Exhibit 10.18

LEASE

 

Landlord:

  

Britannia Hacienda VIII LLC

Tenant:

  

FoxHollow Technologies, Inc.

Date:

  

November 1, 2005

TABLE OF CONTENTS

 

1.

   PROPERTY    1    1.1    Lease of Premises    1    1.2    Landlord’s Reserved
Rights    2    1.3    First Refusal Right to Lease    2

2.

   TERM    3    2.1    Term    3    2.2    Early Possession    5    2.3   
Condition of Premises    7    2.4    Acknowledgment of Rent Commencement Date   
10    2.5    Holding Over    10    2.6    Option to Extend Term    11

3.

   RENTAL    11    3.1    Minimum Rental    11      

(a)    Rental Amounts

   11      

(b)    Rental Amounts During First Extended Term

   12      

(c)    Rental Amounts During Second Extended Term

   12      

(d)    Square Footage of Premises

   12    3.2    Late Charge    12

4.

   TAXES    13    4.1    Personal Property    13    4.2    Real Property    13

5.

   OPERATING EXPENSES    14    5.1    Payment of Operating Expenses    14    5.2
   Definition of Operating Expenses    14    5.3    Determination of Operating
Expenses    16    5.4    Final Accounting for Expense Year    17    5.5   
Proration    18

6.

   UTILITIES    18    6.1    Payment    18    6.2    Interruption    18

7.

   ALTERATIONS; SIGNS    19    7.1    Right to Make Alterations    19    7.2   
Title to Alterations    19    7.3    Tenant Trade Fixtures    21    7.4    No
Liens    22    7.5    Signs    22

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8.

   MAINTENANCE AND REPAIRS    22    8.1    Landlord’s Obligation for Maintenance
   22      

(a)    Repairs and Maintenance

   22      

(b)    Tenant’s Remedy

   23    8.2    Tenant’s Obligation for Maintenance    23      

(a)    Good Order, Condition and Repair

   23      

(b)    Landlord’s Remedy

   23      

(c)    Condition upon Surrender

   24

9.

   USE OF PROPERTY    24    9.1    Permitted Use    24    9.2    [Intentionally
Deleted.]    24    9.3    No Nuisance    24    9.4    Compliance with Laws    25
   9.5    Liquidation Sales    25    9.6    Environmental Matters    25

10.

   INSURANCE AND INDEMNITY    32    10.1    Insurance    32    10.2    Quality
of Policies and Certificates    34    10.3    Workers’ Compensation; Employees
   35    10.4    Waiver of Subrogation    35    10.5    Increase in Premiums   
35    10.6    Indemnification    35    10.7    Blanket Policy    36

11.

   SUBLEASE AND ASSIGNMENT    36    11.1    Assignment and Sublease of Building
   36    11.2    Rights of Landlord    37

12.

   RIGHT OF ENTRY AND QUIET ENJOYMENT    38    12.1    Right of Entry    38   
12.2    Quiet Enjoyment    39

13.

   CASUALTY AND TAKING    39    13.1    Damage or Destruction    39    13.2   
Condemnation    41    13.3    Reservation of Compensation    42    13.4   
Restoration of Improvements    42

14.

   DEFAULT    43    14.1    Events of Default    43      

(a)    Abandonment

   43      

(b)    Nonpayment

   43      

(c)    Other Obligations

   43      

(d)    General Assignment

   43      

(e)    Bankruptcy

   43      

(f)     Receivership

   43      

(g)    Attachment

   44      

(h)    Insolvency

   44    14.2    Remedies upon Tenant’s Default    44

 

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   14.3    Remedies Cumulative    45

15.

   SUBORDINATION, ATTORNMENT AND SALE    45    15.1    Subordination to Mortgage
   45    15.2    Sale of Landlord’s Interest    46    15.3    Estoppel
Certificates    46    15.4    Subordination to CC&R’s    46    15.5    Mortgagee
Protection    47

16.

   SECURITY    48    16.1    Deposit    48      

(a)    Cash Security Deposit

   48      

(b)    Letter of Credit

   48      

(c)    Adjustment of Security Deposit

   50

17.

