment and
material to be used in the making of such sign. Any sign, once approved by
Landlord, shall be fabricated, installed and maintained at Tenant’s sole cost
and expense and only in strict compliance with Landlord’s approval, using a
contractor approved by Landlord to install same. Tenant shall maintain all signs
in first-class condition, or, upon Tenant’s request, Landlord will maintain any
signs at Tenant’s sole cost and expense. Landlord may remove any signs,
advertisements, banners, placards or pictures so placed by Tenant on or within
the Leased Premises, the exterior of the Building, the Outside Areas or the
Property, which have not been approved in writing by Landlord and charge to
Tenant the cost of such removal, together with any costs incurred by Landlord to
repair any damage caused thereby, including any cost incurred to restore the
surface (upon which such sign was so affixed) to its original condition. Tenant
shall, at Tenant’s sole cost and expense, remove all of Tenant’s signs, repair
any damage caused thereby, and restore the surface upon which the sign was
affixed to its original condition, all to Landlord’s reasonable satisfaction,
upon the termination of this Lease; provided, however, Landlord may elect to
remove such signs and perform such repairs at Tenant’s sole cost and expense.

4.7 Compliance With Laws And Private Restrictions. Tenant shall abide by and
shall promptly observe and comply with, at its sole cost and expense, all Laws
and Private Restrictions respecting the use and occupancy of the Leased
Premises, the Building, the Outside Areas or the Property including, without
limitation, all Laws governing the use and/or disposal of Hazardous Materials,
and shall defend with counsel selected by Landlord, indemnify and hold Landlord
harmless from any claims, damages or liability resulting from Tenant’s failure
to so abide, observe, or comply. Notwithstanding anything to the contrary in
this Lease, Tenant’s obligations hereunder shall not apply to Laws, Private
Restrictions or insurance requirements requiring the construction of alterations
unless such compliance is due to Tenant’s alterations or particular use of the
Leased Premises. Tenant’s obligations hereunder shall survive the expiration or
sooner termination of this Lease. Landlord covenants not to cause or allow any
Private Restriction to be recorded against the Property from and after the date
of this Lease which would materially adversely affect Tenant’s rights under this
Lease or which would impose on Tenant a material cost or burden not currently
anticipated.

4.8 Compliance With Insurance Requirements. With respect to any insurance
policies carried by Landlord, Tenant shall not conduct nor permit any other
person to conduct any activities nor keep, store or use (or allow any other
person to keep, store or use) any item or thing within the Leased Premises, the
Building, the Outside Areas or the Property which (i) is prohibited under the
terms of any such policies, (ii) could result in the termination of the coverage
afforded under any of such policies, (iii) could give to the insurance carrier
the right to cancel any of such policies, or (iv) causes a material increase in
the rates (over standard rates) charged for the coverage afforded under any of
such policies, unless Tenant agrees to pay the full amount of any such increase
reasonably demonstrated by Landlord to have been actually caused by Tenant.
Tenant shall comply with all requirements of any insurance company, insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain, at
standard rates, the insurance coverages carried by either Landlord or Tenant
pursuant to this Lease; provided, however, unless Tenant has actual knowledge
that any act or omission of Tenant amounts to a violation of this Paragraph 4.8,
Tenant shall not be deemed to have violated this Paragraph 4.8 until ten
(10) business days after written notice of such violation, unless such violation
poses imminent threat to health or safety.

4.9 Landlord’s Right To Enter. Landlord and its agents shall have the right to
enter the Leased Premises during normal business hours after giving Tenant
reasonable notice, but no less than 24 hours (except in the case of
emergencies), for the purpose of (i) inspecting the same; (ii) showing the
Leased Premises and the roof of the Building to prospective purchasers,
mortgagees and tenants (provided, however, entry for the purpose of showing the
Leased Premises to prospective tenants shall be permitted only during the last
nine (9) months of the term of the Lease), or other licensees; (iii) making
necessary alterations, additions or repairs; and (iv) performing any of Tenant’s
obligations when Tenant has failed to do so. Subject to Tenant’s rights under
Paragraph 6.1(b), Tenant acknowledges and agrees that Landlord retains the
exclusive right to use the roof of the Building and to enter into one or more
leases, licenses or other agreements for use of the roof of the Building,
provided any such lease, license or other use agreement shall be limited to use
for the benefit of the Building or the Property, and in connection with the
same, Landlord and any tenant, licensee or other user pursuant to any such
agreement shall have the right upon

 

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the notice required hereunder to enter the Leased Premises for purposes of
accessing the roof of the Building provided such entry shall not unreasonably
interfere with Tenant’s use of the Leased Premises. Landlord shall have the
right, upon the notice required hereunder, to enter the Leased premises during
normal business hours (or as otherwise agreed), for purposes of supplying any
maintenance or services agreed to be supplied by Landlord. Landlord shall have
the right to enter the Outside Areas for purposes of (i) inspecting the exterior
of the Building and the Outside Areas; (ii) posting notices of nonresponsibility
(and for such purposes Tenant shall provide Landlord at least ten (10) days’
prior written notice of any work to be performed on the Leased Premises); and
(iii) supplying any services to be provided by Landlord. Any entry into the
Leased Premises or the Outside Areas by Landlord or any other party in
accordance with this paragraph shall not under any circumstances be construed or
deemed to be a forcible or unlawful entry into, or a detainer of, the Leased
Premises, or an eviction, actual or constructive of Tenant from the Leased
Premises or any portion thereof. Any entry by Landlord and Landlord’s agents or
licensees shall not impair Tenant’s operations more than reasonably necessary,
and shall comply with Tenant’s reasonable security measures.

4.10 Use Of Outside Areas. Tenant, in its use of the Outside Areas, shall at all
times keep the Outside Areas in a condition free and clear of all materials,
equipment, debris, trash (except within existing enclosed trash areas),
inoperable vehicles, and other items which are not specifically permitted by
Landlord to be stored or located thereon by Tenant. If, in the opinion of
Landlord, unauthorized persons are using any of the Outside Areas by reason of,
or under claim of, the express or implied authority or consent of Tenant, then
Tenant, upon demand of Landlord, shall restrain, to the fullest extent then
allowed by Law, such unauthorized use, and shall initiate such appropriate
proceedings as may be required to so restrain such use. If Landlord reasonably
determines that Tenant’s use of any portion of the Outside Areas requires
additional or special cleaning, maintenance or other services, Landlord shall be
entitled to arrange for any such additional services at Tenant’s sole cost and
expense.

4.11 Environmental Protection. Tenant’s obligations under this Paragraph 4.11
shall survive the expiration or termination of this Lease.

(a) As used herein, the term “Hazardous Materials” shall mean any toxic or
hazardous substance, material or waste or any pollutant or infectious or
radioactive material, including but not limited to those substances, materials
or wastes regulated now or in the future under any of the following statutes or
regulations and any and all of those substances included within the definitions
of “hazardous substances,” “hazardous materials,” “hazardous waste,” “hazardous
chemical substance or mixture,” “imminently hazardous chemical substance or
mixture,” “toxic substances,” “hazardous air pollutant,” “toxic pollutant,” or
“solid waste” in the (a) Comprehensive Environmental Response, Compensation and
Liability Act of 1990 (“CERCLA” or “Superfund”), as amended by the Superfund
Amendments and Reauthorization Act of 1986 (“SARA”), 42 U.S.C. § 9601 et seq.,
(b) Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. § 6901 et
seq., (c) Federal Water Pollution Control Act (“FSPCA”), 33 U.S.C. § 1251 et
seq., (d) Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq., (e) Toxic Substances
Control Act (“TSCA”), 14 U.S.C. § 2601 et seq., (f) Hazardous Materials
Transportation Act, 49 U.S.C. § 1801, et seq., (g) Carpenter-Presley-Tanner
Hazardous Substance Account Act (“California Superfund”), Cal. Health & Safety
Code § 25300 et seq., (h) California Hazardous Waste Control Act, Cal. Health &
Safety code § 25100 et seq., (i) Porter-Cologne Water Quality Control Act
(“Porter-Cologne Act”), Cal. Water Code § 13000 et seq., (j) Hazardous Waste
Disposal Land Use Law, Cal. Health & Safety codes § 25220 et seq., (k) Safe
Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”), Cal.
Health & Safety code § 25249.5 et seq., (l) Hazardous Substances Underground
Storage Tank Law, Cal. Health & Safety code § 25280 et seq., (m) Air Resources
Law, Cal. Health & Safety Code § 39000 et seq., (n) regulations promulgated
pursuant to said laws or any replacement thereof, or as similar terms are
defined in the federal, state and local laws, statutes, regulations, orders or
rules and (o) any similar law that may be enacted after the date hereof by any
federal, state or local authority. Hazardous Materials shall also mean any and
all other biohazardous wastes and substances, materials and wastes which are, or
in the future become, regulated under applicable Laws for the protection of
health or the environment, or which are classified as hazardous or toxic
substances, materials or wastes, pollutants or contaminants, as defined, listed
or regulated by any federal, state or local law, regulation or order or by
common law decision, including, without limitation, (i) trichloroethylene,
tetrachloroethylene, perchloroethylene and other chlorinated solvents, (ii) any
petroleum products or fractions thereof, (iii) asbestos, (iv) polychlorinted
biphenyls, (v) flammable explosives, (vi) urea formaldehyde, (vii) radioactive
materials and waste, and (viii) materials and wastes that are harmful to or may
threaten human health, ecology or the environment.

         (b) Notwithstanding anything to the contrary in this Lease, Tenant, at
its sole cost, shall comply with all Laws relating to the storage, use and
disposal of Hazardous Materials; provided, however, that Tenant shall not be
responsible for contamination of the Leased Premises by Hazardous Materials
unless caused or permitted by Tenant or any subtenant or other occupant of the
Leased Premises and their respective agents, contractors, subcontractors,
employees, invitees or licensees (collectively, “Tenant Party”), excluding any
contamination caused by Landlord or its agents, contractors, subcontractors,
employees, invitees or licensees and provided further Tenant shall not be
responsible for contamination of the Building or the Property by Hazardous
Materials unless caused by Tenant. Tenant shall not store, use or dispose of any
Hazardous Materials (not including any Hazardous Materials contained in normal
office and janitorial products in accordance with all Laws) except for those
Hazardous Materials listed in a Hazardous Materials management plan (“HMMP”)
which Tenant shall deliver to Landlord on or before the Commencement Date if
Tenant is using any such Hazardous Materials and, if there are changes thereto,
update at least annually with Landlord (“Permitted Materials”) which may be
used, stored and disposed of provided (i) such Permitted Materials are used,
stored, transported, and disposed of in strict compliance with applicable Law,
(ii) such Permitted Materials shall be limited to the materials listed on and
may be used only in the quantities specified in the HMMP, and (iii) Tenant shall
provide Landlord with copies of all material safety data sheets and other
documentation required under applicable Law in connection with Tenant’s use of
Permitted Materials as and when such documentation is provided to any regulatory
authority having jurisdiction, in no event shall Tenant cause or permit to be
discharged into the plumbing or sewage system of the Building or the Property or
onto the land underlying or adjacent to the Building or the Property any
Hazardous Materials. Tenant shall be solely responsible for and shall defend,
indemnify, and hold Landlord and its agents harmless from and against all
claims,

 

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costs and liabilities, including attorneys’ fees and costs, arising out of or in
connection with Tenant’s storage, use and/or disposal of Hazardous Materials. If
the presence of Hazardous Materials (x) on the Leased Premises caused or
permitted by Tenant or any Tenant Party or (y) on the Building or the Property
caused by Tenant or any Tenant Party, result in contamination or deterioration
of water or soil, then Tenant shall immediately notify Landlord of the same and
shall immediately take any and all action necessary to clean up such
contamination, but the foregoing shall in no event be deemed to constitute
permission by Landlord to allow the presence of such Hazardous Materials. At any
time prior to the expiration of the Lease Term if Tenant has a reasonable basis
to suspect that there has been any release or the presence of Hazardous
Materials in the ground or ground water on the Property which did not exist upon
commencement of the Lease Term, Tenant shall immediately notify Landlord of the
same and, with Landlord’s prior written approval, shall have the right to
conduct appropriate tests of water and soil and to deliver to Landlord the
results of such tests to demonstrate that no contamination in excess of
permitted levels has occurred as a result of Tenant’s use of the Leased
Premises. Tenant shall further be solely responsible for, and shall defend,
indemnify, and hold Landlord and its agents harmless from and against all
claims, costs and liabilities, including attorneys’ fees and costs, arising out
of or in connection with any removal, cleanup and restoration work and materials
required hereunder to return the Leased Premises and any other property of
whatever nature to their condition existing prior to the appearance of the
Hazardous Materials released by Tenant or any Tenant Party.

(c) Upon termination or expiration of the Lease, Tenant at its sole expense
shall cause all Hazardous Materials placed in or about the Leased Premises, the
Building and/or the Property by Tenant, its agents, contractors, or invitees,
and all installations (whether interior or exterior) made by or on behalf of
Tenant relating to the storage, use, disposal or transportation of Hazardous
Materials to be removed from the property and transported for use, storage or
disposal in accordance and compliance with all Laws and other requirements
respecting Hazardous Materials used or permitted to be used by Tenant. To the
extent required by law due to Tenant’s particular use of the Leased Premises,
Tenant shall apply for and shall obtain from all appropriate regulatory
authorities (including any applicable fire department or regional water quality
control board) all permits, approvals and clearances necessary for the closure
of the Property and shall take all other actions as may be required to complete
the closure of the Building and the Property.

(d) At any time prior to expiration of the Lease term, subject to reasonable
prior notice (not less than forty-eight (48) hours) and Tenant’s reasonable
security requirements and provided such activities do not unreasonably interfere
with the conduct of Tenant’s business at the Leased Premises, Landlord shall
have the right to enter in and upon the Property, Building and Leased Premises
in order to conduct appropriate tests of water and soil to determine whether
levels of any Hazardous Materials in excess of legally permissible levels has
occurred as a result of Tenant’s use thereof. Landlord shall furnish copies of
all such test results and reports to Tenant and, at Tenant’s option and cost,
shall permit split sampling for testing and analysis by Tenant. Such testing
shall be at Tenant’s expense if Landlord has a reasonable basis for suspecting
and confirms the presence of Hazardous Materials in the soil or surface or
ground water in, on, under, or about the Property, the Building or the Leased
Premises, which has been caused by or resulted from the activities of Tenant,
its agents, contractors, or invitees.

(e) Landlord may voluntarily cooperate in a reasonable manner with the efforts
of all governmental agencies in reducing actual or potential environmental
damage. Tenant shall not be entitled to terminate this Lease or to any reduction
in or abatement of rent by reason of such compliance or cooperation. Tenant
agrees at all times to cooperate in a reasonable manner with the requirements
and recommendations of governmental agencies regulating, or otherwise involved
in, the protection of the environment provided Tenant shall not be responsible
for any contamination of the Building or the Property by Hazardous Materials
unless caused by Tenant or any Tenant Party.

(f) Except as set forth in the environmental report(s) delivered to Tenant prior
to the execution of this Lease by Tenant, to Landlord’s knowledge, no Hazardous
Material in excess of legally permissible levels is present on the Property or
in the soil, surface water or groundwater thereof. As used herein, “Landlord’s
knowledge” means the actual knowledge of Richard Czerwinski, without duty of
investigation or inquiry.

4.12 Rules And Regulations. Landlord shall have the right from time to time to
establish reasonable rules and regulations and/or amendments or additions
thereto respecting the use of the Leased Premises and the Outside Areas for the
care and orderly management of the Property. Upon delivery to Tenant of a copy
of such rules and regulations or any amendments or additions thereto, Tenant
shall comply with such rules and regulations. Notwithstanding the foregoing,
Tenant shall not be required to comply with any new rule or regulation unless
the same applies non-discriminatorily to all similarly situated occupants of the
Property, does not unreasonably interfere with Tenant’s use of the Leased
Premises or Tenant’s parking rights and does not materially increase the
obligations or materially decrease the rights of Tenant under this Lease. A
material or repeated violation by Tenant of any of such rules and regulations
shall constitute a default by Tenant under this Lease. If there is a conflict
between the rules and regulations and any of the provisions of this Lease, the
provisions of this Lease shall prevail. Landlord shall not be responsible or
liable to Tenant for the violation of such rules and regulations by any other
tenant of the Property.

ARTICLE 5

REPAIRS, MAINTENANCE, SERVICES AND UTILITIES

5.1 Repair And Maintenance. Except in the case of damage to or destruction of
the Leased Premises, the Building, the Outside Areas or the Property caused by
an act of God or other peril, in which case the provisions of Article 10 shall
control, the parties shall have the following obligations and responsibilities
with respect to the repair and maintenance of the Leased Premises, the Building,
the Outside Areas, and the Property.

(a) Tenant’s Obligations. Tenant shall, at all times during the Lease Term and
at its sole cost and expense, regularly clean and continuously keep and maintain
in good order, condition and repair the Leased

 

10.

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Premises and every part thereof including, without limiting the generality of
the foregoing, (i) all interior walls, floors and ceilings, (ii) all interior
windows, window frames, window casements, interior and exterior doors, door
frames and closers, (iii) all electrical wiring, conduits, connectors and
fixtures, (iv) all plumbing, pipes, sinks, toilets, faucets and drains, (v) all
lighting fixtures, bulbs and lamps and all heating, ventilating and air
conditioning equipment, (vi) Tenant’s security systems in or about or serving
the Leased Premises and, except to the extent that Landlord notifies tenant in
writing of its intention to arrange for such monitoring, cause the fire alarm
systems serving the Leased Premises to be monitored by a monitoring or
protective services firm approved by Landlord in writing and (vii) all
entranceways to the Leased Premises. Tenant shall furnish all other expendables,
including paper goods and soaps used in the Leased Premises. Tenant, if
requested to do so by Landlord, shall hire, at Tenant’s sole cost and expense, a
licensed heating, ventilating and air conditioning contractor to regularly and
periodically (not less frequently than every three months) inspect and perform
required maintenance on the heating, ventilating and air conditioning equipment
and systems serving the Leased Premises, or alternatively, Landlord may, at its
election, contract in its own name for such regular and periodic inspections of
and maintenance on such heating, ventilating and air conditioning equipment and
systems and charge to Tenant, as Additional Rent, the cost thereof. Landlord
may, at its election, contract with a licensed roofing contractor to
periodically inspect and perform required maintenance on the roof of the Leased
Premises and shall have the driveways and parking areas periodically swept and
charge to Tenant, as Additional Rent, the cost thereof. Subject to Section 9.3,
Tenant shall, at its sole cost and expense, repair all damage to the Leased
Premises, the Building, the Outside Areas or the Property caused by the
activities of Tenant, its employees, invitees or contractors promptly following
written notice from Landlord to so repair such damages. If Tenant shall fail to
perform the required maintenance or fail to make repairs required of it pursuant
to this paragraph within a reasonable period of time following notice from
Landlord to do so, then Landlord may, at its election and without waiving any
other remedy it may otherwise have under this Lease or at law, perform such
maintenance or make such repairs and charge to Tenant, as Additional Rent, the
costs so incurred by Landlord for same. All glass within or a part of the Leased
Premises, both interior and exterior, is at the sole risk of Tenant and any
broken glass shall promptly be replaced by Tenant at Tenant’s expense with glass
of the same kind, size and quality.

(b) Landlord’s Obligation. Landlord shall, at all times during the Lease Term,
maintain in good condition and repair the Building Systems, foundation, roof,
roof structure, load-bearing and exterior walls of the Building and all other
structural portions of the Building and the Outside Areas. Notwithstanding any
of the foregoing to the contrary, Landlord shall perform and construct, and
Tenant shall have no responsibility to perform or construct, any repair,
maintenance or improvements (a) which could be treated as a “capital
expenditure” under generally accepted accounting principles or (b) to the
electrical, water, sewer, and plumbing systems serving the Leased Premises to
the extent not located within and exclusively serving the Leased Premises. The
provisions of this subparagraph (b) shall in no way limit the right of Landlord
to charge to Tenant, as Additional Rent pursuant to Article 3 (to the extent
permitted pursuant to Article 3), the costs incurred by Landlord in performing
such maintenance and/or making such repairs.

(c) If a Material Curable Landlord Default (defined below) occurs under this
Lease, and if Tenant intends to exercise its cure rights provided in this
Paragraph, then, before Tenant may exercise such cure rights, Tenant shall
notify Landlord in writing (the “Default Notice”) of the existence of the
Material Curable Landlord Default, the nature thereof in reasonable detail and
of Tenant’s intent to exercise its rights under this Paragraph.

(i) Landlord shall have 10 Business Days following receipt of a Tenant’s Default
Notice to cure such default, unless such Material Curable Landlord Default
cannot be reasonably cured within said 10 Business Day period, in which case
Landlord shall have such time as is reasonably necessary to cure such default,
but only if Landlord commences to cure such default within the 10 Business Day
period specified above and thereafter proceeds diligently and continuously to
cure such default.

(ii) Tenant shall have the right to cure any Material Curable Landlord Default
which is not cured by Landlord within the time periods set forth above. In
curing a Material Curable Landlord’s Default, (1) Tenant may only use
Landlord-approved contractors for any repairs, modifications or alterations to
the Building and the Building Systems; (2) Tenant may not make any changes to
the exterior, interior or common areas of the Building or the Building Systems;
and (3) Tenant shall only make such repairs or take such action as is reasonably
necessary to cure such default.

(iii) Landlord shall reimburse Tenant for the reasonable out-of-pocket costs and
expenses incurred by Tenant in curing a Material Curable Landlord Default in
accordance with the provisions of this Paragraph within 30 days after receipt of
Tenant’s invoice for such amount and supporting data in reasonable detail. Any
amount reimbursed to Tenant under this Paragraph shall be included in Operating
Expenses, to the extent such amount would have been included in Operating
Expenses if Landlord had cured the default in question. All amounts not paid by
Landlord when due shall bear interest at the Interest Rate from the due date
until paid.

(iv) A “Material Curable Landlord Default” shall mean any default by Landlord in
the performance of its obligations under this Lease which (i) materially impairs
Tenant’s use of or access to the Leased Premises; (ii) does not arise as a
result of a fire or casualty or an act or omission of Tenant, its agents,
employees or contractors; and (iii) can be reasonably cured by Landlord. For
purposes of the foregoing and without limiting the determination of whether a
default can be reasonably cured by Landlord, Landlord’s failure to provide
services or repairs because the electric company servicing the Building is
unable to delivery electricity to the Building is a default that cannot be
reasonably cured by Landlord.

5.2 Utilities. Tenant shall arrange at its sole cost and expense and in its own
name, for the supply of utilities to the Leased Premises. Landlord represents
that electricity, gas and water services are separately metered. Tenant shall be
responsible for determining if the local supplier of utilities can supply the
needs of Tenant and whether or not the existing distribution systems within the
Building and the Leased Premises are adequate for Tenant’s needs.

 

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5.3 Security.

(a) Tenant acknowledges that Landlord has not undertaken any duty whatsoever to
provide security for the Leased Premises, the Building, the Outside Areas or the
Property and accordingly, Landlord is not responsible for the security of the
same or the protection of Tenant’s property or Tenant’s employees, invitees or
contractors. To the extent Tenant determines that such security or protection
services are advisable or necessary, Tenant shall arrange for and pay the costs
of providing same. Any election by Landlord to provide any security for all or
any portion of the Leased Premises, the Building, the Outside Areas or the
Property shall not create any liability of Landlord to Tenant for the security
of the same or the protection of Tenant’s property or Tenant’s employees,
invitees or contractors. Tenant hereby waives any claim against Landlord with
respect o any bodily injury, loss by theft or other damaged suffered or incurred
by Tenant or Tenant’s employees, invitees, and visitors in connection with any
unauthorized entry into the Leased Premises or any other breach of security with
respect to the Leased Premises, the Building, the Outside Areas or the Property.

(b) Without limiting the generality of subparagraph (a) above, Tenant agrees to
the exercise by Landlord and Landlord’s agents, in their sole discretion, of
security measures Landlord or its agents may employ from time to time,
including, but not limited to, the evacuation of the Leased Premises, the
Building, or the Property for cause, suspected cause or for drill purposes, the
denial of any access to the Leased Premises, the Building or the Property and
other similarly related actions that Landlord or its agents deem necessary to
prevent any threat of property damage or bodily injury. The exercise of such
measures by Landlord and its agents, and the resulting interruption of service
and cessation of Tenant’s business, if any, shall not be deemed an eviction or
disturbance of Tenant’s use and possession of the Leased Premises, or any part
thereof, or render Landlord or its agents liable to Tenant for any resulting
damages or relieve Tenant from Tenant’s obligations under this Lease.

5.4 Energy And Resource Consumption. Landlord may voluntarily cooperate in a
reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Property
provided such cooperation shall not materially interfere with Tenant’s use of
the Leased Premises for the Permitted Use. Tenant shall not be entitled to
terminate this Lease or to any reduction in or abatement of rent by reason of
such compliance or cooperation. Tenant agrees at all times to cooperate in a
reasonable manner with Landlord and to abide by all commercially reasonable
rules established by Landlord (i) in order to maximize the efficient operation
of the electrical, heating, ventilating and air conditioning systems and all
other energy or other resource consumption systems with the Property and/or
(ii) in order to comply with the requirements and recommendations of utility
suppliers and governmental agencies regulating the consumption of energy and/or
other resources.

5.5 Limitation Of Landlord’s Liability. Landlord shall not be liable to Tenant
for injury to Tenant, its employees, agents, invitees or contractors, damage to
Tenant’s property, nor shall Tenant be entitled to any reduction in or abatement
of rent by reason of (i) Landlord’s failure or election to provide security
services or systems within the Property for the protection of the Leased
Premises, the Building or the Outside Areas, or the protection of Tenant’s
property or Tenant’s employees, invitees, agents or contractors, or
(ii) Landlord’s failure to perform any maintenance or repairs to the Leased
Premises, the Building, the Outside Areas or the Property until Tenant shall
have first notified Landlord, in writing, of the need for such maintenance or
repairs, and then only after Landlord shall have had a reasonable period of time
following its receipt of such notice within which to perform such maintenance or
repairs and in any case not less than the notice and cure periods set forth in
Paragraph 12.3 of this Lease, or (iii) any failure, interruption, rationing or
other curtailment in the supply of water, electric current, gas or other utility
service to the Leased Premises, the Building, the Outside Areas or the Property
from whatever cause (other than Landlord’s sole active negligence or willful
misconduct), or (iv) the unauthorized intrusion or entry into the Leased
Premises by third parties (other than Landlord). Notwithstanding the foregoing
or, anything in this Lease to the contrary, Tenant shall not be entitled to
terminate this Lease by reason of any such Landlord failure or intrusion. If
Tenant is prevented from using and does not use the Leased Premises or any
material portion thereof for the conduct of its business, for three
(3) consecutive Business Days (the “Eligibility Period”) as a result of (i) the
failure in any material respect of Landlord or its agents or contractors to
provide to the Leased Premises any of the utilities and services required to be
provided under this Lease (excluding failure caused by Tenant or any Tenant
Party or due to the occurrence of a casualty or condemnation), or (ii) because
of the presence of Hazardous Materials in, on or around the Building or the
Leased Premises which were not caused or introduced by Tenant or any Tenant
Party and which Hazardous Materials pose an imminent material and significant
health risk to occupants of the Premises as determined by an industrial
hygienist or other comparable public health professional, then, in any and all
such events, Tenant’s obligation to pay Base Monthly Rent, Tenant’s Operating
Payment and Tenant’s Tax Payment shall be abated or reduced, as the case may be,
from and after the first day following the last day of the Eligibility Period
and continuing for such time that Tenant continues to be so prevented from using
for the conduct of its business, and does not so use for the conduct of its
business, the Premises or a material portion thereof, in the proportion that the
rentable square feet of the portion of the Premises that Tenant is prevented
from using, and does not so use, bears to the total rentable square feet of the
Premises. For purposes of this Paragraph, Tenant shall not be deemed to have
used the Leased Premises for the conduct of its business as a result of the
presence of limited numbers of employees of Tenant who are present within the
Leased Premises performing activities such as securing the Leased Premises,
removing files and computers and engaging in other limited commercial
activities.

