Exhibit 10.8

LEASE

BY AND BETWEEN

M WEST PROPCO X, LLC,

a Delaware limited liability company

as Landlord

and

INTEVAC, INC.,

a Delaware corporation

as Tenant

For Premises located at

3560-3580 Bassett Street,

Santa Clara, California

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LEASE

This Lease is dated as of the lease reference date specified in Section A of the
Summary of Basic Lease Terms and is made by and between the party identified as
Landlord in Section B of the Summary and the party identified as Tenant in
Section C of the Summary.

SUMMARY OF BASIC LEASE TERMS

 

SECTION
(LEASE REFERENCE)

  

TERMS

A.     Effective Date: (Introduction)

   March ___, 2014.

B.     Landlord: (Introduction)

   M West Propco X, LLC a Delaware limited liability company

C.     Tenant: (Introduction)

   Intevac, Inc., a Delaware corporation

D.     Premises: (§ 1.20)

   That area consisting of approximately 119,583 rentable square feet of space
in the aggregate, as shown on Exhibit A attached hereto, and which is located
within the Building described below.

E.     Project: (§1.21)

   The land and improvements shown on Exhibit A, commonly referred to as
“Triangle Technology Park” and currently with the following buildings:   

(1) 3506-3510 Bassett Street, Santa Clara, California, which contains
approximately 43,744 rentable square feet of space; and

 

(2) 3520-3530 Bassett Street, Santa Clara, California, which contains
approximately 102,156 rentable square feet of space; and

 

(3) 3540-3548 Bassett Street, Santa Clara, California,, which contains
approximately 104,060 rentable square feet of space; and

 

(4) 3550-3580 Bassett Street, Santa Clara, California, which contains
approximately 167,063 rentable square feet of space.

 

The buildings in the Project currently contain approximately 417,023 rentable
square feet of space in the aggregate.

 

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F.      Building: (§ 1.7)

   The buildings in which the Premises are located, the addresses of which are
3560-3580 Bassett Street, Santa Clara, California. The Building contains
approximately 167,063 rentable square feet of space in the aggregate. The
rentable square footage of the Premises and the aggregate rentable square
footage of the Building referred to above shall be deemed the actual rentable
square footage of the Premises and the Building.

G.     Tenant’s Share: (§ 1.28)

   71.58% of the buildings that comprise the Building based on the ratio that
the rentable square footage of the Premises bears to the total rentable square
footage in the Building.

H.     Tenant’s Allocated Parking Passes: (§ 4.5)

   Three hundred twenty-three (323) unreserved parking passes, subject to the
terms of Section 4.5 of the Lease.

I.       Commencement Date: (§ 1.8)

   April 1, 2014.

Expiration Date: (§ 1.12)

   March 31, 2024.

J.      Lease Term: (§ 1.17)

   One hundred twenty (120) calendar months.

K.     Base Monthly Rent: (§ 3.1)

  

 

Period During

Lease Term

  

Approximate Annual
Base Rent Rate Per
Rentable Square Foot

    

Annual Base Rent**

    

Base Monthly Rent

 

April 1, 2014 – March 31, 2016*

   $ 14.30       $ 1,709,603.58       $ 142,466.96   

April 1, 2016 – March 31, 2017

   $ 14.73       $ 1,760.891.69       $ 146,740.97   

April 1, 2017 – March 31, 2018

   $ 15.17       $ 1,813,718.44       $ 151,143.20   

April 1, 2018 – March 31, 2019

   $ 15.62       $ 1,868,129.99       $ 155,677.50   

April 1, 2019 – March 31, 2020

   $ 16.09       $ 1,924,173.89       $ 160,347.82   

April 1, 2020 – March 31, 2021

   $ 16.57       $ 1,981,899.11       $ 165,158.26   

April 1, 2021 – March 31, 2022

   $ 17.07       $ 2,041,356.08       $ 170,113.01   

 

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April 1, 2022 – March 31, 2023

   $ 17.58       $ 2,102,596.76       $ 175,216.40   

April 1, 2023 – March 31, 2024

   $ 18.11       $ 2,165,674.66       $ 180,472.89   

 

* Tenant’s obligation to pay Base Monthly Rent during months one (1) through
three (3) (i.e., April 1, 2014 through and including June 30, 2014), and months
seven (7) through nine (9) (i.e., October 1, 2014 through and including
December 31, 2014), shall be subject to the Base Rent Abatement, as set forth in
Section 3.1.B of the Lease.

** The Annual Base Rent for the first twenty-four (24) full calendar months of
the Lease Term (i.e., April 1, 2014 through March 31, 2016) was calculated by
multiplying $14.30 by the number of rentable square feet of space in the
Premises. In all subsequent periods (i.e., April 1, 2016 through March 31,
2024), the calculation of Annual Base Rent reflects an annual increase of 3.0%.

L.     Prepaid Rent: (§ 3.3)

   Not applicable.

M.    Letter of Credit: (§ 3.5)

   $1,000,000.00, subject to reduction and the other terms of Section 3.5 of the
Lease.

N.     Permitted Use: (§ 4.1)

   The Premises may only be used for general office, research and development,
manufacturing and warehouse activities, and other lawful uses to the extent
consistent with zoning laws applicable to the Project and approved in advance by
Landlord, which approval shall not be unreasonably withheld, conditioned or
delayed, but for no other purpose.

O.     Permitted Tenant’s Alterations Limit: (§ 5.2)

   $240,000.00, subject to the terms of Section 5.2 of the Lease.

P.      Tenant’s Liability Insurance Minimum: (§ 9.1)

   $2,000,000.00 per occurrence, with a $3,000,000.00 aggregate limit.

Q.     Landlord’s Address: (§ 1.3)

  

M West Propco X, LLC

c/o MWest Properties

3351 Olcott Street

Santa Clara, CA 95054

Attn: Property Manager

With a copy to:

  

DivcoWest Real Estate Services, Inc.

575 Market Street, 35th floor

San Francisco, CA 94105

Attn: Steve Novick

 

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And:

 

DivcoWest Real Estate Services, Inc.

575 Market Street, 35th Floor

San Francisco, CA 94105

Attn: Jackie Moore

 

And:

 

Allen Matkins Leck Gamble Mallory & Natsis LLP

1901 Avenue of the Stars, Suite 1800

Los Angeles, CA 90067

Attn: Tony N. Natsis, Esq.

R.     Tenant’s Address: (§ 1.3)

  

Intevac, Inc.

3560 Bassett Street

Santa Clara, California 95054

Attn: Chief Financial Officer

S.      Retained Real Estate Brokers: (§ 15.13)

   Jones Lang LaSalle (representing Tenant)

T.     Tenant Improvement Allowance: (Exhibit B)

   $10.00 per rentable square foot of the Premises (i.e., an amount equal to
$1,195,830.00 based on 119,583 rentable square feet), subject to the terms and
conditions of the Tenant Work Letter attached hereto as Exhibit B.

U.     Lease:

  

This Lease includes the summary of the Basic Lease Terms, the Lease, and the
following exhibits and addenda:

 

Exhibit A – Project Site Plan and Outline of the Premises

Exhibit B – Tenant Work Letter

Exhibit C – No Reserved Parking Area

Exhibit D – Option to Extend

Exhibit E – Approved Hazardous Materials Exhibit

Exhibit F – Form Letter of Credit

The foregoing Summary is hereby incorporated into and made a part of this Lease.
Each reference in this Lease to any term of the Summary shall mean the
respective information set forth above and shall be construed to incorporate all
of the terms provided under the particular paragraph pertaining to such
information. In the event of any conflict between the Summary and the Lease, the
Summary shall control.

ARTICLE 1

DEFINITIONS

1.1 General: Any initially capitalized term that is given a special meaning by
this Article 1, the Summary, or by any other provision of this Lease (including
the exhibits attached hereto) shall have such meaning when used in this Lease or
any addendum or amendment hereto unless otherwise clearly indicated by the
context.

1.2 Additional Rent: The term “Additional Rent” is defined in Section 3.2.

 

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1.3 Address for Notices: The term “Address for Notices” means the addresses set
forth in Sections Q and R of the Summary.

1.4 Agents: The term “Agents” means the following: (i) with respect to Landlord,
the employees, contractors and agents of Landlord; and (ii) with respect to
Tenant, the employees, contractors, agents and invitees of Tenant and Tenant’s
subtenants and their respective agents, employees, contractors, and invitees.

1.5 Agreed Interest Rate: The term “Agreed Interest Rate” means that interest
rate determined as of the time it is to be applied that is equal to the lesser
of (i) three percent (3%) in excess of the discount rate established by the
Federal Reserve Bank of San Francisco as it may be adjusted from time to time,
or (ii) the maximum interest rate permitted by Law.

1.6 Base Monthly Rent: The term “Base Monthly Rent” means the fixed monthly rent
payable by Tenant pursuant to Section 3.1 which is specified in Section K of the
Summary.

1.7 Building: The term “Building” means the buildings in which the Premises are
located, as identified in Section F of the Summary.

1.8 Commencement Date: The term “Commencement Date” is the date the Lease Term
commences, which date is set forth in Section I of the Summary.

1.9 Common Area: The term “Common Area” means all areas and facilities within
the Project that are not designated by Landlord for the exclusive use of Tenant
or any other lessee or other occupant of the Project, including the parking
areas, access and perimeter roads, pedestrian sidewalks, landscaped areas, trash
enclosures, recreation areas and the like.

1.10 Companion Lease: The term “Companion Lease” means that certain Lease by and
between Landlord and Tenant, dated as of even date herewith, for premises
located within that certain building located at 3548 Bassett Street, Santa
Clara, California.

1.11 Effective Date: The term “Effective Date” means the date upon which the
last signatory to this Lease whose execution is required to make it binding on
the parties hereto shall have executed this Lease and delivered the same to the
other party.

1.12 Event of Tenant’s Default: The term “Event of Tenant’s Default” is defined
in Section 13.1.

1.13 Existing Lease: The term “Existing Lease” shall mean that certain lease
dated February 5, 2001, by and between Mission West Properties, L.P. III, a
Delaware limited partnership (as Landlord’s predecessor-in-interest), and
Intevac Corporation, a California corporation (as Tenant’s
predecessor-in-interest), as amended, modified or supplemented. Notwithstanding
anything to the contrary set forth in the Existing Lease, Landlord and Tenant
hereby acknowledge and agree that, from and after the Commencement of this
Lease, the Existing Lease shall be terminated and of no further force or effect
(except for those obligations and liabilities which are expressly stated to
survive the expiration or earlier termination of the Existing Lease).

1.14 Expiration Date: The term “Expiration Date” is the date the Lease Term
expires, which date is set forth in Section I of the Summary.

 

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1.15 Hazardous Materials: The terms “Hazardous Materials” and “Hazardous
Materials Laws” are defined in Section 7.2.

1.16 Insured and Uninsured Peril: The terms “Insured Peril” and “Uninsured
Peril” are defined in Section 11.2E.

1.17 Law: The term “Law” means any judicial decision, statute, constitution,
ordinance, resolution, regulation, rule, administrative order, or other
requirement of any municipal, county, state, federal or other government agency
or authority having jurisdiction over the parties to this Lease or the Premises,
or both, in effect either at the Effective Date or any time during the Lease
Term, including, without limitation, any Hazardous Material Law (as defined in
Section 7.2) and the Americans with Disabilities Act, 42 U.S.C. §§ 12101 et.
seq., and any rules, regulations, restrictions, guidelines, requirements or
publications promulgated or published pursuant thereto.

1.18 Lease: The term “Lease” means the Summary and all elements of this Lease
identified in Section U of the Summary, all of which are attached hereto and
incorporated herein by this reference.

1.19 Lease Term: The term “Lease Term” or “Term” means the term of this Lease
which shall commence on the Commencement Date and continue for the period
specified in Section J of the Summary.

1.20 Lender: The term “Lender” means any beneficiary, mortgagee, secured party,
lessor, or other holder of any Security Instrument.

1.21 Operating Expenses: The term “Operating Expenses” is defined in
Section 8.2.

1.22 Permitted Use: The term “Permitted Use” means the use specified in
Section N of the Summary.

1.23 Premises: The term “Premises” means that building area described in
Section D of the Summary that is within the Building.

1.24 Project: The term “Project” means that real property and the improvements
thereon which are specified in Section E of the Summary. Landlord reserves the
right, in its sole and absolute discretion, to include such other buildings in
the Project, to sell, transfer, assign or otherwise dispose of any building or
parcel in the Project and elect to remove such building and/or parcel from the
Project, provided that Tenant’s use of the Premises for the Permitted Use and
Tenant’s parking rights provided in this Lease are not materially diminished or
impaired as a result thereof.

1.25 Private Restrictions: The term “Private Restrictions” means all recorded
covenants, conditions and restrictions, private agreements, reciprocal easement
agreements, and any other recorded instruments affecting the use of the Premises
which (i) exist as of the Effective Date, or (ii) are recorded after the
Effective Date.

1.26 Real Property Taxes: The term “Real Property Taxes” is defined in
Section 8.3.

1.27 Security Instrument: The term “Security Instrument” means any underlying
lease, mortgage or deed of trust which now or hereafter affects the Project, and
any renewal, modification, consolidation, replacement or extension thereof.

 

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1.28 Summary: The term “Summary” means the Summary of Basic Lease Terms that
immediately precedes Article 1 of this Lease.

1.29 Tenant’s Alterations: The term “Tenant’s Alterations” or “Tenant’s
Alteration” or “Tenant Alteration” means all improvements, additions,
alterations, and fixtures installed in the Premises by Tenant (excluding Trade
Fixtures).

1.30 Tenant’s Share: The term “Tenant’s Share” means the percentage obtained by
dividing Tenant’s rentable square feet in the Premises (as set forth in
Section D of the Summary) by the total rentable square feet in the Building,
which, as of the Effective Date, is the percentage identified in Section G of
the Summary.

1.31 Trade Fixtures: The term “Trade Fixtures” means (i) Tenant’s inventory,
furniture, signs, and business equipment, and (ii) anything affixed to the
Premises by Tenant at its expense for purposes of trade, manufacture, ornament
or domestic use (except replacement of similar work or material originally
installed by Landlord) which can be removed without material or structural
injury to the Premises unless such thing has, by the manner in which it is
affixed, become an integral part of the “Building Structure” or the “Building
Systems” (as such terms are defined in Section 6.2 and Section 5.2.A,
respectively).

ARTICLE 2

DEMISE, CONSTRUCTION, AND ACCEPTANCE

2.1 Demise of Premises: Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, for the Lease Term upon the terms and conditions of this
Lease, the Premises for the Permitted Use, together with (i) the non-exclusive
right to use the number of Tenant’s Allocated Parking Passes (subject to the
limitations set forth in Section 4.5), and (ii) the non-exclusive right to use
the Common Area as it exists from time to time, subject to any rights, powers
and privileges reserved by Landlord pursuant to the terms of this Lease, or
pursuant to the terms of any rules and regulations or restrictions promulgated
by Landlord in accordance with Section 4.6, below governing the use of the
Project. Landlord reserves the right, as reasonably necessary for Landlord’s
management of the Project, to the use of the exterior walls, the roof and the
area beneath and above the Premises, together with the right to install,
maintain, use, and replace ducts, wires, conduits and pipes leading through the
Premises in locations which will not materially interfere with the Permitted Use
of the Premises.

2.2 Commencement Date: The Lease Term shall commence on the Commencement Date.

2.3 Construction of Improvements: Tenant shall construct the “Tenant
Improvements” (as defined in Exhibit B) in accordance with the terms of
Exhibit B.

2.4 Delivery and Acceptance of Possession: Tenant acknowledges that it has been
and is currently in possession and occupancy of the Premises pursuant to the
Existing Lease. Tenant is fully aware of the condition of the Premises and,
therefore, Tenant shall continue to accept possession of the Premises in its
presently existing, “AS-IS” condition, including all patent and latent defects,
but subject to Landlord’s ongoing repair, restoration, maintenance and other
obligations under this Lease. For purposes of Section 1938 of the California
Civil Code, Landlord hereby discloses to Tenant, and Tenant hereby acknowledges,
that the Premises have not undergone inspection by a Certified Access Specialist
(CASp).

2.5 Intentionally Omitted.

2.6 Intentionally Omitted.

 

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ARTICLE 3

RENT

3.1 Base Monthly Rent:

A. In General. Commencing on the Commencement Date and continuing throughout the
Lease Term, Tenant shall pay to Landlord the Base Monthly Rent set forth in
Section K of the Summary.

B. Abated Base Monthly Rent. During months one (1) through three (3) (i.e.,
April 1, 2014 through and including June 30, 2014) and months seven (7) through
nine (9) (i.e., October 1, 2014 through and including December 31, 2014) (the
“Rent Abatement Period”), Tenant shall not be obligated to pay Base Monthly Rent
otherwise attributable to the Premises during such Rent Abatement Period (the
“Rent Abatement”). Notwithstanding the foregoing, or anything to the contrary
set forth in this Lease, Tenant shall be required to pay Tenant’s Share of
Operating Expenses attributable to the Premises and all other Additional Rent
due pursuant to the terms of this Lease during the Rent Abatement Period.
Landlord and Tenant acknowledge and agree that the aggregate amount of the Rent
Abatement equals Eight Hundred Fifty-Four Thousand Eight Hundred One and 79/100
Dollars ($854,801.79). Tenant acknowledges and agrees that the foregoing Rent
Abatement has been granted to Tenant as additional consideration for entering
into this Lease, and for agreeing to pay the rental and perform the terms and
conditions otherwise required under this Lease. If this Lease is terminated for
any reason other than a mutual termination of this Lease, Landlord’s breach of
this Lease, or an event of casualty or condemnation, which shall be governed by
the terms of Articles 11 and 12 respectively, of this Lease), then, for purposes
of calculating Landlord’s damages, if any, the dollar amount of the unapplied
portion of the Rent Abatement as of the date of such default or termination, as
the case may be, shall be converted to a credit to be applied to the Base Rent
applicable at the end of the Lease Term and Tenant shall immediately be
obligated to begin paying Base Rent for the Premises in full. Notwithstanding
the foregoing or anything to the contrary set forth in this Lease, at any time
during the Rent Abatement Period, Landlord shall have the right (but not the
obligation), in its sole and absolute discretion, to pay Tenant the total amount
of the then remaining and unapplied portion of the Rent Abatement amount, in
which event (i) Tenant’s obligation to pay Base Monthly Rent shall automatically
be reinstated for the remainder of the Rent Abatement Period covered by
Landlord’s lump sum payment, at the then-applicable amounts and otherwise in
accordance with the terms of this Lease, and (ii) Tenant shall not be entitled
to any additional rent abatement under this Lease.

C. Intentionally Omitted.

3.2 Additional Rent: Commencing on the Commencement Date and continuing
throughout the Lease Term, Tenant shall pay the following as additional rent
(the “Additional Rent”): (i) any late charges or interest due Landlord pursuant
to Section 3.4; (ii) Tenant’s Share of Operating Expenses as provided in
Section 8.1; (iii) Landlord’s share of any Subrent received by Tenant upon
certain assignments and sublettings as required by Section 14.1; (iv) any legal
fees and costs due Landlord pursuant to Section 15.9; and (v) any other charges
due Landlord pursuant to this Lease.

3.3 Payment of Rent: The term “Rent” or “rent” shall mean Base Monthly Rent,
Additional Rent and other sums required to be paid by Tenant under this Lease.
All rent required to be paid in monthly installments shall be paid in advance on
the first day of each calendar month during the Lease Term. All rent shall be
paid in lawful money of the United States, without any abatement, deduction or
offset whatsoever (except as otherwise specifically provided in this Lease), and
without any prior demand therefor. Rent shall be paid to Landlord at its address
set forth in Section Q of the Summary, or at such other place as Landlord may
designate to Tenant in writing from time to time. Tenant’s obligation to pay
Base Monthly Rent and Tenant’s Share of Operating Expenses shall be prorated at
the commencement and expiration of the Lease Term.

 

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3.4 Late Charge, Interest and Quarterly Payments:

A. Late Charge. Tenant acknowledges that the late payment by Tenant of any
installment of Rent, or any other sum of money required to be paid by Tenant
under this Lease, will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amount of such costs being extremely
difficult and impractical to fix. Such costs and expenses will include, without
limitation, attorneys’ fees, administrative and collection costs, and processing
and accounting expenses and other costs and expenses necessary and incidental
thereto. If any Base Monthly Rent or Additional Rent is not received by Landlord
from Tenant when due such payment is due, then Tenant shall immediately pay to
Landlord a late charge equal to five percent (5%) of such delinquent rent as
liquidated damages for Tenant’s failure to make timely payment. In no event
shall this provision for a late charge be deemed to grant to Tenant a grace
period or extension of time within which to pay any installment of Rent or
prevent Landlord from exercising any right or remedy available to Landlord upon
Tenant’s failure to pay any installment of Rent due under this Lease in a timely
fashion, including any right to terminate this Lease pursuant to Section 13.2B.
Notwithstanding the foregoing, Tenant shall not be obligated to pay a late
charge pursuant to this Section 3.4A, or interest thereon pursuant to
Section 3.4.B, below, for the first (1st) late payment of Rent (whether such
late payment is with respect to Base Monthly Rent or Additional Rent) in any
calendar year, unless Tenant fails to make such payment within five (5) days
after Tenant’s receipt of notice from Landlord regarding such late payment.

B. Interest. If any installment of Rent remains delinquent for a period in
excess of ten (10) days then, in addition to such late charge, Tenant shall pay
to Landlord interest on any such installment of Rent that is not paid when due
at the Agreed Interest Rate following the date such amount became due until
paid.

C. Quarterly Payments. If Tenant during any twelve (12) month period shall be
more than five (5) days delinquent in the payment of any installment of Rent or
other amount payable by Tenant hereunder on three (3) or more occasions, then,
notwithstanding anything herein to the contrary, Landlord may, by written notice
to Tenant, elect to require Tenant to pay all Base Monthly Rent and Additional
Rent quarterly in advance for the following twenty-four (24) month period. Such
right shall be in addition to and not in lieu of any other right or remedy
available to Landlord hereunder or at law on account of Tenant’s default
hereunder.

3.5 Letter of Credit:

A. Delivery of Letter of Credit. Tenant shall deliver to Landlord, within three
(3) business days following the full execution and delivery of this Lease by
Landlord and Tenant, as protection for the full and faithful performance by
Tenant of all of its obligations under this Lease and the Companion Lease, and
for all losses and damages Landlord may suffer (or which Landlord reasonably
estimates that it may suffer) as a result of any breach or default by Tenant
under this Lease or the Companion Lease, an unconditional, clean, irrevocable
negotiable standby letter of credit (the “L-C”) in the amount set forth in
Section M of the Summary, as the same may be reduced pursuant to Section 3.5.G,
below (the “L-C Amount”), in the form attached hereto as Exhibit F or in a form
otherwise reasonably approved by Landlord, payable in the City of San Francisco,
California, running in favor of Landlord, drawn on Bank of America, National
Association, or another bank reasonably approved by Landlord (the “Bank”) and at
a minimum having a long term issuer credit rating from Standard and Poor’s
Professional Rating Service of A or a comparable rating from Moody’s
Professional Rating Service (the “Credit Rating Threshold”), and otherwise
conforming in all respects to the requirements of this Section 3.5,

 

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including, without limitation, all of the requirements of Section 3.5.B, below,
all as set forth more particularly herein below. Tenant shall pay all expenses,
points and/or fees incurred by Tenant in obtaining and maintaining the L-C. In
the event of an assignment by Tenant of its interest in the Lease (and
irrespective of whether Landlord’s consent is required for such assignment), the
acceptance of any replacement or substitute letter of credit by Landlord from
the assignee shall be subject to Landlord’s prior written approval, in
Landlord’s reasonable discretion, and the reasonable, out-of-pocket attorney’s
fees incurred by Landlord in connection with such determination shall be payable
by Tenant to Landlord within thirty (30) days of billing.

B. In General. The L-C shall be “callable” at sight, permit partial draws and
multiple presentations and drawings, and be otherwise subject to the Uniform
Customs and Practices for Documentary Credits (1993-Rev), International Chamber
of Commerce Publication #500, or the International Standby Practices-ISP 98,
International Chamber of Commerce Publication #590. Tenant further covenants and
warrants as follows:

(1) Landlord Right to Transfer. The L-C shall provide that Landlord, its
successors and assigns, may, at any time and without notice to Tenant and
without first obtaining Tenant’s consent thereto, transfer (one or more times)
all of its interest in and to the L-C to another party, person or entity having
an ownership or security interest in and to this Lease and the Building. In the
event of a transfer of Landlord’s interest in the Building or the Project,
Landlord shall transfer the L-C to the transferee and thereupon Landlord shall,
without any further agreement between the parties, be released by Tenant from
all liability therefor, and it is agreed that the provisions hereof shall apply
to every transfer or assignment of the whole or any portion of said L-C to a new
landlord. In connection with any such transfer of the L-C by Landlord, Tenant
shall, at Tenant’s sole cost and expense, execute and submit to the Bank such
applications, documents and instruments as may be necessary to effectuate such
transfer, and Tenant shall be responsible for paying the Bank’s transfer and
processing fees in connection therewith.

(2) No Assignment by Tenant. Tenant shall neither assign nor encumber the L-C or
any part thereof. Neither Landlord nor its successors or assigns will be bound
by any assignment, encumbrance, attempted assignment or attempted encumbrance by
Tenant in violation of this Section.

(3) Replenishment. If, as a result of any drawing by Landlord on the L-C
pursuant to its rights set forth in Section 3.5.C, below, the amount of the L-C
shall be less than the L-C Amount, Tenant shall, within ten (10) days after its
receipt of written demand therefor from Landlord, provide Landlord with (i) an
amendment to the L-C restoring such L-C to the L-C Amount or (ii) additional
L-Cs in an amount equal to the deficiency, which additional L-Cs shall comply
with all of the provisions of this Section 3.5, and if Tenant fails to comply
with the foregoing, notwithstanding anything to the contrary contained in
Section 13.1, below, the same shall constitute an incurable default by Tenant
under this Lease (without the need for any additional notice and/or cure
period); provided, however, that any such amended or additional L-C shall not be
required to have an effective date earlier than the expiration date of the
then-existing L-C being so replaced.

(4) Renewal; Replacement. If the L-C expires earlier than the date (the “LC
Expiration Date”) that is sixty (60) days after the expiration of the Lease
Term, Tenant shall deliver a new L-C or certificate of renewal or extension to
Landlord at least sixty (60) days prior to the expiration of the L-C then held
by Landlord, without any action whatsoever on the part of Landlord, which new
L-C shall be irrevocable and automatically renewable through the LC Expiration
Date upon the same terms as the expiring L-C or such other terms as may be
acceptable to Landlord in its reasonable discretion. In furtherance of the
foregoing, Landlord and Tenant agree that the L-C shall contain a so-called
“evergreen provision,” whereby the L-C will automatically be renewed unless at
least sixty (60) days’ prior written notice of non-renewal is provided by the
issuer to Landlord; provided, however, that the final expiration date identified
in the L-C, beyond which the L-C shall not automatically renew, shall not be
earlier than the LC Expiration Date.

 

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(5) Bank’s Financial Condition. If, at any time during the Lease Term, the
Bank’s long term credit rating is reduced below the Credit Rating Threshold, or
if the financial condition of the Bank changes in any other materially adverse
way (either, a “Bank Credit Threat”), then Landlord shall have the right to
require that Tenant obtain from a different issuer a substitute L-C that
complies in all respects with the requirements of this Section 3.5, and Tenant’s
failure to obtain such substitute L-C within fifteen (15) days following
Landlord’s written demand therefor (with no other notice or cure or grace period
being applicable thereto, notwithstanding anything in this Lease to the
contrary) shall entitle Landlord, or Landlord’s then managing agent, to
immediately draw upon the then existing L- C in whole or in part, without notice
to Tenant, as more specifically described in Section 3.5.C, below. Tenant shall
be responsible for the payment of any and all costs incurred with the review of
any replacement L-C (including without limitation Landlord’s reasonable,
out-of-pocket attorneys’ fees), which replacement is required pursuant to this
Section or is otherwise requested by Tenant.

C. Application of Letter of Credit. Tenant hereby acknowledges and agrees that
Landlord is entering into this Lease and the Companion Lease in material
reliance upon the ability of Landlord to draw upon the L-C as protection for the
full and faithful performance by Tenant of all of its obligations under this
Lease and the Companion Lease, and for all losses and damages Landlord may
suffer (or which Landlord reasonably estimates that it may suffer) as a result
of any breach or default by Tenant under this Lease or the Companion Lease.
Landlord, or its then managing agent, shall have the right to draw down an
amount up to the face amount of the L-C if any of the following shall have
occurred or be applicable: (1) such amount is due to Landlord under the terms
and conditions of this Lease or the Companion Lease, or (2) Tenant has filed a
voluntary petition under the U. S. Bankruptcy Code or any state bankruptcy code
(collectively, “Bankruptcy Code”), or (3) an involuntary petition has been filed
against Tenant under the Bankruptcy Code, or (4) the Bank has notified Landlord
that the L-C will not be renewed or extended through the LC Expiration Date and
Tenant fails to obtain a substitute L-C in the form required by this Section 3.5
prior to the date that is fifteen (15) days prior to the expiration date of the
then-existing L-C, or (5) a Bank Credit Threat or Receivership (as such term is
defined in Section 3.5.F(1), below) has occurred and Tenant has failed to comply
with the requirements of either Section 3.5.B(5) above or Section 3.5.F below,
as applicable. If Tenant shall breach any provision of this Lease or the
Companion Lease, or otherwise be in default hereunder or under the Companion
Lease, or if any of the foregoing events identified in this Section 3.5.C(2)
through (5) shall have occurred, Landlord may, but without obligation to do so,
and without notice to Tenant, draw upon the L-C, in part or in whole, and the
proceeds may be applied by Landlord to cure any breach or default of Tenant
and/or to compensate Landlord for any and all damages of any kind or nature
sustained or which Landlord reasonably estimates that it will sustain resulting
therefrom. The use, application or retention of the L-C, or any portion thereof,
by Landlord shall not prevent Landlord from exercising any other right or remedy
provided by this Lease, by the Companion Lease, or by any applicable law, it
being intended that Landlord shall not first be required to proceed against the
L-C, and shall not operate as a limitation on any recovery to which Landlord may
otherwise be entitled. Tenant agrees not to interfere in any way with payment to
Landlord of the proceeds of the L-C, either prior to or following a “draw” by
Landlord of any portion of the L-C under the provisions thereof, regardless of
whether any dispute exists between Tenant and Landlord as to Landlord’s right to
draw upon the L-C. No condition or term of this Lease shall be deemed to render
the L-C conditional to justify the issuer of the L-C in failing to honor a
drawing upon such L-C in a timely manner in accordance with the requirements of
the L-C. Tenant agrees and acknowledges that (i) the L-C constitutes a separate
and independent contract between Landlord and the Bank, (ii) Tenant is not a
third party beneficiary of such contract, (iii) Tenant has no property interest
whatsoever in the L-C or the proceeds thereof, and (iv) in the event Tenant
becomes a debtor under any chapter of the Bankruptcy Code, neither Tenant, any
trustee, nor Tenant’s bankruptcy estate shall have any right to restrict or
limit Landlord’s claim and/or rights to the L-C and/or the proceeds thereof by
application of Section 502(b)(6) of the U. S. Bankruptcy Code or otherwise.

 

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D. Letter of Credit not a Security Deposit. Landlord and Tenant acknowledge and
agree that in no event or circumstance shall the L-C or any renewal thereof or
any proceeds thereof be (i) deemed to be or treated as a “security deposit”
within the meaning of California Civil Code Section 1950.7, (ii) subject to the
terms of such Section 1950.7, or (iii) intended to serve as a “security deposit”
within the meaning of such Section 1950.7. The parties hereto (A) recite that
the L-C is not intended to serve as a security deposit and such Section 1950.7
and any and all other laws, rules and regulations applicable to security
deposits in the commercial context (“Security Deposit Laws”) shall have no
applicability or relevancy thereto, and (B) waive any and all rights, duties and
obligations either party may now or, in the future, will have relating to or
arising from the Security Deposit Laws.

E. Proceeds of Draw. In the event Landlord draws down on the L-C pursuant to
Section 3.5.C(4) or (5) above, the proceeds of the L-C may be held by Landlord
and applied by Landlord against any Rent payable by Tenant under this Lease or
the Companion Lease that is not paid when due and/or to pay for all losses and
damages that Landlord has suffered or that Landlord reasonably estimates that it
will suffer as a result of any breach or default by Tenant under this Lease or
the Companion Lease. Any unused proceeds shall constitute the property of
Landlord and need not be segregated from Landlord’s other assets. Tenant hereby
(i) agrees that (1) Tenant has no property interest whatsoever in the proceeds
from any such draw, and (2) such proceeds shall not be deemed to be or treated
as a “security deposit” under the Security Deposit Law, and (ii) waives all
rights, duties and obligations either party may now or, in the future, will have
relating to or arising from the Security Deposit Laws. Landlord agrees that the
amount of any proceeds of the L-C received by Landlord, and not (a) applied
against any Rent payable by Tenant under this Lease or the Companion Lease that
was not paid when due, or (b) used to pay for any losses and/or damages suffered
by Landlord (or reasonably estimated by Landlord that it will suffer) as a
result of any breach or default by Tenant under this Lease or the Companion
Lease (the “Unused L-C Proceeds”), shall be paid by Landlord to Tenant (x) upon
receipt by Landlord of a replacement L-C in the full L-C Amount, which
replacement L-C shall comply in all respects with the requirements of this
Section 3.5, or (y) within thirty (30) days after the LC Expiration Date;
provided, however, that if prior to the LC Expiration Date a voluntary petition
is filed by Tenant, or an involuntary petition is filed against Tenant by any of
Tenant’s creditors, under the Bankruptcy Code, then Landlord shall not be
obligated to make such payment in the amount of the Unused L-C Proceeds until
either all preference issues relating to payments under this Lease or the
Companion Lease have been resolved in such bankruptcy or reorganization case or
such bankruptcy or reorganization case has been dismissed.

F. Bank Placed Into Receivership.

(1) Bank Placed Into Receivership. In the event the Bank is placed into
receivership or conservatorship (any such event, a “Receivership”) by the
Federal Deposit Insurance Corporation or any successor or similar entity (the
“FDIC”), then, effective as of the date such Receivership occurs, the L-C shall
be deemed to not meet the requirements of this Section 3.5, and, within fifteen
(15) days following Landlord’s notice to Tenant of such Receivership (the “LC
Replacement Notice”), Tenant shall (i) replace the L-C with a substitute L-C
from a different issuer reasonably acceptable to Landlord and that complies in
all respects with the requirements of this Section 3.5, or (ii) in the event
Tenant demonstrates to Landlord that Tenant is reasonably unable to obtain a
substitute L-C from a different issuer reasonably acceptable to Landlord and
that complies in all respects with the requirements of this Section 3.5.F(1)
within the foregoing ten (10) business-day period, deposit with Landlord cash in
the L-C Amount (the “Interim Cash Deposit”); provided, however, that, in the
case of the foregoing sub-clause (ii), Tenant shall, within sixty (60) days
after the L-C Replacement

 

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Notice, replace the L-C with a substitute L-C from a different issuer reasonably
acceptable to Landlord, and that complies in all respects with the requirements
of this Section 3.5, and upon Landlord’s receipt and acceptance of such
replacement L-C, Landlord shall return the Interim Cash Deposit to Tenant, with
no obligation on the part of Landlord to pay any interest thereon. If Tenant
fails to comply in any respect with the requirements of this Section 3.5.F(1),
then, notwithstanding anything in this Lease to the contrary, Landlord shall
have the right to either (A) declare Tenant in default of this Lease for which
there shall be no notice or grace or cure periods being applicable thereto other
than the aforesaid ten (10) and sixty (60) day periods, (B) if applicable,
retain such Interim Cash Deposit until such time as such default is cured by
Tenant, which retention shall not constitute a waiver of any right or remedy
available to Landlord under the terms of this Lease or at Law, and (c) pursue
any and all remedies available to it under this Lease and at law, including,
without limitation, if Tenant has failed to provide the Interim Cash Deposit,
treating any Receivership as a Bank Credit Threat and exercising Landlord’s
remedies under Section 3.5.B(5) above, to the extent possible pursuant to
then-existing FDIC policy. Tenant shall be responsible for the payment of any
and all costs incurred with the review of any replacement L- C (including
without limitation Landlord’s reasonable attorneys’ fees), which replacement is
required pursuant to this Section or is otherwise requested by Tenant.

(2) Interim Cash Deposit. During any period that Landlord remains in possession
of the Interim Cash Deposit (any such period, a “Deposit Period”), it is
understood by the parties that such Interim Cash Deposit shall be held by
Landlord as security for the full and faithful performance of Tenant’s covenants
and obligations under this Lease and the Companion Lease. The Interim Cash
Deposit shall not constitute an advance of any Rent, an advance payment of any
other kind, nor a measure of Landlord’s damages in case of Tenant’s default. If,
during any such Deposit Period, Tenant defaults with respect to any provisions
of this Lease or the Companion Lease, including, but not limited to, the
provisions relating to the payment of Rent, the removal of property and the
repair of resultant damage, then Landlord may but shall not be required to, from
time to time, without notice to Tenant and without waiving any other remedy
available to Landlord, use the Interim Cash Deposit, or any portion of it, to
the extent necessary to cure or remedy such default or failure or to compensate
Landlord for all damages sustained by Landlord or which Landlord reasonably
estimates that it will sustain resulting from Tenant’s default or failure to
comply fully and timely with its obligations pursuant to this Lease or the
Companion Lease. Tenant shall immediately pay to Landlord on demand any amount
so applied in order to restore the Interim Cash Deposit to its original amount,
and Tenant’s failure to immediately do so shall constitute a default under this
Lease. In the event Landlord is in possession of the Interim Cash Deposit at the
expiration or earlier termination of this Lease, and Tenant is in compliance
with the covenants and obligations set forth in this Lease and the Companion
Lease at the time of such expiration or termination, then Landlord shall return
to Tenant the Interim Cash Deposit, less any amounts deducted by Landlord to
reimburse Landlord for any sums to which Landlord is entitled under the terms of
this Lease or the Companion Lease, within sixty (60) days following both such
expiration or termination and Tenant’s vacation and surrender of the Premises.
Landlord’s obligations with respect to the Interim Cash Deposit are those of a
debtor and not a trustee. Landlord shall not be required to maintain the Interim
Cash Deposit separate and apart from Landlord’s general or other funds, and
Landlord may commingle the Interim Cash Deposit with any of Landlord’s general
or other funds. Tenant shall not at any time be entitled to interest on the
Interim Cash Deposit. In the event of a transfer of Landlord’s interest in the
Building, Landlord shall transfer the Interim Cash Deposit, in whole or in part,
to the transferee and thereupon Landlord shall, without any further agreement
between the parties, be released by Tenant from all liability therefor, and it
is agreed that the provisions hereof shall apply to every transfer or assignment
of the whole or any portion of said Interim Cash Deposit to a new landlord.
Tenant hereby waives the provisions of Section 1950.7 of the California Civil
Code, or any successor statute, except subsection (b).

 

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G. Reduction of L-C Amount. Provided that on or prior to each “Reduction Date”,
as that term is defined below, Tenant tenders to Landlord (a) evidence
reasonably satisfactory to Landlord demonstrating the Tenant satisfies the “L-C
Reduction Conditions”, as that term is defined below, and (b) a certificate of
amendment to the existing L-C, conforming in all respects to the requirements of
this Section 3.5, in the amount of the applicable L-C Amount as of the
applicable Reduction Date, the L-C Amount shall be reduced pursuant to the
following:

 

Reduction Date

  

Amount of Reduction

  

Remaining L-C Amount

October 1, 2017    $400,000.00    $600,000.00 April 1, 2019    $200,000.00   
$400,000.00

For purposes of this Section 3.5.G, the “L-C Reduction Conditions” shall mean
that (i) Tenant is not then in default under this Lease or the Companion Lease,
and (ii) Tenant has achieved positive earnings before interest and taxes
(“EBIT”), as determined in accordance with generally accepted accounting
principles (“GAAP”), for each of the immediately preceding three (3) consecutive
trailing quarters. In the event Tenant fails to deliver to Landlord evidence
reasonably satisfactory to Landlord demonstrating the Tenant satisfies the L-C
Reduction Conditions prior to the applicable Reduction Date, or if Tenant fails
to deliver a certificate of amendment to the existing L-C as required by this
Section 3.5.G, then the L-C Amount shall not be reduced upon the applicable
Reduction Date, but the terms of this Section 3.5.G shall remain effective and
the L-C Amount shall thereafter be reduced by the L-C Reduction Amount, on the
date Tenant delivers to Landlord evidence reasonably satisfactory to Landlord
demonstrating that Tenant then satisfies the L-C Reduction Conditions (provided
that no such reductions shall be permitted in the event this Lease or the
Companion Lease is terminated early as a result of an Event of Tenant’s
Default).

3.6 Electronic Payment: Landlord shall have the right, on not less than thirty
(30) days prior written notice to Tenant (the “Electronic Payment Notice”), to
require Tenant to make subsequent payments of Monthly Base Rent and Additional
Rent due pursuant to the terms of this Lease by means of a federal funds wire
transfer or such other method of electronic funds transfer as may be required by
Landlord in its sole and absolute discretion (the “Electronic Payment”). The
Electronic Payment Notice shall set forth the proper bank ABA number, account
number and designation of the account to which such Electronic Payment shall be
made. Tenant shall promptly notify Landlord in writing of any additional
information that will be required to establish and maintain Electronic Payment
from Tenant’s bank or financial institution. Landlord shall have the right,
after at least ten (10) days prior written notice to Tenant, to change the name
of the depository for receipt of any Electronic Payment and to discontinue
payment of any sum by Electronic Payment.

ARTICLE 4

USE OF PREMISES

4.1 Limitation on Use: Tenant may only use the Premises for the Permitted Use
specified in Section N of the Summary. There shall not be any change in the
Permitted Use without the prior written consent of Landlord, which consent will
not be unreasonably withheld, conditioned or delayed. Tenant shall not do
anything in or about the Premises which will (i) cause structural injury to the
Building, or (ii) cause damage to any part of the Building except to the extent
reasonably necessary for the installation of Tenant’s Trade Fixtures and
Tenant’s Alterations, and then only in a manner which has been first approved by
Landlord in writing (which approval shall not be unreasonably withheld,
conditioned or delayed), and provided that Tenant shall promptly repair any such
damage at Tenant’s sole cost and expense. Tenant shall not operate any equipment
within the Premises which will (i) materially damage

 

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the Building or the Common Area, (ii) overload existing electrical systems or
other mechanical equipment servicing the Building, (iii) impair the efficient
operation of the sprinkler system or the heating, ventilating or air
conditioning (“HVAC”) equipment within or servicing the Building for the
Permitted Use, or (iv) damage, overload or corrode the sanitary sewer system.
Tenant shall not attach, hang or suspend anything from the ceiling, roof, walls
or columns of the Building or set any load on the floor in excess of the load
limits for which such items are designed, nor operate hard wheel forklifts
within the Premises. Any dust, fumes, or waste products generated by Tenant’s
use of the Premises shall be contained and disposed so that they do not
(i) create an unreasonable fire or health hazard, (ii) damage the Premises, or
(iii) result in the violation of any Law. Except as set forth in Section 15.17,
and except as otherwise approved by Landlord in its sole discretion, Tenant
shall not change the exterior of the Building or install any equipment or
antennas on, or make any penetrations of, the exterior or roof of the Building.
Tenant shall not commit any waste in or about the Premises, and Tenant shall
keep the Premises in a clean and orderly condition, free of any nuisances. If
Landlord designates a standard window covering for use throughout the Building,
Tenant shall use this standard window covering to cover all windows in the
Premises. Tenant shall not conduct on any portion of the Premises or the Project
any over-the-counter sale of any kind, including any public or private auction,
fire sale, going-out-of-business sale, distress sale or other liquidation sale.

4.2 Compliance with Regulations: Tenant agrees that it shall not use the
Premises in any manner which violates any Laws or Private Restrictions which
affect the Premises, and it shall abide by and promptly observe and comply with
all Laws and Private Restrictions; provided, however, that with respect to any
Private Restrictions that are not of record as of the Effective Date of this
Lease, Tenant shall only be required to abide by and observe such Private
Restrictions to the extent that the same do not materially interfere with or
prevent Tenant from using the Premises for the Permitted Use, and do not
(i) materially diminish the rights, (ii) materially increase the non-monetary
obligations, or (iii) increase the monetary obligations of Tenant under this
Lease. Tenant shall not use the Premises in any manner which will cause a
cancellation of any insurance policy covering Tenant’s Alterations or any
improvements installed in the Premises by Landlord at its expense, or which
poses an unreasonable risk of damage or injury to the Premises. Tenant shall not
sell, or permit to be kept, used, or sold in or about the Premises, any article
which may be prohibited by the standard form of fire insurance policy. Tenant
shall comply with all reasonable requirements of any insurance company,
insurance underwriter, or Board of Fire Underwriters which are necessary to
maintain the insurance coverage carried by either Landlord or Tenant pursuant to
this Lease. Notwithstanding anything to the contrary set forth in this Lease,
Tenant shall not be obligated to make any alterations to the Building Structure
or the Building Systems which are required in order to cause the same to comply
with any Laws or Private Restrictions, except as specifically set forth in
Section 5.3, below.

4.3 Outside Areas: Except as specifically set forth in Section 15.17, below, no
materials, supplies, tanks or containers, equipment, finished products or
semi-finished products, raw materials, inoperable vehicles or articles of any
nature shall be stored upon or permitted to remain outside of the Premises
except in fully fenced and screened areas outside the Building which have been
designed for such purpose and have been approved in writing by Landlord for such
use by Tenant.

4.4 Signs: Tenant shall not place on any portion of the Premises any sign,
placard, lettering in or on windows, banner, displays or other advertising or
communicative material which is visible from the exterior of the Building
without the prior written approval of Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing,
Landlord hereby approves of the existing exterior signage installed by Tenant at
the Project pursuant to the terms and conditions of the Existing Lease;
provided, however, that in the event that Landlord implements a new

 

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signage plan at the Project, Tenant shall have a one-time obligation to replace
such existing signage with new signage of like kind and quality that complies
with such new signage plan, provided that such new signage plan is commercially
reasonable. All such approved signs shall strictly conform to all Laws, Private
Restrictions, and Landlord’s commercially reasonable sign criteria then in
effect and shall be installed at the expense of Tenant. Tenant shall maintain
such signs in good condition and repair.

4.5 Parking: Tenant is allocated and shall have the non-exclusive right, at no
separate charge to Tenant (excluding Tenant’s Share of Operating Expenses)
during the initial Lease Term, to use the number of Tenant’s Allocated Parking
Passes contained within the Project described in Section H of the Summary for
its use and the use of Tenant’s Agents, the location of which may be designated
from time to time by Landlord; provided that unless and to the extent that
Landlord has specifically designated areas for exclusive parking at the Project,
such parking shall be on a first-come-first-serve basis for all tenants of the
Project. Tenant shall not at any time be entitled to use more parking passes
than the number so allocated to Tenant pursuant to this Lease, or to park its
vehicles or the vehicles of others in any portion of the Project not designated
by Landlord as a non-exclusive parking area. Notwithstanding the foregoing, or
anything to the contrary set forth in this Lease, Landlord hereby agrees that as
existing leases at the Project which presently provide tenants with allocated
parking passes in excess of three (3) parking passes per one thousand
(1,000) rentable square feet of leased space (the “Project Parking Ratio”)
expire or otherwise terminate, Landlord shall use commercially reasonable
efforts to re-allocate such recaptured spaces (i.e., those spaces in excess of
the Project Parking Ratio) to Tenant until Tenant has a total allocated number
of parking passes equal to the Project Parking Ratio (i.e., 359 parking passes
based on 119,583 rentable square feet). Tenant shall not have the exclusive
right to use any specific parking space. If Landlord grants to any other tenant
the exclusive right to use any particular parking space(s), Tenant shall not use
such spaces; provided, however, Landlord shall not grant any reserved parking
rights to other tenants in the area identified on Exhibit C. Landlord reserves
the right, after having given Tenant reasonable notice, to have any vehicles
owned by Tenant or Tenant’s Agents utilizing parking passes in excess of the
parking passes allowed for Tenant’s use, or parked in any portion of the Project
not designated by Landlord as a non-exclusive parking area, to be towed away at
Tenant’s cost. All trucks and delivery vehicles shall be (i) parked at the rear
of the Building, (ii) loaded and unloaded in a manner which does not interfere
with the businesses of other occupants of the Project, and (iii) permitted to
remain on the Project only so long as is reasonably necessary to complete
loading and unloading. In the event Landlord elects or is required by any Law to
limit or control parking in the Project, whether by validation of parking
tickets or any other method of assessment, Tenant agrees to participate in such
validation or assessment program under such reasonable rules and regulations as
are from time to time established by Landlord.

4.6 Rules and Regulations: Landlord may from time to time promulgate reasonable
and nondiscriminatory rules and regulations applicable to all occupants of the
Project for the care and orderly management of the Project and the safety of its
tenants and invitees. Such rules and regulations shall be binding upon Tenant
upon delivery of a copy thereof to Tenant, and Tenant agrees to abide by such
rules and regulations provided that, except to the extent required by applicable
Laws, such rules and regulations do not materially interfere with or prevent
Tenant from using the Premises for the Permitted Use. If there is a conflict
between the rules and regulations and any of the provisions of this Lease, the
provisions of this Lease shall prevail. Landlord shall not be responsible for
the violation by any other tenant or occupant of the Project of any such rules
and regulations.

ARTICLE 5

TRADE FIXTURES AND ALTERATIONS

5.1 Trade Fixtures: Throughout the Lease Term, Tenant may provide and install,
and shall maintain in good condition, any Trade Fixtures required in the conduct
of its business in the Premises, except to the extent any Trade Fixture will
constitute a Tenant Alteration, in which case it shall be subject to the
requirements set forth below for the construction of a Tenant Alteration. All
Trade Fixtures shall remain Tenant’s property upon the expiration or earlier
termination of this Lease.

 

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5.2 Tenant’s Alterations: Construction by Tenant of a Tenant Alteration shall be
governed by the following:

A. Consent Required. Tenant shall not construct any Tenant Alterations or
otherwise alter the Premises or the “Outside Area” (as defined in Section 15.17,
below) without Landlord’s prior written approval, which will not be unreasonably
withheld, conditioned or delayed, unless such Tenant Alteration materially and
adversely affects areas outside of the Premises (other than the Outside Area) or
the exterior of the Building or the structural parts of the Building, in which
case Landlord may withhold its consent in its sole and absolute discretion.
Notwithstanding the foregoing, Landlord’s consent shall not be required for any
Alteration to the interior of the Premises that complies with the following
requirements: (a) is cosmetic in nature such as painting, (b) does not affect
the roof or any area outside of the Premises or require work inside the exterior
walls or above the ceiling of the Premises; (c) does not affect the “Building
Structure” (as that term is defined in Section 6.2, below), or the electrical,
plumbing, HVAC, sprinkler or other fire life safety, or mechanical systems in
the Building or servicing the Premises (collectively, the “Building Systems”);
and (d) costs less than the Permitted Tenant Alterations Limit specified in
Section O of the Summary per work of improvement (herein referred to as “Minor
Alteration”). Tenant shall provide Landlord with prior written notice of any
Minor Alteration, and if Tenant requests of Landlord in such written notice that
Landlord inform Tenant of whether or not Landlord will require Tenant to remove
such Minor Alteration at the expiration or sooner termination of the Lease Term,
and Landlord fails to inform Tenant that removal will be required, then Tenant
shall not be required to remove such Minor Alteration at the expiration or
earlier termination of this Lease. In the event Landlord’s approval for any
Tenant Alteration is required, Tenant shall not construct the Tenant Alteration
until Landlord has approved in writing the plans and specifications therefor
(which approval shall not be unreasonably withheld, conditioned or delayed), and
such Tenant Alteration shall be constructed substantially in compliance with
such approved plans and specifications by a licensed contractor first approved
by Landlord (which approval shall not be unreasonably withheld, conditioned or
delayed). All Tenant Alterations constructed by Tenant shall be constructed by a
licensed contractor in accordance with all Laws using new materials of good
quality.

B. Other Requirements. Tenant shall not commence construction of any Tenant
Alteration until (i) all required governmental approvals and permits have been
obtained, (ii) all requirements regarding insurance imposed by this Lease have
been satisfied, (iii) Tenant has given Landlord at least five (5) days’ prior
written notice of its intention to commence such construction, and (iv) if
reasonably requested by Landlord, Tenant has obtained contingent liability and
broad form builders’ risk insurance in an amount reasonably satisfactory to
Landlord if there are any perils relating to the proposed construction not
covered by insurance carried pursuant to Article 9.

C. Restoration. All Tenant Alterations shall remain the property of Tenant
during the Lease Term but shall not be altered or removed from the Premises
(except for Tenant Alterations which are altered or removed during the Lease
Term in the ordinary course of Tenant’s business operations, provided that
Tenant shall repair any damage to the Premises and Building caused by such
removal and/or alteration). At the expiration or sooner termination of the Lease
Term, all Tenant Alterations in the Premises shall be surrendered to Landlord as
part of the realty and shall then become Landlord’s property, and Landlord shall
have no obligation to reimburse Tenant for all or any portion of the value or
cost thereof; provided, however, that if Landlord requires Tenant to remove any
Tenant Alterations, Tenant shall so remove such Tenant Alterations prior to the
expiration or sooner termination of the Lease Term and repair any damage to the
Premises and Building caused by such removal. Notwithstanding the foregoing or
anything to the contrary set forth in this Lease, Tenant shall not be

 

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obligated to remove (i) the Tenant Improvements; (ii) any existing alterations
or improvements that were installed in the Premises pursuant to the Existing
Lease; or (iii) any Tenant Alterations with respect to which the following is
true: (A) Tenant was required, or elected, to obtain the approval of Landlord to
the installation of the Tenant Alteration in question; (B) at the time Tenant
requested Landlord’s approval, Tenant requested of Landlord in writing that
Landlord inform Tenant of whether or not Landlord would require Tenant to remove
such Tenant Alteration at the expiration of the Lease Term; and (C) at the time
Landlord granted its approval, it did not inform Tenant that it would require
Tenant to remove such Tenant Alteration at the expiration of the Lease Term.

D. Removal of Electrical and Telecommunication Wires. Within sixty (60) days
prior to the expiration or sooner termination of the Term of this Lease Landlord
may elect (“Election Right”) by written notice to Tenant to:

(1) Retain any or all wires, cables, and similar installations appurtenant
thereto (“Wires”) installed by Tenant within the Premises or anywhere in the
Building outside the Premises, including, without limitation, the plenums or
risers of the Building; or

(2) Require Tenant, at Tenant’s sole cost and expense, to remove any or all of
the Wires installed by Tenant during the Lease Term or during the term of the
Existing Lease and repair all damage to the Premises and the Building caused by
such removal (“Wire Restoration Work”).

Tenant shall comply with all applicable Laws with respect to the Wires, subject
to Landlord’s right to elect to retain the Wires. If Landlord elects to retain
any or all of the Wires (pursuant to Section 5.2D(1) above), Tenant covenants
that: (a) Tenant shall be the sole owner of the Wires, Tenant shall have the
sole right to surrender the Wires, and the wires shall be free of all liens and
encumbrances; and (b) all Wires shall be left in good condition, working order,
properly labeled and capped or sealed at each end and in each
telecommunications/electrical closet and junction box, and in safe condition.

The provisions of Section 5.2D and all subsections thereof shall survive the
expiration or sooner termination of the Term of this Lease.

5.3 Alterations Required by Law: Tenant shall make any alteration, addition or
change of any sort to the Premises or Building (including the Building Structure
and Building Systems), that is required by any Law because of (i) Tenant’s
particular use or change of use of the Premises (as opposed to any general
office uses or generic, as opposed to specific, industrial uses); (ii) the
Tenant Improvements; (iii) Tenant’s construction or installation of any Tenant
Alteration, Minor Alteration or Trade Fixtures; or (iv) any Event of Tenant’s
Default. Any other alteration, addition, or change required by Law which is not
the responsibility of Tenant pursuant to the foregoing shall be made by Landlord
(subject to Landlord’s right to reimbursement from Tenant specified in
Section 5.4).

5.4 Amortization of Certain Capital Improvements: Tenant shall pay Additional
Rent in the event Landlord reasonably elects or is required to make any of the
following kinds of capital improvements to the Project (provided that in no
event shall Additional Rent include any capital expenditures to the extent they
are related to the Building Structure or another building of the Project (and
not to the Building or to the Project as a whole)): (i) capital improvements
required to be constructed in order to comply with any Law (excluding any
Hazardous Materials Laws) not in effect or applicable to the Project as of the
Effective Date; (ii) modification of existing or construction of additional
capital improvements or building service equipment for the purpose of reducing
the consumption of utility services or Operating Expenses of the Project (but
only to the extent of any anticipated savings in Operating Expenses during the
amortization period for such capital improvement); and (iii) replacement of
capital improvements or building service equipment existing as of the Effective
Date with improvements or equipment of comparable quality when required because
of normal wear and tear. The amount of Additional Rent Tenant is to pay with
respect to each such capital improvement shall be determined as follows:

A. Amortization Period. All costs paid by Landlord to construct such
improvements (including financing costs) shall be amortized over the useful life
of such improvement (as reasonably determined by Landlord in accordance with
commercially reasonable real estate management and accounting principles
consistent with the practices of landlords of comparable properties located in
Santa Clara, California) with interest on the unamortized balance at the then
prevailing market rate Landlord would pay if it borrowed funds to construct such
improvements from an institutional lender, and Landlord shall inform Tenant of
the monthly amortization payment required to so amortize such costs, and shall
also provide Tenant with the information upon which such determination is made.

 

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B. Payment. As Additional Rent, Tenant shall pay at the same time the Base
Monthly Rent is due an amount equal to Tenant’s Share of that portion of such
monthly amortization payment fairly allocable to the Building (as reasonably
determined by Landlord) for each month after such improvements are completed
until the first to occur of (i) the expiration of the Lease Term (as it may be
extended), or (ii) the end of the term over which such costs were amortized.

5.5 Mechanic’s Liens: Tenant shall keep the Project free from any liens and
shall pay when due all bills arising out of any work performed, materials
furnished, or obligations incurred by Tenant or Tenant’s Agents relating to the
Project. If any claim of lien is recorded (except those caused by Landlord or
Landlord’s Agents), Tenant shall bond against or discharge the same within ten
(10) days after Tenant obtains knowledge that the same has been recorded against
the Project. Should any lien be filed against the Project or any action be
commenced affecting title to the Project, the party receiving notice of such
lien or action shall immediately give the other party written notice thereof.

5.6 Taxes on Tenant’s Property: Tenant shall pay before delinquency any and all
taxes, assessments, license fees and public charges levied, assessed or imposed
against Tenant or Tenant’s estate in this Lease or the property of Tenant
situated within the Premises which become due during the Lease Term. If any tax
or other charge is assessed by any governmental agency because of the execution
of this Lease, such tax shall be paid by Tenant. Within five (5) days following
demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of
these payments.

