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FORM 10-K [form_10-k.htm]
Exhibit 10.33
LEASE AGREEMENT
 
This Lease Agreement (“Lease”), dated as of December 22, 2010, is made and
entered into by Christensen Holdings, L.P., a California limited partnership,
(“Landlord”) and Silicon Image, Inc., a Delaware corporation (“Tenant”).
 
1.           Demise.  In consideration of the rents and all other charges and
payments payable by Tenant, and for the agreements, terms and conditions to be
performed by Tenant in this Lease, LANDLORD DOES HEREBY LEASE TO TENANT, AND
TENANT DOES HEREBY HIRE AND TAKE FROM LANDLORD, the Premises described below
(the “Premises”), upon the agreements, terms and conditions of this Lease for
the Term hereinafter stated.
 
2.           Premises.  The Premises demised by this Lease are approximately one
hundred twenty-eight thousand one hundred fifty-four (128,154) rentable square
feet of space, as shown on EXHIBIT A attached hereto, in that certain single
story building (“Building”) at 1140 - 1154 East Arques Avenue, Sunnyvale,
California, together with the non-exclusive right to use the Outside Areas
(defined in Paragraph 43 below) of the Property (to the extent set forth in
Paragraph 43 below) and parking set forth in Paragraph 44 below, in common with
other tenants and occupants of the Property.  The Building and the adjacent
building commonly known as 1130 East Arques Avenue, consisting of approximately
thirty-five thousand five hundred fifty-two (35,552) rentable square feet (the
“Adjacent Building”), constitute part of a larger office/research and
development park commonly known as 1130-1198 East Arques, as more particularly
shown on EXHIBIT B attached hereto, with a total building area of approximately
305,846 rentable square feet (collectively, the “Property”).
 
3.           Term.
 
(a)           Commencement Date.  The term of this Lease (“Term”) shall be seven
(7) years commencing on the Commencement Date (defined below), unless sooner
terminated and subject to any extension granted hereunder.  The “Commencement
Date” of this Lease shall be the later of (i) March 1, 2011; or (ii) the date of
substantial completion of the Tenant Improvements to be completed by Landlord
pursuant to the terms of the Work Letter Agreement attached as EXHIBIT C.  For
purposes of this Lease, the date of substantial completion shall be the date
that all of the following has occurred:  (i) the Tenant Improvements are
complete except for minor items of adjustment or repair of the type commonly
found on an architect’s punchlist which would not materially interfere with
Tenant’s use and enjoyment of the Premises; and (ii) the City of Sunnyvale has
approved the Tenant Improvements in accordance with its building code, evidenced
by its completion of a final inspection and written approval of such
improvements as so completed in accordance with the building permit issued for
the Tenant Improvements.  If Landlord cannot deliver possession of the Premises
to Tenant with the Tenant Improvements substantially complete on or before March
1, 2011, this Lease shall not be void or voidable, nor shall Landlord, or
Landlord’s Agents be liable to Tenant for any loss or damage resulting
therefrom.  In such event, subject to the provisions of Paragraph 3(c), Tenant
shall not be liable for Rent until Landlord delivers possession of the Premises
to Tenant with the Tenant Improvements substantially complete, and the
expiration date of the Term shall be extended by the same number of days that
Tenant’s possession of the Premises is delayed.  Notwithstanding the foregoing,
if Landlord is unable to deliver possession of the Premises to Tenant with the
Tenant Improvements substantially complete by August 31, 2011 for any reason
other than a Tenant Delay, then Tenant shall have the right to terminate this
Lease by delivery of written notice to landlord no later than September 15,
2011.  Tenant’s right to terminate this Lease as permitted herein shall be
Tenant’s sole and exclusive remedy for Landlord’s inability to complete the
Tenant Improvements by August 31, 2011, and Landlord shall have no liability to
Tenant for any other damages or losses suffered or incurred by Tenant as a
result thereof.
 
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(b)           Commencement Date Memorandum.  When the actual Commencement Date
is determined, the parties shall execute a Commencement Date Memorandum setting
forth such date in the form shown in EXHIBIT D.
 
(c)           Tenant Delays.  If the Commencement Date has not occurred on or
before March 1, 2011, due to the fault of Tenant, then, beginning on March 1,
2011 and continuing on the first day of each calendar month thereafter until the
Commencement Date, Tenant shall pay to landlord the Base Rent set forth in
Paragraph 4(a).  Delays “due to the fault” of Tenant (each, a “Tenant Delay”)
shall include those caused by:
 
(i)           Tenant’s failure to furnish information to Landlord for the
preparation of plans and drawings for the Tenant Improvements in accordance with
the time periods provided in EXHIBIT C;
 
(ii)           Tenant’s request for special materials, finishes or installations
which are not readily available provided that Landlord shall advise Tenant at
the time of request whether the special materials, finishes or installations
requested by Tenant are available and, if not available, what delay, if any,
would result from the use of special materials, finishes or installations, and
allow Tenant one (1) business day to revoke its request for such special
materials, finishes or installations;
 
(iii)           Tenant’s failure to reasonably approve plans and working
drawings in accordance with EXHIBIT C;
 
(iv)           Tenant’s changes in plans and/or working drawings after their
approval by Landlord provided that Landlord shall advise Tenant at the time of
Tenant’s request whether any delay will result from such changes and allow
Tenant one (1) business days to revoke such changes;
 
(v)           Tenant’s failure to complete any of its own improvement work to
the extent Tenant delays completion by the City of Sunnyvale of its final
inspection and approval of the Tenant Improvements described in EXHIBIT C; or
 
(vi)           Interference with Landlord’s work caused by Tenant or by Tenant’s
contractors or subcontractors provided that Landlord shall notify Tenant in
writing of such interference and if Tenant cures such interference with one (1)
business day from Tenant’s receipt of Landlord’s notice, there shall be no
Tenant Delay.
 
(d)           Early Entry.  Tenant shall be permitted to enter the Premises on
the next business day after this Lease has been fully executed, and Tenant has
delivered to Landlord the certificate of insurance required under Paragraph
14(a) of this Lease, for the purposes of (i) constructing certain improvements
to the Premises that have been approved by Landlord, (ii) installing Tenant’s
furniture, fixtures and equipment in the Premises and otherwise preparing the
Premises for Tenant’s occupancy, and/or (iii) commencing occupancy of the
Premises, provided that Tenant’s early entry and/or occupancy does not interfere
with the completion of the Tenant Improvements.  Such early entry and/or
occupancy shall be at Tenant’s sole risk and subject to all the terms and
provisions hereof, except for the payment of Rent, which shall commence on the
Commencement Date.  Landlord shall have the right to impose such reasonable
additional conditions on Tenant’s early entry and/or occupancy as Landlord shall
deem appropriate, including limiting the area of the Premises to which Tenant
has the right to access and/or occupy at any time during construction of the
Tenant Improvements.  Tenant acknowledges that if Tenant elects to occupy a
portion of the Premises during construction of the Tenant Improvements, Tenant’s
use of the Premises and/or the operation of Tenant’s business may be disrupted
by such construction.  Landlord and Tenant agree to cooperate with each other to
minimize any interference that Tenant’s occupancy may cause to the completion of
the Tenant Improvements.  Landlord shall no have no liability to Tenant,
however, for any disruption or inconvenience that such construction may cause to
Tenant’s business.
 
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4.           Rent.
 
(a)           Base Rent.  Tenant shall pay to Landlord, in advance on or before
the first day of each calendar month of the Term, without further notice or
demand and without offset or deduction, the monthly installments of rent
specified below (“Base Rent”):
 
Months of Term                                                      Base Rent
 
   1 through
6                                                          $0.00/month
   7 through 12                                               $108,931.00/month
 13 through 24                                               $113,288.00/month
 25 through 36                                               $117,820.00/month
 37 through 48                                               $122,532.00/month
 49 through 60                                               $133,280.00/month
 61 through 72                                               $143,532.00/month
 73 through 84                                               $153,785.00/month
 
Upon execution of this Lease, Tenant shall pay to Landlord the Base Rent for the
seventh (7th) month of the Term and the Additional Rent for the first month of
the Term and the Security Deposit hereafter set forth.
 
(b)
Additional Rent. In addition to the Base Rent, Tenant shall pay to Landlord, in
accordance with this paragraph, Tenant's proportionate share as specified below
of the following items (collectively “Additional Rent”).  Tenant’s share shall
be adjusted if at any time during the Term of this Lease, including any Option
Period, if applicable, Tenant is leasing more or less than the original Premises
leased by Tenant as of the date of this Lease.  As of the Commencement Date,
Tenant’s proportionate share of the following items shall be based upon the
entire 128,154 rentable square feet of the Building.

(1)
Taxes and Assessments.  Tenant shall pay as Additional Rent Tenant’s
proportionate share of all real estate taxes and assessments applicable to the
Property during the Term of this Lease (“Taxes and Assessments”), which shall be
determined as provided below.  Taxes and Assessments shall mean any form of
assessment, license, fee, tax, levy, penalty (if a result of Tenant's
delinquency), or tax (other than net income, estate, succession, inheritance,
transfer or franchise taxes), imposed by any authority having the direct or
indirect power to tax or by any city, county, state or federal government or any
improvement or other district or division thereof, whether such tax is (i)
determined by the area of the Premises, the Building or the Property, or any
part thereof or the Rent and other sums payable hereunder by Tenant, including,
but not limited to, any gross income or excise tax levied by any of the
foregoing authorities with respect to receipt of Rent or other sums due under
this Lease; (ii) upon any legal or equitable interest of Landlord in the
Premises, the Building or the Property, or any part thereof; (iii) upon this
transaction or any document to which Tenant is a party creating or transferring
any interest in the Premises, the Building or the Property; (iv) levied or
assessed in lieu of, in substitution for, or in addition to, existing or
additional taxes against the Premises, the Building or the Property, whether or
not now customary or within the contemplation of the parties; or (v) surcharge
against the parking area. Tenant and Landlord acknowledge that Proposition 13
was adopted by the voters of the State of California in the June, 1978 election
and that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such purposes as fire protection, street, sidewalk,
road, utility construction and maintenance, refuse removal and for other
governmental services which may formerly have been provided without charge to
property owners or occupants. It is the intention of the parties that all new
and increased assessments, taxes, fees, levies and charges due to Proposition 13
or any other cause are to be included within the definition of real property
taxes for purposes of this Lease.  Assessments which Landlord has elected to pay
in installments shall only have the installment for the year in question
included in the Taxes and Assessments for such year, and if no such election is
made by Landlord, then election for the longest election payment period
available shall be deemed to have been made by Landlord and only the amount of
the deemed installment plus reasonable interest on the amortized balance of the
assessments shall be included in Taxes and Assessment for the year in question.

 
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Landlord represents and warrants that the Building and other buildings within
the Property are on a single tax parcel.  Accordingly, the Building shall be
allocated a portion of the Taxes for the Property based upon:

(a)           the assessed value of the Building as indicated by the tax
assessor’s records, plus

(b)           52.181% of the assessed value of the land, plus

(c)           Tenant’s proportionate share of any special assessments for the
Property based on the total of the assessed value of (i) the Building, and (ii)
the assessed value of the land allocated to the Building, compared to the total
assessed value of the Property.

These determinations shall be made by Landlord from the respective valuations
assigned in the assessor’s work sheet or such other information as may be
reasonably available.  Landlord’s reasonable determination thereof, in good
faith, shall be conclusive.  If the assessed value of the Building and/or the
Property is increased by the inclusion therein of a value placed upon the
personal property or improvements of the Tenant, and if Landlord pays the Taxes
based on such increased assessment, then Tenant shall, upon demand, repay to
Landlord the portion of such Taxes resulting from such increase in
assessment.  If the Premises and any improvements installed therein by Tenant or
Landlord are valued by the assessor disproportionately higher or lower than
those of other tenants of the Property, Tenant’s share of Taxes shall be
readjusted upwards or downwards accordingly, and Tenant agrees to such
readjusted share.  Such determination shall be made by Landlord from the
respective valuations assigned in the assessor’s work sheet or such other
information as may be reasonably available.  Landlord’s reasonable determination
thereof, in good faith, shall be conclusive.  Tenant’s share of property Taxes
allocated above to the Building shall be the percentage determined by dividing
the rentable area of the Premises by the total rentable area of the Building,
which the parties agree shall be 100% as of the date of this Lease.

(2)
Insurance.  Tenant shall pay as Additional Rent all insurance premiums payable
with respect to any insurance coverage maintained by Landlord for the Building,
including premiums for special form coverage for the Building (including the
cost of any earthquake insurance if Landlord elects to maintain such coverage or
Landlord’s lender requires such coverage, such cost, however, not to exceed 150%
of the cost of special form coverage for the Building during the same policy
period), commercial general liability insurance, and any other insurance as
Landlord deems reasonably necessary and that is generally carried by landlords
on buildings in the Sunnyvale area that are reasonably comparable to the
Building, and any deductibles paid under policies of any such insurance,
provided that in no event shall the deductible payable under any special form
policy of insurance exceed $50,000 per casualty (collectively, the “Insurance
Costs”).  Tenant’s share of the Insurance Costs shall be the percentage
determined by dividing the rentable area of the Premises by the total rentable
area of the Building plus the Adjacent Building, which the parties agree shall
be 78.28% as of the date of this Lease.

(3)
Outside Areas Expenses.  Tenant shall pay as Additional Rent Tenant’s
proportionate share of all costs to operate, manage, maintain, repair, replace,
supervise, insure (including provision of general liability insurance) and
administer the Outside Areas,  including but not limited to watering,
fertilizing, landscaping, tree work, spraying, plant and tree replacement,
lighting, signage, repair and replacement of paving and sidewalks, drainage,
fossil filters, P.I.V.’s, trash pickup and disposal, clean-up and sweeping; fire
line and water therefore; and any parking charges or other costs levied,
assessed or imposed by, or at the direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated by any governmental
authority or insurer in connection with the use or occupancy of the Outside
Areas and/or the Property (collectively, the “Outside Area Expenses”).  Tenant’s
share of the Outside Areas Expenses shall be that percentage determined by
dividing the rentable area of the Premises by the total rentable area of all
buildings on the Property, which the parties agree shall be 41.90% as of the
date of this Lease.