ARTICLE 6

ALTERATIONS AND IMPROVEMENTS

6.1 By Tenant. (a) Tenant shall not make any alterations to or modifications of
the Leased Premises or construct any improvements within the Leased Premises
until Landlord shall have first approved, in writing, the plans and
specifications therefor, which approval may not be unreasonably withheld. All
such modifications, alterations or improvements, once so approved, shall be
made, constructed or installed by Tenant at Tenant’s expense (including all
permit fees and governmental charges related thereto), using a licensed
contractor first

 

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approved by Landlord, in substantial compliance with the Landlord-approved plans
and specifications therefor. All work undertaken by Tenant shall be done in
accordance with all Laws and in a good and workmanlike manner using new
materials of good quality. Tenant shall not commence the making of any such
modifications or alterations or the construction of any such improvements until
(i) all required governmental approvals and permits shall have been obtained,
(ii) all requirements regarding insurance imposed by this Lease have been
satisfied, (iii) Tenant shall have given Landlord at least five business days
prior written notice of its intention to commence such work so that Landlord may
post and file notices of non-responsibility, (iv) if requested by Landlord,
Tenant shall have obtained contingent liability and broad form builder’s risk
insurance in an amount satisfactory to Landlord in its reasonable discretion to
cover any perils relating to the proposed work not covered by insurance carried
by Tenant pursuant to Article 9 and (v) with respect to any alteration or
modification that affect Building Systems, Tenant shall first obtain approval
from Landlord’s designated engineer for the affected Building System. Tenant
shall pay to Landlord, within thirty (30) days of demand therefor an
administrative fee in connection with any alterations or modifications in the
Leased Premises in an amount equal to 3% of the total cost of such alterations
or modifications but in any event not to exceed Landlord’s actual out-of-pocket
costs related to review, approval and supervision of alterations. Except as
specifically set forth in the Lease, in no event shall Tenant make any
modification, alterations or improvements whatsoever to the Outside Areas or the
exterior or structural components of the Building including, without limitation,
any material cuts or penetrations in the floor, roof or exterior walls of the
Leased Premises without Landlord’s prior written consent, which may be granted
or withheld in Landlord’s sole discretion (collectively, “Prohibited
Alterations”). As used in this Article, the term “modifications, alterations
and/or improvements” shall include, without limitation, the installation of
additional electrical outlets, overhead lighting fixtures, drains, sinks,
partitions, doorways, or the like. Notwithstanding the foregoing, Tenant,
without Landlord’s prior written consent, shall be permitted to make alterations
other than Prohibited Alterations to the Building, provided that: (a) such
alterations do not exceed $25,000 individually or $100,000 in the aggregate in
any consecutive twelve (12) month period, (b) Tenant shall timely provide
Landlord the notice required pursuant to subparagraph (iii) above, (c) Tenant
shall notify Landlord in writing within thirty (30) days of completion of the
alteration and deliver to Landlord a set of the plans and specifications
therefor, either “as built” or marked to show construction changes made, and
(d) Tenant shall, upon Landlord’s request, remove the alteration at the
termination of the Lease and restore the Leased Premises to their condition
prior to such alteration. Landlord shall render a decision, at the time that
request is made by Tenant for approval of an alteration or upon notification of
an alteration not requiring Landlord’s consent, whether such alteration can
remain or if such alteration must be removed at the expiration or sooner
termination of the Lease Term; provided that Landlord shall only require the
removal of Tenant Extraordinary Fixtures as defined below. As used herein, the
term “Extraordinary Fixture” means an alteration, addition or improvement which,
at the time of installation, is not the type, quality, or quantity of
improvement that is customarily found in a standard office installation in
comparable office buildings in vicinity of the Premises. By way of example only,
rolling or built-in high density file systems, vaults, safes, raised flooring,
dedicated tenant elevators or dumb waiters, special key card systems on
stairwells or other entry doors, and internal stairways constitute Extraordinary
Fixtures.

(b) During the Lease Term (and any renewals or extensions thereof) Tenant shall
have the right, without payment of any fee or charge therefor, to install and
operate a transmitter-receiver or satellite dish (a “Satellite Dish”) of a
weight, height and width reasonably acceptable to Landlord and as reasonably
necessary for Tenant’s use of the Leased Premises. Tenant’s rights pursuant to
this Paragraph 6.1 (b) are subject to the following:

(i) The precise location of any Satellite Dish shall be as approved by Landlord
in its reasonable discretion.

(ii) Tenant shall pay any federal, state and local taxes applicable to the
installation and use of any Satellite Dish and Tenant shall procure, maintain
and pay for and obtain all fees, permits and governmental agency licenses
necessary in connection with the installation, maintenance and operation of such
Satellite Dish; provided, however, that Landlord shall reasonably cooperate with
the efforts of Tenant in connection with any governmental application or filing
required thereby.

(iii) All installations required in connection with any Satellite Dish shall be
made by means of conduits, wires or cables that will pass through existing
openings in the walls or roof decks of the Building, and all cables and wires
located on the roof of the Building used in connection with any Satellite Dish
shall be covered by rust-proof conduits and attachments. In no event shall any
of Tenant’s installations be made through the roof surface or membrane of the
Building without the prior written consent of Landlord, which consent may be
withheld in Landlord’s sole and absolute discretion. The installation of any
Satellite Dish shall be subject to Landlord’s review and approval and shall
conform to the engineering standards commonly used for installing similar
microwave and satellite dishes on comparable buildings.

(iv) Tenant, at its sole cost and expense, shall comply with all present and
future laws, Private Restrictions and with any requirements of any applicable
fire rating bureau relating to the maintenance, use, installation and operation
of any Satellite Dish. Tenant shall install, maintain and operate all of its
equipment used in connection with any Satellite Dish in conformity with all laws
and all regulations of all government agencies having jurisdiction over the
installation, use and operation of such Satellite Dish, including, without
limitation, the Federal Aviation Administration and the Federal Communications
Commission.

                   (v) Prior to the expiration or earlier termination of the
Lease Term Tenant shall remove any Satellite Dish and all wires and cables used
in connection with such Satellite Dish, and shall restore and repair all damage
to the Building occasioned by the installation, maintenance or removal of such
Satellite Dish. If Tenant fails to timely complete such removal, restoration and
repair, all sums incurred by Landlord to complete such work shall be paid by
Tenant to Landlord upon demand.

(vi) Landlord makes no representations or warranties whatsoever with respect to
the fitness or suitability of the Building for the installation, maintenance and
operation of any Satellite Dish, including, without limitation, with respect to
the quality and clarity of any receptions and transmissions to or from any
Satellite Dish and the presence of any interference with such signals, whether
emanating from the Building or otherwise.

 

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(vii) Tenant must contact the manager of the Building prior to the date Tenant
proposes to install a Satellite Dish on the roof of the Building in order to
make arrangements for the movement of any materials needed in connection with
the installation of such Satellite Dish.

(viii) Tenant shall provide adequate maintenance personnel in order to ensure
the safe operation of any Satellite Dish. In addition, Tenant shall install,
maintain and operate all of its equipment used in connection with any Satellite
Dish in a fashion and manner so as not to interfere with the use and operation
of any: (i) other television or radio equipment in the Building; (ii) present or
future electronic control system for any of the Building Systems or the
operation of the elevators in the Building; (iii) other transmitting, receiving
or master television, telecommunications or microwave antenna equipment
currently located on the roof of the Building; or (iv) any radio communication
system now used by Landlord. In addition, Tenant shall use its commercially
reasonable efforts to ensure that Tenant will not interfere with any equipment
installed by Landlord in the future.

6.2 Ownership Of Improvements. All modifications, alterations and improvements
made or added to the Leased Premises by Tenant (other than Tenant’s inventory,
equipment, movable furniture, wall decorations and trade fixtures) shall be
deemed real property and a part of the Leased Premises and shall automatically
become the property of Landlord upon the expiration or earlier termination of
the Lease (except that Tenant may elect to remove any Extraordinary Fixtures
provided Tenant repairs any damage resulting from such removal). Subject to the
foregoing, any such modifications, alterations or improvements, other than those
not requiring Landlord’s prior consent, once completed, shall not be altered or
removed from the Leased Premises during the Lease Term without Landlord’s
written approval first obtained in accordance with the provisions of Paragraph
6.1 above. At the expiration or sooner termination of this Lease, all such
modifications, alterations and improvements other than Tenant’s inventory,
equipment, movable furniture, wall decorations and trade fixtures, shall be
surrendered to Landlord as part of the Leased Premises as required pursuant to
Article 2, unless Landlord shall require Tenant to remove any of such
modifications, alterations or improvements in accordance with the provisions of
Paragraph 6.1, in which case Tenant shall so remove same. Landlord shall have no
obligations to reimburse Tenant for all or any portion of the cost or value of
any such modifications, alterations or improvements so surrendered to Landlord
or removed by Tenant or for the cost of removal. All modifications, alterations
or improvements which are installed or constructed on or attached to the Leased
Premises by Landlord and/or at Landlord’s expense shall be deemed real property
and a part of the Leased Premises and shall be property of Landlord. All
lighting, plumbing, electrical, heating, ventilating and air conditioning
fixtures, partitioning, window coverings, wall coverings and floor coverings
installed by Tenant shall be deemed improvements to the Leased Premises and not
trade fixtures of Tenant.

6.3 Alterations Required By Law. Tenant shall make all modifications,
alterations and improvements to the Leased Premises, at its sole cost, that are
required by any Law because of (i) Tenant’s particular use or occupancy of the
Leased Premises, the Building, the Outside Areas or the Property, (ii) Tenant’s
application for any permit or governmental approval, or (iii) Tenant’s making of
any modifications, alterations or improvements to or within the Leased Premises.
If Landlord shall, at any time during the Lease Term, be required by any
governmental authority to make any modifications, alterations or improvements to
the Building or the Property as a result of a law, rule or regulation first
becoming effective after the Effective Date, the cost incurred by Landlord in
making such modifications, alterations or improvements, including interest at a
rate equal to the greater of (a) eight percent (8%); or (b) the annual rate of
interest published in The Wall Street Journal from time to time as the prime
rate plus two percent (2%) (the “Prime Rate”) shall be amortized by Landlord
over the useful life of such modifications, alterations or improvements, as
determined in accordance with generally accepted accounting principles and the
monthly amortized cost of such modifications, alterations and improvements as so
amortized shall be considered a Property Maintenance Cost.

6.4 Liens. Tenant shall keep the Property and every part thereof free from any
lien, and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant, its agents, employees or
contractors relating to the Property. If any such claim of lien is recorded
against Tenant’s interest in this Lease, the Property or any part thereof,
Tenant shall bond against, discharge or otherwise cause such lien to be entirely
released within thirty (30) days after the same has been recorded. Tenant’s
failure to do so shall be conclusively deemed a material default under the terms
of this Lease.

ARTICLE 7

ASSIGNMENT AND SUBLETTING BY TENANT

7.1 By Tenant. Tenant shall not sublet the Leased Premises or any portion
thereof or assign its interest in this Lease, whether voluntarily or by
operation of Law, without Landlord’s prior written consent which shall not be
unreasonably withheld. Any attempted subletting or assignment without Landlord’s
prior written consent (except as otherwise permitted under this Article 7) after
the expiration of the applicable notice and cure period set forth in Paragraph
12.1(d), at Landlord’s election, shall constitute a default by Tenant under the
terms of this Lease. The acceptance of rent by Landlord from any person or
entity other than Tenant, or the acceptance of rent by Landlord from Tenant with
knowledge of a violation of the provisions of this paragraph, shall not be
deemed to be a waiver by Landlord of any provision of this Article or this Lease
or to be a consent to any subletting by Tenant or any assignment of Tenant’s
interest in this Lease. Without limiting the circumstances in which it may be
reasonable for Landlord to withhold its consent to an assignment or subletting,
Landlord and Tenant acknowledge that it shall be reasonable for Landlord to
withhold its consent in the following instances:

(a) the proposed assignee or sublessee is a governmental agency;

 

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(b) in Landlord’s reasonable judgment, the use of the Premises by the proposed
assignee or sublessee would involve occupancy by other than the Permitted Use,
would entail any alterations which would materially lessen the value of the
leasehold improvements in the Premises, or would materially require increased
services by Landlord;

(c) in Landlord’s reasonable judgment, the financial worth of the proposed
assignee or sublessee does not meet the then-current reasonable credit standards
applied by Landlord for the assignment or sublease in question; or the character
of the proposed assignee or sublessee is not reasonably acceptable to Landlord

(d) the proposed assignee or sublessee (or any of its affiliates) has been in
material default under a lease within the immediately preceding twelve
(12) months, has been in litigation with a previous landlord and found to be at
fault, or in the ten years prior to the assignment or sublease has filed for
bankruptcy protection, has been the subject of an involuntary bankruptcy, or has
been adjudged insolvent;

(e) Landlord or other entities controlling, controlled by or under common
control with Landlord have experienced a previous default by or is in litigation
with the proposed assignee or sublessee;

(f) Intentionally omitted;

(g) the use of the Premises by the proposed assignee or sublessee will violate
any applicable Law;

(h) the proposed assignee or sublessee is, as of the date of this Lease, a
tenant at the Property or is a person or entity with whom Landlord is then or
has been within the prior six (6) months negotiating in connection with rental
of space at the Property;

(i) the proposed assignment or sublease fails to include all of the terms and
provisions required to be included therein pursuant to this Article 7;

(j) Tenant is in default of any obligation of Tenant under this Lease beyond
applicable notice and cure periods; or

(k) In the case of subletting of less than the entire Premises, if the
subletting would result in more than four subtenants in the Leased Premises.

7.2 Merger, Reorganization or Sale of Assets. Any dissolution, merger,
consolidation or other reorganization of Tenant, or the sale or other transfer
in one or more related transactions of a majority of the capital stock or other
beneficial ownership interest in Tenant, or the sale or transfer of all or a
substantial portion of the assets of Tenant, shall be deemed a voluntary
assignment of Tenant’s interest in this Lease. If Tenant is a partnership, a
withdrawal or change, voluntary, involuntary or by operation of Law, of any
general partner, or the dissolution of the partnership, shall be deemed a
voluntary assignment of Tenant’s interest in this Lease. Notwithstanding the
foregoing, the provisions of this Article 7 shall not apply to (i) PMC-Sierra,
Inc. or any Permitted Transferee of PMC-Sierra, Inc., and (ii) the transfer of
ownership interests in Tenant as part of an initial public offering or if and so
long as Tenant is publicly traded on a nationally recognized stock exchange. For
purposes of this Article the term transfers shall be deemed to include the
issuance of new capital stock or other ownership interests in one or more
related transactions which results in a majority of the capital stock or other
ownership interests in Tenant being held by a person or entity which does not
hold a majority of the capital stock or ownership interests in Tenant on the
Effective Date of this Lease. The provisions of Article 7 shall not apply to
transactions with a business entity into or with which Tenant is merged,
consolidated or converted or to which all or substantially all of Tenant’s
assets are transferred, to an assignment or sublease to an entity controlling,
controlled by or under common control with Tenant or to a deemed assignment due
to a transfer or issuance of Tenant’s ownership interests (each a “Permitted
Transferee”) so long as (i) such transfer was made for a legitimate independent
business purpose and not for the purpose of transferring this Lease, (ii) the
successor to Tenant has net worth computed in accordance with generally accepted
accounting principles consistently applied (excluding goodwill) that is not less
than $80,000,000.00; (iii) proof reasonably satisfactory to Landlord of such net
worth is delivered to Landlord at least 10 days after the effective date of any
such transaction, (iv) any such transfer shall be subject and subordinate to all
of the terms and provisions of this Lease, and the transferee, if it is an
entity other than Tenant, shall assume, in a written document reasonably
satisfactory to Landlord and delivered to Landlord at least 10 days after the
effective date of such transfer, all the obligations of Tenant under this Lease,
and (v) Tenant and any guarantor shall remain fully liable for all obligations
to be performed by Tenant under this Lease.

7.3 Landlord’s Election. If Tenant shall desire to assign its interest under the
Lease or to sublet more than fifty percent (50%) of the Leased Premises for more
than fifty percent (50%) of the remaining term of the Lease, Tenant must first
notify Landlord, in writing, of its intent to so assign or sublet, at least
thirty (30) days in advance of the date it intends to so assign its interest in
this Lease or sublet any portion of the Leased Premises but not sooner than one
hundred twenty (120) days in advance of such date, specifying in detail the
terms of such proposed assignment or subletting, including the name of the
proposed assignee or sublessee, the property assignee’s or sublessee’s intended
use of the Leased Premises, current audited annual financial statements
(including a balance sheet, income statement and statement of cash flow, all
prepared in accordance with generally accepted accounting principles) as well as
all monthly and quarterly financials of such proposed assignee or sublessee, the
form of documents to be used in effectuating such assignment or subletting and
such other information as Landlord may reasonably request. Landlord shall have a
period of fifteen (15) business days following receipt of such notice and the
required information within which to do one of the following: (i) consent to
such requested assignment or subletting subject to Tenant’s compliance with the
conditions set forth in Paragraph 7.4 below, or (ii) refuse to so consent to
such requested assignment or subletting, provided that such consent shall not be
unreasonably refused, or (iii) with respect to any proposed assignment or
subletting (in a single transaction or a series of transactions in the
aggregate) of 50% or more and the rentable square footage of the Leased Premises
terminate this Lease as to the

 

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portion (including all) of the Leased Premises that is the subject of the
proposed assignment or subletting and, at Landlord’s option, enter into a direct
lease with such proposed assignee or subtenant. During such thirty (30) day
period, Tenant covenants and agrees to supply to Landlord, upon request, all
necessary or relevant information which Landlord may reasonably request
respecting such proposed assignment or subletting and/or the proposed assignee
or sublessee.

7.4 Conditions To Landlord’s Consent. If Landlord elects to consent, or shall
have been ordered to so consent by a court of competent jurisdiction, to such
requested assignment or subletting, such consent shall be expressly conditioned
upon the occurrence of each of the conditions below set forth, and any purported
assignment or subletting made or ordered prior to the full and complete
satisfaction of each of the following conditions shall be void and, at the
election of Landlord, which election may be exercised at any time following such
a purported assignment or subletting but prior to the satisfaction of each of
the stated conditions, shall constitute a material default by Tenant under this
Lease until cured by satisfying in full each such condition by the assignee or
sublessee. The conditions are as set forth in subsections (a) through (e) below:

(a) Landlord having approved in form and substance the assignment or sublease
agreement and any ancillary documents, which approval shall not be unreasonably
withheld by Landlord if the requirements of this Article 7 are otherwise
complied with.

(b) Each such sublessee or assignee having agreed, in writing satisfactory to
Landlord and its counsel and for the benefit of Landlord, to assume, to be bound
by, and to perform the obligations of this Lease to be performed by Tenant which
relate to space being subleased.

(c) Tenant having fully and completely performed all of its obligations under
the terms of this Lease through and including the date of such assignment or
subletting.

(d) Tenant having reimbursed to Landlord all reasonable costs and reasonable
attorneys’ fees incurred by Landlord in conjunction with the processing and
documentation of any such requested subletting or assignment, not to exceed
$3,000.

(e) Tenant having delivered to Landlord a complete and fully-executed duplicate
original of such sublease agreement or assignment agreement (as applicable) and
all related agreements.

If Tenant enters into any assignment or sublease permitted hereunder or
consented to by Landlord, then in consideration of such assignment or
subletting, Tenant shall pay to Landlord:

(i) In the case of an assignment, on the effective date of the assignment, 50%
of all sums and other consideration paid to Tenant by the transferee for or by
reason of such assignment after first deducting the Transaction Costs (as
hereinafter defined); or

(ii) In the case of a sublease, 50% of any consideration payable under the
sublease to Tenant by the transferee which exceeds on a per square foot basis
the Base Monthly Rent and Property Operating Expenses and other costs paid
pursuant to the Master Lease (including, without limitation, the cost of
utilities to the Leased Premises) accruing during the term of the sublease in
respect of the sublet space after first deducting the amount of Transaction
Costs. The sums payable under this clause shall be paid by Tenant to Landlord
monthly as and when paid by the subtenant to Tenant. “Transaction Costs” shall
mean Tenant’s reasonable third-party brokerage fees, tenant improvement costs
and legal fees paid or to be paid in connection with such transaction
(collectively, “Transaction Costs”). In order to get credit for Transaction
Costs hereunder, Tenant must deliver to Landlord evidence of the payment of such
Transaction Costs promptly after the same are paid.

7.5 Payments. All payments required by this Article to be made to Landlord shall
be made in cash in full as and when they become due. At the time Tenant,
Tenant’s assignee or sublessee makes each such payment to Landlord, Tenant or
Tenant’s assignee, as the case may be, shall deliver to Landlord an itemized
statement in reasonable detail showing the method by which the amount due
Landlord was calculated and certified by the party making such payment as true
and correct.

7.6 Audit; Good Faith. Landlord or its authorized representatives shall have the
right, subject to Landlord executing a nondisclosure agreement in Tenant’s
commercially reasonable form, at all reasonable times (but not more than once
per calendar year with respect to any single transfer) to audit the books,
records and papers of Tenant relating to any assignment or subletting, and shall
have the right to make copies thereof. If the amounts due to Landlord under this
Article 7 shall be found understated, Tenant shall, within thirty (30) days
after demand, pay the deficiency, and if understated by more than three percent
(3%), Tenant shall pay Landlord’s costs of such audit (but otherwise Landlord
shall pay the same at Landlord’s sole cost and expense). The rights granted to
Tenant by this Article are granted in consideration of Tenant’s express covenant
that all pertinent allocations which are made by Tenant between the rental value
of the Leased Premises and the value of any of Tenant’s personal property which
may be conveyed or leased generally concurrently with and which may reasonably
be considered a part of the same transaction as the permitted assignment or
subletting shall be made fairly, honestly and in good faith. If Tenant shall
breach this covenant, Landlord may immediately declare Tenant to be in default
under the terms of this Lease and terminate this Lease and/or exercise any other
rights and remedies Landlord would have under the terms of this Lease in the
case of a material default by Tenant under this Lease.

7.7 Effect Of Landlord’s Consent. No subletting or assignment, even with the
consent of Landlord, shall relieve Tenant of its personal and primary obligation
to pay rent and to perform all of the other obligations to be performed by
Tenant hereunder. Consent by Landlord to one or more assignments of Tenant’s
interest in this Lease or to one or more sublettings of the Leased Premises
shall not be deemed to be a consent to any subsequent assignment or subletting.
If Landlord shall have been ordered by a court of competent jurisdiction to
consent to a

 

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requested assignment or subletting, or such an assignment or subletting shall
have been ordered by a court of competent jurisdiction over the objection of
Landlord, such assignment or subletting shall not be binding between the
assignee (or sublessee) and Landlord until such time as all conditions set forth
in Paragraph 7.4 above have been fully satisfied (to the extent not then
satisfied) by the assignee or sublessee, including, without limitation, the
payment to Landlord of all agreed assignment considerations and/or excess
rentals then due Landlord.

ARTICLE 8

LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY

8.1 Limitation On Landlord’s Liability And Release. Landlord shall not be liable
to Tenant for, and Tenant hereby releases Landlord and its partners, principals,
members, officers, agents, employees, lenders, attorneys, and consultants from,
any and all liability, whether in contract, tort or on any other basis, for any
injury to or any damage sustained by Tenant, Tenant’s agents, employees,
contractors or invitees, any damage to Tenant’s property resulting from or
attributable to the condition of, the management of, the repair or maintenance
of, the protection of, the supply of services or utilities to, the damage in or
destruction of the Leased Premises, the Building, the Property or the Outside
Areas, including without limitation (i) the failure, interruption, rationing or
other curtailment or cessation in the supply of electricity, water, gas or other
utility service to the Property, the Building or the Leased Premises; (ii) the
vandalism or forcible entry into the Building or the Leased Premises; (iii) the
penetration of water into or onto any portion of the Leased Premises; (iv) the
failure or election to provide security and/or failure or election to provide
any lighting in or about the Property, the Building, the Outside Areas or the
Leased Premises, (v) subject to Landlord’s express maintenance and repair
obligations and the express warranties set forth in this Lease, the existence of
any design or construction defects within the Property, the Building or the
Leased Premises; (vi) the failure of any mechanical systems to function properly
(such as the HVAC systems), provided, however, that Landlord shall warrant the
function of all mechanical systems for a period of one year following the date
of Substantial Completion of the Improvement Work; (vii) the blockage of access
to any portion of the Property, the Building or the Leased Premises, except that
Tenant does not so release Landlord from such liability to the extent such
damage was caused by Landlord’s gross negligence, willful misconduct, or
Landlord’s failure to perform an obligation expressly undertaken pursuant to
this Lease after a reasonable period of time shall have lapsed following receipt
of written notice from Tenant to so perform such obligation and in any case not
less than the notice and cure periods set forth in Paragraph 12.3 of this Lease.
Notwithstanding anything in this Lease to the contrary, Landlord shall not be
liable to Tenant for, and Tenant hereby releases Landlord and its partners,
principals, members, officers, agents, employees, lenders, attorneys, and
consultants from, any and all liability, whether in contract, tort or on any
other basis, for any loss to Tenant’s business, loss of Tenant’s profits or any
other consequential damages or opportunity costs. Tenant acknowledges that it is
fully apprised of the provisions of Law relating to releases, and particularly
to those provisions contained in Section 1542 of the California Civil Code which
reads as follows:

 

  

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”

  

Notwithstanding such statutory provision, and for the purpose of implementing a
full and complete release and discharge, Tenant hereby (i) waives the benefit of
such statutory provision and (ii) acknowledges that, subject to the exceptions
specifically set forth herein, the release and discharge set forth in this
paragraph is a full and complete settlement and release and discharge of all
claims and is intended to include in its effect, without limitation, all claims
which Tenant, as of the date hereof, does not know of or suspect to exist in its
favor.

8.2 Tenant’s Indemnification Of Landlord. Tenant shall defend with counsel
reasonably approved by Landlord any claims made or legal actions filed or
threatened against Landlord with respect to the violation of any Law, or the
death, bodily injury, personal injury, property damage, or interference with
contractual or property rights suffered by any third party occurring within the
Leased Premises or resulting from Tenant’s use or occupancy of the Leased
Premises, the Building or the Outside Areas, or resulting from Tenant’s
activities in or about the Leased Premises, the Building, the Outside Areas or
the Property, and Tenant shall indemnify and hold Landlord, Landlord’s partners,
principals, members, employees, agents and contractors harmless from any loss
liability, penalties, or expense whatsoever (including any loss attributable to
vacant space which otherwise would have been leased, but for such activities)
resulting therefrom, except to the extent caused by the negligence or willful
misconduct of Landlord or Landlord’s failure to perform an obligation expressly
undertaken pursuant to this Lease after a reasonable period of time shall have
lapsed following receipt of written notice from Tenant to so perform such
obligation and in any case not less than the notice and cure periods set forth
in Paragraph 12.3 of this Lease. The provisions of this Paragraph 8.2 shall
survive the expiration or sooner termination of this Lease.

8.3 Limitation of Tenant’s Liability And Release. Except only as set forth in
Section 13.2 and otherwise, notwithstanding anything in this Lease to the
contrary, Tenant shall not be liable to Landlord for, and Landlord hereby
releases Tenant and its partners, principals, members, officers, agents,
employees, lenders, attorneys, and consultants from, any and all liability,
whether in contract, tort or on any other basis, for any consequential damages
or opportunity costs. Landlord acknowledges that it is fully apprised of the
provisions of Law relating to releases, and particularly to those provisions
contained in Section 1542 of the California Civil Code which reads as follows:

 

  

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”

  

Notwithstanding such statutory provision, and for the purpose of implementing a
full and complete release and discharge, Landlord hereby (i) waives the benefit
of such statutory provision and (ii) acknowledges that, subject to the
exceptions specifically set forth herein, the release and discharge set forth in
this paragraph is a full and complete settlement and release and discharge of
all claims and is intended to include in its effect, without limitation, all
claims which Landlord, as of the date hereof, does not know of or suspect to
exist in its favor.