5.7 Tenant’s Security System. Subject to the terms of this Lease (including the
Tenant Work Letter and this Article 5, as applicable), Tenant shall have the
right, at its own expense, to install a security system (“Tenant’s Security
System”) in the Premises. Tenant shall be solely responsible, at Tenant’s sole
cost and expense, for the installation, monitoring and operation during the
Lease Term, and removal upon the expiration or earlier termination of this Lease
of Tenant’s Security System. Tenant hereby agrees that Landlord shall not be
responsible for monitoring Tenant’s Security System, and that neither Landlord
nor the “Landlord Parties”, as that term is defined in Section 7.2E of this
Lease, shall in no case be liable for, and Landlord and the Landlord Parties are
hereby released from any responsibility for, any personal injury or property
damage sustained by Tenant in connection with or arising from any acts or
omissions with regard to the admission to or exclusion from the Premises or the
Building of any person.

 

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ARTICLE 6

REPAIR AND MAINTENANCE

6.1 Tenant’s Obligation to Maintain: Except as otherwise provided in
Sections 5.4, 6.2, 6.4, 11.1, and 12.3, Tenant shall be responsible for the
following during the Lease Term:

A. General. Tenant shall clean and maintain in good order, condition, and repair
and replace when necessary the Premises and every part thereof, through regular
inspections and servicing, including, but not limited to: (i) all plumbing and
sewage facilities located within or exclusively serving the Premises (including
all sinks, toilets, faucets and drains), and all ducts, pipes, vents or other
parts of the HVAC or plumbing system located within or exclusively serving the
Premises; (ii) all fixtures, interior walls, floors, carpets and ceilings;
(iii) all windows, doors, entrances, plate glass, showcases and skylights
(including cleaning both interior and exterior surfaces); (iv) all electrical
facilities and equipment located within or exclusively serving the Premises
(including all lighting fixtures, lamps, bulbs, tubes, fans, vents, exhaust
equipment and systems); and (v) any automatic fire extinguisher equipment
located in the Premises.

B. Utilities and Glass. With respect to utility facilities located within or
exclusively serving the Premises (including electrical wiring and conduits, gas
lines, water pipes, and plumbing and sewage fixtures and pipes), Tenant shall be
responsible for the maintenance and repair of any such facilities which serve
only the Premises, including all such facilities that are within the walls or
floor, or on the roof of the Premises; provided, however, that Landlord shall
maintain all underground utility facilities located outside of the Premises,
except to the extent (i) the same were installed by or on behalf of Tenant, or
(ii) such underground facilities were damaged by Tenant or a Tenant Party
(subject to Section 9.3 regarding waiver of subrogation).

C. Windows. Tenant shall replace any damaged or broken glass in the Premises
(including all interior and exterior doors and windows) with glass of the same
kind, size and quality. Tenant shall repair any damage to the Premises
(including exterior doors and windows) caused by vandalism or any unauthorized
entry. Tenant shall maintain continuously throughout the Lease Term a service
contract for the washing of all exterior windows in the Premises with a
contractor approved by Landlord (which approval shall not be unreasonably
withheld, conditioned or delayed), which contract provides for the periodic
washing of all such windows at least once every one hundred eighty (180) days
during the Lease Term. Promptly following a request from Landlord, Tenant shall
furnish Landlord with copies of all such service contracts, and shall provide
Landlord with written notice within a reasonable period of time following any
change in the service contractor. All interior windows in the Premises shall be
washed on a commercially reasonable basis.

D. HVAC. Tenant shall (i) maintain and repair (including replacement of
component parts when necessary) all HVAC equipment located within or exclusively
serving the Premises, and shall keep the same in good condition and repair
through regular inspection and servicing, and (ii) maintain continuously
throughout the Lease Term a service contract for the maintenance of all such
HVAC equipment with a licensed HVAC repair and maintenance contractor approved
by Landlord, which contract provides for the periodic inspection and servicing
of the HVAC equipment in accordance with the manufacturer’s recommendations, but
in any event at least once every one hundred twenty (120) days during the Lease
Term. Notwithstanding the foregoing, Landlord may elect at any time to assume
responsibility for the maintenance, repair and replacement of such HVAC
equipment which serves the Premises and include such costs in Operating Expenses
(provided that such costs are commercially reasonable and customary for such
service contracts given the nature and type of the work being performed).
Promptly following a request from Landlord, Tenant shall furnish Landlord with
copies of all such service contracts, and shall provide Landlord with written
notice within a reasonable period of

 

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time following any change in the service contractor. Notwithstanding the
foregoing or anything to the contrary set forth in this Lease, in the event that
a base Building HVAC system (and not any supplemental HVAC system installed in
the Premises by Tenant, the maintenance, repair and replacement of which shall
be the sole responsibility of Tenant) needs to be replaced due to normal wear
and tear (and not as a result of (A) damage to the Building caused by peril or
condemnation, which shall be covered by Articles 11 and 12, respectively, of
this Lease, (B) Tenant’s failure to maintain and repair such Building HVAC
system in accordance with the terms of this Section 6.1, or (C) any negligence
or willful misconduct on the part of Tenant or Tenant’s Agents, subject to
Section 9.3 regarding waiver of subrogation), Landlord shall perform such work
and Tenant shall pay Landlord the amortized costs thereof in accordance with
Section 6.4, below.

E. Standards. All repairs and replacements required of Tenant shall be promptly
made with new materials of like kind and quality. If the work affects the
structural parts of the Building or if the estimated cost of any item of repair
or replacement is in excess of the Permitted Tenant’s Alterations Limit, then
Tenant shall first obtain Landlord’s written approval of the scope of the work,
plans therefor, materials to be used, and the contractor, which approval shall
not be unreasonably withheld, conditioned or delayed.

6.2 Landlord’s Obligation to Maintain: Landlord shall repair, maintain and
operate the Common Area and repair and maintain the roof, exterior and
structural parts of the Building (including, without limitation, the foundation,
floor slabs, columns, beams and load-bearing walls) (the “Building Structure”),
so that the same are kept in good order and repair, the costs of which shall be
included in Operating Expenses to the extent permitted by Article 8 of this
Lease. If there is central HVAC or other building service equipment and/or
utility facilities serving portions of both the Common Area and the Premises,
Landlord shall maintain and operate (and replace when necessary) such equipment,
the cost of which shall be included in Operating Expenses to the extent
permitted by Article 8 of this Lease. Landlord shall not be responsible for
repairs required by an accident, fire or other peril or for damage caused to any
part of the Project by any negligent act or omission or willful misconduct of
Tenant or Tenant’s Agents except as otherwise required by Article 11 (subject to
Section 9.3 regarding waiver of subrogation). Landlord may engage contractors of
its choice to perform the obligations required of it by this Article, which
contractors shall be licensed and appropriately qualified, and the necessity of
any expenditure to perform such obligations shall be at the commercially
reasonable discretion of Landlord.

6.3 Control of Common Area: Landlord shall at all times have exclusive control
of the Common Area. Landlord shall have the right, without the same constituting
an actual or constructive eviction and without entitling Tenant to any abatement
of rent, to: (i) close any part of the Common Area to whatever extent required
in the opinion of Landlord’s counsel to prevent a dedication thereof or the
accrual of any prescriptive rights therein; (ii) temporarily close the Common
Area to perform maintenance or for any other reason deemed sufficient by
Landlord; (iii) change the shape, size, location and extent of the Common Area;
(iv) eliminate from or add to the Project any land or improvement, including
multi-deck parking structures; (v) make changes to the Common Area including,
without limitation, changes in the location of driveways, entrances,
passageways, exits, parking spaces, parking areas, sidewalks or the direction of
the flow of traffic and the site of the Common Area; (vi) remove unauthorized
persons from the Project; and/or (vii) change the name or address of the
Building or Project. Tenant shall keep the Common Area clear of all obstructions
created or permitted by Tenant. If in the opinion of Landlord unauthorized
persons are using any of the Common Area by reason of the presence of Tenant in
the Building, Tenant, upon demand of Landlord, shall restrain such unauthorized
use by appropriate proceedings. In exercising any such rights regarding the
Common Area, (i) Landlord shall make a reasonable effort to minimize any
disruption to Tenant’s business, and (ii) Landlord shall not exercise its rights
to close, change or control the Common Area in a manner that would materially
interfere with Tenant’s use of or access to the Premises or parking rights under
this Lease without first

 

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obtaining Tenant’s consent, which consent shall not be unreasonably withheld,
conditioned or delayed. Landlord shall have no obligation to provide guard
services or other security measures for the benefit of the Project. Tenant
assumes all responsibility for the protection of Tenant and Tenant’s Agents from
acts of third parties; provided, however, that nothing contained herein shall
prevent Landlord, at its sole option, from providing security measures for the
Project.

6.4 Landlord Capital HVAC Replacements. In the event that, as a part of Tenant’s
obligations under Section 6.1.D, above, Tenant is required to replace any of the
units of the base Building HVAC system, the fire-life safety system, or the
Building elevators (collectively, the “BB System”). which shall expressly
exclude any supplemental HVAC units and/or fire-life safety systems installed by
or on behalf of Tenant in the Premises, as the result of the failure of such BB
System (as reasonably determined by Landlord) (the “Replacement Unit”), and not
as a result of Tenant’s failure to maintain and repairs such BB Systems in
accordance with the terms of Section 6.1, above, then Tenant shall provide
Landlord written notice of such Replacement Unit, and, provided that Landlord
reasonably agrees with Tenant that, in accordance with commercially reasonable
real estate management and accounting principles consistent with the practices
of landlords of comparable properties located in Santa Clara, California, such
Replacement Unit does in fact need to be replaced, then Landlord shall install
such Replacement Unit at Landlord’s cost, provided that Landlord shall have the
right to amortize the cost such Replacement Unit over the useful life of the
Replacement Unit (determined in accordance with GAAP), in accordance with
Section 5.4, above.

ARTICLE 7

WASTE DISPOSAL AND UTILITIES

7.1 Waste Disposal: Tenant shall store its waste either inside the Premises or
within outside trash enclosures that are fully fenced and screened in compliance
with all Private Restrictions, and designed for such purpose. All entrances to
such outside trash enclosures shall be kept closed, and waste shall be stored in
such manner as not to be visible from the exterior of such outside enclosures.
Landlord hereby acknowledges and agrees that the trash enclosures installed and
maintained by Tenant as of the date of this Lease and pursuant to the Existing
Lease are acceptable. Tenant shall cause all of its waste to be regularly
removed from the Premises at Tenant’s sole cost. Tenant shall keep all fire
corridors and mechanical equipment rooms in the Premises free and clear of all
obstructions at all times.

7.2 Hazardous Materials: Landlord and Tenant agree as follows with respect to
the existence or use of Hazardous Materials on the Project:

A. Hazardous Materials Disclosure Certificate. Upon request by Landlord from
time to time (but not more than once per calendar year, except in connection
with a sale or refinancing of the Project or an Event of Tenant’s Default under
this Lease), Tenant shall deliver to Landlord an executed Hazardous Materials
disclosure statement, substantially in a form reasonably required by Landlord
describing Tenant’s then-present use of Hazardous Materials on the Premises, and
shall also deliver any other reasonably necessary information documenting the
use by Tenant of Hazardous Materials on the Premises as requested by Landlord to
the extent such information is not already included in any Hazardous Materials
Business Plan (“HMBP”) previously provided by Tenant to Landlord. Tenant shall
promptly file with Landlord a copy of any HMBP or any other business response
plan or inventory required to be maintained and/or filed with any federal, state
or local regulatory agency under any applicable Laws. Landlord and Tenant
acknowledge and agree that, as of the date of this Lease, (i) Tenant has fully
and accurately completed Landlord’s pre-leasing environmental exposures
questionnaire (the “Environmental Questionnaire”), (ii) Tenant has submitted to
Landlord a copy of its most current HMBP, and (iii) Tenant has submitted to
Landlord a copy of Tenant’s closure plan and financial assurance mechanism filed
with the County of Santa Clara in connection with Tenant’s “permit-by-rule”

 

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treatment process allowing for an on-site hazardous waste treatment system, as
disclosed by Tenant in the Environmental Questionnaire (the “Closure Plan” and,
collectively with the Environmental Questionnaire and the HMPB Plan, the
“Approved Hazardous Materials”), each as set forth on Exhibit E attached hereto
(the “Approved Hazardous Materials Exhibit”).

B. Hazardous Material Usage. Neither Tenant, nor Tenant’s employees, contractors
and subcontractors of any tier, entities with a contractual relationship with
Tenant (other than Landlord), or any entity acting as an agent or sub-agent of
Tenant, shall be entitled to produce, use, store, generate, transport or dispose
of any Hazardous Materials on, in, or about any portion of the Premises,
Building or the Project, nor cause or permit any Hazardous Materials to be
brought upon, placed, stored, manufactured, generated, blended, handled,
recycled, used or released on, in, under or about the Premises (herein referred
to as “Hazardous Materials Usage”) not previously identified by Tenant to
Landlord per the HMBP provided pursuant to Section 7.2.A above, without, in each
instance, obtaining Landlord’s prior written consent thereto, which consent
shall not be unreasonably withheld, conditioned or delayed; provided, however,
that in the event Tenant desires to use, store or dispose of Hazardous Materials
which are not similar to the Hazardous Materials listed on the Approved
Hazardous Materials Exhibit in terms of their hazardous character, handling
profile, usage and quantity (“New Hazardous Materials Usage”), then (i) Landlord
shall have the right to impose additional terms and conditions on this Lease
based upon such hazardous character, handling profile, use, storage and/or
disposal, to the extent such additional terms and conditions are consistent with
the requirements of institutional landlords of “Comparable Buildings,” as that
term is defined in Section 8.5(B), below, when leasing space to tenants using
Hazardous Materials materially similar in terms of hazardous character, handling
profile, usage and quantity to the New Hazardous Materials Usage, and (ii) the
installation of any additional exterior storage tanks or vessels in the Common
Area or below grade, with respect to such new Hazardous Materials shall be
subject to Landlord’s prior written consent, in its sole and absolute
discretion. If any information provided to Landlord by Tenant on the Approved
Hazardous Materials Exhibit, or otherwise relating to information concerning
Hazardous Materials is intentionally or grossly negligently false, incomplete,
or misleading in any material respect, the same shall be deemed a default by
Tenant under this Lease. Any Hazardous Materials Usage by Tenant and Tenant’s
Agents after the Effective Date on or about the Project shall strictly comply
with all applicable Laws, including all Hazardous Materials Laws. Such foregoing
obligation shall include, without limitation, maintaining, and complying with,
all required necessary licenses, certifications, permits and approvals
appropriate or required for any Hazardous Materials Usage by Tenant on the
Premises. Landlord shall have a continuing right, without obligation, to require
Tenant to obtain, and to review and inspect any and all such permits, licenses,
certifications and approvals, together with copies of any and all Hazardous
Materials management plans and programs, any and all Hazardous Materials risk
management and pollution prevention programs, and any and all Hazardous
Materials emergency response and employee training programs respecting Tenant’s
Hazardous Materials Usage.

C. Tests and Inspections. Landlord shall have the right, but not the obligation,
at all times during the Term of this Lease (but not more than once per calendar
year, except in connection with a sale or refinancing of the Project or an Event
of Tenant’s Default under this Lease) and subject to Tenant’s reasonable
security requirements, to (i) enter and inspect the Premises, (ii) conduct tests
and investigations periodically and from time to time to determine whether
Tenant is in compliance with the provisions of this Section 7.2 or to determine
if Hazardous Materials are present in, on or about the Project, and
(iii) request Tenant confirm in writing that all previously provided information
to Landlord with respect to the type and amount all Hazardous Materials used,
stored or otherwise located on, under or about any portion of the Premises
and/or the Common Areas is accurate and complete. The cost of all such
inspections, tests and investigations shall be borne by Tenant, if and only if
as a result thereof Landlord reasonably determines that contamination has
occurred on the Premises and/or Common Areas and that Tenant or any of Tenant’s
Agents are responsible in any manner for any contamination. The

 

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aforementioned rights granted herein to Landlord and its representatives shall
not create (a) a duty on Landlord’s part to inspect, test, investigate, monitor
or otherwise observe the Premises or the activities of Tenant and Tenant’s
Agents with respect to Hazardous Materials, including without limitation,
Tenant’s operation, use and any remediation related thereto, or (b) liability on
the part of Landlord and its representatives for Tenant’s use, storage, disposal
or remediation of Hazardous Materials, it being understood that Tenant shall be
solely responsible for all liability in connection therewith.

D. Notice; Cleanup Obligations; Closure and Decommissioning.

(1) Notice. Tenant shall give to Landlord prompt verbal and follow-up written
notice of any spills, releases, discharges, disposals, emissions, migrations,
removals or transportation of Hazardous Materials on, under or about any portion
of the Premises, Common Areas or Project in violation of applicable Hazardous
Materials Laws or Tenant’s obligations under this Lease, provided that Tenant
has actual knowledge of such event(s). Tenant shall promptly forward to Landlord
copies of all requests, orders, notices, permits, applications, and other
communications and reports received by Tenant from or submitted by Tenant to any
federal, state or local regulatory agency with jurisdiction over Tenant’s
operations of the Premises in connection with the foregoing. To the extent any
regulatory, judicial or other enforcement action or proceeding in connection
with the foregoing is commenced against Tenant, Tenant shall not enter into any
discretionary or voluntary settlement, consent decree or other compromise or
resolution without first notifying Landlord of Tenant’s intention to do so and
affording Landlord the opportunity to contest such proceedings or to join and
participate, as a party if Landlord so elects, in such proceedings, and in no
event shall Tenant enter into any discretionary or voluntary consent decree,
consent order or other agreements with terms which are binding on Landlord or
the Premises without Landlord’s prior written consent, which consent shall not
be unreasonably withheld, conditioned or delayed; provided, however, that Tenant
shall provide prompt written notice to Landlord in the event that Tenant is
compelled (i.e., the same is not discretionary or voluntary) to enter into any
settlement, consent decree, consent order or other compromise, resolution or
agreement. Landlord shall have the right to appear at and participate in, any
and all judicial or other administrative proceedings concerning any such
foregoing claims.

(2) Cleanup Obligations. Tenant, at its sole cost and expense, covenants and
warrants to promptly investigate, clean up, remove, restore and otherwise
remediate (including, without limitation, preparation of any feasibility studies
or reports and the performance of any and all closures) any spill, release,
discharge, disposal, emission, migration or transportation, incident or other
consequence of its Hazardous Materials Usage in violation of applicable
Hazardous Materials Laws or Tenant’s obligations under this Lease and arising
from the acts or omissions of Tenant or Tenant’s Agents, in accordance with all
applicable Laws, including all Hazardous Materials Laws now or hereinafter
enacted, the HMBP Plan and this Lease. Tenant shall provide a written
certification to Landlord indicating that Tenant has complied with all
applicable reporting requirements in connection with Tenant’s obligations under
this Section 7.2.D(1). Any such investigation, clean up, removal, restoration
and other remediation shall only be performed after Tenant has notified Landlord
with respect to its plans for such work and obtained Landlord’s prior written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed so long as Tenant is in compliance with all applicable Hazardous
Materials Laws. Notwithstanding the foregoing, Tenant shall be entitled to
respond immediately to an emergency without first obtaining Landlord’s prior
written consent.

(3) Closure and Decommissioning. Tenant, at its sole cost and expense, shall
conduct and perform, or cause to be conducted and performed, all closures and
decommissioning activity as required by any Hazardous Materials Laws or any
federal, state or local regulatory agencies or other governmental authorities
having jurisdiction over the Premises and Tenant’s activities thereon, to the
extent that such closures and decommissioning activity is required due to
Hazardous Materials Usage by Tenant or Tenant’s Agents. All such work undertaken
by Tenant, as required herein, shall be performed in such a manner so as to
enable Landlord to continue to use the Premises and the other portions of the
Project for commercial and industrial leasing.

 

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E. Indemnity. Tenant shall indemnify, hold harmless, and, at Landlord’s option
(with such attorneys as Landlord may reasonably approve in advance and in
writing), defend Landlord and Landlord’s officers, directors, shareholders,
partners, members, managers, employees, contractors, property managers, agents
and mortgagees (“Landlord Parties”) and other lien holders, from and against any
and all “Losses” (hereinafter defined) arising from or related to: (a) any
violation or alleged violation by Tenant or any of Tenant’s Agents of any of the
Laws, including, without limitation, the Hazardous Materials Laws; (b) any
breach of the provisions of this Section 7.2 or any subsection thereof by Tenant
or any of Tenant’s Agents; (c) any Hazardous Materials Usage on, about or from
the Premises, the Project or Common Areas of any Hazardous Materials approved by
Landlord under this Lease, or (d) Landlord’s exercise of the “Landlord Cure
Right,” as that term is defined in subparagraph I., below (except to the extent
of any negligence or willful misconduct by Landlord or any Landlord Party in the
exercise of such cure right). The term “Losses” shall mean all claims, demands,
expenses, actions, judgments, damages, penalties, fines, liabilities, losses of
every kind and nature (including, without limitation, property damage,
diminution in value of Landlord’s interest in the Premises or the Project,
damages for the loss or restriction on use of any space or amenity within the
Building or the Project, damages arising from any adverse impact on marketing
space in the Project, sums paid in settlement of claims and any costs and
expenses associated with injury, illness or death to or of any person), suits,
administrative proceedings, costs and fees, including, but not limited to,
attorneys’ and consultants’ fees and expenses, and the costs of cleanup,
remediation, removal and restoration. To the actual knowledge of Landlord,
except as set forth in reports delivered to Tenant before Tenant’s execution of
this Lease, Landlord has no written notices, reports, materials or other written
information indicating the presence of Hazardous Materials on the Project or the
soil, surface water or groundwater thereof in violation of Hazardous Materials
Laws. Landlord agrees to indemnify, hold harmless and, at Tenant’s option (with
such attorneys as Tenant may approve in advance and in writing) defend Tenant
and Tenant’s officers, directors, shareholders, partners, members, managers and
employees (“Tenant Parties”) from and against any liability, obligation, damage
or costs, including without limitation, claims for personal injuries, property
damage or regulatory liability arising out of Hazardous Materials Laws, and
including reasonable attorneys’, consultants and expert’s fees and costs,
resulting from any Hazardous Materials which were brought onto the Project or
within the Building or the Premises by Landlord or a Landlord Party, except to
the extent such liability, obligation, damage or costs was a result of the
negligence or willful misconduct of Tenant or a Tenant Party, or was
proportionately caused, exacerbated or permitted by Tenant or a Tenant Party.

F. Hazardous Material. As used herein, the term “Hazardous Materials” means any
hazardous, radioactive or toxic substance, material or waste which is or becomes
regulated by any local governmental authority, the State of California or the
United States Government or under any Hazardous Materials Laws. The term
“Hazardous Material,” includes, without limitation, hazardous radioactive
material, radioactive material, mixed waste, petroleum products, asbestos,
PCB’s, and any material or substance which is (i) listed under Article 9 or
defined as hazardous or extremely hazardous pursuant to Article 11 of Title 22
of the California Code of Regulations, Division 4, Chapter 20, (ii) defined as a
“hazardous waste” pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6903), (iii) defined as a
“hazardous substance” pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq. (42 U.S.C.
9601) or (iv) regulated as a radioactive material under Title 17, Division 1,
Chapter 5, Subchapter 4 of the California Code or Regulations and Title 10, Code
of Federal Regulations, part 20. As used herein, the term “Hazardous Materials
Laws” shall mean any statute, law, ordinance, or regulation of any governmental
body or agency (including the U.S. Environmental Protection Agency, the
California Regional Water Quality Control Board, the California Department of
Public Health Radiologic Health Branch and the California Department of Toxic
Substances Control) which regulates the use, storage, release or disposal of any
Hazardous Material.

 

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G. Removal. To the extent not otherwise authorized to do so under its
permit-by-rule closure plan or other applicable requirements, Tenant shall
promptly remove from the Premises, Building and Project , and in compliance with
all applicable laws, all Hazardous Materials used by Tenant in its operations
when they are no longer needed for such use. .

H. Tenant’s Obligations upon Surrender. At the expiration or earlier termination
of the Lease Term, Tenant, at Tenant’s sole cost and expense, shall: (i) cause
all Hazardous Materials located on, in or about any portion of the Premises,
Building or Project by Tenant or a Tenant Agent, to be removed from the Premises
and managed or disposed of in accordance with all Hazardous Materials Laws and
as necessary to allow the Premises to be used for any commercial purpose; and
(ii) cause to be removed all containers installed or used by Tenant or Tenant’s
Agents to store any Hazardous Materials on the Premises, and cause to be
repaired any damage to the Premises caused by such removal. Within one hundred
twenty (120) days prior to the expiration or earlier termination of this Lease,
Landlord may, at Landlord’s sole cost and expense, cause an environmental
assessment of the Premises by a competent and experienced environmental engineer
or engineering firm reasonably selected by Landlord, which (i) evidences that
the Premises are in a clean and safe condition and free and clear of any
Hazardous Materials; and (ii) includes a review of the Premises by an
environmental consultant for asbestos, mold, fungus, spores, and other moisture
conditions, on-site chemical use, and lead-based paint. If such environmental
assessment reveals that remediation or clean-up for which Tenant is responsible
under this Lease is required under any Hazardous Materials Laws, then (A) Tenant
shall promptly reimburse Landlord for the cost of such environmental assessment,
and (B) Tenant shall submit a remediation plan prepared by a recognized
environmental consultant and shall be responsible for all costs of remediation
and clean-up, as provided in this Section 7.2.

I. Landlord Cure Right. If Tenant fails to comply with the terms of this
Section 7.2 (subject to any applicable notice and cure periods expressly set
forth herein), including, without limitation, if Tenant fails to commence and
carry out closure or decommissioning or otherwise fails to promptly investigate,
clean up, remove, restore, provide closure or otherwise so remediate the
Premises as required by Hazardous Materials Laws, Landlord may, but without
obligation to do so, take any and all steps necessary to rectify the same and
Tenant shall promptly reimburse Landlord, upon demand, for all out-of-pocket
costs and expenses incurred by Landlord in performing Tenant’s obligations with
respect to the investigation, clean up, removal, restoration, closure and
remediation work hereunder (the “Landlord Cure Right”).

J. Pollution Legal Liability Environmental Insurance. Tenant shall obtain and
maintain Pollution Legal Liability Environmental Insurance (i) from an insurance
carrier with a rating of no less than A-X in Best’s Insurance Guide, and
(ii) providing commercially reasonable coverage and deductibles (to the extent
available) with respect to (i) known and unknown pre-existing conditions;
(ii) unknown and later discovered conditions; (iii) on-site and off-site
third-party claims for bodily injury or property damage; and (iv) legal defense
expenses. The form of the Pollution Legal Liability Environmental Insurance
policy shall be reasonably acceptable to Landlord, and the term of such policy
shall be at least equal to the then-current Lease Term plus an additional six
(6) months. Further, notwithstanding anything to the contrary set forth in this
Lease, as a condition precedent to the effectiveness of Tenant’s exercise of its
right to extend the Lease Term by the Extension Period pursuant to the terms of
Exhibit D attached hereto or otherwise, Tenant shall have obtained the policy
described in this Section 7.2J, in accordance with the terms of this
Section 7.2J, including without limitation, that the term of such policy shall
be at least equal to the length of the Extension Period plus an additional six
(6) months. Landlord shall be named as an additional named insured on the
Pollution Legal Liability

 

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Environmental Insurance policy by endorsement, and an endorsement shall be
issued to the Pollution Legal Liability Environmental Insurance policy that
provides the policy cannot be amended, modified, terminated or cancelled by the
insured without the prior written consent of Landlord. Any new Pollution Legal
Liability Environmental Insurance policy that Tenant obtains shall provide
coverage for pollution conditions and unknown claims arising prior to the date
such policy was issued (e.g., pre-existing conditions shall be covered).

K. Consolidation of Other Facilities. In the event that Tenant elects to
consolidate one or more of its other existing facilities (including, without
limitation, Tenant’s facilities currently located in Fremont, California) into
Tenant’s operations at the Premises, prior to such consolidation and any
construction or alteration of the improvements in the Premises in connection
therewith, Tenant shall submit to Landlord a revised Environmental
Questionnaire, HMBP Plan and Closure Plan, and any other reasonably necessary
documents as requested by Landlord, describing Tenant’s use of Hazardous
Materials as a result of such consolidation (the “Consolidation Hazardous
Materials Documents”). Tenant’s use of the Hazardous Materials disclosed in the
Consolidation Hazardous Materials Documents shall be subject to Landlord’s prior
written consent, which consent shall not be unreasonably withheld or delayed;
provided, however, that if the Hazardous Materials described in the
Consolidation Hazardous Materials Documents are New Hazardous Materials Usage,
then (i) Landlord shall have the right to impose additional terms and conditions
on this Lease based upon such hazardous character, handling profile, use,
storage and/or disposal of the Hazardous Materials described in the
Consolidation Hazardous Materials Documents, to the extent such additional terms
and conditions are consistent with the requirements of institutional landlords
of Comparable Buildings when leasing space to tenants using Hazardous Materials
materially similar in terms of hazardous character, handling profile, usage and
quantity to the New Hazardous Materials Usage, and (ii) the installation of any
exterior storage tanks or vessels in the Common Area or below grade with respect
to such Hazardous Materials described in the Consolidation Hazardous Materials
Documents shall be subject to Landlord’s prior written consent, in its sole and
absolute discretion.

L. Survival. The obligations of Landlord and Tenant under this Section 7.2 shall
survive the expiration or earlier termination of the Lease Term. The rights and
obligations of Landlord and Tenant with respect to issues relating to Hazardous
Materials are exclusively established by this Section 7.2. In the event of any
inconsistency between any other part of this Lease and this Section 7.2, the
terms of this Section 7.2 shall control.

7.3 Utilities: Tenant shall promptly pay, as the same become due, all charges
for water, gas, electricity, telephone, sewer service, waste pick-up and any
other utilities, materials or services furnished directly to or used by Tenant
on or about the Premises during the Lease Term, including, without limitation,
(i) meter, use and/or connection fees, hook-up fees, or standby fees (excluding
any connection fees or hook-up fees which relate to making the existing
electrical, gas, and water service available to the Premises as of the
Commencement Date), and (ii) penalties for discontinued or interrupted services.

7.4 Compliance with Governmental Regulations: Tenant shall comply with all
rules, regulations and requirements promulgated by national, state or local
governmental agencies or utility suppliers concerning the use of utility
services, including any rationing, limitation or other control. Tenant shall not
be entitled to terminate this Lease nor to any abatement in rent by reason of
such compliance.

7.5 Interruption of Use: Notwithstanding anything to the contrary set forth in
this Lease, in the event that any utility service provided to the Premises is
interrupted for a period in excess of five (5) consecutive days (an “Abatement
Event”) due to the active or gross negligence or willful misconduct of Landlord
or Landlord’s Agents, Tenant’s sole remedy with respect to such Abatement Event
shall be an

 

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abatement of Tenant’s obligation to pay Rent under this Lease in proportion to
the extent that the Premises is untenantable and Tenant does not in fact use the
Premises for the Permitted Use as a result of such interruption. In the event of
any Abatement Event that is not due to the active or gross negligence or willful
misconduct of Landlord or Landlord’s Agents, Tenant’s sole remedy shall be an
abatement of Tenant’s obligation to pay Rent under this Lease in an amount not
to exceed the total amount of any reimbursement actually received by Landlord
from any rental loss insurance policy maintained by Landlord.

ARTICLE 8

OPERATING EXPENSES

8.1 Tenant’s Payment Obligation: As Additional Rent, Tenant shall pay Tenant’s
Share (specified in Section G of the Summary) of all Operating Expenses. Tenant
shall pay such share of the actual Operating Expenses incurred or paid by
Landlord but not theretofore billed to Tenant within thirty (30) days after
receipt of a written bill therefor from Landlord, on such periodic basis as
Landlord shall designate, but in no event more frequently than once a month.
Alternatively, Landlord may from time to time require that Tenant pay Tenant’s
Share of Operating Expenses in advance in estimated monthly installments, in
accordance with the following: (i) Landlord shall deliver to Tenant Landlord’s
reasonable estimate of the Operating Expenses it anticipates will be paid or
incurred for the Landlord’s fiscal year in question; (ii) during such Landlord’s
fiscal year Tenant shall pay such share of the estimated Operating Expenses in
advance in monthly installments as required by Landlord due with the
installments of Base Monthly Rent; and (iii) within one hundred eighty
(180) days after the end of each Landlord’s fiscal year, Landlord shall furnish
to Tenant a statement in reasonable detail of the actual Operating Expenses paid
or incurred by Landlord during the just ended Landlord’s fiscal year (the
“Annual Reconciliation Statement”) and thereupon there shall be an adjustment
between Landlord and Tenant, with payment to Landlord or credit by Landlord
against the next installment of Base Monthly Rent (or refund to Tenant with
respect to the last year of the Lease Term), as the case may require, within
thirty (30) days after delivery by Landlord to Tenant of said statement, so that
Landlord shall receive the entire amount of Tenant’s Share of all Operating
Expenses for such Landlord’s fiscal year and no more. The failure of Landlord to
delivery such annual reconciliation statement within said 180-day period under
clause (iii) above shall not constitute a waiver or otherwise release a party
from its obligation to make a payment or credit when such reconciliation is
actually done.

Notwithstanding anything to the contrary in this Lease, if the Project consists
of multiple buildings, certain Operating Expenses may pertain to a particular
building(s) and other Operating Expenses to the Project as a whole. Landlord
reserves the right in its reasonable discretion to equitably allocate any such
costs applicable to any particular building within the Project to the building
in question whose tenants shall be responsible for payment of their respective
proportionate shares in the pertinent building and other such costs applicable
to the Project to each building in the Project (including the Building) with the
tenants in each such building being responsible for paying their respective
proportionate shares in such building of such costs to the extent required under
the applicable leases. Landlord shall use commercially reasonable efforts to
allocate such costs to the buildings (including the Building) in a reasonable,
non-discriminatory manner and such allocation shall be binding on Tenant.

 

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8.2 Operating Expenses Defined: The term “Operating Expenses” shall mean the
total amounts paid or payable, whether by Landlord or others on behalf of
Landlord, in connection with the ownership, maintenance, repair, and operations
of the Building, the Common Areas and the Project, including without limitation,
the following:

A. All costs and expenses paid or incurred by Landlord in doing the following
(including payments to independent contractors providing services related to the
performance of the following): (i) maintaining, cleaning, repairing and
resurfacing the roof (including repair of leaks) and the exterior surfaces
(including painting) of all buildings located on the Project; (ii) maintenance
of any liability, fire, property damage, earthquake and other insurance covering
the Project carried by Landlord pursuant to Section 9.2 (including the
prepayment of premiums for coverage of up to one year, provided that Tenant
shall not be responsible for any premiums relating to any time period for which
Tenant is not obligated to pay its share of Operating Expenses hereunder);
(iii) subject to Section 5.4 and Article 6, above, maintaining, repairing,
operating and replacing when necessary HVAC equipment, utility facilities and
other building service equipment; (iv) providing utilities to the Common Area
(including lighting, trash removal and water for landscaping irrigation);
(v) complying with all applicable Laws and Private Restrictions; (vi) operating,
maintaining, repairing, cleaning, painting, re-striping and resurfacing the
Common Area; (vii) replacement or installation of lighting fixtures, directional
or other signs and signals, irrigation systems, trees, shrubs, ground cover and
other plant materials, and all landscaping in the Common Area; and
(viii) providing security (provided, however, that Landlord shall not be
obligated to provide security and if it does, Landlord may discontinue such
service at any time and in any event Landlord shall not be responsible for any
act or omission of any security personnel); and (ix) capital improvements as
provided in Section 5.4 hereof;

B. The following costs: (i) Real Property Taxes as defined in Section 8.3;
(ii) the amount of any “deductible” paid by Landlord with respect to damage
caused by any Insured Peril, provided that such deductible is in a commercially
reasonable amount comparable to deductibles paid by landlords of comparable
institutionally-owned buildings of similar size, age, location, quality of
appearance and services to the Building, and located in the Santa Clara,
California area (“Comparable Buildings”); (iii) the amount of any deductibles
paid by Landlord with respect to damage caused by earthquake, flood or terrorist
act, subject to Section 5.4(iv), above, and provided that Tenant’s Share of such
deductibles shall not exceed a cumulative amount equal to $1.50 per rentable
square foot of the Premises per year, and provided further than no part of any
such cumulative deductible amounts incurred by Landlord in excess of the
forgoing cap in any fiscal year during the Lease Term may be amortized or
otherwise passed through to Tenant as part of Operating Expenses in any future
fiscal year during the Lease Term; and (iv) that portion of all compensation
(including benefits and premiums for workers’ compensation and other insurance)
paid to or on behalf of employees of Landlord but only to the extent they are
involved in the performance of the work described by Section 8.2A that is fairly
allocable to the Project;

C. Fees for property management services rendered by either Landlord or a third
party manager engaged by Landlord (which may be a party affiliated with
Landlord), not to exceed the monthly rate of three percent (3%) of the gross
revenues from the Project, plus charges for office rent for property management,
supplies, equipment, salaries, wages, bonuses and other compensation (including
fringe benefits, vacation, holidays and other paid absence benefits) relating to
employees of Landlord or its property manager or agents engaged in the
management, operation, repair, or maintenance of the Building and/or Common
Areas of the Project;

D. All additional costs and expenses incurred by Landlord with respect to the
operation, protection, maintenance, repair and replacement of the Project which
would be considered a current expense pursuant to commercially reasonable real
estate management and accounting principles consistent with the practices of
landlords of comparable properties located in Santa Clara, California.

E. Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses
shall not, however, include:

(1) payments on any loans or ground leases affecting the Project;

 

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(2) depreciation of any building or any major systems of building service
equipment within the Project;

(3) any cost incurred in complying with Hazardous Materials Laws, which subject
is governed exclusively by Section 7.2, it being understood that in no event
will any costs related to the presence of any Hazardous Materials on, under or
about the Project be included in Operating Expenses;

(4) costs, including legal fees, space planners’ fees, and brokerage or finder’s
fees incurred in connection with the original construction or development, or
original or future leasing of the Project, and costs, including permit, license
and inspection costs, incurred with respect to the installation of tenant
improvements made for other tenants or occupants of the Project or incurred in
renovating or otherwise improving, decorating, painting or redecorating vacant
space for tenants or other occupants of the Project (excluding, however, such
costs relating to any common areas of the Building or Project or parking
facilities);

(5) any bad debt loss, rent loss, or reserves for bad debts or rent loss;

(6) costs associated with the operation of the business of the limited liability
company, partnership or entity which constitutes Landlord, as the same are
distinguished from the costs of operation of the Building or Project (which
shall specifically include, but not be limited to, accounting costs associated
with the operation of the Building or Project). Costs associated with the
operation of the business of the limited liability company, partnership or
entity which constitutes Landlord include costs of partnership accounting and
legal matters, costs of defending any lawsuits with any mortgagee (except as the
actions of the Tenant may be in issue), costs of selling, syndicating,
financing, mortgaging or hypothecating any of the Landlord’s interest in the
Project, and costs incurred in connection with any disputes between Landlord and
its employees, between Landlord and Project management, or between Landlord and
other tenants or occupants;

(7) except for a management fee provided in Section 8.2.C above, overhead and
profit increment paid to the Landlord or to subsidiaries or affiliates of the
Landlord for services in the Project to the extent the same exceeds the costs of
such services rendered by qualified, unaffiliated third parties on a competitive
basis;

(8) costs arising from the active or gross negligence or willful misconduct of
Landlord or its agents, employees, vendors, contractors, or providers of
materials or services;

(9) costs, including fines or penalties, incurred due to a violation of any Law
by Landlord or any of Landlord’s Agents, but not including (i) on-going
recurring compliance costs (by way of example only, costs to comply with a Law
requiring periodic elevator maintenance, or related to fire-extinguisher
inspections, which shall be included in Operating Expenses), or (ii) costs
resulting from a violation of any Law by Tenant or any of Tenant’s agents or
Tenant’s failure to timely pay Tenant’s Share of Operating Expenses to Landlord,
in which event Tenant shall be solely responsible for such costs;

(10) costs for repairs or other work incurred by reason of fire or other
casualty, or by the exercise of the right of eminent domain, to the extent
Landlord is reimbursed through insurance proceeds or condemnation awards, or
would have been so reimbursed if Landlord had in force all insurance required to
be carried by Landlord under this Lease;

 

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(11) costs for repairs to correct defects in the original construction of the
Project, or repairs that are covered by warranties to the extent actually
covered by such warranties;

(12) legal fees and costs, settlements, judgments or awards paid or incurred
because of disputes between Landlord and Tenant, Landlord and other tenants or
prospective occupants or prospective tenants/occupants or providers of goods and
services to the Project;

(13) costs for capital improvements to the Project (including, without
limitation, capital expenditures related solely to another building of the
Project and not to the Building or to the Project as a whole), except as set
forth in Section 5.4, above;

(14) advertising and promotional expenses;

(15) costs for which Landlord receives separate reimbursement directly from any
other tenant (other than as a reimbursement of operating expenses) or occupant
of the Project;

(16) wages and/or benefits attributable to personnel above the level of Project
manager or Project engineer;

(17) rentals and other related expenses incurred in leasing Building equipment
which if purchased the cost of which would be excluded from Operating Expenses
as a capital cost, except equipment not affixed to the Project which is used in
providing janitorial or similar services and, further excepting from this
exclusion such equipment rented or leased to remedy or ameliorate an emergency
condition in the Building or Common Area servicing the Building;

(18) costs arising from Landlord’s charitable or political contributions;

(19) costs of acquiring sculptures, paintings or other object of art;

(20) fines, penalties or interest payable by Landlord (unless such fines,
penalties and interest result from Tenant’s failure to timely pay its Share of
Operating Expenses to Landlord, in which event Tenant shall be solely
responsible for such costs);

(21) costs first accruing after the expiration or earlier termination of this
Lease; and

(22) the amount of any insurance deductible relating to damage caused by an
event of casualty that is the triggering event for the termination of this Lease
pursuant to Article 11, below.

F. Intentionally Omitted.

8.3 Real Property Taxes Defined: The term “Real Property Taxes” shall mean all
taxes, assessments, levies, and other charges of any kind or nature whatsoever,
general and special, foreseen and unforeseen (including all installments of
principal and interest required to pay any existing or future general or special
assessments for public improvements, services or benefits, and any increases
resulting from reassessments resulting from a change in ownership, new
construction, or any other cause), now or hereafter imposed by any governmental
or quasi-governmental authority or special district having the direct or
indirect power to tax or levy assessments, which are levied or assessed against,
or with respect to the value, occupancy or use of all or any portion of the
Project (as now constructed or as may at any time hereafter be constructed,
altered, or otherwise changed) or Landlord’s interest therein, the fixtures,

 

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equipment and other property of Landlord, real or personal, that are an integral
part of and located on the Project, the gross receipts, income, or rentals from
the Project, or the use of parking areas, public utilities, or energy within the
Project, or Landlord’s business of leasing the Project. The parties acknowledged
that Proposition 13 was adopted by the voters of the State of California in the
June 1978 election (“Proposition 13”) and that assessments, taxes, fees, levies
and charges may be imposed by governmental agencies for such services as fire
protection, street, sidewalk and road maintenance, refuse removal and for other
governmental services formerly provided without charge to property owners or
occupants, and, in further recognition of the decrease in the level and quality
of governmental services and amenities as a result of Proposition 13, Real
Property Taxes shall also include any governmental or private assessments or the
Project’s contribution towards a governmental or private cost-sharing agreement
for the purpose of augmenting or improving the quality of services and amenities
normally provided by governmental agencies. If at any time during the Lease Term
the method of taxation or assessment of the Project prevailing as of the
Effective Date shall be altered so that in lieu of or in addition to any Real
Property Tax described above there shall be levied, assessed or imposed (whether
by reason of a change in the method of taxation or assessment, creation of a new
tax or charge, or any other cause) an alternate or additional tax or charge
(i) on the value, use or occupancy of the Project or Landlord’s interest
therein, or (ii) on or measured by the gross receipts, income or rentals from
the Project, on Landlord’s business of leasing the Project, or computed in any
manner with respect to the operation of the Project, then any such tax or
charge, however designated, shall be included within the meaning of the term
Real Property Taxes for purposes of this Lease. If any Real Property Tax is
based upon property or rents unrelated to the Project, then only that part of
such Real Property Tax that is fairly allocable to the Project shall be included
within the meaning of the term Real Property Taxes. Notwithstanding anything to
the contrary set forth herein, in the event that any assessment or Real Property
Taxes may be payable in installments over a period in excess of one (1) year,
Tenant’s share of Real Property Taxes shall be determined as if Landlord had
elected to pay the charge in the permitted maximum number of installments
(including any costs and fees in connection therewith), and Tenant shall be
responsible only for those installments or parts of installments which would be
attributable to the Lease Term. Any costs and expenses (including, without
limitation, reasonable attorneys’ and consultants’ fees) reasonably incurred in
attempting to protest, reduce or minimize Tax Expenses (a “Tax Appeal”) shall be
included in Real Property Taxes in the year such expenses are incurred. Tax
refunds shall be credited against Real Property Taxes and refunded to Tenant
regardless of when received, based on the year to which the refund is
applicable, provided that in no event shall the amount to be refunded to Tenant
for any such year exceed the total amount paid by Tenant as Additional Rent
under this Article 8 for such year. If Real Property Taxes for any period during
the Lease Term or any extension thereof are increased after payment thereof for
any reason, including, without limitation, error or reassessment by applicable
governmental or municipal authorities, Tenant shall pay Landlord upon demand
Tenant’s Share of any such increased Real Property Taxes included by Landlord as
Operating Expenses pursuant to the terms of this Lease. Notwithstanding the
foregoing, the term Real Property Taxes shall not include (a) estate,
inheritance, succession, transfer, gift or franchise taxes of Landlord, (b) any
federal or state net income tax imposed on Landlord’s income from all sources;
(c) any real estate taxes related to any period of time prior to the
Commencement Date; (d) any liens or levies to the extent related to Hazardous
Materials on the Project that were not caused or introduced onto the Project by
Tenant or any of Tenant’s Agents; or (e) any interest, fines or penalties
payable due to the failure of Landlord to pay Real Property Taxes in a timely
manner (unless such interest, fines and penalties are caused by Tenant’s failure
to pay its share of Real Property Taxes as they become due, in which event
Tenant shall be solely responsible for such costs). Notwithstanding the
foregoing, while Landlord shall not be obligated to file any application or
institute any proceeding seeking a reduction in Real Property Taxes, in the
event that Landlord elects to file a Proposition 8 application seeking a
temporary reduction in Real Property Taxes with respect to any building in the
Project, Landlord shall include the Building in such application (or shall make
a separate such application relating thereto). If Landlord does not initiate
within sixty (60) days after written request by Tenant and thereafter diligently
pursue a Tax Appeal, Tenant shall have the right to do so and if Tenant’s Tax
Appeal

 

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results in a refund or reduction of such Real Property Taxes, then within thirty
(30) days after Landlord’s receipt of the refund, Landlord shall refund to
Tenant all costs and expenses incurred by Tenant (to the extent the refund
exceeds such costs and expenses) and Tenant’s Share of the remaining amount of
such abatement or refund shall be applied by Landlord as a credit against Rent
next becoming due.

The parcel containing the Building may be a separate tax parcel that may also
contain other buildings on such parcel. In such event and if the Building and
the buildings and improvements are currently included in the same tax bill and
contain different size and types of improvements, Landlord shall have the right
to equitably allocate the Taxes to each such building in accordance with
Landlord’s reasonable accounting and management principles.

8.4 Landlord’s Books and Records: Following Tenant’s receipt of the Annual
Reconciliation Statement, Tenant shall have the right, upon prior written notice
to Landlord (“Audit Notice”), to commence and complete an audit of Landlord’s
books and records concerning the Operating Expenses for the Landlord’s fiscal
year that is the subject of such statement (the “Records”), within ninety
(90) days following the delivery of such statement (the “Review Period”).
Following delivery of an Audit Notice, and provided that no Event of Tenant’s
Default is not then occurring, Tenant shall have the right, at Tenant’s sole
cost, during Landlord’s regular business hours and on reasonable prior notice to
Landlord, to audit the Records at Landlord’s principal business office (or at
any other location in northern California designated by Landlord). Such audit
shall occur within sixty (60) days following the delivery of the Audit Notice.
Tenant’s audit of the Records pursuant to this Section 8.5 shall be conducted
only by a reputable independent nationally or regionally recognized certified
public accounting firm, subject to Landlord’s reasonable approval, which
accounting firm: (i) shall have previous experience in auditing financial
operating records of landlords of institutionally-owned buildings; (ii) shall
not already be providing accounting and/or lease administration services to
Tenant and shall not have provided accounting and/or lease administration
services to Tenant in the past three (3) years; (iii) shall not be retained by
Tenant on a contingency fee basis (i.e. Tenant must be billed based on the
actual time and materials that are incurred by the accounting firm in the
performance of the audit), and a copy of the executed audit agreement between
Tenant and auditor shall be provided to Landlord prior to the commencement of
the audit; and (iv) at Landlord’s option, both Tenant and auditor shall be
required to execute a commercially reasonable confidentially agreement prepared
by Landlord. Any audit report prepared by Tenant’s auditors shall be delivered
concurrently to Landlord and Tenant within the Review Period. If, after such
audit of the Records, Tenant disputes the amount of Operating Expense for the
year under audit, Landlord and Tenant shall meet and attempt in good faith to
resolve the dispute. If the parties are unable to resolve the dispute within
sixty (60) days after completion of Tenant’s audit, then, at Tenant’s request,
an independent certified public accounting firm selected by Landlord, and
reasonably approved by Tenant, shall, at Tenant’s cost, conduct an audit of the
relevant Operating Expenses (the “Neutral Audit”). Tenant shall pay all costs
and expenses of the Neutral Audit unless the final determination in such Neutral
Audit is that Landlord overstated Operating Expenses in the Annual
Reconciliation Statement for the year being audited by more than three percent
(3%), in which case Landlord shall pay the actual and reasonable costs and
expenses of the Neutral Audit, in an amount not to exceed Ten Thousand and
00/100 Dollars ($10,000.00). In any event, Landlord will promptly reimburse
Tenant or provide a credit for any overstatement of Operating Expenses, and
Tenant shall promptly pay to Landlord any understatement of Operating Expenses.
To the extent Landlord and Tenant fail to otherwise reach mutual agreement
regarding Operating Expenses, the foregoing audit and Neutral Audit procedures
shall be the sole methods to be used by Tenant to dispute the amount of any
Operating Expenses payable by Tenant pursuant to the terms of this Lease.

 

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ARTICLE 9

INSURANCE

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

A. Types. Tenant shall procure, pay for and keep in full force and effect the
following:

(1) Commercial general liability insurance, including property damage, against
liability for personal injury, bodily injury, death and damage to property
occurring in or about, or resulting from an occurrence in or about, the Premises
with combined single limit coverage of not less than the amount of Tenant’s
Liability Insurance Minimum specified in Section P of the Summary, which
insurance shall contain a “contractual liability” endorsement insuring Tenant’s
performance of Tenant’s obligation to indemnify Landlord contained in
Section 10.3;

(2) Fire and property damage insurance in so-called “all risk” form insuring
Tenant’s Trade Fixtures, and Tenant’s Alterations for the full actual
replacement cost thereof; and

(3) Insurance for: (a) Business Auto Liability covering owned, non-owned and
hired vehicles with a limit of not less than $1,000,000 per accident;
(b) Employers Liability with limits of $1,000,000 each accident, $1,000,000
disease policy limit, $1,000,000 disease—each employee; (c) Business
Interruption Insurance for one hundred percent (100%) of the twelve (12) months
actual loss sustained, and (d) Excess Liability in the amount of $5,000,000. In
addition, whenever Tenant shall undertake any alterations, additions or
improvements in, to or about the Leased Premises (“Work”) the aforesaid
insurance protection must extend to and include injuries to persons and damage
to property arising in connection with such Work, and such other insurance as
Landlord shall reasonably require consistent with requirements of landlords of
comparable properties located in Santa Clara, California; and the policies of or
certificates evidencing such insurance must be delivered to Landlord prior to
the commencement of any such Work.

B. Requirements. Where applicable and required by Landlord, each policy of
insurance required to be carried by Tenant pursuant to this Section 9.1:
(i) shall name Landlord and such other parties in interest as Landlord
reasonably designates as additional insured; (ii) shall be primary insurance
which provides that the insurer shall be liable for the full amount of the loss
up to and including the total amount of liability set forth in the declarations
without the right of contribution from any other insurance coverage of Landlord;
(iii) shall be in a form reasonably satisfactory to Landlord; (iv) shall be
carried with companies licensed to do business in California and with a rating
of no less than A-VIII; (v) shall provide that such policy shall not be subject
to cancellation, lapse or a reduction in coverage except after at least thirty
(30) days prior written notice to Landlord so long as such provision of thirty
(30) days’ notice is reasonably obtainable at a commercially reasonable cost,
but in any event Tenant shall provide Landlord not less than ten (10) days prior
written notice; (vi) shall not have a “deductible” in excess of such amount as
is reasonably approved by Landlord; (vii) shall contain a cross liability
endorsement; and (viii) shall contain a “severability” clause. If Tenant has in
full force and effect a blanket policy of liability insurance with the same
coverage for the Premises as described above, as well as other coverage of other
premises and properties of Tenant, or in which Tenant has some interest, such
blanket insurance shall satisfy the requirements of this Section 9.1.

C. Evidence. A certificate of the insurer, certifying that each policy required
to be carried by Tenant pursuant to this Section 9.1 has been issued, provides
the coverage required by this Section 9.1, and contains the provisions specified
herein, shall be delivered to Landlord prior to the time Tenant or any of its
Agents enters the Premises and upon renewal of such policies, but not less than
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prior to the expiration of the term of such coverage. If any Lender or insurance
advisor reasonably determines that the amount of coverage required for any
policy of insurance Tenant is to obtain pursuant to this Section 9.1 is not
adequate, then Tenant shall increase such coverage for such insurance to such
amount as such Lender or insurance advisor reasonably deems adequate, not to
exceed the level of coverage for such insurance commonly carried by comparable
businesses similarly situated; provided that Tenant shall not be obligated to
increase its insurance coverage pursuant to the foregoing more than once during
any three (3)-year period during the Lease Term.

9.2 Landlord’s Insurance: Landlord shall have the following obligations and
options regarding insurance:

A. Property Damage. Landlord shall maintain a policy or policies of fire and
property damage insurance in so-called “all risk” form insuring Landlord (and
such others as Landlord may designate) against loss of rents for a period of not
less than twelve (12) months and from physical damage to the Project with
coverage of not less than the full replacement cost thereof. Landlord may so
insure the Project separately, or may insure the Project with other property
owned by Landlord which Landlord elects to insure together under the same policy
or policies. Landlord shall have the right, but not the obligation, in its sole
and absolute discretion, to obtain insurance for such additional perils as
Landlord deems appropriate, including, without limitation, coverage for damage
by earthquake and/or flood. All such coverage shall contain commercially
reasonable “deductibles” consistent with those maintained by landlords of
comparable properties located in Santa Clara, California. Landlord shall not be
required to cause such insurance to cover any Trade Fixtures or Tenant’s
Alterations of Tenant.

B. Other. Landlord shall maintain a policy or policies of commercial general
liability insurance insuring Landlord (and such others as are designated by
Landlord) against liability for personal injury, bodily injury, death and damage
to property occurring or resulting from an occurrence in, on or about the
Project, with combined single limit coverage in such amount as Landlord from
time to time determines is reasonably necessary for its protection.

C. Tenant’s Obligation to Reimburse: If Landlord’s insurance rates with respect
to the Building or Outside Area are increased at any time during the Lease Term
as a result of the nature of Tenant’s particular use of the Premises, Tenant
shall reimburse Landlord for the full amount of such increase immediately upon
receipt of a bill from Landlord therefor.

9.3 Release and Waiver of Subrogation: Notwithstanding anything to the contrary
contained herein, the parties hereto release each other, and their respective
agents and employees, and approved subtenants of the Premises (provided such
subtenants provide a reciprocal release and waiver of subrogation) from any
liability for injury or damage to property that is caused by or results from any
risk insured against (or required to be insured against) under any valid and
collectible property insurance policy carried (or required to be carried) by
either of the parties, or which would normally be covered by so-called “all
risk” or “special form” property insurance, without regard to the negligence or
willful misconduct of the entity or party so released or any other cause. Each
party shall cause each property insurance policy obtained by it to provide that
the insurer waives all right of recovery by way of subrogation against the other
party and its agents and employees in connection with any injury or damage
covered by such policy.

 

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ARTICLE 10

LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY

10.1 Limitation on Landlord’s Liability: Landlord shall not be liable to Tenant,
nor shall Tenant be entitled to terminate this Lease or to any abatement of rent
(except as expressly provided otherwise herein), for any injury to Tenant or
Tenant’s Agents, damage to the property of Tenant or Tenant’s Agents, or loss to
Tenant’s business resulting from any cause, including without limitation any:
(i) failure, interruption or installation of any HVAC or other utility system or
service; (ii) failure to furnish or delay in furnishing any utilities or
services when such failure or delay is caused by fire or other peril, the
elements, labor disturbances of any character, or any other accidents or other
conditions beyond the reasonable control of Landlord; (iii) limitation,
curtailment, rationing or restriction on the use of water or electricity, gas or
any other form of energy or any services or utility serving the Project;
(iv) vandalism or forcible entry by unauthorized persons or the criminal act of
any person; or (v) penetration of water into or onto any portion of the Premises
or the Building through roof leaks or otherwise. Notwithstanding the foregoing
but subject to Section 9.3, Landlord shall be liable for any such injury, damage
or loss which is proximately caused by the willful misconduct or gross
negligence of Landlord or Landlord’s Agents.

10.2 Limitation on Tenant’s Recourse: If Landlord or Tenant is a corporation,
limited liability company, trust, partnership, joint venture, unincorporated
association or other form of business entity: (i) the obligations of such party
shall not constitute personal obligations of the officers, directors, trustees,
partners, joint venturers, members, owners, stockholders, or other principals or
representatives of such business entity; and (ii) neither Landlord nor Tenant
shall have recourse to the assets of the other party’s officers, directors,
trustees, partners, joint venturers, members, owners, stockholders, principals
or representatives except to the extent of their interest in the Project. Tenant
shall have recourse only to the interest of Landlord in the Project, including
any interest in the rents of the Project and any sale, condemnation or insurance
proceeds payable to Landlord (collectively, “Owner Proceeds”), for the
satisfaction of the obligations of Landlord and shall not have recourse to any
other assets of Landlord for the satisfaction of such obligations; provided,
however, that Tenant shall not be entitled to recover any Owner Proceeds from
Landlord or any third party after such Owner Proceeds have been distributed or
paid to such third party.

10.3 Indemnification of Landlord: Tenant shall hold harmless, indemnify and
defend Landlord, and its employees, agents and contractors, with competent
counsel reasonably satisfactory to Landlord (and Landlord agrees to accept
counsel that any insurer requires be used), from all liability, penalties,
losses, damages, costs, expenses, causes of action, claims and/or judgments
arising by reason of any death, bodily injury, personal injury or property
damage to the extent resulting from (i) any cause or causes whatsoever occurring
in or on the Premises during the Lease Term, except to the extent of (A) the
willful misconduct, active negligence or gross negligence of Landlord or
Landlord’s Agents, (B) resulting from the violation of any Laws by Landlord or
Landlord’s Agents, or (C) resulting from the underground migration of Hazardous
Materials not brought onto the Project by Tenant or a Tenant Party, (ii) the
negligence or willful misconduct of Tenant or its agents, employees and
contractors, or (iii) an Event of Tenant’s Default. The provisions of this
Section 10.3 shall survive the expiration or sooner termination of this Lease.