(4)
Maintenance and Repair of Building.  Tenant shall pay as Additional Rent all
costs to maintain and repair those portions of the Building to be maintained by
Landlord (as provided in Paragraph 12(c) of this Lease), including any necessary
replacement of components thereof, including but not limited to the roof
coverings, the floor slabs, the exterior glass and the exterior walls (including
the painting and crack sealing thereof) of the Building, all utility and
plumbing systems, and fixtures and equipment located outside the Building and
all costs associated with the maintenance, repair, installation, and replacement
of Building alarm systems (if any) and fire detection systems, back flow systems
and testing, fire line monitoring, washing and cleaning of exterior window and
wall surfaces, and any alterations or improvements to the Building to comply
with laws effective after Commencement Date, and any parking charges or other
costs levied, assessed or imposed by, or at the direction of, or resulting from
statutes or regulations, or interpretations thereof, promulgated by any
governmental authority or insurer in connection with the use or occupancy of the
Building (collectively, the “Maintenance and Repair Costs”).  Notwithstanding
the foregoing, the cost of any improvement or replacement to the Building under
this subparagraph which has a useful life of more than five years and which
costs in excess of $25,000.00, shall be amortized on a straight-line basis over
its useful life, together with interest thereon at the rate of 8% per annum, and
only the amortized portion of such cost and interest shall be included in costs
recoverable by Landlord.  Furthermore, Maintenance and Repair Costs shall not
include any costs to maintain the structural integrity of exterior or
load-bearing walls (other than for painting or crack sealing), the Building
foundation, and the structural components of the roof unless any such repairs or
replacements are required as a result of the negligence or willful misconduct of
Tenant, its agents, employees or invitees.

 
 
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(5)
Management and Administration.  Tenant shall pay as Additional Rent, a
management fee equal to three percent (3%) of the Base Rent (the “Management
Fee”), which Management Fee shall cover Tenant’s share of the costs for
management and administration of the Building and the Property, including a
property management fee, accounting, auditing, billing, postage, employee
benefits, payroll taxes, etc.

(c)
Payment of Additional Rent.

(1)
Upon execution of this Lease, Landlord shall submit to Tenant an estimate of the
monthly Taxes and Assessments, Insurance Costs, Outside Area Expenses,
Maintenance and Repair Costs, and Management Fees (collectively, the “Costs”)
payable by Tenant for the period between the Commencement Date and December 31st
of such calendar year.  Tenant shall pay such estimated Costs in advance on a
monthly basis, commencing as of the Commencement Date and continuing thereafter
on or before the first day of each month of the Term.  As of the seventh month
of the Term, Tenant shall pay such estimated Costs concurrently with the payment
of Base Rent.  Tenant shall continue to make such monthly payments until
notified by Landlord of a change therein.  By March 1 of each calendar year,
Landlord shall endeavor to provide to Tenant a statement showing the actual
Costs due to Landlord for the prior calendar year, prorated from the
Commencement Date during the first year.  If the total of the monthly payments
of Costs that Tenant has made for the prior calendar year (or portion thereof
during which this Lease was in effect) is less than the actual Costs chargeable
to Tenant for such prior calendar year, then Tenant shall pay the difference in
a lump sum within thirty (30) days after receipt of such statement from
Landlord.  Any overpayment by Tenant of Costs for the prior calendar year shall
be applied as a credit to Tenant.

 
(2)           The actual Costs for the prior calendar year shall be used as a
basis of calculating Tenant’s monthly payment of the estimated Costs for the
current year, subject to adjustment as provided above, except that in any year
in which resurfacing of the parking area, exterior painting, or material roof
repairs or other work are planned, Landlord may include the estimated cost of
such work in the estimated monthly Costs.  Landlord shall make final
determination of Costs for the year in which this Lease terminates as soon as
possible after termination.  Tenant shall pay any amount due to Landlord in
excess of the estimated Costs previously paid by Tenant within thirty (30) days
after Tenant’s receipt of Landlord’s final statement, and, conversely, Landlord
shall refund any overpayment to Tenant within thirty (30) days after Landlord’s
determination, even though the Term has expired and Tenant has vacated the
Premises.  Failure of Landlord to submit statements as called for herein shall
not be deemed a waiver of Tenant’s obligation to pay Costs or Landlord’s
obligation to refund any Costs to Tenant as herein provided.
 
(b)           General Payment Terms.  The Base Rent, Additional Rent and all
other sums payable by Tenant to Landlord hereunder are referred to as the
“Rent.” All Rent shall be paid without deduction, offset or abatement in lawful
money of the United States of America.  Rent for any partial month during the
Term shall be prorated for the portion thereof falling due within the Term based
upon the actual number of days in any such partial month.
 
5.           Late Charge.  Notwithstanding any other provision of this Lease,
Tenant hereby acknowledges that late payment to Landlord of Rent or other
amounts due hereunder will cause Landlord to incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult to ascertain.
If any Rent or other sums due from Tenant are not received by Landlord or by
Landlord’s designated agent within five (5) days after the date such Rent or
other sum is due, then Tenant shall pay to Landlord a late charge equal to six
percent (6%) of such overdue amount, plus any attorneys’ fees incurred by
Landlord by reason of Tenant’s failure to pay Rent and/or other charges when due
hereunder. Landlord and Tenant hereby agree that such late charges represent a
fair and reasonable estimate of the cost that Landlord will incur by reason of
Tenant’s late payment. Landlord’s acceptance of such late charges shall not
constitute a waiver of Tenant’s default with respect to such overdue amount or
estop Landlord from exercising any of the other rights and remedies granted
under this Lease.  Notwithstanding the foregoing, Tenant shall be entitled to
one (1) grace period in any twelve (12) consecutive month period whereby
Landlord shall provide Tenant written notice that any Rent is past due, and so
long as Tenant pays to Landlord the amount due within five (5) days after
Tenant’s receipt of Landlord’s notice, no late charge will be assessed for such
late payment.
 
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Initials:
 
Landlord:                         Tenant:
          By:  /s/Herman
Christensen                                                            By: /s/
Camillo Martino                    
              Herman Christensen                   Camillo Martino, CEO
              Manager                          
                                        /s/ Noland Granberry
                                             Noland Granberry, CFO
                                                                 
6.           Security Deposit.
 
(a)           Concurrently with Tenant’s execution of the Lease, Tenant shall
deposit with Landlord the Security Deposit in the amount of Three Hundred Fifty
Thousand Dollars ($350,000) as security for the full and faithful performance of
each and every term, covenant and condition of this Lease.  Landlord may use,
apply or retain the whole or any part of the Security Deposit as may be
reasonably necessary (a) to remedy Tenant’s default in the payment of any Rent,
(b) to repair damage to the Premises which is caused by Tenant, (c) to clean the
Premises upon termination of this Lease (if Tenant has failed to surrender the
Premises in the condition required under Paragraph 10 below), (d) to reimburse
Landlord for the payment of any amount which Landlord may reasonably spend or be
required to spend by reason of Tenant’s default, or (e) to compensate Landlord
for any other loss or damage which Landlord may suffer by reason of Tenant’s
default including without limitation, those damages provided for in California
Civil Code Section 1951.2 and any successor statutes providing for damages in
the event of the termination of a lease due to a default by the tenant
thereunder, and those damages provided by other provision of applicable law now
or hereafter in force or provided for in equity.  As a material part of the
consideration given by Tenant to Landlord to induce Landlord to enter into this
Lease, Tenant waives the provisions of California Civil Code Section 1950.7, and
all other provisions of law now in force or that become in force after the date
of the execution of this Lease, that provide that Landlord may claim from a
security deposit only those sums reasonably necessary to remedy defaults in the
payment of rent, to repair damage caused by Tenant, or to clean the
Premises.  Landlord and Tenant agree that Landlord may, in addition, claim those
sums reasonably necessary to compensate Landlord for any other foreseeable or
unforeseeable loss or damage caused by the acts or omissions of Tenant or
Tenant’s officers, agents, employees, independent contractors or invitees.
 
(b)           Should Tenant faithfully and fully comply with all of the terms,
covenants and conditions of this Lease, within thirty (30) days following the
expiration of the Term, the Security Deposit or any balance thereof shall be
returned to Tenant or, at the option of Landlord, to the last assignee of
Tenant’s interest in this Lease.  If Landlord so uses or applies all or any
portion of the Security Deposit during the Term of this Lease, within ten (10)
days after written demand therefor Tenant shall deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to the full extent of the
above amount, and Tenant’s failure to do so shall be a default under this
Lease.  No part of the Security Deposit shall be considered to be held in trust,
to bear interest or another increment for its use, or to be prepayment for any
moneys to be paid by Tenant under this Lease.  In the event Landlord transfers
its interest in this Lease, Landlord shall transfer the then remaining amount of
the Security Deposit to Landlord’s successor in interest, and thereafter
Landlord shall have no further liability to Tenant with respect to such Security
Deposit.
 
(c)           Notwithstanding the foregoing or anything to the contrary
contained herein, on the fourth anniversary of the Commencement Date (the
“Reduction Date”), the amount of the Security Deposit shall be reduced to Two
Hundred Fifty Thousand Dollars ($250,000) provided that (i) Tenant is not then
in Default under this Lease, (ii) Tenant’s balance sheet for the most recently
reported quarter ending at least thirty (30) days prior to the Reduction Date
(the “Applicable Quarter”) shows cash or equivalent assets (including short term
investments) of at least $100,000,000, (iii) Tenant's current ratio (current
assets to current liabilities) for the Applicable Quarter is greater than 1.5,
and (iv) Tenant has delivered to Landlord the financial statements of Tenant for
the immediately preceding fiscal year and for the Applicable Quarter and, if
necessary, detailed calculations, demonstrating to Landlord's reasonable
satisfaction that the conditions described in clauses (ii) and (iii) above have
been satisfied.  If each of these conditions is satisfied, the balance of the
original Security Deposit shall be returned to Tenant within thirty (30) days
following the Reduction Date.
 
7.           Tenant Improvements and Building Improvements.  Landlord shall
construct certain improvements to the Premises (“Tenant Improvements”) in
accordance with the terms of the Work Letter Agreement attached to this Lease as
EXHIBIT C.  In addition to the Tenant Improvements, Landlord shall construct at
Landlord’s expense, up to a maximum cost to Landlord of $128,154.00 for design
and engineering fees, permit fees and construction costs, certain improvements
to the Building exterior of the main lobby entrance to upgrade the Building
entrance (the “Building Improvements”).  The nature and extent of the Building
Improvements shall be at the discretion of Landlord but reasonably acceptable to
Tenant; provided, however, that if the cost of the Building Improvements exceeds
$128,154.00, and Tenant is responsible for any additional cost, then Tenant
shall have the right to approve or reduce the scope of the Building Improvements
so that the cost thereof will not exceed $128,154.00.  Landlord shall construct
the Tenant Improvements and the Building Improvements in good and workmanlike
manner in compliance with applicable laws.
 
 
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8.           Use of Premises.
 
(a)           Permitted Uses.  The Premises shall be used only for research and
development, labs, manufacturing, warehouse, and general office and
administration, to the extent permitted by governmental regulations.  No printed
circuit board manufacture or wafer fabrication shall be permitted, or any
activities involving Hazardous Materials, except that Tenant shall be permitted
to use customary office products and cleansers and minor quantities of cleaners
and solvents in connection with its business, but as to such cleaners and
solvents subject to the prior written consent of Landlord, which shall not be
unreasonably withheld.
 
(b)           Compliance with Governmental Regulations.  Tenant shall, at
Tenant’s expense, faithfully observe and comply with all municipal, state and
federal statutes, rules, regulations, ordinances, requirements, and orders
(collectively, the “Legal Requirements”), now in force or which may hereafter be
in force pertaining to the Premises or Tenant’s use thereof, including without
limitation, any Legal Requirements pertaining to the installation of fire
sprinkler systems or the removal of any asbestos placed on the Premises by
Tenant, whether substantial in cost or otherwise.  Notwithstanding the
foregoing, Tenant shall not be required to make any structural changes to the
Premises or Building unless the requirement for such changes is imposed as a
result of Tenant’s specific use of the Premises or any improvements or additions
to the Premises that are made or proposed to be made at Tenant’s
request.  Tenant shall also comply with all recorded covenants, conditions and
restrictions affecting the Property (“Private Restrictions”) which are now or
may hereafter be in force; provided that Landlord shall not create or consent to
any future Private Restrictions that would materially affect Tenant’s use and
enjoyment of the Premises or the Property.  Landlord represents and warrants
that, to the best of its knowledge, there are no Private Restrictions recorded
against the Property as of the date of this Lease which would materially affect
Tenant’s use and enjoyment of the Premises or the Property.  If Landlord becomes
aware of any proposed Private Restrictions which could impact Tenant’s use of
the Premises and/or the Property for the purposes permitted under this Lease,
Landlord shall so notify Tenant in writing and shall deliver to Tenant copies of
the proposed Private Restriction.  The judgment of any court of competent
jurisdiction, or the admission of Tenant in any action or proceeding against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
such rule, regulation, ordinance, statute or Private Restrictions, shall be
conclusive of that fact as between Landlord and Tenant.  Notwithstanding the
foregoing to the contrary, Tenant shall have no liability or responsibility
(legally, financially or otherwise) for or with respect to any violations of, or
non-compliance with, any Legal Requirements with respect to the Premises or the
Property or any Private Restrictions if such violations or non-compliance exist
as of the Commencement Date of this Lease, or if such violations or
non-compliance were caused by some party other than Tenant or Tenant’s Agents or
invitees.
 
9.           Acceptance of Premises.  Landlord shall deliver the Premises to
Tenant on the Commencement Date in good clean condition, with all Building
systems (including the heating, ventilating and air conditioning (“HVAC”),
plumbing, and electrical systems), the foundation and structural elements of the
Building, and the generator and generator fueling system in good working
condition.  Subject to the foregoing, the warranty set forth in Paragraph 12(d)
below, and to Landlord’s obligation to complete the Tenant Improvements in
accordance with the Work Letter Agreement attached as EXHIBIT C, by execution
hereof, Tenant accepts the Premises as suitable for Tenant’s intended use and as
being in good and sanitary operating order, condition and repair, AS IS, and
without representation or warranty by Landlord as to the condition of the
Premises or as to the suitability or fitness of the Premises for the conduct of
Tenant’s business or for any other purpose.  Any damage to the Premises which is
caused by Tenant’s move-in shall be repaired or corrected by Tenant, at its
expense.
 