 

17.

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ARTICLE 9

INSURANCE

9.1 Tenant’s Insurance. Tenant shall maintain insurance complying with all of
the following:

(a) Tenant shall procure, pay for and keep in full force and effect, at all
times during the Lease Term, the following:

(i) Comprehensive general liability insurance insuring Tenant against liability
for personal injury, bodily injury, death and damage to property occurring
within the Leased Premises, or resulting from Tenant’s use or occupancy of the
Leased Premises, the Building, the Outside Areas or the Property, or resulting
from Tenant’s activities in or about the Leased Premises or the Property, with
coverage in an amount equal to $3,000,000.00 (“Tenant’s Required Liability
Coverage”), which insurance shall contain a “broad form liability” endorsement
insuring Tenant’s performance of Tenant’s obligations to indemnify Landlord as
contained in this Lease.

(ii) Fire and property damage insurance in so-called “fire and extended
coverage” form insuring Tenant against loss from physical damage to Tenant’s
personal property, inventory, trade fixtures and improvements within the Leased
Premises constructed by or for Tenant other than the Improvement Work with
coverage for the full actual replacement cost thereof;

(iii) Plate glass insurance, at actual replacement cost;

(iv) Pressure vessel insurance, if applicable;

(v) Workers’ compensation insurance and any other employee benefit insurance
sufficient to comply with all laws; and

(vi) With respect to making of alterations or the construction of improvements
or the like undertaken by Tenant, contingent liability and builder’s risk
insurance, in an amount and with coverage reasonably satisfactory to Landlord.

(b) Each policy of liability insurance required to be carried by Tenant pursuant
to this paragraph or actually carried by Tenant with respect to the Leased
Premises or the Property; (i) shall, except with respect to insurance required
by subparagraph (a)(vi) above, name Landlord and Wrightwood Capital LLC, ISAOA,
and such others with an insurable interest as are designated by Landlord, as
additional insureds; (ii) shall be primary insurance providing that the insurer
shall be liable for the full amount of the loss, up to and including the total
amount of liability set forth in the declaration of coverage, without the right
of contribution from or prior payment by any other insurance coverage of
Landlord; (iii) shall be in a form satisfactory to Landlord; (iv) shall be
carried with companies with Best’s ratings of at least A and XI (or equivalent
rating from an alternative rating agency approved by Landlord if Best’s is no
longer rating); (v) shall provide that insurance carrier will endeavor to notify
Landlord within thirty (30) days’ prior written notice if such policy is subject
to cancellation; and (vi) shall contain a so-called “severability” or “cross
liability” endorsement.

(c) Prior to the time Tenant or any of its contractors enters the Leased
Premises, Tenant shall deliver to Landlord, with respect to each policy of
insurance required to be carried by Tenant pursuant to this Article, a copy of
such policy (appropriately authenticated by the insurer as having been issued,
premium paid) or a certificate of the insurer certifying in form satisfactory to
Landlord that a policy has been issued, premium paid, providing the coverage
required by this Paragraph and containing the provisions specified herein. With
respect to each renewal or replacement of any such insurance, the requirements
of this Paragraph must be complied with not less than five (5) business days
prior to the expiration or cancellation of the policies being renewed or
replaced. Landlord may, at any time and from time to time, inspect and/or copy
any and all insurance policies required to be carried by Tenant pursuant to this
Article. If Landlord’s Lender or any investor reasonably determines at any time
that the amount of coverage set forth in Paragraph 9.1(a) for any policy of
insurance Tenant is required to carry pursuant to this Article is not adequate,
then Tenant shall increase the amount of coverage for such insurance to such
greater amount as Landlord’s Lender or any investor reasonably deems adequate,
provided, however, Tenant shall not be required to carry amounts in excess of
those customarily required by landlords of comparable properties in the same
geographic region as the Property.

9.2 Landlord’s Insurance. With respect to insurance maintained by Landlord:

(a) Landlord shall maintain, as the minimum coverage required of it by this
Lease, fire and property damage insurance in so-called “fire and extended
coverage” form insuring Landlord (and such others as Landlord may designate)
against loss from physical damage to the Building with coverage of not less than
one hundred percent (100%) of the full actual replacement cost thereof and
against loss of rents for a period of not less than six months. Such fire and
property damage insurance, at Landlord’s election but without any requirements
on Landlord’s behalf to do so, (i) may be written on a “special cause of loss”
form, excluding only those perils commonly excluded from such coverage by
Landlord’s then property damage insurer; (ii) may provide coverage for physical
damage to the improvements so insured for up to the entire full actual
replacement cost thereof; (iii) may be endorsed to cover loss or damage caused
by any additional perils against which Landlord may elect to insure, including
flood and, if required by Landlord’s Lender or investor or if otherwise
customarily carried by landlords of comparable properties in the same geographic
region as the Property, earthquake; and/or (iv) may provide coverage

 

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for loss of rents for a period of up to twelve months. Landlord shall not be
required to cause such insurance to cover any of Tenant’s personal property,
inventory, and trade fixtures, or any modifications, alterations or improvements
made or constructed by Tenant to or within the Leased Premises, but shall cover
the Improvement Work. Landlord shall use commercially reasonable efforts to
obtain such insurance at competitive rates.

(b) Landlord shall maintain comprehensive general liability insurance insuring
Landlord (and such others as are designated by Landlord) against liability for
personal injury, bodily injury, death, and damage to property occurring in, on
or about, or resulting from the use or occupancy of the Property, or any portion
thereof, with combined single limit coverage of at least Three Million Dollars
($3,000,000). Landlord may carry such greater coverage as Landlord or Landlord’s
Lender, insurance broker, advisor or counsel may from time to time determine is
reasonably necessary for the adequate protection of Landlord and the Property.
Landlord may satisfy the requirements of this Paragraph 9.2(b) with a
combination of primary and excess coverage.

(c) Landlord may maintain any other insurance which in Landlord’s opinion or in
the opinion of its insurance broker, advisor or legal counsel is prudent in
carry under the given circumstances.

9.3 Mutual Waiver Of Subrogation. Landlord and Tenant shall each procure an
appropriate clause in or endorsement to any property insurance covering the
Property or any portion thereof and personal property, fixtures and equipment
located therein, wherein the insurer waives subrogation or consents to a waiver
of right of recovery, and, notwithstanding anything to the contrary in this
Lease, Landlord and Tenant agree not to make any claim against, or seek to
recover from, the other for any loss or damage to its property or the property
of others resulting from fire or other hazards to the extent due to a risk
covered by the property insurance that was required to be carried by that party
under the terms of this Lease regardless of whether such insurance was then
actually carried by such party. Tenant acknowledges that Landlord shall not
carry insurance on, and shall not be responsible for, (i) damage to any above
Building standard installations made by or for Tenant other than the Improvement
Work or any other improvements in the Leased Premises made by or for Tenant,
(ii) Tenant’s property, and (iii) any loss suffered by Tenant due to
interruption of Tenant’s business.

ARTICLE 10

DAMAGE TO LEASED PREMISES

10.1 Landlord’s Duty To Restore. If the Leased Premises, the Building or the
Outside Area are damaged by any peril after the Effective Date of this Lease,
Landlord shall restore the same, as and when required by this paragraph, unless
this Lease is terminated by Landlord pursuant to Paragraph 10.3 or by Tenant
pursuant to Paragraph 10.4. If this Lease is not so terminated, then upon the
issuance of all necessary governmental permits, Landlord shall timely commence
and diligently prosecute to completion the restoration of the Leased Premises,
the Building or the Outside Area, as the case may be, to the extent then allowed
by law, to substantially the same condition in which it existed as of the
Commencement Date. Landlord’s obligation to restore shall be limited to the
improvements constructed by Landlord, including the Improvement Work and any
improvements on the date hereof. Landlord shall have no obligation to restore
any Improvements made by Tenant to the Leased Premises or any of Tenant’s
personal property, inventory or trade fixtures. Upon completion of the
restoration by Landlord, Tenant, at its option, shall replace or repair Tenant’s
personal property, inventory, trade fixtures and other improvements constructed
by Tenant to like or similar conditions as existed at the time immediately prior
to such damage or destruction.

10.2 Insurance Proceeds. All insurance proceeds available from the fire and
property damage insurance carried by Landlord shall be paid to and become the
property of Landlord. If this Lease is terminated pursuant to either Paragraph
10.3 or 10.4, all insurance proceeds available from insurance carried by Tenant
which cover loss of property that is Landlord’s property or would become
Landlord’s property on termination of this Lease shall be paid to and become the
property of Landlord, and the remainder of such proceeds and any other proceeds
from other policies carried by Tenant shall be paid to and become the property
of Tenant. If this Lease is not terminated pursuant to either Paragraph 10.3 or
10.4, all insurance proceeds available from insurance carried by Tenant which
cover loss to property that is Landlord’s property shall be paid to and become
the property of Landlord, and all proceeds available from such insurance which
cover loss to property which would only become the property of Landlord upon the
termination of this Lease shall be paid to and remain the property of Tenant.
The determination of Landlord’s property and Tenant’s property shall be made
pursuant to Paragraph 6.2.

10.3 Landlord’s Right To Terminate. Landlord shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Tenant of a written notice of election to
terminate within ninety (90) days after the date of such damage or destruction:

         (a) The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time of
such damage or destruction (an “insured peril”) to such an extent that the
estimated cost to restore the Building exceeds the lesser of (i) the insurance
proceeds available to Landlord from insurance actually carried by Landlord
(where the shortfall thereof exceeds $250,000 unless Tenant agrees to cover such
the shortfall in excess of such amount), or (ii) fifty percent of the then
actual replacement cost thereof; provided, however, Landlord shall not be
permitted to terminate this Lease if, at the time Landlord purports to exercise
its termination right hereunder, Landlord actually intends to restore the
Building;

(b) The Building is damaged by an uninsured peril, which peril Landlord was not
required to insure against pursuant to the provisions of Article 9 of this Lease
and the restoration would cost more than $250,000 and Tenant does not agree to
pay the uninsured amount in excess of such amount;

 

19.

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(c) The Building is damaged by any peril and, because of the laws then in force,
the Building (i) cannot be restored at reasonable cost or (ii) if restored,
cannot be used for the same use being made thereof before such damage;

(d) If any damage during the final 12 months of the Term renders 50% or more of
the Leased Premises untenantable.

10.4 Tenant’s Right To Terminate. If the Leased Premises, the Building or the
Outside Area are damaged by any peril and Landlord does not elect to terminate
this Lease or is not entitled to terminate this Lease pursuant to this Article,
then as soon as reasonably practicable, Landlord shall furnish Tenant with the
written opinion of Landlord’s architect or construction consultant as to when
the restoration work required of Landlord may be complete. Tenant shall have the
option to terminate this Lease in the event any of the following occurs, which
option may be exercised only by delivery to Landlord of a written notice of
election to terminate within twenty-one (21) days after Tenant receives from
Landlord the estimate of the time needed to complete such restoration:

(a) If the time estimated to substantially complete the restoration exceeds
twelve months from the date of damage or destruction; or

(b) If the damage occurred within twelve months of the last day of the Lease
Term and the time estimated to substantially complete the restoration exceeds
one hundred eighty days from and after the date such restoration is commenced.

(c) If Landlord fails to Substantially Complete the repair or restoration within
12 months from the date of damage or destruction, Tenant, upon not less than
60 days’ prior written notice (a “Termination Notice”), may elect to terminate
this Lease. If Tenant delivers a Termination Notice, this Lease shall be deemed
to have terminated as of the date of the giving of the Termination Notice;
provided, however, if within such 60-day period Landlord Substantially Completes
such repair or restoration then such Termination Notice shall be void and of no
force or effect.

10.5 Tenant’s Waiver. Landlord and Tenant agree that the provisions of Paragraph
10.4 above, captioned “Tenant’s Right To Terminate”, are intended to supersede
and replace the provisions contained in California Civil Code, Section 1932,
Subdivision 2, and California Civil Code, Section 1934, and accordingly, Tenant
hereby waives the provisions of such Civil Code Sections and the provisions of
any successor Civil Code Sections or similar laws hereinafter enacted.

10.6 Abatement Of Rent. In the event of damage to the Leased Premises which does
not result in the termination of this Lease, the Base Monthly Rent (and any
Additional Rent) shall be temporarily abated during the period of restoration in
proportion in the degree to which Tenant’s use of the Leased Premises is
impaired by such damage.

ARTICLE 11

CONDEMNATION

11.1 Tenant’s Right To Terminate. Except as otherwise provided in Paragraph 11.4
below regarding temporary takings, Tenant shall have the option to terminate
this Lease if, as a result of any taking, (i) all of the Leased Premises is
taken, or (ii) ten percent (10%) or more of the Leased Premises is taken and the
part of the Leased Premises that remains cannot, within a reasonable period of
time, be made reasonably suitable for the continued operation of Tenant’s
business. Tenant must exercise such option within thirty (30) days of Tenant’s
first notice of any such condemnation, to be effective on the later to occur of
(i) the date that possession of that portion of the Leased Premises that is
condemned is taken by the condemnor or (ii) the date Tenant vacated the Leased
Premises.

11.2 Landlord’s Right To Terminate. Except as otherwise provided in Paragraph
11.4 below regarding temporary takings, Landlord shall have the option to
terminate this Lease if, as a result of any taking, (i) all of the Leased
Premises is taken, (ii) twenty-five percent (25%) or more of the Leased Premises
is taken and the part of the Leased Premises that remains cannot, within a
reasonable period of time, be made reasonably suitable for the continued
operation of Tenant’s business, or (iii) because of the laws then in force, the
Leased Premises may not be used for the same use being made before such taking,
whether or not restored as required by Paragraph 11.3 below. Any such option to
terminate by Landlord must be exercised within thirty (30) days of Landlord’s
first notice of any such condemnation, to be effective as of the date possession
is taken by the condemnor.

11.3 Restoration. If any part of the Leased Premises or the Building is taken
and this Lease is not terminated, then Landlord shall, to the extent not
prohibited by laws then in force, timely repair any damage occasioned thereby to
the remainder thereof to a condition reasonably suitable for Tenant’s continued
operations and otherwise, to the extent practicable, in the manner and to the
extent provided in Paragraph 10.1.

11.4 Temporary Taking. If a portion of the Leased Premises is temporarily taken
for a period of four (4) months or less and such period does not extend beyond
the Expiration Date, this Lease shall remain in effect. If any portion of the
Leased Premises is temporarily taken for a period which exceeds four months or
which extends beyond the Expiration Date, then the rights of Landlord and Tenant
shall be determined in accordance with Paragraphs 11.1 and 11.2 above.

11.5 Division Of Condemnation Award. Any award made for any taking of the
Property, the Building, or the Leased Premises, or any portion thereof, shall
belong to and be paid to Landlord, and Tenant hereby assigns to

 

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Landlord all of its right, title and interest in any such award; provided,
however, that Tenant shall be entitled to receive any portion of the award that
is made specifically (i) for the taking of personal property, inventory or trade
fixtures belonging to Tenant, (ii) for the interruption of Tenant’s business or
its relocation costs, or (iii) for the value of any leasehold improvements
installed and paid for by Tenant. The rights of Landlord and Tenant regarding
any condemnation shall be determined as provided in this Article, and each party
hereby waives the provisions of Section 1265.130 of the California Code of Civil
Procedure, and the provisions of any similar law hereinafter enacted, allowing
either party to petition the Supreme Court to terminate this Lease and/or
otherwise allocate condemnation awards between Landlord and Tenant in the event
of a taking of the Leased Premises.

11.6 Abatement Of Rent. In the event of a taking of the Leased Premises which
does not result in a termination of this Lease (other than a temporary taking),
then, as of the date possession is taken by the condemning authority, the Base
Monthly Rent and Property Operating Expenses shall be reduced in the same
proportion that the area of that part of the Leased Premises so taken (less any
addition to the area of the Leased Premises by reason of any reconstruction)
bears to the area of the Leased Premises immediately prior to such taking.

11.7 Taking Defined. The term “taking” or “taken” as used in this Article 11
shall mean any transfer or conveyance of all or any portion of the Property to a
public or quasi-public agency or other entity having the power of eminent domain
pursuant to or as a result of the exercise of such power by such an agency,
including any inverse condemnation and/or any sale or transfer by Landlord of
all or any portion of the Property to such an agency under threat of
condemnation or the exercise of such power.

ARTICLE 12

DEFAULT AND REMEDIES

12.1 Events Of Tenant’s Default. Each of the following events shall be deemed an
“Event of Default” hereunder:

(a) Tenant shall have failed to pay Base Monthly Rent or any Additional Rent
where such failure continues for three (3) business days after written notice is
given to Tenant; or

(b) Tenant shall have done or permitted to be done any act, use or thing in its
use, occupancy or possession of the Leased Premises, the Building, the Outside
Areas or the Property which is prohibited by the terms of this Lease which
continues for more than ten (10) days after written notice from Landlord to
Tenant of such violation; or

(c) Tenant shall have failed to perform any other term, covenant or condition of
this Lease (other than failures or acts described in subparagraphs (a) or
(b) above) within thirty (30) days after written notice from Landlord to Tenant
specifying the nature of such failure and requesting Tenant to perform same or
such longer period as is reasonably required to cure such failure so long as
Tenant is diligently prosecuring such cure, in any case not to exceed ninety
(90) days; or

(d) Tenant shall have sublet the Leased Premises or assigned its interest in
this Lease in violation of the provisions contained in Article 7, whether
voluntarily or by operation of law or Tenant shall have encumbered its interest
in this Lease in violation of the provisions of this Lease, which violation
continues for more than ten (10) days after written notice from Landlord to
Tenant of such violation; or

(e) Tenant shall have abandoned the Leased Premises as defined under applicable
Law; or

(f) Tenant or any Guarantor of this Lease shall have permitted or suffered the
sequestration or attachment of, or execution on, or the appointment of a
custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant’s (or such Guarantor’s) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within sixty (60) days thereafter, or prior to sale pursuant to such
sequestration, attachment or levy, whichever is earlier; or

(g) Tenant or any Guarantor of this Lease shall have made a general assignment
of all or a substantial part of its assets for the benefit of its creditors; or

(h) Tenant or any Guarantor of this Lease shall have allowed (or sought) to have
entered against it a decree or order which: (i) grants or constitutes an order
for relief, appointment of a trustee, or condemnation or a reorganization plan
under the bankruptcy laws of the United States; (ii) approves as properly filed
a petition seeking liquidation or reorganization under said bankruptcy laws or
any other debtor’s relief law or similar statute of the United States or any
state thereof; or (iii) otherwise directs the winding up or liquidation of
Tenant; provided, however, if any decree or order was entered without Tenant’s
consent or over Tenant’s objection, Landlord may not terminate this Lease
pursuant to this Subparagraph if such decree or order is rescinded or reversed
within sixty (60) days after its original entry; or

(i) Tenant shall have availed itself of the protection of any debtor’s relief
law, moratorium law or other similar law which does not require the prior entry
of a decree or order.

12.2 Landlord’s Remedies.

(a) Upon the occurrence of an Event of Default under this Lease, Landlord, at
its option, and without limiting the exercise of any other right or remedy
Landlord may have on account of such Event of Default, and

 

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without any further demand or notice, may give to Tenant 3 days’ notice of
termination of this Lease, in which event this Lease and the Lease Term shall
come to an end and expire (whether or not the Term shall have commenced) upon
the expiration of such 3 day period with the same force and effect as if the
date set forth in the notice was the Expiration Date stated herein; and Tenant
shall then quit and surrender the Leased Premises to Landlord, but Tenant shall
remain liable for damages as provided in this Paragraph 12.2, and/or, to the
extent permitted by law, Landlord may remove all persons and property from the
Leased Premises, which property shall be stored by Landlord at a warehouse or
elsewhere at the risk, expense and for the account of Tenant. If Landlord elects
to terminate this Lease, pursuant to Section 1951.2 of the California Civil
Code, Landlord shall be entitled to recover from Tenant the aggregate of:

(i) The worth at the time of award of the unpaid rent earned as of the date of
the termination hereof;

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

(iii) The worth at the time of award of the amount by which the unpaid rent for
the balance of the Term after the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided; and

(iv) Any other amount necessary to compensate Landlord for the 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.

For the purposes of this Paragraph 12.2, “rent” shall be deemed to be and to
mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others, the “time of award” shall
mean the date upon which the judgment in any action brought by Landlord against
Tenant by reason of such default is entered or such earlier date as the court
may determine; the “worth at the time of award” of the amounts referred to in
subparagraphs (i) and (ii) above shall be computed by allowing interest on such
amounts at the lesser of 10% per annum or the then maximum rate of interest not
prohibited or made usurious by law; and the “worth at the time of award” of the
amount referred to in subparagraph (iii) 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 1% per annum. Tenant agrees that such charges shall be
recoverable by Landlord under California Code of Civil Procedure Section 1174(b)
or any similar, successor or related provision of law.

(b) Upon the occurrence of an Event of Default under this Lease, in addition to
any other remedies available to Landlord at law or in equity or under this
Lease, Landlord shall have the remedy described in California Civil Code
Section 1951.4 (lessor may continue lease in effect after lessee’s breach and
abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). If Landlord does not
elect to terminate this Lease for any reason, Landlord may, from time to time,
enforce all of its rights and remedies under this Lease, including the right to
recover all Rent as it becomes due. Such remedy may be exercised by Landlord
without prejudice to its right thereafter to terminate this Lease in accordance
with the other provisions contained in this Paragraph. Landlord’s reentry to
perform acts of maintenance or preservation of, or in connection with efforts to
relet, the Premises, or any portion thereof, or the appointment of a receiver
upon Landlord’s initiative to protect Landlord’s interest under this Lease shall
not terminate Tenant’s right to possession of the Leased Premises or any portion
thereof and, until Landlord elects to terminate this Lease, this Lease shall
continue in full force and Landlord may pursue all its remedies hereunder.
Nothing in this Paragraph shall be deemed to affect Landlord’s right to
indemnification, under the indemnification clauses contained in this Lease, for
losses arising from events occurring prior to the termination of this Lease.

(c) All rights, powers and remedies of Landlord hereunder and under any other
agreement now or hereafter in force between Landlord and Tenant shall be
cumulative and not alternative and shall be in addition to all rights, powers
and remedies given to Landlord at law or in equity. The exercise of any one or
more of such rights or remedies shall not impair Landlord’s right to exercise
any other right or remedy including any and all rights and remedies of Landlord
under California Civil Code Section 1951.8, California Code of Civil Procedure
Section 1161 et seq., or any similar, successor or related Law.

(d) If, after the expiration or earlier termination of the Lease, Tenant leaves
behind any of Tenant’s property, then Landlord shall store such Tenant’s
property at a warehouse or any other location at the risk, expense and for the
account of Tenant, and such property shall be released only upon Tenant’s
payment of such charges, together with moving and other costs relating thereto
and all other sums due and owing under this Lease. If Tenant does not reclaim
such Tenant’s property within the period permitted by Law, Landlord may sell
such Tenant’s property in accordance with Law and apply the proceeds of such
sale to any sums due and owing hereunder, or retain said property, granting
Tenant credit against sums due and owing hereunder for the reasonable value of
such property.

         (e) Limitation of Landlord’s Recourse. Landlord agrees that (i) the
obligations of Tenant under this Lease shall not constitute personal obligations
of the officers, directors, trustees, partners, joint venturers, members,
owners, stockholders, or other principals of Tenant or any affiliate of Tenant,
and (ii) Landlord shall have recourse only to the property of Tenant for the
satisfaction of such obligations and not against the assets of such officers,
directors, trustees, partners, joint venturers, members, owners, stockholders
principals or affiliates. Additionally, Landlord covenants and agrees that no
officer, director, trustee, partner, joint venturer, member, owner, stockholder
or other principal of Tenant or any affiliate of Tenant shall be sued or named
as a party in any suit or action brought by Landlord with respect to any alleged
breach of this Lease and no personal judgment shall be sought or obtained
against any of them.

 

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(f) To the extent not prohibited by Law, Tenant hereby waives all provisions of,
and protections under, any Law to the extent same are inconsistent and in
conflict with specific terms and provisions hereof.

12.3 Landlord’s Default And Tenant’s Remedies. In the event Landlord fails to
perform its obligations under this Lease, Landlord shall nevertheless not be in
default under the terms of this Lease until such time as Tenant shall have first
given Landlord written notice specifying the nature of such failure to perform
its obligations, and then only after Landlord shall have had thirty (30) days
following its receipt of such notice within which to perform such obligations;
provided that, if longer than thirty (30) days is reasonably required in order
to perform such obligations, Landlord shall have such longer period. In the
event of Landlord’s default as above set forth, then, and only then, Tenant may
then proceed in equity or at law to compel Landlord to perform its obligations
and/or to recover damages proximately caused by such failure to perform (except
as and to the extent Tenant has waived its right to damages as provided in this
Lease).

(a) Limitation Of Tenant’s Recourse. Tenant agrees that (i) the obligations of
Landlord under this Lease shall not constitute personal obligations of the
officers, directors, trustees, partners, joint venturers, members, owners,
stockholders, or other principals of Landlord or any affiliate of Landlord, and
(ii) Tenant shall have recourse only to the property of Landlord for the
satisfaction of such obligations and not against the assets of such officers,
directors, trustees, partners, joint venturers, members, owners, stockholders
principals or affiliates. Additionally, Tenant covenants and agrees that no
officer, director, trustee, partner, joint venturer, member, owner, stockholder
or other principal of Landlord or any affiliate of Landlord shall be sued or
named as a party in any suit or action brought by Tenant with respect to any
alleged breach of this Lease and no personal judgment shall be sought or
obtained against any of them.

12.4 Tenant’s Waiver. Landlord and Tenant agree that the provisions of Paragraph
12.3 above are intended to supersede and replace the provisions of California
Civil Code Sections 1932(1), 1941 and 1942, and accordingly, Tenant hereby
waives the provisions of California Civil Code Sections 1932(1), 1941 and 1942
and/or any similar or successor law regarding Tenant’s right to terminate this
Lease or to make repairs and deduct the expenses of such repairs from the rent
due under this Lease.

ARTICLE 13

GENERAL PROVISIONS

13.1 Taxes On Tenant’s Property. Tenant shall pay before delinquency any and all
taxes, assessments, license fees, use fees, permit fees and public charges of
whatever nature or description levied, assessed or imposed against Tenant or
Landlord by a governmental agency arising out of, caused by reason of or based
upon Tenant’s estate in this Lease, Tenant’s ownership of property, improvements
made by Tenant to the Leased Premises or the Outside Areas, improvements made by
Landlord for Tenant’s use within the Leased Premises or the Outside Areas,
Tenant’s use (or estimated use) of public facilities or services or Tenant’s
consumption (or estimated consumption) of public utilities, energy, water or
other resources (collectively, “Tenant’s Interest”). Upon demand by Landlord,
Tenant shall furnish Landlord with satisfactory evidence of these payments. If
any such taxes, assessments, fees or public charges are levied against Landlord,
Landlord’s property, the Building or the Property, or if the assessed value of
the Building or the Property is increased by the inclusion therein of a value
placed upon Tenant’s Interest, regardless of the validity thereof, Landlord
shall have the right to require Tenant to pay such taxes, and if not paid and
satisfactory evidence of payment delivered to Landlord at least ten days prior
to delinquency, then Landlord shall have the right to pay such taxes on Tenant’s
behalf and to invoice Tenant for the same. Tenant shall, within the earlier to
occur of (a) thirty (30) days of the date it receives an invoice from Landlord
setting forth the amount of such taxes, assessments, fees, or public charge so
levied, or (b) the due date of such invoice, pay to Landlord, as Additional
Rent, the amount set forth in such invoice. Failure by Tenant to pay the amount
so invoiced within such time period shall be conclusively deemed a default by
Tenant under this Lease. Tenant shall have the right to bring suit in any court
of competent jurisdiction to recover from the taxing authority the amount of any
such taxes, assessments, fees or public charges so paid.