10.4 Indemnification of Tenant. Landlord shall hold harmless, indemnify and
defend Tenant, and its employees, agents and contractors, with competent counsel
reasonably satisfactory to Tenant (and Tenant agrees to accept counsel that any
insurer requires be used), from all liability, penalties, losses, damages,
costs, expenses, causes of action, claims and/or judgments arising by reason of
any death, bodily injury, personal injury or property damage to the extent
resulting from the violation of any Laws or the negligence (to the extent not
covered by the insurance carried or required to be carried by Landlord pursuant
to this Lease), the gross negligence or willful misconduct of Landlord or
Landlord’s Agents. The provisions of this Section 10.4 shall survive the
expiration or sooner termination of this Lease.

 

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10.5 In General. Tenant’s agreement to indemnify Landlord pursuant to
Section 10.3, above, and Landlord’s agreement to indemnify Tenant pursuant to
Section 10.4, above, are not intended to and shall not relieve any insurance
carrier of its obligations under policies required to be carried pursuant to the
provisions of this Lease, to the extent such policies cover, or if carried,
would have covered the matters, subject to the parties’ respective
indemnification obligations; nor shall they supersede the terms of Section 9.3
of this Lease.

ARTICLE 11

DAMAGE TO PREMISES

11.1 Landlord’s Duty to Restore: If the Premises are damaged by any peril after
the Effective Date, Landlord shall restore the Premises unless the Lease is
terminated by Landlord pursuant to Section 11.2 or by Tenant pursuant to
Section 11.3. All insurance proceeds available from the fire and property damage
insurance carried by Landlord pursuant to Section 9.2 shall be paid to and
become the property of Landlord. If this Lease is terminated pursuant to either
Section 11.2 or Section 11.3, then all insurance proceeds available from
insurance carried by Tenant which covers loss to property that is Landlord’s
property or would become Landlord’s property on termination of this Lease shall
be paid to and become the property of Landlord. If this Lease is not so
terminated, then upon receipt of the insurance proceeds (if the loss is covered
by insurance) and the issuance of all necessary governmental permits, Landlord
shall commence and diligently prosecute to completion the restoration of the
Premises, to the extent then allowed by Law, to substantially the same condition
in which the Premises were immediately prior to such damage. Landlord’s
obligation to restore shall be limited to the Premises and interior
improvements, excluding any Tenant’s Alterations, Trade Fixtures and/or personal
property constructed or installed by Tenant in the Premises. Tenant shall
forthwith replace or fully repair all the Tenant’s Alterations installed by
Tenant and existing at the time of such damage or destruction, subject to any
changes or additions to such Tenant’s Alterations that are (i) requested by
Tenant and approved by Landlord, which approval shall not be unreasonably
withheld, conditioned or delayed, or (ii) required by applicable Law.

11.2 Landlord’s Right to Terminate: Landlord shall have the right to terminate
this Lease in the event any of the following occurs, which right may be
exercised only by delivery to Tenant of a written notice of election to
terminate within thirty (30) days after the date of such damage:

A. Damage From Insured Peril. The Building is damaged by an Insured Peril to
such an extent that the estimated cost to restore exceeds fifty percent (50%) of
the then actual replacement cost thereof, and the estimated time for repair and
restoration of the Building exceeds one (1) year, but only to the extent that
Landlord terminates the leases of all similarly situated and affected tenants of
the Project;

B. Damage From Uninsured Peril. The Building is damaged by an Uninsured Peril to
such an extent that the estimated cost to restore exceeds five percent (5%) of
the then actual replacement cost thereof; provided, however, that Landlord may
not terminate this Lease pursuant to this Section 11.2.B if Tenant agrees in
writing to pay the amount by which the cost to restore the damage to the
Building exceeds such amount and subsequently deposits such excess amount with
Landlord within thirty (30) days after Landlord has notified Tenant of its
election to terminate this Lease;

C. Damage Near End of Term. The Premises are damaged by any peril within twelve
(12) months of the last day of the Lease Term to such an extent that the
estimated cost to restore equals or exceeds an amount equal to six (6) times the
Base Monthly Rent then due; provided, however, that Landlord may not terminate
this Lease pursuant to this Section 11.2.C if Tenant, at the time of such
damage, has a then valid express written option to extend the Lease Term and
Tenant exercises such option to extend within fifteen (15) days following the
date of such damage; or

 

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D. Restrictions on Restoration. The Building is damaged by any peril and,
because of the Laws then in force, (i) cannot be restored to substantially the
same condition in which it was prior to such damage, or (ii) cannot be used for
the Permitted Use if restored as required by this Article.

E. Defined Terms. As used herein, the following terms shall have the following
meanings: (i) the term “Insured Peril” shall mean a peril actually insured
against (or required to be insured against under this Lease) for which the
insurance proceeds actually received by Landlord are sufficient (or would have
been sufficient had Landlord maintained the required insurance) (except for any
“deductible” amount specified by such insurance) to restore the Building under
then existing building codes to substantially the condition existing immediately
prior to the damage; and (ii) the term “Uninsured Peril” shall mean any peril
which is not an Insured Peril. Notwithstanding the foregoing, if the
“deductible” for earthquake, flood or terrorism insurance exceeds five percent
(5%) of the replacement cost of the improvements insured, such peril shall be
deemed an “Uninsured Peril”.

F. Effect of Termination. In the event that Landlord terminates this Lease
pursuant to this Section 11.2, Tenant shall have no obligation to pay or
contribute to any portion of any deductible under any applicable insurance
policy carried or required to be carried by Landlord pursuant to this Lease.

11.3 Tenant’s Right to Terminate: If the Premises are damaged by any peril and
Landlord does not elect to terminate this Lease or is not entitled to terminate
this Lease pursuant to Section 11.2, then as soon as reasonably practicable,
Landlord shall furnish Tenant with the written opinion of Landlord’s licensed
architect or construction consultant as to when the restoration work required of
Landlord may be completed. Tenant shall have the right to terminate this Lease
in the event any of the following occurs, which right may be exercised only by
delivery to Landlord of a written notice of election to terminate within fifteen
(15) days after Tenant receives from Landlord the estimate of the time needed to
complete such restoration.

A. Major Damage. The Premises are damaged by any peril and, in the reasonable
opinion of Landlord’s architect or construction consultant, the restoration of
the Premises cannot be substantially completed within one (1) year after the
date of such damage; or

B. Damage Near End of Term. The Premises are damaged by any peril within twelve
(12) months of the last day of the Lease Term and, in the reasonable opinion of
Landlord’s licensed architect or construction consultant, the restoration of the
Premises cannot be substantially completed within ninety (90) days after the
date of such damage and such damage materially and adversely impairs Tenant’s
ability to operate from the Premises for the Permitted Use.

C. Failure to Complete Restoration. The Premises are damaged by any peril, the
restoration is not substantially completed within one (1) year following the
date on which Landlord obtains the necessary building permits for such
restoration (but in no event more than fifteen (15) months from the date of such
damage), and Landlord fails to substantially complete such restoration within
thirty (30) days following Landlord’s receipt of a written notice from Tenant of
its election to terminate this Lease pursuant to this Section 11.3.C.

11.4 Abatement of Rent: In the event of damage to the Premises which does not
result in the termination of this Lease, then from and after the date of such
damage the Base Monthly Rent and the Additional Rent shall be temporarily abated
during the period of restoration in proportion to the degree to which Tenant’s
use of the Premises is impaired by such damage. In the event of damage to the
Premises which results in the termination of this Lease, then Tenant shall not
be obligated to pay the Base Monthly Rent and the Additional Rent otherwise due
and payable by Tenant under this Lease from and after the date of such damage
until the date on which this Lease is terminated. Tenant shall not be entitled
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compensation or damages from Landlord for loss of Tenant’s business or property
or for any inconvenience or annoyance caused by such damage or restoration.
Tenant hereby waives the provisions of California Civil Code Sections 1932(2)
and 1933(4) and the provisions of any similar law hereinafter enacted.

ARTICLE 12

CONDEMNATION

12.1 Landlord’s Termination Right: Landlord shall have the right to terminate
this Lease if, as a result of a taking by means of the exercise of the power of
eminent domain (including a voluntary sale or transfer by Landlord to a
condemnor under threat of condemnation), (i) ten percent (10%) or more of the
Premises is so taken, (ii) more than ten percent (10%) of the Building Leasable
Area is so taken, or (iii) more than fifty percent (50%) of the Common Area is
so taken. Any such right to terminate by Landlord must be exercised within a
reasonable period of time, to be effective as of the date possession is taken by
the condemnor.

12.2 Tenant’s Termination Right: Tenant shall have the right to terminate this
Lease if, as a result of any taking by means of the exercise of the power of
eminent domain (including any voluntary sale or transfer by Landlord to any
condemnor under threat of condemnation), (i) ten percent (10%) or more of the
Premises is so taken, or a material portion of the manufacturing area of the
Premises is taken such that, in Tenant’s commercially reasonable business
judgment, Tenant can no longer conduct its business from the Premises for the
Permitted Use, and the part of the Premises that remains cannot be restored
within a reasonable period of time and thereby made reasonably suitable for the
continued operation of the Tenant’s business, or (ii) there is a taking
affecting the Common Area and, as a result of such taking, Landlord cannot
provide parking within reasonable walking distance of the Premises equal in
number to at least eighty percent (80%) of the number of passes allocated to
Tenant pursuant to this Lease, whether by rearrangement of the remaining parking
areas in the Common Area (including construction of multi-deck parking
structures or re-striping for compact cars where permitted by Law) or by
alternative parking facilities on other land. Tenant must exercise such right
within a reasonable period of time, to be effective on the date that possession
of that portion of the Premises or Common Area that is condemned is taken by the
condemnor.

12.3 Restoration and Abatement of Rent: If any part of the Premises or the
Common Area is taken by condemnation (other than a temporary taking) and this
Lease is not terminated, then Landlord shall restore the remaining portion of
the Premises and Common Area and interior improvements constructed by Landlord
as they existed as of the Commencement Date, excluding any Tenant’s Alterations,
Trade Fixtures and/or personal property constructed or installed by Tenant, and
the Base Monthly Rent and Additional Rent payable by Tenant hereunder shall be
abated during such period of restoration in proportion to the degree to which
Tenant’s use of the Premises or affected portion thereof is materially impaired
such that, in Tenant’s commercially reasonable business judgment, Tenant can no
longer conduct its business from the Premises for the Permitted Use. Thereafter,
following the period of any such restoration, the Base Monthly Rent and the
Additional Rent shall be reduced in the same proportion that the floor area of
that part of the Premises so taken (less any addition thereto by reason of any
reconstruction) bears to the original floor area of the Premises.

12.4 Temporary Taking: If any portion of the Premises is temporarily taken for
one (1) year or less, this Lease shall remain in effect. If any portion of the
Premises is temporarily taken by condemnation for a period which exceeds one
year or which extends beyond the natural expiration of the Lease Term, and such
taking materially and adversely affects Tenant’s ability to use the Premises for
the Permitted Use, then Tenant shall have the right to terminate this Lease,
effective on the date possession is taken by the condemnor.

 

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12.5 Division of Condemnation Award: Any award made as a result of any
condemnation of the Premises or the Common Area shall belong to and be paid to
Landlord, and Tenant hereby assigns to Landlord all of its right, title and
interest in any such award; provided, however, that Tenant shall be entitled to
receive any condemnation award that is made directly to Tenant for the
following: (i) for the taking of personal property or Trade Fixtures belonging
to Tenant, (ii) for the interruption of Tenant’s business and its
moving/relocation costs, (iii) for loss of Tenant’s goodwill; or (iv) for any
temporary taking where this Lease is not terminated as a result of such taking.
The rights of Landlord and Tenant regarding any condemnation shall be determined
as provided in this Article, and each party hereby waives the provisions of
California Code of Civil Procedure Section 1265.130 and the provisions of any
similar law hereinafter enacted allowing either party to petition the Superior
Court to terminate this Lease in the event of a partial taking of the Premises.

ARTICLE 13

DEFAULT AND REMEDIES

13.1 Events of Tenant’s Default: Tenant shall be in default of its obligations
under this Lease if any of the following events occurs (an “Event of Tenant’s
Default”):

A. Payment. Tenant shall have failed to pay Base Monthly Rent or Additional Rent
when due, and such failure is not cured within five (5) days after delivery of
written notice from Landlord specifying such failure to pay; or

B. General Covenant. Tenant shall have failed to perform any term, covenant, or
condition of this Lease other than those referred to in any other subsection of
this Section 13.1, and Tenant shall have failed to cure such breach within
thirty (30) days after written notice from Landlord specifying the nature of
such breach where such breach could reasonably be cured within said 30-day
period, or if such breach could not be reasonably cured within said 30- day
period, Tenant shall have failed to commence such cure within said 30-day period
and thereafter continue with due diligence to prosecute such cure to completion
within such time period as is reasonably needed; or

C. Transfer. Tenant shall have sublet the Premises or assigned its interest in
the Lease in violation of the provisions contained in Article 14; or

D. Abandonment. Tenant shall have abandoned the Premises pursuant to applicable
California law (provided, however, that Tenant shall not be in default under
this Lease if it leaves all or any part of the Premises vacant so long as
(i) Tenant is performing all of its other obligations under this Lease,
including the obligation to pay Rent, (ii) Tenant provides on-site security
during normal business hours for those parts of the Premises left vacant,
(iii) such vacancy does not materially or adversely affect the validity of or
coverage under any policy of insurance carried by Landlord with respect to the
Premises, and (iv) all utility facilities and systems, including all HVAC
systems, required to be maintained by Tenant pursuant to Section 6.1, above, are
maintained pursuant to the terms of such Section); or

E. Insolvency. The occurrence of the following: (i) the making by Tenant of any
general arrangements or assignments for the benefit of creditors; (ii) Tenant
becomes a “debtor” as defined in 11 USC §101 or any successor statute thereto
(unless, in the case of a petition filed against Tenant, the same is dismissed
within sixty (60) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant’s assets located at the Premises or of
Tenant’s interest in this Lease, where possession is not restored to Tenant
within thirty (30) days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Tenant’s assets located at the Premises or of
Tenant’s interest in this Lease, where such seizure is not discharged within
thirty (30) days; provided, however, in the event that any provision of this
Section 13.1E is contrary to any applicable Law, such provision shall be of no
force or effect; or

 

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F. Required Documents. Tenant shall have failed to deliver documents required of
it pursuant to Section 15.4 or Section 15.6 within the time periods specified
therein, and Tenant thereafter fails to deliver such documents within five
(5) days following written notice from Landlord specifying such failure; or

G. Default Under Companion Lease. Tenant shall be in default under the Companion
Lease beyond any applicable notice and cure periods expressly set forth in the
Companion Lease; or

H. Multiple Defaults. Any two (2) failures by Tenant to observe and perform any
monetary or material non-monetary provision of this Lease during any twelve
(12) month period of the term, as such may be extended, shall constitute, at the
option of Landlord, a separate and noncurable default.

Any written notice of default sent by Landlord to Tenant shall be in lieu of,
and not in addition to, any termination notice required under applicable
statutory or regulatory provisions (and no further notice shall be required
should Landlord elect to terminate this Lease as set forth below), provided that
such notice shall only be “in lieu of” to the extent the same is otherwise
prepared and served upon Tenant in accordance with all applicable statutory or
regulatory provisions.

13.2 Landlord’s Remedies: If an Event of Tenant’s Default occurs, Landlord shall
have the following remedies, in addition to all other rights and remedies
provided by any Law or otherwise provided in this Lease, to which Landlord may
resort cumulatively or in the alternative:

A. Continue. Landlord may keep this Lease in effect and enforce by an action at
law or in equity all of its rights and remedies under this Lease, including
(i) the right to recover the rent and other sums as they become due by
appropriate legal action, (ii) the right to make payments required of Tenant or
perform Tenant’s obligations and be reimbursed by Tenant for the cost thereof
with interest at the Agreed Interest Rate from the date the sum is paid by
Landlord until Landlord is reimbursed by Tenant, and (iii) the remedies of
injunctive relief and specific performance to compel Tenant to perform its
obligations under this Lease. Notwithstanding anything contained in this Lease,
in the event of a breach of an obligation by Tenant which results in a condition
which poses an imminent danger to safety of persons or damage to property, an
unsightly condition visible from the exterior of the Building, or a threat to
insurance coverage, then if Tenant does not cure such breach within three
(3) days after delivery to it of written notice from Landlord identifying the
breach, Landlord may cure the breach of Tenant and be reimbursed by Tenant for
the cost thereof with interest at the Agreed Interest Rate from the date the sum
is paid by Landlord until Landlord is reimbursed by Tenant. Should Landlord not
terminate this Lease by giving Tenant written notice, Landlord may enforce all
its rights and remedies under this Lease, including the right to recover the
rent as it becomes due under the Lease as provided in California Civil Code
Section 1951.4 (lessor may continue lease in effect after lessee’s breach and
abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations).

B. Enter and Relet. To the extent permitted by applicable Laws, Landlord may
enter the Premises and release them to third parties for Tenant’s account for
any period, whether shorter or longer than the remaining Lease Term. Tenant
shall be liable immediately to Landlord for all costs Landlord incurs in
releasing the Premises, including brokers’ commissions, expenses of altering and
preparing the Premises required by the releasing. Tenant shall pay to Landlord
the rent and other sums

 

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due under this Lease on the date the rent is due, less the rent and other sums
Landlord received from any releasing. No act by Landlord allowed by this
subparagraph shall terminate this Lease unless Landlord notifies Tenant in
writing that Landlord elects to terminate this Lease. Notwithstanding any
releasing without termination, Landlord may later elect to terminate this Lease
because of the default by Tenant.

C. Terminate. Landlord may terminate this Lease by giving Tenant written notice
of termination, in which event this Lease shall terminate on the date set forth
for termination in such notice. Any termination under this Section 13.2C shall
not relieve Tenant from its obligation to pay sums then due Landlord or from any
claim against Tenant for damages or rent previously accrued or then accruing. In
no event shall any one or more of the following actions by Landlord, in the
absence of a written election by Landlord to terminate this Lease, constitute a
termination of this Lease: (i) appointment of a receiver or keeper in order to
protect Landlord’s interest hereunder; (ii) consent to any subletting of the
Premises or assignment of this Lease by Tenant, whether pursuant to the
provisions hereof or otherwise; or (iii) any other action by Landlord or
Landlord’s Agents intended to mitigate the adverse effects of any breach of this
Lease by Tenant, including without limitation any action taken to maintain and
preserve the Premises or any action taken to relet the Premises or any portions
thereof to the extent such actions do not affect a termination of Tenant’s right
to possession of the Premises.

D. No Deemed Termination. In the event Tenant breaches this Lease and abandons
the Premises, this Lease shall not terminate unless Landlord gives Tenant
written notice of its election to so terminate this Lease. No act by or on
behalf of Landlord intended to mitigate the adverse effect of such breach,
including those described by Section 13.C, shall constitute a termination of
Tenant’s right to possession unless Landlord gives Tenant written notice of
termination.

E. Damages. In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord’s election, to damages in an amount as set forth in
California Civil Code Section 1951.2 as in effect on the Effective Date. For
purposes of computing damages pursuant to California Civil Code Section 1951.2,
(i) an interest rate equal to the Agreed Interest Rate shall be used where
permitted, and (ii) the term “rent” includes Base Monthly Rent and Additional
Rent. Such damages shall include:

(1) The worth at the time of award of the amount by which the unpaid rent for
the balance of the term after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably avoided, 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%); and

(2) Any other amount necessary to compensate Landlord for all detriment
proximately caused by Tenant’s failure to perform Tenant’s obligations under
this Lease, or which in the ordinary course of things would be likely to result
therefrom, including the following: (i) expenses for cleaning, repairing or
restoring the Premises; (ii) expenses for altering, remodeling or otherwise
improving the Premises for the purpose of reletting, including installation of
leasehold improvements (whether such installation be funded by a reduction of
rent, direct payment or allowance to a new tenant, or otherwise); (iii) broker’s
fees, advertising costs and other expenses of reletting the Premises; (iv) costs
of carrying the Premises, such as taxes, insurance premiums, utilities and
security precautions; (v) expenses in retaking possession of the Premises; and
(vi) attorneys’ fees and court costs incurred by Landlord in retaking possession
of the Premises and in releasing the Premises or otherwise incurred as a result
of Tenant’s default.

F. Non Exclusive Remedies. Nothing in this Section 13.2 shall limit Landlord’s
right to indemnification from Tenant as provided in Section 7.2 and
Section 10.3.

 

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13.3 Waiver: One party’s consent to or approval of any act by the other party
requiring the first party’s consent or approval shall not be deemed to waive or
render unnecessary the first party’s consent to or approval of any subsequent
similar act by the other party. The receipt by Landlord of any rent or payment
with or without knowledge of the breach of any other provision hereof shall not
be deemed a waiver of any such breach unless such waiver is in writing and
signed by Landlord. No delay or omission in the exercise of any right or remedy
accruing to either party upon any breach by the other party under this Lease
shall impair such right or remedy or be construed as a waiver of any such breach
theretofore or thereafter occurring. The waiver by either party of any breach of
any provision of this Lease shall not be deemed to be a waiver of any subsequent
breach of the same or of any other provisions herein contained.

13.4 Limitation On Exercise of Rights: At any time that an Event of Tenant’s
Default has occurred and remains uncured, (i) it shall not be unreasonable for
Landlord to deny or withhold any consent or approval requested of it by Tenant
which Landlord would otherwise be obligated to give, and (ii) Tenant may not
exercise any option to extend, right to terminate this Lease, or other right
granted to it by this Lease which would otherwise be available to it.

13.5 Waiver by Tenant of Certain Remedies: Tenant waives the provisions of
Sections 1932(1), 1941 and 1942 of the California Civil Code and any similar or
successor law regarding Tenant’s right to terminate this Lease or to make
repairs and deduct the expenses of such repairs from the rent due under this
Lease. Tenant hereby waives any right of redemption or relief from forfeiture
under the laws of the State of California, or under any other present or future
law, including the provisions of Sections 1174 and 1179 of the California Code
of Civil Procedure.

ARTICLE 14

ASSIGNMENT AND SUBLETTING

14.1 Transfer by Tenant: The following provisions shall apply to any assignment,
subletting or other transfer by Tenant or any subtenant or assignee or other
successor in interest of the original Tenant (collectively referred to in this
Section 14.1 as “Tenant”):

A. Transfer. Tenant shall not do any of the following (collectively referred to
herein as a “Transfer”), whether voluntarily, involuntarily, by operation of law
or otherwise without the prior written consent of Landlord, which consent shall
not be unreasonably withheld, conditioned or delayed: (i) sublet all or any part
of the Premises or allow it to be sublet, occupied or used by any other person
(the contractors, directors, officers, agents and servants of Tenant excepted)
whether by sublease, license, concession, franchise, agency, or management
agreement; (ii) assign its interest in this Lease; (iii) mortgage or encumber
the Lease (or otherwise use the Lease as a security device) in any manner; or
(iv) materially amend or modify an assignment, sublease or other transfer that
has been previously approved by Landlord. Tenant shall reimburse Landlord, in an
amount not to exceed Five Thousand and No/100 Dollars ($5,000.00), for all
reasonable, out-of-pocket attorneys’ fees and other costs incurred by Landlord
in connection with the evaluation, processing, and/or documentation of any
requested Transfer, whether or not Landlord’s consent is granted. Landlord’s
reasonable costs shall include the cost of any review or investigation performed
by Landlord or consultant acting on Landlord’s behalf of (i) Hazardous Materials
used, stored, released, or disposed of by the potential Subtenant or Assignee,
and/or (ii) violations of Hazardous Materials Laws by the Tenant or the proposed
Subtenant or Assignee. Any Transfer so approved by Landlord shall not be
effective until Tenant has delivered to Landlord an executed counterpart of the
document evidencing the Transfer which (i) is in a form reasonably approved by
Landlord, (ii) contains the same terms and conditions as stated in Tenant’s
notice given to Landlord pursuant to Section 14.1B, and (iii) in the case of an
assignment of the Lease, contains the agreement of the proposed transferee to
assume all obligations of Tenant under this Lease first accruing after the

 

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effective date of such Transfer and to remain jointly and severally liable
therefor with Tenant. Any attempted Transfer without Landlord’s required consent
shall constitute an Event of Tenant’s Default and shall be voidable at
Landlord’s option. Landlord’s consent to any one Transfer shall not constitute a
waiver of the provisions of this Section 14.1 as to any subsequent Transfer or a
consent to any subsequent Transfer. No Transfer, even with the consent of
Landlord, shall relieve Tenant of its personal and primary obligation to pay the
rent and to perform all of the other obligations to be performed by Tenant
hereunder. The acceptance of rent by Landlord from any person shall not be
deemed to be a waiver by Landlord of any provision of this Lease or to be a
consent to any Transfer.

B. Procedure. At least thirty (30) days before a proposed Transfer is to become
effective, Tenant shall give Landlord written notice of the proposed terms of
such Transfer and request Landlord’s approval, which notice shall include the
following: (i) the name and legal composition of the proposed transferee; (ii) a
current financial statement of the transferee, financial statements of the
transferee covering the preceding three years if the same exist, and (if
available) an audited financial statement of the transferee for a period ending
not more than one year prior to the proposed effective date of the Transfer, all
of which statements are prepared in accordance with generally accepted
accounting principles; (iii) the nature of the proposed transferee’s business to
be carried on in the Premises; (iv) all consideration to be given on account of
the Transfer; and (v) an accurately filled out response to Landlord’s standard
hazardous materials questionnaire. Tenant shall provide to Landlord such other
information as may be reasonably requested by Landlord, and which is reasonably
available to, or acquirable by, Tenant, within seven (7) days after Landlord’s
receipt of such notice from Tenant. Landlord shall respond in writing to
Tenant’s request for Landlord’s consent to a Transfer within the later of
(i) twenty (20) days of receipt of such request together with the required
accompanying documentation, or (ii) ten (10) days after Landlord’s receipt of
all information which Landlord reasonably requests, and which is reasonably
available to, or acquirable by, Tenant, within seven (7) days after it receives
Tenant’s first notice regarding the Transfer in question. If Landlord fails to
respond in writing within said period, then Tenant shall provide a second
written notice to Landlord requesting such consent and if Landlord fails to
respond within seven (7) days after receipt of such second notice, then Landlord
will be deemed to have consented to such Transfer. Tenant shall promptly notify
Landlord of any modification to the proposed terms of such Transfer, which shall
also be subject Landlord’s consent in accordance with the same process for
obtaining Landlord’s initial consent to such Transfer.

C. Recapture. In the event that Tenant requests Landlord’s approval to make any
Transfer in accordance with this Section 14.1, Landlord shall have the right to
terminate this Lease in the case of an assignment of this Lease or a sublease of
substantially all of the Premises for substantially the remainder of the Lease
Term (for purposes hereof, a sublease shall be deemed to be for the remainder of
the Lease Term if such sublease shall expire during the final three (3) months
of the Lease Term). In the event Landlord elects to so terminate this Lease,
then such termination shall be effective fifteen (15) days after Landlord has
notified Tenant in writing of such election. Upon such termination, Tenant shall
be released from any further obligation under this Lease, and Landlord and
Tenant shall execute a cancellation and release with respect to the Lease to
effect such termination. Notwithstanding anything to the contrary set forth
herein, in the event that Landlord elects to terminate this Lease pursuant to
this Section 14.1.C, Tenant shall have the right to void such election by
Landlord by delivering written notice to Landlord of its election to withdraw
Tenant’s request to make such Transfer within five (5) business days following
Tenant’s receipt of notice from Landlord terminating this Lease.

D. Other Requirements. If Landlord consents to a Transfer proposed by Tenant,
Tenant may enter into such Transfer, and if Tenant does so, the following shall
apply:

(1) Tenant shall not be released of its liability for the performance of all of
its obligations under the Lease.

 

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(2) If Tenant assigns its interest in this Lease, then Tenant shall pay to
Landlord fifty percent (50%) of all Subrent (as defined in Section 14.1D(5))
received by Tenant. In the case of assignment, the amount of Subrent owed to
Landlord shall be paid to Landlord on the same basis, whether periodic or in
lump sum, that such Subrent is paid to Tenant by the assignee.

(3) If Tenant sublets any part of the Premises, then with respect to the space
so subleased, Tenant shall pay to Landlord fifty percent (50%) of the positive
difference, if any, between (i) all Subrent paid by the subtenant to Tenant,
less (ii) the sum of all Base Monthly Rent and Additional Rent allocable to the
space sublet. Such amount shall be paid to Landlord on the same basis, whether
periodic or in lump sum, that such Subrent is paid to Tenant by its subtenant.

(4) Tenant’s obligations under this Section 14.1D shall survive any Transfer,
and Tenant’s failure to perform its obligations hereunder following any
applicable notice and cure period set forth in this Lease shall be an Event of
Tenant’s Default. At the time Tenant makes any payment to Landlord required by
this Section 14.1D, Tenant shall deliver an itemized statement of the method by
which the amount to which Landlord is entitled was calculated, certified by
Tenant as true and correct to Tenant’s actual knowledge. Landlord shall have the
right at reasonable intervals, during normal business hours and upon reasonable
prior notice to Tenant, to inspect Tenant’s books and records relating to the
payments due hereunder. Promptly upon request therefor, Tenant shall deliver to
Landlord copies of all bills, invoices or other documents upon which its
calculations are based. Landlord may condition its approval of any Transfer upon
obtaining a certification from both Tenant and the proposed transferee of all
Subrent and other amounts that are to be paid to Tenant in connection with such
Transfer.

(5) As used in this Section 14.1D, the term “Subrent” shall mean any
consideration of any kind received, or to be received, by Tenant as a result of
the Transfer, if such sums are related to Tenant’s interest in this Lease or in
the Premises, including payments from or on behalf of the transferee (in excess
of the book value thereof) for Tenant’s assets, fixtures, leasehold
improvements, inventory, accounts, equipment and furniture, less the reasonable,
out-of-pocket expenses incurred by Tenant for attorneys’ fees, brokerage
commissions and/or improvements to the Premises made in connection with the
Transfer.

E. Deemed Transfers. Subject to the Permitted Transfer provisions of
Section 14.1.F, below, the term “Transfer” shall include any of the following,
whether voluntary or involuntary and whether effected by death, operation of law
or otherwise:

(1) If Tenant is a partnership or limited liability company:

(a) A change in ownership effected voluntarily, involuntarily, or by operation
of law of fifty percent (50%) or more of the partners or members or fifty
percent (50%) or more in the aggregate of the partnership or membership
interests, whether in a single transaction or a series of related transactions
(other than transfers to immediate family members, to a living trust for estate
planning purposes or by will or intestacy); or

(b) The sale, mortgage, hypothecation, pledge or other encumbrance at any time
of more than an aggregate of fifty percent (50%) of the value of Tenant’s
assets; or

(c) The dissolution of the partnership, limited liability company or other
entity without its immediate reconstitution.

 

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(2) If Tenant is a closely held corporation (i.e., one whose stock is not
publicly held and not traded through an exchange or over the counter):

(a) The sale or other transfer of more than an aggregate of fifty percent
(50%) of the voting shares of Tenant or more in the aggregate, whether in a
single transaction or a series of related transactions;

(b) The sale, mortgage, hypothecation, pledge or other encumbrance at any time
of more than an aggregate of fifty percent (50%) of the value of Tenant’s
assets; or

(c) The dissolution, merger, consolidation, or other reorganization of Tenant.

F. Permitted Transfers. Notwithstanding anything contained in Section 14.1,
Landlord’s consent is not required for (i) an assignment or subletting of all or
a portion of the Premises to an affiliate of Tenant (an entity which is
controlled by, controls, or is under common control with, Tenant), or an
assignment resulting from a non-bankruptcy reorganization of Tenant, (ii) a sale
of corporate shares of capital stock in Tenant in connection with an initial
public offering of Tenant’s stock on a nationally-recognized stock exchange or
over-the-counter market, (iii) an assignment of the Lease to an entity which
acquires all or substantially all of the stock or assets of Tenant, (iv) an
assignment of the Lease to an entity which is the resulting entity of a merger
or consolidation of Tenant during the Lease Term, (v) an assignment of the Lease
to an entity acquiring and continuing that portion of Tenant’s business
operations conducted at or from the Premises, or (vi) a sublease to a separate
entity resulting from the sale or spin-off of a separate business division of
Tenant that conducts its business operations at or from the Premises, as long as
the following conditions are met and Tenant otherwise complies with the other
provisions of Section 14.1 (each such Transfer shall be referred to as a
“Permitted Transfer”):

(a) At least ten (10) business days before the Transfer (or, if a
confidentiality provision in the Permitted Transfer agreement or applicable Laws
preclude such prior notice, then within ten (10) days following such Permitted
Transfer), Landlord receives written notice of the Transfer (as well as any
documents or information reasonably requested by Landlord regarding the Transfer
or the transferee);

(b) There is no existing Event of Tenant’s Default and the Transfer is not a
subterfuge by Tenant to avoid its obligations under this Lease;

(c) If the Transfer is an assignment under clauses (i), (iii), (iv) or (v) of
this Section 14.1.F, above, the transferee assumes in writing all of Tenant’s
obligations under this Lease relating to the Premises and accruing after the
date of such assignment, and the liability of such transferee thereunder shall
be joint and several with Tenant;

(d) If the Transfer is an assignment under clauses (iii) or (iv) of this
Section 14.1.F, above, the transferee has a tangible net worth (exclusive of
goodwill), as evidenced by financial statements delivered to Landlord and
certified by an independent certified public accountant in accordance with
generally accepted accounting principles that are consistently applied (“Net
Worth”), at least equal in all material respects to Tenant’s Net Worth
immediately preceding the date of the Transfer; and

(e) If the Transfer is an assignment under clauses (i) or (v) of this
Section 14.1.F, above, the transferee has a Net Worth that is sufficient (as
determined by Landlord in its reasonable discretion) in light of the obligations
under this Lease undertaken by the transferee in connection with such Transfer,
and as long as the Transfer is not a subterfuge to avoid the restrictions of
this Lease.

 

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For purposes hereof, the term “Control” means the direct or indirect ownership
of more than fifty percent (50%) of the voting securities of an entity or
possession of the right to vote more than fifty percent (50%) of the voting
interest in the ordinary direction of the entity’s affairs. Landlord shall not
be entitled to terminate the Lease pursuant to Section 14.1C due to a Permitted
Transfer or to receive any part of any Subrent resulting from a Permitted
Transfer that would otherwise be due it pursuant to Section 14.1D.

G. Reasonable Standards. The consent of Landlord to a Transfer may not be
unreasonably withheld, provided that it is agreed to be reasonable for Landlord
to consider any of the following reasons, which list is not exclusive, in
electing to deny consent:

(1) In Landlord’s reasonable judgment, the financial strength or credit, of the
proposed transferee at the time of the proposed Transfer is not sufficient to
perform the Transferee’s monetary and non-monetary obligations under the terms
of the proposed Transfer; provided it shall only be reasonable to consider the
financial strength and/or credit of the proposed transferee if Tenant’s tangible
net worth (as determined in accordance with GAAP) is not reasonably sufficient
in light of Tenant’s obligations under this Lease, taking into account all other
financial obligations of Tenant;

(2) A proposed transferee whose occupation of the Premises would cause a
material diminution in the value of the Building or Project;

(3) A proposed transferee whose use would require improvements to or changes in
any utility or telecommunication capacity currently serving the Building or the
Project, unless the Tenant or the proposed transferee pays for the costs of such
improvements or changes;

(4) A proposed transferee whose use of the Premises would not be permitted under
Section N of the Summary;

(5) The existence of any Event of Tenant’s Default;

(6) Either the proposed transferee, or any person or entity which directly or
indirectly, controls, is controlled by, or is under common control with, the
proposed transferee or an affiliate of the proposed transferee, is negotiating
with Landlord to lease space in the Project at such time (to the extent
comparable space is available for lease in the Project);

(7) The proposed transferee is a governmental agency or unit, a non-profit or
charitable entity or organization or an existing tenant in the Project;

(8) The proposed transferee will use, store or handle Hazardous Materials in or
about the Premises of a type, nature or quantity not then acceptable to Landlord
(provided that the Hazardous Materials, and their respective quantities, which
are specifically listed on the Approved Hazardous Materials Exhibit shall in no
event be unacceptable to Landlord for purposes of this Section 14.1.G(10)); or

(9) The location or configuration of the portion of the Premises to be sublet or
assigned violates applicable Laws (including, without limitation, building
codes).

H. Reasonable Restriction. The restrictions on Transfer described in this Lease
are acknowledged by Tenant to be reasonable for all purposes, including, without
limitation, the provisions of California Civil Code (the “Code”)
Section 1951.4(b)(2). Tenant expressly waives any rights which it might
otherwise be deemed to possess pursuant to applicable law, including, without
limitation, Section 1997.040 of the Code, to limit any remedy of Landlord
pursuant to Section 1951.2 or 1951.4 of the Code by means of proof that
enforcement of a restriction on use of the Premises would be unreasonable.

 

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I. Restrictions on Marketing the Space. Tenant may not promote or advertise the
availability of the Leased Premises or any part thereof unless Landlord has
approved Tenant’s advertising or promotional materials in writing, which
approval shall not be unreasonably withheld, conditioned or delayed.

J. Occupancy by Others. Notwithstanding any contrary provision of this
Article 14, Tenant shall have the right (without the payment of any Subrent,
without being subject to Section 14.1.C, and without the receipt of Landlord’s
consent, but only following prior written notice to Landlord), to permit the
occupancy of up to a total of fifteen thousand (15,000) rentable square feet of
the Premises to Tenant’s related (but not affiliated) parties and vendors
(“Tenant’s Occupants”), on and subject to the following conditions: (i) such
individuals or entities shall not be permitted to occupy a separately demised
portion of the Premises which contains an entrance to such portion of the
Premises other than the primary entrance to the Premises; (ii) all such
individuals or entities shall be of a character and reputation consistent with
the quality of the Project; and (iii) such occupancy shall not be a subterfuge
by Tenant to avoid its obligations under this Lease or the restrictions on
Transfers pursuant to this Article 14. Tenant shall promptly supply Landlord
with any documents or information reasonably requested by Landlord regarding any
such individuals or entities. Any occupancy permitted under this Section 14.1.J
shall not be deemed a Transfer under this Article 14. Notwithstanding the
foregoing, no such occupancy shall relieve Tenant from any liability under this
Lease.

14.2 Transfer By Landlord: Landlord and its successors in interest shall have
the right to transfer their interest in this Lease and the Project at any time
and to any person or entity. In the event of any such transfer, the Landlord
originally named herein (and, in the case of any subsequent transfer, the
transferor) from the date of such transfer, shall be automatically relieved,
without any further act by any person or entity, of all liability for the
performance of the obligations of the Landlord hereunder which may first accrue
after the date of such transfer. After the date of any such transfer, the term
“Landlord” as used herein shall mean the transferee of such interest in the
Premises.

ARTICLE 15

GENERAL PROVISIONS

15.1 Landlord’s Right to Enter: Landlord and its agents may enter the Premises
at any reasonable time after giving at least one (1) business days’ prior notice
to Tenant (and immediately in the case of emergency) for the purpose of:
(i) inspecting the same; (ii) posting notices of non-responsibility;
(iii) supplying any service to be provided by Landlord to Tenant; (iv) showing
the Premises to prospective purchasers or mortgagees; (v) showing the Premises
to prospective tenants during the last twelve (12) months of the Lease Term;
(vi) making necessary alterations, additions or repairs; and (vii) performing
Tenant’s obligations when an Event of Tenant’s Default has occurred;
(viii) responding to an emergency. Landlord shall have the right to use any and
all means Landlord may deem necessary and proper to enter the Premises in an
emergency. Notwithstanding anything set forth in this Article 15 to the
contrary, Tenant may designate certain areas of the Premises as “Secured Areas”
should Tenant require such areas for the purpose of securing certain valuable
property or confidential information. In connection with the foregoing and
except in the event of an emergency, Landlord shall comply with any commercially
reasonable security requirements of Tenant during any entry by Landlord into
such Secured Areas. Any entry into the Premises obtained by Landlord in
accordance with this Section 15.1 shall not be a forcible or unlawful entry
into, or a detainer of, the Premises, or an eviction, actual or constructive, of
Tenant from the Premises. In addition, Landlord shall use commercially
reasonable efforts to ensure that any entry by Landlord into the Premises in
accordance with this Section 15.1 will not unreasonably interfere with Tenant’s
operations from the Premises for the Permitted Use.

 

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15.2 Surrender of the Premises: Upon the expiration or sooner termination of
this Lease, Tenant shall vacate and surrender the Premises to Landlord in the
same condition as existed at the Commencement Date, except for (i) reasonable
wear and tear, (ii) damage caused by any peril or condemnation,
(iii) contamination by Hazardous Materials for which Tenant is not responsible
pursuant to Section 7.2, (iv) alterations or other improvements in the Premises
which Tenant is permitted to surrender at the expiration or earlier termination
of this Lease, and (v) repairs which are the responsibility of Landlord under
this Lease. In this regard, normal wear and tear shall be construed to mean wear
and tear caused to the Premises by the natural aging process which occurs in
spite of prudent application of commercially reasonable standards for
maintenance, repair and janitorial practices, and does not include items of
neglected or deferred maintenance. In any event, Tenant shall cause the
following to be done prior to the expiration or the sooner termination of this
Lease: (i) the HVAC system shall be serviced by a reputable and licensed service
firm and left in good operating condition and repair, reasonable wear and tear,
damage caused by any peril or condemnation, and repairs which are the
responsibility of Landlord under this Lease excepted; and (iii) the plumbing and
electrical systems and lighting shall be placed in good order and repair
(including replacement of any burned out, discolored or broken light bulbs,
ballasts, or lenses), reasonable wear and tear, damage caused by any peril or
condemnation, and repairs which are the responsibility of Landlord under this
Lease. Tenant shall, prior to the expiration or sooner termination of this
Lease, remove any Tenant’s Alterations which Tenant is required to remove
pursuant to Section 5.2 and repair all damage caused by such removal, reasonable
wear and tear, damage caused by any peril or condemnation, and repairs which are
the responsibility of Landlord under this Lease excepted. If the Premises are
not so surrendered at the termination of this Lease, Tenant shall be liable to
Landlord for all costs incurred by Landlord in returning the Premises to the
required condition, plus interest on all costs incurred at the Agreed Interest
Rate. Tenant shall indemnify Landlord against loss or liability resulting from
delay by Tenant in so surrendering the Premises, including, without limitation,
any claims made by any succeeding tenant or losses to Landlord due to lost
opportunities to lease to succeeding tenants and losses and damages suffered by
Landlord due to lost opportunities to lease any portion of the Premises to any
such succeeding tenant or prospective tenant, together with, in each case,
actual attorneys’ fees and costs.

15.3 Holding Over: This Lease shall terminate without further notice at the
expiration of the Lease Term. Any holding over by Tenant after expiration of the
Lease Term shall not constitute a renewal or extension of the Lease or give
Tenant any rights in or to the Premises except as expressly provided in this
Lease. Any holding over after such expiration with the written consent of
Landlord shall be construed to be a tenancy from month to month on the same
terms and conditions herein specified insofar as applicable except that Base
Monthly Rent shall be increased to an amount equal to one hundred fifty percent
(150%) of the Base Monthly Rent payable during the last full calendar month of
the Lease Term. In any event, no provision of this Section 15.3 shall be deemed
to waive Landlord’s right of reentry or any other right under this Lease or at
law. Additionally, in the event that upon termination of the Lease, Tenant has
not fulfilled its obligation with respect to repairs and cleanup of the Premises
or any other Tenant obligations as set forth in this Lease, then Landlord shall
have the right to perform any such obligations as it deems necessary at Tenant’s
sole cost and expense.

15.4 Subordination: Concurrently with its execution and delivery of this Lease,
Landlord shall provide Tenant a subordination, non-disturbance and attornment
agreement (the “Concurrent SNDAA”) from Landlord’s existing “Lienholder”, as
that term is defined in Section 15.5, below. Tenant covenants and agrees that
this Lease is subject and subordinate to any Security Instrument and to any
advances made on the security thereof and to any and all increases, renewals,
modifications, consolidations, replacements and extensions thereof. This clause
shall be self operative and no further instrument of subordination

 

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need be required by any owner or holder of any such ground lease, mortgage, deed
of trust or security agreement; provided, however, that in consideration of and
a condition precedent to Tenant’s agreement to subordinate this Lease to any
future Security Instrument, shall be the receipt by Tenant of a subordination
non-disturbance and attornment agreement in a commercially reasonable form
provided by the “Lienholder” (as defined in Section 15.5, below), which requires
such Lienholder to accept this lease, and not to disturb Tenant’s possession, so
long as an Event of Tenant’s Default has not occurred and be continuing (a
“SNDAA”), executed by Landlord and such Lienholder. Further, in confirmation of
such subordination, at Landlord’s request, Tenant shall execute promptly any
appropriate and commercially reasonable certificate or instrument that Landlord
may request. Landlord hereby represents and warrants that as of the Effective
Date, Prudential Mortgage Capital Company is the only existing Lienholder with
respect to the Building and the Premises. Notwithstanding the foregoing, any
Lienholder shall have the right to elect, by written notice given to Tenant, to
have this Lease be superior to its Security Instrument. In the event of the
enforcement by any holder of the Security Instrument (“Successor Landlord”) of
the remedies provided for by law or by such Security Instrument, at Successor
Landlord’s election, Tenant will attorn to and recognize as its landlord, and
become the tenant of, such Successor Landlord, without any change in the terms
or other provisions of this Lease or without the execution of any further
instrument by Tenant; provided, however, that such Successor Landlord or
successor in interest shall not be bound by (a) any payment of Base Monthly Rent
or Additional Rent for more than one (1) month in advance that is not actually
received by such Successor Landlord (provided that (1) any abatement of Base
Monthly Rent or Additional Rent to which Tenant is entitled shall not be
considered “prepaid rent” for purposes of this Section 15.4, and (2) any payment
by Tenant of Tenant’s Share of Operating Expenses in advance in estimated
monthly installments shall not impact any annual reconciliation of Operating
Expenses pursuant to Section 8.1), (b) any amendment or modification of this
Lease that would reduce or shorten any obligations of Tenant under this Lease,
or materially impair Landlord’s rights under this Lease, or any waiver of the
terms of this Lease, made without the written consent of the Lienholder, which
consent shall not be unreasonably withheld, conditioned or delayed, (c) any
offset right that Tenant may have against any former Landlord relating to any
event or occurrence before the date of attornment that is not specifically
allowed under the terms of this Lease; (d) except as provided in clause (c),
above, any obligation to pay Tenant any sum(s) that any former Landlord owed to
Tenant except to the extent such sums, if any, shall have actually been
delivered to Successor Landlord by way of an assumption of escrow accounts or
otherwise, (e) any obligation to pay Tenant any security deposited with a former
Landlord, except to the extent such security was actually delivered to such
Successor Landlord; or (f) any obligation to commence or complete any initial
construction of improvements in the Premises or any expansion or rehabilitation
of existing improvements thereon, provided that such Successor Landlord shall
satisfy all ongoing maintenance and repair obligations of Landlord under this
Lease. Upon request by such Successor Landlord, whether before or after the
enforcement of its remedies, Tenant shall execute and deliver an instrument or
instruments confirming and evidencing the attornment herein set forth This Lease
is further subject to and subordinate to all matters of record.

15.5 Lender Protection: Tenant will give the owners or holders of any Security
Instrument (“Lienholder”), by registered mail, a copy of any notice of default
Tenant serves on Landlord, provided that Landlord or Lienholder previously
notified Tenant in writing the address of Lienholder. Tenant further agrees that
if Landlord fails to cure such default within a reasonable period of time after
Landlord’s receipt of such notice of default from Tenant, then Tenant will
provide written notice of such failure to Lienholder and Lienholder will have an
additional thirty (30) days within which to cure the default. Lienholder shall
have no obligation to cure (and shall have no liability or obligation for not
curing) any breach or default by Landlord, except to the extent that Lienholder
agrees or undertakes otherwise in writing. If the default cannot be cured within
the additional thirty (30) day period, then Lienholder will have such additional
time as may be necessary to effect the cure if, within the thirty (30) day
period, Lienholder has commenced and is diligently pursuing the cure (including,
without limitation, commencing foreclosure proceedings if necessary to effect
the cure), and provided that Tenant’s use of the Premises for the Permitted Use
is not materially impaired during such period.

 

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15.6 Estoppel Certificates and Financial Statements: At all times during the
Lease Term, Tenant agrees, following any request by Landlord, promptly to
execute and deliver to Landlord within fifteen (15) days following delivery of
such request an estoppel certificate: (i) certifying that this Lease is
unmodified and in full force and effect or, if modified, stating the nature of
such modification and certifying that this Lease, as so modified, is in full
force and effect, (ii) stating the date to which the rent and other charges are
paid in advance, if any, (iii) acknowledging that there are not, to Tenant’s
knowledge, any uncured defaults on the part of any party hereunder or, if there
are uncured defaults, specifying the nature of such defaults, and
(iv) certifying such other information about the Lease as may be reasonably
required by Landlord. Tenant’s failure to deliver an estoppel certificate within
five (5) days after Landlord’s delivery of a second request therefor following
Tenant’s failure to deliver the same within fifteen (15) days following
Landlord’s initial request pursuant to this Section 15.6 shall be a conclusive
admission that, as of the date of the request for such statement: (i) this Lease
is unmodified except as may be represented by Landlord in said request and is in
full force and effect, (ii) there are no uncured defaults in Landlord’s
performance, and (iii) no rent has been paid more than thirty (30) days in
advance. At any time during the Lease Term Tenant shall, upon fifteen (15) days’
prior written notice from Landlord, provide Tenant’s most recent financial
statement and financial statements covering the twenty-four (24) month period
prior to the date of such most recent financial statement to any existing Lender
or to any potential Lender or buyer of the Premises, provided that such
financial statements are not publicly available. Such statements shall be
prepared in accordance with generally accepted accounting principles and, if
such is the normal practice of Tenant, shall be audited by an independent
certified public accountant.

Tenant hereby authorizes Landlord to obtain one or more credit reports on Tenant
at any time, and shall execute such further authorizations as Landlord may
reasonably require in order to obtain a credit report.

15.7 Consent: Whenever Landlord’s approval or consent is required by this Lease,
such approval or consent may be exercised in Landlord’s reasonable discretion,
unless a different standard has been expressly provided in this Lease for the
particular matter requiring Landlord’s consent or approval.

15.8 Notices: Any notice required or desired to be given regarding this Lease
shall be in writing and may be given by personal delivery, by facsimile, by
courier service, or by mail. A notice shall be deemed to have been given (i) on
the third business day after mailing if such notice was deposited in the United
States mail, certified or registered, postage prepaid, addressed to the party to
be served at its Address for Notices specified in Section Q or Section R of the
Summary (as applicable), (ii) when delivered if given by personal delivery, and
(iii) in all other cases when actually received at the party’s Address for
Notices. Any notice received on a Saturday, Sunday or locally or nationally
recognized holiday, such notice shall be deemed received on the next business
day. Either party may change its address by giving notice of the same in
accordance with this Section 15.8, provided, however, that any address to which
notices may be sent must be a California address.

15.9 Attorneys’ Fees: In the event either Landlord or Tenant shall bring any
action or legal proceeding for an alleged breach of any provision of this Lease,
to recover rent, to terminate this Lease or otherwise to enforce, protect or
establish any term or covenant of this Lease, the prevailing party shall be
entitled to recover as a part of such action or proceeding, or in a separate
action brought for that purpose, reasonable attorneys’ fees, court costs, and
experts’ fees as may be fixed by the court.

 

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15.10 Authority: If Landlord or Tenant is a corporation, limited liability
company, partnership or other entity, each individual executing this Lease on
behalf of said organization represents and warrants that he is duly authorized
to execute and deliver this Lease on behalf of said organization in accordance
with a duly adopted resolution or other applicable authorization of said
organization, and that this Lease is binding upon said organization in
accordance with its terms. Further, Tenant shall, within thirty (30) days
following a written request by Landlord, deliver to Landlord a certified copy of
a resolution or other applicable authorization of said organization authorizing
or ratifying the execution of this Lease.

15.11 Miscellaneous: Should any provision of this Lease prove to be invalid or
illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. The captions used in this Lease are for convenience only and shall not
be considered in the construction or interpretation of any provision hereof. Any
executed copy of this Lease shall be deemed an original for all purposes. This
Lease shall, subject to the provisions regarding assignment, apply to and bind
the respective heirs, successors, executors, administrators and assigns of
Landlord and Tenant. “Party” shall mean Landlord or Tenant, as the context
implies. If Tenant consists of more than one person or entity, then all members
of Tenant shall be jointly and severally liable hereunder. This Lease shall be
construed and enforced in accordance with the laws of the State of California,
without giving effect to any choice of law principles thereunder. The language
in all parts of this Lease shall in all cases be construed as a whole according
to its fair meaning, and not strictly for or against either Landlord or Tenant.
When the context of this Lease requires, the neuter gender includes the
masculine, the feminine, a partnership or corporation or joint venture, and the
singular includes the plural. The terms “shall”, “will” and “agree” are
mandatory. The term “may” is permissive. When a party is required to do
something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless a provision of this Lease
expressly requires reimbursement. Landlord and Tenant agree that (i) the gross
leasable area of the Premises includes any atriums, depressed loading docks,
covered entrances or egresses, and covered loading areas, (ii) each has had an
opportunity to determine to its satisfaction the actual area of the Premises,
(iii) all measurements of area contained in this Lease are conclusively agreed
to be correct and binding upon the parties, even if a subsequent measurement of
any one of these areas determines that it is more or less than the amount of
area reflected in this Lease, and (iv) any such subsequent determination that
the area is more or less than shown in this Lease shall not result in a change
in any of the computations of rent, improvement allowances, or other matters
described in this Lease where area is a factor. Where a party hereto is
obligated not to perform any act, such party is also obligated to restrain any
others within its control from performing said act, including the Agents of such
party. Landlord shall not become or be deemed a partner or a joint venturer with
Tenant by reason of the provisions of this Lease.

15.12 Termination by Exercise of Right: If this Lease is terminated pursuant to
its terms by the proper exercise of a right to terminate specifically granted to
Landlord or Tenant by this Lease, then this Lease shall terminate thirty
(30) days after the date the right to terminate is properly exercised (unless
another date is specified in that part of the Lease creating the right, in which
event the date so specified for termination shall prevail), the rent and all
other charges due hereunder shall be prorated as of the date of termination, and
neither Landlord nor Tenant shall have any further rights or obligations under
this Lease except for those that have accrued prior to the date of termination
or those obligations which this Lease specifically provides are to survive
termination. This Section 15.12 does not apply to a termination of this Lease by
Landlord as a result of an Event of Tenant’s Default.

 

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15.13 Brokerage Commissions: Landlord and Tenant each represents and warrants to
the other party that it has not authorized, retained or employed, or acted by
implication to authorize, retain or employ, any real estate broker or salesman
to act for it or on its behalf in connection with this Lease so as to cause the
other party to be responsible for the payment of a brokerage commission, except
for the Retained Real Estate Broker(s) identified in the Summary to this Lease.
Landlord and Tenant shall each indemnify, defend and hold the other party
harmless from and against any and all claims by any real estate broker or
salesman (other than the Retained Real Estate Brokers) whom the indemnifying
party authorized, retained or employed, or acted by implication to authorize,
retain or employ, to act for the indemnifying party in connection with this
Lease. Landlord shall pay a commission to the Retained Real Estate Broker(s)
pursuant to a separate agreement.

15.14 Force Majeure: Any prevention, delay or stoppage due to strikes,
lock-outs, inclement weather, labor disputes, inability to obtain labor,
materials, fuels or reasonable substitutes therefor, governmental restrictions,
regulations, controls, action or inaction, civil commotion, fire or other acts
of God, and other causes beyond the reasonable control of Landlord or Tenant
(except financial inability) shall excuse the performance by Landlord or Tenant,
as the case may be, for a period equal to the period of any said prevention,
delay or stoppage, of any obligation hereunder; provided, however, that nothing
set forth in this Section 15.4 shall (i) shorten any period during which Tenant
is otherwise entitled to an abatement of Rent, or (ii) extend any time periods
for commencing or completing repairs following casualty or condemnation set
forth in this Lease.

15.15 Entire Agreement: This Lease constitutes the entire agreement between the
parties, and there are no binding agreements or representations between the
parties except as expressed herein. Tenant acknowledges that neither Landlord
nor Landlord’s Agents has made any legally binding representation or warranty as
to any matter except those expressly set forth herein, including any warranty as
to (i) whether the Premises may be used for Tenant’s intended use under existing
Law, (ii) the suitability of the Premises or the Project for the conduct of
Tenant’s business, or (iii) the condition of any improvements. There are no oral
agreements between Landlord and Tenant affecting this Lease, and this Lease
supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between Landlord and Tenant or
displayed by Landlord to Tenant with respect to the subject matter of this
Lease. This instrument shall not be legally binding until it is executed by both
Landlord and Tenant. No subsequent change or addition to this Lease shall be
binding unless in writing and signed by Landlord and Tenant.

15.16 OFAC Compliance. Each party shall take any actions that may be required to
comply with the terms of the USA Patriot Act of 2001, as amended, any
regulations promulgated under the foregoing law, Executive Order No. 13224 on
Terrorist Financing, any sanctions program administrated by the U.S. Department
of Treasury’s Office of Foreign Asset Control or Financial Crimes Enforcement
Network, or any other laws, regulations or executive orders designed to combat
terrorism or money laundering, if applicable, to this Lease. Each party
represents and warrants to the other party that it is not an entity named on the
List of Specially Designated Nationals and Blocked Persons maintained by the
U.S. Department of Treasury, as last updated prior to the date of this Lease.

15.17 Outside Area. Subject to the terms and conditions contained in this
Section 15.17 and elsewhere in this Lease, and subject to Tenant obtaining and
maintaining all necessary and applicable governmental approvals, commencing as
of the Commencement Date, Tenant shall have an exclusive license during the
Lease Term for the exclusive use of certain space in the Common Area (the
“Outside Area”), as generally set forth on Exhibit A attached hereto, for the
storage of tanks and other equipment used in Tenant’s operations from the
Premises for the Permitted Use. The Outside Area shall not be included in the
floor area of the Premises for purposes of this Lease. The exclusive license to
use the Outside Area granted to Tenant hereby is personal to the Tenant
originally named in this Lease, any transferee pursuant to a Permitted Transfer
and any transferee pursuant to a Transfer approved by Landlord, and shall not be
otherwise assigned, sublet or otherwise transferred in any way or manner.