10.           Surrender.  Upon the expiration or earlier termination of the
Term, Tenant shall surrender the Premises to Landlord in its condition existing
as of the Commencement Date, normal wear and tear and fire or other casualty
excepted, with all interior walls repaired and repainted if damaged, all carpets
shampooed and cleaned, all broken, marred or nonconforming acoustical ceiling
tiles replaced with matching tiles, all interior sides of windows washed, the
plumbing and electrical systems and lighting in good order and repair, including
replacement of any burned out or broken light bulbs or ballasts, the HVAC
equipment serviced and repaired by a reputable and licensed service firm, and
all floors cleaned, all to the reasonable satisfaction of Landlord.  Tenant
shall remove from the Premises all of Tenant’s Personal Property and any
Alterations that Landlord designates for removal pursuant to Paragraph 11(a)
below (including the Courtyard Improvements, if applicable, but excluding the
Tenant Improvements) and any other Alterations that Landlord designates for
removal if such Alterations were not approved by Landlord, and repair any damage
and perform any restoration work caused by such removal.  If Tenant fails to
remove Tenant’s Personal Property and/or any Alterations that Tenant is required
to remove, and such failure continues after the termination of this Lease,
Landlord may retain such property and all rights of Tenant with respect to it
shall cease, or Landlord may place all or any portion of such property in public
storage for Tenant’s account.  Tenant shall be liable to Landlord for costs of
removal of any such Alterations and Tenant’s Personal Property and storage and
transportation costs of same, and the cost of repairing and restoring the
Premises, together with interest at the Interest Rate from the date of
expenditure by Landlord.  If the Premises are not so surrendered at the
termination of this Lease, Tenant shall indemnify Landlord and Landlord’s Agents
against all loss or liability, including attorneys’ fees and costs, resulting
from delay by Tenant in so surrendering the Premises.
 
Normal wear and tear, for the purposes of this Lease, shall be construed to mean
wear and tear caused to the Premises by a natural aging process which occurs in
spite of prudent application of commercially reasonable standards for
maintenance, repair and janitorial practices to the extent the same are Tenant’s
obligations under this lease.  It is not intended, nor shall it be construed, to
include items of neglected or deferred maintenance which would have or should
have been attended to during the Term of the Lease if commercially reasonable
standards had been applied to properly maintain and keep the Premises at all
times in good condition and repair.
 
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11.           Alterations and Additions.
 
(a)           Tenant shall not make, or permit to be made, any alterations,
additions or improvements (collectively, “Alterations”) to the Premises, or any
part thereof, without the prior written consent of Landlord, such consent not to
be unreasonably withheld.  Normal repair and maintenance work (including
painting and re-carpeting) shall not be deemed to be an Alteration.  Landlord
shall notify Tenant in writing of Landlord’s approval or disapproval of any
proposed Alterations within ten (10) business days after Landlord’s receipt of
reasonably detailed plans and specifications for the proposed
Alterations.  Landlord’s notice shall also specify whether Tenant will be
required to remove any such Alterations from the Premises at the expiration or
sooner termination of this Lease.  Any Alterations to the Premises shall be at
Tenant’s sole cost and expense, in compliance with all applicable Legal
Requirements and requirements of Landlord, and in accordance with plans and
specifications submitted in writing to Landlord and approved in writing.  Tenant
agrees not to proceed to make such Alterations, notwithstanding consent from
Landlord to do so, until ten (10) days after Tenant’s receipt of such written
consent.
 
(b)           All Alterations, including, but not limited to, heating, lighting,
electrical, air conditioning, fire extinguishers, lighting fixtures, ballasts,
light globes, and tubes, hot water heaters, fixed partitioning, drapery, wall
covering and paneling, built-in cabinet work and carpeting installations made by
Tenant, together with all property that has become an integral part of the
Building, shall at once be and become the property of Landlord, and shall not be
deemed trade fixtures; provided, however, that any such Alterations (other than
the Tenant Improvements) shall be subject to removal by Tenant at the expiration
or sooner termination of this Lease as provided in Paragraph 11(a)
above.  Notwithstanding the foregoing, Tenant shall be permitted to remove any
telecommunications and computer-related equipment, including specialized
flooring, cabling, and air conditioning equipment (installed by Tenant for the
sole purpose of Tenant’s computers and servers) from the Premises if such
equipment is paid for by Tenant and not included in a Tenant Improvement
Allowance, so long as Tenant repairs any damage caused by such removal.
 
(c)           Subject to the provisions of Paragraphs 11(a) and 11(b) above,
including without limitation, Landlords’ review and approval of plans and
specifications for any such alterations or improvements, Tenant shall be
permitted to construct certain alterations and improvements to the courtyard
area of the Building, including connecting walk-ways between the wings of the
Building to create an enclosed courtyard (the “Courtyard Improvements”).  If
Landlord has so indicated at the time of Landlords’ approval of the Courtyard
Improvements, Tenant shall remove the Courtyard Improvements at the expiration
or sooner termination of this Lease and restore any portion of the Building
and/or the Outside Area that is modified by the Courtyard Improvements to their
condition existing as of the date of this Lease.   Tenant shall complete such
restoration in a good and workmanlike manner in compliance with all applicable
Legal Requirements.
 
12.           Maintenance of Premises.
 
(a)           Maintenance by Tenant.  Subject to the provisions of Paragraphs
12(c) and 12(d), throughout the Term Tenant shall, at its sole expense and at
all times (whether or not such portion of the Premises requiring repairs, or the
means of repairing the same, are reasonably or readily accessible to Tenant, and
whether or not the need for such repairs occurs as a result of Tenant’s use, any
prior use, the elements, or the age of such portion of the Premises), (1) keep
and maintain in good order, condition, and repair, and to repair and to replace
the Premises, and every part thereof, including but not limited to glass,
windows, window frames, door closers, locks, storefronts, interior and exterior
doors and door frames, and the interior of the Premises, (excepting only those
portions of the Building to be maintained by Landlord, as provided in Paragraph
12(c) below), (2) keep and maintain in good order and condition, repair, and
replace all utility lighting, and plumbing systems, fixtures and equipment,
including without limitation, electricity, gas, fire sprinkler and stand pipes,
fire alarms, smoke detection, HVAC, water, and sewer, located in or on the
Premises, and furnish all expendables, including fluorescent tubes, ballasts,
light bulbs, paper goods and soaps, used in the Premises, (3) subject to
Paragraph 16 hereof, repair all damage to the Building or the Outside Areas
which is caused by the negligence or willful misconduct of Tenant or its agents,
employees, contractors or invitees.  Tenant shall not do anything to cause any
damage, deterioration or unsightliness to the Building and the Outside
Areas.  Tenant shall maintain at all times during the Term of this Lease
(including the Warranty Period (defined below)), at Tenant’s expense, a service
contract for the maintenance and repair of the HVAC system serving the Building
which meets the manufacturer’s recommendations therefor and which contract is
approved by Landlord.  Landlord reserves the right to hire a licensed HVAC
contractor to inspect annually the HVAC system.  If the HVAC contractor finds
any deficiencies in the condition of the HVAC system, Tenant agrees to make all
repairs and corrections within a reasonable period of time at Tenant’s expense,
and after thirty (30) days notice pay the cost of the inspections by Landlord’s
contractor.  If no deficiencies are found in the condition of the HVAC system,
Landlord shall pay for the cost of the inspections.
 
 
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(b)           Landlord's Right to Maintain and Repair at Tenant's
Expense.  Notwithstanding the foregoing, Landlord shall have the right, but not
the obligation, at Tenant’s expense, to enter the Premises with at least
twenty-four (24) hours prior notice (except in the event of an emergency), to
perform Tenant’s maintenance, repair and replacement work. Within thirty (30)
days after invoice therefor from Landlord, Tenant shall pay all reasonable costs
and expenses incurred by Landlord in connection with such maintenance, repair
and replacement work. Landlord shall have the right to perform Tenant’s
maintenance, repair and replacement work only if Tenant fails to take
appropriate remedial action within ten (10) days after receiving written notice
from Landlord specifying the nature of Tenant’s failure to comply with paragraph
12(a) of the Lease. Notwithstanding the foregoing, if Tenant’s failure to
maintain, repair or replace as required by Paragraph 12(a) of the Lease creates
an immediate danger of material further damage to the Premises, Landlord shall
not be required to give the notice to Tenant set forth in the previous sentence.
 
(c)           Maintenance by Landlord.  .  Subject to the provisions of
Paragraphs 21 and 22, Landlord shall, at Landlord’s sole cost and expense,
maintain the structural integrity of the exterior walls, load-bearing walls,
foundation, and roof of the Building, including any necessary repairs and
replacements (provided, however, that Tenant shall be responsible for the cost
of repairing any damage to that roof that is caused by Tenant’s installation of
any HVAC or other equipment on the roof).  Subject to the provisions of
Paragraphs 21 and 22, and further subject to Tenant’s obligation under Paragraph
4 to reimburse Landlord, in the form of Additional Rent, for Tenant’s respective
proportionate share of the cost and expense of the following items, Landlord
shall repair and maintain the roof coverings (provided, however, that Tenant
shall be responsible for the cost of repairing any damage to that roof coverings
that is caused by Tenant’s installation of any HVAC or other equipment on the
roof), the floor slabs, and the exterior walls of the Building (including any
glass therein and including the painting thereof); the utility and plumbing
systems (including fountain and sewer lines), fixtures and equipment located
outside the Building; and the parking areas, landscaping, sprinkler systems,
alarm system, sidewalks, driveways, curbs, and lighting systems in the Outside
Areas.  Landlord’s obligation to maintain the exterior walls of the Building
shall include maintaining the Premises in a weather-tight condition.  Landlord
shall not, however, be obligated to repair minor settlement cracks in the walls
or floors of the Premises.  Landlord shall not be required to repair or maintain
conditions due to any act, negligence or omission of Tenant or its agents,
contractors, employees or invitees.  Landlord’s obligation hereunder to repair
and maintain is subject to the condition precedent that Landlord shall have
received written notice of the need for such repairs and maintenance.  Tenant
shall promptly report in writing to Landlord any defective condition known to
Tenant that Landlord is required to repair.  All work by and for Landlord shall
be performed during normal working hours and not on weekends, holidays, or after
normal working hours at overtime, holiday, or premium pay.
 
(d)           Landlord’s Warranty.  Landlord shall warrant the good operating
condition of the roof and the HVAC system serving the Building for the first one
hundred eighty (180) days of the Term (“Warranty Period”).  Landlord’s warranty
shall not, however, cover any damage to the roof or the HVAC system caused by
the negligence or willful misconduct of Tenant, its agents, employees,
contractors or invitees, which shall be repaired at Tenant’s sole expense, nor
shall Landlord’s warranty relieve Tenant of its obligation to maintain a service
contract for the HVAC system as provided in Paragraph 12(a) above or to pay for
any periodic or routine maintenance of the HVAC system which may be required
during the Warranty Period.  Subject to the foregoing limitation, Landlord shall
make any repairs and/or replacements to the roof and/or the HVAC system that may
be required during the Warranty Period at Landlord’s expense, and the cost of
any such repairs and/or replacements shall not be included in Expenses.
 
(e)           Tenant's Waiver of Rights.  Tenant hereby expressly waives all
rights to make repairs at the expense of Landlord or to terminate this Lease, as
provided for in California Civil Code Sections 1941 and 1942, and 1932 (l),
respectively, and any similar or successor statute or law in effect or any
amendment thereof during the Term.
 
13.           Landlord's Insurance.  Landlord shall maintain in force during the
Term of this Lease special form insurance covering the Building for the full
replacement cost thereof and, at Landlord’s option, earthquake coverage.  Tenant
shall, at its sole cost and expense, comply with any and all reasonable
requirements pertaining to the Premises of any insurer necessary for the
maintenance of reasonable property damage and liability insurance covering
Building and appurtenances.  Landlord may maintain “loss of rents” insurance,
insuring that the Rent will be paid in a timely manner to Landlord for a period
of at least twelve (12) months if the Premises are destroyed or rendered
unusable or inaccessible by any cause insured against under this Lease.  The
premium for such loss of rents insurance shall be Additional Rent as set forth
in paragraph 4(b)(2).
 
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14.           Tenant's Insurance.
 
(a)           Liability Insurance.  Tenant shall, at Tenant’s expense secure and
keep in force a policy of commercial general liability insurance covering the
Premises, insuring Tenant, and naming Landlord and its lenders as additional
insureds, against any liability arising out of the use, occupancy or maintenance
of the Premises.  The minimum limit of coverage of such policy shall be in the
amount of not less than Two Million Dollars ($2,000,000) per occurrence and
Three Million Dollars ($3,000,000) general aggregate, shall include an extended
liability endorsement providing contractual liability coverage, and shall
contain a severability of interest clause or a cross liability endorsement.  The
limit of any insurance shall not limit the liability of Tenant hereunder.  No
policy shall be cancelable or subject to reduction of coverage, without at least
thirty (30) days prior written notice to Landlord, and loss payable clauses
shall be subject to Landlord’s approval.  Such policies of insurance shall be
issued as primary policies and not contributing with or in excess of coverage
that Landlord may carry, by an insurance company authorized to do business in
the State of California for the issuance of such type of insurance coverage with
a Best’s Rating of A:X or better.  A certificate of insurance evidencing to
Landlord’s reasonable satisfaction that such insurance is in effect shall be
delivered to Landlord prior to the date that Landlord delivers possession of the
Premises to Tenant, and thereafter whenever said policies are renewed or
modified, and also whenever Landlord shall reasonably request.
 
(b)           Personal Property Insurance.  Tenant shall maintain in full force
and effect during the Term of this Lease a policy or policies of special form
insurance covering all of its furniture, fixtures, equipment and other personal
property on the Premises, as well as the Personal Property described in
Paragraph 46 of this Lease, for the full replacement cost thereof.  During the
Term of this Lease the proceeds from any such policy or policies of insurance
shall be used for the repair or replacement of the personal property so insured.
Landlord shall have no interest in the insurance upon Tenant’s personal property
and will sign all documents reasonably necessary in connection with the
settlement of any claim or loss by Tenant. Landlord will not carry insurance on
Tenant’s possessions.  Tenant shall furnish Landlord with a certificate
evidencing to Landlord’s reasonable satisfaction that such insurance is
currently in effect, and whenever required, shall satisfy Landlord that such
policy is in full force and effect.
 