13.2 Holding Over. This Lease shall terminate without further notice on the
Expiration Date (as set forth in Article 1). Any holding over by Tenant after
expiration of the Lease Term shall neither constitute a renewal nor extension of
this Lease nor give Tenant any rights in or to the Leased Premises except as
expressly provided in this Paragraph. Any such holding over to which Landlord
has consented shall be construed to be a tenancy from month to month, on the
same terms and conditions herein specified insofar as applicable, except that
the Base Monthly Rent shall be increased to an amount equal to one hundred fifty
percent (150%) of the Base Monthly Rent payable during the last full month
immediately preceding such holding over. In addition, in the event of a holding
over to which Landlord has not consented and which continues for more than sixty
(60) days, Tenant shall (a) be liable to Landlord for (1) any payment or rent
concession which Landlord may be required to make to any tenant obtained by
Landlord for all or any part of the Premises (a “New Tenant”) in order to induce
such New Tenant not to terminate its lease by reason of the holding-over by
Tenant, and (2) the loss of the benefit of the bargain if any New Tenant shall
terminate its lease by reason of the holding-over by Tenant, and (b) indemnify
Landlord against all claims for damages by any New Tenant.

13.3 Surrender Of Possession. Immediately prior to the expiration or upon the
sooner termination of this Lease, Tenant shall remove all of Tenant’s signs from
the exterior of the Building and shall remove all of Tenant’s equipment, trade
fixtures, furniture, supplies, wall decorations and other personal property from
within the Leased Premises, the Building and the Outside Areas, and shall vacate
and surrender the Leased Premises, the Building, the Outside Areas and the
Property to Landlord in the same condition, broom clean, as existed at the
Commencement Date, reasonable wear and tear, damage by casualty and condemnation
and repairs which are specifically made the responsibility of Landlord hereunder
excepted. Tenant shall repair all damage to the Leased Premises, the exterior of
the Building and the Outside Areas caused by Tenant’s removal of Tenant’s
property. Tenant shall patch and refinish, to Landlord’s reasonable
satisfaction, all penetrations made by Tenant or its employees to the floor,
walls

 

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or ceiling of the Leased Premises, whether such penetrations were made with
Landlord’s approval or not. Tenant shall repair or replace all stained or
damaged ceiling tiles, wall coverings and floor coverings to the reasonable
satisfaction of Landlord. Tenant shall replace as needed all light bulbs and
ballasts in the Leased Premises. Tenant shall repair all damage caused by Tenant
to the exterior surface of the Building and the paved surfaces of the Outside
Areas and, where necessary, replace or resurface same. Additionally, for
alterations made by Tenant that Landlord requested be removed upon termination
under Paragraph 6.1, Tenant shall, upon the expiration or sooner termination of
the Lease, remove any such improvements constructed or installed by Landlord or
Tenant and repair all damage caused by such removal. If the Leased Premises, the
Building, the Outside Areas and the Property are not surrendered to Landlord in
the condition required by this paragraph at the expiration or sooner termination
of this Lease, Landlord may, at Tenant’s expense, so remove Tenant’s signs,
property and/or improvements not so removed and make such repairs and
replacements not so made or hire, at Tenant’s expense, independent contractors
to perform such work. Tenant shall be liable to Landlord for all costs incurred
by Landlord in returning the Leased Premises, the Building and the Outside Areas
to the required condition, together with interest on all costs so incurred from
the date paid by Landlord at the then maximum rate of interest not prohibited or
made usurious by law until paid. Tenant shall pay to Landlord the amount of all
costs so incurred plus such interest thereon, within twenty (20) days of
Landlord’s billing Tenant for same.

13.4 Subordination To Mortgages. This Lease is subject to and subordinate to all
ground leases, mortgages and deeds of trust which affect the Building or the
Property and which are of public record as of the Effective Date of this Lease,
and to all renewals, modifications, consolidations, replacements and extensions
thereof. However, if the lessor under any such ground lease or any lender
holding any such mortgage or deed of trust shall advise Landlord that it desires
or requires this Lease to be made prior and superior thereto, then, upon written
request of Landlord to Tenant, Tenant shall promptly execute, acknowledge and
deliver any and all customary or reasonable documents or instruments which
Landlord and such lessor or lender deems necessary or desirable to make this
Lease prior thereto. Tenant hereby consents to Landlord’s ground leasing the
land underlying the Building or the Property and/or encumbering the Building or
the Property as security for future loans on such terms as Landlord shall
desire, all of which future ground leases, mortgages or deeds of trust shall be
subject to and subordinate to this Lease. However, if any lessor under any such
future ground lease or any lender holding such future mortgage or deed of trust
shall desire or require that this Lease be made subject to and subordinate to
such future ground lease, mortgage or deed of trust, then Tenant agrees, within
ten (10) business days after Landlord’s written request therefor, to execute,
acknowledge and deliver to Landlord any and all documents or instruments
requested by Landlord or by such lessor or lender as may be necessary or proper
to assure the subordination of this Lease to such future ground lease, mortgage
or deed of trust, but only if such lessor or lender agrees to recognize Tenant’s
rights under this Lease and agrees not to disturb Tenant’s quiet possession of
the Leased Premises so long as Tenant is not in default under this Lease. If
Landlord assigns the Lease as security for a loan, Tenant agrees to execute such
documents as are reasonably requested by the lender and to provide reasonable
provisions in the Lease protecting such lender’s security interest which are
customarily required by institutional lenders making loans secured by a deed of
trust.

Notwithstanding anything to contrary herein:

(a) Landlord shall use commercially reasonable efforts to obtain from any and
all current lenders or current ground lessors of the Leased Premises as of the
Effective Date a written agreement in substantially the form attached hereto as
Exhibit D. If such agreement is not obtained on or before September 30, 2010
from all such lenders or current ground lessors, then Tenant shall have the
right, as Tenant’s sole and exclusive remedy thereupon, to terminate this Lease
by written notice to Landlord given no earlier than September 30, 2010 and no
later than October 11, 2010, such termination to be effective on the date such
notice is given, and thereafter neither party shall have any liability to the
other hereunder, except that Landlord shall return to Tenant the Security
Deposit together with all prepaid Rent deposited by Tenant hereunder; provided,
however, (i) if such agreement is executed by such current lenders or ground
lessors on or before the date that is 10 business days following Landlord’s
receipt of Tenant’s termination notice, or (ii) if such current lenders or
ground lessors execute a recognition agreement in their standard form and in
addition Landlord agrees to provide adequate security for the performance of
Landlord’s obligation to construct the Tenant Improvements notwithstanding any
foreclosure by such lenders or ground lessors, including without limitation,
deposit of funds with a third party escrow, delivery of a guaranty from a
creditworthy parent or affiliate of Landlord reasonably acceptable to Tenant, or
delivery of a letter of credit in the amount of the estimated cost to complete
the Tenant Improvements less any Over-Allowance Amount, all of the foregoing on
terms and conditions reasonably acceptable to Tenant and Landlord, then, in
either case of (i) or (ii) above, Tenant’s termination shall be void and of no
force and effect and this Lease will continue in full force and effect.

(b) The subordination of this Lease to any future ground lease or instrument of
security shall be conditioned upon Tenant’s receipt from any such ground lessors
or lenders of a recognition agreement in form reasonably satisfactory to Tenant
providing for recognition of Tenant’s interests under this Lease in the event of
a foreclosure of the lender’s security interest or termination of the ground
lease.

13.5 Tenant’s Attornment Upon Foreclosure. Tenant shall, upon request, attorn
(i) to any purchaser of the Building or the Property at any foreclosure sale or
private sale conducted pursuant to any security instruments encumbering the
Building or the Property, (ii) to any grantee or transferee designated in any
deed given in lieu of foreclosure of any security interest encumbering the
Building or the Property, or (iii) to the lessor under an underlying ground
lease of the land underlying the Building or the Property, should such ground
lease be terminated; provided that such purchaser, grantee or lessor recognizes
Tenant’s rights under this Lease.

13.6 Mortgagee Protection. In the event of any default on the part of Landlord,
Tenant will give notice by registered mail to any Lender or lessor under any
underlying ground lease who shall have requested, in writing, to Tenant that it
be provided with such notice, and Tenant shall offer such Lender or lessor a
reasonable opportunity to cure the default, including time to obtain possession
of the Leased Premises by power of sale or judicial foreclosure or other
appropriate legal proceedings, including, without limitation, appointment of a
receiver if reasonably necessary to effect a cure.

 

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13.7 Estoppel Certificate. Tenant will, following any request by Landlord,
promptly execute and deliver to Landlord an estoppel certificate (i) certifying
that this Lease is unmodified and in full force and effect, or, if modified,
stating the nature of such modification and certifying that this Lease, as so
modified, is in full force and effect, (ii) stating the date to which the rent
and other charges are paid in advance, if any, (iii) acknowledging that there
are not, to Tenant’s knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed, and (iv) certifying
such other information about this Lease as may be reasonably requested by
Landlord, its Lender or prospective lenders, investors or purchasers of the
Building or the Property. Tenant’s failure to execute and deliver such estoppel
certificate within ten (10) business days after Landlord’s request therefor,
where such failure shall continue for an additional five (5) business days after
delivery of written notice to Tenant of such failure, shall be a material
default by Tenant under this Lease, and Landlord shall have all of the rights
and remedies available to Landlord as Landlord would otherwise have in the case
of any other material default by Tenant, including the right to terminate this
Lease and sue for damages proximately caused thereby, it being agreed and
understood by Tenant that Tenant’s failure to so deliver such estoppel
certificate in a timely manner could result in Landlord being unable to perform
committed obligations to other third parties which were made by Landlord in
reliance upon this covenant of Tenant. Landlord and Tenant intend that any
statement delivered pursuant to this paragraph may be relied upon by any Lender
or purchaser or prospective Lender or purchaser of the Building, the Property,
or any interest in them.

13.8 Tenant’s Financial Information. Tenant shall, within fifteen (15) days
after Landlord’s request therefor, which request shall not be made more than
twice per calendar year, deliver to Landlord a copy of Tenant’s current
financial statements (including a balance sheet, income statement and statement
of cash flow, all prepared in accordance with generally accepted accounting
principles and audited by an accountant reasonably acceptable to Landlord) and
any such other information reasonably requested by Landlord regarding Tenant’s
financial condition. Landlord shall be entitled to disclose such financial
statements or other information to its Lender, to any present or prospective
principal of or investor in Landlord, or to any prospective Lender or purchaser
of the Building, the Property, or any portion thereof or interest therein;
provided that during any period when the stock in Tenant is not publically
traded, any such recipient first executes a commercially reasonable
confidentiality agreement. Any such financial statement or other information
which is marked “confidential” or “company secrets” (or is otherwise similarly
marked by Tenant) shall be confidential and shall not be disclosed by Landlord
to any third party except as specifically provided in this paragraph, unless the
same becomes a part of the public domain without the fault of Landlord.

13.9 Transfer By Landlord. Landlord and its successors in interest shall have
the right to transfer their interest in the Building, the Property, or any
portion thereof at any time and to any person or entity. In the event of any
such transfer, the Landlord originally named herein (and in the case of any
subsequent transfer, the transferor), upon the effective date of such transfer
to a successor in interest, (i) shall be automatically relieved, without any
further act by any person or entity, of all liability for the performance of the
obligations of the Landlord hereunder which may accrue after the date of such
transfer and (ii) shall be relieved of all liability for the performance of the
obligations of the Landlord hereunder which have accrued before the date of
transfer if its transferee agrees to assume and perform all such prior
obligations of the Landlord hereunder. Tenant shall attorn to any such
transferee. After the date of any such transfer, the term “Landlord” as used
herein shall mean the transferee of such interest in the Building or the
Property.

13.10 Force Majeure. The obligations of each of the parties under this Lease
(other than the obligations to pay money) shall be temporarily excused if such
party is prevented or delayed in performing such obligations by reason of any
strikes, lockouts or labor disputes; government restrictions, regulations,
controls, action or inaction; civil commotion; or extraordinary weather, fire or
other acts of God.

13.11 Notices. Any notice required or desired to be given by a party regarding
this Lease shall be in writing and shall be personally served, or in lieu of
personal service may be given by reputable overnight courier service, postage
prepaid, addressed to the other party as follows:

 

If to Landlord:

  

WCP Bourdeaux Centre LLC

  

c/o Wrightwood Capital

  

2 North LaSalle Street

  

9th Floor

  

Chicago, Illinois 60602

  

Attention: General Counsel

with a copy to:

  

WCP Bourdeaux Centre LLC

  

c/o Wrightwood Capital

  

2 North LaSalle Street

  

9th Floor

  

Chicago, Illinois 60602

  

Attention: Director of Portfolio Management

and a copy to:

  

DLA Piper LLP (US)

  

203 N. LaSalle

  

Chicago, Illinois 60601

  

Attention: Alison Mitchell

If to Tenant:

  

Before the Commencement Date:

  

PMC-Sierra, Inc.

  

3975 Freedom Circle, Suite 300

  

Santa Clara, CA 95054

    

Attn: General Counsel

 

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with a copy to:

  

PMC-Sierra

  

8555 Baxter Place

  

Burnaby, BC, V5A 4V7, Canada

  

Attn: Director, Worldwide Facilities

  

After the Commencement Date:

  

PMC-Sierra, Inc.

  

1380 Bordeaux Drive

  

Sunnyvale, California 94089

  

Attention: General Counsel

with a copy to:

  

PMC-Sierra

  

8555 Baxter Place

  

Burnaby, BC, V5A 4V7, Canada

  

Attention: Director, Worldwide Facilities

Any notice given in accordance with the foregoing shall be deemed received upon
actual receipt or refusal to accept delivery. Either party may change its
address for notice hereunder by written notice to the other party.

13.12 Attorneys’ Fees. In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease, to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any term or covenant of this Lease or rights or duties
hereunder of either party, the prevailing party shall be entitled to recover
from the non-prevailing party as a part of such action or proceeding, or in a
separate action for that purpose brought within one year from the determination
of such proceeding, reasonable attorneys’ fees, expert witness fees, court costs
and other reasonable expenses incurred by the prevailing party.

13.13 Definitions. Any term that is given a special meaning by any provision in
this Lease shall, unless otherwise specifically stated, have such meaning
wherever used in this Lease or in any Addenda or amendment hereto. In addition
to the terms defined in Article 1, the following terms shall have the following
meanings:

(a) Real Property Taxes. The term “Real Property Tax” or “Real Property Taxes”
shall each mean Tenant’s Expense Share of (i) all taxes, assessments, levies and
other charges of any kind or nature whatsoever, general and special, foreseen
and unforeseen (including all instruments of principal and interest required to
pay any general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership or new
construction), now or hereafter imposed by any governmental or
quasi-governmental authority or special district having the direct or indirect
power to tax or levy assessments, which are levied or assessed for whatever
reason against the Property or any portion thereof, or Landlord’s interest
herein, or the fixtures, equipment and other property of Landlord that is an
integral part of the Property and located thereon, or Landlord’s business of
owning, leasing or managing the Property or the gross receipts, income or
rentals from the Property, (ii) all charges, levies or fees imposed by any
governmental authority against Landlord by reason of or based upon the use of or
number of parking spaces within the Property, the amount of public services or
public utilities used or consumed (e.g. water, gas, electricity, sewage or waste
water disposal) at the Property, the number of person employed by tenants of the
Property, the size (whether measured in area, volume, number of tenants or
whatever) or the value of the Property, or the type of use or uses conducted
within the Property, and all costs and fees (including attorneys’ fees)
reasonably incurred by Landlord in contesting any Real Property Tax and in
negotiating with public authorities as to any Real Property Tax. If, at any time
during the Lease Term, the taxation or assessment of the Property prevailing as
of the Effective Date of this Lease shall be altered so that in lieu of or in
addition to any the Real Property Tax described above there shall be levied,
awarded or imposed (whether by reason of a change in the method of taxation or
assessment, creation of a new tax or charge, or any other cause) an alternate,
substitute, or additional use or charge (i) on the value, size, use or occupancy
of the Property or Landlord’s interest therein or (ii) on or measured by the
gross receipts, income or rentals from the Property, or on Landlord’s business
of owning, leasing or managing the Property or (iii) computed in any manner with
respect to the operation of the Property, then any such tax or charge, however
designated, shall be included within the meaning of the terms “Real Property
Tax” or “Real Property Taxes” for purposes of this Lease. If any Real Property
Tax is partly based upon property or rents unrelated to the Property, then only
that part of such Real Property Tax that is fairly allocable to the Property
shall be included within the meaning of the terms “Real Property Tax” or “Real
Property Taxes.” Notwithstanding the foregoing, the terms “Real Property Tax” or
“Real Property Taxes” and “Property Operating Expenses” shall not include
estate, inheritance, transfer, gift or franchise taxes of Landlord or the
federal or state income tax imposed on Landlord’s income from all sources. If a
special assessment payable in installments is levied against the Building,
Property Taxes for any year shall include only the installment of such
assessment and any interest payable or paid during such year as if such
assessment were paid over the longest possible term, unless the same would
subject Landlord to interest (beyond the interest applicable to a special
assessment going to bond) or penalties.

         (b) Landlord’s Insurance Costs. The term “Landlord’s Insurance Costs”
shall mean Tenant’s Expense Share of the costs to Landlord to carry and maintain
the policies of fire and property damage insurance for the Building and the
Property and general liability and any other insurance required or permitted to
be carried by Landlord pursuant to Article 9, together with any deductible
amounts paid by Landlord upon the occurrence of any insured casualty or loss,
not to exceed $60,000 per occurrence. In determining the amount of Landlord’s
Insurance Costs for any calendar year, if less than 100% of the rentable area of
the Property is occupied by tenants at any time, Landlord’s Insurance Costs
shall be determined to be an amount equal to the like expenses which would
normally be expected to be incurred had such occupancy been 100%.

 

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(c) Property Maintenance Costs. The term “Property Maintenance Costs” shall
mean, without duplication, Tenant’s Expense Share of the aggregate of all costs
and expenses paid or incurred by or on behalf of Landlord in connection with the
ownership, operation, repair and maintenance of the Property, including the
rental value of any management office at the Property and capital improvements
if such capital improvement is reasonably intended to result in a reduction in
Property Maintenance Costs (but then only to the extent of the anticipated
reduction in Property Maintenance Costs) or are required for compliance with
Laws or insurance requirements first becoming effective after the Effective
Date. Such capital improvements shall be amortized on a straight-line basis over
the reasonable life of the capital item in question, and the amount included in
Property Maintenance Costs in any calendar year shall be equal to the annual
amortized amount. Property Maintenance Costs shall also include all costs for
management and administration of the Leased Premises, the Building, the Outside
Areas and the Property or any portion thereof, including, without limitation, a
property management fee (not to exceed 3% of the Base Rent), accounting,
auditing, billing postage, salaries and benefits for all employees and
contractors engaged in the management, operating, maintenance, repair and
protection of the Building and the Property, whether located on the Property or
offsite. During any period when Tenant’s Expense Share is less than 100%, if
during all or part of any calendar year, Landlord shall not furnish any
particular item(s) of work or service (which would otherwise constitute a
Property Maintenance Cost) to any occupiable able portions of the Property for
any reason, then, for purposes of computing Property Maintenance Costs for such
period, the amount included in Property Maintenance Costs for such period shall
be increased by an amount equal to the costs and expenses that would have been
reasonably incurred by Landlord during such period if Landlord had furnished
such item(s) of work or service to such portion of the Property. During any
period when Tenant’s Expense Share is less than 100%, in determining the amount
of Property Maintenance Costs for any calendar year, if less than 100% of the
rentable area of the Property is occupied by tenants at any time, Property
Maintenance Costs shall be determined to be an amount equal to the like expenses
which would normally be expected to be incurred had such occupancy been 100%.
Notwithstanding the foregoing, Property Maintenance Costs and Property Operating
Expenses shall not include (a) costs that are reimbursed out of insurance,
warranties, guaranties or condemnation proceeds (b) costs to remedy violations
of any Laws or violations of any Private Restrictions applicable to the Leased
Premises, the Building or the Property to the extent the same amount to such a
violation on or prior to the Effective Date, (c) costs incurred in connection
with the presence of any Hazardous Material, except to the extent caused by the
release or emission of the Hazardous Material in question by Tenant or any
Tenant Party and except to the extent related to Hazardous Materials classified
as such after the Effective Date, (d) costs which could properly be capitalized
under generally accepted accounting principles, except to the extent set forth
in the first two sentences of this Section 13.13(c), (e) expense reserves,
(f) costs occasioned by the violation of any law by Landlord, any other occupant
of the Property, or their respective agents, employees or contractors, (g) fees,
commissions, attorneys’ fees, costs or other disbursements incurred in
connection with negotiations or disputes with any other occupant of the Property
and costs arising from the violation by Landlord or any occupant of the Property
(other than Tenant) of the terms and conditions of any lease or other agreement,
(h) interest, charges and fees incurred on debt, payments on mortgages and rent
under ground leases; (i) costs for which Landlord has a right of reimbursement
from others (other than through the obligation of tenants of the Property to pay
their respective share of Property Maintenance Costs); (j) depreciation;
(k) costs incurred in connection with the operation of any parking or commercial
concession within the Property; (l) advertising or promotional costs; (m) costs
of sculptures, fountains, paintings and other art objects, provided, however,
the cost of maintaining and repairing any of the foregoing located at the
Building or the Project as of the Effective Date shall not be excluded; or
(n) costs for insurance in excess of the cost of insurance customarily carried
by landlords of similar projects in the vicinity of the Premises.

(d) Property Operating Expenses. The term “Property Operating Expenses” shall
mean and include all Real Property Taxes, plus all Landlord’s Insurance Costs,
plus all Property Maintenance Costs.

(e) Law. The term “Law” shall mean any judicial decisions and any statute,
constitution, ordinance, resolution, regulation, rule, administrative order, or
other requirements of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Property, or any of them, in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or published
policy of any quasi-official entity or body (e.g. a board of fire examiners or a
public utility or special district).

(f) Lender. The term “Lender” shall mean the holder of any promissory note or
other evidence of indebtedness secured by the Property or any portion thereof.

(g) Private Restrictions. The term “Private Restrictions” shall mean (as they
may exist from time to time) any and all covenants, conditions and restrictions,
private agreements, easements, and any other recorded documents or instruments
affecting the use of the Property, the Building, the Leased Premises, or the
Outside Areas.

(h) Rent. The term “Rent” shall mean collectively Base Monthly Rent and all
Additional Rent.

(i) Building Systems. The term “Building Systems” shall mean collectively the
mechanical, electrical, plumbing, sanitary, sprinkler, heating, ventilation and
air conditioning, security, life safety, elevator and other service systems or
facilities of the Building and the finished ceiling and Building standard
lighting fixtures in the Leased Premises, that are excluding any Premises
Fixtures.

(j) Premises Fixtures. The term “Premises Fixtures” shall mean Tenant’s security
systems in the Leased Premises and all non-Building standard lighting in the
Premises.

13.14 General Waivers. One party’s consent to or approval of any act by the
other party requiring the first party’s consent or approval shall not be deemed
to waive or render unnecessary the first party’s consent to or

 

27.

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approval of any subsequent similar act by the other party. No waiver of any
provision hereof, or any waiver of any breach of any provision hereof, shall be
effective unless in writing and signed by the waiving party. The receipt by
Landlord of any Rent or other payment with or without knowledge of the breach of
any other provision hereof shall not be deemed a waiver of any such breach. No
waiver of any provision of this Lease shall be deemed a continuing waiver unless
such waiver specifically states so in writing and is signed by both Landlord and
Tenant. No delay or omission in the exercise of any right or remedy accruing to
either party upon any breach by the other party under this Lease shall impair
such right or remedy or be construed as a waiver of any such breach theretofore
or thereafter occurring. The waiver by either party of any breach of any
provision of this Lease shall not be deemed to be a waiver of any subsequent
breach of the same or any other provisions herein contained.

13.15 Private Adjudication; Waiver of Jury Trial. The parties hereto agree that
any and all disputes or controversies of any nature between them arising at any
time that are before any state court located within the county where the
Property is located shall be decided by a reference to a private judge, mutually
selected by the parties (or, if they cannot agree, by the presiding judge of the
Santa Clara County Superior Court) appointed in accordance with California Code
of Civil Procedure Section 638 (or pursuant to comparable provisions of federal
law if the dispute falls within the exclusive jurisdiction of the federal
courts), sitting without a jury, in Santa Clara County, California; and the
parties hereby submit to the jurisdiction of such court. The reference
proceedings shall be conducted pursuant to and in accordance with the provisions
of California Code of Civil Procedure §§ 638 through 645.1, inclusive. The
private judge shall have the power, among others, to grant provisional relief,
including without limitation, entering temporary restraining orders, issuing
preliminary and permanent injunctions and appointing receivers. All such
proceedings shall be closed to the public and confidential and all records
relating thereto shall be permanently sealed. If during the course of any
dispute, a party desires to seek provisional relief, but a judge has not been
appointed at that point pursuant to the judicial reference procedures, then such
party may apply to the Santa Clara County Superior Court for such relief. THE
PARTIES ACKNOWLEDGE THAT JUDICIAL REFERENCE PROCEEDINGS CONDUCTED IN ACCORDANCE
WITH THIS PARAGRAPH WOULD BE CONDUCTED BY A PRIVATE JUDGE ONLY, SITTING WITHOUT
A JURY.

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO RESOLVE ANY
DISPUTE PURSUANT TO JUDICIAL REFERENCE AS SET FORTH IMMEDIATELY ABOVE, TO THE
EXTENT ANY DISPUTE IS NOT SUBMITTED TO A REFEREE, THEN TO THE FULLEST EXTENT NOT
PROHIBITED BY LAW, each party hereto, knowingly and voluntarily, and for their
mutual benefit, waives any right to trial by jury in the event of litigation
regarding the performance or enforcement of, or in any way related to, this
Agreement.

13.16 Miscellaneous. Should any provisions of this Lease prove to be invalid or
illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provisions hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant. The term “party”
shall mean Landlord or Tenant as the context implies. If Tenant consists of more
than one person or entity, then all members of Tenant shall be jointly and
severally liable hereunder. This Lease shall be construed and enforced in
accordance with the Laws of the State in which the Leased Premises are located.
The captions in this Lease are for convenience only and shall not be construed
in the construction or interpretation of any provision hereof. When the context
of this Lease requires, the neuter gender includes the masculine, the feminine,
a partnership, corporation, limited liability company, joint venture, or other
form of business entity, and the singular includes the plural. The terms “must,”
“shall,” “will,” and “agree” are mandatory. The term “may” is permissive. When a
party is required to do something by this Lease, it shall do so at its sole cost
and expense without right of reimbursement from the other party unless specific
provision is made therefor. Where Landlord’s consent is required hereunder, the
consent of any Lender shall also be required. Landlord and Tenant shall both be
deemed to have drafted this Lease, and the rule of construction that a document
is to be construed against the drafting party shall not be employed in the
construction or interpretation of this Lease. Where Tenant is obligated not to
perform any act or is not permitted to perform any act, Tenant is also obligated
to restrain any others reasonably within its control, including agents,
invitees, contractors, subcontractors and employees, from performing such act.
Landlord shall not become or be deemed a partner or a joint venturer with Tenant
by reason of any of the provisions of this Lease.

ARTICLE 14

CORPORATE AUTHORITY

BROKERS AND ENTIRE AGREEMENT

14.1 Corporate Authority. Tenant represents and warrants that Tenant is validly
formed and duly authorized and existing, that Tenant is qualified to do business
in the State in which the Leased Premises are located, that Tenant has the full
right and legal authority to enter into this Lease, and that the individual
executing this Lease on its behalf is duly authorized to execute and deliver
this Lease on behalf of Tenant in accordance with its terms.