 

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Tenant acknowledges that it has been and is currently in possession of the
Outside Area pursuant to the Existing Lease and is fully aware of the condition
of the Outside Area and, therefore, Tenant shall continue to accept the Outside
Area in its “as-is” condition as of the Commencement Date, and Landlord shall
not be obligated to provide or pay for any work or services related to the
improvement of the Outside Area. Tenant also acknowledges that neither Landlord
nor any agent of Landlord has made any representation or warranty regarding the
condition of the Outside Area or the compliance of the Outside Area with any
applicable Laws. Tenant shall have the right, at Tenant’s sole cost and expense,
to alter, change or make improvements to the Outside Area, subject to Landlord’s
approval, which approval shall not be unreasonably withheld, conditioned or
delayed; provided, however, that Tenant shall be responsible, at its sole cost
and expense, for the maintenance and repair of the Outside Area (except to the
extent the same are necessitated by the active or gross negligence or willful
misconduct of Landlord or a Landlord Party). Tenant acknowledges and agrees that
although Tenant shall have the exclusive license to use the Outside Area during
the Lease Term, Landlord shall have no obligation to enforce Tenant’s exclusive
use of the Outside Area, and neither Landlord nor the Landlord Parties shall in
no event be liable for, and Landlord and the Landlord Parties are hereby
released from any responsibility for, any personal injury or property damage
sustained by Tenant in connection with or arising from any acts or omissions
with regard to the admission or exclusion from the Outside Area of any person;
provided, however, that Landlord hereby covenants and agrees that it shall not
grant any third party the right to use the Outside Area or to install any
equipment or structure on the Outside Area during the Lease Term, as the same
may be extended, and shall reasonably cooperate with Tenant at no cost to
Landlord to enforce Tenant’s exclusive license to use the Outside Area. Tenant
shall keep the Outside Area clean of all trash and debris and shall also keep
the surrounding areas clean of debris and trash arising from the use of the
Outside Area. Tenant agrees, at its own expense, to pay for all utilities used
by Tenant in the Outside Area (including, without limitation, all sales, use and
other taxes (but excluding real property taxes) imposed thereon by any
governmental authority). Tenant shall remove any personal property from the
Outside Area upon the expiration or earlier termination of this Lease, or upon
the termination of Tenant’s license under this Section 15.17, and shall repair
any damage to the Premises and Building caused by such removal, reasonable wear
and tear and damage caused by any peril or condemnation excepted. Except as set
forth in Section 4.4, above, Tenant shall not be permitted to display any
graphics, signs or insignias or the like in the Outside Area. Tenant’s use of
the Outside Area shall be subject to such reasonable additional rules and
regulations as Landlord may make from time to time concerning the Outside Area;
provided, however, that to the extent there is a conflict between such rules and
regulations and the provisions of this Section 15.17, the provisions of this
Section 15.17 shall govern and control. Landlord hereby acknowledges and agrees
that Tenant’s use of the Outside Area as of the Effective Date of this Lease is
acceptable. Except as expressly set forth in this Section 15.17, all of the
terms, conditions, limitations and restrictions contained in this Lease
pertaining to the Premises and Tenant’s use thereof (excluding Tenant’s
obligation to pay Base Monthly Rent and the determination of Tenant’s Share)
shall apply equally to the Outside Area and Tenant’s use thereof, including,
without limitation, Tenant’s repair and maintenance obligations set forth in
Section 6.1, Tenant’s responsibilities and obligations with respect to Hazardous
Materials set forth in Section 7.2, Tenant’s indemnity of Landlord set forth in
Sections 7.2E and 10.3, and Tenant’s insurance obligations set forth in
Article 9. The license to use the Outside Area granted to Tenant hereby shall be
revocable by Landlord for cause upon written notice to Tenant, and Landlord
thereafter shall have the right to prevent Tenant’s access thereto. As used in
this Section 15.17, “cause” shall include, without limitation, any of the
following: (i) the license granted hereby constitutes a violation of or
otherwise conflicts with any law, statute, ordinance or other governmental rule,
regulation or requirement now in force or which may hereafter be enacted or
promulgated (unless Tenant changes its use of the Outside Area in order to
comply with such law, statute, ordinance or other governmental rule, regulation
or requirement); (ii) this Lease is terminated for any reason; or (iii) Tenant
fails, after notice and a reasonable opportunity to cure (but in no event more
than forty-five (45) days), to comply with any of the terms, conditions,
limitations or restrictions contained in this Section 15.17 or elsewhere in this
Lease which apply to the Outside Area or Tenant’s use thereof. In

 

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the event that Landlord makes a good faith determination that the license
granted hereby and/or the use of the Outside Area by Tenant threatens the safety
and/or security of persons or property, or endangers or otherwise interferes
with the use and occupancy of the Building or Project by Landlord, its
employees, agents or contractors or other tenants or occupants of the Building
or Project, then upon receipt of written notice from Landlord identifying with
reasonable specificity the grounds therefor, Tenant shall immediately
discontinue its use of the Outside Area until such time as Tenant has mitigated
such threat, danger or interference to Landlord’s approval, such approval not to
be unreasonably withheld, conditioned or delayed.

15.18 Rooftop Rights. In accordance with, and subject to, the terms and
conditions set forth in Article 5, above, and this Section 15.17, Tenant may
install and maintain, at Tenant’s sole cost and expense, the following
equipment: (i) one (1) satellite dish/antennae on the roof of the Building for
receiving of signals or broadcasts (as opposed to the generation or transmission
of any such signals or broadcasts) and (ii) process equipment required to
service the business conducted by Tenant from within the Premises (all such
equipment is defined collectively as the “Operations Equipment”).
Notwithstanding anything to the contrary set forth in this Section 15.18,
Tenant’s installation, repair and maintenance and removal of such Operations
Equipment shall not invalidate any warranty held by Landlord with respect to the
roof of the Building.

A. Landlord makes no representations or warranties whatsoever with respect to
the condition of the roof of the Building, or the fitness or suitability of the
roof of the Building for the installation, maintenance and operation of the
Operations Equipment.

B. In the event Tenant elects to exercise its right to install any Operations
Equipment, then Tenant shall give Landlord prior notice thereof. Such Operations
Equipment shall be installed pursuant to plans and specifications approved by
Landlord (specifically including, without limitation, all mounting and
waterproofing details), which approval will not be unreasonably withheld,
conditioned, or delayed. In addition, the physical appearance, size and weight
of the Operations Equipment shall be subject to Landlord’s reasonable approval.
The location of any such installation of the Operations Equipment shall be
designated by Tenant subject to Landlord’s approval, which approval shall not be
unreasonably withheld, conditioned or delayed, and Landlord may require Tenant
to install screening around such Operations Equipment, at Tenant’s sole cost and
expense, as reasonably designated by Landlord. Tenant shall reimburse to
Landlord the actual, out-of-pocket costs reasonably incurred by Landlord in
approving such Operations Equipment. Notwithstanding any such review or approval
by Landlord, Tenant shall remain solely liable for any damage to any portion of
the roof or roof membrane, specifically including any penetrations, in
connection with Tenant’s installation, use, maintenance and/or repair of such
Operations Equipment, and Landlord shall have no liability therewith (except to
the extent caused by Landlord’s or Landlord’s Agents’ active gross negligence or
willful misconduct). Such Operations Equipment shall, in all instances, comply
with applicable governmental laws, codes, rules and regulations. In no event
shall any such Operations Equipment interfere with any existing rooftop
communication equipment or other existing equipment of any other tenant or
occupant of the Building or Project, or interfere with any existing rooftop
communication equipment or other existing equipment of any other third-party
with whom Landlord has any third-party agreement.

C. Tenant shall maintain such Operations Equipment, at Tenant’s sole cost and
expense. Tenant shall remove such Operations Equipment upon the expiration or
earlier termination of the Lease. In connection with any such removal, Tenant
and shall return the affected portion of the rooftop and the Premises to the
condition the rooftop and the Premises would have been in had no such Operations
Equipment been installed (reasonable wear and tear, damage caused by any peril
or condemnation, and repairs which are the responsibility of Landlord under this
Lease excepted).

 

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D. For the purposes of determining Tenant’s obligations under this Lease with
respect to its use of the Operations Equipment and areas of the Building in
which the Operations Equipment is located, the areas in which the Operations
Equipment is located (to the extent outside the Premises) shall be deemed to be
a portion of the Premises (but Tenant shall have no obligation to pay Rent on
such portion); consequently, all of the provisions of this Lease with respect to
Tenant’s obligations as to the Premises shall apply to the installation, use and
maintenance of the Operations Equipment, including, without limitation, the
provisions relating to insurance, indemnity, repairs and maintenance, and
compliance with Laws.

[the balance of this page has been intentionally left blank; signature page
follows]

 

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

 

LANDLORD:     TENANT:

M WEST PROPCO X, LLC,

a Delaware limited liability company

 

 

 

INTEVAC, INC.,

a Delaware corporation

By:   Divco West Real Estate Services, Inc.,     By:   /s/ Jeffrey Andreson   a
Delaware corporation     Name:   Jeffrey Andreson   Its Agent     Its:   EVP,
CFO, Secretary   By:   /s/ Steve Novick     Dated: 03/18/2014   Name:   Steve
Novick         Its:   Authorized Signatory     By:             Name:      
Dated: 03/21/2014     Its:             Dated:    

 

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EXHIBIT A

PROJECT SITE PLAN AND OUTLINE OF THE PREMISES

This Exhibit is intended only to show the general outline of the Project and
Premises. The depiction of interior windows, cubicles, modules, furniture and
equipment in this Exhibit, if shown, is for illustrative purposes only, but does
not mean that such items exist. Landlord is not required to provide, install or
construct any such items. It is not to be scaled; any measurements or distances
shown should be taken as approximate. The inclusion of elevators, stairways,
electrical and mechanical closets, and other similar facilities for the benefit
of occupants of the Building does not mean such items are part of the Premises.

 

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EXHIBIT B

TENANT WORK LETTER

This Tenant Work Letter shall set forth the terms and conditions relating to the
construction of the Tenant Improvements in the Premises. This Tenant Work Letter
is essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of the Premises. All references in this Tenant Work Letter
to Articles or Sections of “this Lease” shall mean the relevant portions of
Articles 1 through 15 of the Lease to which this Tenant Work Letter is attached
as Exhibit B, and all references in this Tenant Work Letter to Sections of “this
Tenant Work Letter” shall mean the relevant portions of Sections 1 through 5 of
this Tenant Work Letter.

SECTION 1

DELIVERY OF THE PREMISES AND BASE BUILDING

Tenant acknowledges that it is currently in possession and occupancy of the
Premises pursuant to the Existing Lease and is fully aware of the condition of
the Premises and, therefore, Tenant shall continue to accept the Premises in its
presently existing, “AS-IS” condition as of the date of this Lease. but subject
to Landlord’s ongoing repair, restoration and maintenance obligations under this
Lease.

SECTION 2

TENANT IMPROVEMENTS

2.1 Tenant Improvement Allowance. Tenant shall be entitled to a one-time tenant
improvement allowance (the “Tenant Improvement Allowance”), in the amount set
forth in Section T of the Summary to the Lease for the costs relating to the
initial design and construction of Tenant’s improvements to be installed in the
Premises (the “Tenant Improvements”). In no event shall Landlord be obligated to
make disbursements pursuant to this Tenant Work Letter in a total amount which
exceeds the Tenant Improvement Allowance. Tenant shall have until December 31,
2014 (which date shall be extended on a day-for-day basis for any delays in the
completion of the Tenant Improvements caused by (i) an event of force majeure as
set forth in Section 15.4 of the Lease, (ii) Tenant’s inability to obtain any
required permits despite Tenant’s diligent and good-faith efforts to obtain the
same, or (iii) delays caused by Landlord’s failure to comply with the terms of
this Tenant Work Letter (collectively, “Tenant Improvement Delays”)), to utilize
up to $5.00 per rentable square foot of the Premises of the Tenant Improvement
Allowance (i.e., up to $597,915.00) towards the costs relating to the initial
design and construction of the Tenant Improvements under this Lease or the
Companion Lease. In the event that Tenant has not fully utilized such amount by
December 31, 2014 (as such date may be extended by any Tenant Improvement
Delay), then Tenant’s only rights with respect to the Tenant Improvement
Allowance following such date shall be as set forth in Section 2.4 of this
Tenant Work Letter. Any Tenant Improvements that require the use of Building
risers, raceways, shafts and/or conduits, shall be subject to Landlord’s
reasonable rules, regulations, and restrictions, and that the amount and
location of any such cabling must be approved by Landlord, which approval shall
not be unreasonably withheld, conditioned or delayed. All Tenant Improvements
for which the Tenant Improvement Allowance has been made available shall be
deemed Landlord’s property under the terms of the Lease.

 

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2.2 Disbursement of the Tenant Improvement Allowance.

2.2.1 Tenant Improvement Allowance Items. Except as otherwise set forth in this
Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by
Landlord only for the following items and costs (collectively the “Tenant
Improvement Allowance Items”):

2.2.1.1 Payment of the fees of the “Architect” and the “Engineers,” as those
terms are defined in Section 3.1 of this Tenant Work Letter, which fees shall,
notwithstanding anything to the contrary contained in this Tenant Work Letter,
not exceed an aggregate amount equal to $5.00 per rentable square foot of the
Premises, and payment of the fees incurred by, and the cost of documents and
materials supplied by, Landlord and Landlord’s consultants in connection with
the preparation and review of the “Construction Drawings,” as that term is
defined in Section 3.1 of this Tenant Work Letter;

2.2.1.2 The payment of plan check, permit and license fees relating to
construction of the Tenant Improvements;

2.2.1.3 The cost of construction of the Tenant Improvements, including, without
limitation, testing and inspection costs, freight elevator usage, hoisting and
trash removal costs, and contractors’ fees and general conditions;

2.2.1.4 Costs incurred by Tenant in connection with the engagement of
specialized vendors for the relocation and installation of equipment from
Tenant’s photocathode facility located in Fremont, California (a floor plan of
which is attached to this Tenant Work Letter as Schedule 1 and incorporated
herein), as opposed to standard moving or relocation costs;

2.2.1.5 The cost of any changes in the Base building structure when such changes
are required by the Construction Drawings (including if such changes are due to
the fact that such work is prepared on an unoccupied basis), such cost to
include all direct architectural and/or engineering fees and expenses incurred
in connection therewith;

2.2.1.6 The cost of any changes to the Construction Drawings or Tenant
Improvements required by all applicable building codes (the “Code”);

2.2.1.7 The cost of connection of the Premises to the Building’s energy
management systems;

2.2.1.8 The cost of any project management consultants retained by Tenant;

2.2.1.9 The cost of the “Coordination Fee,” as that term is defined in
Section 4.2.2 of this Tenant Work Letter;

2.2.1.10 Sales and use taxes and Title 24 fees; and

2.2.1.11 All other reasonable, out-of-pocket costs actually expended by Landlord
and directly related to the construction of the Tenant Improvements, provided
such costs are approved by Tenant in advance, such approval not to be
unreasonably withheld, conditioned or delayed.

 

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2.2.2 Disbursement of Tenant Improvement Allowance. During the design of the
Tenant Improvements, Landlord shall make monthly disbursements of the Tenant
Improvement Allowance for Tenant Improvement Allowance Items for the benefit of
Tenant, and during the construction of the Tenant Improvements, Landlord shall
authorize the release of monies for the benefit of Tenant as follows.

2.2.2.1 Monthly Disbursements. On or before the first day of each calendar month
during the construction of the Tenant Improvements (or such other date as
Landlord may reasonably designate), Tenant shall deliver to Landlord: (i) a
request for payment of the “Contractor,” as that term is defined in Section 4.1
of this Tenant Work Letter, approved by Tenant, in a form reasonably approved by
Landlord, showing the schedule, by trade, of percentage of completion of the
Tenant Improvements in the Premises, detailing the portion of the work completed
and the portion not completed; (ii) invoices from the Contractor for labor
rendered and materials delivered to the Premises; (iii) executed mechanic’s lien
releases from all of Tenant’s Agents which shall comply with the appropriate
provisions, as reasonably determined by Landlord, of California Civil Code
Section 3262(d); and (iv) all other information reasonably requested by
Landlord. As between Landlord and Tenant, Tenant’s request for payment shall be
deemed Tenant’s acceptance and approval of the work furnished and/or the
materials supplied as set forth in Tenant’s payment request, but shall not
otherwise be deemed to waive any warranty or other obligation that the
Contractor may have pursuant to its contract with Tenant. Thereafter, Landlord
shall deliver a check to Tenant made jointly payable to Contractor and Tenant in
payment of the lesser of: (A) the amounts so requested by Tenant, as set forth
in this Section 2.2.2.1, above, less a ten percent (10%) retention (the
aggregate amount of such retentions to be known as the “Final Retention”)
(provided, however, that if Tenant’s request for payment or invoice from the
Contractor includes a ten percent (10%) retention, Landlord shall not withhold
an additional retention from its payment), and (B) the balance of any remaining
available portion of the Tenant Improvement Allowance (not including the Final
Retention), provided that Landlord does not dispute any request for payment
based on non-compliance of any work with the “Approved Working Drawings,” as
that term is defined in Section 3.4 below, or due to any substandard work.
Landlord’s payment of such amounts shall not be deemed Landlord’s approval or
acceptance of the work furnished or materials supplied as set forth in Tenant’s
payment request.

2.2.2.2 Final Retention. Subject to the provisions of this Tenant Work Letter, a
check for any Final Retention held by Landlord pursuant to Section 2.2.2.1,
above, payable jointly to Tenant and Contractor shall be delivered by Landlord
to Tenant following the completion of construction of the Premises, provided
that (i) Tenant delivers to Landlord properly executed mechanics lien releases
in compliance with both California Civil Code Section 3262(d)(2) and either
Section 3262(d)(3) or Section 3262(d)(4), (ii) the Tenant Improvements are in
compliance with the Approved Working Drawings, and (iii) Architect delivers to
Landlord a certificate, in a form reasonably acceptable to Landlord, certifying
that the construction of the Tenant Improvements in the Premises has been
substantially completed.

2.2.2.3 Other Terms. Landlord shall only be obligated to make disbursements from
the Tenant Improvement Allowance to the extent costs are incurred by Tenant for
Tenant Improvement Allowance Items. All Tenant Improvement Allowance Items for
which the Tenant Improvement Allowance has been made available shall be deemed
Landlord’s property under the terms of this Lease.

2.3 Building Standard Components. The quality of Tenant Improvements shall be
equal to or of greater quality than the quality of Building standard components
customary in buildings in comparable properties located in Santa Clara,
California, provided that the Tenant Improvements shall comply with any
specifications reasonably designated by Landlord and communicated to Tenant
prior to the design and construction of the Tenant Improvements.

 

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2.4 Unused Tenant Improvement Allowance.

2.4.1 Companion Lease Tenant Improvements. Tenant shall have until February 28,
2016 (as such date may be extended by any Tenant Improvement Delay) to elect to
apply any portion of the total amount of the Tenant Improvement Allowance that
remains unused following December 31, 2014 (the “Remaining Allowance”) to the
costs relating to the Tenant Improvements under this Lease or the Companion
Lease. In the event that Tenant has not fully utilized the Remaining Allowance
by February 28, 2016 (as such date may be extended by any Tenant Improvement
Delay), then all of such unused amounts shall revert to Landlord, and Tenant
shall have no further rights with respect thereto.

2.4.2 Base Rent Credit. In the event that after completion of the construction
of the Tenant Improvements and Landlord’s last disbursement of the Tenant
Improvement Allowance pursuant to Section 2.2 and, if applicable, Section 2.4.1,
above, any portion of the Tenant Improvement Allowance remains undisbursed and
unallocated (the “Unused Tenant Improvement Allowance”), Tenant shall have the
right, by written notice to Landlord, to elect to apply up to Fifty Thousand and
00/100 Dollars ($50,000.00) of any such Unused Tenant Improvement Allowance as a
credit against Base Rent next coming due under the Lease, provided that in any
given month the amount of such credit shall not exceed fifty percent (50%) of
the Base Rent otherwise due and owing for such month.

2.5 Failure to Disburse Tenant Improvement Allowance. If Landlord fails to
timely fulfill its obligation to fund any portion of the Tenant Improvement
Allowance, Tenant shall be entitled to deliver notice (the “Payment Notice”)
thereof to Landlord. If Landlord still fails to fulfill any such obligation
within twenty (20) business days after Landlord’s receipt of the Payment Notice
from Tenant and if Landlord fails to deliver notice to Tenant within such twenty
(20) business day period explaining Landlord’s reasons that Landlord believes
that the amounts described in Tenant’s Payment Notice are not due and payable by
Landlord (“Refusal Notice”), Tenant shall be entitled to offset the amount so
owed to Tenant by Landlord but not paid by Landlord (or if Landlord delivers a
Refusal Notice but only with respect to a portion of the amount set forth in the
Payment Notice and Landlord fails to pay such undisputed amount as required by
the next succeeding sentence, the undisputed amount so owed to Tenant), together
with interest at the Agreed Interest Rate from the last day of such twenty
(20) business day period until the date of offset, against Tenant’s next
obligations to pay Rent under the Lease. Notwithstanding the foregoing, Landlord
hereby agrees that if Landlord delivers a Refusal Notice disputing a portion of
the amount set forth in Tenant’s Payment Notice, Landlord shall pay to Tenant,
concurrently with the delivery of the Refusal Notice, the undisputed portion of
the amount set forth in the Payment Notice. However, if an Event of Tenant’s
Default exists under Article 13 of the Lease at the time that such offset would
otherwise be applicable, Tenant shall not be entitled to such offset until such
Default is cured. If Landlord delivers a Refusal Notice, and if Landlord and
Tenant are not able to agree on the disputed amounts to be so paid by Landlord,
if any, within ten (10) days after Tenant’s receipt of a Refusal Notice, Tenant
may commence a binding arbitration action with respect to such disputed amounts.
If Tenant prevails in any such action, the award shall include interest at the
Agreed Interest Rate calculated from the date of funding by Tenant, if any, or
the date such amount was otherwise due to Tenant, as the case may be, until the
date of Landlord’s payment of such award. Similarly, if Tenant prevails in any
such arbitration, Tenant shall be entitled to apply such award as a credit
against Tenant’s obligations to pay Rent under the Lease, and the award shall
include interest at the Agreed Interest Rate calculated from the date of funding
by Tenant, if any, until the date of Tenant’s application of such amounts as a
credit against Rent.

 

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SECTION 3

CONSTRUCTION DRAWINGS

3.1 Selection of Architect/Construction Drawings. Tenant shall retain an
architect/space planner approved by Landlord (the “Architect”) to prepare the
“Construction Drawings,” as that term is defined in this Section 3.1, which
approval shall not be unreasonably withheld, conditioned or delayed. Tenant
shall retain engineering consultants approved by Landlord (the “Engineers”) to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, life safety, and sprinkler work in the
Premises, which work is not part of the Base Building, which approval shall be
unreasonably withheld, conditioned or delayed. The plans and drawings to be
prepared by Architect and the Engineers hereunder shall be known collectively as
the “Construction Drawings.” Tenant shall be required to include in its
contracts with the Architect and the Engineers a provision which requires a
standard and customary license for the use of all Construction Drawings to be
transferred to Tenant and Landlord upon the Substantial Completion of the Tenant
Improvements, including, without limitation, a right to make copies thereof;
notwithstanding the foregoing, or anything to the contrary set forth herein,
Landlord shall have no right to license or use any of Tenant’s designs,
processes, business plans or other confidential or proprietary information
contained in the Construction Drawings, all of which shall be kept strictly
confidential by Landlord. All Construction Drawings shall be subject to
Landlord’s approval, which approval shall not be unreasonably withheld,
conditioned or delayed. Tenant shall cause Architect to verify, in the field,
the dimensions and conditions as shown on the relevant portions of the base
building plans, and Tenant and Architect shall be solely responsible for the
same, and Landlord shall have no responsibility in connection therewith.
Landlord’s review of the Construction Drawings as set forth in this Section 3,
shall be for its sole purpose and shall not imply Landlord’s review of the same,
or obligate Landlord to review the same, for quality, design, Code compliance or
other like matters. Accordingly, notwithstanding that any Construction Drawings
are reviewed by Landlord or its space planner, architect, engineers and
consultants, and notwithstanding any advice or assistance which may be rendered
to Tenant by Landlord or Landlord’s space planner, architect, engineers, and
consultants, Landlord shall have no liability whatsoever in connection therewith
and shall not be responsible for any omissions or errors contained in the
Construction Drawings, and Tenant’s waiver and indemnity set forth in this Lease
shall specifically apply to the Construction Drawings.

3.2 Final Space Plan. Subject to the terms and conditions of this Tenant Work
Letter, Landlord conceptually approves the relocation and installation of
equipment from Tenant’s photocathode facility located in Fremont, California as
set forth on Schedule 1 attached hereto (the “Fremont Relocation Plan”),
provided that Landlord reserves its right to approve the same as part of the
Approved Working Drawings for the Tenant Improvements pursuant to this Tenant
Work Letter. Tenant shall supply Landlord with four (4) copies signed by Tenant
of its final space plan for the Premises before any architectural working
drawings or engineering drawings have been commenced. The final space plan (the
“Final Space Plan”) shall include a layout and designation of all offices, rooms
and other partitioning, their intended use, and equipment to be contained
therein. Landlord may request clarification or more specific drawings for
special use items not included in the Final Space Plan. Landlord shall approve
or disapprove the Final Space Plan within five (5) business days after
Landlord’s receipt thereof, which approval shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding anything set forth herein to the
contrary, Landlord and Tenant hereby agree that it shall be deemed reasonable
for Landlord to withhold its approval of the Final Space Plan if a “Design
Problem” exists. A “Design Problem” shall mean and refer to any design criteria
which would (a) materially and adversely affect the Building Structure or the
base Building mechanical, electrical, life safety, plumbing, sprinkler and HVAC
systems installed or furnished by Landlord; (b) be in non-compliance with
applicable building codes or Laws; (c) cause material interference with other
tenants of the Project, or (d) materially and adversely affect the certificate
of occupancy or its legal equivalent for the Building or any portion thereof. If
Tenant is so advised, Tenant shall promptly cause the Final Space Plan to be
revised to correct any deficiencies or other matters Landlord may reasonably
require.

 

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3.3 Final Working Drawings. After the Final Space Plan has been approved by
Landlord, Tenant shall supply the Engineers with a complete listing of standard
and non-standard equipment and specifications, including, without limitation,
B.T.U. calculations, electrical requirements and special electrical receptacle
requirements for the Premises, to enable the Engineers and the Architect to
complete the “Final Working Drawings” (as that term is defined below) in the
manner as set forth below. Upon the approval of the Final Space Plan by Landlord
and Tenant, Tenant shall promptly cause the Architect and the Engineers to
complete the architectural and engineering drawings for the Premises, and
Architect shall compile a fully coordinated set of architectural, structural,
mechanical, electrical and plumbing working drawings in a form which is complete
to allow subcontractors to bid on the work and to obtain all applicable permits
(collectively, the “Final Working Drawings”) and shall submit the same to
Landlord for Landlord’s approval, which approval shall not be unreasonably
withheld, conditioned or delayed; provided that Landlord and Tenant hereby agree
that it shall be deemed reasonable for Landlord to withhold its approval of the
Final Working Drawings if a Design Problem exists or the Final Working Drawings
are not substantially consistent with the Final Space Plan. Tenant shall supply
Landlord with four (4) copies signed by Tenant of such Final Working Drawings.
Landlord shall advise Tenant within five (5) business days after Landlord’s
receipt of the Final Working Drawings for the Premises if the same is
unsatisfactory or incomplete in any respect, then the parties shall promptly
meet and confer and negotiate in good faith to reach an agreement on the Final
Working Drawings.

3.4 Approved Working Drawings. The Final Working Drawings shall be approved by
Landlord (the “Approved Working Drawings”) prior to the commencement of
construction of the Premises by Tenant. After approval by Landlord of the Final
Working Drawings, Tenant may submit the same to the appropriate municipal
authorities for all applicable building permits (the “Permits”). Tenant hereby
agrees that neither Landlord nor Landlord’s consultants shall be responsible for
obtaining any building permit or certificate of occupancy for the Premises with
respect to the Tenant Improvements, and that obtaining the same shall be
Tenant’s responsibility; provided, however, that Landlord shall cooperate with
Tenant in executing permit applications and performing other ministerial acts
reasonably necessary to enable Tenant to obtain any such permit or certificate
of occupancy. No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Landlord, which
consent may not be unreasonably withheld, conditioned or delayed. In the event
that Landlord fails to respond to a written request (an “Approval Request”) from
Tenant for approval of any change to the Approved Working Drawings which
requires Landlord’s prior written consent within three (3) business days after
Landlord’s receipt of such Approval Request, such failure to respond shall be
deemed Landlord’s approval of the proposed change set forth in the Approval
Request. In addition, in the event that Landlord disapproves of a proposed
change in an Approval Request, Landlord shall provide Tenant with a written
explanation of such disapproval and the parties shall thereafter meet and confer
and negotiate in good faith to reach an agreement with respect to such proposed
change. Notwithstanding the foregoing, Tenant may make changes to the Approved
Working Drawings without Landlord’s prior written consent (but with prompt
written notice to Landlord setting forth the type, scope and cost of such
change) in the event such changes (i) are required by the City of Santa Clara or
other applicable governmental body having jurisdiction over the Premises,
Building or Project and are substantially consistent with the design intent of
the Approved Working Drawings, or (ii) consist of minor field changes that
(A) are consistent with the intent or required for the proper execution of the
Approved Working Drawings, and (B) will not materially and adversely affect the
design, use or operation of the Premises or the Tenant Improvements.

 

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SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1 Tenant’s Selection of Contractors.

4.1.1 The Contractor. A general contractor shall be retained by Tenant to
construct the Tenant Improvements. Such general contractor (“Contractor”) shall
be subject to Landlord’s approval, which approval shall not be unreasonably
withheld, conditioned or delayed. Tenant shall obtain cost estimate bids from a
minimum of two (2) general contractors to construct the Tenant Improvements.

4.1.2 Tenant’s Agents. The Contractor and Tenant’s subcontractors, laborers,
materialmen, and suppliers used by Tenant and present at the Project are
collectively referred to herein as “Tenant’s Agents”. All HVAC, plumbing and
electrical subcontractors engaged by the Contractor shall be subject to
Landlord’s approval, which approval shall not be unreasonably withheld,
conditioned or delayed.

4.2 Construction of Tenant Improvements by Tenant’s Agents.

4.2.1 Construction Contract; Cost Budget. Prior to Tenant’s execution of the
construction contract and general conditions with Contractor (the “Contract”),
Tenant shall submit the Contract to Landlord for its approval, which approval
shall not be unreasonably withheld, conditioned or delayed. Prior to the
commencement of the construction of the Tenant Improvements, and after Tenant
has accepted all bids for the Tenant Improvements, Tenant shall provide Landlord
with a detailed breakdown, by trade, of the final costs to be incurred or which
have been incurred, as set forth more particularly in Sections 2.2.1.1 through
2.2.1.10, above, in connection with the design and construction of the Tenant
Improvements to be performed by or at the direction of Tenant or the Contractor,
which costs form a basis for the amount of the Contract (the “Final Costs”). The
amount equal to the difference between the amount of the Final Costs and the
amount of the Tenant Improvement Allowance (less any portion thereof already
disbursed by Landlord, or in the process of being disbursed by Landlord, on or
before the commencement of construction of the Tenant Improvements) shall be
referred to as the “Over-Allowance Amount”. The Over-Allowance Amount shall be
disbursed by Tenant prior to the disbursement of any portion of the Tenant
Improvement Allowance. In the event that, after the Final Costs have been
delivered by Tenant to Landlord, the costs relating to the design and
construction of the Tenant Improvements shall change, any additional costs
necessary to such design and construction in excess of the Final Costs, shall be
paid by Tenant promptly as an addition to the Over-Allowance Amount, but Tenant
shall continue to provide Landlord with the documents described in
Sections 2.2.2.1 (i), (ii), (iii) and (iv) of this Tenant Work Letter, above,
for Landlord’s approval, prior to Tenant paying such costs. Notwithstanding
anything set forth in this Tenant Work Letter to the contrary, construction of
the Tenant Improvements shall not commence until (a) Landlord has approved the
Contract, and (b) Tenant has procured and delivered to Landlord a copy of all
Permits.

4.2.2 Tenant’s Agents.

4.2.2.1 Landlord’s General Conditions for Tenant’s Agents and Tenant Improvement
Work. Tenant’s and Tenant’s Agent’s construction of the Tenant Improvements
shall comply with the following: (i) the Tenant Improvements shall be
constructed in strict accordance with the Approved Working Drawings;
(ii) Landlord’s reasonable rules and regulations for the construction of
improvements in the Building, (iii) Tenant’s Agents shall submit schedules of
all work relating to the Tenant’s Improvements to Contractor and Contractor
shall promptly inform Tenant’s Agents of any changes which are necessary
thereto, and Tenant’s Agents shall adhere to such corrected schedule; and

 

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(iv) Tenant shall abide by all reasonable rules made by Landlord’s Building
manager with respect to the use of loading dock areas, storage of equipment and
materials at the Project, and any other matter in connection with this Tenant
Work Letter, including, without limitation, the construction of the Tenant
Improvements. Tenant shall pay a logistical coordination fee (the “Coordination
Fee”) to Landlord in an amount equal to two and one-half percent (2.5%) of the
amount of all costs to construct the Tenant Improvements (excluding the cost of
building permits and architectural fees). The Coordination Fee shall be included
in the costs to construct the Tenant Improvements, which Coordination Fee shall
be for services relating to the coordination of the construction of the Tenant
Improvements. Landlord shall deduct the Coordination Fee from the Tenant
Improvement Allowance and pay its agent on a monthly basis. Tenant shall be
responsible for payment of the Coordination Fee to the extent that the costs to
construct the Tenant Improvements exceed the Tenant Improvement Allowance. In
the event of a conflict between the Approved Working Drawings and Landlord’s
construction rules and regulations, the Approved Working Drawings shall prevail.

4.2.2.2 Indemnity. Tenant’s indemnity of Landlord as set forth in this Lease
(including all applicable exceptions and limitations thereto) shall also apply
with respect to any and all costs, losses, damages, injuries and liabilities
related in any way to any act or omission of Tenant or Tenant’s Agents, or
anyone directly or indirectly employed by any of them, or in connection with
Tenant’s non-payment of any amount arising out of the Tenant Improvements (which
non-payment was not the result of a breach of Landlord’s obligations under this
Tenant Work Letter) and/or Tenant’s disapproval of all or any portion of any
request for payment. Such indemnity by Tenant, as set forth in this Lease, shall
also apply with respect to any and all costs, losses, damages, injuries and
liabilities related in any way to Landlord’s performance of any ministerial acts
reasonably necessary (i) to permit Tenant to complete the Tenant Improvements,
and (ii) to enable Tenant to obtain any building permit or certificate of
occupancy for the Premises.

4.2.2.3 Requirements of Tenant’s Agents. Tenant shall obtain an
industry-standard warranty from the Contractor for the benefit of Tenant and
Landlord that the Tenant Improvements shall be free from any defects in
workmanship and materials for a period of not less than one (1) year from the
date of completion thereof. Such warranty as to materials or workmanship of or
with respect to the Tenant Improvements shall be contained in the Contract and
shall be written such that such warranty shall inure to the benefit of both
Landlord and Tenant, as their respective interests may appear, and can be
directly enforced by either. Tenant covenants to give to Landlord any assignment
or other assurances which may be necessary to effect such right of direct
enforcement.

4.2.2.4 Insurance Requirements.

4.2.2.4.1 General Coverages. Tenant shall cause the Contractor and all of
Tenant’s Agents to carry worker’s compensation insurance covering all of their
respective employees, and to also carry public liability insurance, including
property damage, all with limits, in form and with companies reasonably
acceptable to Landlord.

4.2.2.4.2 Special Coverages. Tenant shall carry “Builder’s All Risk” insurance
in an amount covering the cost of construction of the Tenant Improvements, and
such other standard and customary insurance as Landlord may reasonably require,
it being understood and agreed that the Tenant Improvements shall be insured by
Tenant pursuant to this Lease immediately upon completion thereof. Such
insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Landlord including, but not
limited to, the requirement that all of Tenant’s Agents shall carry excess
liability and Products and Completed Operation Coverage insurance, each in
amounts not less than $500,000 per incident, $1,000,000 in aggregate.

 

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4.2.2.4.3 General Terms. Certificates for all insurance carried pursuant to this
Section 4.2.2.4 shall be delivered to Landlord before the commencement of
construction of the Tenant Improvements and before the Contractor’s equipment is
moved onto the site. All such policies of insurance must contain a provision
that the company writing said policy will give Landlord thirty (30) days prior
written notice of any cancellation or lapse of the effective date or any
reduction in the amounts of such insurance so long as such provision is
obtainable at a commercially reasonable cost, but in any event Tenant shall
provide Landlord not less than ten (10) days prior written notice of any
cancellation or lapse of the effective date or any reduction in the amounts of
such insurance. In the event that the Tenant Improvements are damaged by any
cause during the course of the construction thereof, Tenant shall promptly
repair or cause the repair of the same at no cost or expense to Landlord,
subject to the provisions of Article 11 of the Lease. Tenant’s Agents shall
maintain all of the foregoing insurance coverage in force until the Tenant
Improvements are fully completed and accepted by Landlord, except for any
Products and Completed Operation Coverage insurance required by Landlord, which
is to be maintained for three (3) years following completion of the work and
acceptance by Landlord and Tenant. All policies carried under this
Section 4.2.2.4 shall name Landlord and Tenant as additional insureds. All
insurance, except Workers’ Compensation, maintained by Tenant’s Agents shall
preclude subrogation claims by the insurer against anyone insured thereunder.
Such insurance shall provide that it is primary insurance as respects the owner
and that any other insurance maintained by owner is excess and noncontributing
with the insurance required hereunder. The requirements for the foregoing
insurance shall not derogate from the provisions for indemnification of Landlord
by Tenant under Section 4.2.2.2 of this Tenant Work Letter. In no event shall
Landlord require Tenant to obtain a lien and completion bond or other alternate
form of security to ensure the lien-free completion of the Tenant Improvements.

4.2.3 Governmental Compliance. The Tenant Improvements shall comply in all
material respects with the following: (i) the Code and other state, federal,
city or quasi-governmental laws, codes, ordinances and regulations, as each may
apply according to the rulings of the controlling public official, agent or
other person; (ii) applicable standards of the American Insurance Association
(formerly, the National Board of Fire Underwriters) and the National Electrical
Code; and (iii) building material manufacturer’s specifications, as applicable.

4.2.4 Inspection by Landlord. Tenant shall use commercially reasonable efforts
to provide Landlord with reasonable prior notice of any inspection to be
performed by a governmental entity in connection with the construction of the
Tenant Improvements in order to allow Landlord to be present during such
inspection. Landlord shall have the right to inspect the Tenant Improvements at
all times, provided however, that Landlord’s failure to inspect the Tenant
Improvements shall in no event constitute a waiver of any of Landlord’s rights
hereunder nor shall Landlord’s inspection of the Tenant Improvements constitute
Landlord’s approval of the same. Should Landlord reasonably disapprove any
portion of the Tenant Improvements, Landlord shall notify Tenant in writing of
such disapproval and shall specify the items disapproved. Any defects or
deviations in, and/or reasonable disapproval by Landlord of, the Tenant
Improvements shall be rectified by Tenant at no expense to Landlord.

4.2.5 Meetings. Commencing upon the execution of this Lease, Tenant shall hold
weekly meetings at a reasonable time, with the Architect and the Contractor
regarding the progress of the preparation of Construction Drawings and the
construction of the Tenant Improvements, and Landlord and/or its agents shall
receive prior notice of, and shall have the right to attend, all such meetings.
In addition, minutes shall be taken at all such meetings, a copy of which
minutes shall be delivered to Landlord. One such meeting each month shall
include the review of Contractor’s current request for payment.

 

EXHIBIT B

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4.3 Notice of Completion; Copy of Record Set of Plans. Within ten (10) days
after completion of construction of the Tenant Improvements, Tenant shall cause
a Notice of Completion to be recorded in the office of the Recorder of the
county in which the Building is located in accordance with Section 3093 of the
Civil Code of the State of California or any successor statute, and a copy
thereof shall be furnished to Landlord upon such recordation. If a Notice of
Completion is not so recorded, Landlord may execute and file the same on behalf
of Tenant as Tenant’s agent for such purpose, at Tenant’s sole cost and expense.
At the conclusion of construction of the Tenant Improvements, Tenant shall
(i) cause the Architect to prepare final as-built drawings for the Premises,
(B) cause the Architect and the Contractor to certify to the best of their
knowledge that the “record-set” of as-built drawings are true and correct, which
certification shall survive the expiration or termination of this Lease, and
(C) cause the delivery to Landlord of four (4) sets of copies of such record set
of drawings within ninety (90) days following issuance of all governmental
permits and approvals required for the completion of the Tenant Improvements and
occupancy of the Premises affected thereby, and (ii) Tenant shall deliver to
Landlord a copy of all warranties, guaranties, and operating manuals and
information relating to the Tenant Improvements.

SECTION 5

MISCELLANEOUS

5.1 Tenant’s Representative. Tenant has designated Mr. Jeff Andreson as its sole
representative with respect to the matters set forth in this Tenant Work Letter,
who shall have full authority and responsibility to act on behalf of the Tenant
as required in this Tenant Work Letter.

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

5.3 Time of the Essence in This Tenant Work Letter. Unless otherwise indicated,
all references herein to a “number of days” shall mean and refer to calendar
days. If any item requiring approval is timely disapproved by Landlord, the
parties shall meet and confer and negotiate in good faith to reach an agreement
on such matter.

5.4 Tenant’s Lease Default. Notwithstanding any provision to the contrary
contained in this Lease, if an Event of Tenant’s Default as described in the
Lease or this Tenant Work Letter has occurred at any time on or before the
Substantial Completion of the Tenant Improvements, then (i) in addition to all
other rights and remedies granted to Landlord pursuant to this Lease, Landlord
shall have the right to withhold payment of all or any portion of the Tenant
Improvement Allowance and/or Landlord may cause Contractor to cease the
construction of the Premises (in which case, Tenant shall be responsible for any
delay in the substantial completion of the Premises caused by such work
stoppage), and (ii) all other obligations of Landlord under the terms of this
Tenant Work Letter shall be forgiven until such time as such default is cured
pursuant to the terms of this Lease (in which case, Tenant shall be responsible
for any delay in the substantial completion of the Premises caused by such
inaction by Landlord).

 

EXHIBIT B

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SCHEDULE 1 TO EXHIBIT B

FREMONT RELOCATION PLAN

 

LOGO [g710754stp72.jpg]

Fremont Photocathode Facility Overview

GaAs and InGaAsP MOCVD (Metal Organic Chemical Vapor Deposition) reactors.
Process plumbing includes supply gasses (N2, CDA, H2, Arsine & Phosphine),
cooling water and exhaust ducting/pumps. Life Safety system.

Semi conductor processing tools: Dicers, Aligners, photo resist spinners,
bonders, microscopes.

Thin Film deposition tools: PEVCD (Silane gas), Sputter and E-beam tools (gold,
nickel, etc.).

Wet chemistry processing: exhausted wet benches (solvents and acid/bases).

Facility Pad support Equipment: Acid Waste Neutralization, Arsenic treatment
system, Process cooling water, DI water, HF waste storage, N2 tank, H2 tank.

 

SCHEDULE 1 TO

EXHIBIT B

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EXHIBIT C

NO RESERVED PARKING AREA

 

LOGO [g710754stp73.jpg]

 

EXHIBIT C

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EXHIBIT D

OPTION TO EXTEND

This Exhibit D (this “Exhibit”) is made in connection with and is a part of that
certain Lease, dated as of March     , 2014, by and between M WEST PROPCO X,
LLC, a Delaware limited liability company, as Landlord, and INTEVAC, INC., a
Delaware corporation, as Tenant, (the “Lease”).

1. Definitions and Conflict. All capitalized terms referred to in this Exhibit
shall have the same meaning as provided in the Lease, except as expressly
provided to the contrary in this Exhibit. In case of any conflict between any
term or provision of the Lease and any exhibits attached thereto and this
Exhibit, this Exhibit shall control.

2. Option to Extend and Rent During the Extended Period: Tenant shall have one
(1) option to extend the Lease Term for a period of five (5) years (the period
shall be referred to as the “Extension Period”) by giving delivering notice of
exercise of such option (“Extension Option Notice”) to Landlord at least two
hundred seventy (270) days, but not more than three hundred sixty-five
(365) days, prior to the expiration of the initial Lease Term. The Extension
Period shall commence, if at all, immediately following the expiration of the
initial Lease Term. If Tenant is in default, after notice and the expiration of
the applicable cure period, under any term or provision of the Lease on the date
of giving an Extension Option Notice, or if Tenant is in default, after notice
and the expiration of the applicable cure period, under any term or provision of
the Lease on the date of the applicable Extension Period is to commence, the
Extension Period at the option of Landlord shall not commence and the Lease
shall expire at the end of initial Lease Term. The Extension Period shall be
upon all of the terms and provisions of the Lease, except that (i) the Base
Monthly Rent during such Extension Period shall be one hundred percent (100%) of
then Fair Market Rent, (ii) any work, allowance, free rent, or concession
provided by Landlord in connection with the commencement of the initial Lease
Term shall not apply; and (iii) Tenant shall not have any additional option to
extend.

2.1 Fair Market Rent. The term “Fair Market Rent” for purposes of determining
Base Monthly Rent during the Extension Period shall mean the base monthly rent
generally applicable to full-building leases at comparable class buildings of
comparable size, age and quality of the Premises in the Santa Clara area
projected as of the first day of the Extension Period by giving due
consideration for the quality of the Building and improvements therein
(including the quality of the then existing improvements in the Premises), the
quality for credit tenants, for a term comparable to the Extension Period at the
time the commencement of the Extension Period is scheduled to commence, and for
comparable space that is not subleased or subject to another party’s expansion
rights or not leased to a tenant that holds an ownership interest in the
landlord, taking into account rental structure, including, without limitation,
rental rates per rentable square foot (including whether gross or net, and if
gross adjusting for base year or expense stop), additional rental, all other
payments and escalations, the size of the Premises compared to the size of the
premises of the comparison leases, location, floor levels and efficiencies of
the floor(s) for which the determination is being made, free rent, moving
expenses and other cash payments, allowances or monetary concessions provided to
Tenant, the age and quality of construction of the Building, and leasehold
improvements and/or allowances, including the amounts thereof in renewal leases,
and taking into account, in the case of renewal leases (including this Lease),
the value of existing leasehold improvements, but without any deduction for
commissions whether or not incurred by Landlord, and otherwise subject to the
terms and conditions of this Lease that will be applicable during the Extension
Period.

2.2 Procedure to Determine Fair Market Rent. Landlord shall notify Tenant in
writing of Landlord’s determination of the Fair Market Rent (“Landlord’s FMR”)
within thirty (30) days after receipt of the Extension Option Notice. Within
thirty (30) days after Tenant’s receipt of such written notice of Landlord’s
FMR, Tenant shall have the right either to: (i) accept Landlord’s FMR, or
(ii) elect to have the Fair Market Rent determined in accordance with the
appraisal procedure set forth below. The failure of Tenant to deliver written
notice of its election under the preceding sentence shall be deemed an
acceptance of Landlord’s FMR. The election (or deemed election) by Tenant under
this section shall be non-revocable and binding on the parties.

 

EXHIBIT D

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2.3 Appraisers. If Tenant has elected to have the Fair Market Rent determined by
an appraisal, then within ten (10) days after receipt of Tenant’s written notice
of such an election, each party, by delivering written notice to the other
party, shall appoint a broker to render a written opinion of the Fair Market
Rent for the Extension Period. Each broker must be a real estate broker licensed
in the State where the Building is located for at least five years and with at
least five years’ experience in the appraisal of rental rates of leases or in
the leasing of space in office buildings in the area in which the Building is
located and otherwise unaffiliated with either Landlord or Tenant. The two
brokers shall render their written opinion of the Fair Market Rent for the
Extension Period to Landlord and Tenant within thirty (30) days after the
appointment of the second broker. If the Fair Market Rent of each broker is
within three percent (3%) of each other, then the average of the two appraisals
of Fair Market Rent shall be the Fair Market Rent for the Extension Period. If
one party does not appoint its broker as provided above, then the one appointed
shall determine the Fair Market Rent. The Fair Market Rent so determined under
this section shall be binding on Landlord and Tenant.

2.4 Third Appraiser. If the Fair Market Rent determined by the brokers is more
than three percent (3%) apart, then the two brokers shall pick a third broker
within ten (10) days after the two brokers have rendered their opinions of Fair
Market Rent as provided above. If the two brokers are unable to agree on the
third broker within said ten (10) day period, Landlord and Tenant shall mutually
agree on the third broker within ten (10) days thereafter. If the parties do not
agree on a third qualified broker within ten (10) days, then at the request of
either Landlord or Tenant, such third broker shall be promptly appointed by the
then Presiding Judge of the Superior Court of the State of California for the
County where the Building is located. The third broker shall be a person who has
not previously acted in such capacity for either party and must meet the
qualifications stated above.

2.5 Impartial Appraisal. Within thirty (30) days after its appointment, the
third broker (the “Third Party”), Landlord’s broker and Tenant’s broker shall
reach a decision as to whether the parties shall use the appraisal made by the
Landlord’s or Tenant’s broker as the Fair Market Rent for the Extension Period,
and shall notify Landlord and Tenant thereof. The three brokers may not offer
any different opinion or recommendation of Fair Market Rent. The decision of the
majority of the three brokers shall be binding upon Landlord and Tenant. The
Fair Market Rent determined in accordance with the foregoing procedure shall be
binding on the parties.

2.6 Appraisal Costs. Each party shall bear the cost of its own appraiser and
one-half (1/2) the cost of the third appraiser, unless the Fair Market Rent of
the Third Opinion is within five percent (5%) either party’s FMR, in which case
the other party shall bear the entire cost of the third appraiser.

2.7 Acknowledgment of Rent. After the Fair Market Rent for the Extension Period
has been established in accordance with the foregoing procedure, Landlord and
Tenant shall promptly execute an amendment to the Lease to reflect the Base
Monthly Rent for the Extension Period.

2.8 Personal Option. The foregoing option to extend is personal to the original
Tenant signing the Lease (and any Transferee pursuant to a Permitted Transfer),
but may not be assigned or transferred to or exercised by any other assignee,
sublessee or transferee under a Transfer.

2.9 Conditions to Exercise. The foregoing option to extend may only be exercised
by Tenant if Tenant then occupies not less than seventy-five percent (75%) of
the Premises.

 

EXHIBIT D

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EXHIBIT E

APPROVED HAZARDOUS MATERIALS EXHIBIT

[see attached]

 

EXHIBIT E

-1-

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EXHIBIT F

FORM OF LETTER OF CREDIT

BANK OF AMERICA

1 FLEET WAY

SCRANTON, PA 18507-1999

ATTN: GTO – STANDBY UNIT

DATE:

IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER                                     

APPLICANT:

BENEFICIARY:

AMOUNT: USD

EXPIRY DATE:

EXPIRE PLACE: OUR COUNTERS

GENTLEMEN:

WE HEREBY ISSUE THIS IRREVOCABLE LETTER OF CREDIT NO.                      IN
YOUR FAVOR, FOR THE ACCOUNT OF APPLICANT, FOR UP TO AN AGGREGATE AMOUNT OF USD
                     AVAILABLE BY YOUR DRAFT(S) DRAWN ON US AT SIGHT,
ACCOMPANIED BY THE FOLLOWING:

 

1. THE ORIGINAL OF THIS LETTER OF CREDIT AND AMENDMENT(S), IF ANY.

 

2. BENEFICIARY’S WRITTEN, DATED STATEMENT ON BENEFICIARY LETTERHEAD SIGNED BY AN
OFFICER READING:

QUOTE

BENEFICIARY IS PERMITTED TO DRAW ON THIS LETTER OF CREDIT UNDER THE EXPRESS
TERMS OF THE LEASE DATED                     , BY AND BETWEEN
                                     AND

                                                                  (THE “LEASE”)

UNQUOTE

OR

QUOTE

 

EXHIBIT F

-1-

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

BENEFICIARY IS ENTITLED TO DRAW DOWN THE FULL AMOUNT OF LETTER OF CREDIT NO.
                     AS THE RESULT OF THE FILING OF A VOLUNTARY PETITION UNDER
THE U.S. BANKRUPTCY CODE OR A STATE BANKRUPTCY CODE BY THE TENANT UNDER THE
LEASE, WHICH FILING HAS NOT BEEN DISMISSED AT THE TIME OF THIS DRAWING.

UNQUOTE

OR

QUOTE

BENEFICIARY IS ENTITLED TO DRAW DOWN THE FULL AMOUNT OF LETTER OF CREDIT NO.
                     AS THE RESULT OF AN INVOLUNTARY PETITION HAVING BEEN FILED
UNDER THE U.S. BANKRUPTCY CODE OR A STATE BANKRUPTCY CODE AGAINST THE TENANT
UNDER THE LEASE, WHICH FILING HAS NOT BEEN DISMISSED AT THE TIME OF THIS
DRAWING.

UNQUOTE

PARTIAL DRAWINGS ARE PERMITTED.

IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT IS DEEMED TO BE AUTOMATICALLY
EXTENDED WITHOUT AMENDMENT FOR PERIOD(S) OF ONE YEAR EACH FROM THE CURRENT
EXPIRY DATE HEREOF, OR ANY FUTURE EXPIRATION DATE, UNLESS AT LEAST THIRTY
(30) DAYS PRIOR TO ANY EXPIRATION DATE, WE NOTIFY YOU BY REGISTERED MAIL OR
OVERNIGHT COURIER AT THE ABOVE LISTED ADDRESS THAT WE ELECT NOT TO CONSIDER THIS
LETTER OF CREDIT EXTENDED FOR ANY SUCH ADDITIONAL PERIOD.

ANY SUCH NOTICE SHALL BE EFFECTIVE WHEN SENT BY US AND UPON SUCH NOTICE TO YOU,
YOU MAY DRAW AT ANY TIME PRIOR TO THE THEN CURRENT EXPIRATION DATE, UP TO THE
FULL AMOUNT THEN AVAILABLE HEREUNDER, AGAINST YOUR DRAFT(S) DRAWN ON US AT SIGHT
AND THE ORIGINAL OF THIS LETTER OF CREDIT AND ALL AMENDMENTS THERETO,
ACCOMPANIED BY YOUR STATEMENT, SIGNED BY AN AUTHORIZED OFFICER ON YOUR
LETTERHEAD STATING THAT YOU ARE IN RECEIPT OF BANK OF AMERICA, N.A.’S NOTICE OF
NON-EXTENSION UNDER LETTER OF CREDIT NO.                     AND THE APPLICANT’S
OBLIGATION TO YOU REMAINS.

THIS LETTER OF CREDIT IS TRANSFERABLE, ONE OR MORE TIMES, IN FULL AND NOT IN
PART. ANY TRANSFER MADE HEREUNDER MUST CONFORM STRICTLY TO THE TERMS HEREOF AND
TO THE CONDITIONS OF RULE 6 OF THE INTERNATIONAL STANDBY PRACTICES (ISP98) FIXED
BY THE INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 590. SHOULD YOU WISH
TO EFFECT A TRANSFER UNDER THIS CREDIT, SUCH TRANSFER WILL BE SUBJECT TO THE
RETURN TO US OF THE ORIGINAL CREDIT INSTRUMENT, ACCOMPANIED BY OUR FORM OF
TRANSFER, PROPERLY COMPLETED AND SIGNED BY AN AUTHORIZED SIGNATORY OF YOUR FIRM,
BEARING YOUR BANKERS STAMP AND SIGNATURE AUTHENTICATION AND SUBJECT TO YOUR
PAYMENT OF OUR TRANSFER FEE. SUCH TRANSFER FORM IS AVAILABLE UPON REQUEST.

DRAFT(S) MUST STATE: “DRAWN UNDER BANK OF AMERICA, N.A. STANDBY L/C NO.
                     DATED                     .”

DRAFTS AND DOCUMENTS MUST BE PRESENTED AT OUR OFFICE ADDRESSED: BANK OF AMERICA,
N.A., 1 FLEET WAY, SCRANTON, PA 18507-1999, ATTN: GTO - STANDBY DEPT.
PRESENTATION OF A DRAWING UNDER THIS LETTER OF CREDIT MAY BE MADE ON OR PRIOR

 

EXHIBIT F

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TO THE THEN CURRENT EXPIRATION DATE HEREOF BY HAND DELIVERY, COURIER SERVICE,
OVERNIGHT MAIL, OR FACSIMILE. PRESENTATION BY FACSIMILE TRANSMISSION SHALL BE BY
TRANSMISSION OF THE ABOVE REQUIRED SIGHT DRAFT DRAWN ON US TOGETHER WITH THIS
LETTER OF CREDIT TO OUR FACSIMILE NUMBER, (            )                     
ATTENTION: THE MANAGER, STANDBY LETTER OF CREDIT DEPARTMENT, WITH TELEPHONIC
CONFIRMATION OF OUR RECEIPT OF SUCH FACSIMILE TRANSMISSION AT OUR TELEPHONE
NUMBER (            )                      OR TO SUCH OTHER FACSIMILE OR
TELEPHONE NUMBERS, AS TO WHICH YOU HAVE RECEIVED WRITTEN NOTICE FROM US AS BEING
THE APPLICABLE SUCH NUMBER).

WE HEREBY AGREE WITH YOU THAT DRAFT(S) DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED UPON DUE PRESENTATION TO
US.

THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES (ISP98),
THE INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 590.

 

 

 

BANK OF AMERICA, N.A.

 

EXHIBIT F

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TABLE OF CONTENTS

 

          Page  

ARTICLE 1

   DEFINITIONS      4   

ARTICLE 2

   DEMISE, CONSTRUCTION, AND ACCEPTANCE      7   

ARTICLE 3

   RENT      8   

ARTICLE 4

   USE OF PREMISES      14   

ARTICLE 5

   TRADE FIXTURES AND ALTERATIONS      16   

ARTICLE 6

   REPAIR AND MAINTENANCE      20   

ARTICLE 7

   WASTE DISPOSAL AND UTILITIES      22   

ARTICLE 8

   OPERATING EXPENSES      28   

ARTICLE 9

   INSURANCE      34   

ARTICLE 10

   LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY      36   

ARTICLE 11

   DAMAGE TO PREMISES      37   

ARTICLE 12

   CONDEMNATION      39   

ARTICLE 13

   DEFAULT AND REMEDIES      40   

ARTICLE 14

   ASSIGNMENT AND SUBLETTING      43   

ARTICLE 15

   GENERAL PROVISIONS      48   

 

(i)

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

Prepared By and After Recording Return To:

  

Bryan Cave LLP

  

2200 Ross Avenue, Suite 3300

  

Dallas, Texas 75201

  

Attn: Ed Fields

      Recording information above this line    Prudential Loan No. 703000212

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

This Subordination, Non-Disturbance and Attornment Agreement (“Agreement”) is
effective as of the date of execution by the last of the parties hereto to
execute their respective signatures as set forth below (the “Effective Date”)
between THE BANK OF NEW YORK MELLON, a New York banking corporation, not in its
individual capacity but solely as Trustee under the Reserve Trust Agreement for
the PICA HARTFORD LIFE & ACCIDENT COMFORT TRUST and THE BANK OF NEW YORK MELLON,
a New York banking corporation, not in its individual capacity but solely as
Trustee under the Reserve Trust Agreement for the PAR U HARTFORD LIFE & ANNUITY
COMFORT TRUST (together with its successors or assigns in interest, collectively
“Lender”) with a mailing address c/o Prudential Asset Resources, Inc., 2100 Ross
Avenue, Suite 2500, Dallas, Texas 75201, and INTEVAC, INC., a Delaware
corporation (“Tenant”, which includes any assigns and successors in interest of
Tenant permitted under the Lease), with a current mailing address of Intevac,
Inc., 3560 Bassett Street, Santa Clara, California 95054: Attn: Chief Financial
Officer.