15.           Indemnification.
 
(a)           Tenant’s Indemnification.  Tenant shall indemnify, defend and hold
harmless Landlord and its agents, employees, partners, members, shareholders,
officers and directors (collectively “Landlord’s Agents”) against and from any
and all claims, liabilities, judgments, costs, demands, causes of action and
expenses (including, without limitation, reasonable attorneys’ fees) arising
from (1) Tenant’s use of the Premises or the Building or from any activity done,
permitted or suffered by Tenant or Tenant’s Agents or invitees in and about the
Premises, the Building or the Property, and (2) any act, neglect, fault, willful
misconduct or omission of Tenant, or Tenant’s Agents and invitees or from any
breach or default in the terms of this Lease by Tenant, and (3) any action or
proceeding brought on account of any matter in items (1) or (2).  If any action
or proceeding is brought against Landlord by reason of any such claim, upon
notice from Landlord, Tenant shall defend the same at Tenant’s expense by
counsel reasonably satisfactory to Landlord.  As a material part of the
consideration to Landlord, Tenant hereby assumes all risk of damage to property
or injury to persons in or about the Premises from any cause whatsoever, except
to the extent any such damage or injury is caused by the negligence or willful
misconduct by Landlord or its Agents or by the failure of Landlord to observe
any of the terms and conditions of this Lease. The obligations of Tenant under
this Paragraph 15 shall survive any termination of this Lease.  The foregoing
indemnity shall not relieve any insurance carrier of its obligations under any
policies required to be carried by either party pursuant to this Lease, to the
extent that such policies cover the peril or occurrence that results in the
claim that is subject to the foregoing indemnity.
 
(b)             Landlord’s Indemnification.  Landlord shall indemnify, defend
and hold harmless Tenant and its agents, employees, partners, members,
shareholders, officers and directors (collectively “Tenant’s Agents”) against
and from any and all claims, liabilities, judgments, costs, demands, causes of
action and expenses (including, without limitation, reasonable attorneys’ fees)
arising from (1) the negligence or willful misconduct of Landlord or Landlord’s
Agents or invitees, or (2) any breach or default in the terms of this Lease by
Landlord, and (3) any action or proceeding brought on account of any matter in
items (1) and (2).  If any action or proceeding is brought against Tenant by
reason of any such claim, upon notice from Tenant, Landlord shall defend the
same at Landlord’s expense by counsel reasonably satisfactory to Tenant.  The
obligations of Landlord under this Paragraph 15 shall survive any termination of
this Lease.
 
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16.           Subrogation.  Subject to the approval of their respective
insurance carriers, Landlord and Tenant hereby mutually waive any claim against
the other during the Term for any loss or damage to any of their property
located on or about the Premises, the Building or the Property (including the
Premises, Building and Property) that is caused by or results from perils
covered by insurance carried (or required to be carried pursuant to the terms of
this lease) by the respective parties, to the extent of the proceeds of such
insurance actually received with respect to such loss or damage, whether or not
due to the negligence of the other party or its Agents. Because the foregoing
waivers will preclude the assignment of any claim by way of subrogation to an
insurance company or any other person, each party now agrees to immediately give
to its insurer written notice of the terms of these mutual waivers.  In the
event either party’s insurance carriers refuse to permit a waiver of subrogation
rights as contemplated in this Paragraph 16, such party shall promptly notify
the other party of such refusal.  Nothing in this Paragraph 16 shall relieve a
party of liability to the other for failure to carry insurance required by this
Lease.
 
17.           Free from Liens.  Tenant shall keep the Premises and the Property
free from any liens arising out of any work performed, materials furnished, or
obligations incurred by or for Tenant hereby indemnifies and holds Landlord and
its Agents harmless from all liability and cost, including attorneys’ fees and
costs, in connection with or arising out of any such lien or claim of lien.
Tenant shall cause any such lien imposed to be released of record by payment or
posting of a proper bond acceptable to Landlord within ten (10) days after
written request by Landlord. Tenant shall give Landlord written notice of
Tenant’s intention to perform work on the Premises which might result in any
claim of lien at least ten (10) days prior to the commencement of such work to
enable Landlord to post and record a Notice of Nonresponsibility.  If Tenant
fails to so remove any such lien within the prescribed ten (10) day period, then
Landlord may do so at Tenant’s expense and Tenant shall reimburse Landlord as
Additional Rent for such amounts upon demand.  Such reimbursement shall include
all costs incurred by Landlord including Landlord’s reasonable attorneys’ fees
with interest thereon at the Interest Rate.
 
18.           Advertisements and Signs.  Subject to Tenant’s receipt of all
necessary governmental approvals, Tenant shall be permitted to install and
maintain, at Tenant’s sole cost and expense, (i) identification signage at the
entry area(s) on the exterior of the Building pursuant to the Building’s master
signage program with the City of Sunnyvale, and (ii) Tenant identification
signage on the two monument signs in the Outside Area provided for tenants of
the Building and the Adjacent Building.  Tenant shall be entitled to use the
entire monument sign facing Miraloma and one-half of the monument sign facing
Arques Avenue.  The size, design, materials and exact location of Tenant’s
signage shall be subject to Landlord’s prior approval, which shall not be
unreasonably withheld.  Tenant shall not place or permit to be placed in, upon,
or about the Premises or the Property any other signs, advertisements or notices
without obtaining Landlord’s prior written consent or without complying with
applicable law, and will not conduct, or permit to be conducted, any sale by
auction on the Premises or otherwise on the Property. Tenant shall remove any
sign, advertisement or notice placed on the Premises by Tenant upon the
expiration of the Term or sooner termination of this Lease, and Tenant shall
repair any damage or injury to the Premises, the Building or the Property caused
thereby, all at Tenant’s expense. If any signs are not removed, or necessary
repairs not made, Landlord shall have the right to remove the signs and repair
any damage or injury to the Premises, the Building or the Property at Tenant’s
sole cost and expense.
 
19.           Utilities.  Tenant shall contract directly with the appropriate
utility provider for all water, gas, electricity, sewer, and refuse pickup for
the Building.  Tenant shall be responsible for all telephone services,
janitorial service and any other utilities and services furnished directly to
and used by Tenant in, on or about the Premises during the Term, together with
any taxes thereon, and shall promptly pay all charges for any such utilities and
services as and when due.  Landlord shall not be liable in damages or otherwise
for any failure or interruption of any utility service or other service
furnished to the Premises, except that resulting from the willful misconduct of
Landlord.  In addition, Tenant shall not be entitled to any abatement or
reduction of Rent by reason of such failure or interruption, no eviction of
Tenant shall result from such failure or interruption, and Tenant shall not be
relieved from the performance of any covenant or agreement in this Lease because
of such failure or interruption.  Notwithstanding the foregoing to the contrary,
if any failure or interruption of utilities is caused by the negligence or
willful misconduct of Landlord and such interruption or failure continues for
more than one (1) business day, then Tenant shall be entitled to a proportionate
abatement of Rent for the time and to the extent that such interruption or
failure interferes with Tenant’s use of the Premises.
 
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20.           Entry by Landlord.  Tenant shall permit Landlord and Landlord’s
Agents to enter into and upon the Premises at all reasonable times, upon
reasonable notice of no less than twenty four (24) hours, (except in the case of
an emergency, for which no notice shall be required), and subject to Tenant’s
reasonable security arrangements, to inspect the same, to show the Premises to
prospective purchasers or lenders or, during the last six (6) months of the
Term, to prospective tenants, or to alter, improve, maintain and repair the
Premises as required or permitted of Landlord under the terms hereof.  Landlord
and Landlord’s Agents shall also be permitted to access the roof of the Building
to maintain and repair the roof of the Building and any Building equipment
located on the roof, including HVAC equipment, and no prior notice to Tenant
shall be required for any such access.  In each instance, such entry or access
by Landlord or Landlord’s Agents shall be without any liability to Tenant for
any loss of occupation or quiet enjoyment of the Premises thereby occasioned
(except for actual damages resulting from the negligence or willful misconduct
of Landlord or Landlord’s Agents).  Tenant shall permit Landlord to post notices
of non-responsibility and ordinary “for sale” or “for lease” signs, provided
that Landlord may post such “for lease” signs and exhibit the Premises to
prospective tenants only during the six (6) months prior to termination of this
Lease.  No such entry shall be construed to be a forcible or unlawful entry
into, or a detainer of, the Premises, or an eviction of Tenant from the
Premises.
 
21.           Destruction and Damage.
 
(a)           If the Building is damaged by fire or other perils covered by
special form insurance, Landlord shall, at Landlord’s option:
 
(i)           In the event of total destruction (which shall mean destruction or
damage in excess of twenty-five percent (25%) of the full insurable value
thereof) of the Building, elect either to commence promptly to repair and
restore the Building and prosecute the same diligently to completion, in which
event this Lease shall remain in full force and effect; or not to repair or
restore the Building, in which event this Lease shall terminate. Landlord shall
give Tenant written notice of its intention within sixty (60) days after the
occurrence of such destruction. If Landlord elects not to restore the Building,
this Lease shall be deemed to have terminated as of the date of such total
destruction.
 
(ii)           In the event of a partial destruction (which shall mean
destruction or damage to an extent not exceeding twenty-five percent (25%) of
the full insurable value thereof) or the Building for which Landlord will
receive insurance proceeds sufficient to cover the cost to repair and restore
such partial destruction and, if the damage thereto is such that the Building
may be substantially repaired or restored to its condition existing immediately
prior to such damage or destruction within one hundred eighty (180) days from
the date of such destruction, Landlord shall commence and proceed diligently
with the work of repair and restoration, in which event the Lease shall continue
in full force and effect.  If such repair and restoration requires longer than
one hundred eighty (180) days or if the insurance proceeds therefor (plus any
amounts Tenant may elect or is obligated to contribute) are not sufficient to
cover the cost of such repair and restoration, Landlord may elect either to so
repair and restore, in which event the Lease shall continue in full force and
effect, or not to repair or restore, in which event the Lease shall
terminate.  In either case, Landlord shall give written notice to Tenant of its
intention within sixty (60) days after the destruction occurs. If Landlord
elects not to restore the Building, this Lease shall be deemed to have
terminated as of the date of such partial destruction.
 
(b)           If the Building is damaged by any peril not covered by special
form insurance, and the cost to repair such damage exceeds any amount Tenant may
agree to contribute, Landlord may elect either to commence promptly to repair
and restore the Building and prosecute the same diligently to completion, in
which event this Lease shall remain in full force and effect; or not to repair
or restore the Building, in which event this Lease shall terminate.  Landlord
shall give Tenant written notice of its intention within sixty (60) days after
the occurrence of such damage.  If Landlord elects not to restore the Building,
this Lease shall be deemed to have terminated as of the date on which Tenant
surrenders possession of the Premises to Landlord, except that if the damage to
the Premises materially impairs Tenant’s ability to continue its business
operations in the Premises, then this Lease shall be deemed to have terminated
as of the date such damage occurred.
 
(c)           In the event of any damage or destruction to the Premises, the
monthly installments of Base Rent shall be abated proportionately from the date
of such damage or destruction until the Premises are repaired based upon the
extent to which Tenant’s use of the Premises is impaired during the period of
such repair or restoration, unless the damage was caused by the negligent or
willful acts of omissions of Tenant, in which event there shall be abatement of
Base Rent only to the extent of rental abatement insurance proceeds received by
Landlord. Tenant shall not be entitled to any compensation or damages for loss
of use of the whole or any part of the Premises and/or any inconvenience or
annoyance occasioned by such damage, repair or restoration.
 
(d)           If Landlord is obligated to or elects to repair or restore as
herein provided, Landlord shall repair or restore only those portions of the
Building and Premises which were originally provided at Landlord’s expense,
substantially to their condition existing immediately prior to the occurrence of
the damage or destruction; and Tenant shall promptly repair and restore, at
Tenant’s expense, Tenant’s fixtures, improvements, alterations and additions in
and to the Premises or Building which were not provided at Landlord’s expense.
 
(e)           Tenant hereby waives the provisions of California Civil Code
Section 1932(2) and Section 1933(4) which permit termination of a lease upon
destruction of the leased Premises, and the provisions of any similar law now or
hereinafter in effect, and the provisions of this Paragraph 22 shall govern
exclusively in case of such destruction.
 
 
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22.           Condemnation.  If twenty-five percent (25%) or more of the
Building or the parking area for the Premises is taken for any public or
quasipublic purpose by any lawful governmental power or authority, by exercise
of the right of appropriation, inverse condemnation, condemnation or eminent
domain, or sold to prevent such taking (each such event being referred to as a
“Condemnation”), Landlord or Tenant may, at its option, terminate this Lease as
of the date title vests in the condemning party. If the Building after any
Condemnation and any repairs by Landlord would be untenantable for the conduct
of Tenant’s business operations, Tenant shall have the right to terminate this
Lease as of the date title vests in the condemning party. If either party elects
to terminate this Lease as provided herein, such election shall be made by
written notice to the other party given within thirty (30) days after the nature
and extent of such Condemnation have been finally determined. Tenant shall not
because of such taking assert any claim against Landlord. Landlord shall be
entitled to receive the proceeds of all Condemnation awards, (except separate
awards for trade fixtures and relocation expense), and Tenant hereby assigns to
Landlord all of its interest in such awards. If less than twenty-five percent
(25%) of the Building or the parking area is taken, Landlord at its option may
terminate this Lease. If neither Landlord nor Tenant elects to terminate this
Lease to the extent permitted above, Landlord shall promptly proceed to restore
the Premises, to the extent of any Condemnation award received by Landlord, to
substantially their same condition as existed prior to such Condemnation,
allowing for the reasonable effects of such Condemnation, and a proportionate
abatement shall be made to the Base Rent corresponding to the time during which,
and to the portion of the floor area of the Building (adjusted for any increase
thereto resulting from any reconstruction) of which, Tenant is deprived on
account of such Condemnation and restoration. The provisions of California Code
of Civil Procedure Section 1265.130, which allows either party to petition the
Superior Court to terminate the Lease in the event of a partial taking of the
Premises, and any other applicable law now or hereafter enacted, are hereby
waived by Landlord and Tenant.
 