14.2 Brokerage Commissions. Landlord and Tenant each represents, warrants and
agrees that it has not had any dealings with any real estate brokers, leasing
agents, finders or salesmen, other than the Broker (as named in Article 1) with
respect to the negotiations of this Lease. Landlord shall be responsible at its
sole cost for all such commissions payable to the Broker in connection with this
Lease. Each party hereby agrees to indemnify, defend (with counsel reasonably
approved by the indemnified party), and hold harmless the other party from any
liability for the payment of any real estate brokerage commissions, leasing
commissions or finder’s fees claimed by any other real estate brokers, leasing
agents, finders, or salesmen to be earned or due and payable by reason of the
indemnifying party’s agreement or promise (implied or otherwise) to pay (or to
have Landlord pay) such a commission or finder’s fee with respect to this Lease.

 

28.

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14.3 Entire Agreement. This Lease and the Exhibits which Exhibits are by this
reference incorporated herein, constitute the entire agreement between the
parties, and there are no other agreements, understandings or representations
between the parties relating to the lease by Landlord of the Leased Premises to
Tenant, except as expressed herein. No subsequent changes, modifications or
additions to this Lease shall be binding upon the parties unless in writing and
signed by both Landlord and Tenant.

14.4 Landlord’s Representations. Tenant acknowledges that neither Landlord nor
any of its agents made any representations or warranties respecting the
Property, the Building or the Leased Premises, upon which Tenant relied in
entering into the Lease, which are not expressly set forth in this Lease. Tenant
further acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the leased Premises may be used for Tenant’s
intended use under existing Law, or (ii) the suitability of the Leased Premises
for the conduct of Tenant’s business, or (iii) the exact square footage of the
Leased Premises, and that Tenant relies solely upon its own investigations with
respect to such matters. Tenant expressly waives any and all claims for damage
by reason of any statement, representation, warranty, promise or other agreement
of Landlord or Landlord’s agent(s), if any, not contained in this Lease or in
any Exhibit attached hereto.

ARTICLE 15

OPTIONS TO TERMINATE, EXTEND

15.1 Option to Terminate. Provided that Tenant is not in default under this
Lease, and subject to the following terms and provisions, Tenant shall have a
one time option, exercisable if at all by irrevocable notice to Landlord
delivered at least eighteen (18) full calendar months prior to the effective
date of termination, to terminate this Lease effective on the ninety sixth
(96th) full calendar month of the Lease Term. If Tenant elects to so terminate
this Lease, Tenant shall pay to Landlord at the time of Tenant’s delivery of the
notice of termination a termination fee (the “Termination Fee”) in an amount
equal to One Million One Hundred Thousand and 00/100 Dollars $1,100,000.00. If
Tenant fails to timely deliver to Landlord its notice of termination, together
with its payment of the Termination Fee, then Tenant’s rights, pursuant to this
Section 15.1, shall lapse and be of no further force or effect.

15.2 Renewal Term. Tenant shall have the right to renew the initial Term for all
of the Leased Premises for one (1) renewal term of five (5) years (the “Renewal
Term”), commencing on the day after the expiration of the initial Lease Term
(the “Renewal Term Commencement Date”) and ending on the day immediately
preceding the fifth (5th) anniversary of the Renewal Term Commencement Date,
unless the Renewal Term shall sooner terminate pursuant to any of the terms of
this Lease or otherwise. The Renewal Term shall commence only if (i) Tenant
notifies Landlord in writing (the “Renewal Exercise Notice”) of Tenant’s
exercise of such renewal right not earlier than fifteen (15) full calendar
months, and not later than twelve (12) full calendar months, prior to the
Expiration Date (the “Extension Deadline”), and, (ii) at the time of the
exercise of such right and, at the option of Landlord, immediately prior to the
Renewal Term Commencement Date, no Event of Default under this Lease shall have
occurred and be continuing hereunder. A Renewal Exercise Notice shall be
irrevocable once delivered. Time is of the essence with respect to the giving of
the Renewal Exercise Notice. The Renewal Term shall be upon all of the
agreements, terms, covenants and conditions of this Lease, except that (a) the
Base Monthly Rent shall be determined as provided below and (b) Tenant shall
have no further right to renew or extend the Lease Term. Upon the commencement
of the Renewal Term, (1) the Renewal Term shall be added to and become part of
the Lease Term, (2) any reference to “this Lease”, to the “Lease Term”, the
“term of this Lease” or any similar expression shall be deemed to include the
Renewal Term, and (3) the expiration of the Renewal Term shall become the
Expiration Date. Any termination, cancellation or surrender of any interest of
Tenant under this Lease at any time during the Lease Term shall automatically
terminate the renewal rights set forth herein. The renewal right contained
herein shall be personal to PMC-Sierra, Inc. (and Permitted Transferees) (and
not available to any other assignee, or any other sublessee or other transferee)
and may be exercised only provided and on condition that PMC-Sierra, Inc. has
not assigned its interest in this Lease (except to a Permitted Transferee) or
sublet (except to a Permitted Transferee) more than 50% of Leased Premises as of
the date Tenant purports to give the Renewal Exercise Notice and, at the option
of Landlord, upon commencement of the Renewal Term.

15.3 Renewal Term Rent. The Base Monthly Rent payable during the Renewal Term
shall be equal to the Fair Market Value (as hereinafter defined) of the Leased
Premises, as of the last day of the calendar month immediately preceding the
Renewal Term (the “Calculation Date”). “Fair Market Value” shall mean the fair
market monthly rent, taking into account all escalations, at which, as of the
Calculation Date, tenants are leasing non-sublease, non-renewal, non-encumbered,
non-equity, non-expansion space comparable in size, location and quality to the
Leased Premises for a term of five (5) years, in an arm’s-length transaction,
which comparable space is located in the same geographic market as the Property,
and which comparable transactions (collectively, the “Comparable Transactions”)
have been entered into within the six (6) month period immediately preceding the
Calculation Date, taking into consideration the following concessions (the
“Concessions”): (a) rental abatement concessions, if any, being granted such
tenants in connection with such comparable space; and (b) tenant improvements or
allowances provided or to be provided for such comparable space, taking into
account, and deducting the value of, the existing improvements in the Leased
Premises, such value to be based upon the age, condition, design, quality of
finishes and layout of the improvements and the extent to which the same can be
utilized by a Tenant based upon the fact that the precise tenant improvements
existing in the Leased Premises are specifically suitable to Tenant; and
(c) other reasonable monetary concessions being granted such tenants in
connection with such comparable space; provided, however, that in calculating
the Fair Market Value, no consideration shall be given to (i) the fact that
Landlord is or is not required to pay a real estate brokerage commission in
connection with Tenant’s exercise of its right to lease the Leased Premises
during the Renewal Term, as the case may be, or in connection with the
Comparable Transactions or the fact that landlords are or are not paying real
estate brokerage commissions in connection with such comparable space; and
(ii) any period of rental abatement, if any, granted to tenants in Comparable
Transactions in connection with the design, permitting and construction of
tenant improvements in such comparable spaces.

 

29.

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15.4 Parties to Confer Regarding Fair Market Rental. If Tenant has determined
that it may exercise its right to renew the Lease Term pursuant to this Article,
Tenant may give Landlord notice in writing thereof (the “Notice to Confer”) at
least sixty (60) days prior to the Extension Deadline. Following delivery of the
Notice to Confer, Landlord and Tenant shall confer and in good faith endeavor to
mutually agree upon the matters to be determined pursuant to Paragraph 15.2
above. If the parties are not able to agree on the Fair Market Value prior to
the Extension Deadline and Tenant elects to deliver the Renewal Exercise Notice
and timely delivers the same in accordance with the provisions of this Lease,
then the Fair Market Value shall be determined as provided below.

(a) Rent Notice. Landlord shall advise Tenant (the “Rent Notice”) of Landlord’s
determination of Fair Market Value of the Leased Premises for the Renewal Term
prior to the Renewal Term Commencement Date. If Tenant timely disputes
Landlord’s determination of Fair Market Value in accordance with Paragraph
15.4(e) below, then the dispute shall be resolved by arbitration as provided in
Paragraph 15.4(e) below. If the Base Monthly Rent payable during the Renewal
Term is not determined prior to the Renewal Term Commencement Date, Tenant shall
pay Base Monthly Rent in an amount equal to the Base Monthly Rent in effect on
the initial Expiration Date (the “Interim Rent”). Upon final determination of
the Base Monthly Rent for the Renewal Term, Tenant shall commence paying such
Base Monthly Rent as so determined, and within ten (10) days after such
determination Tenant shall pay any deficiency in prior payments or, if the Base
Monthly Rent as so determined shall be less than the Interim Rent, Tenant shall
be entitled to a credit against the next succeeding installments of Base Monthly
Rent in an amount equal to the difference between each installment of Interim
Rent and the Base Monthly Rent as so determined which should have been paid for
such installment until the total amount of the over payment has been recouped.

(b) Arbitration. If Tenant wishes to dispute Landlord’s determination of Fair
Market Value of the Premises for the Renewal Term pursuant to the foregoing
provisions of this Article 15, then Tenant shall give notice to Landlord of such
dispute within ten (10) business days after delivery of the Rent Notice, and
such dispute thereafter shall be determined by arbitration in accordance with
the then prevailing Expedited Procedures of the American Arbitration Association
or its successor for arbitration of commercial disputes, except that the
Expedited Procedures shall be modified as follows:

(i) In its demand for arbitration, Tenant shall specify the name and address of
the person who has agreed to act as the arbitrator on Tenant’s behalf. The
arbitrator shall be a real estate broker with at least ten (10) years’ full-time
commercial brokerage experience who is familiar with the Fair Market Value of
first-class office space in the geographic market of the Building. Failure on
the part of Tenant to make the timely and proper demand for such arbitration
shall constitute a waiver of the right thereto and the Base Monthly Rent shall
be as set forth in the Rent Notice. Within ten (10) business days after the
service of the demand for arbitration, Landlord shall give notice to Tenant
specifying the name and address of the person designated by Landlord to act as
arbitrator on its behalf, which arbitrator shall be similarly qualified. If
Landlord fails to notify Tenant of the appointment of its arbitrator within such
ten (10) business day period, and such failure continues for three (3) business
days after Tenant delivers a second notice to Landlord, then the arbitrator
appointed by Tenant shall be the arbitrator to determine the Fair Market Value
for the Premises.

(ii) If two arbitrators are chosen pursuant to subparagraph (i) above, the
arbitrators so chosen shall meet within ten (10) business days after the second
arbitrator is appointed and shall seek to reach agreement on Fair Market Value.
If within twenty (20) days after the second arbitrator is appointed the two
arbitrators are unable to reach agreement on Fair Market Value then the two
arbitrators shall appoint a third arbitrator, who shall be a competent and
impartial person with qualifications similar to those required of the first two
arbitrators. If they are unable to agree upon such appointment within five
(5) business days after expiration of such twenty (20) day period, the third
arbitrator shall be selected by the presiding judge of the superior court in
which the Property is located. The third arbitrator shall decide the dispute, if
it has not been previously resolved, by following the procedures set forth in
subparagraph (iii) below. Each party shall pay the fees and expenses of its
respective arbitrator and both shall share the fees and expenses of the third
arbitrator. Attorneys’ fees and expenses of counsel and of witnesses for the
respective parties shall be paid by the respective party engaging such counsel
or calling such witnesses.

(iii) Fair Market Value shall be fixed by the third arbitrator in accordance
with the following procedures. Concurrently with the appointment of the third
arbitrator, each of the arbitrators selected by the parties shall state, in
writing, his or her determination of the Fair Market Value supported by the
reasons therefor. The third arbitrator shall have the right to consult experts
and competent authorities for factual information or evidence pertaining to a
determination of Fair Market Value, but any conclusion of such determination
shall be made in the presence of both parties with full right on their part to
cross-examine. The third arbitrator shall conduct such hearings and
investigations as he or she deem appropriate and shall, within twenty (20) days
after being appointed, select which of the two proposed determinations most
closely approximates his or her determination of Fair Market Value. The third
arbitrator shall have no right to propose a middle ground or any modification of
either of the two proposed determinations. The determination he or she chooses
as that most closely approximating his or her determination of the Fair Market
Value shall constitute the decision of the third arbitrator and shall be final
and binding upon the parties. The third arbitrator shall render the decision in
writing with counterpart copies to each party. The third arbitrator shall have
no power to add to or modify the provisions of this Lease. Promptly following
receipt of the third arbitrator’s decision, the parties shall enter into an
amendment to this Lease evidencing the extension of the Lease Term for the
Renewal Term and confirming the Base Monthly Rent for the Renewal Term, but the
failure of the parties to do so shall not affect the effectiveness of the third
arbitrator’s determination or that the Lease Term is extended.

                (iv) In the event of a failure, refusal or inability of any
arbitrator to act, his or her successor shall be appointed by him or her, but in
the case of the third arbitrator, his or her successor shall be appointed in the
same manner as that set forth herein with respect to the appointment of the
original third arbitrator.

(Signature page continue next page)

 

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date
first set forth above with the intent to be legally bound thereby as of the
Effective Date of this Lease.

 

LANDLORD:

WCP BORDEAUX CENTRE LLC,

a Delaware limited liability company

By:

 

/s/ Henry Bieber

Name:

 

Henry Bieber

Title:

 

Vice President

TENANT:

PMC-SIERRA, INC.,

a Delaware corporation

By:

 

/s/ Gregory S. Lang

Name:

 

Gregory S. Lang

Title:

 

President and Chief Executive Officer

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EXHIBIT A

LEGAL DESCRIPTION OF PROPERTY AND SITE PLAN

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SUNNYVALE, COUNTY
OF SANTA CLARA, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

All that certain real property described as Parcel A and Parcel B in that
certain, “Certificate of Compliance (Lot Line Adjustment)” recorded on July 31,
2007 as Instrument No. 19532077, Santa Clara County Records, more particularly
described as follows:

Parcel A:

Being a portion of Parcel 1 as shown on that certain Parcel Map filed for record
on September 25, 1998 in Book 708, pages 25 and 26, Santa Clara County Records
and being more particularly described as follows:

Beginning at the northwesterly corner of said Parcel 1 and also being on the
easterly line of Mathilda Avenue as shown on said Parcel Map;

Thence along the westerly line of said Parcel 1, South 14°52’14” West 312.00
feet;

Thence along a curve to the left, having a radius of 50.00 feet, through a
central angle of 90°00’00” an arc distance of 78.54 feet to a point on the
southerly line of said Parcel 1;

Thence along said southerly line, South 75°07’46” East, 257.66 feet;

Thence leaving said line, North 14°52’14” East, 362.00 feet along a line
parallel with and distant 73.22 feet westerly measured at right angles to the
common line between Parcel 1 and Parcel 2 of said Parcel Map to a point on the
northerly line of said Parcel;

Thence along said northerly line, North 75°07’46” West, 307.66 feet to the Point
of Beginning.

Parcel B:

Being all of Parcel 2 and a portion of Parcel 1 as shown on that certain Parcel
Map filed for record on September 25, 1998 in Book 708, pages 25 and 26, Santa
Clara County Records and being more particularly described as follows:

Beginning at the northwesterly corner of said Parcel 1 said corner also being on
the easterly line of Mathilda Avenue as shown on said Parcel Map;

Thence along the westerly line of said Parcel 1, South 14°52’14” West 312.00
feet;

Thence along a curve to the left, having a radius of 50.00 feet, through a
central angle of 90°00’00” an arc distance of 78.54 feet to a point on the
southerly line of said Parcel 1;

Thence along said southerly line, South 75°07’46” East, 257.66 feet to the True
Point of Beginning of Parcel B;

Thence continuing along the southerly line of said Parcel 1 and Parcel 2, South
75°07’46” East, 346.00 feet to the southeasterly corner of said Parcel 2;

Thence along the easterly line of said Parcel 2, North 14°52’14” East, 362.00
feet to the northeasterly corner of said Parcel 2;

Thence along the northerly line of said Parcel 2 and Parcel 1, North 75°07’46”
West, 346.00 feet;

Thence leaving said northerly line, South 14°52’14” West 362.00 feet along a
line parallel with and distant 73.22 feet westerly measured at right angles to
the common line between Parcel 1 and Parcel 2 to the True Point of Beginning.

APN: 110-26-050, 051

 

A-1.

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EXHIBIT B

WORK LETTER

This Work Letter sets forth the terms and conditions relating to the initial
improvement of the Leased Premises for Tenant. This Work Letter addresses the
issues of construction of the initial improvement of the Leased Premises for
Tenant. All references in this Work Letter to Articles or Sections of “this
Lease” shall mean the portions of the Lease to which this Work Letter is
attached.

SECTION 1

TENANT IMPROVEMENTS

The parties have previously agreed on a draft space plan for tenant improvements
in the Leased Premises prepared by Arc Tec and attached hereto as Exhibit A-3
(the “Draft Space Plan”) and the initial scope of work specified in the Initial
Cost Proposal (defined below). Tenant has indicated that it would like to make
modifications to the Draft Space Plan (the “Space Plan Modifications”). Within
ten (10) Business Days after the Effective Date, Tenant may submit Space Plan
Modifications to Landlord for Landlord’s approval, which shall not be
unreasonably withheld, conditioned or delayed; provided however, Landlord may
disapprove of any Space Plan Modifications in Landlord’s sole discretion if such
Space Plan Modifications would be of a quality lower than the quality of the
Building-standard improvements. If Tenant fails to submit Space Plan
Modifications to Landlord for Landlord’s approval within such ten (10) Business
Day period, then (A) Tenant shall be deemed to have waived its right to make any
modifications to the Draft Space Plan, and (B) the parties shall be deemed to
have approved the unmodified Draft Space Plan as the “Final Space Plan”. If
Tenant submits any Space Plan Modifications to Landlord within such ten
(10) Business Day period, then Landlord shall notify Tenant of either
(1) Landlord’s approval of such Space Plan Modifications, or (2) Landlord’s
disapproval of such Space Plan Modifications, in which case Landlord shall
specify in reasonable detail Landlord’s reasons for such disapproval. The Draft
Space Plan as modified by any Space Plan Modifications approved by Landlord
shall be referred to herein as the “Final Space Plan”. Landlord shall obtain a
revised cost proposal (the “Final Cost Proposal”) based on the Final Space Plan
setting forth any change in the Initial Cost Proposal resulting from Space Plan
Modifications. The improvements in accordance with the Final Space Plan and the
Final Cost Proposal are referred to herein as the “Tenant Improvements”). Unless
otherwise agreed in writing by Landlord and Tenant, all subsequent plans shall
be consistent with the Final Space Plan.

As used herein, “Initial Cost Proposal” means 1) the Scope of Work and Remarks
provided in OPI Commercial Builder Inc. Preliminary Budget- dated 8/6/10 in the
amount of $3,485,110.00 and attached hereto as Exhibit “A-1”, 2) the Scope of
Services outlined in the Arc Tec-contract architectural services proposal dated
6/16/10 revised 6/23/10 and 6/25/10 in the amount of $160,201.01 and attached
hereto as Exhibit “A-2”, and 3) Skyline Partners, Inc. construction management
proposal dated 6/25/10 in the amount of $37,000.00; provided, however, the
Initial Cost Proposal excludes any items or specifications not included in
Exhibits “A-1” or “A-2” as well as any additional work or costs related to the
Assumptions/Exceptions section on page 9 of said Arc Tec-contract architectural
services proposal (see Exhibit “A-2”), and the Qualifications and Exclusions
section on page 2 of said OPI Commercial Builders, Inc proposal (see Exhibit
“A-1”).

Landlord shall retain Arc Tec Inc. (the “Architect”) and shall retain
engineering consultants reasonably acceptable to Landlord and Tenant (the
“Engineers”) to prepare all plans and engineering working drawings relating to
the structural, mechanical, electrical, plumbing, HVAC, life safety, sprinkler
and IT engineering work in the Leased Premises (collectively as the
“Construction Drawings”). All Construction Drawings shall comply with the
drawing format and specifications reasonably determined by Landlord, and shall
be subject to Landlord’s and Tenant’s approval, which approval shall not be
unreasonably conditioned or denied. Tenant shall supply the Engineers with a
complete listing of standard and non-standard equipment and specifications,
including, without limitation, B.T.U. calculations, electrical requirements and
special electrical receptacle requirements for the Leased Premises, to enable
the Engineers and the Architect to complete the Final Working Drawings (defined
below) in the manner as set forth below. The Architect and the Engineers shall
complete the architectural and engineering drawings for the Leased Premises, and
Architect shall compile a fully coordinated set of architectural, structural,
mechanical, electrical, fire life safety, plumbing and telecommunications
working drawings in a form which is complete to allow subcontractors to bid on
the work and to obtain all applicable permits (collectively, as reasonably
approved by Landlord and Tenant, the “Final Working Drawings”). Landlord shall
construct the Tenant Improvements in accordance with the Final Working Drawings.
Tenant shall make no changes or modifications to the Final Working Drawings
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld, conditioned or delayed; provided, however, any delay in
“Substantial Completion,” as that term is defined in Section 5.1 of this Work
Letter caused by such changes or modifications by Tenant to the Final Working
Drawings previously approved by Landlord and Tenant shall be a Tenant Delay and
any increase in the cost of designing or constructing the Tenant Improvements as
a result of such changes to the previously approved Final Working Drawings shall
be at Tenant’s cost.

SECTION 2

OVER-ALLOWANCE AMOUNT; ALLOWANCES

        Landlord shall construct, at its cost (except as specifically set forth
herein) the Tenant Improvements described in the Final Working Drawings. As of
the date hereof the total estimated cost of the Tenant Improvements pursuant to
the Draft Space Plan and the Initial Cost Proposal is $3,682,311.01 (the
“Estimated TI Costs”). Landlord shall be responsible for the costs of the Tenant
Improvements in excess of the Estimated TI Costs, except

 

B-1.

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

that any actual increase in costs incurred by Landlord as a result of Space Plan
Modifications to the Draft Space Plan or changes in the scope of work set forth
in the Initial Cost Proposal or other changes requested by Tenant (subject to
Landlord’s approval of the same) to the Final Space Plan or the scope of work
described in the Final Cost Proposal shall be paid by Tenant (any such amounts
are referred to herein as the “Over-Allowance Amount”). Landlord shall request
payment of the Over-Allowance Amount from time to time as costs are incurred and
the same shall be paid by Tenant to Landlord within ten (10) days of Landlord’s
request. Landlord shall disburse the Over-Allowance Amount concurrently with
disbursements of Landlord’s contribution to the construction of the Tenant
Improvements, on a pro rata pari passu basis.

Upon final completion of the Tenant Improvements, Landlord shall provide
reasonable evidence to Tenant of all of the hard and soft cost of construction
of the Tenant Improvements (collectively, the “Final TI Costs”) including,
without limitation, copies of contractor and subcontractor invoices and any
other vendor invoices constituting part of the Final TI Costs. In addition,
Landlord shall provide an additional allowance (the “Additional Allowance”) in
an amount equal to the sum of (i) $218,711.99, plus (ii) if the Final TI Costs
are less than the Estimated TI Costs, one hundred percent (100%) of the
difference between the Estimated TI Costs less the Final TI Costs. Tenant shall
be entitled to use the Additional Allowance to pay for Tenant’s wiring and
furniture in the Leased Premises in an amount not to exceed eight dollars
($8.00) per rentable square foot of the Leased Premises and any remaining
portion of the Additional Allowance shall be credited against installments of
Base Monthly Rent due under the Lease after application of any rent abatement
pursuant to Section 3.1 of the Lease, provided and on condition that Tenant is
not in default under the Lease at the time such credit is to be applied. After
all costs of the Tenant Improvements have been paid in full, Landlord shall
disburse that portion of the Additional Allowance Tenant elects to use for
wiring and furniture directly to Tenant within thirty (30) days of Landlord’s
receipt from Tenant of original or certified copies of all invoices for such
expenses, together with reasonable supporting documentation.

For purposes of this Section 2, the Final TI Costs shall not be deemed to
include, and Landlord shall be solely responsible for, any of the following:
(a) costs incurred to remove Hazardous Materials from the premises or the
surrounding area; (b) attorneys’ fees incurred in connection with negotiation of
construction contracts, and attorneys’ fees, experts’ fees and other costs in
connection with disputes with third parties; (c) interest and other costs of
financing construction costs; (d) costs to bring the Leased Premises or the
Building into compliance with applicable laws, building codes and restrictions,
including, without limitation, the Americans with Disabilities Act and
environmental laws; or (e) wages, labor and overhead for overtime and premium
time, unless requested or approved by Tenant.

SECTION 3

CONSTRUCTION OF TENANT IMPROVEMENTS

Landlord shall retain OPI (“Contractor”) to construct the Tenant Improvements in
accordance with the Final Working Drawings. Landlord shall require that
Contractor obtain at least three (3) competitive bids for each major trade.
Landlord shall cause the Contractor to construct the Tenant Improvements in
accordance with the Final Working Drawings and all Laws in a good and
workmanlike manner. Landlord shall deliver the Leased Premises to Tenant
promptly upon Substantial Completion of the Tenant Improvements. Landlord shall,
at Landlord’s sole cost and expense, repair any defects in the Tenant
Improvements (other than those caused by or resulting from the negligence or
willful misconduct of a Tenant Party) for a period of one year following
Substantial Completion thereof. Landlord hereby assigns, on a non-exclusive
basis, to Tenant all warranties and guaranties by Contractor and other third
party contractors, subcontractors and vendors relating to the Tenant
Improvements from and after the date that is one year after Substantial
Completion thereof. From and after such date, Tenant hereby waives all claims
against Landlord relating to, or arising out of the construction of the Tenant
Improvements.

        If Landlord fails to cause construction of the Tenant Improvements in
accordance with this Work Letter and such failure continues for a period of
thirty (30) days after written notice to Landlord, Tenant shall have the right
at any time after such thirty (30) day period while such failure is continuing,
to elect to undertake the Tenant Improvements on Landlord’s behalf and, upon
such election Tenant shall have the right to offset the cost of such undertaking
against payments of Rent due under the Lease (with interest accruing thereon at
the lesser of 10% per annum or the then maximum rate of interest not prohibited
or made usurious by Law from the date of the expenditure until the date Tenant
has been reimbursed therefor through such offset), provided that notwithstanding
any such undertaking, Tenant shall remain responsible for any Over-Allowance
Amount. Any work so undertaken by Tenant shall be performed by the Contractor,
Architect, and Engineers named herein unless otherwise approved in writing by
Landlord, which approval shall not be unreasonably withheld, conditioned or
delayed.

SECTION 4

TENANT’S COVENANTS

        Tenant shall cooperate with Landlord with respect to construction of the
Tenant Improvements, Tenant shall timely comply with all Time Deadlines set
forth on the attached Schedule 1 and Tenant shall promptly reply to any other
requests for information or approval Landlord may make with respect to the
Tenant Improvements.

SECTION 5

COMPLETION OF THE TENANT IMPROVEMENTS;

LEASE COMMENCEMENT DATE

5.1 Ready for Occupancy. As used herein “Substantial Completion” means that the
Tenant Improvements have been completed, as reasonably determined by Architect,
with a Certificate of Occupancy

 

B-2.

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granted from the City of Sunnyvale, with the exception of any punch list items
including minor details of construction and mechanical adjustments and any
tenant fixtures, work-stations, built-in furniture, or equipment to be installed
by Tenant.