RECITALS:

A. Lender is the current owner and the holder of a loan evidenced by a
Promissory Notes (collectively, the “Note”) dated October 1, 2008, in the
original aggregate amount of $115,000,000.00. The Note is secured by a Deed of
Trust, Security Agreement and Fixture Filing dated the same date as said Note,
and recorded under Document No. 20003674 of the Real Property Records of Santa
Clara County, California (as the same may have been subsequently amended,
extended, assigned or otherwise modified, hereinafter referred to as the
“Mortgage”), covering the real property described therein (the “Mortgaged
Premises”), including certain premises located at 3560-3580 Basset Street,
Sunnyvale, CA (the “Subject Premises”).

B. Tenant is the tenant under that certain Lease Agreement dated March 20, 2014
(the “Lease”), between Tenant and M West Propco X LLC, a Delaware limited
liability company, as landlord (said landlord and its successors and assigns
under the Lease, except Lender and those claiming under Lender, hereinafter
called “Landlord”), covering part of the Subject Premises as set forth under the
Lease (hereinafter called the “Demised Premises”).

 

Loan No. 703000212

SNDA for Intevac for 3560-3580 Basset Street

   1   

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

C. Tenant and Lender desire to confirm their understanding with respect to the
Lease and the Mortgage.

THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by all parties, Lender and Tenant agree as
follows:

1. Subordination. The Lease is now, and will at all times and for all purposes
be, subject and subordinate, in every respect, to the Mortgage and the lien
imposed by the Mortgage, with the provisions of this Agreement (as between the
Tenant and Lender only) controlling over the provisions of the Lease. The Lease
is subordinate and subject, in each and every respect, to any and all increases,
renewals, modifications, extensions, substitutions, replacements and/or
consolidations of the Mortgage (collectively a “Modification”), and all other
loan documents securing the Note, provided that any and all Modifications shall
nevertheless be subject to the terms of this Agreement.

2. Non-Disturbance. So long as Tenant is not in default, beyond the applicable
cure periods, under any of the terms, provisions, agreements, covenants, or
obligations set forth in the Lease (a) Lender shall not name or join Tenant as a
defendant in any exercise of Lender’s rights and remedies arising upon default
under the Mortgage, unless applicable law requires Tenant to be made a party,
and (b) Tenant’s possession of the Demised Premises under said Lease shall not
be disturbed or interfered with by Lender.

3. Attornment. If Lender or any other party succeeds to the interest of Landlord
under the Lease in any manner (“Successor Landlord”), including but not limited
to foreclosure, exercise of any power of sale, succession by deed in lieu or
other conveyance (a “Succession”), Tenant will attorn to and be bound to
Successor Landlord upon Succession and will recognize any Successor Landlord as
the landlord under the Lease. The Lease shall continue in full force and effect
as a direct lease, in accordance with its terms, except as provided in this
Agreement. Such attornment is effective and self-operative without the execution
of any further instrument. Tenant, upon request, will sign and deliver any
instruments reasonably requested to evidence such attornment. Tenant waives the
provisions of any statute or rule of law, now or hereafter in effect, which may
give or purport to give Tenant any right or election to terminate or otherwise
adversely affect the Lease and the obligations of Tenant thereunder as a result
of any such foreclosure or trustee’s sale. Lender shall use commercially
reasonable efforts to exercise Lender’s remedies pursuant to the Mortgage in a
manner that does not materially and adversely affect Tenant’s ability to operate
its business in the Demised Premises.

4. Limitation on Successor Landlord’s Liability. Upon any Succession, Successor
Landlord shall not be (a) liable for any act or omission of the Landlord under
said Lease, provided that the Successor Landlord shall be obligated to cure any
Continuing Defaults (as defined below), (b) subject to any offsets or defenses
which Tenant may have against the Landlord arising or occurring prior to the
Succession, except for offsets pertaining to rent abatement, tenant improvement
allowances or other credits, expressly provided for in the Lease, (c) bound by
any rent or additional rent which Tenant may have paid to Landlord for more than
the current month, except for monthly payments of common area maintenance
charges, unreconciled capital improvement payments, property taxes, and
so-called “free rent” or rental abatement provided in the Lease, (d) bound by
any amendment or modification of the Lease that would reduce or shorten any
economic

 

Loan No. 703000212

SNDA for Intevac for 3560-3580 Basset Street

   2   

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

obligations of Tenant under the Lease or materially impair Landlord’s rights
under the Lease made without Lender’s prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed, (e) liable for any
security deposit paid by Tenant to Landlord except to the extent such deposit is
delivered to Successor Landlord, or (f) liable for the payment of any leasing
commissions, the triggering event for which arose or occurred prior to the
Succession. Any reference to Landlord includes all prior landlords under the
Lease. Successor Landlord shall not be liable for the performance of the
obligations of the Landlord under the Lease, except for those obligations which
first arise during the period of Successor Landlord’s ownership of the Subject
Premises and for “Continuing Defaults” (as defined below). In the case of a
casualty or condemnation repair obligation, during the time period during which
Lender is the Successor Landlord, Lender must receive the insurance or
condemnation proceeds as a condition precedent to Lender’s repair obligation
under the Lease.

A “Continuing Default” is defined as a non-monetary default by Landlord under
the Lease that began prior to Succession, is ongoing and continuing following
Succession, and is susceptible to being cured. Successor Landlord shall only
have liability for actual damages (not consequential or special damages) that
arise after Succession as a result of its failure to cure a Continuing Default.

5. Tenant’s Warranty. Tenant warrants to Lender, as of the date hereof, that
(a) attached hereto as Exhibit A is a true, correct and complete copy of the
Lease, (b) to Tenant’s current actual knowledge, there are no known defaults on
the part of Landlord, (c) the Lease is a complete statement of the agreement of
the parties with respect to the leasing of the Demised Premises, (d) the Lease
is validly executed by Tenant and in full force and effect, and (e) to Tenant’s
current actual knowledge, all conditions to the effectiveness or continuing
effectiveness thereof required to be satisfied as of the date hereof have been
satisfied. Tenant acknowledges and warrants to Lender that Tenant has not
entered into any agreement to subordinate the Lease or any of Tenant’s rights
under the Lease to any lien or mortgage other than the Mortgage.

Each party hereto further represents and warrants to the other party hereto that
such party: (i) is not a person or entity with whom the other party is
restricted from doing business with under regulations of the Office of Foreign
Assets Control (“OFAC”) of the U.S. Department of the Treasury (including, but
not limited to, those named on OFAC’s Specially Designated Nationals and Blocked
Persons list) or under any statute, executive order (including, but not limited
to, the September 24, 2001 Executive Order Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism),
or other governmental action; (ii) is not a person or entity with whom the other
party is restricted from doing business under the International Money Laundering
Abatement and Financial Anti-Terrorism Act of 2001 or the regulations or orders
thereunder; and (iii) is not knowingly engaged in any dealings or transaction or
be otherwise associated with such persons or entities described in (i) and
(ii) above.

6. Lender Cure Rights. Tenant will notify Lender in writing of any default by
Landlord under the Lease that would entitle Tenant to cancel or terminate the
Lease or abate the rents payable thereunder. Such notice shall be sent to Lender
at 2100 Ross Avenue, Suite 2500, Dallas, Texas 75201, Reference Loan
No. 703000212, certified mail, return receipt requested. Lender shall thereafter
have forty-five (45) days to cure the default by Landlord, provided that if the
default does not arise solely from the nonpayment of money and cannot reasonably
be cured within

 

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the time period set forth above, then Lender will have such additional time as
is reasonably necessary to cure the default so long as Lender commences the cure
thereof within original time period set forth above and diligently and in good
faith pursues same to completion, and so long as Tenant’s use and enjoyment of
the Demised Premises is not materially impaired during such period. Lender has
no obligation to cure any default by Landlord and shall have no liability for
not curing any default. Notwithstanding the foregoing, if Tenant shall
inadvertently fail to provide such notice of Landlord’s default or breach to
Lender, such failure shall not constitute a default of Tenant hereunder or under
the Lease, but no such notice shall be binding on Lender until actually
delivered by Tenant in accordance with the above notice provisions.

7. Exculpation of Successor Landlord. Notwithstanding anything to the contrary
in this Agreement or the Lease, Tenant shall look exclusively to Successor
Landlord’s interest in the Mortgaged Premises or any proceeds from the
disposition thereof, any rents or profits derived from the Mortgaged Premises,
or any insurance or condemnation proceeds related thereto, for the satisfaction
of Tenant’s remedies in the event of (a) default by Successor Landlord as
landlord under the Lease, (b) any indemnity obligation that arises pursuant to
the Lease, or (c) any payment or discharge of any money judgment in favor of
Tenant against Successor Landlord with respect to the Lease.

8. Rent Payment. Immediately upon written notice to Tenant (a) that Lender is
exercising its rights under the Mortgage or any other loan documents acting to
secure the Note following a default under the Loan, or (b) of Lender’s
succeeding to the Landlord’s interest under the Lease, Tenant agrees to pay all
rents due under the Lease directly to Lender in accordance with the Lease. In
such event, Landlord hereby expressly authorizes Tenant to make such payments to
Lender and further agrees that any sums paid to Lender shall be in satisfaction
of Tenant’s obligations under the Lease.

9. Complete Agreement. If this Agreement conflicts with the Lease, then as
between the Tenant and Lender only hereto, all of the terms and provisions of
this Agreement which are inconsistent with the Lease shall govern and control.

10. No Oral Modification/Binding Effect. This Agreement may not be modified
orally or in any manner other than by an agreement in writing signed by the
parties hereto or their respective successors in interest.

11. Laws. This Agreement shall be construed in accordance with the laws of the
State where the Mortgaged Premises are located.

12. Hazardous Materials. Following a Succession, Successor Landlord shall have
no liability for any misrepresentation by Landlord under Section 7.2.E of the
Lease or any obligation to indemnity Tenant under Section 7.2.E of the Lease.
However, Successor Landlord must (i) comply with all laws governing Hazardous
Materials (defined in Section 7.2.E of the Lease), (ii) store, use and dispose
of all Hazardous Materials at the Subject Premises in accordance with all
applicable Hazardous Materials Laws, and (iii) remove, remediate and/or clean
up, as applicable, in accordance with all applicable Hazardous Materials Laws
(defined in Section 7.2.E of the Lease), all Hazardous Materials at the Subject
Premises (to the extent not caused by Tenant or its employees, contractors or
agents) impairing Tenant’s use or access to the Demised Premises.

 

Loan No. 703000212

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13. Insurance. Pursuant to Section 9.1.B of the Lease, Landlord hereby
designates that Lender shall be an additional insured under the commercial
general liability policy of insurance required to be carried by Tenant pursuant
to Section 9.1 of the Lease. If Lender becomes a Successor Landlord, insurance
required to be carried by Landlord under the Lease may be effected by Lender or
an affiliate of Lender by self-insurance or by a policy or policies of blanket
insurance covering additional items or locations or insureds and with such
commercially reasonable deductibles as Lender may from time to time reasonably
determine. Tenant has no rights in any policy or policies maintained by Lender.

14. Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become a
binding agreement when one or more counterparts have been signed and delivered
to each of the parties.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed.

LENDER:

THE BANK OF NEW YORK MELLON, a New York banking corporation, not in its
individual capacity but solely as Trustee under the Reserve Trust Agreement for
the PICA HARTFORD LIFE & ACCIDENT COMFORT TRUST and THE BANK OF NEW YORK MELLON,
a New York banking corporation, not in its individual capacity but solely as
Trustee under the Reserve Trust Agreement for the PAR U HARTFORD LIFE & ANNUITY
COMFORT TRUST

 

By:     Prudential Asset Resources, Inc.,   a Delaware corporation Its:  
Servicer

 

By:   /s/ Cheryl Eskridge Name:   Cheryl Eskridge Title:   Vice President Dated:
  4/2, 2014

 

STATE OF TEXAS    §             §    ss.       COUNTY OF DALLAS    §         

Before me, on April 2, 2014 in and for said State, personally appeared Cheryl T.
Eskridge as Vice President of Prudential Asset Resources, Inc., a Delaware
corporation, as Servicer for The Bank of Mellon of New York, a New York banking
corporation, not in its individual capacity but solely as Trustee, personally
known to me to be the person whose name is subscribed to the within instrument
and acknowledged to me that he executed the instrument on behalf of said entity.

 

/S/ EMILY J. HODGES Notary Public

 

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TENANT:

INTEVAC, INC., a Delaware corporation

 

By:   /s/ JEFFREY ANDRESON Name:   JEFFREY ANDRESON Title:   EVP, CFO, Secretary
Dated:   March 18, 2014

STATE OF CALIFORNIA

COUNTY OF Santa Clara

On March 18, 2014, before me, Melody Dunn, a Notary Public, personally appeared
Jeffrey Scott Andreson, who proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

 

/s/ MELODY A. DUNN Signature of the Notary Public

(Seal)

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With respect to Sections 8 and 13.     LANDLORD:    

M WEST PROPCO X LLC,

a Delaware limited liability company

    By:   /s/ Steve Novick     Name:   Steve Novick     Title:   Authorized
Signatory     Dated:   March 21st, 2014

STATE OF CALIFORNIA

COUNTY OF San Francisco

On March 21, 2014, before me, Laura Leon, a Notary Public, personally appeared
Steve Novick, who proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

 

/s/ LAURA LEON Signature of the Notary Public

(Seal)

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Exhibit A

Lease

[See Attached]

 

 

A – 1

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LEASE

BY AND BETWEEN

M WEST PROPCO X, LLC,

a Delaware limited liability company

as Landlord

and

INTEVAC, INC.,

a Delaware corporation

as Tenant

For Premises located at

3548 Bassett Street,

Santa Clara, California

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

LEASE

This Lease is dated as of the lease reference date specified in Section A of the
Summary of Basic Lease Terms and is made by and between the party identified as
Landlord in Section B of the Summary and the party identified as Tenant in
Section C of the Summary.

SUMMARY OF BASIC LEASE TERMS

 

SECTION
(LEASE REFERENCE)

  

TERMS

A.     Effective Date: (Introduction)

   March ___, 2014.

B.     Landlord: (Introduction)

  

M West Propco X, LLC

a Delaware limited liability company

C.     Tenant: (Introduction)

  

Intevac, Inc.,

a Delaware corporation

D.     Premises: (§ 1.20)

   That area consisting of approximately 50,000 rentable square feet of space in
the aggregate, as shown on Exhibit A attached hereto, and which is located
within the Building described below.

E.     Project: (§1.21)

  

The land and improvements shown on Exhibit A, commonly referred to as “Triangle
Technology Park” and currently with the following buildings:

 

  

(1) 3506-3510 Bassett Street, Santa Clara, California, which contains
approximately 43,744 rentable square feet of space; and

 

(2) 3520-3530 Bassett Street, Santa Clara, California, which contains
approximately 102,156 rentable square feet of space; and

 

(3) 3540-3548 Bassett Street, Santa Clara, California,, which contains
approximately 104,060 rentable square feet of space; and

 

(4) 3550-3580 Bassett Street, Santa Clara, California, which contains
approximately 167,063 rentable square feet of space.

 

The buildings in the Project currently contain approximately 417,023 rentable
square feet of space in the aggregate.

 

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

F.      Building: (§ 1.7)

   The buildings in which the Premises are located, the addresses of which are
3540-3548 Bassett Street, Santa Clara, California. The Building contains
approximately 104,060 rentable square feet of space in the aggregate. The
rentable square footage of the Premises and the aggregate rentable square
footage of the Building referred to above shall be deemed the actual rentable
square footage of the Premises and the Building.

G.     Tenant’s Share: (§ 1.28)

   48.05% of the buildings that comprise the Building based on the ratio that
the rentable square footage of the Premises bears to the total rentable square
footage in the Building.

H.     Tenant’s Allocated Parking Passes: (§ 4.5)

   One hundred thirty-five (135) unreserved parking passes, subject to the terms
of Section 4.5 of the Lease.

I.       Commencement Date: (§ 1.8)

   April 1, 2014.

Expiration Date: (§ 1.12)

   March 31, 2024.

J.      Lease Term: (§ 1.17)

   One hundred twenty (120) calendar months.

K.     Base Monthly Rent: (§ 3.1)

  

 

Period During
Lease Term

  

Approximate Annual
Base Rent Rate Per
Rentable Square Foot

    

Annual Base Rent**

    

Base Monthly Rent

 

April 1, 2014 – March 31, 2016*

   $ 14.30       $ 714,999.96       $ 59,583.33   

April 1, 2016 – March 31, 2017

   $ 14.73       $ 736,449.96       $ 61,370.83   

April 1, 2017 – March 31, 2018

   $ 15.17       $ 758,543.52       $ 63,211.96   

April 1, 2018 – March 31, 2019

   $ 15.62       $ 781,299.84       $ 65,108.32   

April 1, 2019 – March 31, 2020

   $ 16.09       $ 804,738.84       $ 67,061.57   

April 1, 2020 – March 31, 2021

   $ 16.57       $ 828,880.92       $ 69,073.41   

April 1, 2021 – March 31, 2022

   $ 17.07       $ 853,747.44       $ 71,145.62   

 

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April 1, 2022 – March 31, 2023

   $ 17.58       $ 879,359.76       $ 73,279.98   

April 1, 2023 – March 31, 2024

   $ 18.11       $ 905,740.56       $ 75,478.38   

 

* Tenant’s obligation to pay Base Monthly Rent during months one (1) through
three (3) (i.e., April 1, 2014 through and including June 30, 2014), and months
seven (7) through nine (9) (i.e., October 1, 2014 through and including
December 31, 2014), shall be subject to the Base Rent Abatement, as set forth in
Section 3.1.B of the Lease.

** The Annual Base Rent for the first twenty-four (24) full calendar months of
the Lease Term (i.e., April 1, 2014 through March 31, 2016) was calculated by
multiplying $14.30 by the number of rentable square feet of space in the
Premises. In all subsequent periods (i.e., April 1, 2016 through March 31,
2024), the calculation of Annual Base Rent reflects an annual increase of 3.0%.

 

L.     Prepaid Rent: (§ 3.3)

   Not applicable.

M.    Intentionally Omitted

  

N.     Permitted Use: (§ 4.1)

   The Premises may only be used for general office, research and development,
manufacturing and warehouse activities, and other lawful uses to the extent
consistent with zoning laws applicable to the Project and approved in advance by
Landlord, which approval shall not be unreasonably withheld, conditioned or
delayed, but for no other purpose.

O.     Permitted Tenant’s Alterations Limit: (§ 5.2)

   $100,000.00, subject to the terms of Section 5.2 of the Lease.

P.      Tenant’s Liability Insurance Minimum: (§ 9.1)

   $2,000,000.00 per occurrence, with a $3,000,000.00 aggregate limit.

Q.     Landlord’s Address: (§ 1.3)

  

M West Propco X, LLC

c/o MWest Properties

3351 Olcott Street

Santa Clara, CA 95054

Attn: Property Manager

With a copy to:

  

DivcoWest Real Estate Services, Inc.

575 Market Street, 35th floor

San Francisco, CA 94105

Attn: Steve Novick

 

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And:

 

DivcoWest Real Estate Services, Inc.

575 Market Street, 35th Floor

San Francisco, CA 94105

Attn: Jackie Moore

 

And:

 

Allen Matkins Leck Gamble Mallory & Natsis LLP

1901 Avenue of the Stars, Suite 1800

Los Angeles, CA 90067

Attn: Tony N. Natsis, Esq.

R.     Tenant’s Address: (§ 1.3)

  

Intevac, Inc.

3560 Bassett Street

Santa Clara, California 95054

Attn: Chief Financial Officer

S.      Retained Real Estate Brokers: (§ 15.13)

   Jones Lang LaSalle (representing Tenant)

T.     Tenant Improvement Allowance: (Exhibit B)

   $10.00 per rentable square foot of the Premises (i.e., an amount equal to
$500,000.00 based on 50,000 rentable square feet), subject to the terms and
conditions of the Tenant Work Letter attached hereto as Exhibit B.

U.     Lease:

  

This Lease includes the summary of the Basic Lease Terms, the Lease, and the
following exhibits and addenda:

 

Exhibit A – Project Site Plan and Outline of the Premises

Exhibit B – Tenant Work Letter

Exhibit C – No Reserved Parking Area

Exhibit D – Option to Extend

Exhibit E – Approved Hazardous Materials Exhibit

Exhibit F – Intentionally Omitted

The foregoing Summary is hereby incorporated into and made a part of this Lease.
Each reference in this Lease to any term of the Summary shall mean the
respective information set forth above and shall be construed to incorporate all
of the terms provided under the particular paragraph pertaining to such
information. In the event of any conflict between the Summary and the Lease, the
Summary shall control.

ARTICLE 1

DEFINITIONS

1.1 General: Any initially capitalized term that is given a special meaning by
this Article 1, the Summary, or by any other provision of this Lease (including
the exhibits attached hereto) shall have such meaning when used in this Lease or
any addendum or amendment hereto unless otherwise clearly indicated by the
context.

1.2 Additional Rent: The term “Additional Rent” is defined in Section 3.2.

 

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1.3 Address for Notices: The term “Address for Notices” means the addresses set
forth in Sections Q and R of the Summary.

1.4 Agents: The term “Agents” means the following: (i) with respect to Landlord,
the employees, contractors and agents of Landlord; and (ii) with respect to
Tenant, the employees, contractors, agents and invitees of Tenant and Tenant’s
subtenants and their respective agents, employees, contractors, and invitees.

1.5 Agreed Interest Rate: The term “Agreed Interest Rate” means that interest
rate determined as of the time it is to be applied that is equal to the lesser
of (i) three percent (3%) in excess of the discount rate established by the
Federal Reserve Bank of San Francisco as it may be adjusted from time to time,
or (ii) the maximum interest rate permitted by Law.

1.6 Base Monthly Rent: The term “Base Monthly Rent” means the fixed monthly rent
payable by Tenant pursuant to Section 3.1 which is specified in Section K of the
Summary.

1.7 Building: The term “Building” means the buildings in which the Premises are
located, as identified in Section F of the Summary.

1.8 Commencement Date: The term “Commencement Date” is the date the Lease Term
commences, which date is set forth in Section I of the Summary.

1.9 Common Area: The term “Common Area” means all areas and facilities within
the Project that are not designated by Landlord for the exclusive use of Tenant
or any other lessee or other occupant of the Project, including the parking
areas, access and perimeter roads, pedestrian sidewalks, landscaped areas, trash
enclosures, recreation areas and the like.

1.10 Companion Lease: The term “Companion Lease” means that certain Lease by and
between Landlord and Tenant, dated as of even date herewith, for premises
located within that certain building located at 3560-3580 Bassett Street, Santa
Clara, California.

1.11 Effective Date: The term “Effective Date” means the date upon which the
last signatory to this Lease whose execution is required to make it binding on
the parties hereto shall have executed this Lease and delivered the same to the
other party.

1.12 Event of Tenant’s Default: The term “Event of Tenant’s Default” is defined
in Section 13.1.

1.13 Existing Lease: The term “Existing Lease” shall mean that certain lease
dated February 5, 2001, by and between Mission West Properties, L.P. III, a
Delaware limited partnership (as Landlord’s predecessor-in-interest), and
Intevac Corporation, a California corporation (as Tenant’s
predecessor-in-interest), as amended, modified or supplemented. Notwithstanding
anything to the contrary set forth in the Existing Lease, Landlord and Tenant
hereby acknowledge and agree that, from and after the Commencement of this
Lease, the Existing Lease shall be terminated and of no further force or effect
(except for those obligations and liabilities which are expressly stated to
survive the expiration or earlier termination of the Existing Lease).

1.14 Expiration Date: The term “Expiration Date” is the date the Lease Term
expires, which date is set forth in Section I of the Summary.

 

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1.15 Hazardous Materials: The terms “Hazardous Materials” and “Hazardous
Materials Laws” are defined in Section 7.2.

1.16 Insured and Uninsured Peril: The terms “Insured Peril” and “Uninsured
Peril” are defined in Section 11.2E.

1.17 Law: The term “Law” means any judicial decision, statute, constitution,
ordinance, resolution, regulation, rule, administrative order, or other
requirement of any municipal, county, state, federal or other government agency
or authority having jurisdiction over the parties to this Lease or the Premises,
or both, in effect either at the Effective Date or any time during the Lease
Term, including, without limitation, any Hazardous Material Law (as defined in
Section 7.2) and the Americans with Disabilities Act, 42 U.S.C. §§ 12101 et.
seq., and any rules, regulations, restrictions, guidelines, requirements or
publications promulgated or published pursuant thereto.

1.18 Lease: The term “Lease” means the Summary and all elements of this Lease
identified in Section U of the Summary, all of which are attached hereto and
incorporated herein by this reference.

1.19 Lease Term: The term “Lease Term” or “Term” means the term of this Lease
which shall commence on the Commencement Date and continue for the period
specified in Section J of the Summary.

1.20 Lender: The term “Lender” means any beneficiary, mortgagee, secured party,
lessor, or other holder of any Security Instrument.

1.21 Operating Expenses: The term “Operating Expenses” is defined in
Section 8.2.

1.22 Permitted Use: The term “Permitted Use” means the use specified in
Section N of the Summary.

1.23 Premises: The term “Premises” means that building area described in
Section D of the Summary that is within the Building.

1.24 Project: The term “Project” means that real property and the improvements
thereon which are specified in Section E of the Summary. Landlord reserves the
right, in its sole and absolute discretion, to include such other buildings in
the Project, to sell, transfer, assign or otherwise dispose of any building or
parcel in the Project and elect to remove such building and/or parcel from the
Project, provided that Tenant’s use of the Premises for the Permitted Use and
Tenant’s parking rights provided in this Lease are not materially diminished or
impaired as a result thereof.

1.25 Private Restrictions: The term “Private Restrictions” means all recorded
covenants, conditions and restrictions, private agreements, reciprocal easement
agreements, and any other recorded instruments affecting the use of the Premises
which (i) exist as of the Effective Date, or (ii) are recorded after the
Effective Date.

1.26 Real Property Taxes: The term “Real Property Taxes” is defined in
Section 8.3.

1.27 Security Instrument: The term “Security Instrument” means any underlying
lease, mortgage or deed of trust which now or hereafter affects the Project, and
any renewal, modification, consolidation, replacement or extension thereof.

 

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1.28 Summary: The term “Summary” means the Summary of Basic Lease Terms that
immediately precedes Article 1 of this Lease.

1.29 Tenant’s Alterations: The term “Tenant’s Alterations” or “Tenant’s
Alteration” or “Tenant Alteration” means all improvements, additions,
alterations, and fixtures installed in the Premises by Tenant (excluding Trade
Fixtures).

1.30 Tenant’s Share: The term “Tenant’s Share” means the percentage obtained by
dividing Tenant’s rentable square feet in the Premises (as set forth in
Section D of the Summary) by the total rentable square feet in the Building,
which, as of the Effective Date, is the percentage identified in Section G of
the Summary.

1.31 Trade Fixtures: The term “Trade Fixtures” means (i) Tenant’s inventory,
furniture, signs, and business equipment, and (ii) anything affixed to the
Premises by Tenant at its expense for purposes of trade, manufacture, ornament
or domestic use (except replacement of similar work or material originally
installed by Landlord) which can be removed without material or structural
injury to the Premises unless such thing has, by the manner in which it is
affixed, become an integral part of the “Building Structure” or the “Building
Systems” (as such terms are defined in Section 6.2 and Section 5.2.A,
respectively).

ARTICLE 2

DEMISE, CONSTRUCTION, AND ACCEPTANCE

2.1 Demise of Premises: Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, for the Lease Term upon the terms and conditions of this
Lease, the Premises for the Permitted Use, together with (i) the non-exclusive
right to use the number of Tenant’s Allocated Parking Passes (subject to the
limitations set forth in Section 4.5), and (ii) the non-exclusive right to use
the Common Area as it exists from time to time, subject to any rights, powers
and privileges reserved by Landlord pursuant to the terms of this Lease, or
pursuant to the terms of any rules and regulations or restrictions promulgated
by Landlord in accordance with Section 4.6, below governing the use of the
Project. Landlord reserves the right, as reasonably necessary for Landlord’s
management of the Project, to the use of the exterior walls, the roof and the
area beneath and above the Premises, together with the right to install,
maintain, use, and replace ducts, wires, conduits and pipes leading through the
Premises in locations which will not materially interfere with the Permitted Use
of the Premises.

2.2 Commencement Date: The Lease Term shall commence on the Commencement Date.

2.3 Construction of Improvements: Tenant shall construct the “Tenant
Improvements” (as defined in Exhibit B) in accordance with the terms of
Exhibit B.

2.4 Delivery and Acceptance of Possession: Tenant acknowledges that it has been
and is currently in possession and occupancy of the Premises pursuant to the
Existing Lease. Tenant is fully aware of the condition of the Premises and,
therefore, Tenant shall continue to accept possession of the Premises in its
presently existing, “AS-IS” condition, including all patent and latent defects,
but subject to Landlord’s ongoing repair, restoration, maintenance and other
obligations under this Lease. For purposes of Section 1938 of the California
Civil Code, Landlord hereby discloses to Tenant, and Tenant hereby acknowledges,
that the Premises have not undergone inspection by a Certified Access Specialist
(CASp).

2.5 Intentionally Omitted.

2.6 Intentionally Omitted.

 

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ARTICLE 3

RENT

3.1 Base Monthly Rent:

A. In General. Commencing on the Commencement Date and continuing throughout the
Lease Term, Tenant shall pay to Landlord the Base Monthly Rent set forth in
Section K of the Summary.

B. Abated Base Monthly Rent. During months one (1) through three (3) (i.e.,
April 1, 2014 through and including June 30, 2014) and months seven (7) through
nine (9) (i.e., October 1, 2014 through and including December 31, 2014) (the
“Rent Abatement Period”), Tenant shall not be obligated to pay Base Monthly Rent
otherwise attributable to the Premises during such Rent Abatement Period (the
“Rent Abatement”). Notwithstanding the foregoing, or anything to the contrary
set forth in this Lease, Tenant shall be required to pay Tenant’s Share of
Operating Expenses attributable to the Premises and all other Additional Rent
due pursuant to the terms of this Lease during the Rent Abatement Period.
Landlord and Tenant acknowledge and agree that the aggregate amount of the Rent
Abatement equals Three Hundred Fifty-Seven Thousand Four Hundred Ninety-Nine and
98/100 Dollars ($357,499.98). Tenant acknowledges and agrees that the foregoing
Rent Abatement has been granted to Tenant as additional consideration for
entering into this Lease, and for agreeing to pay the rental and perform the
terms and conditions otherwise required under this Lease. If this Lease is
terminated for any reason other than a mutual termination of this Lease,
Landlord’s breach of this Lease, or an event of casualty or condemnation, which
shall be governed by the terms of Articles 11 and 12 respectively, of this
Lease), then, for purposes of calculating Landlord’s damages, if any, the dollar
amount of the unapplied portion of the Rent Abatement as of the date of such
default or termination, as the case may be, shall be converted to a credit to be
applied to the Base Rent applicable at the end of the Lease Term and Tenant
shall immediately be obligated to begin paying Base Rent for the Premises in
full. Notwithstanding the foregoing or anything to the contrary set forth in
this Lease, at any time during the Rent Abatement Period, Landlord shall have
the right (but not the obligation), in its sole and absolute discretion, to pay
Tenant the total amount of the then remaining and unapplied portion of the Rent
Abatement amount, in which event (i) Tenant’s obligation to pay Base Monthly
Rent shall automatically be reinstated for the remainder of the Rent Abatement
Period covered by Landlord’s lump sum payment, at the then-applicable amounts
and otherwise in accordance with the terms of this Lease, and (ii) Tenant shall
not be entitled to any additional rent abatement under this Lease.

C. Intentionally Omitted.

3.2 Additional Rent: Commencing on the Commencement Date and continuing
throughout the Lease Term, Tenant shall pay the following as additional rent
(the “Additional Rent”): (i) any late charges or interest due Landlord pursuant
to Section 3.4; (ii) Tenant’s Share of Operating Expenses as provided in
Section 8.1; (iii) Landlord’s share of any Subrent received by Tenant upon
certain assignments and sublettings as required by Section 14.1; (iv) any legal
fees and costs due Landlord pursuant to Section 15.9; and (v) any other charges
due Landlord pursuant to this Lease.

3.3 Payment of Rent: The term “Rent” or “rent” shall mean Base Monthly Rent,
Additional Rent and other sums required to be paid by Tenant under this Lease.
All rent required to be paid in monthly installments shall be paid in advance on
the first day of each calendar month during the Lease Term. All rent shall be
paid in lawful money of the United States, without any abatement, deduction or
offset whatsoever (except as otherwise specifically provided in this Lease), and
without any prior demand therefor. Rent shall be paid to Landlord at its address
set forth in Section Q of the Summary, or at such other place as Landlord may
designate to Tenant in writing from time to time. Tenant’s obligation to pay
Base Monthly Rent and Tenant’s Share of Operating Expenses shall be prorated at
the commencement and expiration of the Lease Term.

 

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3.4 Late Charge, Interest and Quarterly Payments:

A. Late Charge. Tenant acknowledges that the late payment by Tenant of any
installment of Rent, or any other sum of money required to be paid by Tenant
under this Lease, will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amount of such costs being extremely
difficult and impractical to fix. Such costs and expenses will include, without
limitation, attorneys’ fees, administrative and collection costs, and processing
and accounting expenses and other costs and expenses necessary and incidental
thereto. If any Base Monthly Rent or Additional Rent is not received by Landlord
from Tenant when due such payment is due, then Tenant shall immediately pay to
Landlord a late charge equal to five percent (5%) of such delinquent rent as
liquidated damages for Tenant’s failure to make timely payment. In no event
shall this provision for a late charge be deemed to grant to Tenant a grace
period or extension of time within which to pay any installment of Rent or
prevent Landlord from exercising any right or remedy available to Landlord upon
Tenant’s failure to pay any installment of Rent due under this Lease in a timely
fashion, including any right to terminate this Lease pursuant to Section 13.2B.
Notwithstanding the foregoing, Tenant shall not be obligated to pay a late
charge pursuant to this Section 3.4A, or interest thereon pursuant to
Section 3.4.B, below, for the first (1st) late payment of Rent (whether such
late payment is with respect to Base Monthly Rent or Additional Rent) in any
calendar year, unless Tenant fails to make such payment within five (5) days
after Tenant’s receipt of notice from Landlord regarding such late payment.

B. Interest. If any installment of Rent remains delinquent for a period in
excess of ten (10) days then, in addition to such late charge, Tenant shall pay
to Landlord interest on any such installment of Rent that is not paid when due
at the Agreed Interest Rate following the date such amount became due until
paid.

C. Quarterly Payments. If Tenant during any twelve (12) month period shall be
more than five (5) days delinquent in the payment of any installment of Rent or
other amount payable by Tenant hereunder on three (3) or more occasions, then,
notwithstanding anything herein to the contrary, Landlord may, by written notice
to Tenant, elect to require Tenant to pay all Base Monthly Rent and Additional
Rent quarterly in advance for the following twenty-four (24) month period. Such
right shall be in addition to and not in lieu of any other right or remedy
available to Landlord hereunder or at law on account of Tenant’s default
hereunder.

3.5 Intentionally Omitted

3.6 Electronic Payment: Landlord shall have the right, on not less than thirty
(30) days prior written notice to Tenant (the “Electronic Payment Notice”), to
require Tenant to make subsequent payments of Monthly Base Rent and Additional
Rent due pursuant to the terms of this Lease by means of a federal funds wire
transfer or such other method of electronic funds transfer as may be required by
Landlord in its sole and absolute discretion (the “Electronic Payment”). The
Electronic Payment Notice shall set forth the proper bank ABA number, account
number and designation of the account to which such Electronic Payment shall be
made. Tenant shall promptly notify Landlord in writing of any additional
information that will be required to establish and maintain Electronic Payment
from Tenant’s bank or financial institution. Landlord shall have the right,
after at least ten (10) days prior written notice to Tenant, to change the name
of the depository for receipt of any Electronic Payment and to discontinue
payment of any sum by Electronic Payment.

 

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ARTICLE 4

USE OF PREMISES

4.1 Limitation on Use: Tenant may only use the Premises for the Permitted Use
specified in Section N of the Summary. There shall not be any change in the
Permitted Use without the prior written consent of Landlord, which consent will
not be unreasonably withheld, conditioned or delayed. Tenant shall not do
anything in or about the Premises which will (i) cause structural injury to the
Building, or (ii) cause damage to any part of the Building except to the extent
reasonably necessary for the installation of Tenant’s Trade Fixtures and
Tenant’s Alterations, and then only in a manner which has been first approved by
Landlord in writing (which approval shall not be unreasonably withheld,
conditioned or delayed), and provided that Tenant shall promptly repair any such
damage at Tenant’s sole cost and expense. Tenant shall not operate any equipment
within the Premises which will (i) materially damage the Building or the Common
Area, (ii) overload existing electrical systems or other mechanical equipment
servicing the Building, (iii) impair the efficient operation of the sprinkler
system or the heating, ventilating or air conditioning (“HVAC”) equipment within
or servicing the Building for the Permitted Use, or (iv) damage, overload or
corrode the sanitary sewer system. Tenant shall not attach, hang or suspend
anything from the ceiling, roof, walls or columns of the Building or set any
load on the floor in excess of the load limits for which such items are
designed, nor operate hard wheel forklifts within the Premises. Any dust, fumes,
or waste products generated by Tenant’s use of the Premises shall be contained
and disposed so that they do not (i) create an unreasonable fire or health
hazard, (ii) damage the Premises, or (iii) result in the violation of any Law.
Except as set forth in Section 15.17, and except as otherwise approved by
Landlord in its sole discretion, Tenant shall not change the exterior of the
Building or install any equipment or antennas on, or make any penetrations of,
the exterior or roof of the Building. Tenant shall not commit any waste in or
about the Premises, and Tenant shall keep the Premises in a clean and orderly
condition, free of any nuisances. If Landlord designates a standard window
covering for use throughout the Building, Tenant shall use this standard window
covering to cover all windows in the Premises. Tenant shall not conduct on any
portion of the Premises or the Project any over-the-counter sale of any kind,
including any public or private auction, fire sale, going-out-of-business sale,
distress sale or other liquidation sale.

4.2 Compliance with Regulations: Tenant agrees that it shall not use the
Premises in any manner which violates any Laws or Private Restrictions which
affect the Premises, and it shall abide by and promptly observe and comply with
all Laws and Private Restrictions; provided, however, that with respect to any
Private Restrictions that are not of record as of the Effective Date of this
Lease, Tenant shall only be required to abide by and observe such Private
Restrictions to the extent that the same do not materially interfere with or
prevent Tenant from using the Premises for the Permitted Use, and do not
(i) materially diminish the rights, (ii) materially increase the non-monetary
obligations, or (iii) increase the monetary obligations of Tenant under this
Lease. Tenant shall not use the Premises in any manner which will cause a
cancellation of any insurance policy covering Tenant’s Alterations or any
improvements installed in the Premises by Landlord at its expense, or which
poses an unreasonable risk of damage or injury to the Premises. Tenant shall not
sell, or permit to be kept, used, or sold in or about the Premises, any article
which may be prohibited by the standard form of fire insurance policy. Tenant
shall comply with all reasonable requirements of any insurance company,
insurance underwriter, or Board of Fire Underwriters which are necessary to
maintain the insurance coverage carried by either Landlord or Tenant pursuant to
this Lease. Notwithstanding anything to the contrary set forth in this Lease,
Tenant shall not be obligated to make any alterations to the Building Structure
or the Building Systems which are required in order to cause the same to comply
with any Laws or Private Restrictions, except as specifically set forth in
Section 5.3, below.

 

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4.3 Outside Areas: Except as specifically set forth in Section 15.17, below, no
materials, supplies, tanks or containers, equipment, finished products or
semi-finished products, raw materials, inoperable vehicles or articles of any
nature shall be stored upon or permitted to remain outside of the Premises
except in fully fenced and screened areas outside the Building which have been
designed for such purpose and have been approved in writing by Landlord for such
use by Tenant.

4.4 Signs: Tenant shall not place on any portion of the Premises any sign,
placard, lettering in or on windows, banner, displays or other advertising or
communicative material which is visible from the exterior of the Building
without the prior written approval of Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing,
Landlord hereby approves of the existing exterior signage installed by Tenant at
the Project pursuant to the terms and conditions of the Existing Lease;
provided, however, that in the event that Landlord implements a new signage plan
at the Project, Tenant shall have a one-time obligation to replace such existing
signage with new signage of like kind and quality that complies with such new
signage plan, provided that such new signage plan is commercially reasonable.
All such approved signs shall strictly conform to all Laws, Private
Restrictions, and Landlord’s commercially reasonable sign criteria then in
effect and shall be installed at the expense of Tenant. Tenant shall maintain
such signs in good condition and repair.

4.5 Parking: Tenant is allocated and shall have the non-exclusive right, at no
separate charge to Tenant (excluding Tenant’s Share of Operating Expenses)
during the initial Lease Term, to use the number of Tenant’s Allocated Parking
Passes contained within the Project described in Section H of the Summary for
its use and the use of Tenant’s Agents, the location of which may be designated
from time to time by Landlord; provided that unless and to the extent that
Landlord has specifically designated areas for exclusive parking at the Project,
such parking shall be on a first-come-first-serve basis for all tenants of the
Project. Tenant shall not at any time be entitled to use more parking passes
than the number so allocated to Tenant pursuant to this Lease, or to park its
vehicles or the vehicles of others in any portion of the Project not designated
by Landlord as a non-exclusive parking area. Notwithstanding the foregoing, or
anything to the contrary set forth in this Lease, Landlord hereby agrees that as
existing leases at the Project which presently provide tenants with allocated
parking passes in excess of three (3) parking passes per one thousand
(1,000) rentable square feet of leased space (the “Project Parking Ratio”)
expire or otherwise terminate, Landlord shall use commercially reasonable
efforts to re-allocate such recaptured spaces (i.e., those spaces in excess of
the Project Parking Ratio) to Tenant until Tenant has a total allocated number
of parking passes equal to the Project Parking Ratio (i.e., 150 parking passes
based on 50,000 rentable square feet). Tenant shall not have the exclusive right
to use any specific parking space. If Landlord grants to any other tenant the
exclusive right to use any particular parking space(s), Tenant shall not use
such spaces; provided, however, Landlord shall not grant any reserved parking
rights to other tenants in the area identified on Exhibit C. Landlord reserves
the right, after having given Tenant reasonable notice, to have any vehicles
owned by Tenant or Tenant’s Agents utilizing parking passes in excess of the
parking passes allowed for Tenant’s use, or parked in any portion of the Project
not designated by Landlord as a non-exclusive parking area, to be towed away at
Tenant’s cost. All trucks and delivery vehicles shall be (i) parked at the rear
of the Building, (ii) loaded and unloaded in a manner which does not interfere
with the businesses of other occupants of the Project, and (iii) permitted to
remain on the Project only so long as is reasonably necessary to complete
loading and unloading. In the event Landlord elects or is required by any Law to
limit or control parking in the Project, whether by validation of parking
tickets or any other method of assessment, Tenant agrees to participate in such
validation or assessment program under such reasonable rules and regulations as
are from time to time established by Landlord.

4.6 Rules and Regulations: Landlord may from time to time promulgate reasonable
and nondiscriminatory rules and regulations applicable to all occupants of the
Project for the care and orderly management of the Project and the safety of its
tenants and invitees. Such rules and regulations shall be binding upon Tenant
upon delivery of a copy thereof to Tenant, and Tenant agrees to abide by such
rules and regulations provided that, except to the extent required by applicable
Laws, such rules and regulations

 

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do not materially interfere with or prevent Tenant from using the Premises for
the Permitted Use. If there is a conflict between the rules and regulations and
any of the provisions of this Lease, the provisions of this Lease shall prevail.
Landlord shall not be responsible for the violation by any other tenant or
occupant of the Project of any such rules and regulations.

ARTICLE 5

TRADE FIXTURES AND ALTERATIONS

5.1 Trade Fixtures: Throughout the Lease Term, Tenant may provide and install,
and shall maintain in good condition, any Trade Fixtures required in the conduct
of its business in the Premises, except to the extent any Trade Fixture will
constitute a Tenant Alteration, in which case it shall be subject to the
requirements set forth below for the construction of a Tenant Alteration. All
Trade Fixtures shall remain Tenant’s property upon the expiration or earlier
termination of this Lease.

5.2 Tenant’s Alterations: Construction by Tenant of a Tenant Alteration shall be
governed by the following:

A. Consent Required. Tenant shall not construct any Tenant Alterations or
otherwise alter the Premises or the “Outside Area” (as defined in Section 15.17,
below) without Landlord’s prior written approval, which will not be unreasonably
withheld, conditioned or delayed, unless such Tenant Alteration materially and
adversely affects areas outside of the Premises (other than the Outside Area) or
the exterior of the Building or the structural parts of the Building, in which
case Landlord may withhold its consent in its sole and absolute discretion.
Notwithstanding the foregoing, Landlord’s consent shall not be required for any
Alteration to the interior of the Premises that complies with the following
requirements: (a) is cosmetic in nature such as painting, (b) does not affect
the roof or any area outside of the Premises or require work inside the exterior
walls or above the ceiling of the Premises; (c) does not affect the “Building
Structure” (as that term is defined in Section 6.2, below), or the electrical,
plumbing, HVAC, sprinkler or other fire life safety, or mechanical systems in
the Building or servicing the Premises (collectively, the “Building Systems”);
and (d) costs less than the Permitted Tenant Alterations Limit specified in
Section O of the Summary per work of improvement (herein referred to as “Minor
Alteration”). Tenant shall provide Landlord with prior written notice of any
Minor Alteration, and if Tenant requests of Landlord in such written notice that
Landlord inform Tenant of whether or not Landlord will require Tenant to remove
such Minor Alteration at the expiration or sooner termination of the Lease Term,
and Landlord fails to inform Tenant that removal will be required, then Tenant
shall not be required to remove such Minor Alteration at the expiration or
earlier termination of this Lease. In the event Landlord’s approval for any
Tenant Alteration is required, Tenant shall not construct the Tenant Alteration
until Landlord has approved in writing the plans and specifications therefor
(which approval shall not be unreasonably withheld, conditioned or delayed), and
such Tenant Alteration shall be constructed substantially in compliance with
such approved plans and specifications by a licensed contractor first approved
by Landlord (which approval shall not be unreasonably withheld, conditioned or
delayed). All Tenant Alterations constructed by Tenant shall be constructed by a
licensed contractor in accordance with all Laws using new materials of good
quality.

B. Other Requirements. Tenant shall not commence construction of any Tenant
Alteration until (i) all required governmental approvals and permits have been
obtained, (ii) all requirements regarding insurance imposed by this Lease have
been satisfied, (iii) Tenant has given Landlord at least five (5) days’ prior
written notice of its intention to commence such construction, and (iv) if
reasonably requested by Landlord, Tenant has obtained contingent liability and
broad form builders’ risk insurance in an amount reasonably satisfactory to
Landlord if there are any perils relating to the proposed construction not
covered by insurance carried pursuant to Article 9.

 

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C. Restoration. All Tenant Alterations shall remain the property of Tenant
during the Lease Term but shall not be altered or removed from the Premises
(except for Tenant Alterations which are altered or removed during the Lease
Term in the ordinary course of Tenant’s business operations, provided that
Tenant shall repair any damage to the Premises and Building caused by such
removal and/or alteration). At the expiration or sooner termination of the Lease
Term, all Tenant Alterations in the Premises shall be surrendered to Landlord as
part of the realty and shall then become Landlord’s property, and Landlord shall
have no obligation to reimburse Tenant for all or any portion of the value or
cost thereof; provided, however, that if Landlord requires Tenant to remove any
Tenant Alterations, Tenant shall so remove such Tenant Alterations prior to the
expiration or sooner termination of the Lease Term and repair any damage to the
Premises and Building caused by such removal. Notwithstanding the foregoing or
anything to the contrary set forth in this Lease, Tenant shall not be obligated
to remove (i) the Tenant Improvements; (ii) any existing alterations or
improvements that were installed in the Premises pursuant to the Existing Lease;
or (iii) any Tenant Alterations with respect to which the following is true:
(A) Tenant was required, or elected, to obtain the approval of Landlord to the
installation of the Tenant Alteration in question; (B) at the time Tenant
requested Landlord’s approval, Tenant requested of Landlord in writing that
Landlord inform Tenant of whether or not Landlord would require Tenant to remove
such Tenant Alteration at the expiration of the Lease Term; and (C) at the time
Landlord granted its approval, it did not inform Tenant that it would require
Tenant to remove such Tenant Alteration at the expiration of the Lease Term.

D. Removal of Electrical and Telecommunication Wires. Within sixty (60) days
prior to the expiration or sooner termination of the Term of this Lease Landlord
may elect (“Election Right”) by written notice to Tenant to:

(1) Retain any or all wires, cables, and similar installations appurtenant
thereto (“Wires”) installed by Tenant within the Premises or anywhere in the
Building outside the Premises, including, without limitation, the plenums or
risers of the Building; or

(2) Require Tenant, at Tenant’s sole cost and expense, to remove any or all of
the Wires installed by Tenant during the Lease Term or during the term of the
Existing Lease and repair all damage to the Premises and the Building caused by
such removal (“Wire Restoration Work”).

Tenant shall comply with all applicable Laws with respect to the Wires, subject
to Landlord’s right to elect to retain the Wires. If Landlord elects to retain
any or all of the Wires (pursuant to Section 5.2D(1) above), Tenant covenants
that: (a) Tenant shall be the sole owner of the Wires, Tenant shall have the
sole right to surrender the Wires, and the wires shall be free of all liens and
encumbrances; and (b) all Wires shall be left in good condition, working order,
properly labeled and capped or sealed at each end and in each
telecommunications/electrical closet and junction box, and in safe condition.

The provisions of Section 5.2D and all subsections thereof shall survive the
expiration or sooner termination of the Term of this Lease.

5.3 Alterations Required by Law: Tenant shall make any alteration, addition or
change of any sort to the Premises or Building (including the Building Structure
and Building Systems), that is required by any Law because of (i) Tenant’s
particular use or change of use of the Premises (as opposed to any general
office uses or generic, as opposed to specific, industrial uses); (ii) the
Tenant Improvements; (iii) Tenant’s construction or installation of any Tenant
Alteration, Minor Alteration or Trade Fixtures; or (iv) any Event of Tenant’s
Default. Any other alteration, addition, or change required by Law which is not
the responsibility of Tenant pursuant to the foregoing shall be made by Landlord
(subject to Landlord’s right to reimbursement from Tenant specified in
Section 5.4).

 

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5.4 Amortization of Certain Capital Improvements: Tenant shall pay Additional
Rent in the event Landlord reasonably elects or is required to make any of the
following kinds of capital improvements to the Project (provided that in no
event shall Additional Rent include any capital expenditures to the extent they
are related to the Building Structure or another building of the Project (and
not to the Building or to the Project as a whole)): (i) capital improvements
required to be constructed in order to comply with any Law (excluding any
Hazardous Materials Laws) not in effect or applicable to the Project as of the
Effective Date; (ii) modification of existing or construction of additional
capital improvements or building service equipment for the purpose of reducing
the consumption of utility services or Operating Expenses of the Project (but
only to the extent of any anticipated savings in Operating Expenses during the
amortization period for such capital improvement); and (iii) replacement of
capital improvements or building service equipment existing as of the Effective
Date with improvements or equipment of comparable quality when required because
of normal wear and tear. The amount of Additional Rent Tenant is to pay with
respect to each such capital improvement shall be determined as follows:

A. Amortization Period. All costs paid by Landlord to construct such
improvements (including financing costs) shall be amortized over the useful life
of such improvement (as reasonably determined by Landlord in accordance with
commercially reasonable real estate management and accounting principles
consistent with the practices of landlords of comparable properties located in
Santa Clara, California) with interest on the unamortized balance at the then
prevailing market rate Landlord would pay if it borrowed funds to construct such
improvements from an institutional lender, and Landlord shall inform Tenant of
the monthly amortization payment required to so amortize such costs, and shall
also provide Tenant with the information upon which such determination is made.

B. Payment. As Additional Rent, Tenant shall pay at the same time the Base
Monthly Rent is due an amount equal to Tenant’s Share of that portion of such
monthly amortization payment fairly allocable to the Building (as reasonably
determined by Landlord) for each month after such improvements are completed
until the first to occur of (i) the expiration of the Lease Term (as it may be
extended), or (ii) the end of the term over which such costs were amortized.

5.5 Mechanic’s Liens: Tenant shall keep the Project free from any liens and
shall pay when due all bills arising out of any work performed, materials
furnished, or obligations incurred by Tenant or Tenant’s Agents relating to the
Project. If any claim of lien is recorded (except those caused by Landlord or
Landlord’s Agents), Tenant shall bond against or discharge the same within ten
(10) days after Tenant obtains knowledge that the same has been recorded against
the Project. Should any lien be filed against the Project or any action be
commenced affecting title to the Project, the party receiving notice of such
lien or action shall immediately give the other party written notice thereof.

5.6 Taxes on Tenant’s Property: Tenant shall pay before delinquency any and all
taxes, assessments, license fees and public charges levied, assessed or imposed
against Tenant or Tenant’s estate in this Lease or the property of Tenant
situated within the Premises which become due during the Lease Term. If any tax
or other charge is assessed by any governmental agency because of the execution
of this Lease, such tax shall be paid by Tenant. Within five (5) days following
demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of
these payments.

5.7 Tenant’s Security System. Subject to the terms of this Lease (including the
Tenant Work Letter and this Article 5, as applicable), Tenant shall have the
right, at its own expense, to install a security system (“Tenant’s Security
System”) in the Premises. Tenant shall be solely responsible, at Tenant’s sole
cost and expense, for the installation, monitoring and operation during the
Lease Term, and removal upon the expiration or earlier termination of this Lease
of Tenant’s Security System. Tenant hereby agrees that Landlord shall not be
responsible for monitoring Tenant’s Security System, and that

 

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neither Landlord nor the “Landlord Parties”, as that term is defined in
Section 7.2E of this Lease, shall in no case be liable for, and Landlord and the
Landlord Parties are hereby released from any responsibility for, any personal
injury or property damage sustained by Tenant in connection with or arising from
any acts or omissions with regard to the admission to or exclusion from the
Premises or the Building of any person.

ARTICLE 6

REPAIR AND MAINTENANCE

6.1 Tenant’s Obligation to Maintain: Except as otherwise provided in
Sections 5.4, 6.2, 6.4, 11.1, and 12.3, Tenant shall be responsible for the
following during the Lease Term:

A. General. Tenant shall clean and maintain in good order, condition, and repair
and replace when necessary the Premises and every part thereof, through regular
inspections and servicing, including, but not limited to: (i) all plumbing and
sewage facilities located within or exclusively serving the Premises (including
all sinks, toilets, faucets and drains), and all ducts, pipes, vents or other
parts of the HVAC or plumbing system located within or exclusively serving the
Premises; (ii) all fixtures, interior walls, floors, carpets and ceilings;
(iii) all windows, doors, entrances, plate glass, showcases and skylights
(including cleaning both interior and exterior surfaces); (iv) all electrical
facilities and equipment located within or exclusively serving the Premises
(including all lighting fixtures, lamps, bulbs, tubes, fans, vents, exhaust
equipment and systems); and (v) any automatic fire extinguisher equipment
located in the Premises.

B. Utilities and Glass. With respect to utility facilities located within or
exclusively serving the Premises (including electrical wiring and conduits, gas
lines, water pipes, and plumbing and sewage fixtures and pipes), Tenant shall be
responsible for the maintenance and repair of any such facilities which serve
only the Premises, including all such facilities that are within the walls or
floor, or on the roof of the Premises; provided, however, that Landlord shall
maintain all underground utility facilities located outside of the Premises,
except to the extent (i) the same were installed by or on behalf of Tenant, or
(ii) such underground facilities were damaged by Tenant or a Tenant Party
(subject to Section 9.3 regarding waiver of subrogation).

C. Windows. Tenant shall replace any damaged or broken glass in the Premises
(including all interior and exterior doors and windows) with glass of the same
kind, size and quality. Tenant shall repair any damage to the Premises
(including exterior doors and windows) caused by vandalism or any unauthorized
entry. Tenant shall maintain continuously throughout the Lease Term a service
contract for the washing of all exterior windows in the Premises with a
contractor approved by Landlord (which approval shall not be unreasonably
withheld, conditioned or delayed), which contract provides for the periodic
washing of all such windows at least once every one hundred eighty (180) days
during the Lease Term. Promptly following a request from Landlord, Tenant shall
furnish Landlord with copies of all such service contracts, and shall provide
Landlord with written notice within a reasonable period of time following any
change in the service contractor. All interior windows in the Premises shall be
washed on a commercially reasonable basis.

D. HVAC. Tenant shall (i) maintain and repair (including replacement of
component parts when necessary) all HVAC equipment located within or exclusively
serving the Premises, and shall keep the same in good condition and repair
through regular inspection and servicing, and (ii) maintain continuously
throughout the Lease Term a service contract for the maintenance of all such
HVAC equipment with a licensed HVAC repair and maintenance contractor approved
by Landlord, which contract provides for the periodic inspection and servicing
of the HVAC equipment in accordance with the manufacturer’s recommendations, but
in any event at least once every one hundred twenty (120)

 

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days during the Lease Term. Notwithstanding the foregoing, Landlord may elect at
any time to assume responsibility for the maintenance, repair and replacement of
such HVAC equipment which serves the Premises and include such costs in
Operating Expenses (provided that such costs are commercially reasonable and
customary for such service contracts given the nature and type of the work being
performed). Promptly following a request from Landlord, Tenant shall furnish
Landlord with copies of all such service contracts, and shall provide Landlord
with written notice within a reasonable period of time following any change in
the service contractor. Notwithstanding the foregoing or anything to the
contrary set forth in this Lease, in the event that a base Building HVAC system
(and not any supplemental HVAC system installed in the Premises by Tenant, the
maintenance, repair and replacement of which shall be the sole responsibility of
Tenant) needs to be replaced due to normal wear and tear (and not as a result of
(A) damage to the Building caused by peril or condemnation, which shall be
covered by Articles 11 and 12, respectively, of this Lease, (B) Tenant’s failure
to maintain and repair such Building HVAC system in accordance with the terms of
this Section 6.1, or (C) any negligence or willful misconduct on the part of
Tenant or Tenant’s Agents, subject to Section 9.3 regarding waiver of
subrogation), Landlord shall perform such work and Tenant shall pay Landlord the
amortized costs thereof in accordance with Section 6.4, below.

E. Standards. All repairs and replacements required of Tenant shall be promptly
made with new materials of like kind and quality. If the work affects the
structural parts of the Building or if the estimated cost of any item of repair
or replacement is in excess of the Permitted Tenant’s Alterations Limit, then
Tenant shall first obtain Landlord’s written approval of the scope of the work,
plans therefor, materials to be used, and the contractor, which approval shall
not be unreasonably withheld, conditioned or delayed.