23.           Assignment and Subletting.
 
(a)           Tenant shall not voluntarily or by operation of law, (1) mortgage,
pledge, hypothecate or encumber this Lease or any interest herein, (2) assign or
transfer this Lease or any interest herein, sublet the Premises or any part
thereof, or any right or privilege appurtenant thereto, or allow any other
person (the employees, agents and invitees of Tenant excepted) to occupy or use
the Premises, or any portion thereof, without first obtaining the written
consent of Landlord, which consent shall not be unreasonably withheld.  A change
in control of Tenant shall constitute an assignment requiring Landlord’s consent
to the transfer, on a cumulative basis, of more than fifty percent of the voting
control of Tenant shall constitute a change in control for this purpose. When
Tenant requests Landlord’s consent to such assignment or subletting, it shall
notify Landlord in writing of the name and address of the proposed assignee or
subtenant and the nature and character of the business of the proposed assignee
or subtenant and shall provide current financial statements for the proposed
assignee or subtenant prepared in accordance with generally accepted accounting
principles. Tenant shall also provide Landlord with a copy of the proposed
sublet or assignment agreement, including all material terms and conditions
thereof. Landlord shall have the option, to be exercised within thirty (30) days
of receipt of the foregoing, to (1) cancel this Lease as of the commencement
date stated in the proposed sublease or assignment in the event of an assignment
of the Lease or a sublease of the entire Premises, (2) acquire from Tenant the
interest, or any portion thereof, in this Lease and/or the Premises that Tenant
proposes to assign or sublease, on the same terms and conditions as stated in
the proposed sublet or assignment agreement, (3) consent to the proposed
assignment or sublease, or (4) refuse its consent to the proposed assignment or
sublease, providing that such consent shall not be unreasonably
withheld.  Within five (5) business days after Tenant’s receipt of Landlord’s
notice of recapture, if applicable, Tenant may deliver to Landlord a written
revocation of Tenant’s request for Landlord’s consent to the proposed assignment
or sublease, in which event Tenant’s request for consent shall be deemed to have
never been given and Landlord’s recapture right with respect to the proposed
assignment or sublease shall terminate.
 
(b)           Without otherwise limiting the criteria upon which Landlord may
withhold its consent, Landlord may take into account the reputation and credit
worthiness of the proposed assignee or subtenant, the character of the business
proposed to be conducted in the Premises or portion thereof sought to be
subleased, and the potential impact of the proposed assignment or sublease on
the economic value of the Premises. In any event, Landlord may withhold its
consent to any assignment or sublease, if (1) the actual use proposed to be
conducted in the Premises or portion thereof conflicts with the provisions of
Paragraph 8(a) or (b) above or with any other lease to a tenant at the Property
which restricts the use to which any space in the Building may be put, or (2)
the proposed assignment or sublease requires unreasonable alterations,
improvements or additions to the Premises or portions thereof.
 
(c)           If Landlord approves an assignment or subletting as herein
provided, Tenant shall pay to Landlord, as Additional Rent, fifty percent (50%)
of the difference, if any, between (1) the Base Rent plus Additional Rent
allocable to that part of the Premises affected by such assignment or sublease
pursuant to the provisions of this Lease, and (2) the rent and any additional
rent paid by the assignee or sublessee to Tenant, after deducting the costs of
customary real estate commissions, tenant improvement cost or allowance, or
reasonable attorneys’ fees, if any, actually incurred by Tenant in connection
with any such assignment or sublease.  The assignment or sublease agreement, as
the case may be, after approval by Landlord, shall not be amended without
Landlord’s prior written consent, and shall contain a provision directing the
assignee or subtenant to pay the rent and other sums due thereunder directly to
Landlord upon receiving written notice from Landlord that Tenant is in default
under this Lease with respect to the payment of Rent. Landlord’s collection of
such rent and other sums shall not constitute an acceptance by Landlord of
attornment by such assignee or subtenant. A consent to one assignment
subletting, occupation or use, and consent to any assignment or subletting shall
in no way relieve Tenant of any liability under this Lease. Any assignment or
subletting without Landlord’s consent shall be void, and shall, at the option of
Landlord, constitute a Default under this Lease.
 
(d)           Notwithstanding the provisions of this Paragraph 23 to the
contrary, Landlord's prior written consent shall not be required for, and
Landlord shall not have the right to terminate this Lease pursuant to Paragraph
23(a) with respect to, an assignment or sublease to any company which controls,
is controlled by, or is under common control with, Tenant; any entity resulting
from a merger or consolidation with Tenant; or any person or entity which
acquires substantially all of the assets of Tenant as a going concern of the
business that is conducted at the Premises, provided that in each such instance
Tenant gives Landlord written notice of any such assignment or sublease and, in
the event of an assignment the assignee has equal or better financial strength
and assumes, in writing, for the benefit of Landlord all of Tenant's obligations
under the Lease.
 
(e)           Tenant shall pay Landlord’s reasonable fees, including a
reasonable administration fee, not to exceed One Thousand Dollars ($1,000.00)
per transaction, incurred in connection with Landlord’s review and processing of
documents regarding any proposed assignment or sublease.
 
(f)           Tenant acknowledges and agrees that the restrictions, conditions
and limitations imposed by this Paragraph 23 on Tenant’s ability to assign or
transfer this Lease or any interest herein, to sublet the Premises or any part
thereof, to transfer or assign any right or privilege appurtenant to the
Premises, or to allow any other person to occupy or, use the Premises or any
portion thereof, are, for the purposes of California Civil Code Section 1951.4,
as amended from time to time, and for all other purposes, reasonable at the time
that the Lease was entered into, and shall be deemed to be reasonable at the
time that Tenant seeks to assign or transfer this Lease or any interest herein,
to sublet the Premises or any part thereof, to transfer or assign any right or
privilege appurtenant to the Premises, or to allow any other person to occupy or
use the Premises or any portion thereof.
 
 
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24.           Tenant's Default.  The occurrence of any one of the following
events shall constitute an event of default on the part of Tenant (“Default”):
 
(a)           The abandonment of the Premises by Tenant for a period of thirty
(30) consecutive days;
 
(b)           Failure to pay any installment of Rent or any other monies due and
payable hereunder, said failure continuing for a period of ten (10) days after
the same is due;
 
(c)           A general assignment by Tenant for the benefit of creditors;
 
(d)           The filing of a voluntary petition in bankruptcy by Tenant, the
filing of a voluntary petition for an arrangement, the filing of a petition,
voluntary or involuntary, for reorganization, or the filing of an involuntary
petition by Tenant’s creditors, said involuntary petition remaining undischarged
for a period of sixty (60) days;
 
(e)           Receivership, attachment, or other judicial seizure of
substantially all of Tenant’s assets on the Premises, such attachment or other
seizure remaining undismissed or undischarged for a period of sixty (60) days
after the levy thereof;
 
(f)           Failure of Tenant to execute and deliver to Landlord any estoppel
certificate, subordination agreement, or lease amendment within the time periods
and in the manner required by Paragraph 29 or 30 or 39.
 
(g)           An assignment or sublease, or attempted assignment or sublease, of
this Lease or the Premises by Tenant contrary to the provision of Paragraph 23,
unless such assignment or sublease is expressly conditioned upon Tenant having
received Landlord’s consent thereto;
 
(h)           Failure of Tenant to restore the Security Deposit to the amount
and within the time period provided in Paragraph 6 above;
 
(i)            Failure in the performance of any of Tenant’s covenants,
agreements or obligations hereunder (except those failures specified as events
of Default in other Paragraphs or this Paragraph 24, which shall be governed by
such other Paragraphs), which failure continues for ten (10) days after written
notice thereof from Landlord to Tenant provided that, if Tenant has exercised
reasonable diligence to cure such failure and such failure cannot be cured
within such ten (10) day period despite reasonable diligence, Tenant shall not
be in default under this subparagraph unless Tenant fails thereafter diligently
and continuously to prosecute the cure to completion; and
 
(j)           Chronic delinquency by Tenant in the payment of Rent, or any other
periodic payments required to be paid by Tenant under this Lease.  “Chronic
delinquency” shall mean failure by Tenant to pay Rent, or any other payments
required to be paid by Tenant under this Lease within (5) calendar days after
written notice thereof for any three (3) months (consecutive or nonconsecutive)
during any consecutive twelve (12) month period. In the event of a Chronic
Delinquency, in addition to Landlord’s other remedies for Default provided in
this Lease, at Landlord’s option, Landlord shall have the right to require that
Rent be paid by Tenant quarterly, in advance.
 
Tenant agrees that any notice given by Landlord pursuant to Paragraph 24(b), (i)
or (j) above shall satisfy the requirements for notice under California Code of
Civil Procedure Section 1161, and Landlord shall not be required to give any
additional notice in order to be entitled to commence an unlawful detainer
proceeding.
 
25.           Landlord's Remedies.
 
(a)           Termination. In the event of any Default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity and
under this Lease, Landlord shall have the immediate option to terminate this
Lease and all rights of Tenant hereunder by giving written notice of such
intention to terminate. In the event that Landlord shall elect to so terminate
this Lease, then Landlord may recover from Tenant:
 
(1)           the worth at the time of award of any unpaid Rent and any other
sums due and payable which have been earned at the time of such termination;
plus
 
(2)           the worth at the time of award of the amount by which the unpaid
Rent and any other sums due and payable which would have been earned after
termination until the time of award exceeds the amount of such rental loss
Tenant proves could have been reasonably avoided; plus
 
(3)           the worth at the time of award of the amount by which the unpaid
Rent and any other sums due and payable for the balance of the term of this
Lease after the time of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; plus
 
(4)           any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant’s failure to perform its obligations
under this Lease or which in the ordinary course would be likely to result
therefrom, including, without limitation, any costs or expenses reasonably and
necessarily incurred by Landlord (i) in retaking possession of the Premises;
(ii) in maintaining, repairing, preserving, restoring, replacing, cleaning,
altering or rehabilitating the Premises or any portion thereof, including such
acts for reletting to a new tenant or tenants; (iii) for leasing commissions; or
(iv) for any other costs necessary or appropriate to relet the Premises; plus
 
(5)           such reasonable attorneys’ fees incurred by Landlord as a result
of a Default, and costs in the event suit is filed by Landlord to enforce such
remedy; and plus
 
(6)           at Landlord’s election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable law.
 
 
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As used in subparagraphs (1) and (2) above, the “worth at the time of award” is
computed by allowing interest at an annual rate equal to ten percent (10%) per
annum or the maximum rate permitted by law, whichever is less. As used in
subparagraph (3) above, the “worth at the time of award” is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award, plus one percent (1%). Tenant waives redemption
of relief from forfeiture under California Code of Civil Procedure Sections 1174
and 1179, or under any other present or future law, in the event Tenant is
evicted or Landlord takes possession of the Premises by reason of any Default or
Tenant hereunder.
 
(b)           Continuation of Lease. In the event of any Default by Tenant, then
in addition to any other remedies available to Landlord at law or in equity and
under this Lease, Landlord shall have the remedy described in California Civil
Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant’s
Default and abandonment and recover Rent as it becomes due, provided Tenant has
the right to sublet or assign, subject only to reasonable limitations).
 
(c)           Re-entry.  In the event of any Default by Tenant, Landlord shall
also have the right, with or without terminating this Lease, in compliance with
applicable law, to re-enter the Premises and remove all persons and property
from the Premises; such property may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account of Tenant.
 
(d)           Reletting.  In the event of the abandonment of the Premises by
Tenant or in the event that Landlord shall elect to re-enter as provided in
Paragraph 25(c) or shall take possession of the Premises pursuant to legal
proceeding or pursuant to any notice provided by law, then if Landlord does not
elect to terminate this Lease as provided in Paragraph 25(a), Landlord may from
time to time, without terminating this Lease, relet the Premises or any part
thereof for such term or terms and at such rental or rentals and upon such other
terms and conditions as Landlord in its sole discretion may deem advisable with
the right to make alterations and repairs to the Premises. In the event that
Landlord shall elect to so relet, then rentals received by Landlord from such
reletting shall be applied in the following order: (1) to reasonable attorneys’
fees incurred by Landlord as a result of a Default and costs in the event suit
is filed by Landlord to enforce such remedies; (2) to the payment of any
indebtedness other than Rent due hereunder from Tenant to Landlord; (3) to the
payment of any reasonable costs of such reletting; (4) to the payment of the
costs of any reasonable alterations and repairs to the Premises; (5) to the
payment of Rent due and unpaid hereunder; and (6) the residue, if any, shall be
held by Landlord and applied in payment of future Rent and other sums payable by
Tenant hereunder as the same may become due and payable hereunder. Should that
portion of such rentals received from such reletting during any month, which is
applied to the payment of Rent hereunder, be less than the Rent payable during
the month by Tenant hereunder, then Tenant shall pay such deficiency to
Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord, as soon as ascertained, any costs and expenses reasonably
and necessarily incurred by Landlord in such reletting or in making such
alterations and repairs not covered by the rentals received from such reletting.
 
(e)           Termination. No re-entry or taking of possession of the Premises
by Landlord pursuant to this Paragraph 25 shall be construed as an election to
terminate this Lease unless a written notice of such intention is given to
Tenant or unless the termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any Default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such Default.
 
(f)           Cumulative Remedies. The remedies herein provided are not
exclusive and Landlord shall have any and all other remedies provided herein or
by law or in equity.
 
(g)           No Surrender. No act or conduct of Landlord, whether consisting of
the acceptance of the keys to the Premises, or otherwise, shall be deemed to be
or constitute an acceptance of the surrender of the Premises by Tenant prior to
the expiration of the Term, and such acceptance by Landlord of surrender by
Tenant shall only flow from and must be evidenced by a written acknowledgment of
acceptance of surrender signed by Landlord. The surrender of this Lease by
Tenant, voluntarily or otherwise, shall not work a merger unless Landlord elects
in writing that such merger takes place, but shall operate as an assignment to
Landlord of any and all existing subleases, or Landlord may, at its option,
elect in writing to treat such surrender as a merger terminating Tenant’s estate
under this Lease, and thereupon Landlord may terminate any or all such subleases
by notifying the sublessee of its election so to do within (5) days after such
surrender.
 