5.2 Delay of the Substantial Completion of the Leased Premises. Except as
provided in this Section 5.2, the Commencement Date shall occur as set forth in
the Lease. If and to the extent there are delays in the Substantial Completion
of the Tenant Improvements or in the occurrence of any of the other conditions
precedent to the Commencement Date, as set forth in of the Lease, to the extent
resulting from:

5.2.1 Tenant’s failure to comply with Section 4 of this Work Letter;

5.2.2 A breach by Tenant of the terms of this Work Letter or the Lease;

5.2.3 Tenant’s request for changes in the Final Working Drawings;

5.2.4 Tenant’s requirement for materials, components, finishes or improvements
which are not available in a commercially reasonable time given the anticipated
date of Substantial Completion of the Tenant Improvements, as set forth in the
Lease, to the extent such lead times are in excess of the those applicable to
the materials, components, finishes or improvements set forth in the Approved
Scope Proposal;

5.2.5 Tenant’s request for changes to the Final Work Drawings previously
approved by Tenant and Landlord that involve changes to the base Building shell
and core;

5.2.6 Any failure by Tenant to timely pay any Over Allowance Amount.

5.2.7 Any other acts or omissions of Tenant, or its agents, or employees;

(individually and collectively, “Tenant Delay”) then, notwithstanding anything
to the contrary set forth in the Lease or this Work Letter and regardless of the
actual date of the Substantial Completion of the Tenant Improvements, the date
of Substantial Completion of the Leased Premises shall be deemed to be the date
the Substantial Completion of the Tenant Improvements would have occurred if no
Tenant Delay(s), as set forth above, had occurred.

SECTION 6

MISCELLANEOUS

6.1 Freight Elevators. Landlord shall, consistent with its obligations to other
tenants of the Building, make the freight elevator reasonably available to
Tenant in connection with initial decorating, furnishing and moving into the
Leased Premises.

6.2 Tenant’s Representative. Tenant has designated Don Thiel as its sole
representative with respect to the matters set forth in this Work Letter, who,
until further notice to Landlord, shall have full authority and responsibility
to act on behalf of the Tenant as required in this Work Letter.

6.3 Landlord’s Representative. Landlord has designated Richard Czerwinski as its
sole representative with respect to the matters set forth in this Work Letter,
who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Work Letter.

6.4 Tenant’s Agents. All subcontractors, laborers, materialmen, and suppliers
retained directly by Tenant shall all be union labor in compliance with the then
existing master labor agreements (except as otherwise approved by Landlord,
which approval shall not be unreasonably withheld). This Section 6.4 shall not
apply to furniture installers, movers, data cabling contractors, AV contractors,
security contractors and signage contractors.

6.5 Time of the Essence in This Work Letter. Unless otherwise indicated, all
references herein to a “number of days” shall mean and refer to calendar days.
In all instances where Tenant is required to approve or deliver an item, if no
written notice of approval is given or the item is not delivered within the
stated time period, Landlord may, but shall not be obligated to send Tenant
written notice of Tenant’s failure to so approve or deliver. If such failure
continues for a period of three (3) Business Days after such notice, then at
Landlord’s sole option, at the end of such period the item shall automatically
be deemed approved or delivered by Tenant and the next succeeding time period
shall commence.

        6.6 Tenant’s Lease Default. Notwithstanding any provision to the
contrary contained in this Lease, if an event of default as described in the
Lease, or a default by Tenant under this Work Letter, has occurred at any time
on or before the Substantial Completion of the Premises, then (i) in addition to
all other rights and remedies granted to Landlord pursuant to the Lease, upon
written notice to Tenant of such default, Landlord shall have the right to cause
Contractor to cease the construction of the Premises (in which case, Tenant
shall be responsible for any delay in the Substantial Completion of the Premises
caused by such work stoppage as set forth in Section 5 of this Work Letter), and
(ii) all other obligations of Landlord under the terms of this Work Letter shall
be suspended until such time as such default is cured pursuant to the terms of
the Lease.

 

B-3.

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

 

SCHEDULE 1

TIME DEADLINES

 

Deadline

  

Actions to be Performed

Within 21 days after approval of Final Space Plan.

  

Working Drawings to be provided for Tenant review.

Within 3 business days after receipt of Working Drawings.

  

Tenant to approve or provide any comments to Working Drawings.

Within 3 business days after receipt of revised Working Drawings.

  

Tenant to approve or provide any comments.

 

B-4.

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EXHIBIT A-1 TO WORK LETTER

OPI

Commercial Builders

Design

Build… Repeat

August 6, 2010

RE: PMC Sierra Tenant Improvements - Rev 8-6-10

Dear Gentlemen:

OPI Commercial Builders is pleased to provide you with the following revised
preliminary budget for the PMC Sierra Tenant Improvements at 1380 Bordeaux per
plans dated 7.29.10, by ARCTEC, the revised scope of work by Skyline Partners
dated August 5, 2010 and attached hereto, the following descriptive cost
breakdown, and the qualifications and exclusions.

Our budget for the work as described is: $3,485,110.00

Please review the following scope of work and the qualifications and exclusions.
Feel free to call me if you have any questions or if you need any additional
information. I can be reached at (408) 209-1383.

We have not included any hazardous material removal, permits, or latent
conditions in this budget. In addition, we have based this budget on all work
taking place during normal working hours.

Thank you for the opportunity to provide this budget.

Sincerely,

Jon Persing

President

445 Leigh Avenue, Los Gatos, CA 95032 Ph: 408-377-4800 Fax: 408-377-4804 Lic
#816254

1

 

B-5.

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QUALIFICATIONS AND EXCLUSIONS

This budget shall be subject to an AIA107 Guaranteed Maximum Price provided
final drawings are based upon the finishes stated herein (or equal) and layout
is based upon plans dated 7.29.10, by ARCTEC.

We exclude any hazardous material removal.

This budget is based upon normal working hours.

Tenant signage is assumed to be provided and installed by tenant.

Low-voltage / data cabling are not included.

445 Leigh Avenue, Los Gatos, CA 95032 + Ph: 408-377-4800 + Fax: 408-377-4804 +
Lic #816254

2

 

B-6.

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OPI

Commercial Builders

Design Build… Repeat

PMC SIERRA

1380 BORDEAUX DRIVE

SUNNYVALE, CA

PRELIMINARY BUDGET - REVISED

AUGUST 4, 2010

CODE ACTIVITY DESCRIPTION ESTIMATE PSF REMARKS

01 GENERAL REQUIREMENTS

1000 INSURANCE 49,943 0.82 Liability insurance at 1.5% of the project cost.

1010 PRINTING AND SUPPLIES 1,500 0.02 Cost to reproduce drawings for permit and
subcontractors.

1020 PERMITS 75,000 1.23 Allowance for permit fees.

1200 PROJECT EXPENSES 20,000 0.33 Cost for dumpsters, small tools and protection
of existing finishes.

1220 RENTALS 8,000 0.13 Cost for equipment rentals and portable toilet rental.

1510 PROJECT SUPERVISION 62,800 1.03 Cost for field supervision.

1520 PROJECT MANAGEMENT 34,200 0.56 Cost for project management.

1700 DAILY CLEANUP 15,000 0.25 Daily clean up based upon 4 hours per day.

1800 FINAL CLEAN UP 5,400 0.09 Final clean the entire space and stock bathrooms.

1900 OVERHEAD AND FEE 128,058 2.10

05 METALS

5700 ORNAMENTAL METAL 38,000 0.62 Includes aluminum column covers at the lobby.

06 WOOD AND PLASTICS

6100 ROUGH CARPENTRY 7,500 0.12 Install sleepers for fan coils and new framing
for the roof top boiler. Cost includes miscellaneous backing and deck repair at
penetrations.

6400 CUSTOM CASEWORK 74,582 1.22 Supply and install P-lam case work in standard
P-lam colors with white melamine interiors per layout shown at phone rooms, copy
and office break areas. Also includes new counters in restroom cores, lockers in
showers, and an allowance for a new reception desk.

6400 CUSTOM CASEWORK 24,110 0.40 Supply and install 3 form feature wall behind
the reception desk at the first floor lobby.

6400 CUSTOM CASEWORK 26,800 0.44 Interlam panels at 1st, second, and third floor
lobby per notes.

7010 CAULKING 2,500 0.04 Allowance to fire caulk penetrations in rated walls.

7200 INSULATION 12,587 0.21 Supply and install R-11 unfaced batts at new walls.

7500 BUILT UP ROOFING 2,500 0.04 Allowance to patch miscellaneous rooftop
penetrations as a result of our work.

445 Leigh Avenue, Los Gatos, CA 95032 + Ph: 408-377-4800 + Fax: 408-377-4804 +
Lic #816254

3

 

B-7.

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08 DOORS AND WINDOWS

8100 DOORS, FRAMES & HARDWARE

72,480

1.19

Supply and install (37) 3080 pre-finished maple doors with integral sidelights
per layout shown. Supply and install (11) pre-finished maple doors with no
sidelights. Door hardware to be Schlage ND-series.

8800 GLASS & GLAZING

64,528

1.06

Supply and install 1/4” clear tempered glass at offices and small conference
rooms. Supply and install 3/8” butt glazing in expanded sidelight frames at
large conference rooms. New mirrors in gym and new restroom core. New storefront
system at second floor lobby balcony.

09 FINISHES

9250 DRYWALL

217,859

3.57

Supply and install walls per layout shown in a level 4 smooth wall finish.
Office and conference room walls to be under grid. Includes soffets shown as
dotted line on plan. Includes an allowance for an additional 21 ea. 10x14
offices.

9300 CERAMIC TILE

81,439

1.34

New Dal Group 1 or II tile in showers. New Dal Terrazzo tile in lobby and
elevator lobbies per plans.

9500 SUSPENDED CEILINGS

201,568

3.30

Supply and install 2’x4’ Armstrong 15/16” Prelude ceiling grid with 2’x4’
Armstrong Dune # 2712 Second Look ceiling tile at office areas. Provide
Armstrong Metalworks ceiling in copy areas and elevator lobbies as shown.
Install new 2x2 grid in main lobby and hallways shown.

9540 WAINSCOT/WALL SPECIALTY

4,500

0.07

Supply and install standard FRP at the galley and janitors closets.

9650 FLOOR COVERINGS

228,410

3.74

Supply and install carpet as direct glue using a field carpet of Patcraft Razzle
10118 or equal at office areas. Upgraded carpet at the board room. Supply and
install Armstrong Standard Excelon VCT at Server, IDF rooms and Labs. Supply and
install Armstrong Stone-Tex VCT in the break room. Supply and install Burke 4”
rubber base at new walls. Cost includes a Padimat entry at the lobby doors.

9900 PAINTING

31,400

0.51

Paint new walls in (2) coats of latex enamel paint.

9950 WALL COVERINGS

26,800

0.44

Interlam panels at 1st, second, and third floor lobby per notes.

10 SPECIALTIES

10100 CHALKBOARDS, TACKBOARDS

12,000

0.20

Standard 4’x8’ whiteboards at conference rooms and huddle room.

10520 FIRE EXTINGUISHERS

4,500

0.07

Allowance for paintable fire extinguishers and cabinets.

10655 SIGNAGE

3,500

0.06

Allowance for tactile signage per code.

10670 STORAGE SHELVING

1,500

0.02

Shelves at storage areas.

10800 TOILET AND BATH ACCESSORIES

4,580

0.08

Partitions and accessories in showers.

445 Leigh Avenue, Los Gatos, CA 95032 Ph: 408-377-4800 Fax: 408-377-4804 Lic
#816254

4

 

B-8.

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11 EQUIPMENT

11130 AUDIO VISUAL EQUIPMENT

21,000

0.34

(8) New ceiling mounted standard projection screens.

11400 FOOD SERVICE EQUIPMENT

8,000

0.13

Supply and install (3) GE ADA compliant dishwashers and refrigerators at coffee
stations and break rooms, provide new refrigerators at galley and lunch rooms.

12500 WINDOW TREATMENT

28,000

0.46

New Levolor 1” mini blinds at all perimeter windows.

13 SPECIAL CONSTRUCTION

13950 PRE-ACTION SYSTEM

17,500

0.29

Provide dry pre-action system at server room.

15 MECHANICAL

15300 FIRE PROTECTION SYSTEMS

78,425

1.29

Add and relocate sprinkler heads as required by code. Office area heads to be
semi-recessed, heads at the lobby to be recessed. Relocate sprinkler lines at
trusses on each floor for HVAC ducting.

15400 PLUMBING

61,880

1.01

Supply and install (5) break room sinks at the break areas. Supply and install
new showers and restroom core on second floor. Plumbing to galley as shown.
Install condensates to new HVAC units.

15500 HVAC

958,222

15.71

Supply and install 1 hot water fan coil system at first floor, 3 VAV zones (3)
20 ton units with air cooled condensers on roof, (3) 15 ton split systems in
server room, (1) new VAV zone and exhaust for gym, coffee bars, and (1) solder
exhaust hood, (3) new VAV zones and exhaust at lunch room, (3) conference room
zones, and (1) lobby zone. New ductwork on second floor with 22 VAV zones, (2) 5
ton split systems in lab, and (1) 2 ton split system in IDF room, (1) 5 ton
split system in IT setup room, 4 hot water coils on 3rd floor with 25 new VAV
zones, 2 ton split in IDF, drawings, engineering, and permit.

15950 CONTROLS

110,258

1.81

Supply and install a Johnson Controls Metasys digital controls system for the
HVAC system or equal

16 ELECTRICAL

16100 ELECTRICAL

483,800

7.93

Supply and install Avanti indirect T-8 light fixtures at office areas, (2)
receptacles per office and conference room, (4) GFI outlets per break area,
power for split systems. Supply and install cubicle power at (3) cubes per
circuit. Supply and install new panels and transformers as required for new
work. Supply and install (60) new 120V-30 amp receptacles at the server room,
(134) 120V 20 amp dedicated receptacles at lab, (3) at each IDF room, (47) new
ceiling boxes for new cubes, (15) power, date poke throughs, connect new HVAC
equipment, includes plans and permit.

445 Leigh Avenue, Los Gatos, CA 95032 + Ph: 408-377-4800 + Fax: 408-377-4804 +
Lic #816254

5

 

B-9.

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16700 COMMUNICATIONS

0

0.00

NIC

16760 FIRE ALARM SYSTEMS

68,826

1.13

Full evacuation system along with Preaction panel and tie in to server room.

SUBTOTAL

$3,379,455

55.40

UPS System

105,655

1.73

Furnish and install new 225 KVA APC UPS system with bypass, and in server room.

TOTAL

$3,485,110

57.13

445 Leigh Avenue, Los Gatos, CA 95032 + Ph: 408-377-4800 + Fax: 408-377-4804 +
Lic #816254

6

 

B-10.

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Exhibit A

PMC Sierra Scope Proposal

Issued: 6/2/2010

The specifications and scope listed in this document shall be considered a
minimal guideline. Should these change after the design is complete it is agreed
the equivelant manufactures and products (equivelant shall mean equal in price
and quality) will be acceptable.

Description

PMC Specific Requirements

Division 1

1900

Demolition

Division 2

Site Construction

Division 3

Concrete

As required

Division 4

Masonry

Division 5

Metals

As required. Include angle at: A) all stair stringers that are not flush with
gypboard wall B) all areas where there is a gap at slab and curtain wall system
such that flooring has material to adhere to.

Division 6

Wood and Plastics

6100

Rough Carpentry

Provide required backing for wall hung TV’s at Game Room, and Gym.

Provide backing as required for wall hung plasma screens in board room.

6200

Finish Carpentry

6400

Architectural Woodwork / Millwork All cabinets to be plastic laminate exteriors
and melamine interiors. Uppers to have adjustable shelving. The following rooms
shall have enclosed uppers and lowers: Coffee Station, Copy / Mail, lunch room,
first aid room, Gallery – Gallery also to have a countertop / pass-through with
sliding doors. Include an allowance of $20000 for reception desk.

Install wood veneer on boardroom wall.

Division 7

Thermal and Moisture Protection

Provide floor / moisture sealer if required to accommodate vinyl flooring

in 1st floor lab, IT Set Up Room and server room.

7100

Damproofing and Waterproofing

7800

Fire and Smoke Protection

Provide fire life safety system per code.

7900

Joint Sealers

Division

8

Doors and Windows

8100

Metal Doors and Frames

8200

Wood and Plastic Doors Solid core doors with wood veneer faces and transparent
finish. Doors For Transparent Finish: Standard White Maple doors with factory
finish Provide 9’ wood veneer doors with anodized aluminum frames. Hardware to
be Schlage

ND series. Provide electronic latch sets to accommodate card readers where noted
on the plan. All conference rooms and offices to have locksets. IDF Rooms to
have lockset. Quite room to have an “in use” lockset. Gallery Room to have
lockset.

8300

Specially Doors

8400

Entrances and Storefronts

Provide full height storefront glazing at second floor lobby.

8500

Windows

8700

Hardware

See section 8200

Page 1 of 4

 

B-11.

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Exhibit A

8800

Glazing

Glazing at all offices, labs, huddle rooms, conference rooms, and coffee
stations, to be butt glazed and have dusted crystal frost film on 1/3 of
elevation. Gym to have all glass mirror floor to ceiling on one wall.

8900

Glazed Curtain Wall

Division 9

Finishes

In general the intent is to match the finishes found in Cortina for quality.

9200

Gypsum Board

Gypboard to have a level 4 finish (deleted level 5 as Cortina did not have
this). All conference room (deleted office walls) to be 6” through grid (deleted
to deck) with insulation. All walls that share electric panels to be 6” studs or
as required to accommodate recessed panels. Board room to have 50% gypsum board
ceiling. Locker rooms to have gypsum board ceilings. Elevator lobbies to have a
barrel gypsum board ceiling. All existing fire taped walls to be finish taped.
Contractor to verify that all existing framing is plumb and true. Should framing
not be plumb and true, contractor to repair. Insulation to be placed on top of
ceiling where wall goes 6” through grid.

9300

Tile

Locker rooms on floor 1 shall have a ceramic tile wainscot throughout. (deleted
coffee) Reception area to have terrazzo tile flooring or equivalent. All showers
to be ceramic tile showers, no pre-manufactured fiberglass showers.

9400

Terrazzo

9500

Ceilings

Acoustic T-Bar ceiling specification in lobby to be Optima 2 x 2 with 9/16” grid
and square tegular tile. Remaining office area shall have Dune 2x4 Second Look
Ceiling tiles with 15/16* grid, Labs on floor 1, Server Room on floor 1, lab on
floor 2, which shall have 2 x 4 Cortega 2nd Look in 15/16 lay in grid. All
elevator lobbies and coffee break areas to have Armstrong Metal works ceilings.

9600

Flooring

Lab on floor 1, server room, lab on floor 2, IT Set Up room on floor 1 shall
have VCT flooring with static dissapative wax Gym to have rubber floor tiles
designed for commercial weight rooms. Locker rooms on floor 1 shall have ceramic
tile flooring. All storage rooms to have VCT, Lunch room to have VCT, copy rooms
to have sheet vinyl, coffee stations to have sheetvinyl, IDF rooms to have VCT
with static dissapative wax. The following areas to have Building standard
carpet which is to be comparable to Patcraft carpet tile: Razzie 10118carpet:
Stairs, Conf. Rooms, Offices, Specialty / Quite Room, huddle rooms, game area.
First Aid Room to have VCT, CL room to have VCT. Lobby to receive a terrazzo
tile. Elevator lobbies to receive terrazzo tile. Board room to have a carpet
based upon a $50.00 yd material cost Galley Room to have VCT flooring. All
floors to be prepped and leveled. Lunch room to have VCT flooring.

9700

Wall Finishes

9800

Acoustical Treatment

9900

Paints and Coatings

Space to be painted throughout. (1) coat of primer (2) coats of finish paint

Division 10

Specialties

10100

Visual Display Boards

10200

Louvers and Vents

Building standard to match 1376 Bordeaux.

10240

Grilles and Screens

Building standard to match 1376 Bordeaux.

10260

Wall and Corner Guards

Provide stainless steel corner guards on all corners where applicable.

10270

Access Flooring

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Exhibit A

10400

Identification Devices

10500

Lockers

Provide laminate lockers with the ability to be locked with a padlock in the
men’s & women’s locker rooms off of the gym.

10520

Fire Protection Specialties

All fire extinguishers shall be placed in recessed fire extinguisher cabinets
clear anodized finish with black vertical lettering and no window.

10600

Partitions

10670

Storage Shelving

6’ high Storage shelving to be placed in the following rooms on two walls: Any
storage room.

10800

Toilet, Bath, and Laundry Specialties

10900

Window Coverings

All exterior glazing to have perforated ‘aluminum’ finish 1” level or
mini-blinds to match 1376 Bordeaux.

Division 11

Equipment

11130

Audio-Visual Equipment

Provide 8’ electrical projection screen in conference rooms and boardroom.

11460

Appliances

Provide the following appliances: Dishwasher at: lunch room, coffee station
floor 2 & 3, Gallery, lunch room. Full size stainless steel refrigerator at
coffee station floor 2 and 3, Gallery, (2) at Lunch Room

Division 12

Furnishings

12050

Fabrics

12300

Manufactured Casework

12400

Furnishings and Accessories

12500

Furniture

Division 13

Special Construction

Division 14

Conveying Systems

Division 15

Mechanical

Mechanical Loads shall be as follows: Server Room Equipment Loads Only shall
require 30 Tons of 24 / 7 HVAC distributed via a minimum of at leaset two
separate units. Lab floor # 2 Provide 11 tons of 24/7 Cooling. Lab Floor #1
Provide 60 tons of 24/7 cooling. IT Set Up Room Floor 1 provide 5 tons of 24 / 7
cooling. Provide exhaust fans in the following rooms: Gym, Galley, Coffee
stations, copy mail room, locker rooms floor 1, Office space shall be zoned per
industry standards(I changed since I don’t have design criteria referenced)
Provide fully engineered drawings and obtain all permits as required. Include
(1) 6’long soldering hood. Provide a DDC building control system. Oven Lab shall
receive upt to 7.5 tons of dedicted cooling.

Plumbing

Provide complete design build plumbing to include: All permits necessary,
garbage disposals with an air switch at each sink, pre-manufactured fiberglass
showers will not be acceptable, all showers to be ceramic tile. Provide water
and hook up at all: refrigerators, coffee machines (assume two coffee machines
at each coffee bar, galley, and lunch room). Don’t have water coolers and CDA
isn’t in their labProvide gas & Plumbing as required to all mechanical units.

Fire Protection

Provide a complete code compliant fire protection system to include: Preaction
system and server room, provide recessed heads at all gypsum board ceilings.
Provide fully engineered drawings and obtain all permits as required.

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Exhibit A

Division 16

Electrical

Every office shall have two duplex receptacles. A 20 AMP dedicated circuit shall
be shared by two offices. Open cubicle areas shall have direct / indirect
ceiling lay in light fixtures. Offices shall have 2 x 4 direct / indirect
Lithonia lay in to match Cortina. Provide electrical for vending machines at
lunch room. Provide power and hook up to cubicles, provide 3 circuits per
cluster of 9 cubes. Server Room Power Requirements: Provide electrical
distribution of 5.5 KW per rack, assume 30 racks total, power to be distributed
overhead, all power to be back up by UPS that shall last 15 minutes- furnish and
install of UPS shall be part of scope. Lab Requirements (Lab on Floor 1, Lab on
Floor 2, IT Set Up Room on floor 1): Labs shall receive 1 dedicated 20 amp 120V
circuit for every 2 benches. There will be a total of 8 ovens in the lab which
will require a 112 KVA transformer and a 25 AMP subpanel in total for the ovens.
Total of 8 ovens. Each bench shall have two duplex receptacles. Assume 3 benches
in IT set Up Room. Quite room to have an “in use” light on the corridor side.
Provide all electrical as required for vending ma

Shell Construction

Any existing shell construction to be made code compliant and of good
workmanship that would ordinarily be found of the industry.

Architecture & Engineering

Provide complete architecture and engineering to include: All specialty lighting
specifications, all color and finish specifications, all evacuation and other
code signage, all reimbursable expenses and plan copies needed to construct
space to include complete sets to tenant of each revision as needed,
completeness to obtain all building permits.

Permits

Include the cost of all building permits as needed.

Signage

Provide all code required signage.

Page 4 of 4

 

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DEXHIBIT A-2 TO WORK LETTER

June 16, 2010

Revised June 23, 2010

Revised June 25, 2010 (Revisions in bold italics)

Mr. Keith DeBrine

Managing Partner

Skyline Partners, Inc.

270 Chestnut Street, Suite 201

Redwood City, CA 94063

Phone (650) 367-9657

Fax (650) 367-9657

Email: keith@skylinepartnerscm.com

Arizona

2960 E. Northern Avenue

Building {

Phoenix, AZ 85028

602.953.2355

602.953.2988

California

99 Almaden Boulevard

Suite 840

San Jose, CA 95113

408.496.0676

408.496.1121

FOR

Mr. Rick Czerwinski

Asset Manager

Wrightwood Capital

2 N. La Salle Street, 9th Floor

Chicago, IL 60602

Phone (312)324-5963

Email: rczerwinski@wrightwoodcapital.com

Cc: Jeff.Houston@cbre.com

Re: Contract Architectural Services

PMC-Sierra Build-out

1380 Bordeaux Drive, Sunnyvale

ARC TEC # 092370.06

Dear Keith:

In response to your request, ARC TEC is very enthusiastic about the prospect of
working with you, Skyline Partners, Inc. and Wrightwood Capital on this project.
ARC TEC is pleased do submit this proposal for professional services.

SCOPE OF PROJECT

PMC-Sierra, the premier internet infrastructure semiconductor solution provider,
has entered into an agreement with Wrightwood Capital (the Client) to lease the
building

located at 1380 Bordeaux Drive in Sunnyvale. The building is an existing
three-story warm shell building. Their requirements will include 10,000 square
feet of Light Dry Lab, 51,000 square feet of office space to include offices,
conference rooms, open cubicle areas, gym and lunch room. PMC Sierra requires
the value of a flexible and timeless design to last a minimum of 10 years. ARC
TEC assumes the General Contractor will be negotiated and will be part of the
team at the commencement of the project.

This proposal is based upon the space plans prepared by ARC TEC dated June 10,
2010. Any program changes will be reviewed. If changes in the scope of work are
significant, this proposal will be revised accordingly.

 

B-15.

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ARC TEC # 092370.06

Mr. Keith DeBrine

June 16, 2010

Revised June 23, 2010

Revised June 25, 2010

Page 2

SCOPE OF SERVICES

ARC TEC understands the goal of Wrightwood Capital is to provide an efficient,
design oriented, flexible, innovative and highly interactive tenant improvement.
We believe that the only means of achieving this goal is through a highly
creative and proven design process that delivers an excellent quality product.
ARC TEC’s team assembled for this project possesses a vast wealth of experience
on projects delivered under this approach. This experience enables us to provide
programming, site planning, design and engineering services for this project.
ARC TEC shall provide the following professional Architectural and Engineering
services for the Project:

Program Validation

As a process, programming involves the analysis and identification of a problem
and its context. This process centers on translating the functional requirements
into architectural vocabularies. It involves the investigation of the
organizational, social and individual aspects of the organization or projects
and considers the physical, psychological, sociological, and cultural attributes
of the uses involved. This is achieved by defining project objectives (GOALS),
collecting factual data (FACTS), determining spatial and physical requirements
(NEEDS), and uncovering functional operational structures (CONCEPTS), to arrive
at a final problem definition. Professional services will include:

Review and discuss the current and intended organization of the company process
as it affects design. Discuss potential future operational developments that
could affect design.

Review and discuss organizational and functional requirements for initial and
long-term operational uses.

Review and discuss facility form and image and their impact on the functional
requirements.

Review and discuss schedule issues, including projected growth and project
phasing.

Review and discuss project budget and its relationship with image, function and
schedule.

Obtain interior functional & qualitative requirements & data through interviews
with management.

Identify group space, adjacency and interaction requirements.

Compile space demand data, which will include personnel, support, equipment and
circulation space, as well as future growth requirements.

Schematic Design

Based on a mutually agreed upon program, schedule, and construction budget
requirements, ARC TEC shall prepare for approval by the Client, schematic design
documents illustrating the scale and relationship of the Project components.
These Professional services will include:

Attend design meetings deemed necessary to complete the project.