   MISCELLANEOUS    50    17.1    Notices    50    17.2    Successors and
Assigns    51    17.3    No Waiver    51    17.4    Severability    51    17.5
   Litigation Between Parties    52    17.6    Surrender    52    17.7   
Interpretation    52    17.8    Entire Agreement    52    17.9    Governing Law
   52    17.10    No Partnership    52    17.11    Financial Information    52
   17.12    Costs    53    17.13    Time    53    17.14    Rules and Regulations
   53    17.15    Brokers    54    17.16    Memorandum of Lease    54    17.17
   Corporate Authority    54    17.18    Execution and Delivery    54    17.19
   Survival    54    17.20    Parking    54    17.21    Approvals    55

 

EXHIBITS

  

EXHIBIT A-1

  

Site Plan (The Center)

EXHIBIT A-2

  

Building Plan

EXHIBIT A-3

  

Clean Room Priority Construction Area

EXHIBIT B

  

Workletter

EXHIBIT C

  

Form of Acknowledgment of Rent Commencement Date

 

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LEASE

THIS LEASE (“Lease”) is made and entered into as of November 1, 2005, by and
between BRITANNIA HACIENDA VIII LLC, a Delaware limited liability company
(“Landlord”), and FOXHOLLOW TECHNOLOGIES, INC., a Delaware corporation
(“Tenant”).

THE PARTIES AGREE AS FOLLOWS:

1. PROPERTY

1.1 Lease of Premises.

(a) Landlord leases to Tenant and Tenant hires and leases from Landlord, on the
terms, covenants and conditions hereinafter set forth, the premises (the
“Premises”) consisting of approximately 124,274 square feet of space
constituting the building commonly known as 2081 Stierlin Court (the “Building”)
located in the Britannia Shoreline Technology Park (referred to interchangeably
herein as the “Center” or the “Property”) in the City of Mountain View, County
of Santa Clara, State of California. The location of the Premises within the
Center is depicted on the site plan attached hereto as Exhibit A-l and
incorporated herein by this reference (the “Site Plan”). The outline or
footprint of the Building is depicted on the building plan attached hereto as
Exhibit A-2 and incorporated herein by this reference (the “Building Plan”). The
parking areas, driveways, sidewalks, landscaped areas and other portions of the
Center that lie outside the exterior walls of the buildings now or hereafter
existing from time to time in the Center, as depicted in the Site Plan and as
hereafter modified by Landlord from time to time in accordance with the
provisions of this Lease, are sometimes referred to herein as the “Common
Areas.” Such Common Areas include, but are not limited to, the “recreational
area” which is maintained by Landlord in the area between the buildings at 2023
Stierlin Court and 2025 Stierlin Court, provided that the right of Tenant and
other occupants of the Center to use such “recreational area” is subject to the
right of the City of Mountain View to require that a portion of the recreational
area be paved and converted to parking use at a time to be determined at the
discretion of the City.

(b) As an appurtenance to Tenant’s leasing of the Premises pursuant to
Section 1.1 (a), Landlord hereby grants to Tenant, for the benefit of Tenant and
its employees, suppliers, shippers, customers and invitees, during the term of
this Lease, the non-exclusive right to use, in common with others entitled to
such use, (i) those portions of the Common Areas improved from time to time for
use as parking areas, driveways, sidewalks, landscaped areas, or for other
common purposes, and (ii) all access easements and similar rights and privileges
relating to or appurtenant to the Center and created or existing from time to
time under any access easement agreements, declarations of covenants, conditions
and restrictions, or other written agreements now or hereafter of record with
respect to the Center, subject however to any limitations applicable to such
rights and privileges under applicable law, under this Lease and/or under the
written agreements creating such rights and privileges.

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1.2 Landlord’s Reserved Rights. To the extent reasonably necessary to permit
Landlord to exercise any rights of Landlord and discharge any obligations of
Landlord under this Lease, Landlord shall have, in addition to the right of
entry set forth in Section 12.1 hereof, the following rights: (i) to make
changes to the Common Areas, including, without limitation, changes in the
location, size or shape of any portion of the Common Areas, and to construct
and/or relocate parking structures and/or parking spaces in the Center; (ii) to
close temporarily any of the Common Areas for maintenance or other reasonable
purposes; (iii) to construct, alter or add to other buildings and Common Area
improvements in the Center; (iv) to use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Center or any portion
thereof; and (v) to do and perform such other acts with respect to the Common
Areas and the Center as may be necessary or appropriate. Landlord shall not
exercise rights reserved to it pursuant to this Section 1.2 in such a manner as
to cause any material diminution of Tenant’s rights, or any material increase of
Tenant’s obligations, under this Lease, or in such a manner as to leave Tenant
without reasonable parking or reasonable access to the Premises or otherwise to
materially impair Tenant’s ability to conduct its activities in the normal
manner; provided, however, that the foregoing shall not limit or restrict
Landlord’s right to undertake reasonable construction activity and Tenant’s use
of the Premises shall be subject to reasonable temporary disruption incidental
to such activity diligently prosecuted.