6.2 Landlord’s Obligation to Maintain: Landlord shall repair, maintain and
operate the Common Area and repair and maintain the roof, exterior and
structural parts of the Building (including, without limitation, the foundation,
floor slabs, columns, beams and load-bearing walls) (the “Building Structure”),
so that the same are kept in good order and repair, the costs of which shall be
included in Operating Expenses to the extent permitted by Article 8 of this
Lease. If there is central HVAC or other building service equipment and/or
utility facilities serving portions of both the Common Area and the Premises,
Landlord shall maintain and operate (and replace when necessary) such equipment,
the cost of which shall be included in Operating Expenses to the extent
permitted by Article 8 of this Lease. Landlord shall not be responsible for
repairs required by an accident, fire or other peril or for damage caused to any
part of the Project by any negligent act or omission or willful misconduct of
Tenant or Tenant’s Agents except as otherwise required by Article 11 (subject to
Section 9.3 regarding waiver of subrogation). Landlord may engage contractors of
its choice to perform the obligations required of it by this Article, which
contractors shall be licensed and appropriately qualified, and the necessity of
any expenditure to perform such obligations shall be at the commercially
reasonable discretion of Landlord.

6.3 Control of Common Area: Landlord shall at all times have exclusive control
of the Common Area. Landlord shall have the right, without the same constituting
an actual or constructive eviction and without entitling Tenant to any abatement
of rent, to: (i) close any part of the Common Area to whatever extent required
in the opinion of Landlord’s counsel to prevent a dedication thereof or the
accrual of any prescriptive rights therein; (ii) temporarily close the Common
Area to perform maintenance or for any other reason deemed sufficient by
Landlord; (iii) change the shape, size, location and extent of the Common Area;
(iv) eliminate from or add to the Project any land or improvement, including
multi-deck parking structures; (v) make changes to the Common Area including,
without limitation, changes in the location of driveways, entrances,
passageways, exits, parking spaces, parking areas, sidewalks or the direction of
the flow of traffic and the site of the Common Area; (vi) remove unauthorized
persons from the Project; and/or (vii) change the name or address of the
Building or Project. Tenant shall keep the Common Area clear of all obstructions
created or permitted by Tenant. If in the

 

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opinion of Landlord unauthorized persons are using any of the Common Area by
reason of the presence of Tenant in the Building, Tenant, upon demand of
Landlord, shall restrain such unauthorized use by appropriate proceedings. In
exercising any such rights regarding the Common Area, (i) Landlord shall make a
reasonable effort to minimize any disruption to Tenant’s business, and
(ii) Landlord shall not exercise its rights to close, change or control the
Common Area in a manner that would materially interfere with Tenant’s use of or
access to the Premises or parking rights under this Lease without first
obtaining Tenant’s consent, which consent shall not be unreasonably withheld,
conditioned or delayed. Landlord shall have no obligation to provide guard
services or other security measures for the benefit of the Project. Tenant
assumes all responsibility for the protection of Tenant and Tenant’s Agents from
acts of third parties; provided, however, that nothing contained herein shall
prevent Landlord, at its sole option, from providing security measures for the
Project.

6.4 Landlord Capital HVAC Replacements. In the event that, as a part of Tenant’s
obligations under Section 6.1.D, above, Tenant is required to replace any of the
units of the base Building HVAC system, the fire-life safety system, or the
Building elevators (collectively, the “BB System”). which shall expressly
exclude any supplemental HVAC units and/or fire-life safety systems installed by
or on behalf of Tenant in the Premises, as the result of the failure of such BB
System (as reasonably determined by Landlord) (the “Replacement Unit”), and not
as a result of Tenant’s failure to maintain and repairs such BB Systems in
accordance with the terms of Section 6.1, above, then Tenant shall provide
Landlord written notice of such Replacement Unit, and, provided that Landlord
reasonably agrees with Tenant that, in accordance with commercially reasonable
real estate management and accounting principles consistent with the practices
of landlords of comparable properties located in Santa Clara, California, such
Replacement Unit does in fact need to be replaced, then Landlord shall install
such Replacement Unit at Landlord’s cost, provided that Landlord shall have the
right to amortize the cost such Replacement Unit over the useful life of the
Replacement Unit (determined in accordance with GAAP), in accordance with
Section 5.4, above.

ARTICLE 7

WASTE DISPOSAL AND UTILITIES

7.1 Waste Disposal: Tenant shall store its waste either inside the Premises or
within outside trash enclosures that are fully fenced and screened in compliance
with all Private Restrictions, and designed for such purpose. All entrances to
such outside trash enclosures shall be kept closed, and waste shall be stored in
such manner as not to be visible from the exterior of such outside enclosures.
Landlord hereby acknowledges and agrees that the trash enclosures installed and
maintained by Tenant as of the date of this Lease and pursuant to the Existing
Lease are acceptable. Tenant shall cause all of its waste to be regularly
removed from the Premises at Tenant’s sole cost. Tenant shall keep all fire
corridors and mechanical equipment rooms in the Premises free and clear of all
obstructions at all times.

7.2 Hazardous Materials: Landlord and Tenant agree as follows with respect to
the existence or use of Hazardous Materials on the Project:

A. Hazardous Materials Disclosure Certificate. Upon request by Landlord from
time to time (but not more than once per calendar year, except in connection
with a sale or refinancing of the Project or an Event of Tenant’s Default under
this Lease), Tenant shall deliver to Landlord an executed Hazardous Materials
disclosure statement, substantially in a form reasonably required by Landlord
describing Tenant’s then-present use of Hazardous Materials on the Premises, and
shall also deliver any other reasonably necessary information documenting the
use by Tenant of Hazardous Materials on the Premises as requested by Landlord to
the extent such information is not already included in any Hazardous Materials
Business Plan (“HMBP”) previously provided by Tenant to Landlord. Tenant shall
promptly file with Landlord a copy of any HMBP or any other business response
plan or

 

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inventory required to be maintained and/or filed with any federal, state or
local regulatory agency under any applicable Laws. Landlord and Tenant
acknowledge and agree that, as of the date of this Lease, (i) Tenant has fully
and accurately completed Landlord’s pre-leasing environmental exposures
questionnaire (the “Environmental Questionnaire”), (ii) Tenant has submitted to
Landlord a copy of its most current HMBP, and (iii) Tenant has submitted to
Landlord a copy of Tenant’s closure plan and financial assurance mechanism filed
with the County of Santa Clara in connection with Tenant’s “permit-by-rule”
treatment process allowing for an on-site hazardous waste treatment system, as
disclosed by Tenant in the Environmental Questionnaire (the “Closure Plan” and,
collectively with the Environmental Questionnaire and the HMPB Plan, the
“Approved Hazardous Materials”), each as set forth on Exhibit E attached hereto
(the “Approved Hazardous Materials Exhibit”).

B. Hazardous Material Usage. Neither Tenant, nor Tenant’s employees, contractors
and subcontractors of any tier, entities with a contractual relationship with
Tenant (other than Landlord), or any entity acting as an agent or sub-agent of
Tenant, shall be entitled to produce, use, store, generate, transport or dispose
of any Hazardous Materials on, in, or about any portion of the Premises,
Building or the Project, nor cause or permit any Hazardous Materials to be
brought upon, placed, stored, manufactured, generated, blended, handled,
recycled, used or released on, in, under or about the Premises (herein referred
to as “Hazardous Materials Usage”) not previously identified by Tenant to
Landlord per the HMBP provided pursuant to Section 7.2.A above, without, in each
instance, obtaining Landlord’s prior written consent thereto, which consent
shall not be unreasonably withheld, conditioned or delayed; provided, however,
that in the event Tenant desires to use, store or dispose of Hazardous Materials
which are not similar to the Hazardous Materials listed on the Approved
Hazardous Materials Exhibit in terms of their hazardous character, handling
profile, usage and quantity (“New Hazardous Materials Usage”), then (i) Landlord
shall have the right to impose additional terms and conditions on this Lease
based upon such hazardous character, handling profile, use, storage and/or
disposal, to the extent such additional terms and conditions are consistent with
the requirements of institutional landlords of “Comparable Buildings,” as that
term is defined in Section 8.5(B), below, when leasing space to tenants using
Hazardous Materials materially similar in terms of hazardous character, handling
profile, usage and quantity to the New Hazardous Materials Usage, and (ii) the
installation of any additional exterior storage tanks or vessels in the Common
Area or below grade, with respect to such new Hazardous Materials shall be
subject to Landlord’s prior written consent, in its sole and absolute
discretion. If any information provided to Landlord by Tenant on the Approved
Hazardous Materials Exhibit, or otherwise relating to information concerning
Hazardous Materials is intentionally or grossly negligently false, incomplete,
or misleading in any material respect, the same shall be deemed a default by
Tenant under this Lease. Any Hazardous Materials Usage by Tenant and Tenant’s
Agents after the Effective Date on or about the Project shall strictly comply
with all applicable Laws, including all Hazardous Materials Laws. Such foregoing
obligation shall include, without limitation, maintaining, and complying with,
all required necessary licenses, certifications, permits and approvals
appropriate or required for any Hazardous Materials Usage by Tenant on the
Premises. Landlord shall have a continuing right, without obligation, to require
Tenant to obtain, and to review and inspect any and all such permits, licenses,
certifications and approvals, together with copies of any and all Hazardous
Materials management plans and programs, any and all Hazardous Materials risk
management and pollution prevention programs, and any and all Hazardous
Materials emergency response and employee training programs respecting Tenant’s
Hazardous Materials Usage.

C. Tests and Inspections. Landlord shall have the right, but not the obligation,
at all times during the Term of this Lease (but not more than once per calendar
year, except in connection with a sale or refinancing of the Project or an Event
of Tenant’s Default under this Lease) and subject to Tenant’s reasonable
security requirements, to (i) enter and inspect the Premises, (ii) conduct tests
and investigations periodically and from time to time to determine whether
Tenant is in compliance with the provisions of this Section 7.2 or to determine
if Hazardous Materials are present in, on or about the

 

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Project, and (iii) request Tenant confirm in writing that all previously
provided information to Landlord with respect to the type and amount all
Hazardous Materials used, stored or otherwise located on, under or about any
portion of the Premises and/or the Common Areas is accurate and complete. The
cost of all such inspections, tests and investigations shall be borne by Tenant,
if and only if as a result thereof Landlord reasonably determines that
contamination has occurred on the Premises and/or Common Areas and that Tenant
or any of Tenant’s Agents are responsible in any manner for any contamination.
The aforementioned rights granted herein to Landlord and its representatives
shall not create (a) a duty on Landlord’s part to inspect, test, investigate,
monitor or otherwise observe the Premises or the activities of Tenant and
Tenant’s Agents with respect to Hazardous Materials, including without
limitation, Tenant’s operation, use and any remediation related thereto, or
(b) liability on the part of Landlord and its representatives for Tenant’s use,
storage, disposal or remediation of Hazardous Materials, it being understood
that Tenant shall be solely responsible for all liability in connection
therewith.

D. Notice; Cleanup Obligations; Closure and Decommissioning.

(1) Notice. Tenant shall give to Landlord prompt verbal and follow-up written
notice of any spills, releases, discharges, disposals, emissions, migrations,
removals or transportation of Hazardous Materials on, under or about any portion
of the Premises, Common Areas or Project in violation of applicable Hazardous
Materials Laws or Tenant’s obligations under this Lease, provided that Tenant
has actual knowledge of such event(s). Tenant shall promptly forward to Landlord
copies of all requests, orders, notices, permits, applications, and other
communications and reports received by Tenant from or submitted by Tenant to any
federal, state or local regulatory agency with jurisdiction over Tenant’s
operations of the Premises in connection with the foregoing. To the extent any
regulatory, judicial or other enforcement action or proceeding in connection
with the foregoing is commenced against Tenant, Tenant shall not enter into any
discretionary or voluntary settlement, consent decree or other compromise or
resolution without first notifying Landlord of Tenant’s intention to do so and
affording Landlord the opportunity to contest such proceedings or to join and
participate, as a party if Landlord so elects, in such proceedings, and in no
event shall Tenant enter into any discretionary or voluntary consent decree,
consent order or other agreements with terms which are binding on Landlord or
the Premises without Landlord’s prior written consent, which consent shall not
be unreasonably withheld, conditioned or delayed; provided, however, that Tenant
shall provide prompt written notice to Landlord in the event that Tenant is
compelled (i.e., the same is not discretionary or voluntary) to enter into any
settlement, consent decree, consent order or other compromise, resolution or
agreement. Landlord shall have the right to appear at and participate in, any
and all judicial or other administrative proceedings concerning any such
foregoing claims.

(2) Cleanup Obligations. Tenant, at its sole cost and expense, covenants and
warrants to promptly investigate, clean up, remove, restore and otherwise
remediate (including, without limitation, preparation of any feasibility studies
or reports and the performance of any and all closures) any spill, release,
discharge, disposal, emission, migration or transportation, incident or other
consequence of its Hazardous Materials Usage in violation of applicable
Hazardous Materials Laws or Tenant’s obligations under this Lease and arising
from the acts or omissions of Tenant or Tenant’s Agents, in accordance with all
applicable Laws, including all Hazardous Materials Laws now or hereinafter
enacted, the HMBP Plan and this Lease. Tenant shall provide a written
certification to Landlord indicating that Tenant has complied with all
applicable reporting requirements in connection with Tenant’s obligations under
this Section 7.2.D(1). Any such investigation, clean up, removal, restoration
and other remediation shall only be performed after Tenant has notified Landlord
with respect to its plans for such work and obtained Landlord’s prior written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed so long as Tenant is in compliance with all applicable Hazardous
Materials Laws. Notwithstanding the foregoing, Tenant shall be entitled to
respond immediately to an emergency without first obtaining Landlord’s prior
written consent.

 

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(3) Closure and Decommissioning. Tenant, at its sole cost and expense, shall
conduct and perform, or cause to be conducted and performed, all closures and
decommissioning activity as required by any Hazardous Materials Laws or any
federal, state or local regulatory agencies or other governmental authorities
having jurisdiction over the Premises and Tenant’s activities thereon, to the
extent that such closures and decommissioning activity is required due to
Hazardous Materials Usage by Tenant or Tenant’s Agents. All such work undertaken
by Tenant, as required herein, shall be performed in such a manner so as to
enable Landlord to continue to use the Premises and the other portions of the
Project for commercial and industrial leasing .

E. Indemnity. Tenant shall indemnify, hold harmless, and, at Landlord’s option
(with such attorneys as Landlord may reasonably approve in advance and in
writing), defend Landlord and Landlord’s officers, directors, shareholders,
partners, members, managers, employees, contractors, property managers, agents
and mortgagees (“Landlord Parties”) and other lien holders, from and against any
and all “Losses” (hereinafter defined) arising from or related to: (a) any
violation or alleged violation by Tenant or any of Tenant’s Agents of any of the
Laws, including, without limitation, the Hazardous Materials Laws; (b) any
breach of the provisions of this Section 7.2 or any subsection thereof by Tenant
or any of Tenant’s Agents; (c) any Hazardous Materials Usage on, about or from
the Premises, the Project or Common Areas of any Hazardous Materials approved by
Landlord under this Lease, or (d) Landlord’s exercise of the “Landlord Cure
Right,” as that term is defined in subparagraph I., below (except to the extent
of any negligence or willful misconduct by Landlord or any Landlord Party in the
exercise of such cure right). The term “Losses” shall mean all claims, demands,
expenses, actions, judgments, damages, penalties, fines, liabilities, losses of
every kind and nature (including, without limitation, property damage,
diminution in value of Landlord’s interest in the Premises or the Project,
damages for the loss or restriction on use of any space or amenity within the
Building or the Project, damages arising from any adverse impact on marketing
space in the Project, sums paid in settlement of claims and any costs and
expenses associated with injury, illness or death to or of any person), suits,
administrative proceedings, costs and fees, including, but not limited to,
attorneys’ and consultants’ fees and expenses, and the costs of cleanup,
remediation, removal and restoration. To the actual knowledge of Landlord,
except as set forth in reports delivered to Tenant before Tenant’s execution of
this Lease, Landlord has no written notices, reports, materials or other written
information indicating the presence of Hazardous Materials on the Project or the
soil, surface water or groundwater thereof in violation of Hazardous Materials
Laws. Landlord agrees to indemnify, hold harmless and, at Tenant’s option (with
such attorneys as Tenant may approve in advance and in writing) defend Tenant
and Tenant’s officers, directors, shareholders, partners, members, managers and
employees (“Tenant Parties”) from and against any liability, obligation, damage
or costs, including without limitation, claims for personal injuries, property
damage or regulatory liability arising out of Hazardous Materials Laws, and
including reasonable attorneys’, consultants and expert’s fees and costs,
resulting from any Hazardous Materials which were brought onto the Project or
within the Building or the Premises by Landlord or a Landlord Party, except to
the extent such liability, obligation, damage or costs was a result of the
negligence or willful misconduct of Tenant or a Tenant Party, or was
proportionately caused, exacerbated or permitted by Tenant or a Tenant Party.

F. Hazardous Material. As used herein, the term “Hazardous Materials” means any
hazardous, radioactive or toxic substance, material or waste which is or becomes
regulated by any local governmental authority, the State of California or the
United States Government or under any Hazardous Materials Laws. The term
“Hazardous Material,” includes, without limitation, hazardous radioactive
material, radioactive material, mixed waste, petroleum products, asbestos,
PCB’s, and any material or substance which is (i) listed under Article 9 or
defined as hazardous or extremely hazardous pursuant to Article 11 of Title 22
of the California Code of Regulations, Division 4, Chapter 20, (ii) defined as a
“hazardous waste” pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6903), (iii) defined as a
“hazardous substance” pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act, 42

 

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U.S.C. 9601 et seq. (42 U.S.C. 9601) or (iv) regulated as a radioactive material
under Title 17, Division 1, Chapter 5, Subchapter 4 of the California Code or
Regulations and Title 10, Code of Federal Regulations, part 20. As used herein,
the term “Hazardous Materials Laws” shall mean any statute, law, ordinance, or
regulation of any governmental body or agency (including the U.S. Environmental
Protection Agency, the California Regional Water Quality Control Board, the
California Department of Public Health Radiologic Health Branch and the
California Department of Toxic Substances Control) which regulates the use,
storage, release or disposal of any Hazardous Material.

G. Removal. To the extent not otherwise authorized to do so under its
permit-by-rule closure plan or other applicable requirements, Tenant shall
promptly remove from the Premises, Building and Project , and in compliance with
all applicable laws, all Hazardous Materials used by Tenant in its operations
when they are no longer needed for such use.

H. Tenant’s Obligations upon Surrender. At the expiration or earlier termination
of the Lease Term, Tenant, at Tenant’s sole cost and expense, shall: (i) cause
all Hazardous Materials located on, in or about any portion of the Premises,
Building or Project by Tenant or a Tenant Agent, to be removed from the Premises
and managed or disposed of in accordance with all Hazardous Materials Laws and
as necessary to allow the Premises to be used for any commercial purpose; and
(ii) cause to be removed all containers installed or used by Tenant or Tenant’s
Agents to store any Hazardous Materials on the Premises, and cause to be
repaired any damage to the Premises caused by such removal. Within one hundred
twenty (120) days prior to the expiration or earlier termination of this Lease,
Landlord may, at Landlord’s sole cost and expense, cause an environmental
assessment of the Premises by a competent and experienced environmental engineer
or engineering firm reasonably selected by Landlord, which (i) evidences that
the Premises are in a clean and safe condition and free and clear of any
Hazardous Materials; and (ii) includes a review of the Premises by an
environmental consultant for asbestos, mold, fungus, spores, and other moisture
conditions, on-site chemical use, and lead-based paint. If such environmental
assessment reveals that remediation or clean-up for which Tenant is responsible
under this Lease is required under any Hazardous Materials Laws, then (A) Tenant
shall promptly reimburse Landlord for the cost of such environmental assessment,
and (B) Tenant shall submit a remediation plan prepared by a recognized
environmental consultant and shall be responsible for all costs of remediation
and clean-up, as provided in this Section 7.2.

I. Landlord Cure Right. If Tenant fails to comply with the terms of this
Section 7.2 (subject to any applicable notice and cure periods expressly set
forth herein), including, without limitation, if Tenant fails to commence and
carry out closure or decommissioning or otherwise fails to promptly investigate,
clean up, remove, restore, provide closure or otherwise so remediate the
Premises as required by Hazardous Materials Laws, Landlord may, but without
obligation to do so, take any and all steps necessary to rectify the same and
Tenant shall promptly reimburse Landlord, upon demand, for all out-of-pocket
costs and expenses incurred by Landlord in performing Tenant’s obligations with
respect to the investigation, clean up, removal, restoration, closure and
remediation work hereunder (the “Landlord Cure Right”).

J. Pollution Legal Liability Environmental Insurance. Tenant shall obtain and
maintain Pollution Legal Liability Environmental Insurance (i) from an insurance
carrier with a rating of no less than A-X in Best’s Insurance Guide, and
(ii) providing commercially reasonable coverage and deductibles (to the extent
available) with respect to (i) known and unknown pre-existing conditions;
(ii) unknown and later discovered conditions; (iii) on-site and off-site
third-party claims for bodily injury or property damage; and (iv) legal defense
expenses. The form of the Pollution Legal Liability Environmental Insurance
policy shall be reasonably acceptable to Landlord, and the term of such policy
shall be at least equal to the then-current Lease Term plus an additional six
(6) months. Further, notwithstanding anything to the contrary set forth in this
Lease, as a condition precedent to the

 

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effectiveness of Tenant’s exercise of its right to extend the Lease Term by the
Extension Period pursuant to the terms of Exhibit D attached hereto or
otherwise, Tenant shall have obtained the policy described in this Section 7.2J,
in accordance with the terms of this Section 7.2J, including without limitation,
that the term of such policy shall be at least equal to the length of the
Extension Period plus an additional six (6) months. Landlord shall be named as
an additional named insured on the Pollution Legal Liability Environmental
Insurance policy by endorsement, and an endorsement shall be issued to the
Pollution Legal Liability Environmental Insurance policy that provides the
policy cannot be amended, modified, terminated or cancelled by the insured
without the prior written consent of Landlord. Any new Pollution Legal Liability
Environmental Insurance policy that Tenant obtains shall provide coverage for
pollution conditions and unknown claims arising prior to the date such policy
was issued (e.g., pre-existing conditions shall be covered).

K. Consolidation of Other Facilities. In the event that Tenant elects to
consolidate one or more of its other existing facilities (including, without
limitation, Tenant’s facilities currently located in Fremont, California) into
Tenant’s operations at the Premises, prior to such consolidation and any
construction or alteration of the improvements in the Premises in connection
therewith, Tenant shall submit to Landlord a revised Environmental
Questionnaire, HMBP Plan and Closure Plan, and any other reasonably necessary
documents as requested by Landlord, describing Tenant’s use of Hazardous
Materials as a result of such consolidation (the “Consolidation Hazardous
Materials Documents”). Tenant’s use of the Hazardous Materials disclosed in the
Consolidation Hazardous Materials Documents shall be subject to Landlord’s prior
written consent, which consent shall not be unreasonably withheld or delayed;
provided, however, that if the Hazardous Materials described in the
Consolidation Hazardous Materials Documents are New Hazardous Materials Usage,
then (i) Landlord shall have the right to impose additional terms and conditions
on this Lease based upon such hazardous character, handling profile, use,
storage and/or disposal of the Hazardous Materials described in the
Consolidation Hazardous Materials Documents, to the extent such additional terms
and conditions are consistent with the requirements of institutional landlords
of Comparable Buildings when leasing space to tenants using Hazardous Materials
materially similar in terms of hazardous character, handling profile, usage and
quantity to the New Hazardous Materials Usage, and (ii) the installation of any
exterior storage tanks or vessels in the Common Area or below grade with respect
to such Hazardous Materials described in the Consolidation Hazardous Materials
Documents shall be subject to Landlord’s prior written consent, in its sole and
absolute discretion.

L. Survival. The obligations of Landlord and Tenant under this Section 7.2 shall
survive the expiration or earlier termination of the Lease Term. The rights and
obligations of Landlord and Tenant with respect to issues relating to Hazardous
Materials are exclusively established by this Section 7.2. In the event of any
inconsistency between any other part of this Lease and this Section 7.2, the
terms of this Section 7.2 shall control.

7.3 Utilities: Tenant shall promptly pay, as the same become due, all charges
for water, gas, electricity, telephone, sewer service, waste pick-up and any
other utilities, materials or services furnished directly to or used by Tenant
on or about the Premises during the Lease Term, including, without limitation,
(i) meter, use and/or connection fees, hook-up fees, or standby fees (excluding
any connection fees or hook-up fees which relate to making the existing
electrical, gas, and water service available to the Premises as of the
Commencement Date), and (ii) penalties for discontinued or interrupted services.

7.4 Compliance with Governmental Regulations: Tenant shall comply with all
rules, regulations and requirements promulgated by national, state or local
governmental agencies or utility suppliers concerning the use of utility
services, including any rationing, limitation or other control. Tenant shall not
be entitled to terminate this Lease nor to any abatement in rent by reason of
such compliance.

 

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7.5 Interruption of Use: Notwithstanding anything to the contrary set forth in
this Lease, in the event that any utility service provided to the Premises is
interrupted for a period in excess of five (5) consecutive days (an “Abatement
Event”) due to the active or gross negligence or willful misconduct of Landlord
or Landlord’s Agents, Tenant’s sole remedy with respect to such Abatement Event
shall be an abatement of Tenant’s obligation to pay Rent under this Lease in
proportion to the extent that the Premises is untenantable and Tenant does not
in fact use the Premises for the Permitted Use as a result of such interruption.
In the event of any Abatement Event that is not due to the active or gross
negligence or willful misconduct of Landlord or Landlord’s Agents, Tenant’s sole
remedy shall be an abatement of Tenant’s obligation to pay Rent under this Lease
in an amount not to exceed the total amount of any reimbursement actually
received by Landlord from any rental loss insurance policy maintained by
Landlord.

ARTICLE 8

OPERATING EXPENSES

8.1 Tenant’s Payment Obligation: As Additional Rent, Tenant shall pay Tenant’s
Share (specified in Section G of the Summary) of all Operating Expenses. Tenant
shall pay such share of the actual Operating Expenses incurred or paid by
Landlord but not theretofore billed to Tenant within thirty (30) days after
receipt of a written bill therefor from Landlord, on such periodic basis as
Landlord shall designate, but in no event more frequently than once a month.
Alternatively, Landlord may from time to time require that Tenant pay Tenant’s
Share of Operating Expenses in advance in estimated monthly installments, in
accordance with the following: (i) Landlord shall deliver to Tenant Landlord’s
reasonable estimate of the Operating Expenses it anticipates will be paid or
incurred for the Landlord’s fiscal year in question; (ii) during such Landlord’s
fiscal year Tenant shall pay such share of the estimated Operating Expenses in
advance in monthly installments as required by Landlord due with the
installments of Base Monthly Rent; and (iii) within one hundred eighty
(180) days after the end of each Landlord’s fiscal year, Landlord shall furnish
to Tenant a statement in reasonable detail of the actual Operating Expenses paid
or incurred by Landlord during the just ended Landlord’s fiscal year (the
“Annual Reconciliation Statement”) and thereupon there shall be an adjustment
between Landlord and Tenant, with payment to Landlord or credit by Landlord
against the next installment of Base Monthly Rent (or refund to Tenant with
respect to the last year of the Lease Term), as the case may require, within
thirty (30) days after delivery by Landlord to Tenant of said statement, so that
Landlord shall receive the entire amount of Tenant’s Share of all Operating
Expenses for such Landlord’s fiscal year and no more. The failure of Landlord to
delivery such annual reconciliation statement within said 180-day period under
clause (iii) above shall not constitute a waiver or otherwise release a party
from its obligation to make a payment or credit when such reconciliation is
actually done.

Notwithstanding anything to the contrary in this Lease, if the Project consists
of multiple buildings, certain Operating Expenses may pertain to a particular
building(s) and other Operating Expenses to the Project as a whole. Landlord
reserves the right in its reasonable discretion to equitably allocate any such
costs applicable to any particular building within the Project to the building
in question whose tenants shall be responsible for payment of their respective
proportionate shares in the pertinent building and other such costs applicable
to the Project to each building in the Project (including the Building) with the
tenants in each such building being responsible for paying their respective
proportionate shares in such building of such costs to the extent required under
the applicable leases. Landlord shall use commercially reasonable efforts to
allocate such costs to the buildings (including the Building) in a reasonable,
non-discriminatory manner and such allocation shall be binding on Tenant.

 

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8.2 Operating Expenses Defined: The term “Operating Expenses” shall mean the
total amounts paid or payable, whether by Landlord or others on behalf of
Landlord, in connection with the ownership, maintenance, repair, and operations
of the Building, the Common Areas and the Project, including without limitation,
the following:

A. All costs and expenses paid or incurred by Landlord in doing the following
(including payments to independent contractors providing services related to the
performance of the following): (i) maintaining, cleaning, repairing and
resurfacing the roof (including repair of leaks) and the exterior surfaces
(including painting) of all buildings located on the Project; (ii) maintenance
of any liability, fire, property damage, earthquake and other insurance covering
the Project carried by Landlord pursuant to Section 9.2 (including the
prepayment of premiums for coverage of up to one year, provided that Tenant
shall not be responsible for any premiums relating to any time period for which
Tenant is not obligated to pay its share of Operating Expenses hereunder);
(iii) subject to Section 5.4 and Article 6, above, maintaining, repairing,
operating and replacing when necessary HVAC equipment, utility facilities and
other building service equipment; (iv) providing utilities to the Common Area
(including lighting, trash removal and water for landscaping irrigation);
(v) complying with all applicable Laws and Private Restrictions; (vi) operating,
maintaining, repairing, cleaning, painting, re-striping and resurfacing the
Common Area; (vii) replacement or installation of lighting fixtures, directional
or other signs and signals, irrigation systems, trees, shrubs, ground cover and
other plant materials, and all landscaping in the Common Area; and
(viii) providing security (provided, however, that Landlord shall not be
obligated to provide security and if it does, Landlord may discontinue such
service at any time and in any event Landlord shall not be responsible for any
act or omission of any security personnel); and (ix) capital improvements as
provided in Section 5.4 hereof;

B. The following costs: (i) Real Property Taxes as defined in Section 8.3;
(ii) the amount of any “deductible” paid by Landlord with respect to damage
caused by any Insured Peril, provided that such deductible is in a commercially
reasonable amount comparable to deductibles paid by landlords of comparable
institutionally-owned buildings of similar size, age, location, quality of
appearance and services to the Building, and located in the Santa Clara,
California area (“Comparable Buildings”); (iii) the amount of any deductibles
paid by Landlord with respect to damage caused by earthquake, flood or terrorist
act, subject to Section 5.4(iv), above, and provided that Tenant’s Share of such
deductibles shall not exceed a cumulative amount equal to $1.50 per rentable
square foot of the Premises per year, and provided further than no part of any
such cumulative deductible amounts incurred by Landlord in excess of the
forgoing cap in any fiscal year during the Lease Term may be amortized or
otherwise passed through to Tenant as part of Operating Expenses in any future
fiscal year during the Lease Term; and (iv) that portion of all compensation
(including benefits and premiums for workers’ compensation and other insurance)
paid to or on behalf of employees of Landlord but only to the extent they are
involved in the performance of the work described by Section 8.2A that is fairly
allocable to the Project;

C. Fees for property management services rendered by either Landlord or a third
party manager engaged by Landlord (which may be a party affiliated with
Landlord), not to exceed the monthly rate of three percent (3%) of the gross
revenues from the Project, plus charges for office rent for property management,
supplies, equipment, salaries, wages, bonuses and other compensation (including
fringe benefits, vacation, holidays and other paid absence benefits) relating to
employees of Landlord or its property manager or agents engaged in the
management, operation, repair, or maintenance of the Building and/or Common
Areas of the Project;

D. All additional costs and expenses incurred by Landlord with respect to the
operation, protection, maintenance, repair and replacement of the Project which
would be considered a current expense pursuant to commercially reasonable real
estate management and accounting principles consistent with the practices of
landlords of comparable properties located in Santa Clara, California.

 

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E. Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses
shall not, however, include:

(1) payments on any loans or ground leases affecting the Project;

(2) depreciation of any building or any major systems of building service
equipment within the Project;

(3) any cost incurred in complying with Hazardous Materials Laws, which subject
is governed exclusively by Section 7.2, it being understood that in no event
will any costs related to the presence of any Hazardous Materials on, under or
about the Project be included in Operating Expenses;

(4) costs, including legal fees, space planners’ fees, and brokerage or finder’s
fees incurred in connection with the original construction or development, or
original or future leasing of the Project, and costs, including permit, license
and inspection costs, incurred with respect to the installation of tenant
improvements made for other tenants or occupants of the Project or incurred in
renovating or otherwise improving, decorating, painting or redecorating vacant
space for tenants or other occupants of the Project (excluding, however, such
costs relating to any common areas of the Building or Project or parking
facilities);

(5) any bad debt loss, rent loss, or reserves for bad debts or rent loss;

(6) costs associated with the operation of the business of the limited liability
company, partnership or entity which constitutes Landlord, as the same are
distinguished from the costs of operation of the Building or Project (which
shall specifically include, but not be limited to, accounting costs associated
with the operation of the Building or Project). Costs associated with the
operation of the business of the limited liability company, partnership or
entity which constitutes Landlord include costs of partnership accounting and
legal matters, costs of defending any lawsuits with any mortgagee (except as the
actions of the Tenant may be in issue), costs of selling, syndicating,
financing, mortgaging or hypothecating any of the Landlord’s interest in the
Project, and costs incurred in connection with any disputes between Landlord and
its employees, between Landlord and Project management, or between Landlord and
other tenants or occupants;

(7) except for a management fee provided in Section 8.2.C above, overhead and
profit increment paid to the Landlord or to subsidiaries or affiliates of the
Landlord for services in the Project to the extent the same exceeds the costs of
such services rendered by qualified, unaffiliated third parties on a competitive
basis;

(8) costs arising from the active or gross negligence or willful misconduct of
Landlord or its agents, employees, vendors, contractors, or providers of
materials or services;

(9) costs, including fines or penalties, incurred due to a violation of any Law
by Landlord or any of Landlord’s Agents, but not including (i) on-going
recurring compliance costs (by way of example only, costs to comply with a Law
requiring periodic elevator maintenance, or related to fire-extinguisher
inspections, which shall be included in Operating Expenses), or (ii) costs
resulting from a violation of any Law by Tenant or any of Tenant’s agents or
Tenant’s failure to timely pay Tenant’s Share of Operating Expenses to Landlord,
in which event Tenant shall be solely responsible for such costs;

 

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(10) costs for repairs or other work incurred by reason of fire or other
casualty, or by the exercise of the right of eminent domain, to the extent
Landlord is reimbursed through insurance proceeds or condemnation awards, or
would have been so reimbursed if Landlord had in force all insurance required to
be carried by Landlord under this Lease;

(11) costs for repairs to correct defects in the original construction of the
Project, or repairs that are covered by warranties to the extent actually
covered by such warranties;

(12) legal fees and costs, settlements, judgments or awards paid or incurred
because of disputes between Landlord and Tenant, Landlord and other tenants or
prospective occupants or prospective tenants/occupants or providers of goods and
services to the Project;

(13) costs for capital improvements to the Project (including, without
limitation, capital expenditures related solely to another building of the
Project and not to the Building or to the Project as a whole), except as set
forth in Section 5.4, above;

(14) advertising and promotional expenses;

(15) costs for which Landlord receives separate reimbursement directly from any
other tenant (other than as a reimbursement of operating expenses) or occupant
of the Project;

(16) wages and/or benefits attributable to personnel above the level of Project
manager or Project engineer;

(17) rentals and other related expenses incurred in leasing Building equipment
which if purchased the cost of which would be excluded from Operating Expenses
as a capital cost, except equipment not affixed to the Project which is used in
providing janitorial or similar services and, further excepting from this
exclusion such equipment rented or leased to remedy or ameliorate an emergency
condition in the Building or Common Area servicing the Building;

(18) costs arising from Landlord’s charitable or political contributions;

(19) costs of acquiring sculptures, paintings or other object of art;

(20) fines, penalties or interest payable by Landlord (unless such fines,
penalties and interest result from Tenant’s failure to timely pay its Share of
Operating Expenses to Landlord, in which event Tenant shall be solely
responsible for such costs);

(21) costs first accruing after the expiration or earlier termination of this
Lease; and

(22) the amount of any insurance deductible relating to damage caused by an
event of casualty that is the triggering event for the termination of this Lease
pursuant to Article 11, below.

F. Intentionally Omitted.

8.3 Real Property Taxes Defined: The term “Real Property Taxes” shall mean all
taxes, assessments, levies, and other charges of any kind or nature whatsoever,
general and special, foreseen and unforeseen (including all installments of
principal and interest required to pay any existing or future general or special
assessments for public improvements, services or benefits, and any increases
resulting

 

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from reassessments resulting from a change in ownership, new construction, or
any other cause), now or hereafter imposed by any governmental or
quasi-governmental authority or special district having the direct or indirect
power to tax or levy assessments, which are levied or assessed against, or with
respect to the value, occupancy or use of all or any portion of the Project (as
now constructed or as may at any time hereafter be constructed, altered, or
otherwise changed) or Landlord’s interest therein, the fixtures, equipment and
other property of Landlord, real or personal, that are an integral part of and
located on the Project, the gross receipts, income, or rentals from the Project,
or the use of parking areas, public utilities, or energy within the Project, or
Landlord’s business of leasing the Project. The parties acknowledged that
Proposition 13 was adopted by the voters of the State of California in the
June 1978 election (“Proposition 13”) and that assessments, taxes, fees, levies
and charges may be imposed by governmental agencies for such services as fire
protection, street, sidewalk and road maintenance, refuse removal and for other
governmental services formerly provided without charge to property owners or
occupants, and, in further recognition of the decrease in the level and quality
of governmental services and amenities as a result of Proposition 13, Real
Property Taxes shall also include any governmental or private assessments or the
Project’s contribution towards a governmental or private cost-sharing agreement
for the purpose of augmenting or improving the quality of services and amenities
normally provided by governmental agencies. If at any time during the Lease Term
the method of taxation or assessment of the Project prevailing as of the
Effective Date shall be altered so that in lieu of or in addition to any Real
Property Tax described above there shall be levied, assessed or imposed (whether
by reason of a change in the method of taxation or assessment, creation of a new
tax or charge, or any other cause) an alternate or additional tax or charge
(i) on the value, use or occupancy of the Project or Landlord’s interest
therein, or (ii) on or measured by the gross receipts, income or rentals from
the Project, on Landlord’s business of leasing the Project, or computed in any
manner with respect to the operation of the Project, then any such tax or
charge, however designated, shall be included within the meaning of the term
Real Property Taxes for purposes of this Lease. If any Real Property Tax is
based upon property or rents unrelated to the Project, then only that part of
such Real Property Tax that is fairly allocable to the Project shall be included
within the meaning of the term Real Property Taxes. Notwithstanding anything to
the contrary set forth herein, in the event that any assessment or Real Property
Taxes may be payable in installments over a period in excess of one (1) year,
Tenant’s share of Real Property Taxes shall be determined as if Landlord had
elected to pay the charge in the permitted maximum number of installments
(including any costs and fees in connection therewith), and Tenant shall be
responsible only for those installments or parts of installments which would be
attributable to the Lease Term. Any costs and expenses (including, without
limitation, reasonable attorneys’ and consultants’ fees) reasonably incurred in
attempting to protest, reduce or minimize Tax Expenses (a “Tax Appeal”) shall be
included in Real Property Taxes in the year such expenses are incurred. Tax
refunds shall be credited against Real Property Taxes and refunded to Tenant
regardless of when received, based on the year to which the refund is
applicable, provided that in no event shall the amount to be refunded to Tenant
for any such year exceed the total amount paid by Tenant as Additional Rent
under this Article 8 for such year. If Real Property Taxes for any period during
the Lease Term or any extension thereof are increased after payment thereof for
any reason, including, without limitation, error or reassessment by applicable
governmental or municipal authorities, Tenant shall pay Landlord upon demand
Tenant’s Share of any such increased Real Property Taxes included by Landlord as
Operating Expenses pursuant to the terms of this Lease. Notwithstanding the
foregoing, the term Real Property Taxes shall not include (a) estate,
inheritance, succession, transfer, gift or franchise taxes of Landlord, (b) any
federal or state net income tax imposed on Landlord’s income from all sources;
(c) any real estate taxes related to any period of time prior to the
Commencement Date; (d) any liens or levies to the extent related to Hazardous
Materials on the Project that were not caused or introduced onto the Project by
Tenant or any of Tenant’s Agents; or (e) any interest, fines or penalties
payable due to the failure of Landlord to pay Real Property Taxes in a timely
manner (unless such interest, fines and penalties are caused by Tenant’s failure
to pay its share of Real Property Taxes as they become due, in which event
Tenant shall be solely responsible for such costs). Notwithstanding the
foregoing, while Landlord shall not be obligated to file any application or
institute any proceeding

 

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seeking a reduction in Real Property Taxes, in the event that Landlord elects to
file a Proposition 8 application seeking a temporary reduction in Real Property
Taxes with respect to any building in the Project, Landlord shall include the
Building in such application (or shall make a separate such application relating
thereto). If Landlord does not initiate within sixty (60) days after written
request by Tenant and thereafter diligently pursue a Tax Appeal, Tenant shall
have the right to do so and if Tenant’s Tax Appeal results in a refund or
reduction of such Real Property Taxes, then within thirty (30) days after
Landlord’s receipt of the refund, Landlord shall refund to Tenant all costs and
expenses incurred by Tenant (to the extent the refund exceeds such costs and
expenses) and Tenant’s Share of the remaining amount of such abatement or refund
shall be applied by Landlord as a credit against Rent next becoming due.

The parcel containing the Building may be a separate tax parcel that may also
contain other buildings on such parcel. In such event and if the Building and
the buildings and improvements are currently included in the same tax bill and
contain different size and types of improvements, Landlord shall have the right
to equitably allocate the Taxes to each such building in accordance with
Landlord’s reasonable accounting and management principles.

8.4 Landlord’s Books and Records: Following Tenant’s receipt of the Annual
Reconciliation Statement, Tenant shall have the right, upon prior written notice
to Landlord (“Audit Notice”), to commence and complete an audit of Landlord’s
books and records concerning the Operating Expenses for the Landlord’s fiscal
year that is the subject of such statement (the “Records”), within ninety
(90) days following the delivery of such statement (the “Review Period”).
Following delivery of an Audit Notice, and provided that no Event of Tenant’s
Default is not then occurring, Tenant shall have the right, at Tenant’s sole
cost, during Landlord’s regular business hours and on reasonable prior notice to
Landlord, to audit the Records at Landlord’s principal business office (or at
any other location in northern California designated by Landlord). Such audit
shall occur within sixty (60) days following the delivery of the Audit Notice.
Tenant’s audit of the Records pursuant to this Section 8.5 shall be conducted
only by a reputable independent nationally or regionally recognized certified
public accounting firm, subject to Landlord’s reasonable approval, which
accounting firm: (i) shall have previous experience in auditing financial
operating records of landlords of institutionally-owned buildings; (ii) shall
not already be providing accounting and/or lease administration services to
Tenant and shall not have provided accounting and/or lease administration
services to Tenant in the past three (3) years; (iii) shall not be retained by
Tenant on a contingency fee basis (i.e. Tenant must be billed based on the
actual time and materials that are incurred by the accounting firm in the
performance of the audit), and a copy of the executed audit agreement between
Tenant and auditor shall be provided to Landlord prior to the commencement of
the audit; and (iv) at Landlord’s option, both Tenant and auditor shall be
required to execute a commercially reasonable confidentially agreement prepared
by Landlord. Any audit report prepared by Tenant’s auditors shall be delivered
concurrently to Landlord and Tenant within the Review Period. If, after such
audit of the Records, Tenant disputes the amount of Operating Expense for the
year under audit, Landlord and Tenant shall meet and attempt in good faith to
resolve the dispute. If the parties are unable to resolve the dispute within
sixty (60) days after completion of Tenant’s audit, then, at Tenant’s request,
an independent certified public accounting firm selected by Landlord, and
reasonably approved by Tenant, shall, at Tenant’s cost, conduct an audit of the
relevant Operating Expenses (the “Neutral Audit”). Tenant shall pay all costs
and expenses of the Neutral Audit unless the final determination in such Neutral
Audit is that Landlord overstated Operating Expenses in the Annual
Reconciliation Statement for the year being audited by more than three percent
(3%), in which case Landlord shall pay the actual and reasonable costs and
expenses of the Neutral Audit, in an amount not to exceed Ten Thousand and
00/100 Dollars ($10,000.00). In any event, Landlord will promptly reimburse
Tenant or provide a credit for any overstatement of Operating Expenses, and
Tenant shall promptly pay to Landlord any understatement of Operating Expenses.
To the extent Landlord and Tenant fail to otherwise reach mutual agreement
regarding Operating Expenses, the foregoing audit and Neutral Audit procedures
shall be the sole methods to be used by Tenant to dispute the amount of any
Operating Expenses payable by Tenant pursuant to the terms of this Lease.

 

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ARTICLE 9

INSURANCE

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

A. Types. Tenant shall procure, pay for and keep in full force and effect the
following:

(1) Commercial general liability insurance, including property damage, against
liability for personal injury, bodily injury, death and damage to property
occurring in or about, or resulting from an occurrence in or about, the Premises
with combined single limit coverage of not less than the amount of Tenant’s
Liability Insurance Minimum specified in Section P of the Summary, which
insurance shall contain a “contractual liability” endorsement insuring Tenant’s
performance of Tenant’s obligation to indemnify Landlord contained in
Section 10.3;

(2) Fire and property damage insurance in so-called “all risk” form insuring
Tenant’s Trade Fixtures, and Tenant’s Alterations for the full actual
replacement cost thereof; and

(3) Insurance for: (a) Business Auto Liability covering owned, non-owned and
hired vehicles with a limit of not less than $1,000,000 per accident;
(b) Employers Liability with limits of $1,000,000 each accident, $1,000,000
disease policy limit, $1,000,000 disease—each employee; (c) Business
Interruption Insurance for one hundred percent (100%) of the twelve (12) months
actual loss sustained, and (d) Excess Liability in the amount of $5,000,000. In
addition, whenever Tenant shall undertake any alterations, additions or
improvements in, to or about the Leased Premises (“Work”) the aforesaid
insurance protection must extend to and include injuries to persons and damage
to property arising in connection with such Work, and such other insurance as
Landlord shall reasonably require consistent with requirements of landlords of
comparable properties located in Santa Clara, California; and the policies of or
certificates evidencing such insurance must be delivered to Landlord prior to
the commencement of any such Work.

B. Requirements. Where applicable and required by Landlord, each policy of
insurance required to be carried by Tenant pursuant to this Section 9.1:
(i) shall name Landlord and such other parties in interest as Landlord
reasonably designates as additional insured; (ii) shall be primary insurance
which provides that the insurer shall be liable for the full amount of the loss
up to and including the total amount of liability set forth in the declarations
without the right of contribution from any other insurance coverage of Landlord;
(iii) shall be in a form reasonably satisfactory to Landlord; (iv) shall be
carried with companies licensed to do business in California and with a rating
of no less than A-VIII; (v) shall provide that such policy shall not be subject
to cancellation, lapse or a reduction in coverage except after at least thirty
(30) days prior written notice to Landlord so long as such provision of thirty
(30) days’ notice is reasonably obtainable at a commercially reasonable cost,
but in any event Tenant shall provide Landlord not less than ten (10) days prior
written notice; (vi) shall not have a “deductible” in excess of such amount as
is reasonably approved by Landlord; (vii) shall contain a cross liability
endorsement; and (viii) shall contain a “severability” clause. If Tenant has in
full force and effect a blanket policy of liability insurance with the same
coverage for the Premises as described above, as well as other coverage of other
premises and properties of Tenant, or in which Tenant has some interest, such
blanket insurance shall satisfy the requirements of this Section 9.1.

 

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C. Evidence. A certificate of the insurer, certifying that each policy required
to be carried by Tenant pursuant to this Section 9.1 has been issued, provides
the coverage required by this Section 9.1, and contains the provisions specified
herein, shall be delivered to Landlord prior to the time Tenant or any of its
Agents enters the Premises and upon renewal of such policies, but not less than
five (5) days prior to the expiration of the term of such coverage. If any
Lender or insurance advisor reasonably determines that the amount of coverage
required for any policy of insurance Tenant is to obtain pursuant to this
Section 9.1 is not adequate, then Tenant shall increase such coverage for such
insurance to such amount as such Lender or insurance advisor reasonably deems
adequate, not to exceed the level of coverage for such insurance commonly
carried by comparable businesses similarly situated; provided that Tenant shall
not be obligated to increase its insurance coverage pursuant to the foregoing
more than once during any three (3)-year period during the Lease Term.

9.2 Landlord’s Insurance: Landlord shall have the following obligations and
options regarding insurance:

A. Property Damage. Landlord shall maintain a policy or policies of fire and
property damage insurance in so-called “all risk” form insuring Landlord (and
such others as Landlord may designate) against loss of rents for a period of not
less than twelve (12) months and from physical damage to the Project with
coverage of not less than the full replacement cost thereof. Landlord may so
insure the Project separately, or may insure the Project with other property
owned by Landlord which Landlord elects to insure together under the same policy
or policies. Landlord shall have the right, but not the obligation, in its sole
and absolute discretion, to obtain insurance for such additional perils as
Landlord deems appropriate, including, without limitation, coverage for damage
by earthquake and/or flood. All such coverage shall contain commercially
reasonable “deductibles” consistent with those maintained by landlords of
comparable properties located in Santa Clara, California. Landlord shall not be
required to cause such insurance to cover any Trade Fixtures or Tenant’s
Alterations of Tenant.

B. Other. Landlord shall maintain a policy or policies of commercial general
liability insurance insuring Landlord (and such others as are designated by
Landlord) against liability for personal injury, bodily injury, death and damage
to property occurring or resulting from an occurrence in, on or about the
Project, with combined single limit coverage in such amount as Landlord from
time to time determines is reasonably necessary for its protection.

C. Tenant’s Obligation to Reimburse: If Landlord’s insurance rates with respect
to the Building or Outside Area are increased at any time during the Lease Term
as a result of the nature of Tenant’s particular use of the Premises, Tenant
shall reimburse Landlord for the full amount of such increase immediately upon
receipt of a bill from Landlord therefor.

9.3 Release and Waiver of Subrogation: Notwithstanding anything to the contrary
contained herein, the parties hereto release each other, and their respective
agents and employees, and approved subtenants of the Premises (provided such
subtenants provide a reciprocal release and waiver of subrogation) from any
liability for injury or damage to property that is caused by or results from any
risk insured against (or required to be insured against) under any valid and
collectible property insurance policy carried (or required to be carried) by
either of the parties, or which would normally be covered by so-called “all
risk” or “special form” property insurance, without regard to the negligence or
willful misconduct of the entity or party so released or any other cause. Each
party shall cause each property insurance policy obtained by it to provide that
the insurer waives all right of recovery by way of subrogation against the other
party and its agents and employees in connection with any injury or damage
covered by such policy.

 

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ARTICLE 10

LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY

10.1 Limitation on Landlord’s Liability: Landlord shall not be liable to Tenant,
nor shall Tenant be entitled to terminate this Lease or to any abatement of rent
(except as expressly provided otherwise herein), for any injury to Tenant or
Tenant’s Agents, damage to the property of Tenant or Tenant’s Agents, or loss to
Tenant’s business resulting from any cause, including without limitation any:
(i) failure, interruption or installation of any HVAC or other utility system or
service; (ii) failure to furnish or delay in furnishing any utilities or
services when such failure or delay is caused by fire or other peril, the
elements, labor disturbances of any character, or any other accidents or other
conditions beyond the reasonable control of Landlord; (iii) limitation,
curtailment, rationing or restriction on the use of water or electricity, gas or
any other form of energy or any services or utility serving the Project;
(iv) vandalism or forcible entry by unauthorized persons or the criminal act of
any person; or (v) penetration of water into or onto any portion of the Premises
or the Building through roof leaks or otherwise. Notwithstanding the foregoing
but subject to Section 9.3, Landlord shall be liable for any such injury, damage
or loss which is proximately caused by the willful misconduct or gross
negligence of Landlord or Landlord’s Agents.

10.2 Limitation on Tenant’s Recourse: If Landlord or Tenant is a corporation,
limited liability company, trust, partnership, joint venture, unincorporated
association or other form of business entity: (i) the obligations of such party
shall not constitute personal obligations of the officers, directors, trustees,
partners, joint venturers, members, owners, stockholders, or other principals or
representatives of such business entity; and (ii) neither Landlord nor Tenant
shall have recourse to the assets of the other party’s officers, directors,
trustees, partners, joint venturers, members, owners, stockholders, principals
or representatives except to the extent of their interest in the Project. Tenant
shall have recourse only to the interest of Landlord in the Project, including
any interest in the rents of the Project and any sale, condemnation or insurance
proceeds payable to Landlord (collectively, “Owner Proceeds”), for the
satisfaction of the obligations of Landlord and shall not have recourse to any
other assets of Landlord for the satisfaction of such obligations; provided,
however, that Tenant shall not be entitled to recover any Owner Proceeds from
Landlord or any third party after such Owner Proceeds have been distributed or
paid to such third party.

10.3 Indemnification of Landlord: Tenant shall hold harmless, indemnify and
defend Landlord, and its employees, agents and contractors, with competent
counsel reasonably satisfactory to Landlord (and Landlord agrees to accept
counsel that any insurer requires be used), from all liability, penalties,
losses, damages, costs, expenses, causes of action, claims and/or judgments
arising by reason of any death, bodily injury, personal injury or property
damage to the extent resulting from (i) any cause or causes whatsoever occurring
in or on the Premises during the Lease Term, except to the extent of (A) the
willful misconduct, active negligence or gross negligence of Landlord or
Landlord’s Agents, (B) resulting from the violation of any Laws by Landlord or
Landlord’s Agents, or (C) resulting from the underground migration of Hazardous
Materials not brought onto the Project by Tenant or a Tenant Party, (ii) the
negligence or willful misconduct of Tenant or its agents, employees and
contractors, or (iii) an Event of Tenant’s Default. The provisions of this
Section 10.3 shall survive the expiration or sooner termination of this Lease.

10.4 Indemnification of Tenant. Landlord shall hold harmless, indemnify and
defend Tenant, and its employees, agents and contractors, with competent counsel
reasonably satisfactory to Tenant (and Tenant agrees to accept counsel that any
insurer requires be used), from all liability, penalties, losses, damages,
costs, expenses, causes of action, claims and/or judgments arising by reason of
any death, bodily injury, personal injury or property damage to the extent
resulting from the violation of any Laws or the negligence (to the extent not
covered by the insurance carried or required to be carried by Landlord pursuant
to this Lease), the gross negligence or willful misconduct of Landlord or
Landlord’s Agents. The provisions of this Section 10.4 shall survive the
expiration or sooner termination of this Lease.

 

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10.5 In General. Notwithstanding anything to the contrary set forth in this
Lease, either party’s agreement to indemnify the other party as set forth in
Section 10.3 and 10.4, above, shall be ineffective to the extent the matters for
which such party agreed to indemnify the other party are covered by insurance
required to be carried by the non-indemnifying party pursuant to this Lease.
Further, Tenant’s agreement to indemnify Landlord pursuant to Section 10.3,
above, and Landlord’s agreement to indemnify Tenant pursuant to Section 10.4,
above, are not intended to and shall not relieve any insurance carrier of its
obligations under policies required to be carried pursuant to the provisions of
this Lease, to the extent such policies cover, or if carried, would have covered
the matters, subject to the parties’ respective indemnification obligations; nor
shall they supersede the terms of Section 9.3 of this Lease.

ARTICLE 11

DAMAGE TO PREMISES

11.1 Landlord’s Duty to Restore: If the Premises are damaged by any peril after
the Effective Date, Landlord shall restore the Premises unless the Lease is
terminated by Landlord pursuant to Section 11.2 or by Tenant pursuant to
Section 11.3. All insurance proceeds available from the fire and property damage
insurance carried by Landlord pursuant to Section 9.2 shall be paid to and
become the property of Landlord. If this Lease is terminated pursuant to either
Section 11.2 or Section 11.3, then all insurance proceeds available from
insurance carried by Tenant which covers loss to property that is Landlord’s
property or would become Landlord’s property on termination of this Lease shall
be paid to and become the property of Landlord. If this Lease is not so
terminated, then upon receipt of the insurance proceeds (if the loss is covered
by insurance) and the issuance of all necessary governmental permits, Landlord
shall commence and diligently prosecute to completion the restoration of the
Premises, to the extent then allowed by Law, to substantially the same condition
in which the Premises were immediately prior to such damage. Landlord’s
obligation to restore shall be limited to the Premises and interior
improvements, excluding any Tenant’s Alterations, Trade Fixtures and/or personal
property constructed or installed by Tenant in the Premises. Tenant shall
forthwith replace or fully repair all the Tenant’s Alterations installed by
Tenant and existing at the time of such damage or destruction, subject to any
changes or additions to such Tenant’s Alterations that are (i) requested by
Tenant and approved by Landlord, which approval shall not be unreasonably
withheld, conditioned or delayed, or (ii) required by applicable Law.

11.2 Landlord’s Right to Terminate: Landlord shall have the right to terminate
this Lease in the event any of the following occurs, which right may be
exercised only by delivery to Tenant of a written notice of election to
terminate within thirty (30) days after the date of such damage:

A. Damage From Insured Peril. The Building is damaged by an Insured Peril to
such an extent that the estimated cost to restore exceeds fifty percent (50%) of
the then actual replacement cost thereof, and the estimated time for repair and
restoration of the Building exceeds one (1) year, but only to the extent that
Landlord terminates the leases of all similarly situated and affected tenants of
the Project;

B. Damage From Uninsured Peril. The Building is damaged by an Uninsured Peril to
such an extent that the estimated cost to restore exceeds five percent (5%) of
the then actual replacement cost thereof; provided, however, that Landlord may
not terminate this Lease pursuant to this Section 11.2.B if Tenant agrees in
writing to pay the amount by which the cost to restore the damage to the
Building exceeds such amount and subsequently deposits such excess amount with
Landlord within thirty (30) days after Landlord has notified Tenant of its
election to terminate this Lease;

 

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C. Damage Near End of Term. The Premises are damaged by any peril within twelve
(12) months of the last day of the Lease Term to such an extent that the
estimated cost to restore equals or exceeds an amount equal to six (6) times the
Base Monthly Rent then due; provided, however, that Landlord may not terminate
this Lease pursuant to this Section 11.2.C if Tenant, at the time of such
damage, has a then valid express written option to extend the Lease Term and
Tenant exercises such option to extend within fifteen (15) days following the
date of such damage; or

D. Restrictions on Restoration. The Building is damaged by any peril and,
because of the Laws then in force, (i) cannot be restored to substantially the
same condition in which it was prior to such damage, or (ii) cannot be used for
the Permitted Use if restored as required by this Article.

E. Defined Terms. As used herein, the following terms shall have the following
meanings: (i) the term “Insured Peril” shall mean a peril actually insured
against (or required to be insured against under this Lease) for which the
insurance proceeds actually received by Landlord are sufficient (or would have
been sufficient had Landlord maintained the required insurance) (except for any
“deductible” amount specified by such insurance) to restore the Building under
then existing building codes to substantially the condition existing immediately
prior to the damage; and (ii) the term “Uninsured Peril” shall mean any peril
which is not an Insured Peril. Notwithstanding the foregoing, if the
“deductible” for earthquake, flood or terrorism insurance exceeds five percent
(5%) of the replacement cost of the improvements insured, such peril shall be
deemed an “Uninsured Peril”.

F. Effect of Termination. In the event that Landlord terminates this Lease
pursuant to this Section 11.2, Tenant shall have no obligation to pay or
contribute to any portion of any deductible under any applicable insurance
policy carried or required to be carried by Landlord pursuant to this Lease.