Prepare schematic floor plans to indicate new construction, new construction and
adjacencies to existing construction, if applicable, and identify fixed
equipment and architectural woodwork.

Furniture and moveable equipment layouts (1/8”=1’-0” for all areas: ¼”=1’0” for
specialty areas).

Prepare interior and exterior elevations.

Prepare diagrammatic building sections.

Prepare typical wall sections indicating materials, relationships and design
intent.

Prepare key architectural details.

Prepare room finishes and material outline.

Perform a building code analysis.

Prepare outline specifications.

Conduct preliminary review meeting with the City of Sunnyvale for compliance
with city requirements.

 

B-16.

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ARC TEC # 092370.06

Mr. Keith DeBrine

June 16, 2010

Revised June 23, 2010

Revised June 25, 2010

Page 3

Design Development

Based on the approved Schematic Design Documents and any adjustments in the
program, schedule or construction budget authorized by the Client, ARC TEC will
prepare, for approval by the Client, Design Development Documents consisting of
drawings and other documents to fix and describe the size and character of the
Project as to architectural, the acceptance of the interior design, and all
other systems and components which are appropriate for the building, structural,
mechanical and electrical systems, materials and such other elements as may be
appropriate. Professional services will include:

Prepare final floor and reflected ceiling plans in AutoCAD for Client review and
approval, to also be serve as CAD base files for design-build mechanical,
electrical and plumbing subcontractors to utilize for preparation of MEP
construction documents for permit.

Select interior finishes and colors.

Provide preliminary and final finish presentation for Client approval.

Prepare presentation boards with color and finish samples.

Prepare section drawings indicating the type(s) of material(s), construction
type, and vertical dimensions.

Provide finish selections, furniture, typical millwork layouts, technical
documentation regarding design elements, and details and specifications, which
will be reviewed by the Client.

Coordinate corporate workstation design and standards for each functional level.

Develop design scheme with finishes, for the Reception Desk in the Main Lobby. A
separate line item is provided in the fee section.

Coordinate finish specifications, and furniture and workstation specifications
from selected vendors.

Coordinate MEP Design-Build sub-contractor design.

Assistance in review of colors and design for modular furniture and office
furniture systems.

Recommend interior acoustical concepts.

Recommend lighting and ceiling concepts.

At completion of Design Development, Skyline Partners, Inc. will conduct a
thorough review of the Design Development documents and create a list of
clarifications and questions for ARC TEC and/or PMC Sierra to consider. ARC TEC
will incorporate all approved changes into the documents.

 

B-17.

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ARC TEC # 092370.06

Mr. Keith DeBrine

June 16, 2010

Revised June 23, 2010

Revised June 25, 2010

Page 4

Construction Documentation

Based on the approved Design Development Documents and any further adjustments
in the scope or quality of the Project or in the construction budget authorized
by the Client, ARC TEC shall prepare, for approval by the Client, Construction
Documents consisting of Drawings and Specifications setting forth in detail the
requirements for the construction of the Project. Professional services will
include:

Prepare dimensioned site, floor, and reflected ceiling plans for the defined
Scope of Work.

Prepare interior elevations and details.

Prepare door and hardware schedules.

Develop architectural detailing to describe design intent, obtain contractor
bids, and construct the improvements.

Prepare architectural specifications.

Prepare finish and material drawing(s) and review documentation of Client’s
selected furniture supplier.

Prepare a complete color board for Tenant presentation.

Coordinate the documentation of Mechanical, Plumbing, Electrical and Fire
Protection design build contractors relative to Architectural intent and design.

Coordinate audio/visual consultant relative to architectural intent and design.

Provide design criteria which will outline the rooms that will require AV and
the specific requirements of each room. Equipment specification is not included.

Participate in a value Engineering studies. Drawing changes are not included.

Follow the City of Sunnyvale Building Department plan check process through to
Permit.

Two individual Permit Packages will be submitted; one for the Data Center, and
one for the balance of the build-out.

Architectural Drawings to be produced on AutoCADTM 2008.

Bidding and Construction Contract Award

Upon the Client’s approval of the Construction Documents and the recent probable
Construction Cost, ARC TEC shall assist the Client in obtaining bids or
negotiated proposals and assist in awarding and preparing contracts for
construction. Professional Services will include:

Recommend prospective qualified bidders to Client.

Conduct, or assist Client in conducting, the pre-bid conference with qualified
bidders.

At Client’s direction, distribute construction documents to qualified bidders
(reproduction costs are a reimbursable expense).

Respond to bidder’s questions and requests for clarifications regarding the
construction documents.

Issue appropriate addenda to the construction documents to the bidders.

Assist the Client in the evaluation of bids and make recommendations for bid
selection.

Conduct, or assist Client in conducting, the pre-construction conference with
the successful bidder and subcontractors.

 

B-18.

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ARC TEC # 092370.06

Mr. Keith DeBrine

June 16, 2010

Revised June 23, 2010

Revised June 25, 2010

Page 5

Construction Administration

ARC TEC’s responsibility to provide Basic Services for the construction phase
commences with the award of the initial contract for construction and terminates
sixty (60) days after the originally scheduled date of Substantial Completion of
Work. Professional services will include:

Arrange and conduct the pre-construction conference with the successful bidder
and subcontractors.

Attend weekly project meetings for a period of twelve (12) weeks. The General
Contractor or Construction Manager will be responsible for writing and
distributing minutes for these meetings.

Process relevant documents, including interpretation of construction documents,
shop drawings and submittals.

Provide clarification of project documents, including written responses to
written requests for information.

Perform site observation visits for a period of twelve (12) weeks. Scheduling of
observation visits will be at intervals appropriate to the stage of
construction, or as otherwise agreed in writing by the Client and ARC TEC, in
order to become generally familiar with the progress and quality of the work
completed and to determine, in general, if the work is being performed in a
manner indicating that the work, when completed will be in accordance with the
construction documents.

On the basis of on-site observation as an architect, ARC TEC shall keep the
Client informed of the progress and quality of the work, and shall endeavor to
guard the Client against defects and deficiencies in the work. (Additional and
more extensive site representation may be authorized as an Additional Service.)

Prepare changes to construction documents and specifications to reflect Client
approved change orders. Redesign due to changes and modifications would justify
adjustments to our professional service fee, and will be authorized upon
acceptance of an Additional Service proposal.

Maintain responsibility for design, documentation, and construction
administration for the project.

Provide a document control log.

Provide deficiency “punch list” and track issues through completion.

Other Included Services

Assist the Client by preparing a Certificate of Substantial Completion and in
obtaining a Temporary Certificate of Occupancy.

Assist in preparing application in order to obtain the Building Permit.

Prepare Evacuation Maps to be approved by the City of Sunnyvale. A separate line
item is provided in the fee section.

Provide one set of Record Documents and Specs in both hard and electronic
copies. Record Documents and defined as a reproducible set of drawings that
conform to the marked-up prints, drawings and other data furnished to ARC TEC by
the General Contractor (shall include all RFI’s, ASI’s, superintendent red
lines, and any other changes made during the course of construction). This set
of Record Documents will show the reported location of the Work and significant
changes made during the construction process. The Record Documents are based on
unverified information provided by other parties, which will be assumed
reliable. ARC TEC cannot and does not warrant the accuracy of Record Documents.
A separate line item is provided in the fee section.

 

B-19.

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Mr.Keith DeBrine

ARC TEC # 092370.06

June 16, 2010

Revised June 23, 2010

Revised June 25, 2010

Page 6

FURNITURE

Develop the criteria to direct the design-build furniture vendors. Criteria will
include:

Prepare a block plan showing the entire floor areas to include:

Complete layout and size of all cubes.

Complete layout and size of all hard wall offices.

Complete layout and size of all conference tables.

A layout of the lineal footage of filing needed.

Prepare a generic finish plan or schedule. This shall identify generally the
color selections of the finishes. The exact spec will be identified upon
completion of the Client’s selected furniture vendor contract documents.

Review computer generated furniture layouts provided by the Client’s selected
furniture vendor.

Coordinate of furniture layouts provided by the furniture vendor.

Provide generic specifications. This shall identify general requirements of each
cube to include 1) acoustic qualities, 2) electrical requirement (how many
outlets, where located, height), 3) depth of pedestals, 4) etc.

Provide a typical layout that lists the specific heights and dimensions of power
and data that is coordinated with the furniture.

All items listed above are included in our base bid. The last two bullet items
are included as a separate line item in the fee section.

IT ENGINEERING

If independent consultant documentation in lieu of design build sub-contractor
documentation is deemed necessary, the following scope of work will be provided
by the IT vendor design-build subcontractor.

Attend design meetings deemed necessary to complete the project.

Provide other engineering disciplines with pertinent information to support the
telecommunications infrastructure.

Provide diagrams for copper, fiber optic, grounding and pathway risers
indicating sizes, quantities and destinations as required. All riser diagrams
shall indicate new and existing facilities.

Provide floor plan drawings indicating all voice, data outlet and equipment
locations to include numbering sequences and distribution method; i.e., conduit,
J-hooks, etc. All pathways shall be dimensioned and coordinated with the other
disciplines.

Provide enlarged plans of all telecommunications rooms, server rooms, equipment
rooms and engineering labs as applicable. Drawings shall include all new
equipment locations, frame locations, power receptacle requirements (circuiting
provided by the electrical engineer), cooling requirements, fire suppression
systems, racking systems, grounding locations and sizing. All drawings shall
provide plan view and sectional views of all walls, racks, and pertinent systems
to include all dimensions for all new or relocated equipment.

Provide a full set of detailed drawings indicating mounting and support systems
and requirements. Details shall include, but are not limited to the following,
rack mounting, seismic support systems, ground bus and hardware installation and
termination requirements, cable tray mounting and seismic support) as required.
J-hook mounting and requirements, cable termination hardware mounting, cable
termination requirements, outlet types and configurations complete fire stop
systems details, cable routing practices and

 

B-20.

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Mr. Keith DeBrine

ARC TEC # 092370.06

June 16, 2010

Revised June 23, 2010

Revised June 25, 2010

Page 7

requirements, coordination details for installation of non-telecom contractor
installed systems such as plywood backboards, conduits, cable trays, etc.,
manhole butterfly details, duct bank installation requirements, waterproofing
requirements and all other pertinent information required for complete server
room and telecommunications infrastructure and support systems.

The specifics shall address the following items:

Telecommunications and IT Rooms System General Conditions

Telecommunications and IT Rooms Outside Plant Support Systems (as required)

Telecommunications and IT Rooms Equipment Racks/Cabinets, Distribution Frames,
Shelving, Rails, Fasteners and Cable Management Devices

Telecommunications and IT Rooms Copper Cabling and Termination

Telecommunications and IT Rooms Fiber Optic Cabling and Termination

Fire Stop and Suppression Systems

Telecommunications and IT Rooms Cabling Schedules

Testing and Acceptance Requirements

All of the items listed above shall be fully coordinated with all other
applicable disciplines for architectural, electrical, mechanical, structural,
and civil requirements throughout the design process. All drawings shall be
provided in AutoCAD Release 2007 and PDF format.

Provide all Programming Questionnaires, Calculations, Spreadsheets, and Designs.

Provide Bidding and Negotiation Services to include:

Assist Owner’s representative with selection of qualified Telecommunications
Contractors and Vendors.

Provide a Request for Proposal document to qualified Telecommunications
Contractors to include detailed drawings, specifications, scope of work and
pricing breakdown requirements for the completion of the project.

Conduct bidders’ conference and walk-through of the project site, addressing all
bidders questions.

Address all bidder written requests for information.

Review all submitted bids for technical compliance and budgetary quality.

Assist Client personnel in the selection of the most qualified
Telecommunications Vendors for the project.

Assist and guide the Client through the process of both designing for and
getting any possible rebates from PG&E.

Provide Construction Administration Services to include:

Conduct a telecommunications kick-off meeting with Owner’s representative, the
General Contractor, and the Telecommunications Contractor in order to coordinate
responsibilities and scheduling. Develop a telecommunications installation
schedule in accordance with the results from the kick-off meeting.

Attend weekly progress meetings at the request of the Owner, throughout the
construction phase of the project. Conduct site visits and provide field
observation reports as necessary for each visit, indicating any discrepancies
with the overall telecommunications design and/or failure to comply with
specifications and drawings.

Review and comment on all required submittals, shop drawings, cable placement
schedules and other documentation from the selected Telecommunications
Contractor as required in the Telecommunications Specification.

 

B-21.

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ARC TEC # 092370.06

Mr. Keith DeBrine

June 16, 2010

Revised June 23, 2010

Revised June 25, 2010

Page 8

Review and advise on any and all telecommunications related change orders.

Assist Owner’s representative in resolving any telecommunications related
disputes, which may arise and review contractor’s applications for payment at
the request of the Owner’s representative.

Review all as-built drawings, test results and cable documentation for
compliance with the requirements as stated in the telecommunications
specifications prior to acceptance of the specified system. Coordinate the
as-builts for issuance to Owner’s representative as indicated in the
specification.

ITEMS NOT INCLUDED

The following items are not part of Basic Services, but may be provided as an
Additional Service if requested and authorized by the Client:

Acoustical design and vibration analysis Modular furniture design

Audio / Visual design Planning submittal

Cafeteria design Renderings

Cost estimating Security system design

Electrical engineering Signage design

Energy evaluation and conservation studies Title 24 building envelope energy
calculations

Exterior work of any kind Telecommunications, telephone, data network design.

Fire protection engineering

Food consultant Value engineering

Furnishings, fixtures and equipment specification Work due to existing
conditions uncovered during construction

Lighting design Work due to constructed conditions not in accordance with
contract documents

Mechanical and plumbing equipment

CLIENT REQUIREMENTS

The Client will provide ARC TEC access to the site and existing facilities for
field and inventory activities.

The Client shall designate a representative authorized to act on the Client’s
behalf with respect to the Project. The Client or such designated representative
shall render decisions in a timely manner pertaining to documents submitted by
ARC TEC in order to avoid unreasonable delay in the orderly and sequential
progress of ARC TEC’s services.

The Client shall provide sign-offs in accordance with scope of work and schedule
requirements.

The services, information, surveys and reports required by the Project will be
furnished at the client’s expense, and ARC TEC shall be entitled to rely upon
the accuracy and completeness thereof.

The Client shall provide prompt written notice to ARC TEC if the Client becomes
aware of any fault of defect in the Project, including any errors, omissions or
inconsistencies in ARC TEC’s Documentation.

The Client will pay for all City and other miscellaneous fees required to
complete the project.

 

B-22.

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ARC TEC # 092370.06

Mr. Keith DeBrine

June 16, 2010

Revised June 23, 2010

Revised June 25, 2010

Page 9

ASSUMPTIONS/EXCEPTIONS

We assume there will not be any modifications required to the existing exterior
of the building, the existing roof, or the existing roof screening.

We assume there will not be a requirement for any energy evaluations or studies,
including Title 24 calculations.

We assume we will not be required to prepare BOMA calculations for the building.

We assume site modifications are not required.

We assume the Client will provide ARC TEC with all programming information,
direction and approval in a manner consistent with the agreed upon schedule.

We assume that there will not be any hazardous material review required by the
City.

We assume a planning submittal will not be required.

We assume fire protection systems will be a deferred submittal, but information
required for permitting by the City will be provided to ARC TEC during the CD
phase.

We assume the City Permit Submittal will be acceptable for bidding purposes by
the General Contractor.

We assume no civil engineering will be required for this scope of work.

We assume the Client will provide directly, or contracted through the General
Contractor, the services of Mechanical, Plumbing, Fire Protection, and
Electrical Engineering (including: design, drawings, specifications, and
necessary Title 24 calculations).

We assume the Client will contract directly (or contractually through ARC TEC)
for any other consultants required by the governing jurisdiction regulating
agency to complete the Project.

We assume the Client will provide the necessary and required consultant
services. Should ARC TEC be required to secure such services, the expense will
be cost +15% markup.

We assume audio/visual and acoustical expertise will be provided by the Client’s
in-house staff.

We assume the Client will provide “in-house” design for security systems.

We assume landscape architectural design is not required.

We assume the General Contractor will prepare Record Documents and As-Builts.

We assume the General Contractor will be the engineer-of-record for the fire
sprinkler and fire alarm

 

B-23.

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Mr. Keith DeBrine

ARC TEC # 092370.06

June 16, 2010

Revised June 23, 2010

Revised June 25, 2010

Page 10

SCHEDULE

Our proposal is based on the following project schedule. The basis for the
project schedule is an initiation date indicated of June 28, 2010. Slippage in
the project initiation date may result in an overall schedule slippage.

Program Validation 1 Week

Schematic Design 1 Week

Design Development 3 Weeks

Construction Documents 4 Weeks

Submit Data Center to City of Sunnyvale On or before August 2, 2010

Submit TI plans to City of Sunnyvale On or before September 1, 2010

City plan check comments* To be Determined

Building permit** To be Determined

Construction begins To be Determined

Data Center Move In September 1, 2010

PMC Sierra Moved In December 1, 2010

*Scheduling beyond the control of ARC TEC. ARC TEC will work with City of
Sunnyvale Building Department in an effort to expedite the City’s plan check and
approval process.

**Should any construction begin prior to obtaining a Building Permit, the Client
acknowledges that the Construction is at risk. Redesign and modification to the
in-place construction is a possibility.

COMPENSATION

ARC TEC’s approach to the development of professional services fees is one of
flexibility and responsiveness to owner requirements. The firm has taken
projects on a variety of fee basis methods including: percentage of construction
cost; lump sum fixed fee; various forms of cost reimbursable, labor and
expenses; and combinations of the above for various phases of projects.

The needs and requirements of each client and project are carefully reviewed by
ARC TEC, and a fee structure is established which closely matches project
requirements. ARC TEC has developed a consistent track record of satisfactorily
arriving at agreements with clients regarding our fees for services, based on
the cost effectiveness of services rendered.

 

B-24.

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ARC TEC # 092370.06

Mr. Keith DeBrine

June 16, 2010

Revised June 23, 2010

Revised June 25, 2010

Page 11

ARC TEC will perform the professional services associated with the scope of work
defined above for a stipulated sum to be billed monthly on a percent complete
basis.

The breakdown for the professional service fee is as follows:

Money Spent to Date Thru 05/31/10 (ARC TEC # 092370.05):

Labor Fee $6,820.00

Reimbursable Expenses $206.01

Total $7,026.01

Architectural (ARC TEC)

Program Validation $4,000.00

Schematic Design $5,000.00

Design Development $16,500.00

Basic Furniture Layouts * Included

Construction Documents $39,000.00

Bid Coordination $2,000.00

Construction Administration $18,000.00

Furniture Architectural Assistance $3,000.00

Custom Reception Desk Design $2,000.00

Evacuation Maps $1,000.00

Record Documents $2,000.00

Drawing Coordination * Included

Specifications * Included

Estimated Reimbursable Expenses $9,500.00

Sub-Total Architectural $102,000.00

IT Engineering (NETCOR)

Programming $1,365.00

Schematic Design $2,270.00

Design Development $9,085.00

Construction Documents $18,170.00

Bid Coordination $2,725.00

Construction Administration $11,810.00

Drawing Coordination * Included

Specifications * Included

Sub-Total IT Engineering $45,425.00

Structural (Allowance) $5,750.00

* Included In Construction Documents Fee

 

B-25.

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Mr. Keith DeBrine

ARC TEC # 092370.06

June 16, 2010

Revised June 23, 2010

Revised June 25, 2010

Page 12

In addition to the above labor fees, reimbursable expenses include all printing
for design review, project coordination (other than ARC TEC review) and
government agencies review; express courier service; one reproducible set for
bidding; and other direct expenses incurred in performing Work on this project
will be charged. The fee for these expenses shall be the actual expense +15%.

If ARC TEC is required to perform any services in addition to those described in
this Agreement, whether by reason of substantial changes ordered by the Client,
or for any reason beyond ARC TEC’s reasonable control, ARC TEC will be entitled
to receive payment of such additional services in accordance with rates provided
for additional services under the Proposal. ARC TEC will not be obligated to
perform these additional services until it receives authorization in writing
from the Client.

Keith, please find attached a copy of our terms and conditions and hourly rate
schedule. Should you have any questions, or if I can be of further assistance,
feel free to contact me at any time.

Upon your review and acceptance, please forward a signed copy of this proposal
to my attention at ARC TEC. Thank You.

Sincerely,

ARC TEC, Inc.

[GRAPHIC APPEARS]

Craig Almeleh, NCARB

Principal

Accepted by:

Signature

Date

Title

 

B-26.

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TERMS AND CONDITIONS

Capitalized words are defined in the Definitions section at the end of this
Terms and Conditions.

BILLING

Progress invoicing is monthly and payment is expected within 30 days of the date
of the invoice. All fees unpaid after 60 days will accrue interest at a rate of
1 1/2% per month.

ADA COMPLIANCE

The Americans with Disabilities Act (ADA) requires the removal of architectural
barriers in existing facilities where removal is readily achievable. The Client
acknowledges that the definition of “readily achievable” contained in the ADA is
flexible and subject to interpretation on a case-by-case basis. The requirements
of the ADA will therefore be subject to various and possible contradictory
interpretations. ARC TEC will use its reasonable professional efforts and
judgment to interpret applicable ADA requirements and to advise the Client as to
the modifications to the Client’s facility that may be required to comply with
the ADA. ARC TEC cannot and does not warrant or guarantee that the Client’s
facility will fully comply with interpretations of ADA requirements by
regulatory bodies or court decisions.

INSURANCE

ARC TEC will maintain the following insurance, and upon request by the Client,
ARC TEC will provide the Client with Certificates of insurance:

Workers’ Compensation coverage as required by law.

Professional liability insurance including errors and omissions in the amount of
$1,000.000. This insurance will remain in effect during the term of this
Agreement and for a period of one year after completion of the services
performed by ARC TEC.

General Liability and Automobile coverage with personal injury limits of at
least $1,000,000.

OWNERSHIP OF DOCUMENTS

The Client acknowledges and agrees that the Documents may be used only for this
Project. The parties agree that the Design Team will be the author of the
Documents and will retain all common law, statutory and other reserved rights,
including copyright. Upon request, the Client will be provided with reproducible
copies of the Documents.

The Client will not use or authorize any person to use the Documents for
anything other than the Project. The Client will indemnify and hold harmless the
Design Team, its officers, directors, employees, agents, contractors,
sub-contractors, consultants and sub-consultants against claims, damages, losses
and expenses, including but not limited to attorney’s fees, arising out of the
unauthorized use of the Documents.

ASSIGNMENT

Neither party to this Agreement will transfer, subject or assign any rights
under or interest in this Agreement (including but not limited to monies that
are due or monies that may be due) without the prior written consent of the
other party.

WAIVERS

No act, failure or delay by any party will constitute a waiver of any its rights
and remedies. Each party will retain the right to enforce any provision of this
Agreement.

 

B-27.

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TERMS AND CONDITIONS

LIMITATION OF LIABILITY

In recognition of the relative risks and benefits of the Project to both the
Client and the Design Team, the total aggregate liability of the Design Team to
the Client and to all construction contractors and sub-contractors on the
Project for any and all claims, losses, costs, expenses or damages of any nature
whatsoever arising out of or in any way connected with the performance of this
Agreement or the services provided under this Agreement is hereby limited to
$100,000 or the amount paid by the Client under this Agreement, whichever is
less. This limitation applies to all liability, including, but not limited to,
negligence, professional errors or omissions, strict liability, breach of
contract or warranty claims.

The Client will, to the fullest extent permitted by law and subject to the limit
set forth in the previous paragraph, indemnify and hold harmless the Design Team
and its officers, directors, employees, agents, contractors, sub-contractors,
consultants and sub-consultants from all losses, claims, demands, damages,
assessments, reasonable attorney’s fees, costs and expenses arising out of or in
any way connected with the performance of this Agreement by the Design Team
except to the extent such damages, liabilities or costs are caused by the sole
negligence or willful misconduct of the Design Team or any of its members.

The Design Team will not be responsible for, have authority over, or be subject
to any liability for construction, construction supervision or observation of
construction means, methods, techniques, or safety measures.

SEVERABILITY

If any provision of this Agreement is held to be invalid or unenforceable, the
remainder of the provisions will remain in full force and effect.

COMPLIANCE WITH LAWS

The Client and ARC TEC shall comply with the provisions of the applicable
federal, state, county and local laws, ordinances, regulations and codes.

NOTICES

Any notice, demand or request required or permitted to be given under the
provisions of this Agreement must be in writing and will be deemed to have been
duly delivered on the date of personal delivery or on the date of mailing if
mailed by registered or certified mail, postage prepaid and return receipt
requested to the other party at the address set forth in this Agreement, unless
either party gives written notice to the other party of a change of address.

FORCE MAJEURE

Neither party will be liable for delays or failure to meet its obligations under
this Agreement due to causes beyond the party’s reasonable control, provided the
non-performing party promptly notifies the other party of the nonperformance and
takes all reasonable steps to recommence performance promptly.

SURVIVAL

Notwithstanding anything else in this Agreement, all rights and obligations of
the parties, specifically including but not limited to those set forth in the
Section entitled “Ownership of Documents” and any other terms, which by the
specific language or by reasonable implication are to continue beyond the term
of this Agreement, will survive the expiration or termination of this Agreement.

 

B-28.

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TERMS AND CONDITIONS

APPLICABLE LAW

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

HAZARDOUS MATERIALS

It is acknowledged by both parties that the services to be provided by ARC TEC
under this Agreement do not include any services related to asbestos or
hazardous or toxic materials. In the event ARC TEC or any other party encounters
asbestos or hazardous or toxic materials at the Project site, or it becomes
known in any way that such materials may be present at the Project site or any
adjacent areas that may affect the performance of ARC TEC’s service, ARC TEC
may, at its option and without liability for consequential or any other damages,
suspend performance of its services on the Project until the Client retains
appropriate specialty consultants or contractors to identify, abate and/or
remove the asbestos, hazardous or toxic materials, and such specialty
consultants or contractors warrant in writing that the Project site is in full
compliance with applicable laws and regulations.

WARRANTY OF CONDITIONS

ARC TEC will not be required to execute any document that would result in the
certifying, guaranteeing and warranting of concealed conditions whose existence
cannot be ascertained by ARC TEC at the Project site.

CHANGES AND ADDITIONAL SERVICES

If ARC TEC is required to perform any services in addition to those described in
this Agreement, whether by reason of substantial changes ordered by the Client,
or for any reason beyond ARC TEC’s reasonable control, ARC TEC will be entitled
to receive payment for such additional services in accordance with rates
provided for additional services under the Proposal. ARC TEC will not be
obligated to perform these additional services until it receives authorization
in writing from the Client.

CALIFORNIA ARCHITECTURAL REGISTRATION

Pursuant to the California Architectural Practice Act, Section 5536.22, any
contract for architectural services must contain the name and license number of
the architect providing the architectural services. The following architects,
who are licensed in good standing in the State of California, may be providing
services on the Project, and may seal and sign any required documentation:

Craig J. Almeleh License # C-21289 Expires 10/31/2011

Daniel S. Kirby License # C-19463 Expires 09/30/2011

MEDIATION

All claims, disputes and other matters in question between the parties to this
Agreement, arising out of, or relating to, this Agreement or the breach of this
Agreement, will be submitted to non-binding mediation under the auspices of a
mutually agreed upon mediation service, experienced in the resolution of
construction disputes, prior to initiation of any lawsuit or other litigation.
The cost of the mediation will be split equally between the parties.

The Client and ARC TEC further agree to include a similar mediation provision in
all agreements with independent contractors and consultants retained for the
Project and to require all independent contractors and consultants to include a
similar mediation provision in all agreements with sub-contractors,
sub-consultants, suppliers or fabricators so retained.

 

B-29.

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TERMS AND CONDITIONS

TERMINATION OR SUSPENSION

Either party may terminate this Agreement at any time with or without cause upon
giving the other party seven calendar days prior written notice. The Client will
within 30 calendar days of termination pay ARC TEC for all services rendered and
all costs incurred up to the date of termination, in accordance with the Billing
provisions of this Agreement.