1.3 First Refusal Right to Lease.

(a) The building commonly known as 2091 Stierlin Court and designated as “First
Refusal Building” on the Site Plan (the “First Refusal Building”), consisting of
approximately 65,604 square feet, is presently leased and occupied by an
existing tenant (the “Existing Tenant”) pursuant to a written lease agreement
(as it now exists and as it may be amended from time to time, the “Existing
Lease”). Landlord shall not lease all or any portion of the First Refusal
Building at any time during the term of this Lease (including any extended
terms, if applicable), except in compliance with this Section 1.3; provided,
however, that the foregoing restriction shall not apply during any period in
which Tenant is in default under this Lease, beyond any applicable notice and
cure periods, and provided further, however, that Tenant’s rights pursuant to
this Section 1.3 are subordinate to the rights of the Existing Tenant and its
successors in interest (if any) pursuant to the Existing Lease.

(b) If, at any time during the term of this Lease (including any extended terms,
if applicable), Landlord receives and wishes to accept a bona fide written offer
from a person or entity (an “Offeror,” provided, however, that the term
“Offeror” shall not include Tenant itself, nor shall it include the Existing
Tenant with respect to any rights or negotiations under the Existing Lease) to
lease all or any portion of the First Refusal Building, or if Landlord and a
third party otherwise have agreed upon the terms for such a lease, and if in
either such event Tenant is not then in default under this Lease (beyond any
applicable notice and cure periods), then Landlord shall give written notice of
such bona fide written offer or agreement to Tenant (the “First Refusal
Notice”), specifying the material terms on which the Offeror proposes to lease
the First Refusal Building or applicable portion thereof (a “First Refusal
Space”), and shall offer to Tenant the opportunity to lease such First Refusal
Space on the terms specified in the First Refusal Notice. For purposes of this
Section 1.3(b), an offer shall be considered bona fide if it is contained in a
letter of intent or other writing signed by the Offeror

 

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and specifies the material terms of the proposed lease. Tenant shall have ten
(10) business days after the date of giving of the First Refusal Notice in which
to accept such offer by written notice to Landlord. Upon such acceptance by
Tenant, the First Refusal Space shall be leased to Tenant on the terms set forth
in the First Refusal Notice and on the additional terms and provisions set forth
in this Lease (except to the extent inconsistent with the terms set forth in the
First Refusal Notice), and the parties shall promptly (and in all events within
ten (10) business days after delivery of Tenant’s acceptance) execute a lease
amendment or other written agreement containing the terms of the First Refusal
Notice and containing or incorporating all other terms and provisions of this
Lease not inconsistent with the terms of said First Refusal Notice, except as
the parties may otherwise mutually agree; provided, however, that the failure of
the parties to execute such a lease amendment or other agreement shall not
impair the validity or the legally binding nature of Tenant’s leasing of the
First Refusal Space pursuant to its acceptance of the offer set forth in the
First Refusal Notice, and Tenant’s written acceptance of such offer shall be
sufficient to cause the parties to be mutually bound by Tenant’s leasing of the
First Refusal Space on the terms set forth in the First Refusal Notice and on
the additional terms and provisions set forth in this Lease (except to the
extent inconsistent with the terms set forth in the First Refusal Notice). If
Tenant does not accept Landlord’s offer within the allotted time, Landlord shall
thereafter have the right to lease the First Refusal Space to the Offeror or to
any other third party, at any time within one hundred eighty (180) days after
the expiration of Landlord’s offer under the First Refusal Notice, at a minimum
rental and on other terms and conditions not materially more favorable to the
lessee than the minimum rental and other terms offered to Tenant in the First
Refusal Notice. If, in the course of negotiations with the Offeror or another
third party during the 180-day period described in the preceding sentence,
Landlord wishes to modify the minimum rental or other terms set forth in the
First Refusal Notice in a manner materially more favorable to the Offeror or
other third party than the minimum rental or other terms set forth in the First
Refusal Notice, then Landlord shall be required to re-offer the First Refusal
Space to Tenant on such more favorable terms pursuant to a new First Refusal
Notice, but Tenant’s time to respond to such new First Refusal Notice shall be
limited to five (5) business days. If Landlord does not lease the First Refusal
Space to the Offeror or another third party during the 180-day period described
above, or if Landlord leases the First Refusal Space to the Offeror or another
third party and Landlord later, upon expiration or termination of such lease,
again wishes to lease the First Refusal Space or any portion thereof during the
term of this Lease (including any extended terms, if applicable), then in either
such event this First Refusal Right shall reattach to the First Refusal Space on
all of the same terms set forth above.