 
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26.           Attorney's Fees.  If any legal action or proceeding, including
arbitration and declaratory relief, is commenced for the purpose of enforcing
any rights or remedies pursuant to this Lease, the prevailing party shall be
entitled to recover from the non-prevailing party reasonable attorneys’ fees, as
well as its costs of suit, in any such action or proceeding, whether or not such
action is prosecuted to judgment.
 
27.           Taxes.  Tenant shall be liable for and shall pay, prior to
delinquency, all taxes levied against personal property and trade or business
fixtures of Tenant. If any alteration, addition or improvement installed by
Tenant pursuant to paragraph 11, or any personal property, trade fixture or
other property of Tenant, is assessed and taxed with the Property, Tenant shall
pay such taxes to Landlord within fifteen (15) days after delivery to Tenant of
a statement therefor.
 
28.           Effect of Conveyance.  The term “Landlord” as used in this Lease,
means only the owner for the time being of the Property containing the Building,
so that, in the event of any sale of the Property or the Building, Landlord
shall be and hereby is entirely freed and relieved of all covenants and
obligations of Landlord hereunder accruing from and after the transfer, and it
shall be deemed and construed, without further agreement between the parties and
the purchaser at any such sale, that the purchaser of the Property or the
Building has assumed and agreed to carry out any and all covenants and
obligations of Landlord hereunder.
 
29.           Tenant's Estoppel Certificate.  From time to time, upon written
request of Landlord, but not more than twice in any calendar year during the
Term, Tenant shall execute, acknowledge and deliver to Landlord or its designee,
a written certificate stating (a) the date this Lease was executed, the
Commencement Date of the Term and the date the Term expires; (b) the date Tenant
entered into occupancy of the Premises; (c) the amount of Rent and the date to
which such Rent has been paid; (d) that this Lease is in full force and effect
and has not been assigned, modified, supplemented or amended in any way (or, if
assigned, modified, supplemented or amended, specifying the date and terms of
any agreement so affecting this Lease); (e) that this Lease represents the
entire agreement between the parties with respect to Tenant’s right to use and
occupy the Premises (or specifying such other agreements, if any): (f) that all
obligations under this Lease to be performed by Landlord as of the date of such
certificate have been satisfied (or specifying those as to which Tenant claims
that Landlord has yet to perform); (g) that all required contributions by
Landlord to Tenant on account of Tenant’s improvements have been received (or
stating exceptions thereto); (h) to the best of Tenant’s knowledge that on such
date there exist no defenses or offsets that Tenant has against the enforcement
of this Lease by Landlord (or stating exceptions thereto); (i) that no Rent or
other sum payable by Tenant hereunder has been paid more than one (1) month in
advance (or stating exceptions thereto); (j) that security has been deposited
with Landlord, stating the amount thereof; and (k) any other matters evidencing
the status of this Lease that may be required either by a lender making a loan
to Landlord to be secured by a deed of trust covering the Premises or by a
purchaser of the Premises.  Any such certificate delivered pursuant to this
Paragraph 29 may be relied upon by a prospective purchaser of Landlord’s
interest or a mortgagee of Landlord’s interest or assignee of any mortgage upon
Landlord’s interest in the Premises.  If Tenant shall fail to provide such
certificate within ten (10) business days of receipt by Tenant of a written
request by Landlord as herein provided, such failure shall, at Landlord’s
election, constitute a Default under this Lease, and Tenant shall be deemed to
have given such certificate as above provided without modification and shall be
deemed to have admitted the accuracy of any information supplied by Landlord to
a prospective purchaser or mortgagee.
 
30.           Subordination.  Landlord shall have the right to cause this Lease
to be and remain subject and subordinate to any and all mortgages, deeds of
trust, and ground leases (collectively “Encumbrances”) that may hereafter be
executed covering the Premises, or any renewals, modifications, consolidations,
replacements or extensions thereof, for the full amount of all advances made or
to be made thereunder and without regard to the time or character of such
advances, together with interest thereon and subject to all the terms and
provisions thereof; provided only that in the event of the foreclosure of any
such mortgage or deed of trust, so long as Tenant is not in default, the holder
thereof (“Holder”) shall agree to recognize Tenant’s rights under this Lease as
long as Tenant shall pay the Rent and observe and perform all the provisions of
this Lease to be observed and performed by Tenant.  Within ten (10) days after
Landlord’s written request, Tenant shall execute, acknowledge and deliver any
and all reasonable documents required by Landlord or the Holder to effectuate
such subordination so long as such documents provide Tenant with commercially
reasonable non-disturbance.  If Tenant fails to do so, such failure shall
constitute a Default by Tenant under this Lease.  Notwithstanding anything to
the contrary set forth in this Paragraph 30, Tenant hereby attorns and agrees to
attorn to any person or entity purchasing or otherwise acquiring the Premises at
any sale or other proceeding or pursuant to the exercise of any other rights,
powers or remedies under such Encumbrance.  Landlord represents and warrants
that, as of the date of this Lease, there are no Encumbrances recorded against
the Property.
 
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31.           Environmental Covenants.
 
(a)           As used herein, the term “Hazardous Material” shall mean any
substance or material which has been determined by any state, federal or local
governmental authority to be capable of posing a risk of injury to health,
safety or property, including all of those materials and substances designated
as hazardous or toxic by the city in which the Premises are located, the U.S.
Environmental Protection Agency, the Consumer Product Safety Commissions, the
Food and Drug Administration, the California Water Resources Control Board, the
Regional Water Quality Control Board, San Francisco Bay Region, the California
Air Resources Board, CAL/OSHA Standards Board, Division of Occupational Safety
and Health, the California Department of Food and Agriculture, the California
Department of Health Services, and any federal agencies that have overlapping
jurisdiction with such California agencies, or any other governmental agency now
or hereafter authorized to regulate materials and substances in the environment.
Without limiting the generality of the foregoing, the term “Hazardous Material”
shall include all of those materials and substances defined as “hazardous
materials” or “hazardous waste” in Sections 66680 through 66685 of Title 22 of
the California Administrative Code, Division 4, Chapter 30, as the same
products, fractions, constituents and sub-constituents of petroleum or
petroleum-related substances, asbestos, and any other materials requiring
remediation now or in the future under federal, state or local statutes,
ordinances, regulations or policies.
 
(b)           Tenant represents, warrants and covenants (i) that subject to the
provisions of Paragraph 8(a) above Tenant will use and store in, on or about the
Premises, only those Hazardous Materials that are necessary for Tenant to
conduct its business activities on the Premises, (ii) that, with respect to any
Hazardous Materials used, stored or disposed of by Tenant, Tenant shall comply
with all applicable Legal Requirements relating to the storage, use, disposal or
cleanup of Hazardous Materials, including, but not limited to, the obtaining of
proper permits, and (iii) that neither Tenant nor Tenant’s Agents or invitees
will dispose of any Hazardous Materials in, on or about the Premises under any
circumstances.  Attached to this Lease as EXHIBIT E is a list of those Hazardous
Materials that Tenant currently intends to use in its business operations at the
Premises.  Tenant shall deliver an updated list of such Hazardous Materials to
Landlord on a quarterly basis during the Term of this Lease (i.e., on or before
January 1, April 1, July 1, and October 1 of each calendar year).  Landlord
consents to Tenant’s use of the Hazardous Materials identified on EXHIBIT E
provided that Tenant stores, uses and disposes of such Hazardous Materials in
compliance with all applicable Legal Requirements.  Landlord’s consent to any
new Hazardous Materials identified on any updated list provided by Tenant shall
not be unreasonably withheld, delayed or conditioned.
 
(c)           Tenant shall immediately notify Landlord of any inquiry, test,
investigation or enforcement proceeding by or against Tenant, Landlord or the
Premises concerning Hazardous Materials and affecting the Premises or the
Property. Tenant acknowledges that Landlord, as the owner of the Premises, shall
have the right to negotiate, defend, approve and appeal, any action taken or
order issued with regard to any Hazardous Materials by an applicable
governmental authority.  Landlord shall immediately notify Tenant of any
inquiry, test, investigation or enforcement proceeding against the Premises
concerning any Hazardous Materials on the Premises.  Tenant shall pay Landlord’s
cost of negotiating, defending or appealing any action or order issued with
regard to any Hazardous Materials by an applicable governmental authority if
Tenant or Tenant’s Agents or invitees caused such Hazardous Materials to come
onto the Premises.
 
(d)           If the storage, use or disposal of any Hazardous Materials in, on
or adjacent to the Premises by Tenant, Tenant’s Agents or invitees results in
any contamination of the Premises, the Building or the Property (or the soil or
surface, or groundwater under the property) (1) requiring remediation under any
applicable Legal Requirements, or (2) at levels which are unacceptable to
Landlord, in Landlord’s reasonable judgment, Tenant agrees to remediate said
contamination.  Tenant further agrees to indemnify, defend and hold Landlord
harmless from and against any claims, liabilities, suits, causes of action,
costs, expenses or fees, including reasonable attorneys’ fees and costs, arising
out of or in connection with any remediation, cleanup work, inquiry or
enforcement proceeding in connection with any Hazardous Materials used, stored
or disposed of by Tenant or Tenant’s Agents or invitees in, on or adjacent to
the Premises.
 
(e)           Notwithstanding any other right of entry granted to Landlord under
this Lease, Landlord shall have the right upon reasonable prior written notice
(except in an emergency or in a situation where there is a danger of immediate
further contamination, in which case no prior notice will be required) to enter
the Premises or to have consultants enter the Premises throughout the Term of
this Lease for the purpose of (1) determining whether the Premises are in
conformity with any Legal Requirements pertaining to the environmental condition
of the Premises, (2) conducting an environmental audit or investigation of the
Premises for purposes of sale, transfer, conveyance or financing, (3)
determining whether Tenant has complied with this Paragraph 31, (4) determining
the corrective measures, if any, required of Tenant to ensure the safe use,
storage and disposal of Hazardous Materials, and (5) removing any Hazardous
Materials (except to the extent used, stored or disposed of by Tenant or
Tenant’s Agents or invitees in compliance with applicable Legal
Requirements).  Tenant agrees to provide access and reasonable assistance for
such inspections.  Such inspections may include, but are not limited to,
entering the Premises or adjacent property with drill rigs or other machinery
for the purpose of obtaining laboratory samples. Landlord shall not be limited
in the number of such inspections during the Term of this Lease.  To the extent
such inspection disclose the presence of Hazardous Materials used, stored or
disposed of other than in accordance with subparagraph (b) (ii) above, Tenant
shall reimburse Landlord for the reasonable cost of such inspections within ten
(10) days of receipt of a written statement thereof. If such consultants
determine that the Premises are contaminated with Hazardous Materials used,
stored or disposed of by Tenant or Tenant’s Agents or invitees, Tenant shall, in
a timely manner, at its expense, remediate such Hazardous Materials in
compliance with applicable Legal Requirements to the reasonable satisfaction of
Landlord and any applicable governmental agencies.  In exercising Landlord’s
inspection rights, Landlord and Landlord’s Agents shall use commercially
reasonable efforts to minimize interference with Tenant’s use of the
Premises.  The right granted to Landlord herein to inspect the Premises shall
not create a duty on Landlord’s part to inspect the Premises, or liability of
Landlord for Tenant’s use, storage or disposal of Hazardous Materials, it being
understood that Tenant shall be solely responsible for all liability in
connection therewith. Landlord shall be liable for the gross negligence or
willful misconduct of Landlord or its agents, employees or consultants in
conducting the aforementioned inspections.
 
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(f)           Tenant shall surrender the Premises to Landlord upon the
expiration or earlier termination of this Lease free of debris, waste and any
Hazardous Materials used, stored or disposed of by Tenant or Tenant’s Agents or
invitees.
 
(g)           Tenant’s obligations under this Paragraph 31 shall survive
termination of this Lease, and Tenant waives the statute of limitations, as to
Landlord, applicable to any action brought hereunder.
 
(h)           Landlord hereby discloses to Tenant that the Premises and the
Property are in an area in which contamination of soils or groundwater by
Hazardous Materials may exist.  If Tenant desires more specific information
regarding the existence or possible existence of contamination by Hazardous
Materials of soils or groundwater of or beneath the Premises, the Property, or
other real property in the general area of the Property, then Tenant shall
investigate such matters.
 
(i)           If any Hazardous Materials are released in, on or under the
Premises by Landlord or Landlord’s Agents or invitees, Landlord shall promptly
remediate such Hazardous Materials in compliance with applicable Legal
Requirements.  If the presence and/or remediation of any such Hazardous
Materials materially interfere with Tenant’s use of the Premises, then Tenant
shall be entitled to proportionate abatement of Rent for the time and to the
extent of such interference.  If, however, the remediation of any such Hazardous
Materials cannot be completed within one hundred eighty (180) days and the
presence and/or remediation of such Hazardous Materials materially interferes
with Tenant’s use of the Premises, then Tenant shall have the right to terminate
this Lease by delivery of written notice to Landlord no later than thirty (30)
days after the expiration of such 180-day period.
 
(j)           Landlord shall indemnify, defend and hold Tenant harmless from and
against any claims, liabilities, suits, causes of action, costs, expenses or
fees, including reasonable attorneys’ fees and costs, arising out of or in
connection with any remediation, cleanup work, inquiry or enforcement proceeding
in connection with any Hazardous Materials located on, under or about the
Premises or the Property as of the date of this Lease.
 
32.           Notices.  All notices and demands which may or are to be required
or permitted to be given to either party by the other hereunder shall be in
writing and shall be sent by United States mail, postage prepaid, certified, or
by personal delivery or overnight courier, addressed to the addressee at the
address for such addressee as specified herein, or to such other place as such
party may from time to time designate in a notice to the other party given as
provided herein. Notice shall be deemed given upon the earlier of actual receipt
or the date on which delivery was attempted if Tenant refuses to receive.
 
33.           Waiver.  The waiver of any breach of any term, covenant or
condition of this Lease shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant,
other than the failure of Tenant to pay the particular rental so accepted,
regardless of Landlord’s knowledge of such preceding breach at the time of
acceptance of such Rent. No delay or omission in the exercise of any right or
remedy of Landlord on any Default by Tenant shall impair such a right or remedy
or be construed as a waiver. Any waiver by landlord of any Default must be in
writing and shall not be a waiver of any other Default concerning the same or
any other provisions of this Lease.
 