If the Client elects to suspend the project for more than thirty (30)
consecutive days, ARC TEC shall be compensated for services performed prior to
notice of such suspension. When the Project is resumed, ARC TEC shall be
compensated for expenses incurred in the interruption and resumption of ARC
TEC’s services. The Architect’s fees for the remaining services and the time
schedules shall be equitably adjusted.

COMPLETE AGREEMENTS

The Agreement constitutes the entire agreement between the parties pertaining to
the subject matter of this Agreement. This Agreement supersedes and cancels all
prior oral and written agreements between the parties with respect to this
subject matter. This Agreement may not be changed in any way except by an
instrument in writing signed by both parties. No representations or statements
of any kind made by a representative of either party, which are not stated
herein, will be binding on that party. No course of dealing or course of
performance will be relevant to explain or supplement any term expressed in this
contract.

DEFINITIONS

The following terms are defined below and will have that meaning throughout the
Agreement:

“Agreement” will mean the Proposal and this Terms and Conditions.

“ARC TEC” will mean ARC TEC, Inc.

“Client” will mean Wrightwood Capital.

“Design Team” will mean ARC TEC and any contractors, sub-contractors,
consultants and sub-consultants used on the Project by ARC TEC.

“Documents” will mean all drawings, specifications and other documents prepared
by ARC TEC, either through its own employees or through contractors or
consultants, for the Project.

“Project” will mean PMC-Sierra, Inc., 1380 Bordeaux Drive, Sunnyvale.

“Proposal” will mean the attached revised letter June 25, 2010, from ARC TEC to
the Client, which describes the specific architectural services for the Project.

WRITTEN CONTRACT

ARC TEC will not perform any services until a signed copy of this Agreement is
returned. This offer will remain valid for 30 days from the date first
identified in the Proposal.

The Client and ARC TEC acknowledge that they have read this Agreement,
understand the terms and agree to be bound by this Agreement.

The Client and ARC TEC acknowledge that they have read this Agreement, including
Appendices and Addenda, if any, understand them and agree to be bound by their
terms and conditions.

 

B-30.

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HOURLY RATE SCHEDULE

ARCHITECTURAL (ARC TEC)

Principal $145.00 - $165.00/hr.

Project Manager $110.00 - $130.00/hr.

Project Designer $95.00 - $120.00/hr.

Project Captain $80.00 - $110.00/hr.

Technical Support $65.00 - $85.00/hr.

Administrative $65.00/hr.

STRUCTURAL (S.E.I.) Structural Engineers Inc.)

Principal $145.00-165.00/hr.

Associate- Structural Engineer $110.00-145.00/hr.

Project Manager- Civil Engineer $95.00-120.00/hr.

Project Engineer $80.00-105.00/hr.

CAD Operator $75.00-110.00/hr.

Administrative $65.00-90.00/hr.

 

B-31.

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EXHIBIT A-3 TO WORK LETTER

 

B-32.

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FIRST FLOOR PLAN

ELEVATION AT LOBBY FEATURE WALL

PMC-Sierra

1380 Bordeaux Drive, Building A

Sunnyvale, DA

 

B-33.

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FIRST FLOOR PLAN

ELEVATION AT LOBBY FEATURE WALL

PMC-Sierra

 

B-34.

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ARC TEC

SECOND FLOOR

REFLECTED CEILING PLAN

PMC-Sierra

SP-7

 

B-35.

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SECOND FLOOR PLAN

PMC-Sierra

 

B-36.

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THIRD FLOOR REFLECTED CEILING PLAN

PMC-Sierra

 

B-37.

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ARC TEC

THIRD FLOOR PLAN

PMC-Sierra

SP-7

 

B-38.

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B-39.

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EXHIBIT C

FORM OF COMMENCEMENT CERTIFICATE

                           , 200    

__________________                             

__________________                             

__________________                             

__________________                             

RE: Office Lease (“Lease”) dated                 , 200     between,
                 as

“Tenant”, and, as “Landlord”, for the premises located at
                            

Commencement Certificate

Dear                     :

We have deemed the Improvement Work in the Leased Premises “substantially
complete” (subject to punchlist items that have been noted by Tenant in writing)
as of                 . In accordance with the above Lease, this letter is to
confirm the following:

Commencement Date is/occurred on                 .

Expiration Date is                 , 20     unless earlier terminated.

 

[LANDLORD/PROPERTY MANAGER TO INCLUDE OTHER VARIABLE INFORMATION THAT MUST BE
CONFIRMED AFTER THE COMMENCEMENT DATE]

If you concur with the aforementioned, please execute and return one original
copy to my attention.

 

Thank you.

      

ACCEPTED AND AGREED:

 

Sincerely,

    

 

         By:     

 

         Name:     

 

           Title:     

 

 

Property Manager

        

 

C-1.

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EXHIBIT D

FORM OF SNDA

Attached.

 

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

 

RECORDING REQUESTED BY

  

AND WHEN RECORDED MAIL TO:

    

Bank of America, N.A.

c/o Jeremy Bunnow

  

Barack, Ferrazzano, Kirschbaum & Nagelberg LLP

  

200 West Madison Street, Suite 3900

  

Chicago, Illinois 60606

               Space above for Recorder’s Use  

SUBORDINATION, NONDISTURBANCE AND

ATTORNMENT AGREEMENT

This Subordination, Nondisturbance and Attornment Agreement (“Agreement”) is
entered into as of                     , 20        , by BANK OF AMERICA, N.A.
(“Bank”), and (“Tenant”).

RECITALS

A. WCP BORDEAUX CENTRE LLC, a Delaware limited liability company (“Landlord”),
owns the real property located at 1376 Bordeaux Drive, Sunnyvale, California
(such real property, including all buildings, improvements, structures and
fixtures located thereon, “Landlord’s Premises”), as more particularly described
in Schedule A.

B. Landlord has encumbered Landlord’s Premises by entering into that certain
Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (“Deed
of Trust”) dated as of July 29, 2009, and recorded on July 30, 2009, as
Instrument No. 20371108 in the Official Records of Santa Clara County,
California, encumbering the Property. The Deed of Trust secures certain
obligations to Bank as more particularly described therein.

C. Pursuant to a Lease, dated as of                      (the “Lease”); Landlord
demised to Tenant a portion of Landlord’s Premises (“Tenant’s Premises”).

D. Tenant and Bank desire to agree upon the relative priorities of their
interests in Landlord’s Premises and their rights and obligations if certain
events occur.

NOW, THEREFORE, for good and sufficient consideration, Tenant and Bank agree:

1. Definitions.

The following terms shall have the following meanings for purposes of this
Agreement.

1.1 Construction-Related Obligation. A “Construction-Related Obligation” means
the “Additional Allowance” under Exhibit B to the Lease and any other obligation
of Landlord under the Lease to make, pay for, or reimburse Tenant for any
alterations, demolition, or other improvements or work at Landlord’s Premises,
including Tenant’s Premises. “Construction-Related Obligations” shall not
include: (a) reconstruction or repair following fire, casualty or condemnation;
or (b) day-to-day maintenance and repairs.

1.2 Foreclosure Event. A “Foreclosure Event” means: (a) foreclosure under the
Deed of Trust; (b) any other exercise by Bank of rights and remedies (whether
under the Deed of Trust or under applicable law, including bankruptcy law) as
holder of the Loan and/or the Deed of Trust, as a result of

 

D-1.

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which Successor Landlord becomes owner of Landlord’s Premises; or (c) delivery
by Landlord to Bank (or its designee or nominee) of a deed or other conveyance
of Landlord’s interest in Landlord’s Premises in lieu of any of the foregoing.

1.3 Former Landlord. A “Former Landlord” means Landlord and any other party that
was landlord under the Lease at any time before the occurrence of any attornment
under this Agreement.

1.4 Offset Right. An “Offset Right” means any right or alleged right of Tenant
to any offset, defense (other than one arising from actual payment and
performance, which payment and performance would bind a Successor Landlord
pursuant to this Agreement), claim, counterclaim, reduction, deduction, or
abatement against Tenant’s payment of Rent or performance of Tenant’s other
obligations under the Lease, arising (whether under the Lease or other
applicable law) from Landlord’s breach or default under the Lease.

1.5 Rent. The “Rent” means any fixed rent, base rent or additional rent under
the Lease.

1.6 Successor Landlord. A “Successor Landlord” means any party that becomes
owner of Landlord’s Premises as the result of a Foreclosure Event.

1.7 Termination Right. A “Termination Right” means any right of Tenant to cancel
or terminate the Lease or to claim a partial or total eviction arising (whether
under the Lease or under applicable law) from Landlord’s breach or default under
the Lease.

2. Subordination.

The Lease shall be, and shall at all times remain, subject and subordinate to
the Deed of Trust, the lien imposed by the Deed of Trust, and all advances made
under the Deed of Trust.

3. Nondisturbance, Recognition and Attornment.

3.1 No Exercise of Deed of Trust Remedies Against Tenant. So long as the Lease
has not been terminated on account of Tenant’s default that has continued beyond
applicable cure periods (an “Event of Default”), Bank shall not name or join
Tenant as a defendant in any exercise of Bank’s rights and remedies arising upon
a default under the Deed of Trust unless applicable law requires Tenant to be
made a party thereto as a condition to proceeding against Landlord or
prosecuting such rights and remedies. In the latter case, Bank may join Tenant
as a defendant in such action only for such purpose and not to terminate the
Lease or otherwise adversely affect Tenant’s rights under the Lease or this
Agreement in such action.

3.2 Nondisturbance and Attornment. If the Lease has not been terminated on
account of an Event of Default by Tenant, then, when Successor Landlord takes
title to Landlord’s Premises: (a) Successor Landlord shall not terminate or
disturb Tenant’s possession of Tenant’s Premises under the Lease, except in
accordance with the terms of the Lease and this Agreement; (b) Successor
Landlord shall be bound to Tenant under all the terms and conditions of the
Lease (except as provided in this Agreement); (c) Tenant shall recognize and
attorn to Successor Landlord as Tenant’s direct landlord under the Lease as
affected by this Agreement; and (d) the Lease shall continue in full force and
effect as a direct lease, in accordance with its terms (except as provided in
this Agreement), between Successor Landlord and Tenant.

3.3 Further Documentation. The provisions of this Article shall be effective and
self-operative without any need for Successor Landlord or Tenant to execute any
further documents. Tenant and Successor Landlord shall, however, confirm the
provisions of this Article in writing upon request by either of them.

 

D-2.

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4. Protection of Successor Landlord.

Notwithstanding anything to the contrary in the Lease or the Deed of Trust,
Successor Landlord shall not be liable for or bound by any of the following
matters:

4.1 Claims Against Former Landlord. Any Offset Right that Tenant may have
against any Former Landlord relating to any event or occurrence before the date
of attornment (except for any such Offset Right specifically set forth in the
Lease), including any claim for damages of any kind whatsoever as the result of
any breach by Former Landlord that occurred before the date of attornment. (The
foregoing shall not limit either (a) Tenant’s right to exercise against
Successor Landlord any Offset Right specifically set forth in the Lease whether
occurring prior to or after the date of attornment; (b) Tenant’s right to
exercise against Successor Landlord any Offset Right otherwise available to
Tenant because of events occurring after the date of attornment or (c) Successor
Landlord’s obligation to correct any conditions that existed as of the date of
attornment and violate Successor Landlord’s obligations as landlord under the
Lease.)

4.2 Prepayments. Any payment of Rent that Tenant may have made to Former
Landlord more than thirty days before the date such Rent was first due and
payable under the Lease with respect to any period after the date of attornment
other than, and only to the extent that, the Lease expressly required such a
prepayment.

4.3 Payment; Security Deposit. Any obligation: (a) to pay Tenant any damages
that any Former Landlord owed to Tenant or (b) with respect to any security
deposited with Former Landlord, unless such security was actually delivered to
Bank. This paragraph is not intended to apply to Landlord’s obligation to make
any payment that constitutes a “Construction-Related Obligation” or to provide
any rent credit specifically set forth in the Lease.

4.4 Modification, Amendment, or Waiver. Any modification or amendment of the
Lease, or any waiver of any terms of the Lease, made without Bank’s written
consent.

4.5 Surrender, Etc. Any consensual or negotiated surrender, cancellation, or
termination of the Lease, in whole or in part, agreed upon between Landlord and
Tenant, unless approved in writing by Bank or unless effected unilaterally by
Tenant or Landlord pursuant to the express terms of the Lease.

4.6 Construction Related Obligations. Any Construction Related Obligation of
Landlord under the Lease, but subject to any Offset Right specifically set forth
in the Lease.

4.7 Default Under Deed of Trust. In the event that Bank notifies Tenant of a
default under the Deed of Trust and demands that Tenant pay its rent and all
other sums due under the Lease directly to Bank, Tenant shall honor such demand
and pay the full amount of its rent and all other sums due under the Lease
directly to Bank, without offset, or as otherwise required pursuant to such
notice beginning with the payment next due after such notice of default, without
inquiry as to whether a default actually exists under the Deed of Trust and
notwithstanding any contrary instructions of or demands from Landlord.

5. Exculpation of Successor Landlord.

Notwithstanding anything to the contrary in this Agreement or the Lease, upon
any attornment pursuant to this Agreement the Lease shall be deemed to have been
automatically amended to provide that Successor Landlord’s obligations and
liability under the Lease shall never extend beyond Successor Landlord’s (or its
successors’ or assigns’) interest, if any, in Landlord’s Premises from time to
time, including insurance and condemnation proceeds, Successor Landlord’s
interest in the Lease, and the proceeds from any sale or other disposition of
Landlord’s Premises by Successor Landlord (collectively, “Successor Landlord’s
Interest”). Tenant shall look exclusively to Successor Landlord’s Interest (or
that of

 

D-3.

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

its successors and assigns) for payment or discharge of any obligations of
Successor Landlord under the Lease as affected by this Agreement. If Tenant
obtains any money judgment against Successor Landlord with respect to the Lease
or the relationship between Successor Landlord and Tenant, then Tenant shall
look solely to Successor Landlord’s Interest (or that of its successors and
assigns) to collect such judgment. Tenant shall not collect or attempt to
collect any such judgment out of any other assets of Successor Landlord.

6. Bank’s Right to Cure.

6.1 Notice to Bank. Notwithstanding anything to the contrary in the Lease or
this Agreement, before exercising any Termination Right, Tenant shall provide
Bank with notice of the breach or default by Landlord giving rise to same (the
“Default Notice”) and, thereafter, the opportunity to cure such breach or
default as provided for below.

6.2 Bank’s Cure Period. After Bank receives a Default Notice, Bank shall have a
period of thirty days beyond the time available to Landlord under the Lease in
which to cure the breach or default by Landlord. Bank shall have no obligation
to cure (and shall have no liability or obligation for not curing) any breach or
default by Landlord, except to the extent that Bank agrees or undertakes
otherwise in writing.

6.3 Extended Cure Period. In addition, as to any breach or default by Landlord
the cure of which requires possession and control of Landlord’s Premises,
provided only that Bank undertakes to Tenant by written notice to Tenant within
thirty days after receipt of the Default Notice to exercise reasonable efforts
to cure or cause to be cured by a receiver such breach or default within the
period permitted by this paragraph, Bank’s cure period shall continue for such
additional time (the “Extended Cure Period”) as Bank may reasonably require to
either (a) obtain possession and control of Landlord’s Premises and thereafter
cure the breach or default with reasonable diligence and continuity or
(b) obtain the appointment of a receiver and give such receiver a reasonable
period of time in which to cure the default.

7. Confirmation of Facts.

Tenant represents to Bank and to any Successor Landlord, in each case as of the
date hereof:

7.1 Effectiveness of Lease. The Lease is in full force and effect, has not been
modified, and constitutes the entire agreement between Landlord and Tenant
relating to Tenant’s Premises. Tenant has no interest in Landlord’s Premises
except pursuant to the Lease. No unfulfilled conditions exist to Tenant’s
obligations under the Lease.

7.2 Rent. Tenant has not paid any Rent that is first due and payable under the
Lease after the date hereof except for the prepaid rent specifically required
under Paragraph 3.6 of the Lease.

7.3 No Landlord Default. To Tenant’s knowledge, no breach or default by Landlord
exists and no event has occurred that, with the giving of notice, the passage of
time or both, would constitute such a breach or default.

7.4 No Tenant Default. Tenant is not in default under the Lease and has not
received any uncured notice of any default by Tenant under the Lease.

7.5 No Termination. Tenant has not commenced any action nor sent or received any
notice to terminate the Lease. Tenant has no presently exercisable Termination
Right(s) or Offset Right(s).

 

D-4.

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7.6 No Transfer. Tenant has not transferred, encumbered, mortgaged, assigned,
conveyed or otherwise disposed of the Lease or any interest therein, other than
sublease(s) made in compliance with the Lease.

7.7 Due Authorization. Tenant has full authority to enter into this Agreement,
which has been duly authorized by all necessary actions.

8. Miscellaneous.

8.1 Notices. All notices or other communications required or permitted under
this Agreement shall be in writing and given by certified mail (return receipt
requested) or by nationally recognized overnight courier service that regularly
maintains records of items delivered. Each party’s address is as set forth in
the opening paragraph of this Agreement, subject to change by notice under this
paragraph. Notices shall be effective the next business day after being sent by
overnight courier service, and five business days after being sent by certified
mail (return receipt requested).

8.2 Successors and Assigns. This Agreement shall bind and benefit the parties,
their successors and assigns, any Successor Landlord, and its successors and
assigns. If Bank assigns the Deed of Trust, then upon delivery to Tenant of
written notice thereof accompanied by the assignee’s written assumption of all
obligations under this Agreement, all liability of the assignor shall terminate.

8.3 Entire Agreement. This Agreement constitutes the entire agreement between
Bank and Tenant regarding the subordination of the Lease to the Deed of Trust
and the rights and obligations of Tenant and Bank as to the subject matter of
this Agreement.

8.4 Interaction with Lease and with Deed of Trust. If this Agreement conflicts
with the Lease, then this Agreement shall govern as between the parties and any
Successor Landlord, including upon any attornment pursuant to this Agreement.
This Agreement supersedes, and constitutes full compliance with, any provisions
in the Lease that provide for subordination of the Lease to, or for delivery of
nondisturbance agreements by the holder of, the Deed of Trust. Bank confirms
that Bank has consented to Landlord’s entering into the Lease.

8.5 Bank’s Rights and Obligations. Except as expressly provided for in this
Agreement, Bank shall have no obligations to Tenant with respect to the Lease.
If an attornment occurs pursuant to this Agreement, then all rights and
obligations of Bank under this Agreement shall terminate, without thereby
affecting in any way the rights and obligations of Successor Landlord provided
for in this Agreement.

8.6 Interpretation; Governing Law. The interpretation, validity and enforcement
of this Agreement shall be governed by and construed under the internal laws of
the State of Missouri, excluding its principles of conflict of laws.

8.7 Amendments. This Agreement may be amended, discharged or terminated, or any
of its provisions waived, only by a written instrument executed by the party to
be charged.

8.8 Execution. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.

8.9 Bank’s Representation. Bank represents that Bank has full authority to enter
into this Agreement, and Bank’s entry into this Agreement has been duly
authorized by all necessary actions.

[Signature Pages Follow]

 

D-5.

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

 

IN WITNESS WHEREOF, this Agreement has been duly executed and sealed by Bank and
Tenant as of the Effective Date.

 

BANK

BANK OF AMERICA, N.A.,

a national banking association

By:

   

Name:

   

Title:

      [BANK SEAL]

 

STATE OF                          

              )                 )                   SS

COUNTY OF                        

              )  

I,                                          
                                   , a notary public in and for and residing in
said county, in the state aforesaid, do hereby certify that
                    , a                                   who is personally
known to me to be the same person whose name is subscribed to the foregoing
instrument as such                     , appeared before me this day in person
and acknowledged that he signed the said instrument as his own free and
voluntary act and as the free and voluntary act of                     , for the
uses and purposes therein set forth.

GIVEN under my hand and notarial seal this          day of             , 20    .

 

     

 

     

Notary Public

My commission expires:

 

     

 

D-6.

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

 

TENANT

By:

 

 

Name:

 

 

Title:

 

 

 

[CORPORATE SEAL]

 

STATE OF

 

 

  )     )    ss.

COUNTY OF

 

 

  )

On                                                       before me,
                                             , personally appeared
                                        , who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY
under the laws of the State of California that the foregoing paragraph is true
and correct.

WITNESS my hand and official seal.

 

                                                                   

         

Notary Public

                                           (Seal)

 

D-7.

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

 

LANDLORD’S CONSENT

Landlord consents and agrees to the foregoing Agreement, which was entered into
at Landlord’s request. The foregoing Agreement shall not alter, waive or
diminish any of Landlord’s obligations under the Deed of Trust or the Lease. The
above Agreement discharges any obligations of Bank under the Deed of Trust and
related loan documents to enter into a nondisturbance agreement with Tenant.
Tenant is hereby authorized to pay its rent and all other sums due under the
Lease directly to Bank upon receipt of a notice as set forth in Section 4.7
above from Bank and that Tenant is not obligated to inquire as to whether a
default actually exists under the Deed of Trust and to the extent Tenant so
makes such payments firectly to Bank, Tenant shall be released from any
obligation to pay such amounts to Landlord. Landlord is not a party to the above
Agreement.

 

LANDLORD

 

WCP BORDEAUX CENTRE LLC, a Delaware

limited liability company

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

Dated:                    , 20    

  [CORPORATE SEAL]  

 

STATE OF                     

  

)

       

)

  

                SS

COUNTY OF                     

  

)

  

I,                                                                      , a
notary public in and for and residing in said county, in the state aforesaid, do
hereby certify that                                     , a
                                                                          who is
personally known to me to be the same person whose name is subscribed to the
foregoing instrument as such                                     , appeared
before me this day in person and acknowledged that he signed the said instrument
as his own free and voluntary act and as the free and voluntary act of
                                    , for the uses and purposes therein set
forth.

GIVEN under my hand and notarial seal this          day of             ,
20        .

 

 

Notary Public

 

My commission expires:

 

Attachment:

Schedule A = Description of Landlord’s Premises

 

D-8.

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SCHEDULE A

Description of Landlord’s Premises

 

D-1.

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TABLE OF CONTENTS

 

          PAGE  

ARTICLE 1

   REFERENCE PROVISIONS      1   

1.1  

   References      1   

ARTICLE 2

   LEASED PREMISES, TERM AND POSSESSION      2   

2.1  

   Demise Of Leased Premises      2   

2.2  

   Right To Use Outside Areas      3   

2.3  

   Commencement Date And Lease Term      3   

2.4  

   Delivery Of Possession      3   

2.5  

   Performance Of Improvement Work; Acceptance Of Possession      3   

ARTICLE 3

   RENT, LATE CHARGES AND SECURITY DEPOSITS      4   

3.1  

   Base Monthly Rent      4   

3.2  

   Additional Rent      4   

3.3  

   Year-End Adjustments      4   

3.4  

   Late Charge, And Interest On Rent In Default      5   

3.5  

   Payment Of Rent      5   

3.6  

   Prepaid Rent; First Partial Month      5   

3.7  

   Security Deposit      5   

ARTICLE 4

   USE OF LEASED PREMISES AND OUTSIDE AREA      6   

4.1  

   Permitted Use      6   

4.2  

   General Limitations On Use      6   

4.3  

   Noise And Emissions      6   

4.4  

   Trash Disposal      6   

4.5  

   Parking      6   

4.6  

   Signs      6   

4.7  

   Compliance With Laws And Private Restrictions      7   

4.8  

   Compliance With Insurance Requirements      7   

4.9  

   Landlord’s Right To Enter      7   

4.10

   Use Of Outside Areas      8   

4.11

   Environmental Protection      8   

4.12

   Rules And Regulations      9   

ARTICLE 5

   REPAIRS, MAINTENANCE, SERVICES AND UTILITIES      9   

5.1  

   Repair And Maintenance      9   

5.2  

   Utilities      10   

5.3  

   Security      11   

5.4  

   Energy And Resource Consumption      11   

5.5  

   Limitation Of Landlord’s Liability      11   

ARTICLE 6

   ALTERATIONS AND IMPROVEMENTS      11   

6.1  

   By Tenant      11   

6.2  

   Ownership Of Improvements      13   

6.3  

   Alterations Required By Law      13   

6.4  

   Liens      13   

ARTICLE 7

   ASSIGNMENT AND SUBLETTING BY TENANT      13   

7.1  

   By Tenant      13   

7.2  

   Merger, Reorganization or Sale of Assets      14   

7.3  

   Landlord’s Election      14   

7.4  

   Conditions To Landlord’s Consent      15   

7.5  

   Payments      15   

7.6  

   Audit; Good Faith      15   

 

i.

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

 

TABLE OF CONTENTS

(CONTINUED)

 

          PAGE  

7.7  

   Effect Of Landlord’s Consent      15   

ARTICLE 8

   LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY      16   

8.1  

   Limitation On Landlord’s Liability And Release      16   

8.2  

   Tenant’s Indemnification Of Landlord      16   

8.3  

   Limitation of Tenant’s Liability And Release      16   

ARTICLE 9

   INSURANCE      17   

9.1  

   Tenant’s Insurance      17   

9.2  

   Landlord’s Insurance      17   

9.3  

   Mutual Waiver Of Subrogation      18   

ARTICLE 10

   DAMAGE TO LEASED PREMISES      18   

10.1  

   Landlord’s Duty To Restore      18   

10.2  

   Insurance Proceeds      18   

10.3  

   Landlord’s Right To Terminate      18   

10.4  

   Tenant’s Right To Terminate      19   

10.5  

   Tenant’s Waiver      19   

10.6  

   Abatement Of Rent      19   

ARTICLE 11

   CONDEMNATION      19   

11.1  

   Tenant’s Right To Terminate      19   

11.2  

   Landlord’s Right To Terminate      19   

11.3  

   Restoration      19   

11.4  

   Temporary Taking      19   

11.5  

   Division Of Condemnation Award      19   

11.6  

   Abatement Of Rent      20   

11.7  

   Taking Defined      20   

ARTICLE 12

   DEFAULT AND REMEDIES      20   

12.1  

   Events Of Tenant’s Default      20   

12.2  

   Landlord’s Remedies      20   

12.3  

   Landlord’s Default And Tenant’s Remedies      22   

12.4  

   Tenant’s Waiver      22   

ARTICLE 13

   GENERAL PROVISIONS      22   

13.1  

   Taxes On Tenant’s Property      22   

13.2  

   Holding Over      22   

13.3  

   Surrender Of Possession      22   

13.4  

   Subordination To Mortgages      23   

13.5  

   Tenant’s Attornment Upon Foreclosure      23   

13.6  

   Mortgagee Protection      23   

13.7  

   Estoppel Certificate      24   

13.8  

   Tenant’s Financial Information      24   

13.9  

   Transfer By Landlord      24   

13.10

   Force Majeure      24   

13.11

   Notices      24   

13.12

   Attorneys’ Fees      25   

13.13

   Definitions      25   

13.14

   General Waivers      26   

13.15

   Private Adjudication; Waiver of Jury Trial      27   

13.16

   Miscellaneous      27   

ARTICLE 14

   CORPORATE AUTHORITY BROKERS AND ENTIRE AGREEMENT      27   

 

ii.

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TABLE OF CONTENTS

(CONTINUED)

 

          PAGE  

14.1

   Corporate Authority      27   

14.2

   Brokerage Commissions      27   

14.3

   Entire Agreement      28   

14.4

   Landlord’s Representations      28   

ARTICLE 15

   OPTIONS TO TERMINATE, EXTEND      28   

15.1

   Option to Terminate      28   

15.2

   Renewal Term      28   

15.3

   Renewal Term Rent      28   

15.4

   Parties to Confer Regarding Fair Market Rental      29   

 

iii.

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