2. TERM

2.1 Term.

(a) The term of this Lease shall commence on the earlier to occur of (i) the
later of January 1, 2007 or eleven (11) months following the Construction Access
Date (as defined below), or (ii) the date on which Tenant Commences Material
Business Operations (as defined below) in the Premises (the earlier of the
applicable dates determined under the foregoing clauses (i) and (ii) being
hereinafter referred to as the “Rent Commencement Date”) and shall end on the
day immediately preceding the tenth (10th) anniversary of the Rent Commencement
Date (the “Termination Date”), unless sooner terminated or extended as

 

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hereinafter provided. The phrase “Commence(s) Material Business Operations”
shall mean Tenant’s commencement of actual business operations in at least a
material portion of the Premises; provided, however, that Tenant shall not be
deemed to have Commenced Material Business Operations in the Premises to the
extent Tenant’s activities in the Premises consist solely of activities
reasonably related to the pursuit of full certification of the Premises by the
Food and Drug Administration for the manufacturing of medical devices in the
Premises (which activities may include the use of Tenant’s manufacturing
facilities to manufacture test products or sample products as part of such
certification process) and do not involve either (x) the manufacture of products
for sale or distribution in the normal course of Tenant’s business or (y) the
use of non-manufacturing space to a material extent for purposes other than
those reasonably related to the pursuit of full FDA certification as described
above.

(b) Notwithstanding the foregoing provisions:

(i) The Rent Commencement Date shall be delayed by one (1) day for each day, if
any, by which Tenant’s ability to Commence Material Business Operations in the
Premises is delayed beyond the later of January 1, 2007 or eleven (11) months
following the Construction Access Date by one or more Landlord Delays. “Landlord
Delay” means any actual and material delay in completion of Tenant’s
construction of the Tenant Improvements to the extent caused by (i) any delay by
Landlord, beyond the applicable response periods prescribed in the Workletter
(as defined below), in responding to any request by Tenant for approval of
plans, specifications or changes pursuant to the Workletter, or (ii) any delay,
after the Construction Access Date, in the completion of Landlord’s Work (as
defined below); provided that no Landlord Delay shall be deemed to commence
prior to the later to occur of (x) the date of actual commencement of the actual
and material delay in completion of Tenant’s construction of the Tenant
Improvements or (y) the date Tenant notifies Landlord in writing that Tenant
believes a Landlord Delay has commenced, which notice shall describe in
reasonable detail the nature of the event claimed by Tenant to constitute the
Landlord Delay and the nature of the actual delay claimed by Tenant to be
occurring in Tenant’s construction of the Tenant Improvements.

(ii) The Rent Commencement Date shall be delayed by one-half (1/2) day for each
full day, if any, by which Tenant’s ability to Commence Material Business
Operations in the Premises is delayed beyond the later of January 1, 2007 or
eleven (11) months following the Construction Access Date by one or more Force
Majeure Delays; provided, however, that the maximum extension of the Rent
Commencement Date pursuant to this subparagraph (ii) shall be thirty (30) days
(corresponding to a maximum delay of sixty (60) days attributable to Force
Majeure Delays). “Force Majeure Delay” means any actual and material delay in
completion of Tenant’s construction of the Tenant Improvements to the extent
caused by (A) fire, flood, earthquake or other acts of God, or (B) strikes,
embargoes or inability (despite the exercise of reasonable diligence) to obtain
required materials or supplies; provided, however, that in each case, Force
Majeure Delay shall exclude any such event or circumstance to the extent within
the reasonable control of Tenant; and provided further that no Force Majeure
Delay shall be deemed to commence prior to the later to occur of (x) the date of
actual commencement of the actual

 