 
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34.           Holding Over.  Any holding over after the expiration of the Term,
without the express written consent of Landlord, shall constitute a Default and,
without limiting Landlord’s remedies provided in this Lease, such holding over
shall be construed to be a tenancy at sufferance, at a rental rate of one
hundred fifty percent (150%) of the Base Rent last due in this Lease, plus
Additional Rent, and shall otherwise be on the terms and conditions herein
specified, so far as applicable.
 
35.           Successors and Assigns.  The terms, covenants and conditions of
this Lease shall, subject to the provisions as to assignment, apply to and bind
the heirs, successors, executors, administrators and assigns of all of the
parties hereto. If Tenant shall consist of more than one entity or person, the
obligations of Tenant under this Lease shall be joint and several.
 
36.           Time.  Time is of the essence of this Lease and each and every
term, condition and provision herein.
 
37.           Brokers.  Landlord represents and warrants to Tenant that neither
it nor its officers or agents not anyone acting on its behalf has dealt with any
real estate broker except Cassidy Turley CPS and Tenant represents to Landlord
that Cassidy Turley CPS is its sole real estate broker in such negotiations, and
each party agrees to indemnify and hold harmless the other from any claim or
claims, and costs and expenses, including attorney’s fees, incurred by the
indemnified party in conjunction with any such claim or claims of any other
broker or brokers to a commission in connection with this Lease as a result of
the actions of the indemnifying party.  Landlord shall pay a commission to
Cassidy Turley CPS in accordance with a separate agreement.  No brokerage fee or
commission shall be paid by Landlord on renewals of this Lease, or exercises of
any options to extend the term under this Lease.
 
38.           Rules and Regulations.  Tenant agrees to comply with such
reasonable rules and regulations as Landlord may adopt from time to time for the
orderly and proper operating of the Building and parking and other common areas.
Such rules may include but shall not be limited to the following: (a)
restriction of employee parking to a limited, designated area or areas; and (b)
regulation of the removal, storage and disposal of Tenant’s refuse and other
rubbish at the sole cost and expense of Tenant. The rules and regulations shall
be binding upon Tenant upon delivery of a copy of them to Tenant. Landlord shall
not be responsible to Tenant for the failure of any other person to observe and
abide by any of said rules and regulations.  In the event of any conflict
between the rules and regulations and this Lease, this Lease shall control.
 
39.           Mortgagee Protection.
 
(a)           Modifications for Lender.  If, in connection with obtaining
financing for the Premises or any portion thereof, Landlord’s lender shall
request reasonable modifications to this Lease as a condition to such financing,
Tenant shall not unreasonably withhold, delay or defer its consent to such
modifications, provided such modifications do not materially adversely affect
Tenant’s rights or increase Tenant’s obligations under this Lease.
 
(b)           Rights to Cure.  Tenant agrees to give to any trust deed or
mortgage holder (“Holder”), by registered mail, at the same time as it is given
to Landlord, a copy of any notice of default given to Landlord, provided that
prior to such notice Tenant has been notified, in writing, (by way of notice of
assignment of rents and leases, or otherwise) of the address of such Holder.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then the Holder shall have an
additional twenty (20) days after expiration of such period, or after receipt of
such notice from Tenant (if such notice to the Holder is required by this
paragraph 39(b), whichever shall last occur, within which to cure such default
or if such default cannot be cured within that time, then such additional time
as may be necessary if within such twenty (20) days, any Holder has commenced
and is diligently pursuing the remedies necessary to cure such default
(including but not limited to commencement of foreclosure proceedings, if
necessary to effect such cure), in which event this Lease shall not be
terminated.
 
40.             Entire Agreement.  This Lease, including the Exhibits and any
Addenda attached hereto, which are hereby incorporated herein by this reference,
contains the entire agreement of the parties hereto, and no representations,
inducements, promises or agreements, oral or otherwise, between the parties, not
embodied herein or therein, shall be of any force and effect.
 
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41.             Construction.  This Lease shall be construed and interpreted in
accordance with the laws of the State of California. The parties acknowledge and
agree that no rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall be employed in the interpretation of
this Lease, including the Exhibits and any Addenda attached hereto. All captions
in this Lease are for reference only and shall not be used in the interpretation
of this Lease. Whenever required by the context of this Lease, the singular
shall include the plural, the masculine shall include the feminine, and vice
versa. If any provision of this Lease shall be determined to be illegal or
unenforceable, such determination shall not affect any other provision of this
Lease and all such other provisions shall remain in full force and effect.
 
42.             Representations and Warranties of Tenant.  Tenant hereby makes
the following representations and warranties, each of which is material and
being relied upon by Landlord, is true in all respects as of the date of this
Lease, and shall survive the expiration or termination of the Lease.
 
(a)             Tenant is duly organized, validly existing and in good standing
under the laws of the state of its organization and the persons executing this
Lease on behalf of Tenant have the full right and authority to execute this
Lease on behalf of Tenant and to bind Tenant without the consent or approval of
any other person or entity. Tenant has full power, capacity, authority and legal
right to execute and deliver this Lease and to perform all of its obligations
hereunder. This Lease is a legal, valid and binding obligation of Tenant,
enforceable in accordance with its terms.
 
(b)             Tenant has not (1) made a general assignment for the benefit of
creditors, (2) filed any voluntary petition in bankruptcy or suffered the filing
of an involuntary petition by any creditors, (3) suffered the appointment of a
receiver to take possession of all or substantially all of its assets, (4)
suffered the attachment or other judicial seizure of all or substantially all of
its assets, (5) admitted in writing its inability to pay its debts as they come
due, or (6) made an offer of settlement, extension or composition to its
creditors generally.
 
43.             Outside Areas.
 
(a)             Subject to the terms and conditions of this Lease and such rules
and regulations as Landlord may from time to time prescribe, Tenant and Tenant’s
employees, invitees, guests and customers shall have the nonexclusive right to
use the access roads, parking areas, and facilities within the Property,
exclusive of the Building and the other buildings on the Property, provided and
designated by Landlord for the general use and convenience of all occupants of
the Property, which areas and facilities are referred to herein at “Outside
Area”. This right shall terminate upon the termination of this Lease.  Landlord
reserves the right from time to time to make changes in the shape, size,
location, amount and extent of the Outside Area provided such modification does
not reduce the number of parking spaces provided at the Property below the ratio
of 3.5 parking spaces per 1,000 square feet of rentable building area.  Landlord
further reserves the right to promulgate such reasonable rules and regulations
relating to the use of the Outside Area, the Building, and any part or parts
thereof, as Landlord may deem appropriate for the best interests of the
occupants of the Building and the Property.  The rules and regulations shall be
binding upon Tenant upon delivery of a copy of them to Tenant and Tenant shall
abide by them and cooperate in their observance. Such rules and regulations may
be amended by Landlord from time to time, with or without advance notice, and
all amendments shall be effective upon delivery of a copy to Tenant. Tenant
agrees to require its employees, executives, invitees, guests and customers to
abide by such rules and regulations including parking regulations.
 
(b)           Landlord shall operate, manage and maintain the Outside Area, and
landscaping and the surface of the exterior walls.  The manner in which the
Outside Area shall be maintained shall be consistent with other comparable
projects in the Sunnyvale area and the expenditures for such maintenance shall
be at the discretion of Landlord.
 
(c)           No materials, supplies, equipment, finished products or
semi-finished products, raw materials or articles of any nature shall be stored
upon or permitted to remain  outside of the Building, except with the prior
written consent of the Landlord. No waste materials or refuse shall be dumped
upon or permitted to remain upon any part of the Property outside of the
Building, unless approved by Landlord.
 
(d)           Tenant shall not use solid hard tires on any fork lifts or dollies
on paved parking, truck loading or driveway areas, and in the event Tenant
violates this provision, Tenant shall be responsible for the cost of resurfacing
the entire damaged area.
 
 
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44.           Parking.  Motor vehicle parking shall be non-exclusive, subject to
reallocation by Landlord from time to time.  Landlord reserves the right to
designate from time to time the parking spaces for vehicles of Tenant and its
guests and invitees.  Tenant shall have the right to a total parking allocation
equal to 3.5 parking spaces for every 1,000 rentable square feet of the
Premises.  Tenant acknowledges, however, that the foregoing parking allocation
will be reduced if Tenant elects to construct any modifications to the Building
courtyard as described in Paragraph 11(c) of this Lease.  Tenant agrees that
Landlord shall have no responsibility for policing these parking spaces or
seeing that they are used exclusively by Tenant’s employees, guests, or
invitees.  Tenant shall not at any time park or permit the parking of Tenant’s
trucks or other vehicles, or the trucks or other vehicles of others in driveways
or adjacent to loading areas as to interfere in any way with the use of such
areas, nor shall Tenant at any time park or permit the parking of Tenant
vehicles or trucks, or the vehicles or trucks of Tenant’s suppliers or invitees
in any portion of the parking areas not designated by Landlord for such use by
Tenant.  Tenant shall not park or permit to be parked inoperative vehicles or
equipment on any portion of the Outside Area and agrees that no vehicle will be
parked on the Outside Area for longer than seventy-two (72) hours.
 
45.             Right of First Refusal to Lease Adjacent Building.  Provided
that Tenant is not in Default at the time of exercise, during the initial Term
of this Lease Tenant shall have a one-time right of first refusal to lease the
Adjacent Building on the following terms and conditions:  If at any time during
the initial Term of this Lease, Landlord receives or provides a bona fide offer
to lease the Adjacent Building on terms and conditions acceptable to Landlord,
as evidenced by a letter of intent or other written offer, Landlord shall notify
Tenant of the terms of such third-party offer (“Landlord’s Notice”).  Tenant
shall have seven (7) days after receipt of Landlord’s Notice to notify Landlord
in writing of Tenant’s election to lease the Adjacent Building on the terms
stated in Landlord’s Notice.  If Tenant notifies Landlord within such seven-day
period of Tenant’s desire to lease the Adjacent Building on the terms stated in
Landlord’s Notice, then, at Landlord’s election, Landlord and Tenant shall
either enter into an amendment to this Lease adding the Adjacent Building to the
Premises and modifying the Base Rent and any other terms affected by the lease
of the Adjacent Building, or Landlord and Tenant shall enter into a separate
lease for the Adjacent Building on the same terms and conditions set forth
herein, as such terms may be modified by the terms set forth in Landlord’s
Notice.  If Landlord elects to enter into a separate lease for the Adjacent
Building then such lease shall contain a cross-default provision and this Lease
shall be amended to include a similar cross-default provision so that a Default
by Tenant under either lease shall constitute a Default under the other.  If,
however, Tenant fails to notify Landlord of Tenant’s election to lease the
Adjacent Building within such seven-day period or, if Landlord and Tenant,
through no fault of Landlord, fail to execute either an amendment to this Lease
or a separate lease for the Adjacent Building within thirty (30) days after the
date of Tenant’s notice to Landlord, Tenant shall be deemed to have waived its
right to lease the Adjacent Building and Landlord shall have the right to lease
the Adjacent Building to the third party, or any other party, on substantially
the terms stated in Landlord’s Notice without further notice to Tenant.
 
46.             Tenant’s Right to Use Personal Property.  During the Term of
this Lease, Tenant shall have the right to use, for no additional charge
hereunder, all of the workstations, chairs, tables, and other personal property,
if any, located in the Premises as of the date of this Lease (collectively, the
“Personal Property”).  Landlord makes no representations and warranties of any
kind with respect to the Personal Property.  Specifically, Landlord makes no
representations or warranties concerning the condition of the Personal Property
or its fitness for any particular purpose and Tenant hereby accepts the Personal
Property in its current, AS IS condition.  Tenant shall use the Personal
Property only for the purposes for which the Personal Property was
intended.  Tenant shall keep and maintain the Personal Property in good
condition and repair.  Tenant shall not remove any of the Personal Property from
the Premises at any time prior to the expiration of the forty-eighth (48th)
month of the Term.  The Personal Property shall remain the property of Landlord
until the expiration of the forty-eighth (48th) month of the Term, subject to
Tenant’s right to use the Personal Property on the terms and conditions stated
herein.  In no event shall Tenant pledge the Personal Property or Tenant’s
rights hereunder as security for any loan or financing prior to such date.  Upon
the expiration of the forty-eighth (48th) month of the Term, the Personal
Property shall become the property of Tenant and Landlord shall, at Tenant’s
request, execute and deliver to Tenant a bill of sale for the Personal Property
formally transferring all right, title and interest of Landlord in and to the
Personal Property to Tenant. Upon the expiration of this Lease, Tenant shall
remove the Personal Property from the Premises.
 
47.             Option to Extend.
 
(a)             Option Term.  Provided that Tenant is not in Default hereunder,
either at the time of exercise or at the time the extended Term commences,
Tenant shall have the option to extend the initial Term of this Lease for one
(1) additional period of five (5) years, an “Option Period” with respect to all
of the Premises, on the same terms, covenants and conditions provided herein,
except that (i) the Option Period Base Rent due hereunder shall be ninety-five
percent (95%) of the then fair market rental value of the Premises, as
determined pursuant to Paragraph 47(b), and (ii) no commission shall be owed or
paid to Tenant’s broker in connection with the Option Period or any other
extension of the Term of this Lease.   Tenant shall exercise its option, if at
all, by giving Landlord written notice (the “Option Notice”) at least two
hundred seventy (270) days but not more than three hundred sixty (360) days
prior to the expiration of the initial Term of this Lease.
 
 
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(b)             Option Period Rent.
 
(1)             The “then fair market rental value of the Premises” shall be
defined to mean the fair market rental value of the Premises as of the
commencement of the Option Period in question, taking into consideration the
uses permitted under this Lease, the quality, size, design and location of the
Premises, and the rent for comparable buildings located in Sunnyvale, and shall
be determined as follows.  The parties shall have thirty (30) days after
Landlord receives the Option Notice within which to agree on the then fair
market rental value of the Premises.  If the parties so agree within said
period, they shall immediately execute an amendment to this Lease stating the
Base Rent for the Option Period in question based upon ninety-five percent (95%)
of the then fair market rental value of the Premises.  If the parties are unable
to so agree within said period then the then fair market rental value of the
Premises shall be determined in accordance with Paragraph 47(b)(2).
 