11.3 Tenant’s Right to Terminate: If the Premises are damaged by any peril and
Landlord does not elect to terminate this Lease or is not entitled to terminate
this Lease pursuant to Section 11.2, then as soon as reasonably practicable,
Landlord shall furnish Tenant with the written opinion of Landlord’s licensed
architect or construction consultant as to when the restoration work required of
Landlord may be completed. Tenant shall have the right to terminate this Lease
in the event any of the following occurs, which right may be exercised only by
delivery to Landlord of a written notice of election to terminate within fifteen
(15) days after Tenant receives from Landlord the estimate of the time needed to
complete such restoration.

A. Major Damage. The Premises are damaged by any peril and, in the reasonable
opinion of Landlord’s architect or construction consultant, the restoration of
the Premises cannot be substantially completed within one (1) year after the
date of such damage; or

B. Damage Near End of Term. The Premises are damaged by any peril within twelve
(12) months of the last day of the Lease Term and, in the reasonable opinion of
Landlord’s licensed architect or construction consultant, the restoration of the
Premises cannot be substantially completed within ninety (90) days after the
date of such damage and such damage materially and adversely impairs Tenant’s
ability to operate from the Premises for the Permitted Use.

C. Failure to Complete Restoration. The Premises are damaged by any peril, the
restoration is not substantially completed within one (1) year following the
date on which Landlord obtains the necessary building permits for such
restoration (but in no event more than fifteen (15) months from the date of such
damage), and Landlord fails to substantially complete such restoration within
thirty (30) days following Landlord’s receipt of a written notice from Tenant of
its election to terminate this Lease pursuant to this Section 11.3.C.

 

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11.4 Abatement of Rent: In the event of damage to the Premises which does not
result in the termination of this Lease, then from and after the date of such
damage the Base Monthly Rent and the Additional Rent shall be temporarily abated
during the period of restoration in proportion to the degree to which Tenant’s
use of the Premises is impaired by such damage. In the event of damage to the
Premises which results in the termination of this Lease, then Tenant shall not
be obligated to pay the Base Monthly Rent and the Additional Rent otherwise due
and payable by Tenant under this Lease from and after the date of such damage
until the date on which this Lease is terminated. Tenant shall not be entitled
to any compensation or damages from Landlord for loss of Tenant’s business or
property or for any inconvenience or annoyance caused by such damage or
restoration. Tenant hereby waives the provisions of California Civil Code
Sections 1932(2) and 1933(4) and the provisions of any similar law hereinafter
enacted.

ARTICLE 12

CONDEMNATION

12.1 Landlord’s Termination Right: Landlord shall have the right to terminate
this Lease if, as a result of a taking by means of the exercise of the power of
eminent domain (including a voluntary sale or transfer by Landlord to a
condemnor under threat of condemnation), (i) ten percent (10%) or more of the
Premises is so taken, (ii) more than ten percent (10%) of the Building Leasable
Area is so taken, or (iii) more than fifty percent (50%) of the Common Area is
so taken. Any such right to terminate by Landlord must be exercised within a
reasonable period of time, to be effective as of the date possession is taken by
the condemnor.

12.2 Tenant’s Termination Right: Tenant shall have the right to terminate this
Lease if, as a result of any taking by means of the exercise of the power of
eminent domain (including any voluntary sale or transfer by Landlord to any
condemnor under threat of condemnation), (i) ten percent (10%) or more of the
Premises is so taken, or a material portion of the manufacturing area of the
Premises is taken such that, in Tenant’s commercially reasonable business
judgment, Tenant can no longer conduct its business from the Premises for the
Permitted Use, and the part of the Premises that remains cannot be restored
within a reasonable period of time and thereby made reasonably suitable for the
continued operation of the Tenant’s business, or (ii) there is a taking
affecting the Common Area and, as a result of such taking, Landlord cannot
provide parking within reasonable walking distance of the Premises equal in
number to at least eighty percent (80%) of the number of passes allocated to
Tenant pursuant to this Lease, whether by rearrangement of the remaining parking
areas in the Common Area (including construction of multi-deck parking
structures or re-striping for compact cars where permitted by Law) or by
alternative parking facilities on other land. Tenant must exercise such right
within a reasonable period of time, to be effective on the date that possession
of that portion of the Premises or Common Area that is condemned is taken by the
condemnor.

12.3 Restoration and Abatement of Rent: If any part of the Premises or the
Common Area is taken by condemnation (other than a temporary taking) and this
Lease is not terminated, then Landlord shall restore the remaining portion of
the Premises and Common Area and interior improvements constructed by Landlord
as they existed as of the Commencement Date, excluding any Tenant’s Alterations,
Trade Fixtures and/or personal property constructed or installed by Tenant, and
the Base Monthly Rent and Additional Rent payable by Tenant hereunder shall be
abated during such period of restoration in proportion to the degree to which
Tenant’s use of the Premises or affected portion thereof is materially impaired
such that, in Tenant’s commercially reasonable business judgment, Tenant can no
longer conduct its business from the Premises for the Permitted Use. Thereafter,
following the period of any such restoration, the Base Monthly Rent and the
Additional Rent shall be reduced in the same proportion that the floor area of
that part of the Premises so taken (less any addition thereto by reason of any
reconstruction) bears to the original floor area of the Premises.

 

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12.4 Temporary Taking: If any portion of the Premises is temporarily taken for
one (1) year or less, this Lease shall remain in effect. If any portion of the
Premises is temporarily taken by condemnation for a period which exceeds one
year or which extends beyond the natural expiration of the Lease Term, and such
taking materially and adversely affects Tenant’s ability to use the Premises for
the Permitted Use, then Tenant shall have the right to terminate this Lease,
effective on the date possession is taken by the condemnor.

12.5 Division of Condemnation Award: Any award made as a result of any
condemnation of the Premises or the Common Area shall belong to and be paid to
Landlord, and Tenant hereby assigns to Landlord all of its right, title and
interest in any such award; provided, however, that Tenant shall be entitled to
receive any condemnation award that is made directly to Tenant for the
following: (i) for the taking of personal property or Trade Fixtures belonging
to Tenant, (ii) for the interruption of Tenant’s business and its
moving/relocation costs, (iii) for loss of Tenant’s goodwill; or (iv) for any
temporary taking where this Lease is not terminated as a result of such taking.
The rights of Landlord and Tenant regarding any condemnation shall be determined
as provided in this Article, and each party hereby waives the provisions of
California Code of Civil Procedure Section 1265.130 and the provisions of any
similar law hereinafter enacted allowing either party to petition the Superior
Court to terminate this Lease in the event of a partial taking of the Premises.

ARTICLE 13

DEFAULT AND REMEDIES

13.1 Events of Tenant’s Default: Tenant shall be in default of its obligations
under this Lease if any of the following events occurs (an “Event of Tenant’s
Default”):

A. Payment. Tenant shall have failed to pay Base Monthly Rent or Additional Rent
when due, and such failure is not cured within five (5) days after delivery of
written notice from Landlord specifying such failure to pay; or

B. General Covenant. Tenant shall have failed to perform any term, covenant, or
condition of this Lease other than those referred to in any other subsection of
this Section 13.1, and Tenant shall have failed to cure such breach within
thirty (30) days after written notice from Landlord specifying the nature of
such breach where such breach could reasonably be cured within said 30-day
period, or if such breach could not be reasonably cured within said 30- day
period, Tenant shall have failed to commence such cure within said 30-day period
and thereafter continue with due diligence to prosecute such cure to completion
within such time period as is reasonably needed; or

C. Transfer. Tenant shall have sublet the Premises or assigned its interest in
the Lease in violation of the provisions contained in Article 14; or

D. Abandonment. Tenant shall have abandoned the Premises pursuant to applicable
California law (provided, however, that Tenant shall not be in default under
this Lease if it leaves all or any part of the Premises vacant so long as
(i) Tenant is performing all of its other obligations under this Lease,
including the obligation to pay Rent, (ii) Tenant provides on-site security
during normal business hours for those parts of the Premises left vacant,
(iii) such vacancy does not materially or adversely affect the validity of or
coverage under any policy of insurance carried by Landlord with respect to the
Premises, and (iv) all utility facilities and systems, including all HVAC
systems, required to be maintained by Tenant pursuant to Section 6.1, above, are
maintained pursuant to the terms of such Section); or

 

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E. Insolvency. The occurrence of the following: (i) the making by Tenant of any
general arrangements or assignments for the benefit of creditors; (ii) Tenant
becomes a “debtor” as defined in 11 USC §101 or any successor statute thereto
(unless, in the case of a petition filed against Tenant, the same is dismissed
within sixty (60) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant’s assets located at the Premises or of
Tenant’s interest in this Lease, where possession is not restored to Tenant
within thirty (30) days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Tenant’s assets located at the Premises or of
Tenant’s interest in this Lease, where such seizure is not discharged within
thirty (30) days; provided, however, in the event that any provision of this
Section 13.1E is contrary to any applicable Law, such provision shall be of no
force or effect; or

F. Required Documents. Tenant shall have failed to deliver documents required of
it pursuant to Section 15.4 or Section 15.6 within the time periods specified
therein, and Tenant thereafter fails to deliver such documents within five
(5) days following written notice from Landlord specifying such failure; or

G. Default Under Companion Lease. Tenant shall be in default under the Companion
Lease beyond any applicable notice and cure periods expressly set forth in the
Companion Lease; or

H. Multiple Defaults. Any two (2) failures by Tenant to observe and perform any
monetary or material non-monetary provision of this Lease during any twelve
(12) month period of the term, as such may be extended, shall constitute, at the
option of Landlord, a separate and noncurable default.

Any written notice of default sent by Landlord to Tenant shall be in lieu of,
and not in addition to, any termination notice required under applicable
statutory or regulatory provisions (and no further notice shall be required
should Landlord elect to terminate this Lease as set forth below), provided that
such notice shall only be “in lieu of” to the extent the same is otherwise
prepared and served upon Tenant in accordance with all applicable statutory or
regulatory provisions.

13.2 Landlord’s Remedies: If an Event of Tenant’s Default occurs, Landlord shall
have the following remedies, in addition to all other rights and remedies
provided by any Law or otherwise provided in this Lease, to which Landlord may
resort cumulatively or in the alternative:

A. Continue. Landlord may keep this Lease in effect and enforce by an action at
law or in equity all of its rights and remedies under this Lease, including
(i) the right to recover the rent and other sums as they become due by
appropriate legal action, (ii) the right to make payments required of Tenant or
perform Tenant’s obligations and be reimbursed by Tenant for the cost thereof
with interest at the Agreed Interest Rate from the date the sum is paid by
Landlord until Landlord is reimbursed by Tenant, and (iii) the remedies of
injunctive relief and specific performance to compel Tenant to perform its
obligations under this Lease. Notwithstanding anything contained in this Lease,
in the event of a breach of an obligation by Tenant which results in a condition
which poses an imminent danger to safety of persons or damage to property, an
unsightly condition visible from the exterior of the Building, or a threat to
insurance coverage, then if Tenant does not cure such breach within three
(3) days after delivery to it of written notice from Landlord identifying the
breach, Landlord may cure the breach of Tenant and be reimbursed by Tenant for
the cost thereof with interest at the Agreed Interest Rate from the date the sum
is paid by Landlord until Landlord is reimbursed by Tenant. Should Landlord not
terminate this Lease by giving Tenant written notice, Landlord may enforce all
its rights and remedies under this Lease, including the right to recover the
rent as it becomes due under the Lease as provided in California Civil Code
Section 1951.4 (lessor may continue lease in effect after lessee’s breach and
abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations).

 

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B. Enter and Relet. To the extent permitted by applicable Laws, Landlord may
enter the Premises and release them to third parties for Tenant’s account for
any period, whether shorter or longer than the remaining Lease Term. Tenant
shall be liable immediately to Landlord for all costs Landlord incurs in
releasing the Premises, including brokers’ commissions, expenses of altering and
preparing the Premises required by the releasing. Tenant shall pay to Landlord
the rent and other sums due under this Lease on the date the rent is due, less
the rent and other sums Landlord received from any releasing. No act by Landlord
allowed by this subparagraph shall terminate this Lease unless Landlord notifies
Tenant in writing that Landlord elects to terminate this Lease. Notwithstanding
any releasing without termination, Landlord may later elect to terminate this
Lease because of the default by Tenant.

C. Terminate. Landlord may terminate this Lease by giving Tenant written notice
of termination, in which event this Lease shall terminate on the date set forth
for termination in such notice. Any termination under this Section 13.2C shall
not relieve Tenant from its obligation to pay sums then due Landlord or from any
claim against Tenant for damages or rent previously accrued or then accruing. In
no event shall any one or more of the following actions by Landlord, in the
absence of a written election by Landlord to terminate this Lease, constitute a
termination of this Lease: (i) appointment of a receiver or keeper in order to
protect Landlord’s interest hereunder; (ii) consent to any subletting of the
Premises or assignment of this Lease by Tenant, whether pursuant to the
provisions hereof or otherwise; or (iii) any other action by Landlord or
Landlord’s Agents intended to mitigate the adverse effects of any breach of this
Lease by Tenant, including without limitation any action taken to maintain and
preserve the Premises or any action taken to relet the Premises or any portions
thereof to the extent such actions do not affect a termination of Tenant’s right
to possession of the Premises.

D. No Deemed Termination. In the event Tenant breaches this Lease and abandons
the Premises, this Lease shall not terminate unless Landlord gives Tenant
written notice of its election to so terminate this Lease. No act by or on
behalf of Landlord intended to mitigate the adverse effect of such breach,
including those described by Section 13.C, shall constitute a termination of
Tenant’s right to possession unless Landlord gives Tenant written notice of
termination.

E. Damages. In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord’s election, to damages in an amount as set forth in
California Civil Code Section 1951.2 as in effect on the Effective Date. For
purposes of computing damages pursuant to California Civil Code Section 1951.2,
(i) an interest rate equal to the Agreed Interest Rate shall be used where
permitted, and (ii) the term “rent” includes Base Monthly Rent and Additional
Rent. Such damages shall include:

(1) The worth at the time of award of the amount by which the unpaid rent for
the balance of the term after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably avoided, 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%); and

(2) Any other amount necessary to compensate Landlord for all detriment
proximately caused by Tenant’s failure to perform Tenant’s obligations under
this Lease, or which in the ordinary course of things would be likely to result
therefrom, including the following: (i) expenses for cleaning, repairing or
restoring the Premises; (ii) expenses for altering, remodeling or otherwise
improving the Premises for the purpose of reletting, including installation of
leasehold improvements (whether such installation be funded by a reduction of
rent, direct payment or allowance to a new tenant, or otherwise); (iii) broker’s
fees, advertising costs and other expenses of reletting the Premises; (iv) costs

 

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of carrying the Premises, such as taxes, insurance premiums, utilities and
security precautions; (v) expenses in retaking possession of the Premises; and
(vi) attorneys’ fees and court costs incurred by Landlord in retaking possession
of the Premises and in releasing the Premises or otherwise incurred as a result
of Tenant’s default.

F. Non Exclusive Remedies. Nothing in this Section 13.2 shall limit Landlord’s
right to indemnification from Tenant as provided in Section 7.2 and
Section 10.3.

13.3 Waiver: One party’s consent to or approval of any act by the other party
requiring the first party’s consent or approval shall not be deemed to waive or
render unnecessary the first party’s consent to or approval of any subsequent
similar act by the other party. The receipt by Landlord of any rent or payment
with or without knowledge of the breach of any other provision hereof shall not
be deemed a waiver of any such breach unless such waiver is in writing and
signed by Landlord. No delay or omission in the exercise of any right or remedy
accruing to either party upon any breach by the other party under this Lease
shall impair such right or remedy or be construed as a waiver of any such breach
theretofore or thereafter occurring. The waiver by either party of any breach of
any provision of this Lease shall not be deemed to be a waiver of any subsequent
breach of the same or of any other provisions herein contained.

13.4 Limitation On Exercise of Rights: At any time that an Event of Tenant’s
Default has occurred and remains uncured, (i) it shall not be unreasonable for
Landlord to deny or withhold any consent or approval requested of it by Tenant
which Landlord would otherwise be obligated to give, and (ii) Tenant may not
exercise any option to extend, right to terminate this Lease, or other right
granted to it by this Lease which would otherwise be available to it.

13.5 Waiver by Tenant of Certain Remedies: Tenant waives the provisions of
Sections 1932(1), 1941 and 1942 of the California Civil Code and any similar or
successor law regarding Tenant’s right to terminate this Lease or to make
repairs and deduct the expenses of such repairs from the rent due under this
Lease. Tenant hereby waives any right of redemption or relief from forfeiture
under the laws of the State of California, or under any other present or future
law, including the provisions of Sections 1174 and 1179 of the California Code
of Civil Procedure.

ARTICLE 14

ASSIGNMENT AND SUBLETTING

14.1 Transfer by Tenant: The following provisions shall apply to any assignment,
subletting or other transfer by Tenant or any subtenant or assignee or other
successor in interest of the original Tenant (collectively referred to in this
Section 14.1 as “Tenant”):

A. Transfer. Tenant shall not do any of the following (collectively referred to
herein as a “Transfer”), whether voluntarily, involuntarily, by operation of law
or otherwise without the prior written consent of Landlord, which consent shall
not be unreasonably withheld, conditioned or delayed: (i) sublet all or any part
of the Premises or allow it to be sublet, occupied or used by any other person
(the contractors, directors, officers, agents and servants of Tenant excepted)
whether by sublease, license, concession, franchise, agency, or management
agreement; (ii) assign its interest in this Lease; (iii) mortgage or encumber
the Lease (or otherwise use the Lease as a security device) in any manner; or
(iv) materially amend or modify an assignment, sublease or other transfer that
has been previously approved by Landlord. Tenant shall reimburse Landlord, in an
amount not to exceed Five Thousand and No/100 Dollars ($5,000.00), for all
reasonable, out-of-pocket attorneys’ fees and other costs incurred by Landlord
in connection with the evaluation, processing, and/or documentation of any
requested Transfer, whether or not Landlord’s consent is granted. Landlord’s
reasonable costs shall include the cost of any

 

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review or investigation performed by Landlord or consultant acting on Landlord’s
behalf of (i) Hazardous Materials used, stored, released, or disposed of by the
potential Subtenant or Assignee, and/or (ii) violations of Hazardous Materials
Laws by the Tenant or the proposed Subtenant or Assignee. Any Transfer so
approved by Landlord shall not be effective until Tenant has delivered to
Landlord an executed counterpart of the document evidencing the Transfer which
(i) is in a form reasonably approved by Landlord, (ii) contains the same terms
and conditions as stated in Tenant’s notice given to Landlord pursuant to
Section 14.1B, and (iii) in the case of an assignment of the Lease, contains the
agreement of the proposed transferee to assume all obligations of Tenant under
this Lease first accruing after the effective date of such Transfer and to
remain jointly and severally liable therefor with Tenant. Any attempted Transfer
without Landlord’s required consent shall constitute an Event of Tenant’s
Default and shall be voidable at Landlord’s option. Landlord’s consent to any
one Transfer shall not constitute a waiver of the provisions of this
Section 14.1 as to any subsequent Transfer or a consent to any subsequent
Transfer. No Transfer, even with the consent of Landlord, shall relieve Tenant
of its personal and primary obligation to pay the rent and to perform all of the
other obligations to be performed by Tenant hereunder. The acceptance of rent by
Landlord from any person shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any Transfer.

B. Procedure. At least thirty (30) days before a proposed Transfer is to become
effective, Tenant shall give Landlord written notice of the proposed terms of
such Transfer and request Landlord’s approval, which notice shall include the
following: (i) the name and legal composition of the proposed transferee; (ii) a
current financial statement of the transferee, financial statements of the
transferee covering the preceding three years if the same exist, and (if
available) an audited financial statement of the transferee for a period ending
not more than one year prior to the proposed effective date of the Transfer, all
of which statements are prepared in accordance with generally accepted
accounting principles; (iii) the nature of the proposed transferee’s business to
be carried on in the Premises; (iv) all consideration to be given on account of
the Transfer; and (v) an accurately filled out response to Landlord’s standard
hazardous materials questionnaire. Tenant shall provide to Landlord such other
information as may be reasonably requested by Landlord, and which is reasonably
available to, or acquirable by, Tenant, within seven (7) days after Landlord’s
receipt of such notice from Tenant. Landlord shall respond in writing to
Tenant’s request for Landlord’s consent to a Transfer within the later of
(i) twenty (20) days of receipt of such request together with the required
accompanying documentation, or (ii) ten (10) days after Landlord’s receipt of
all information which Landlord reasonably requests, and which is reasonably
available to, or acquirable by, Tenant, within seven (7) days after it receives
Tenant’s first notice regarding the Transfer in question. If Landlord fails to
respond in writing within said period, then Tenant shall provide a second
written notice to Landlord requesting such consent and if Landlord fails to
respond within seven (7) days after receipt of such second notice, then Landlord
will be deemed to have consented to such Transfer. Tenant shall promptly notify
Landlord of any modification to the proposed terms of such Transfer, which shall
also be subject Landlord’s consent in accordance with the same process for
obtaining Landlord’s initial consent to such Transfer.

C. Recapture. In the event that Tenant requests Landlord’s approval to make any
Transfer in accordance with this Section 14.1, Landlord shall have the right to
terminate this Lease in the case of an assignment of this Lease or a sublease of
substantially all of the Premises for substantially the remainder of the Lease
Term (for purposes hereof, a sublease shall be deemed to be for the remainder of
the Lease Term if such sublease shall expire during the final three (3) months
of the Lease Term). In the event Landlord elects to so terminate this Lease,
then such termination shall be effective fifteen (15) days after Landlord has
notified Tenant in writing of such election. Upon such termination, Tenant shall
be released from any further obligation under this Lease, and Landlord and
Tenant shall execute a cancellation and release with respect to the Lease to
effect such termination. Notwithstanding anything to the contrary set forth
herein, in the event that Landlord elects to terminate this Lease pursuant to
this Section 14.1.C, Tenant shall have the right to void such election by
Landlord by delivering written notice to Landlord of its election to withdraw
Tenant’s request to make such Transfer within five (5) business days following
Tenant’s receipt of notice from Landlord terminating this Lease.

 

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D. Other Requirements. If Landlord consents to a Transfer proposed by Tenant,
Tenant may enter into such Transfer, and if Tenant does so, the following shall
apply:

(1) Tenant shall not be released of its liability for the performance of all of
its obligations under the Lease.

(2) If Tenant assigns its interest in this Lease, then Tenant shall pay to
Landlord fifty percent (50%) of all Subrent (as defined in Section 14.1D(5))
received by Tenant. In the case of assignment, the amount of Subrent owed to
Landlord shall be paid to Landlord on the same basis, whether periodic or in
lump sum, that such Subrent is paid to Tenant by the assignee.

(3) If Tenant sublets any part of the Premises, then with respect to the space
so subleased, Tenant shall pay to Landlord fifty percent (50%) of the positive
difference, if any, between (i) all Subrent paid by the subtenant to Tenant,
less (ii) the sum of all Base Monthly Rent and Additional Rent allocable to the
space sublet. Such amount shall be paid to Landlord on the same basis, whether
periodic or in lump sum, that such Subrent is paid to Tenant by its subtenant.

(4) Tenant’s obligations under this Section 14.1D shall survive any Transfer,
and Tenant’s failure to perform its obligations hereunder following any
applicable notice and cure period set forth in this Lease shall be an Event of
Tenant’s Default. At the time Tenant makes any payment to Landlord required by
this Section 14.1D, Tenant shall deliver an itemized statement of the method by
which the amount to which Landlord is entitled was calculated, certified by
Tenant as true and correct to Tenant’s actual knowledge. Landlord shall have the
right at reasonable intervals, during normal business hours and upon reasonable
prior notice to Tenant, to inspect Tenant’s books and records relating to the
payments due hereunder. Promptly upon request therefor, Tenant shall deliver to
Landlord copies of all bills, invoices or other documents upon which its
calculations are based. Landlord may condition its approval of any Transfer upon
obtaining a certification from both Tenant and the proposed transferee of all
Subrent and other amounts that are to be paid to Tenant in connection with such
Transfer.

(5) As used in this Section 14.1D, the term “Subrent” shall mean any
consideration of any kind received, or to be received, by Tenant as a result of
the Transfer, if such sums are related to Tenant’s interest in this Lease or in
the Premises, including payments from or on behalf of the transferee (in excess
of the book value thereof) for Tenant’s assets, fixtures, leasehold
improvements, inventory, accounts, equipment and furniture, less the reasonable,
out-of-pocket expenses incurred by Tenant for attorneys’ fees, brokerage
commissions and/or improvements to the Premises made in connection with the
Transfer.

E. Deemed Transfers. Subject to the Permitted Transfer provisions of
Section 14.1.F, below, the term “Transfer” shall include any of the following,
whether voluntary or involuntary and whether effected by death, operation of law
or otherwise:

(1) If Tenant is a partnership or limited liability company:

(a) A change in ownership effected voluntarily, involuntarily, or by operation
of law of fifty percent (50%) or more of the partners or members or fifty
percent (50%) or more in the aggregate of the partnership or membership
interests, whether in a single transaction or a series of related transactions
(other than transfers to immediate family members, to a living trust for estate
planning purposes or by will or intestacy); or

 

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(b) The sale, mortgage, hypothecation, pledge or other encumbrance at any time
of more than an aggregate of fifty percent (50%) of the value of Tenant’s
assets; or

(c) The dissolution of the partnership, limited liability company or other
entity without its immediate reconstitution.

(2) If Tenant is a closely held corporation (i.e., one whose stock is not
publicly held and not traded through an exchange or over the counter):

(a) The sale or other transfer of more than an aggregate of fifty percent
(50%) of the voting shares of Tenant or more in the aggregate, whether in a
single transaction or a series of related transactions;

(b) The sale, mortgage, hypothecation, pledge or other encumbrance at any time
of more than an aggregate of fifty percent (50%) of the value of Tenant’s
assets; or

(c) The dissolution, merger, consolidation, or other reorganization of Tenant.

F. Permitted Transfers. Notwithstanding anything contained in Section 14.1,
Landlord’s consent is not required for (i) an assignment or subletting of all or
a portion of the Premises to an affiliate of Tenant (an entity which is
controlled by, controls, or is under common control with, Tenant), or an
assignment resulting from a non-bankruptcy reorganization of Tenant, (ii) a sale
of corporate shares of capital stock in Tenant in connection with an initial
public offering of Tenant’s stock on a nationally-recognized stock exchange or
over-the-counter market, (iii) an assignment of the Lease to an entity which
acquires all or substantially all of the stock or assets of Tenant, (iv) an
assignment of the Lease to an entity which is the resulting entity of a merger
or consolidation of Tenant during the Lease Term, (v) an assignment of the Lease
to an entity acquiring and continuing that portion of Tenant’s business
operations conducted at or from the Premises, or (vi) a sublease to a separate
entity resulting from the sale or spin-off of a separate business division of
Tenant that conducts its business operations at or from the Premises, as long as
the following conditions are met and Tenant otherwise complies with the other
provisions of Section 14.1 (each such Transfer shall be referred to as a
“Permitted Transfer”):

(a) At least ten (10) business days before the Transfer (or, if a
confidentiality provision in the Permitted Transfer agreement or applicable Laws
preclude such prior notice, then within ten (10) days following such Permitted
Transfer), Landlord receives written notice of the Transfer (as well as any
documents or information reasonably requested by Landlord regarding the Transfer
or the transferee);

(b) There is no existing Event of Tenant’s Default and the Transfer is not a
subterfuge by Tenant to avoid its obligations under this Lease;

(c) If the Transfer is an assignment under clauses (i), (iii), (iv) or (v) of
this Section 14.1.F, above, the transferee assumes in writing all of Tenant’s
obligations under this Lease relating to the Premises and accruing after the
date of such assignment, and the liability of such transferee thereunder shall
be joint and several with Tenant;

(d) If the Transfer is an assignment under clauses (iii) or (iv) of this
Section 14.1.F, above, the transferee has a tangible net worth (exclusive of
goodwill), as evidenced by financial statements delivered to Landlord and
certified by an independent certified public accountant in accordance with
generally accepted accounting principles that are consistently applied (“Net
Worth”), at least equal in all material respects to Tenant’s Net Worth
immediately preceding the date of the Transfer; and

 

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(e) If the Transfer is an assignment under clauses (i) or (v) of this
Section 14.1.F, above, the transferee has a Net Worth that is sufficient (as
determined by Landlord in its reasonable discretion) in light of the obligations
under this Lease undertaken by the transferee in connection with such Transfer,
and as long as the Transfer is not a subterfuge to avoid the restrictions of
this Lease.

For purposes hereof, the term “Control” means the direct or indirect ownership
of more than fifty percent (50%) of the voting securities of an entity or
possession of the right to vote more than fifty percent (50%) of the voting
interest in the ordinary direction of the entity’s affairs. Landlord shall not
be entitled to terminate the Lease pursuant to Section 14.1C due to a Permitted
Transfer or to receive any part of any Subrent resulting from a Permitted
Transfer that would otherwise be due it pursuant to Section 14.1D.

G. Reasonable Standards. The consent of Landlord to a Transfer may not be
unreasonably withheld, provided that it is agreed to be reasonable for Landlord
to consider any of the following reasons, which list is not exclusive, in
electing to deny consent:

(1) In Landlord’s reasonable judgment, the financial strength or credit, of the
proposed transferee at the time of the proposed Transfer is not sufficient to
perform the Transferee’s monetary and non-monetary obligations under the terms
of the proposed Transfer; provided it shall only be reasonable to consider the
financial strength and/or credit of the proposed transferee if Tenant’s tangible
net worth (as determined in accordance with GAAP) is not reasonably sufficient
in light of Tenant’s obligations under this Lease, taking into account all other
financial obligations of Tenant;

(2) A proposed transferee whose occupation of the Premises would cause a
material diminution in the value of the Building or Project;

(3) A proposed transferee whose use would require improvements to or changes in
any utility or telecommunication capacity currently serving the Building or the
Project, unless the Tenant or the proposed transferee pays for the costs of such
improvements or changes;

(4) A proposed transferee whose use of the Premises would not be permitted under
Section N of the Summary;

(5) The existence of any Event of Tenant’s Default;

(6) Either the proposed transferee, or any person or entity which directly or
indirectly, controls, is controlled by, or is under common control with, the
proposed transferee or an affiliate of the proposed transferee, is negotiating
with Landlord to lease space in the Project at such time (to the extent
comparable space is available for lease in the Project);

(7) The proposed transferee is a governmental agency or unit, a non-profit or
charitable entity or organization or an existing tenant in the Project;

(8) The proposed transferee will use, store or handle Hazardous Materials in or
about the Premises of a type, nature or quantity not then acceptable to Landlord
(provided that the Hazardous Materials, and their respective quantities, which
are specifically listed on the Approved Hazardous Materials Exhibit shall in no
event be unacceptable to Landlord for purposes of this Section 14.1.G(10)); or

 

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(9) The location or configuration of the portion of the Premises to be sublet or
assigned violates applicable Laws (including, without limitation, building
codes).

H. Reasonable Restriction. The restrictions on Transfer described in this Lease
are acknowledged by Tenant to be reasonable for all purposes, including, without
limitation, the provisions of California Civil Code (the “Code”)
Section 1951.4(b)(2). Tenant expressly waives any rights which it might
otherwise be deemed to possess pursuant to applicable law, including, without
limitation, Section 1997.040 of the Code, to limit any remedy of Landlord
pursuant to Section 1951.2 or 1951.4 of the Code by means of proof that
enforcement of a restriction on use of the Premises would be unreasonable.

I. Restrictions on Marketing the Space. Tenant may not promote or advertise the
availability of the Leased Premises or any part thereof unless Landlord has
approved Tenant’s advertising or promotional materials in writing, which
approval shall not be unreasonably withheld, conditioned or delayed.

J. Occupancy by Others. Notwithstanding any contrary provision of this
Article 14, Tenant shall have the right (without the payment of any Subrent,
without being subject to Section 14.1.C, and without the receipt of Landlord’s
consent, but only following prior written notice to Landlord), to permit the
occupancy of up to a total of five thousand (5,000) rentable square feet of the
Premises to Tenant’s related (but not affiliated) parties and vendors (“Tenant’s
Occupants”), on and subject to the following conditions: (i) such individuals or
entities shall not be permitted to occupy a separately demised portion of the
Premises which contains an entrance to such portion of the Premises other than
the primary entrance to the Premises; (ii) all such individuals or entities
shall be of a character and reputation consistent with the quality of the
Project; and (iii) such occupancy shall not be a subterfuge by Tenant to avoid
its obligations under this Lease or the restrictions on Transfers pursuant to
this Article 14. Tenant shall promptly supply Landlord with any documents or
information reasonably requested by Landlord regarding any such individuals or
entities. Any occupancy permitted under this Section 14.1.J shall not be deemed
a Transfer under this Article 14. Notwithstanding the foregoing, no such
occupancy shall relieve Tenant from any liability under this Lease.

14.2 Transfer By Landlord: Landlord and its successors in interest shall have
the right to transfer their interest in this Lease and the Project at any time
and to any person or entity. In the event of any such transfer, the Landlord
originally named herein (and, in the case of any subsequent transfer, the
transferor) from the date of such transfer, shall be automatically relieved,
without any further act by any person or entity, of all liability for the
performance of the obligations of the Landlord hereunder which may first accrue
after the date of such transfer. After the date of any such transfer, the term
“Landlord” as used herein shall mean the transferee of such interest in the
Premises.

ARTICLE 15

GENERAL PROVISIONS

15.1 Landlord’s Right to Enter: Landlord and its agents may enter the Premises
at any reasonable time after giving at least one (1) business days’ prior notice
to Tenant (and immediately in the case of emergency) for the purpose of:
(i) inspecting the same; (ii) posting notices of non-responsibility;
(iii) supplying any service to be provided by Landlord to Tenant; (iv) showing
the Premises to prospective purchasers or mortgagees; (v) showing the Premises
to prospective tenants during the last twelve (12) months of the Lease Term;
(vi) making necessary alterations, additions or repairs; and

 

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(vii) performing Tenant’s obligations when an Event of Tenant’s Default has
occurred; (viii) responding to an emergency. Landlord shall have the right to
use any and all means Landlord may deem necessary and proper to enter the
Premises in an emergency. Notwithstanding anything set forth in this Article 15
to the contrary, Tenant may designate certain areas of the Premises as “Secured
Areas” should Tenant require such areas for the purpose of securing certain
valuable property or confidential information. In connection with the foregoing
and except in the event of an emergency, Landlord shall comply with any
commercially reasonable security requirements of Tenant during any entry by
Landlord into such Secured Areas. Any entry into the Premises obtained by
Landlord in accordance with this Section 15.1 shall not be a forcible or
unlawful entry into, or a detainer of, the Premises, or an eviction, actual or
constructive, of Tenant from the Premises. In addition, Landlord shall use
commercially reasonable efforts to ensure that any entry by Landlord into the
Premises in accordance with this Section 15.1 will not unreasonably interfere
with Tenant’s operations from the Premises for the Permitted Use.

15.2 Surrender of the Premises: Upon the expiration or sooner termination of
this Lease, Tenant shall vacate and surrender the Premises to Landlord in the
same condition as existed at the Commencement Date, except for (i) reasonable
wear and tear, (ii) damage caused by any peril or condemnation,
(iii) contamination by Hazardous Materials for which Tenant is not responsible
pursuant to Section 7.2, (iv) alterations or other improvements in the Premises
which Tenant is permitted to surrender at the expiration or earlier termination
of this Lease, and (v) repairs which are the responsibility of Landlord under
this Lease. In this regard, normal wear and tear shall be construed to mean wear
and tear caused to the Premises by the natural aging process which occurs in
spite of prudent application of commercially reasonable standards for
maintenance, repair and janitorial practices, and does not include items of
neglected or deferred maintenance. In any event, Tenant shall cause the
following to be done prior to the expiration or the sooner termination of this
Lease: (i) the HVAC system shall be serviced by a reputable and licensed service
firm and left in good operating condition and repair, reasonable wear and tear,
damage caused by any peril or condemnation, and repairs which are the
responsibility of Landlord under this Lease excepted; and (iii) the plumbing and
electrical systems and lighting shall be placed in good order and repair
(including replacement of any burned out, discolored or broken light bulbs,
ballasts, or lenses), reasonable wear and tear, damage caused by any peril or
condemnation, and repairs which are the responsibility of Landlord under this
Lease. Tenant shall, prior to the expiration or sooner termination of this
Lease, remove any Tenant’s Alterations which Tenant is required to remove
pursuant to Section 5.2 and repair all damage caused by such removal, reasonable
wear and tear, damage caused by any peril or condemnation, and repairs which are
the responsibility of Landlord under this Lease excepted. If the Premises are
not so surrendered at the termination of this Lease, Tenant shall be liable to
Landlord for all costs incurred by Landlord in returning the Premises to the
required condition, plus interest on all costs incurred at the Agreed Interest
Rate. Tenant shall indemnify Landlord against loss or liability resulting from
delay by Tenant in so surrendering the Premises, including, without limitation,
any claims made by any succeeding tenant or losses to Landlord due to lost
opportunities to lease to succeeding tenants and losses and damages suffered by
Landlord due to lost opportunities to lease any portion of the Premises to any
such succeeding tenant or prospective tenant, together with, in each case,
actual attorneys’ fees and costs.

15.3 Holding Over: This Lease shall terminate without further notice at the
expiration of the Lease Term. Any holding over by Tenant after expiration of the
Lease Term shall not constitute a renewal or extension of the Lease or give
Tenant any rights in or to the Premises except as expressly provided in this
Lease. Any holding over after such expiration with the written consent of
Landlord shall be construed to be a tenancy from month to month on the same
terms and conditions herein specified insofar as applicable except that Base
Monthly Rent shall be increased to an amount equal to one hundred fifty percent
(150%) of the Base Monthly Rent payable during the last full calendar month of
the Lease Term. In any event, no provision of this Section 15.3 shall be deemed
to waive Landlord’s right of reentry or any other right under this Lease or at
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the Lease, Tenant has not fulfilled its obligation with respect to repairs and
cleanup of the Premises or any other Tenant obligations as set forth in this
Lease, then Landlord shall have the right to perform any such obligations as it
deems necessary at Tenant’s sole cost and expense.

15.4 Subordination: Concurrently with its execution and delivery of this Lease,
Landlord shall provide Tenant a subordination, non-disturbance and attornment
agreement (the “Concurrent SNDAA”) from Landlord’s existing “Lienholder”, as
that term is defined in Section 15.5, below. Tenant covenants and agrees that
this Lease is subject and subordinate to any Security Instrument and to any
advances made on the security thereof and to any and all increases, renewals,
modifications, consolidations, replacements and extensions thereof. This clause
shall be self operative and no further instrument of subordination need be
required by any owner or holder of any such ground lease, mortgage, deed of
trust or security agreement; provided, however, that in consideration of and a
condition precedent to Tenant’s agreement to subordinate this Lease to any
future Security Instrument, shall be the receipt by Tenant of a subordination
non-disturbance and attornment agreement in a commercially reasonable form
provided by the “Lienholder” (as defined in Section 15.5, below), which requires
such Lienholder to accept this lease, and not to disturb Tenant’s possession, so
long as an Event of Tenant’s Default has not occurred and be continuing (a
“SNDAA”), executed by Landlord and such Lienholder. Further, in confirmation of
such subordination, at Landlord’s request, Tenant shall execute promptly any
appropriate and commercially reasonable certificate or instrument that Landlord
may request. Landlord hereby represents and warrants that as of the Effective
Date, Prudential Mortgage Capital Company is the only existing Lienholder with
respect to the Building and the Premises. Notwithstanding the foregoing, any
Lienholder shall have the right to elect, by written notice given to Tenant, to
have this Lease be superior to its Security Instrument. In the event of the
enforcement by any holder of the Security Instrument (“Successor Landlord”) of
the remedies provided for by law or by such Security Instrument, at Successor
Landlord’s election, Tenant will attorn to and recognize as its landlord, and
become the tenant of, such Successor Landlord, without any change in the terms
or other provisions of this Lease or without the execution of any further
instrument by Tenant; provided, however, that such Successor Landlord or
successor in interest shall not be bound by (a) any payment of Base Monthly Rent
or Additional Rent for more than one (1) month in advance that is not actually
received by such Successor Landlord (provided that (1) any abatement of Base
Monthly Rent or Additional Rent to which Tenant is entitled shall not be
considered “prepaid rent” for purposes of this Section 15.4, and (2) any payment
by Tenant of Tenant’s Share of Operating Expenses in advance in estimated
monthly installments shall not impact any annual reconciliation of Operating
Expenses pursuant to Section 8.1), (b) any amendment or modification of this
Lease that would reduce or shorten any obligations of Tenant under this Lease,
or materially impair Landlord’s rights under this Lease, or any waiver of the
terms of this Lease, made without the written consent of the Lienholder, which
consent shall not be unreasonably withheld, conditioned or delayed, (c) any
offset right that Tenant may have against any former Landlord relating to any
event or occurrence before the date of attornment that is not specifically
allowed under the terms of this Lease; (d) except as provided in clause (c),
above, any obligation to pay Tenant any sum(s) that any former Landlord owed to
Tenant except to the extent such sums, if any, shall have actually been
delivered to Successor Landlord by way of an assumption of escrow accounts or
otherwise, (e) any obligation to pay Tenant any security deposited with a former
Landlord, except to the extent such security was actually delivered to such
Successor Landlord; or (f) any obligation to commence or complete any initial
construction of improvements in the Premises or any expansion or rehabilitation
of existing improvements thereon, provided that such Successor Landlord shall
satisfy all ongoing maintenance and repair obligations of Landlord under this
Lease. Upon request by such Successor Landlord, whether before or after the
enforcement of its remedies, Tenant shall execute and deliver an instrument or
instruments confirming and evidencing the attornment herein set forth This Lease
is further subject to and subordinate to all matters of record.

 

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15.5 Lender Protection: Tenant will give the owners or holders of any Security
Instrument (“Lienholder”), by registered mail, a copy of any notice of default
Tenant serves on Landlord, provided that Landlord or Lienholder previously
notified Tenant in writing the address of Lienholder. Tenant further agrees that
if Landlord fails to cure such default within a reasonable period of time after
Landlord’s receipt of such notice of default from Tenant, then Tenant will
provide written notice of such failure to Lienholder and Lienholder will have an
additional thirty (30) days within which to cure the default. Lienholder shall
have no obligation to cure (and shall have no liability or obligation for not
curing) any breach or default by Landlord, except to the extent that Lienholder
agrees or undertakes otherwise in writing. If the default cannot be cured within
the additional thirty (30) day period, then Lienholder will have such additional
time as may be necessary to effect the cure if, within the thirty (30) day
period, Lienholder has commenced and is diligently pursuing the cure (including,
without limitation, commencing foreclosure proceedings if necessary to effect
the cure), and provided that Tenant’s use of the Premises for the Permitted Use
is not materially impaired during such period.

15.6 Estoppel Certificates and Financial Statements: At all times during the
Lease Term, Tenant agrees, following any request by Landlord, promptly to
execute and deliver to Landlord within fifteen (15) days following delivery of
such request an estoppel certificate: (i) certifying that this Lease is
unmodified and in full force and effect or, if modified, stating the nature of
such modification and certifying that this Lease, as so modified, is in full
force and effect, (ii) stating the date to which the rent and other charges are
paid in advance, if any, (iii) acknowledging that there are not, to Tenant’s
knowledge, any uncured defaults on the part of any party hereunder or, if there
are uncured defaults, specifying the nature of such defaults, and
(iv) certifying such other information about the Lease as may be reasonably
required by Landlord. Tenant’s failure to deliver an estoppel certificate within
five (5) days after Landlord’s delivery of a second request therefor following
Tenant’s failure to deliver the same within fifteen (15) days following
Landlord’s initial request pursuant to this Section 15.6 shall be a conclusive
admission that, as of the date of the request for such statement: (i) this Lease
is unmodified except as may be represented by Landlord in said request and is in
full force and effect, (ii) there are no uncured defaults in Landlord’s
performance, and (iii) no rent has been paid more than thirty (30) days in
advance. At any time during the Lease Term Tenant shall, upon fifteen (15) days’
prior written notice from Landlord, provide Tenant’s most recent financial
statement and financial statements covering the twenty-four (24) month period
prior to the date of such most recent financial statement to any existing Lender
or to any potential Lender or buyer of the Premises, provided that such
financial statements are not publicly available. Such statements shall be
prepared in accordance with generally accepted accounting principles and, if
such is the normal practice of Tenant, shall be audited by an independent
certified public accountant.

Tenant hereby authorizes Landlord to obtain one or more credit reports on Tenant
at any time, and shall execute such further authorizations as Landlord may
reasonably require in order to obtain a credit report.

15.7 Consent: Whenever Landlord’s approval or consent is required by this Lease,
such approval or consent may be exercised in Landlord’s reasonable discretion,
unless a different standard has been expressly provided in this Lease for the
particular matter requiring Landlord’s consent or approval.

15.8 Notices: Any notice required or desired to be given regarding this Lease
shall be in writing and may be given by personal delivery, by facsimile, by
courier service, or by mail. A notice shall be deemed to have been given (i) on
the third business day after mailing if such notice was deposited in the United
States mail, certified or registered, postage prepaid, addressed to the party to
be served at its Address for Notices specified in Section Q or Section R of the
Summary (as applicable), (ii) when delivered if given by personal delivery, and
(iii) in all other cases when actually received at the party’s Address for
Notices. Any notice received on a Saturday, Sunday or locally or nationally
recognized holiday, such notice shall be deemed received on the next business
day. Either party may change its address by giving notice of the same in
accordance with this Section 15.8, provided, however, that any address to which
notices may be sent must be a California address.

 

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15.9 Attorneys’ Fees: In the event either Landlord or Tenant shall bring any
action or legal proceeding for an alleged breach of any provision of this Lease,
to recover rent, to terminate this Lease or otherwise to enforce, protect or
establish any term or covenant of this Lease, the prevailing party shall be
entitled to recover as a part of such action or proceeding, or in a separate
action brought for that purpose, reasonable attorneys’ fees, court costs, and
experts’ fees as may be fixed by the court.

15.10 Authority: If Landlord or Tenant is a corporation, limited liability
company, partnership or other entity, each individual executing this Lease on
behalf of said organization represents and warrants that he is duly authorized
to execute and deliver this Lease on behalf of said organization in accordance
with a duly adopted resolution or other applicable authorization of said
organization, and that this Lease is binding upon said organization in
accordance with its terms. Further, Tenant shall, within thirty (30) days
following a written request by Landlord, deliver to Landlord a certified copy of
a resolution or other applicable authorization of said organization authorizing
or ratifying the execution of this Lease.

15.11 Miscellaneous: Should any provision of this Lease prove to be invalid or
illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. The captions used in this Lease are for convenience only and shall not
be considered in the construction or interpretation of any provision hereof. Any
executed copy of this Lease shall be deemed an original for all purposes. This
Lease shall, subject to the provisions regarding assignment, apply to and bind
the respective heirs, successors, executors, administrators and assigns of
Landlord and Tenant. “Party” shall mean Landlord or Tenant, as the context
implies. If Tenant consists of more than one person or entity, then all members
of Tenant shall be jointly and severally liable hereunder. This Lease shall be
construed and enforced in accordance with the laws of the State of California,
without giving effect to any choice of law principles thereunder. The language
in all parts of this Lease shall in all cases be construed as a whole according
to its fair meaning, and not strictly for or against either Landlord or Tenant.
When the context of this Lease requires, the neuter gender includes the
masculine, the feminine, a partnership or corporation or joint venture, and the
singular includes the plural. The terms “shall”, “will” and “agree” are
mandatory. The term “may” is permissive. When a party is required to do
something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless a provision of this Lease
expressly requires reimbursement. Landlord and Tenant agree that (i) the gross
leasable area of the Premises includes any atriums, depressed loading docks,
covered entrances or egresses, and covered loading areas, (ii) each has had an
opportunity to determine to its satisfaction the actual area of the Premises,
(iii) all measurements of area contained in this Lease are conclusively agreed
to be correct and binding upon the parties, even if a subsequent measurement of
any one of these areas determines that it is more or less than the amount of
area reflected in this Lease, and (iv) any such subsequent determination that
the area is more or less than shown in this Lease shall not result in a change
in any of the computations of rent, improvement allowances, or other matters
described in this Lease where area is a factor. Where a party hereto is
obligated not to perform any act, such party is also obligated to restrain any
others within its control from performing said act, including the Agents of such
party. Landlord shall not become or be deemed a partner or a joint venturer with
Tenant by reason of the provisions of this Lease.

15.12 Termination by Exercise of Right: If this Lease is terminated pursuant to
its terms by the proper exercise of a right to terminate specifically granted to
Landlord or Tenant by this Lease, then this Lease shall terminate thirty
(30) days after the date the right to terminate is properly exercised (unless

 

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another date is specified in that part of the Lease creating the right, in which
event the date so specified for termination shall prevail), the rent and all
other charges due hereunder shall be prorated as of the date of termination, and
neither Landlord nor Tenant shall have any further rights or obligations under
this Lease except for those that have accrued prior to the date of termination
or those obligations which this Lease specifically provides are to survive
termination. This Section 15.12 does not apply to a termination of this Lease by
Landlord as a result of an Event of Tenant’s Default.

15.13 Brokerage Commissions: Landlord and Tenant each represents and warrants to
the other party that it has not authorized, retained or employed, or acted by
implication to authorize, retain or employ, any real estate broker or salesman
to act for it or on its behalf in connection with this Lease so as to cause the
other party to be responsible for the payment of a brokerage commission, except
for the Retained Real Estate Broker(s) identified in the Summary to this Lease.
Landlord and Tenant shall each indemnify, defend and hold the other party
harmless from and against any and all claims by any real estate broker or
salesman (other than the Retained Real Estate Brokers) whom the indemnifying
party authorized, retained or employed, or acted by implication to authorize,
retain or employ, to act for the indemnifying party in connection with this
Lease. Landlord shall pay a commission to the Retained Real Estate Broker(s)
pursuant to a separate agreement.

15.14 Force Majeure: Any prevention, delay or stoppage due to strikes,
lock-outs, inclement weather, labor disputes, inability to obtain labor,
materials, fuels or reasonable substitutes therefor, governmental restrictions,
regulations, controls, action or inaction, civil commotion, fire or other acts
of God, and other causes beyond the reasonable control of Landlord or Tenant
(except financial inability) shall excuse the performance by Landlord or Tenant,
as the case may be, for a period equal to the period of any said prevention,
delay or stoppage, of any obligation hereunder; provided, however, that nothing
set forth in this Section 15.4 shall (i) shorten any period during which Tenant
is otherwise entitled to an abatement of Rent, or (ii) extend any time periods
for commencing or completing repairs following casualty or condemnation set
forth in this Lease.

15.15 Entire Agreement: This Lease constitutes the entire agreement between the
parties, and there are no binding agreements or representations between the
parties except as expressed herein. Tenant acknowledges that neither Landlord
nor Landlord’s Agents has made any legally binding representation or warranty as
to any matter except those expressly set forth herein, including any warranty as
to (i) whether the Premises may be used for Tenant’s intended use under existing
Law, (ii) the suitability of the Premises or the Project for the conduct of
Tenant’s business, or (iii) the condition of any improvements. There are no oral
agreements between Landlord and Tenant affecting this Lease, and this Lease
supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between Landlord and Tenant or
displayed by Landlord to Tenant with respect to the subject matter of this
Lease. This instrument shall not be legally binding until it is executed by both
Landlord and Tenant. No subsequent change or addition to this Lease shall be
binding unless in writing and signed by Landlord and Tenant.

15.16 OFAC Compliance. Each party shall take any actions that may be required to
comply with the terms of the USA Patriot Act of 2001, as amended, any
regulations promulgated under the foregoing law, Executive Order No. 13224 on
Terrorist Financing, any sanctions program administrated by the U.S. Department
of Treasury’s Office of Foreign Asset Control or Financial Crimes Enforcement
Network, or any other laws, regulations or executive orders designed to combat
terrorism or money laundering, if applicable, to this Lease. Each party
represents and warrants to the other party that it is not an entity named on the
List of Specially Designated Nationals and Blocked Persons maintained by the
U.S. Department of Treasury, as last updated prior to the date of this Lease.

 

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15.17 Outside Area. Subject to the terms and conditions contained in this
Section 15.17 and elsewhere in this Lease, and subject to Tenant obtaining and
maintaining all necessary and applicable governmental approvals, commencing as
of the Commencement Date, Tenant shall have an exclusive license during the
Lease Term for the exclusive use of certain space in the Common Area (the
“Outside Area”), as generally set forth on Exhibit A attached hereto, for the
storage of tanks and other equipment used in Tenant’s operations from the
Premises for the Permitted Use. The Outside Area shall not be included in the
floor area of the Premises for purposes of this Lease. The exclusive license to
use the Outside Area granted to Tenant hereby is personal to the Tenant
originally named in this Lease, any transferee pursuant to a Permitted Transfer
and any transferee pursuant to a Transfer approved by Landlord, and shall not be
otherwise assigned, sublet or otherwise transferred in any way or manner. Tenant
acknowledges that it has been and is currently in possession of the Outside Area
pursuant to the Existing Lease and is fully aware of the condition of the
Outside Area and, therefore, Tenant shall continue to accept the Outside Area in
its “as-is” condition as of the Commencement Date, and Landlord shall not be
obligated to provide or pay for any work or services related to the improvement
of the Outside Area. Tenant also acknowledges that neither Landlord nor any
agent of Landlord has made any representation or warranty regarding the
condition of the Outside Area or the compliance of the Outside Area with any
applicable Laws. Tenant shall have the right, at Tenant’s sole cost and expense,
to alter, change or make improvements to the Outside Area, subject to Landlord’s
approval, which approval shall not be unreasonably withheld, conditioned or
delayed; provided, however, that Tenant shall be responsible, at its sole cost
and expense, for the maintenance and repair of the Outside Area (except to the
extent the same are necessitated by the active or gross negligence or willful
misconduct of Landlord or a Landlord Party). Tenant acknowledges and agrees that
although Tenant shall have the exclusive license to use the Outside Area during
the Lease Term, Landlord shall have no obligation to enforce Tenant’s exclusive
use of the Outside Area, and neither Landlord nor the Landlord Parties shall in
no event be liable for, and Landlord and the Landlord Parties are hereby
released from any responsibility for, any personal injury or property damage
sustained by Tenant in connection with or arising from any acts or omissions
with regard to the admission or exclusion from the Outside Area of any person;
provided, however, that Landlord hereby covenants and agrees that it shall not
grant any third party the right to use the Outside Area or to install any
equipment or structure on the Outside Area during the Lease Term, as the same
may be extended, and shall reasonably cooperate with Tenant at no cost to
Landlord to enforce Tenant’s exclusive license to use the Outside Area. Tenant
shall keep the Outside Area clean of all trash and debris and shall also keep
the surrounding areas clean of debris and trash arising from the use of the
Outside Area. Tenant agrees, at its own expense, to pay for all utilities used
by Tenant in the Outside Area (including, without limitation, all sales, use and
other taxes (but excluding real property taxes) imposed thereon by any
governmental authority). Tenant shall remove any personal property from the
Outside Area upon the expiration or earlier termination of this Lease, or upon
the termination of Tenant’s license under this Section 15.17, and shall repair
any damage to the Premises and Building caused by such removal, reasonable wear
and tear and damage caused by any peril or condemnation excepted. Except as set
forth in Section 4.4, above, Tenant shall not be permitted to display any
graphics, signs or insignias or the like in the Outside Area. Tenant’s use of
the Outside Area shall be subject to such reasonable additional rules and
regulations as Landlord may make from time to time concerning the Outside Area;
provided, however, that to the extent there is a conflict between such rules and
regulations and the provisions of this Section 15.17, the provisions of this
Section 15.17 shall govern and control. Landlord hereby acknowledges and agrees
that Tenant’s use of the Outside Area as of the Effective Date of this Lease is
acceptable. Except as expressly set forth in this Section 15.17, all of the
terms, conditions, limitations and restrictions contained in this Lease
pertaining to the Premises and Tenant’s use thereof (excluding Tenant’s
obligation to pay Base Monthly Rent and the determination of Tenant’s Share)
shall apply equally to the Outside Area and Tenant’s use thereof, including,
without limitation, Tenant’s repair and maintenance obligations set forth in
Section 6.1, Tenant’s responsibilities and obligations with respect to Hazardous
Materials set forth in Section 7.2, Tenant’s indemnity of Landlord set forth in
Sections 7.2E and 10.3, and Tenant’s insurance obligations set forth in
Article 9. The license

 

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to use the Outside Area granted to Tenant hereby shall be revocable by Landlord
for cause upon written notice to Tenant, and Landlord thereafter shall have the
right to prevent Tenant’s access thereto. As used in this Section 15.17, “cause”
shall include, without limitation, any of the following: (i) the license granted
hereby constitutes a violation of or otherwise conflicts with any law, statute,
ordinance or other governmental rule, regulation or requirement now in force or
which may hereafter be enacted or promulgated (unless Tenant changes its use of
the Outside Area in order to comply with such law, statute, ordinance or other
governmental rule, regulation or requirement); (ii) this Lease is terminated for
any reason; or (iii) Tenant fails, after notice and a reasonable opportunity to
cure (but in no event more than forty-five (45) days), to comply with any of the
terms, conditions, limitations or restrictions contained in this Section 15.17
or elsewhere in this Lease which apply to the Outside Area or Tenant’s use
thereof. In the event that Landlord makes a good faith determination that the
license granted hereby and/or the use of the Outside Area by Tenant threatens
the safety and/or security of persons or property, or endangers or otherwise
interferes with the use and occupancy of the Building or Project by Landlord,
its employees, agents or contractors or other tenants or occupants of the
Building or Project, then upon receipt of written notice from Landlord
identifying with reasonable specificity the grounds therefor, Tenant shall
immediately discontinue its use of the Outside Area until such time as Tenant
has mitigated such threat, danger or interference to Landlord’s approval, such
approval not to be unreasonably withheld, conditioned or delayed.

15.18 Rooftop Rights. In accordance with, and subject to, the terms and
conditions set forth in Article 5, above, and this Section 15.17, Tenant may
install and maintain, at Tenant’s sole cost and expense, the following
equipment: (i) one (1) satellite dish/antennae on the roof of the Building for
receiving of signals or broadcasts (as opposed to the generation or transmission
of any such signals or broadcasts) and (ii) process equipment required to
service the business conducted by Tenant from within the Premises (all such
equipment is defined collectively as the “Operations Equipment”).
Notwithstanding anything to the contrary set forth in this Section 15.18,
Tenant’s installation, repair and maintenance and removal of such Operations
Equipment shall not invalidate any warranty held by Landlord with respect to the
roof of the Building.

A. Landlord makes no representations or warranties whatsoever with respect to
the condition of the roof of the Building, or the fitness or suitability of the
roof of the Building for the installation, maintenance and operation of the
Operations Equipment.