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and material delay in completion of Tenant’s construction of the Tenant
Improvements or (y) the date Tenant notifies Landlord in writing that Tenant
believes a Force Majeure Delay has commenced, which notice shall describe in
reasonable detail the nature of the event claimed by Tenant to constitute a
Force Majeure Delay and the nature of the actual delay claimed by Tenant to be
occurring in Tenant’s construction of the Tenant Improvements. In no event shall
any delays by the City of Mountain View, the Food and Drug Administration or any
other governmental agency or authority in reviewing Tenant’s plans and
specifications and/or in issuing any applicable permits, approvals or
certifications with respect to the Tenant Improvements constitute Force Majeure
Delays hereunder.

(iii) In applying the provisions of subparagraphs (b)(i) and (ii) above and
Section 2.2(a)(iii) below, (A) references to Tenant’s “ability to Commence
Material Business Operations” (emphasis added) shall mean Tenant’s ability
(including, but not limited to, substantial completion of all necessary Tenant
Improvements and receipt of all necessary governmental authorizations and
certifications) to commence business operations which include the manufacture of
products for sale or distribution in the normal course of Tenant’s business;
(B) Tenant and Landlord shall each use reasonable, good faith efforts to
identify and adopt any commercially reasonable “work arounds” or alternative
plans to avoid or minimize the adverse impact of any Landlord Delays or Force
Majeure Delays, provided that the phrase “commercially reasonable” shall not be
construed to require either party to incur any material increase in such party’s
costs, net of any economic benefits reasonably accruing to such party, in order
to mitigate the effects of a Landlord Delay or Force Majeure Delay; and (C) if
both Landlord Delays and Force Majeure Delays occur, the provisions of
subparagraph (b)(ii) [Force Majeure Delay] shall be applied first, and the
provisions of subparagraph (b)(i) [Landlord Delay] shall be applied separately
and cumulatively only to the extent such Landlord Delay causes a separate and
cumulative actual delay of the kind contemplated in such subparagraphs, and
shall not be applied to the extent any periods of actual delay are overlapping
rather than cumulative.

2.2 Early Possession. Tenant shall have the right to enter and use the Premises
for the purpose of constructing tenant improvements in the Premises (subject to
all the terms and conditions of Article 7 below and of the Workletter as defined
below), installing fixtures and furniture, laboratory equipment, computer
equipment, telephone equipment, low-voltage data wiring and personal property
and performing other similar work preparatory to the commencement of Tenant’s
business in the Premises, beginning upon the date Landlord notifies Tenant in
writing that the Premises are available for such early access by Tenant (the
“Construction Access Date”), which Construction Access Date shall in all events
be no later than thirty (30) days after the Premises have been fully vacated by
the existing tenant. Such right of Tenant to enter early to construct tenant
improvements shall be subject to Landlord’s right concurrently to perform or
complete the performance of Landlord’s Work. Tenant’s early occupancy and
possession pursuant to this Section 2.2 shall be subject to and upon all of the
terms and conditions of this Lease (including, but not limited to, conditions
relating to the payment of utilities and maintenance of required insurance by
Tenant), except that Tenant shall

 

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have no obligation to pay minimum rental for any period prior to the Rent
Commencement Date, Tenant shall have no obligation to pay Operating Expenses for
any period prior to January 1, 2007 (as provided in Section 5.3 below), and such
early possession shall not advance or otherwise affect the Rent Commencement
Date or Termination Date determined under Section 2.1. Tenant shall indemnify
Landlord and its agents and employees to the extent provided in Section 10.6(a)
below and in Paragraph 4(c) of the Workletter in connection with Tenant’s early
entry upon the Premises hereunder.

(a) During all periods when both parties and/or their respective contractors or
consultants are concurrently performing work on the Property or in the Premises
prior to the Rent Commencement Date, subject to the express provisions of this
paragraph (a) and its subparagraphs, neither party shall unreasonably interfere
with or delay the work of the other party and/or its contractors or consultants,
and both parties shall mutually coordinate and cooperate with each other, and
shall cause their respective contractors and consultants to work in harmony with
and to mutually coordinate and cooperate with the other’s contractors and
consultants, respectively, to minimize any interference or delay by either party
with respect to the other party’s work. The coordination and cooperation
obligations set forth in this paragraph shall be subject to the following:

(i) As Tenant proceeds with the design and planning of the Tenant Improvements
pursuant to the Workletter and as Landlord proceeds with its planning for
Landlord’s Work pursuant to Section 2.3(a) below, the parties agree to cooperate
diligently, reasonably and in good faith to develop a mutually agreeable
construction schedule for Landlord’s Work and for the Tenant Improvements (any
such construction schedule mutually approved by the parties, and as modified
from time to time [if applicable] by mutual agreement of the parties, being
referred to in this Lease as the “Approved Construction Schedule”). To the
extent Landlord completes and delivers the principal elements of Landlord’s Work
within the time deadlines established in the Approved Construction Schedule (if
any), it shall be conclusively presumed that the timing of Landlord’s completion
and delivery of such elements did not give rise to any Landlord Delay. If the
parties fail or are unable to agree upon an Approved Construction Schedule, such
failure or inability shall not affect or impair in any manner the validity of
this Lease and the Workletter, or of the respective obligations of the parties
hereunder and thereunder.

(ii) During the period prior to the earlier to occur of (A) Landlord’s
substantial completion of any seismic upgrade work undertaken by Landlord
(whether on a voluntary basis or in compliance with applicable legal
requirements) as part of Landlord’s Work or (B) April 1, 2006 (the “Landlord
Priority Period”), in the event of any irreconcilable conflict or interference
between the work of Landlord’s workers, mechanics and contractors and the work
of Tenant’s workers, mechanics and contractors, Landlord and Tenant shall
resolve such conflict or interference by a reasonable resequencing or
rescheduling of Tenant’s remaining work to avoid the conflict or interference.
After the Landlord Priority Period, in the event of any irreconcilable conflict
or interference between the work of Landlord’s workers, mechanics and
contractors and the work of Tenant’s workers, mechanics and contractors,
Landlord and

 

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Tenant shall resolve such conflict or interference by a reasonable resequencing
or rescheduling of Landlord’s remaining work to avoid the conflict or
interference.

(iii) Notwithstanding subparagraphs (i) and (ii) above, in the event Tenant, as
a result of Landlord’s Work, is unable to commence Tenant’s construction of
Tenant Improvements in the area designated as the “Clean Room Priority
Construction Area” on Exhibit A-3 attached hereto and incorporated herein by
this reference (which Clean Room Priority Construction Area is the area of
primary activity associated with Tenant’s initial installation of clean room
infrastructure and construction of clean room facilities as part of the first
phase of the Tenant Improvements) by February 1, 2006, or is materially hindered
or delayed after February 1, 2006 in continuing with the construction of such
Tenant Improvements in the Clean Room Priority Construction Area, and if such
delay(s) caused by Landlord’s Work result in an actual and material delay in
Tenant’s ability to Commence Material Business Operations in the Premises beyond
the later of January 1, 2007 or eleven (11) months following the Construction
Access Date, then such delay shall constitute a Landlord Delay subject to
Section 2.1(b)(i).

(b) In the event the Construction Access Date does not occur for any reason on
or before April 1, 2006, then Tenant shall have the right to terminate this
Lease upon written notice at any time after April 1, 2006 and prior to the
occurrence of the Construction Access Date, and in the event Tenant timely
elects such termination, this Lease shall terminate and Landlord shall return
promptly to Tenant all letters of credit or other security and all prepaid rent
(if any) paid by Tenant pursuant to this Lease.

2.3 Condition of Premises. Tenant has had an opportunity to inspect the
condition of the Premises and agrees to accept the Premises “as is” in their
condition existing as of the date of this Lease, without any obligation on the
part of Landlord to improve, alter, repair or clean the Premises in any way for
Tenant’s occupancy hereunder, except as otherwise expressly provided herein.
Notwithstanding the foregoing:

(a) Landlord shall deliver the Premises and all Building systems and existing
improvements in “as is” condition, except that Landlord shall, at Landlord’s
sole expense, perform all work necessary to cause the following (collectively,
“Landlord’s Work”) to be true as soon as practicable after the Construction
Access Date (and in all events prior to the Rent Commencement Date) and to
remain true through the date which is six (6) months after the Rent Commencement
Date; provided, however, that to the extent any of the following becomes untrue
after delivery of Landlord’s Completion Notice (as defined below) as a result of
any modifications or improvements made by Tenant or its contractors (subject to
the provisions of Section 2.3(d) below), or as a result of any damage occurring
in the course of Tenant’s use or occupancy of the Premises (including [without
limitation] damage arising from excessive use, misuse, negligence or willful
misconduct by Tenant or its contractors or employees, or as a result of any
failure by Tenant to observe reasonable and customary preventive maintenance
procedures, or from any other similar cause, but excluding any damage in the
nature of ordinary wear and tear, which for purposes of this provision shall be
construed to include [without limitation] system or equipment failures, defects
or other operational deficiencies to the extent arising or occurring in the
course of ordinary use and operation of Building systems and existing