(2)             Within seven (7) days after the expiration of the thirty (30)
day period set forth in Paragraph 47(b)(i), each party, at its cost and by
giving notice to the other party, shall appoint an independent real estate
appraiser with at least five (5) years’ full-time commercial appraisal
experience in the area in which the Premises are located to determine the then
fair market rental value of the Premises for the applicable Option Period.  If a
party does not appoint an appraiser within ten (10) days after the other party
has given notice of the name of its appraiser, the single appraiser appointed
shall be the sole appraiser and shall determine the then fair market rental
value of the Premises.  If the two (2) appraisers are appointed by the parties
as stated in this paragraph, they shall meet promptly and attempt to determine
the then fair market rental value of the Premises.  If they are unable to agree
within thirty (30) days after the second appraiser has been appointed, they
shall attempt to elect a third appraiser meeting the qualifications stated in
this paragraph within ten (10) days after the last day the two (2) appraisers
are given to determine the then fair market rental value of the Premises.  If
they are unable to agree on the third appraiser, either of the parties to this
Lease, by giving ten (10) days' notice to the other party, can apply to the
Santa Clara County Superior Court, for the selection of a third appraiser who
meets the qualifications stated in this paragraph.  Each of the parties shall
bear one-half (1/2) of the cost of appointing the third appraiser and of paying
the third appraiser's fee.  The third appraiser, however selected, shall be a
person who has not previously acted in any capacity for either party.
 
Within thirty (30) days after the selection of the third appraiser, a majority
of the appraisers shall determine the then fair market rental value of the
Premises for the Option Period in question.  If a majority of the appraisers are
unable to do so within said period of time, the three (3) appraisals shall be
added together and their total divided by three (3); the resulting quotient
shall be deemed to be the then fair market rental value of the Premises.  If,
however, the low appraisal and/or the high appraisal are/is more than ten
percent (10%) lower or higher, respectively, than the middle appraisal, then the
low appraisal and/or the high appraisal, respectively, shall be disregarded.  If
only one appraisal is disregarded, the remaining two (2) appraisals shall be
added together and their total divided by two (2); the resulting quotient shall
be deemed to be the then fair market rental value of the Premises.  If both the
low appraisal and the high appraisal are disregarded as stated in this
paragraph, then only the middle appraisal shall be used as the result of the
appraisal.  After the fair market rental value of the Premises has been
determined, the appraisers shall immediately notify the parties and the parties
shall amend this Lease to set forth the Base Rent for the Option Period based
upon ninety-five percent (95%) of the then fair market rental value of the
Premises.

(c)           Rights Personal to Tenant.  The option to extend the Term set
forth herein is personal to Silicon Image, Inc. and its Permitted Transferees
and shall not be transferred or assigned to any third party; provided, however,
that if the net worth of an assignee then in possession of the Premises is equal
to or greater than the net worth of Silicon Image, Inc. as of the date of
exercise of an option to extend the Term pursuant to Paragraph 47(b), then the
option may be exercised by such assignee.
 
 
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48.           Interest on Past Due Obligations.  Any Base Rent or Additional
Rent due Landlord hereunder, other than late charges, not received by Landlord
within thirty (30) days following the date on which it was due, shall bear
interest from the thirty-first (31st) day after it was due at the rate of 10%
per annum, but not exceeding the maximum rate allowed by law (the “Interest
Rate”), in addition to the late charge provided for in Paragraph 5.
 
 49.           Confidentiality.  Except as required by applicable law, the
Securities and Exchange Commission regulations, or any securities listing agency
rules or requirements, Landlord and Tenant each agree to keep the terms and
conditions of this Lease confidential and neither party shall disclose any such
terms to a third party without the prior written consent of the other, provided,
however, that the foregoing shall not prohibit Tenant from presenting a copy of
this Lease to a prospective assignee, sublessee, lender or purchaser nor shall
it prohibit Landlord from presenting a copy of this Lease to a prospective
lender or purchaser of the Building or the Property.
 
50.           Tenant’s Remedy.  If, as a consequence of a default by Landlord
under this Lease, Tenant recovers a money judgment against Landlord, such
judgment shall be satisfied only out of the proceeds of sale received upon
execution of such judgment and levied thereon against the right, title and
interest of Landlord in the Property and out of Rent or other income received by
Landlord from the Property or out of consideration received by Landlord from the
sale or other disposition of all or any part of Landlord’s right, title or
interest in the Property, and neither Landlord nor its Agents shall be liable
for any deficiency.
 
Landlord and Tenant have executed and delivered this Lease as of the date first
hereinabove set forth.
 
LANDLORD:
Christensen Holdings, L.P., a California
limited partnership
By: The Christensen Company, LLC, a
       California limited liability company,
       General Partner
       By:  /s/ Herman Christensen, Jr.
                     Herman Christensen, Jr.
       Date: January 6, 2011
       Its: Manager
TENANT:
Silicon Image, Inc., a Delaware corporation
By: /s/Camillo Martino
          Camillo Martino, CEO
Date: January 6, 2011
 
By: /s/Noland Granberry
          Noland Granberry, CFO
Date: January 6, 2011

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EXHIBIT A [ THE PREMISES]
 
 
 
EXHIBIT B [ THE PROPERTY]

 
 
 
 

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EXHIBIT C
 
WORK LETTER AGREEMENT
 
In connection with Tenant Improvements to be installed on the Premises, the
parties hereby agree as follows:
 
1. Plans and Specifications for Office Improvements.  Landlord and Tenant have
approved that certain demolition plan and floor plan for the office improvements
to be completed in the Premises (the “Office Improvements”), which demolition
plan and floor plan were prepared by jcaARCHITECTS, INC. as of November 30,
2010, and copies of which are attached hereto as Exhibit C-1 (collectively, the
“Space Plan”).  Landlord shall prepare final working architectural and
engineering plans and specifications for the Office Improvements to be
constructed on the Premises based upon the approved Space Plan (“Final Plans and
Specifications”).  Landlord shall submit the Final Plans and Specifications to
Tenant for Tenant’s review and approval.  Within five (5) business days after
receipt of the Final Plans and Specifications, Tenant shall notify Landlord of
Tenant’s approval or disapproval thereof, specifying in reasonable detail the
basis for Tenant’s disapproval, if applicable.  If, within such five (5)
business day period, Tenant notifies Landlord of any changes or corrections to
be made to the Final Plans and Specifications, Landlord shall have five (5)
business days to notify Tenant of Landlord’s approval or disapproval
thereof.  If Landlord approves such changes and/or corrections, Landlord shall,
within such five (5) business day period, revise the Final Plans and
Specifications accordingly and re-submit the Final Plans and Specifications to
Tenant for Tenant’s final approval.  If Landlord disapproves such changes and/or
corrections, Landlord shall, within such five (5) business day period, notify
Tenant in writing of the basis for Landlord’s disapproval and thereafter the
parties shall meet promptly to attempt to resolve any disagreement.  If,
however, Tenant fails to notify Landlord of Tenant’s approval or disapproval of
the Final Plans and Specifications within five (5) business days after Tenant’s
receipt of the same, the Final Plans and Specifications shall be deemed approved
in the form delivered to Tenant.  Following final approval of the Final Plans
and Specifications by Landlord and Tenant, Landlord shall submit the Final Plans
and Specifications to the City of Sunnyvale for plan checking and a building
permit.
 
2. Market Ready Improvements.  In addition to the Office Improvements, Landlord
shall complete the following improvements to the Premises: (a) install new
Building-standard carpeting throughout the Premises; (b) paint all interior
walls within the Premises; (c) install new 2’ x 4’ ceiling grid and ceiling
tiles throughout the Premises with new overhead lighting; (d) install up to ten
(10) fixed skylights in the ceiling (collectively, the “Market Ready
Improvements”).  The Market Ready Improvements and the Office Improvements are
referred to collectively in this Lease as the “Tenant Improvements.”
 
3. Landlord to Construct Tenant Improvements.  Following approval of the Final
Plans and Specifications, and Landlord’s receipt of a building permit for the
Tenant Improvements, Landlord shall enter into a construction contract with a
licensed general contractor (“General Contractor”) for installation of the
Tenant Improvements in accordance with the Final Plans and
Specifications.  Landlord shall cause construction of the Tenant Improvements to
be completed in a good and workmanlike manner in compliance with (i) the Final
Plans and Specifications approved by Landlord and Tenant, (ii) all applicable
laws, and (iii) the building permit issued by the City of Sunnyvale for such
construction.
 
4. Tenant Improvements Cost.
 
(a) Except as set forth herein, Landlord shall pay all costs associated with the
design, permitting and construction of (i) the Market Ready Improvements; and
(ii) the Office Improvements set forth in the Space Plan, up to a maximum cost
of $1,281,540.00 with respect to the Office Improvements (the “Office
Improvement Maximum”).  Tenant shall pay the following costs in connection with
the Tenant Improvements: (x) any costs associated with the design, permitting or
construction of the Office Improvements set forth in the Space Plan, including
any such costs resulting from any Change Orders requested by Tenant or any such
costs resulting from Tenant Delays (as defined in Paragraph 3(d) of the Lease),
that are in excess of the Office Improvement Maximum, and (y) any increase in
the cost of construction of the Market Ready Improvements resulting from any
Tenant Delays.  If Landlord and Tenant agree on any Change Orders requested by
Tenant as provided in Section 5 below, Landlord shall furnish Tenant with an
invoice specifying the estimated increase in the cost of the Tenant Improvements
resulting therefrom, and Tenant shall pay such estimated increase to Landlord
within thirty (30) days thereafter if the total costs of the Office
Improvements, Change Orders and any Tenant Delays exceed the Office Improvement
Maximum.
 
 
 
 

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(b)           If Landlord anticipates that the total cost of designing,
permitting and constructing the Office Improvements shown on Final Plans and
Specifications will exceed the Office Improvement Maximum, Landlord shall cause
General Contractor to prepare and deliver to Landlord and Tenant a final pricing
for construction of the Office Improvements based upon the Final Plans and
Specifications (“Final Pricing”), taking into account any modifications which
may be required to reflect changes in the Final Plans and Specifications which
may required by the City of Sunnyvale.  Landlord shall deliver the Final
Pricing, including a line item detailed breakdown, to Tenant for Tenant’s review
and approval.  The Final Pricing shall include the General Contractor’s overhead
and profit and general conditions which includes supervision and clean-up during
construction, including final clean-up.  Tenant shall, within ten (10) business
days after receipt of the Final Pricing, notify Landlord in writing of Tenant’s
approval or disapproval of the Final Pricing, which will include specific terms
objected to and the reasons therefor, if applicable.  If Tenant disapproves the
Final Pricing, Landlord and Tenant will promptly meet to discuss modifications
to the Final Plans and Specifications and the Final Pricing.
 
5. Change Requests.  No revisions to the approved Final Plans and Specifications
shall be made by either Landlord or Tenant unless approved in writing by both
parties.  Any request by Tenant or Landlord for a change in the Office
Improvements after final approval of the Final Plans and Specifications by
Landlord and Tenant (a “Change Request”) shall be presented to the
non-requesting party in writing and shall be accompanied by all information
necessary to clearly identify and explain the proposed change.  As soon as
practicable after receipt of such Change Request from Tenant, Landlord shall
notify Tenant in writing of the estimated cost of such Change Request as well as
the estimated increase in construction time caused by the Change Request, if
any.  Tenant shall approve or disapprove such estimates in writing within three
(3) business days after receipt of Landlord’s notice.  Upon receipt of such
written approval, Landlord shall be authorized to cause General Contractor to
proceed with implementation of the Change Request.  If Tenant disputes such
estimates, or fails to approve in writing such estimates within such three (3)
business day period, Landlord shall not be required to proceed with such Change
Request, and all costs incurred by Landlord or General Contractor in preparing
such estimates shall be included in the cost of the Office Improvements, which
cost shall be paid by Tenant; provided, however, that the parties shall promptly
negotiate in good faith to resolve any dispute over the Change Request.  If
Landlord is instructed in writing by Tenant to proceed with a Change Request
prior to determination of the increased cost or increased construction time
resulting from such Change Request and without approval of such increase by
Tenant, the amount thereof shall be determined by Landlord upon completion of
the Office Improvements, subject only to Landlord furnishing to Tenant
appropriate back-up information from the General Contractor concerning the
increased costs and increased construction time, if any.
 
6. Punch-list.  Within five (5) business days after substantial completion of
the Tenant Improvements, Tenant shall conduct a walkthrough inspection of the
Premises with Landlord and General Contractor and complete a punch-list of those
minor corrections of construction or decoration details and minor mechanical
adjustments that are required to cause any applicable portion of the Tenant
Improvements to conform to the Final Plans and Specifications.  If Tenant fails
to submit a punch-list to Landlord within such five (5) business day period, it
shall be deemed that there are no Tenant Improvement items needing additional
work or repair.  General Contractor shall complete all punch-list items within
thirty (30) days after the walk-through inspection, or as soon as reasonably
practicable thereafter.  Upon completion of such punch-list items, Tenant shall
approve such completed items in writing to Landlord.  If Tenant fails to approve
such items within fourteen (14) days of completion, such items shall be deemed
approved by Tenant.
 
7. Parties’ Representatives.  Tenant shall designate in writing (which may
include email for this purpose) an individual to act as Tenant’s representative
with respect to all approvals, directions and authorizations pursuant to this
Work Letter Agreement.  Landlord shall designate in writing (which may include
email for this purpose) an individual to act as Landlord’s representative with
respect to all approvals, directions and authorizations pursuant to this Work
Letter Agreement.
 

 
 

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EXHIBIT D
 
 
COMMENCEMENT DATE MEMORANDUM
 
    The undersigned parties agree that the Commencment Date under and as defined
in the Lease Agreement dated December __, 2010, entered into between the parties
is ___________, 2011.

LANDLORD:
Christensen Holdings, L.P., a California limited partnership
By: The Christensen Company, LLC, a
       California limited liability company,
       General Partner
 
      By: ___________________________
             Herman Christensen, Jr.
 
TENANT:
Silicon Image, Inc., a Delaware corporation
By:       
Its:       

 
 
 
 
 
 

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