B. In the event Tenant elects to exercise its right to install any Operations
Equipment, then Tenant shall give Landlord prior notice thereof. Such Operations
Equipment shall be installed pursuant to plans and specifications approved by
Landlord (specifically including, without limitation, all mounting and
waterproofing details), which approval will not be unreasonably withheld,
conditioned, or delayed. In addition, the physical appearance, size and weight
of the Operations Equipment shall be subject to Landlord’s reasonable approval.
The location of any such installation of the Operations Equipment shall be
designated by Tenant subject to Landlord’s approval, which approval shall not be
unreasonably withheld, conditioned or delayed, and Landlord may require Tenant
to install screening around such Operations Equipment, at Tenant’s sole cost and
expense, as reasonably designated by Landlord. Tenant shall reimburse to
Landlord the actual, out-of-pocket costs reasonably incurred by Landlord in
approving such Operations Equipment. Notwithstanding any such review or approval
by Landlord, Tenant shall remain solely liable for any damage to any portion of
the roof or roof membrane, specifically including any penetrations, in
connection with Tenant’s installation, use, maintenance and/or repair of such
Operations Equipment, and Landlord shall have no liability therewith (except to
the extent caused by Landlord’s or Landlord’s Agents’ active gross negligence or
willful misconduct). Such Operations Equipment shall, in all instances, comply
with applicable governmental laws, codes, rules and regulations. In no event
shall any such Operations Equipment interfere with any existing rooftop
communication equipment or other existing equipment of any other tenant or
occupant of the Building or Project, or interfere with any existing rooftop
communication equipment or other existing equipment of any other third-party
with whom Landlord has any third-party agreement.

 

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C. Tenant shall maintain such Operations Equipment, at Tenant’s sole cost and
expense. Tenant shall remove such Operations Equipment upon the expiration or
earlier termination of the Lease. In connection with any such removal, Tenant
and shall return the affected portion of the rooftop and the Premises to the
condition the rooftop and the Premises would have been in had no such Operations
Equipment been installed (reasonable wear and tear, damage caused by any peril
or condemnation, and repairs which are the responsibility of Landlord under this
Lease excepted).

D. For the purposes of determining Tenant’s obligations under this Lease with
respect to its use of the Operations Equipment and areas of the Building in
which the Operations Equipment is located, the areas in which the Operations
Equipment is located (to the extent outside the Premises) shall be deemed to be
a portion of the Premises (but Tenant shall have no obligation to pay Rent on
such portion); consequently, all of the provisions of this Lease with respect to
Tenant’s obligations as to the Premises shall apply to the installation, use and
maintenance of the Operations Equipment, including, without limitation, the
provisions relating to insurance, indemnity, repairs and maintenance, and
compliance with Laws.

[the balance of this page has been intentionally left blank; signature page
follows]

 

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

 

LANDLORD:     TENANT:

M WEST PROPCO X, LLC,

a Delaware limited liability company

   

INTEVAC, INC.,

a Delaware corporation

 

By:

 

 

Divco West Real Estate Services, Inc.,

a Delaware corporation

Its Agent

    By:   /s/ Jeffrey Andreson       Name:   Jeffrey Andreson       Its:   EVP,
CFO, Secretary   By:   /s/ Steve Novick     Dated:   03/18/2014   Name:   Steve
Novick         Its:   Authorized Signatory     By:      

 

Dated:

 

 

03/21/2014

    Name:             Its:             Dated:    

 

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EXHIBIT A

PROJECT SITE PLAN AND OUTLINE OF THE PREMISES

This Exhibit is intended only to show the general outline of the Project and
Premises. The depiction of interior windows, cubicles, modules, furniture and
equipment in this Exhibit, if shown, is for illustrative purposes only, but does
not mean that such items exist. Landlord is not required to provide, install or
construct any such items. It is not to be scaled; any measurements or distances
shown should be taken as approximate. The inclusion of elevators, stairways,
electrical and mechanical closets, and other similar facilities for the benefit
of occupants of the Building does not mean such items are part of the Premises.

 

LOGO [g710754stp143.jpg]

 

EXHIBIT A

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LOGO [g710754stp144.jpg]

 

EXHIBIT A

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EXHIBIT B

TENANT WORK LETTER

This Tenant Work Letter shall set forth the terms and conditions relating to the
construction of the Tenant Improvements in the Premises. This Tenant Work Letter
is essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of the Premises. All references in this Tenant Work Letter
to Articles or Sections of “this Lease” shall mean the relevant portions of
Articles 1 through 15 of the Lease to which this Tenant Work Letter is attached
as Exhibit B, and all references in this Tenant Work Letter to Sections of “this
Tenant Work Letter” shall mean the relevant portions of Sections 1 through 5 of
this Tenant Work Letter.

SECTION 1

DELIVERY OF THE PREMISES AND BASE BUILDING

Tenant acknowledges that it is currently in possession and occupancy of the
Premises pursuant to the Existing Lease and is fully aware of the condition of
the Premises and, therefore, Tenant shall continue to accept the Premises in its
presently existing, “AS-IS” condition as of the date of this Lease. but subject
to Landlord’s ongoing repair, restoration and maintenance obligations under this
Lease.

SECTION 2

TENANT IMPROVEMENTS

2.1 Tenant Improvement Allowance. Tenant shall be entitled to a one-time tenant
improvement allowance (the “Tenant Improvement Allowance”), in the amount set
forth in Section T of the Summary to the Lease for the costs relating to the
initial design and construction of Tenant’s improvements to be installed in the
Premises (the “Tenant Improvements”). In no event shall Landlord be obligated to
make disbursements pursuant to this Tenant Work Letter in a total amount which
exceeds the Tenant Improvement Allowance. Tenant shall have until December 31,
2014 (which date shall be extended on a day-for-day basis for any delays in the
completion of the Tenant Improvements caused by (i) an event of force majeure as
set forth in Section 15.4 of the Lease, (ii) Tenant’s inability to obtain any
required permits despite Tenant’s diligent and good-faith efforts to obtain the
same, or (iii) delays caused by Landlord’s failure to comply with the terms of
this Tenant Work Letter (collectively, “Tenant Improvement Delays”)), to utilize
up to $5.00 per rentable square foot of the Premises of the Tenant Improvement
Allowance (i.e., up to $250,000.00) towards the costs relating to the initial
design and construction of the Tenant Improvements under this Lease or the
Companion Lease. In the event that Tenant has not fully utilized such amount by
December 31, 2014 (as such date may be extended by any Tenant Improvement
Delay), then Tenant’s only rights with respect to the Tenant Improvement
Allowance following such date shall be as set forth in Section 2.4 of this
Tenant Work Letter. Any Tenant Improvements that require the use of Building
risers, raceways, shafts and/or conduits, shall be subject to Landlord’s
reasonable rules, regulations, and restrictions, and that the amount and
location of any such cabling must be approved by Landlord, which approval shall
not be unreasonably withheld, conditioned or delayed. All Tenant Improvements
for which the Tenant Improvement Allowance has been made available shall be
deemed Landlord’s property under the terms of the Lease.

 

EXHIBIT B

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2.2 Disbursement of the Tenant Improvement Allowance.

2.2.1 Tenant Improvement Allowance Items. Except as otherwise set forth in this
Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by
Landlord only for the following items and costs (collectively the “Tenant
Improvement Allowance Items”):

2.2.1.1 Payment of the fees of the “Architect” and the “Engineers,” as those
terms are defined in Section 3.1 of this Tenant Work Letter, which fees shall,
notwithstanding anything to the contrary contained in this Tenant Work Letter,
not exceed an aggregate amount equal to $5.00 per rentable square foot of the
Premises, and payment of the fees incurred by, and the cost of documents and
materials supplied by, Landlord and Landlord’s consultants in connection with
the preparation and review of the “Construction Drawings,” as that term is
defined in Section 3.1 of this Tenant Work Letter;

2.2.1.2 The payment of plan check, permit and license fees relating to
construction of the Tenant Improvements;

2.2.1.3 The cost of construction of the Tenant Improvements, including, without
limitation, testing and inspection costs, freight elevator usage, hoisting and
trash removal costs, and contractors’ fees and general conditions;

2.2.1.4 Costs incurred by Tenant in connection with the engagement of
specialized vendors for the relocation and installation of equipment from
Tenant’s photocathode facility located in Fremont, California (a floor plan of
which is attached to this Tenant Work Letter as Schedule 1 and incorporated
herein), as opposed to standard moving or relocation costs;

2.2.1.5 The cost of any changes in the Base building structure when such changes
are required by the Construction Drawings (including if such changes are due to
the fact that such work is prepared on an unoccupied basis), such cost to
include all direct architectural and/or engineering fees and expenses incurred
in connection therewith;

2.2.1.6 The cost of any changes to the Construction Drawings or Tenant
Improvements required by all applicable building codes (the “Code”);

2.2.1.7 The cost of connection of the Premises to the Building’s energy
management systems;

2.2.1.8 The cost of any project management consultants retained by Tenant;

2.2.1.9 The cost of the “Coordination Fee,” as that term is defined in
Section 4.2.2 of this Tenant Work Letter;

2.2.1.10 Sales and use taxes and Title 24 fees; and

2.2.1.11 All other reasonable, out-of-pocket costs actually expended by Landlord
and directly related to the construction of the Tenant Improvements, provided
such costs are approved by Tenant in advance, such approval not to be
unreasonably withheld, conditioned or delayed.

 

EXHIBIT B

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2.2.2 Disbursement of Tenant Improvement Allowance. During the design of the
Tenant Improvements, Landlord shall make monthly disbursements of the Tenant
Improvement Allowance for Tenant Improvement Allowance Items for the benefit of
Tenant, and during the construction of the Tenant Improvements, Landlord shall
authorize the release of monies for the benefit of Tenant as follows.

2.2.2.1 Monthly Disbursements. On or before the first day of each calendar month
during the construction of the Tenant Improvements (or such other date as
Landlord may reasonably designate), Tenant shall deliver to Landlord: (i) a
request for payment of the “Contractor,” as that term is defined in Section 4.1
of this Tenant Work Letter, approved by Tenant, in a form reasonably approved by
Landlord, showing the schedule, by trade, of percentage of completion of the
Tenant Improvements in the Premises, detailing the portion of the work completed
and the portion not completed; (ii) invoices from the Contractor for labor
rendered and materials delivered to the Premises; (iii) executed mechanic’s lien
releases from all of Tenant’s Agents which shall comply with the appropriate
provisions, as reasonably determined by Landlord, of California Civil Code
Section 3262(d); and (iv) all other information reasonably requested by
Landlord. As between Landlord and Tenant, Tenant’s request for payment shall be
deemed Tenant’s acceptance and approval of the work furnished and/or the
materials supplied as set forth in Tenant’s payment request, but shall not
otherwise be deemed to waive any warranty or other obligation that the
Contractor may have pursuant to its contract with Tenant. Thereafter, Landlord
shall deliver a check to Tenant made jointly payable to Contractor and Tenant in
payment of the lesser of: (A) the amounts so requested by Tenant, as set forth
in this Section 2.2.2.1, above, less a ten percent (10%) retention (the
aggregate amount of such retentions to be known as the “Final Retention”)
(provided, however, that if Tenant’s request for payment or invoice from the
Contractor includes a ten percent (10%) retention, Landlord shall not withhold
an additional retention from its payment), and (B) the balance of any remaining
available portion of the Tenant Improvement Allowance (not including the Final
Retention), provided that Landlord does not dispute any request for payment
based on non-compliance of any work with the “Approved Working Drawings,” as
that term is defined in Section 3.4 below, or due to any substandard work.
Landlord’s payment of such amounts shall not be deemed Landlord’s approval or
acceptance of the work furnished or materials supplied as set forth in Tenant’s
payment request.

2.2.2.2 Final Retention. Subject to the provisions of this Tenant Work Letter, a
check for any Final Retention held by Landlord pursuant to Section 2.2.2.1,
above, payable jointly to Tenant and Contractor shall be delivered by Landlord
to Tenant following the completion of construction of the Premises, provided
that (i) Tenant delivers to Landlord properly executed mechanics lien releases
in compliance with both California Civil Code Section 3262(d)(2) and either
Section 3262(d)(3) or Section 3262(d)(4), (ii) the Tenant Improvements are in
compliance with the Approved Working Drawings, and (iii) Architect delivers to
Landlord a certificate, in a form reasonably acceptable to Landlord, certifying
that the construction of the Tenant Improvements in the Premises has been
substantially completed.

2.2.2.3 Other Terms. Landlord shall only be obligated to make disbursements from
the Tenant Improvement Allowance to the extent costs are incurred by Tenant for
Tenant Improvement Allowance Items. All Tenant Improvement Allowance Items for
which the Tenant Improvement Allowance has been made available shall be deemed
Landlord’s property under the terms of this Lease.

2.3 Building Standard Components. The quality of Tenant Improvements shall be
equal to or of greater quality than the quality of Building standard components
customary in buildings in comparable properties located in Santa Clara,
California, provided that the Tenant Improvements shall comply with any
specifications reasonably designated by Landlord and communicated to Tenant
prior to the design and construction of the Tenant Improvements.

 

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2.4 Unused Tenant Improvement Allowance. Tenant shall have until February 28,
2016 (as such date may be extended by any Tenant Improvement Delay) to elect to
apply any portion of the total amount of the Tenant Improvement Allowance that
remains unused following December 31, 2014 (the “Remaining Allowance”) to the
costs relating to the Tenant Improvements under this Lease or the Companion
Lease. In the event that Tenant has not fully utilized the Remaining Allowance
by February 28, 2016 (as such date may be extended by any Tenant Improvement
Delay), then all of such unused amounts shall revert to Landlord, and Tenant
shall have no further rights with respect thereto.

2.5 Failure to Disburse Tenant Improvement Allowance. If Landlord fails to
timely fulfill its obligation to fund any portion of the Tenant Improvement
Allowance, Tenant shall be entitled to deliver notice (the “Payment Notice”)
thereof to Landlord. If Landlord still fails to fulfill any such obligation
within twenty (20) business days after Landlord’s receipt of the Payment Notice
from Tenant and if Landlord fails to deliver notice to Tenant within such twenty
(20) business day period explaining Landlord’s reasons that Landlord believes
that the amounts described in Tenant’s Payment Notice are not due and payable by
Landlord (“Refusal Notice”), Tenant shall be entitled to offset the amount so
owed to Tenant by Landlord but not paid by Landlord (or if Landlord delivers a
Refusal Notice but only with respect to a portion of the amount set forth in the
Payment Notice and Landlord fails to pay such undisputed amount as required by
the next succeeding sentence, the undisputed amount so owed to Tenant), together
with interest at the Agreed Interest Rate from the last day of such twenty
(20) business day period until the date of offset, against Tenant’s next
obligations to pay Rent under the Lease. Notwithstanding the foregoing, Landlord
hereby agrees that if Landlord delivers a Refusal Notice disputing a portion of
the amount set forth in Tenant’s Payment Notice, Landlord shall pay to Tenant,
concurrently with the delivery of the Refusal Notice, the undisputed portion of
the amount set forth in the Payment Notice. However, if an Event of Tenant’s
Default exists under Article 13 of the Lease at the time that such offset would
otherwise be applicable, Tenant shall not be entitled to such offset until such
Default is cured. If Landlord delivers a Refusal Notice, and if Landlord and
Tenant are not able to agree on the disputed amounts to be so paid by Landlord,
if any, within ten (10) days after Tenant’s receipt of a Refusal Notice, Tenant
may commence a binding arbitration action with respect to such disputed amounts.
If Tenant prevails in any such action, the award shall include interest at the
Agreed Interest Rate calculated from the date of funding by Tenant, if any, or
the date such amount was otherwise due to Tenant, as the case may be, until the
date of Landlord’s payment of such award. Similarly, if Tenant prevails in any
such arbitration, Tenant shall be entitled to apply such award as a credit
against Tenant’s obligations to pay Rent under the Lease, and the award shall
include interest at the Agreed Interest Rate calculated from the date of funding
by Tenant, if any, until the date of Tenant’s application of such amounts as a
credit against Rent.

SECTION 3

CONSTRUCTION DRAWINGS

3.1 Selection of Architect/Construction Drawings. Tenant shall retain an
architect/space planner approved by Landlord (the “Architect”) to prepare the
“Construction Drawings,” as that term is defined in this Section 3.1, which
approval shall not be unreasonably withheld, conditioned or delayed. Tenant
shall retain engineering consultants approved by Landlord (the “Engineers”) to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, life safety, and sprinkler work in the
Premises, which work is not part of the Base Building, which approval shall be
unreasonably withheld, conditioned or delayed. The plans and drawings to be
prepared by Architect and the Engineers hereunder shall be known collectively as
the “Construction Drawings.” Tenant shall be required to include in its
contracts with the Architect and the Engineers a provision which requires a
standard and customary license for the use of all Construction Drawings to be
transferred to Tenant and Landlord upon the Substantial Completion of the Tenant
Improvements, including, without

 

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limitation, a right to make copies thereof; notwithstanding the foregoing, or
anything to the contrary set forth herein, Landlord shall have no right to
license or use any of Tenant’s designs, processes, business plans or other
confidential or proprietary information contained in the Construction Drawings,
all of which shall be kept strictly confidential by Landlord. All Construction
Drawings shall be subject to Landlord’s approval, which approval shall not be
unreasonably withheld, conditioned or delayed. Tenant shall cause Architect to
verify, in the field, the dimensions and conditions as shown on the relevant
portions of the base building plans, and Tenant and Architect shall be solely
responsible for the same, and Landlord shall have no responsibility in
connection therewith. Landlord’s review of the Construction Drawings as set
forth in this Section 3, shall be for its sole purpose and shall not imply
Landlord’s review of the same, or obligate Landlord to review the same, for
quality, design, Code compliance or other like matters. Accordingly,
notwithstanding that any Construction Drawings are reviewed by Landlord or its
space planner, architect, engineers and consultants, and notwithstanding any
advice or assistance which may be rendered to Tenant by Landlord or Landlord’s
space planner, architect, engineers, and consultants, Landlord shall have no
liability whatsoever in connection therewith and shall not be responsible for
any omissions or errors contained in the Construction Drawings, and Tenant’s
waiver and indemnity set forth in this Lease shall specifically apply to the
Construction Drawings.

3.2 Final Space Plan. Subject to the terms and conditions of this Tenant Work
Letter, Landlord conceptually approves the relocation and installation of
equipment from Tenant’s photocathode facility located in Fremont, California as
set forth on Schedule 1 attached hereto (the “Fremont Relocation Plan”),
provided that Landlord reserves its right to approve the same as part of the
Approved Working Drawings for the Tenant Improvements pursuant to this Tenant
Work Letter. Tenant shall supply Landlord with four (4) copies signed by Tenant
of its final space plan for the Premises before any architectural working
drawings or engineering drawings have been commenced. The final space plan (the
“Final Space Plan”) shall include a layout and designation of all offices, rooms
and other partitioning, their intended use, and equipment to be contained
therein. Landlord may request clarification or more specific drawings for
special use items not included in the Final Space Plan. Landlord shall approve
or disapprove the Final Space Plan within five (5) business days after
Landlord’s receipt thereof, which approval shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding anything set forth herein to the
contrary, Landlord and Tenant hereby agree that it shall be deemed reasonable
for Landlord to withhold its approval of the Final Space Plan if a “Design
Problem” exists. A “Design Problem” shall mean and refer to any design criteria
which would (a) materially and adversely affect the Building Structure or the
base Building mechanical, electrical, life safety, plumbing, sprinkler and HVAC
systems installed or furnished by Landlord; (b) be in non-compliance with
applicable building codes or Laws; (c) cause material interference with other
tenants of the Project, or (d) materially and adversely affect the certificate
of occupancy or its legal equivalent for the Building or any portion thereof. If
Tenant is so advised, Tenant shall promptly cause the Final Space Plan to be
revised to correct any deficiencies or other matters Landlord may reasonably
require.

3.3 Final Working Drawings. After the Final Space Plan has been approved by
Landlord, Tenant shall supply the Engineers with a complete listing of standard
and non-standard equipment and specifications, including, without limitation,
B.T.U. calculations, electrical requirements and special electrical receptacle
requirements for the Premises, to enable the Engineers and the Architect to
complete the “Final Working Drawings” (as that term is defined below) in the
manner as set forth below. Upon the approval of the Final Space Plan by Landlord
and Tenant, Tenant shall promptly cause the Architect and the Engineers to
complete the architectural and engineering drawings for the Premises, and
Architect shall compile a fully coordinated set of architectural, structural,
mechanical, electrical and plumbing working drawings in a form which is complete
to allow subcontractors to bid on the work and to obtain all applicable permits
(collectively, the “Final Working Drawings”) and shall submit the same to
Landlord for Landlord’s approval, which approval shall not be unreasonably
withheld, conditioned or delayed; provided that Landlord and Tenant hereby agree
that it shall be deemed reasonable for Landlord to

 

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withhold its approval of the Final Working Drawings if a Design Problem exists
or the Final Working Drawings are not substantially consistent with the Final
Space Plan. Tenant shall supply Landlord with four (4) copies signed by Tenant
of such Final Working Drawings. Landlord shall advise Tenant within five
(5) business days after Landlord’s receipt of the Final Working Drawings for the
Premises if the same is unsatisfactory or incomplete in any respect, then the
parties shall promptly meet and confer and negotiate in good faith to reach an
agreement on the Final Working Drawings.

3.4 Approved Working Drawings. The Final Working Drawings shall be approved by
Landlord (the “Approved Working Drawings”) prior to the commencement of
construction of the Premises by Tenant. After approval by Landlord of the Final
Working Drawings, Tenant may submit the same to the appropriate municipal
authorities for all applicable building permits (the “Permits”). Tenant hereby
agrees that neither Landlord nor Landlord’s consultants shall be responsible for
obtaining any building permit or certificate of occupancy for the Premises with
respect to the Tenant Improvements, and that obtaining the same shall be
Tenant’s responsibility; provided, however, that Landlord shall cooperate with
Tenant in executing permit applications and performing other ministerial acts
reasonably necessary to enable Tenant to obtain any such permit or certificate
of occupancy. No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Landlord, which
consent may not be unreasonably withheld, conditioned or delayed. In the event
that Landlord fails to respond to a written request (an “Approval Request”) from
Tenant for approval of any change to the Approved Working Drawings which
requires Landlord’s prior written consent within three (3) business days after
Landlord’s receipt of such Approval Request, such failure to respond shall be
deemed Landlord’s approval of the proposed change set forth in the Approval
Request. In addition, in the event that Landlord disapproves of a proposed
change in an Approval Request, Landlord shall provide Tenant with a written
explanation of such disapproval and the parties shall thereafter meet and confer
and negotiate in good faith to reach an agreement with respect to such proposed
change. Notwithstanding the foregoing, Tenant may make changes to the Approved
Working Drawings without Landlord’s prior written consent (but with prompt
written notice to Landlord setting forth the type, scope and cost of such
change) in the event such changes (i) are required by the City of Santa Clara or
other applicable governmental body having jurisdiction over the Premises,
Building or Project and are substantially consistent with the design intent of
the Approved Working Drawings, or (ii) consist of minor field changes that
(A) are consistent with the intent or required for the proper execution of the
Approved Working Drawings, and (B) will not materially and adversely affect the
design, use or operation of the Premises or the Tenant Improvements.

SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1 Tenant’s Selection of Contractors.

4.1.1 The Contractor. A general contractor shall be retained by Tenant to
construct the Tenant Improvements. Such general contractor (“Contractor”) shall
be subject to Landlord’s approval, which approval shall not be unreasonably
withheld, conditioned or delayed. Tenant shall obtain cost estimate bids from a
minimum of two (2) general contractors to construct the Tenant Improvements.

4.1.2 Tenant’s Agents. The Contractor and Tenant’s subcontractors, laborers,
materialmen, and suppliers used by Tenant and present at the Project are
collectively referred to herein as “Tenant’s Agents”. All HVAC, plumbing and
electrical subcontractors engaged by the Contractor shall be subject to
Landlord’s approval, which approval shall not be unreasonably withheld,
conditioned or delayed.

 

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4.2 Construction of Tenant Improvements by Tenant’s Agents.

4.2.1 Construction Contract; Cost Budget. Prior to Tenant’s execution of the
construction contract and general conditions with Contractor (the “Contract”),
Tenant shall submit the Contract to Landlord for its approval, which approval
shall not be unreasonably withheld, conditioned or delayed. Prior to the
commencement of the construction of the Tenant Improvements, and after Tenant
has accepted all bids for the Tenant Improvements, Tenant shall provide Landlord
with a detailed breakdown, by trade, of the final costs to be incurred or which
have been incurred, as set forth more particularly in Sections 2.2.1.1 through
2.2.1.10, above, in connection with the design and construction of the Tenant
Improvements to be performed by or at the direction of Tenant or the Contractor,
which costs form a basis for the amount of the Contract (the “Final Costs”). The
amount equal to the difference between the amount of the Final Costs and the
amount of the Tenant Improvement Allowance (less any portion thereof already
disbursed by Landlord, or in the process of being disbursed by Landlord, on or
before the commencement of construction of the Tenant Improvements) shall be
referred to as the “Over-Allowance Amount”. The Over-Allowance Amount shall be
disbursed by Tenant prior to the disbursement of any portion of the Tenant
Improvement Allowance. In the event that, after the Final Costs have been
delivered by Tenant to Landlord, the costs relating to the design and
construction of the Tenant Improvements shall change, any additional costs
necessary to such design and construction in excess of the Final Costs, shall be
paid by Tenant promptly as an addition to the Over-Allowance Amount, but Tenant
shall continue to provide Landlord with the documents described in
Sections 2.2.2.1 (i), (ii), (iii) and (iv) of this Tenant Work Letter, above,
for Landlord’s approval, prior to Tenant paying such costs. Notwithstanding
anything set forth in this Tenant Work Letter to the contrary, construction of
the Tenant Improvements shall not commence until (a) Landlord has approved the
Contract, and (b) Tenant has procured and delivered to Landlord a copy of all
Permits.

4.2.2 Tenant’s Agents.

4.2.2.1 Landlord’s General Conditions for Tenant’s Agents and Tenant Improvement
Work. Tenant’s and Tenant’s Agent’s construction of the Tenant Improvements
shall comply with the following: (i) the Tenant Improvements shall be
constructed in strict accordance with the Approved Working Drawings;
(ii) Landlord’s reasonable rules and regulations for the construction of
improvements in the Building, (iii) Tenant’s Agents shall submit schedules of
all work relating to the Tenant’s Improvements to Contractor and Contractor
shall promptly inform Tenant’s Agents of any changes which are necessary
thereto, and Tenant’s Agents shall adhere to such corrected schedule; and
(iv) Tenant shall abide by all reasonable rules made by Landlord’s Building
manager with respect to the use of loading dock areas, storage of equipment and
materials at the Project, and any other matter in connection with this Tenant
Work Letter, including, without limitation, the construction of the Tenant
Improvements. Tenant shall pay a logistical coordination fee (the “Coordination
Fee”) to Landlord in an amount equal to two and one-half percent (2.5%) of the
amount of all costs to construct the Tenant Improvements (excluding the cost of
building permits and architectural fees). The Coordination Fee shall be included
in the costs to construct the Tenant Improvements, which Coordination Fee shall
be for services relating to the coordination of the construction of the Tenant
Improvements. Landlord shall deduct the Coordination Fee from the Tenant
Improvement Allowance and pay its agent on a monthly basis. Tenant shall be
responsible for payment of the Coordination Fee to the extent that the costs to
construct the Tenant Improvements exceed the Tenant Improvement Allowance. In
the event of a conflict between the Approved Working Drawings and Landlord’s
construction rules and regulations, the Approved Working Drawings shall prevail.

4.2.2.2 Indemnity. Tenant’s indemnity of Landlord as set forth in this Lease
(including all applicable exceptions and limitations thereto) shall also apply
with respect to any and all costs, losses, damages, injuries and liabilities
related in any way to any act or omission of Tenant or

 

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Tenant’s Agents, or anyone directly or indirectly employed by any of them, or in
connection with Tenant’s non-payment of any amount arising out of the Tenant
Improvements (which non-payment was not the result of a breach of Landlord’s
obligations under this Tenant Work Letter) and/or Tenant’s disapproval of all or
any portion of any request for payment. Such indemnity by Tenant, as set forth
in this Lease, shall also apply with respect to any and all costs, losses,
damages, injuries and liabilities related in any way to Landlord’s performance
of any ministerial acts reasonably necessary (i) to permit Tenant to complete
the Tenant Improvements, and (ii) to enable Tenant to obtain any building permit
or certificate of occupancy for the Premises.

4.2.2.3 Requirements of Tenant’s Agents. Tenant shall obtain an
industry-standard warranty from the Contractor for the benefit of Tenant and
Landlord that the Tenant Improvements shall be free from any defects in
workmanship and materials for a period of not less than one (1) year from the
date of completion thereof. Such warranty as to materials or workmanship of or
with respect to the Tenant Improvements shall be contained in the Contract and
shall be written such that such warranty shall inure to the benefit of both
Landlord and Tenant, as their respective interests may appear, and can be
directly enforced by either. Tenant covenants to give to Landlord any assignment
or other assurances which may be necessary to effect such right of direct
enforcement.

4.2.2.4 Insurance Requirements.

4.2.2.4.1 General Coverages. Tenant shall cause the Contractor and all of
Tenant’s Agents to carry worker’s compensation insurance covering all of their
respective employees, and to also carry public liability insurance, including
property damage, all with limits, in form and with companies reasonably
acceptable to Landlord.

4.2.2.4.2 Special Coverages. Tenant shall carry “Builder’s All Risk” insurance
in an amount covering the cost of construction of the Tenant Improvements, and
such other standard and customary insurance as Landlord may reasonably require,
it being understood and agreed that the Tenant Improvements shall be insured by
Tenant pursuant to this Lease immediately upon completion thereof. Such
insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Landlord including, but not
limited to, the requirement that all of Tenant’s Agents shall carry excess
liability and Products and Completed Operation Coverage insurance, each in
amounts not less than $500,000 per incident, $1,000,000 in aggregate.

4.2.2.4.3 General Terms. Certificates for all insurance carried pursuant to this
Section 4.2.2.4 shall be delivered to Landlord before the commencement of
construction of the Tenant Improvements and before the Contractor’s equipment is
moved onto the site. All such policies of insurance must contain a provision
that the company writing said policy will give Landlord thirty (30) days prior
written notice of any cancellation or lapse of the effective date or any
reduction in the amounts of such insurance so long as such provision is
obtainable at a commercially reasonable cost, but in any event Tenant shall
provide Landlord not less than ten (10) days prior written notice of any
cancellation or lapse of the effective date or any reduction in the amounts of
such insurance. In the event that the Tenant Improvements are damaged by any
cause during the course of the construction thereof, Tenant shall promptly
repair or cause the repair of the same at no cost or expense to Landlord,
subject to the provisions of Article 11 of the Lease. Tenant’s Agents shall
maintain all of the foregoing insurance coverage in force until the Tenant
Improvements are fully completed and accepted by Landlord, except for any
Products and Completed Operation Coverage insurance required by Landlord, which
is to be maintained for three (3) years following completion of the work and
acceptance by Landlord and Tenant. All policies carried under this
Section 4.2.2.4 shall name Landlord and Tenant as additional insureds. All
insurance, except Workers’ Compensation, maintained by Tenant’s Agents shall
preclude subrogation claims by the insurer against anyone insured thereunder.
Such insurance shall provide that it is primary

 

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insurance as respects the owner and that any other insurance maintained by owner
is excess and noncontributing with the insurance required hereunder. The
requirements for the foregoing insurance shall not derogate from the provisions
for indemnification of Landlord by Tenant under Section 4.2.2.2 of this Tenant
Work Letter. In no event shall Landlord require Tenant to obtain a lien and
completion bond or other alternate form of security to ensure the lien-free
completion of the Tenant Improvements.

4.2.3 Governmental Compliance. The Tenant Improvements shall comply in all
material respects with the following: (i) the Code and other state, federal,
city or quasi-governmental laws, codes, ordinances and regulations, as each may
apply according to the rulings of the controlling public official, agent or
other person; (ii) applicable standards of the American Insurance Association
(formerly, the National Board of Fire Underwriters) and the National Electrical
Code; and (iii) building material manufacturer’s specifications, as applicable.

4.2.4 Inspection by Landlord. Tenant shall use commercially reasonable efforts
to provide Landlord with reasonable prior notice of any inspection to be
performed by a governmental entity in connection with the construction of the
Tenant Improvements in order to allow Landlord to be present during such
inspection. Landlord shall have the right to inspect the Tenant Improvements at
all times, provided however, that Landlord’s failure to inspect the Tenant
Improvements shall in no event constitute a waiver of any of Landlord’s rights
hereunder nor shall Landlord’s inspection of the Tenant Improvements constitute
Landlord’s approval of the same. Should Landlord reasonably disapprove any
portion of the Tenant Improvements, Landlord shall notify Tenant in writing of
such disapproval and shall specify the items disapproved. Any defects or
deviations in, and/or reasonable disapproval by Landlord of, the Tenant
Improvements shall be rectified by Tenant at no expense to Landlord.

4.2.5 Meetings. Commencing upon the execution of this Lease, Tenant shall hold
weekly meetings at a reasonable time, with the Architect and the Contractor
regarding the progress of the preparation of Construction Drawings and the
construction of the Tenant Improvements, and Landlord and/or its agents shall
receive prior notice of, and shall have the right to attend, all such meetings.
In addition, minutes shall be taken at all such meetings, a copy of which
minutes shall be delivered to Landlord. One such meeting each month shall
include the review of Contractor’s current request for payment.

4.3 Notice of Completion; Copy of Record Set of Plans. Within ten (10) days
after completion of construction of the Tenant Improvements, Tenant shall cause
a Notice of Completion to be recorded in the office of the Recorder of the
county in which the Building is located in accordance with Section 3093 of the
Civil Code of the State of California or any successor statute, and a copy
thereof shall be furnished to Landlord upon such recordation. If a Notice of
Completion is not so recorded, Landlord may execute and file the same on behalf
of Tenant as Tenant’s agent for such purpose, at Tenant’s sole cost and expense.
At the conclusion of construction of the Tenant Improvements, Tenant shall
(i) cause the Architect to prepare final as-built drawings for the Premises,
(B) cause the Architect and the Contractor to certify to the best of their
knowledge that the “record-set” of as-built drawings are true and correct, which
certification shall survive the expiration or termination of this Lease, and
(C) cause the delivery to Landlord of four (4) sets of copies of such record set
of drawings within ninety (90) days following issuance of all governmental
permits and approvals required for the completion of the Tenant Improvements and
occupancy of the Premises affected thereby, and (ii) Tenant shall deliver to
Landlord a copy of all warranties, guaranties, and operating manuals and
information relating to the Tenant Improvements.

 

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SECTION 5

MISCELLANEOUS

5.1 Tenant’s Representative. Tenant has designated Mr. Jeff Andreson as its sole
representative with respect to the matters set forth in this Tenant Work Letter,
who shall have full authority and responsibility to act on behalf of the Tenant
as required in this Tenant Work Letter.

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

5.3 Time of the Essence in This Tenant Work Letter. Unless otherwise indicated,
all references herein to a “number of days” shall mean and refer to calendar
days. If any item requiring approval is timely disapproved by Landlord, the
parties shall meet and confer and negotiate in good faith to reach an agreement
on such matter.

5.4 Tenant’s Lease Default. Notwithstanding any provision to the contrary
contained in this Lease, if an Event of Tenant’s Default as described in the
Lease or this Tenant Work Letter has occurred at any time on or before the
Substantial Completion of the Tenant Improvements, then (i) in addition to all
other rights and remedies granted to Landlord pursuant to this Lease, Landlord
shall have the right to withhold payment of all or any portion of the Tenant
Improvement Allowance and/or Landlord may cause Contractor to cease the
construction of the Premises (in which case, Tenant shall be responsible for any
delay in the substantial completion of the Premises caused by such work
stoppage), and (ii) all other obligations of Landlord under the terms of this
Tenant Work Letter shall be forgiven until such time as such default is cured
pursuant to the terms of this Lease (in which case, Tenant shall be responsible
for any delay in the substantial completion of the Premises caused by such
inaction by Landlord).

 

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SCHEDULE 1 TO EXHIBIT B

FREMONT RELOCATION PLAN

 

LOGO [g710754stp155.jpg]

Fremont Photocathode Facility Overview

GaAs and InGaAsP MOCVD (Metal Organic Chemical Vapor Deposition) reactors.
Process plumbing includes supply gasses (N2, CDA, H2, Arsine & Phosphine),
cooling water and exhaust ducting/pumps. Life Safety system.

Semi conductor processing tools: Dicers, Aligners, photo resist spinners,
bonders, microscopes.

Thin Film deposition tools: PEVCD (Silane gas), Sputter and E-beam tools (gold,
nickel, etc.).

Wet chemistry processing: exhausted wet benches (solvents and acid/bases).

Facility Pad support Equipment: Acid Waste Neutralization, Arsenic treatment
system, Process cooling water, DI water, HF waste storage, N2 tank, H2 tank.

 

SCHEDULE 1 TO

EXHIBIT B

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EXHIBIT C

NO RESERVED PARKING AREA

 

LOGO [g710754stp156.jpg]

 

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EXHIBIT D

OPTION TO EXTEND

This Exhibit D (this “Exhibit”) is made in connection with and is a part of that
certain Lease, dated as of March     , 2014, by and between M WEST PROPCO X,
LLC, a Delaware limited liability company, as Landlord, and INTEVAC, INC., a
Delaware corporation, as Tenant, (the “Lease”).

1. Definitions and Conflict. All capitalized terms referred to in this Exhibit
shall have the same meaning as provided in the Lease, except as expressly
provided to the contrary in this Exhibit. In case of any conflict between any
term or provision of the Lease and any exhibits attached thereto and this
Exhibit, this Exhibit shall control.

2. Option to Extend and Rent During the Extended Period: Tenant shall have one
(1) option to extend the Lease Term for a period of five (5) years (the period
shall be referred to as the “Extension Period”) by giving delivering notice of
exercise of such option (“Extension Option Notice”) to Landlord at least two
hundred seventy (270) days, but not more than three hundred sixty-five
(365) days, prior to the expiration of the initial Lease Term. The Extension
Period shall commence, if at all, immediately following the expiration of the
initial Lease Term. If Tenant is in default, after notice and the expiration of
the applicable cure period, under any term or provision of the Lease on the date
of giving an Extension Option Notice, or if Tenant is in default, after notice
and the expiration of the applicable cure period, under any term or provision of
the Lease on the date of the applicable Extension Period is to commence, the
Extension Period at the option of Landlord shall not commence and the Lease
shall expire at the end of initial Lease Term. The Extension Period shall be
upon all of the terms and provisions of the Lease, except that (i) the Base
Monthly Rent during such Extension Period shall be one hundred percent (100%) of
then Fair Market Rent, (ii) any work, allowance, free rent, or concession
provided by Landlord in connection with the commencement of the initial Lease
Term shall not apply; and (iii) Tenant shall not have any additional option to
extend.

2.1 Fair Market Rent. The term “Fair Market Rent” for purposes of determining
Base Monthly Rent during the Extension Period shall mean the base monthly rent
generally applicable to full-building leases at comparable class buildings of
comparable size, age and quality of the Premises in the Santa Clara area
projected as of the first day of the Extension Period by giving due
consideration for the quality of the Building and improvements therein
(including the quality of the then existing improvements in the Premises), the
quality for credit tenants, for a term comparable to the Extension Period at the
time the commencement of the Extension Period is scheduled to commence, and for
comparable space that is not subleased or subject to another party’s expansion
rights or not leased to a tenant that holds an ownership interest in the
landlord, taking into account rental structure, including, without limitation,
rental rates per rentable square foot (including whether gross or net, and if
gross adjusting for base year or expense stop), additional rental, all other
payments and escalations, the size of the Premises compared to the size of the
premises of the comparison leases, location, floor levels and efficiencies of
the floor(s) for which the determination is being made, free rent, moving
expenses and other cash payments, allowances or monetary concessions provided to
Tenant, the age and quality of construction of the Building, and leasehold
improvements and/or allowances, including the amounts thereof in renewal leases,
and taking into account, in the case of renewal leases (including this Lease),
the value of existing leasehold improvements, but without any deduction for
commissions whether or not incurred by Landlord, and otherwise subject to the
terms and conditions of this Lease that will be applicable during the Extension
Period.

2.2 Procedure to Determine Fair Market Rent. Landlord shall notify Tenant in
writing of Landlord’s determination of the Fair Market Rent (“Landlord’s FMR”)
within thirty (30) days after receipt of the Extension Option Notice. Within
thirty (30) days after Tenant’s receipt of such written notice of Landlord’s
FMR, Tenant shall have the right either to: (i) accept Landlord’s FMR, or
(ii) elect to have the Fair Market Rent determined in accordance with the
appraisal procedure set forth below. The failure of Tenant to deliver written
notice of its election under the preceding sentence shall be deemed an
acceptance of Landlord’s FMR. The election (or deemed election ) by Tenant under
this section shall be non-revocable and binding on the parties.

 

EXHIBIT D

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2.3 Appraisers. If Tenant has elected to have the Fair Market Rent determined by
an appraisal, then within ten (10) days after receipt of Tenant’s written notice
of such an election, each party, by delivering written notice to the other
party, shall appoint a broker to render a written opinion of the Fair Market
Rent for the Extension Period. Each broker must be a real estate broker licensed
in the State where the Building is located for at least five years and with at
least five years’ experience in the appraisal of rental rates of leases or in
the leasing of space in office buildings in the area in which the Building is
located and otherwise unaffiliated with either Landlord or Tenant. The two
brokers shall render their written opinion of the Fair Market Rent for the
Extension Period to Landlord and Tenant within thirty (30) days after the
appointment of the second broker. If the Fair Market Rent of each broker is
within three percent (3%) of each other, then the average of the two appraisals
of Fair Market Rent shall be the Fair Market Rent for the Extension Period. If
one party does not appoint its broker as provided above, then the one appointed
shall determine the Fair Market Rent. The Fair Market Rent so determined under
this section shall be binding on Landlord and Tenant.

2.4 Third Appraiser. If the Fair Market Rent determined by the brokers is more
than three percent (3%) apart, then the two brokers shall pick a third broker
within ten (10) days after the two brokers have rendered their opinions of Fair
Market Rent as provided above. If the two brokers are unable to agree on the
third broker within said ten (10) day period, Landlord and Tenant shall mutually
agree on the third broker within ten (10) days thereafter. If the parties do not
agree on a third qualified broker within ten (10) days, then at the request of
either Landlord or Tenant, such third broker shall be promptly appointed by the
then Presiding Judge of the Superior Court of the State of California for the
County where the Building is located. The third broker shall be a person who has
not previously acted in such capacity for either party and must meet the
qualifications stated above.

2.5 Impartial Appraisal. Within thirty (30) days after its appointment, the
third broker (the “Third Party”), Landlord’s broker and Tenant’s broker shall
reach a decision as to whether the parties shall use the appraisal made by the
Landlord’s or Tenant’s broker as the Fair Market Rent for the Extension Period,
and shall notify Landlord and Tenant thereof. The three brokers may not offer
any different opinion or recommendation of Fair Market Rent. The decision of the
majority of the three brokers shall be binding upon Landlord and Tenant. The
Fair Market Rent determined in accordance with the foregoing procedure shall be
binding on the parties.

2.6 Appraisal Costs. Each party shall bear the cost of its own appraiser and
one-half (1/2) the cost of the third appraiser, unless the Fair Market Rent of
the Third Opinion is within five percent (5%) either party’s FMR, in which case
the other party shall bear the entire cost of the third appraiser.

2.7 Acknowledgment of Rent. After the Fair Market Rent for the Extension Period
has been established in accordance with the foregoing procedure, Landlord and
Tenant shall promptly execute an amendment to the Lease to reflect the Base
Monthly Rent for the Extension Period.

2.8 Personal Option. The foregoing option to extend is personal to the original
Tenant signing the Lease (and any Transferee pursuant to a Permitted Transfer),
but may not be assigned or transferred to or exercised by any other assignee,
sublessee or transferee under a Transfer.

2.9 Conditions to Exercise. The foregoing option to extend may only be exercised
by Tenant if Tenant then occupies not less than seventy-five percent (75%) of
the Premises.

 

EXHIBIT D

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EXHIBIT E

APPROVED HAZARDOUS MATERIALS EXHIBIT

[see attached]

 

EXHIBIT E

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EXHIBIT F

INTENTIONALLY OMITTED

 

EXHIBIT F

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TABLE OF CONTENTS

 

          Page  

ARTICLE 1

   DEFINITIONS      4   

ARTICLE 2

   DEMISE, CONSTRUCTION, AND ACCEPTANCE      7   

ARTICLE 3

   RENT      8   

ARTICLE 4

   USE OF PREMISES      10   

ARTICLE 5

   TRADE FIXTURES AND ALTERATIONS      12   

ARTICLE 6

   REPAIR AND MAINTENANCE      15   

ARTICLE 7

   WASTE DISPOSAL AND UTILITIES      17   

ARTICLE 8

   OPERATING EXPENSES      23   

ARTICLE 9

   INSURANCE      29   

ARTICLE 10

   LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY      31   

ARTICLE 11

   DAMAGE TO PREMISES      32   

ARTICLE 12

   CONDEMNATION      34   

ARTICLE 13

   DEFAULT AND REMEDIES      35   

ARTICLE 14

   ASSIGNMENT AND SUBLETTING      38   

ARTICLE 15

   GENERAL PROVISIONS      43   

 

(i)

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Prepared By and After Recording Return To:

Bryan Cave LLP

2200 Ross Avenue, Suite 3300

Dallas, Texas 75201

Attn: Ed Fields

Recording information above this line

Prudential Loan No. 703000212

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

This Subordination, Non-Disturbance and Attornment Agreement (“Agreement”) is
effective as of the date of execution by the last of the parties hereto to
execute their respective signatures as set forth below (the “Effective Date”)
between THE BANK OF NEW YORK MELLON, a New York banking corporation, not in its
individual capacity but solely as Trustee under the Reserve Trust Agreement for
the PICA HARTFORD LIFE & ACCIDENT COMFORT TRUST and THE BANK OF NEW YORK MELLON,
a New York banking corporation, not in its individual capacity but solely as
Trustee under the Reserve Trust Agreement for the PAR U HARTFORD LIFE & ANNUITY
COMFORT TRUST (together with its successors or assigns in interest, collectively
“Lender”) with a mailing address c/o Prudential Asset Resources, Inc., 2100 Ross
Avenue, Suite 2500, Dallas, Texas 75201, and INTEVAC, INC., a Delaware
corporation (“Tenant”, which includes any assigns and successors in interest of
Tenant permitted under the Lease), with a current mailing address of Intevac,
Inc., 3560 Bassett Street, Santa Clara, California 95054: Attn: Chief Financial
Officer.

RECITALS:

A. Lender is the current owner and the holder of a loan evidenced by a
Promissory Notes (collectively, the “Note”) dated October 1, 2008, in the
original aggregate amount of $115,000,000.00. The Note is secured by a Deed of
Trust, Security Agreement and Fixture Filing dated the same date as said Note,
and recorded under Document No. 20003674 of the Real Property Records of Santa
Clara County, California (as the same may have been subsequently amended,
extended, assigned or otherwise modified, hereinafter referred to as the
“Mortgage”), covering the real property described therein (the “Mortgaged
Premises”), including certain premises located at 3548 Basset Street, Sunnyvale,
CA (the “Subject Premises”).

B. Tenant is the tenant under that certain Lease Agreement dated March 20, 2014
(the “Lease”), between Tenant and M West Propco X LLC, a Delaware limited
liability company, as landlord (said landlord and its successors and assigns
under the Lease, except Lender and those claiming under Lender, hereinafter
called “Landlord”), covering part of the Subject Premises as set forth under the
Lease (hereinafter called the “Demised Premises”).

 

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C. Tenant and Lender desire to confirm their understanding with respect to the
Lease and the Mortgage.

THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by all parties, Lender and Tenant agree as
follows:

1. Subordination. The Lease is now, and will at all times and for all purposes
be, subject and subordinate, in every respect, to the Mortgage and the lien
imposed by the Mortgage, with the provisions of this Agreement (as between the
Tenant and Lender only) controlling over the provisions of the Lease. The Lease
is subordinate and subject, in each and every respect, to any and all increases,
renewals, modifications, extensions, substitutions, replacements and/or
consolidations of the Mortgage (collectively a “Modification”), and all other
loan documents securing the Note, provided that any and all Modifications shall
nevertheless be subject to the terms of this Agreement.

2. Non-Disturbance. So long as Tenant is not in default, beyond the applicable
cure periods, under any of the terms, provisions, agreements, covenants, or
obligations set forth in the Lease (a) Lender shall not name or join Tenant as a
defendant in any exercise of Lender’s rights and remedies arising upon default
under the Mortgage, unless applicable law requires Tenant to be made a party,
and (b) Tenant’s possession of the Demised Premises under said Lease shall not
be disturbed or interfered with by Lender.

3. Attornment. If Lender or any other party succeeds to the interest of Landlord
under the Lease in any manner (“Successor Landlord”), including but not limited
to foreclosure, exercise of any power of sale, succession by deed in lieu or
other conveyance (a “Succession”), Tenant will attorn to and be bound to
Successor Landlord upon Succession and will recognize any Successor Landlord as
the landlord under the Lease. The Lease shall continue in full force and effect
as a direct lease, in accordance with its terms, except as provided in this
Agreement. Such attornment is effective and self-operative without the execution
of any further instrument. Tenant, upon request, will sign and deliver any
instruments reasonably requested to evidence such attornment. Tenant waives the
provisions of any statute or rule of law, now or hereafter in effect, which may
give or purport to give Tenant any right or election to terminate or otherwise
adversely affect the Lease and the obligations of Tenant thereunder as a result
of any such foreclosure or trustee’s sale. Lender shall use commercially
reasonable efforts to exercise Lender’s remedies pursuant to the Mortgage in a
manner that does not materially and adversely affect Tenant’s ability to operate
its business in the Demised Premises.

4. Limitation on Successor Landlord’s Liability. Upon any Succession, Successor
Landlord shall not be (a) liable for any act or omission of the Landlord under
said Lease, provided that the Successor Landlord shall be obligated to cure any
Continuing Defaults (as defined below), (b) subject to any offsets or defenses
which Tenant may have against the Landlord arising or occurring prior to the
Succession, except for offsets pertaining to rent abatement, tenant improvement
allowances or other credits, expressly provided for in the Lease, (c) bound by
any rent or additional rent which Tenant may have paid to Landlord for more than
the current month, except for monthly payments of common area maintenance
charges, unreconciled capital improvement payments, property taxes, and
so-called “free rent” or rental abatement provided in the Lease, (d) bound by
any amendment or modification of the Lease that would reduce or shorten any
economic

 

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obligations of Tenant under the Lease or materially impair Landlord’s rights
under the Lease made without Lender’s prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed, (e) liable for any
security deposit paid by Tenant to Landlord except to the extent such deposit is
delivered to Successor Landlord, or (f) liable for the payment of any leasing
commissions, the triggering event for which arose or occurred prior to the
Succession. Any reference to Landlord includes all prior landlords under the
Lease. Successor Landlord shall not be liable for the performance of the
obligations of the Landlord under the Lease, except for those obligations which
first arise during the period of Successor Landlord’s ownership of the Subject
Premises and for “Continuing Defaults” (as defined below). In the case of a
casualty or condemnation repair obligation, during the time period during which
Lender is the Successor Landlord, Lender must receive the insurance or
condemnation proceeds as a condition precedent to Lender’s repair obligation
under the Lease.

A “Continuing Default” is defined as a non-monetary default by Landlord under
the Lease that began prior to Succession, is ongoing and continuing following
Succession, and is susceptible to being cured. Successor Landlord shall only
have liability for actual damages (not consequential or special damages) that
arise after Succession as a result of its failure to cure a Continuing Default.

5. Tenant’s Warranty. Tenant warrants to Lender, as of the date hereof, that
(a) attached hereto as Exhibit A is a true, correct and complete copy of the
Lease, (b) to Tenant’s current actual knowledge, there are no known defaults on
the part of Landlord, (c) the Lease is a complete statement of the agreement of
the parties with respect to the leasing of the Demised Premises, (d) the Lease
is validly executed by Tenant and in full force and effect, and (e) to Tenant’s
current actual knowledge, all conditions to the effectiveness or continuing
effectiveness thereof required to be satisfied as of the date hereof have been
satisfied. Tenant acknowledges and warrants to Lender that Tenant has not
entered into any agreement to subordinate the Lease or any of Tenant’s rights
under the Lease to any lien or mortgage other than the Mortgage.

Each party hereto further represents and warrants to the other party hereto that
such party: (i) is not a person or entity with whom the other party is
restricted from doing business with under regulations of the Office of Foreign
Assets Control (“OFAC”) of the U.S. Department of the Treasury (including, but
not limited to, those named on OFAC’s Specially Designated Nationals and Blocked
Persons list) or under any statute, executive order (including, but not limited
to, the September 24, 2001 Executive Order Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism),
or other governmental action; (ii) is not a person or entity with whom the other
party is restricted from doing business under the International Money Laundering
Abatement and Financial Anti-Terrorism Act of 2001 or the regulations or orders
thereunder; and (iii) is not knowingly engaged in any dealings or transaction or
be otherwise associated with such persons or entities described in (i) and
(ii) above.

6. Lender Cure Rights. Tenant will notify Lender in writing of any default by
Landlord under the Lease that would entitle Tenant to cancel or terminate the
Lease or abate the rents payable thereunder. Such notice shall be sent to Lender
at 2100 Ross Avenue, Suite 2500, Dallas, Texas 75201, Reference Loan
No. 703000212, certified mail, return receipt requested. Lender shall thereafter
have forty-five (45) days to cure the default by Landlord, provided that if the
default does not arise solely from the nonpayment of money and cannot reasonably
be cured within

 

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the time period set forth above, then Lender will have such additional time as
is reasonably necessary to cure the default so long as Lender commences the cure
thereof within original time period set forth above and diligently and in good
faith pursues same to completion, and so long as Tenant’s use and enjoyment of
the Demised Premises is not materially impaired during such period. Lender has
no obligation to cure any default by Landlord and shall have no liability for
not curing any default. Notwithstanding the foregoing, if Tenant shall
inadvertently fail to provide such notice of Landlord’s default or breach to
Lender, such failure shall not constitute a default of Tenant hereunder or under
the Lease, but no such notice shall be binding on Lender until actually
delivered by Tenant in accordance with the above notice provisions.

7. Exculpation of Successor Landlord. Notwithstanding anything to the contrary
in this Agreement or the Lease, Tenant shall look exclusively to Successor
Landlord’s interest in the Mortgaged Premises or any proceeds from the
disposition thereof, any rents or profits derived from the Mortgaged Premises,
or any insurance or condemnation proceeds related thereto, for the satisfaction
of Tenant’s remedies in the event of (a) default by Successor Landlord as
landlord under the Lease, (b) any indemnity obligation that arises pursuant to
the Lease, or (c) any payment or discharge of any money judgment in favor of
Tenant against Successor Landlord with respect to the Lease.

8. Rent Payment. Immediately upon written notice to Tenant (a) that Lender is
exercising its rights under the Mortgage or any other loan documents acting to
secure the Note following a default under the Loan, or (b) of Lender’s
succeeding to the Landlord’s interest under the Lease, Tenant agrees to pay all
rents due under the Lease directly to Lender in accordance with the Lease. In
such event, Landlord hereby expressly authorizes Tenant to make such payments to
Lender and further agrees that any sums paid to Lender shall be in satisfaction
of Tenant’s obligations under the Lease.

9. Complete Agreement. If this Agreement conflicts with the Lease, then as
between the Tenant and Lender only hereto, all of the terms and provisions of
this Agreement which are inconsistent with the Lease shall govern and control.

10. No Oral Modification/Binding Effect. This Agreement may not be modified
orally or in any manner other than by an agreement in writing signed by the
parties hereto or their respective successors in interest.

11. Laws. This Agreement shall be construed in accordance with the laws of the
State where the Mortgaged Premises are located.

12. Hazardous Materials. Following a Succession, Successor Landlord shall have
no liability for any misrepresentation by Landlord under Section 7.2.E of the
Lease or any obligation to indemnity Tenant under Section 7.2.E of the Lease.
However, Successor Landlord must (i) comply with all laws governing Hazardous
Materials (defined in Section 7.2.E of the Lease), (ii) store, use and dispose
of all Hazardous Materials at the Subject Premises in accordance with all
applicable Hazardous Materials Laws, and (iii) remove, remediate and/or clean
up, as applicable, in accordance with all applicable Hazardous Materials Laws
(defined in Section 7.2.E of the Lease), all Hazardous Materials at the Subject
Premises (to the extent not caused by Tenant or its employees, contractors or
agents) impairing Tenant’s use or access to the Demised Premises.

 

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13. Insurance. Pursuant to Section 9.1.B of the Lease, Landlord hereby
designates that Lender shall be an additional insured under the commercial
general liability policy of insurance required to be carried by Tenant pursuant
to Section 9.1 of the Lease. If Lender becomes a Successor Landlord, insurance
required to be carried by Landlord under the Lease may be effected by Lender or
an affiliate of Lender by self-insurance or by a policy or policies of blanket
insurance covering additional items or locations or insureds and with such
commercially reasonable deductibles as Lender may from time to time reasonably
determine. Tenant has no rights in any policy or policies maintained by Lender.

14. Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become a
binding agreement when one or more counterparts have been signed and delivered
to each of the parties.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed.

LENDER:

THE BANK OF NEW YORK MELLON, a New York banking corporation, not in its
individual capacity but solely as Trustee under the Reserve Trust Agreement for
the PICA HARTFORD LIFE & ACCIDENT COMFORT TRUST and THE BANK OF NEW YORK MELLON,
a New York banking corporation, not in its individual capacity but solely as
Trustee under the Reserve Trust Agreement for the PAR U HARTFORD LIFE & ANNUITY
COMFORT TRUST

 

By:     Prudential Asset Resources, Inc.,   a Delaware corporation Its:  
Servicer

 

By:   /s/ Cheryl Eskridge Name:   Cheryl Eskridge Title:   Vice President Dated:
  4/2, 2014

 

STATE OF TEXAS    §             §    ss.       COUNTY OF DALLAS    §         

Before me, on April 2, 2014 in and for said State, personally appeared Cheryl T.
Eskridge as Vice President of Prudential Asset Resources, Inc., a Delaware
corporation, as Servicer for The Bank of Mellon of New York, a New York banking
corporation, not in its individual capacity but solely as Trustee, personally
known to me to be the person whose name is subscribed to the within instrument
and acknowledged to me that he executed the instrument on behalf of said entity.

 

/s/ EMILY J. HODGES Notary Public

 

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TENANT:

INTEVAC, INC., a Delaware corporation

 

By:   /s/ JEFFREY ANDRESON Name:   JEFFREY ANDRESON Title:   EVP, CFO, Secretary
Dated:   March 18th, 2014

STATE OF CALIFORNIA

COUNTY OF Santa Clara

On March 18, 2014, 2014, before me, Melody Dunn, a Notary Public, personally
appeared Jeffrey Scott Andreson, who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies.), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

 

/s/ MELODY A. DUNN Signature of the Notary Public

(Seal)

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With respect to Sections 8 and 13.     LANDLORD:    

M WEST PROPCO X LLC,

a Delaware limited liability company

    By:   /s/ Steve Novick     Name:   Steve Novick     Title:   Authorized
Signatory     Dated: March 21, 2014

STATE OF CALIFORNIA

COUNTY OF San Francisco

On March 21, 2014, before me, Laura Leon, a Notary Public, personally appeared
Steve Novick, who proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

 

/s/ LAURA LEON Signature of the Notary Public

(Seal)

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Exhibit A

Lease

[See Attached]

 

A – 1