 

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improvements in an ordinary and reasonable manner and not attributable to the
kinds of aggravating factors listed at the beginning of this parenthetical),
then Landlord shall not be responsible for correction of the applicable
conditions under this Section 2.3 and the responsibilities of the parties with
respect to the repair or correction of the applicable conditions shall instead
be governed by Article 8 and any other applicable provisions of this Lease other
than this Section 2.3:

(i) the Building roof shall be in good and watertight condition;

(ii) the structural elements of the Building and all existing Building systems
(including, but not limited to, mechanical, electrical, plumbing and life safety
systems), utilities serving the Premises, Building glazing, Building roll-up
doors and other existing improvements in the Premises shall be in good working
condition and operable in their current locations (provided that nothing in this
subparagraph (ii) shall require Landlord to perform any seismic upgrade of the
Building structure which is not otherwise required under applicable law);

(iii) the walkways, parking lots, driveways and landscaping in the Common Areas
shall be in good working condition; and

(iv) the Premises and existing improvements therein, as delivered to Tenant,
shall comply and conform with all applicable laws, ordinances, regulations and
building codes (including, but not limited to, the Americans with Disabilities
Act (“ADA”)).

To the extent it is not reasonably practicable for Landlord’s Work to be
completed by the Construction Access Date, Landlord shall thereafter continue to
proceed diligently and with reasonable efforts to complete Landlord’s Work as
promptly as practicable thereafter, and Landlord and Tenant shall continue to
cooperate reasonably and in good faith with one another (and cause their
respective consultants and contractors to cooperate reasonably and in good faith
with one another) in the manner described in Section 2.2 above in connection
with the concurrent performance of their respective work in the Building.
Following Landlord’s written notice to Tenant that Landlord has completed
Landlord’s Work and is delivering the Premises and the existing Building systems
and improvements in the condition required above in this paragraph (“Landlord’s
Completion Notice”), Tenant shall thereafter during the term of this Lease be
responsible (subject, however, to any corrective obligations of Landlord as
expressly set forth in this Section 2.3) for maintenance, repair and/or
replacement of all such systems and improvements to the extent required in
accordance with Article 8 hereof. Notwithstanding the preceding sentence, if
Landlord’s obligations with respect to Landlord’s Work under this paragraph are
violated in any respect, then it shall be the obligation of Landlord, after
receipt of written notice from Tenant setting forth with specificity the nature
of the violation, to correct promptly and diligently, at Landlord’s sole cost,
the condition(s) constituting such violation; provided, however, that Tenant’s
failure to give such written notice to Landlord regarding any alleged violation
within six (6) months after the Rent Commencement Date shall give rise to a
conclusive and irrebuttable presumption that Landlord has complied with all
Landlord’s obligations under this paragraph. TENANT ACKNOWLEDGES THAT THE
WARRANTIES

 

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AND/OR OBLIGATIONS CONTAINED IN THIS SECTION 2.3 ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION OF THE
PREMISES, BUILDING SYSTEMS AND EXISTING IMPROVEMENTS IN THE PREMISES, AND THAT
LANDLORD MAKES NO OTHER WARRANTIES EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION
2.3.

(b) As set forth in the Workletter attached hereto as Exhibit B and incorporated
herein by this reference (the “Workletter”), Landlord shall provide Tenant with
a tenant improvement allowance in the amount of up to Nine Million Nine Hundred
Forty-One Thousand Nine Hundred Twenty Dollars ($9,941,920) (the “Tenant
Improvement Allowance”) towards the construction of Tenant Improvements by
Tenant in the Premises. Tenant’s construction of such Tenant Improvements shall
be governed by the provisions of Article 7 hereof and of the Workletter, and
such Tenant Improvements shall be constructed in compliance with all of the
provisions thereof (including, without limitation, all conditions relating to
Landlord’s approval of plans and specifications), as well as the provisions of
this Section 2.3. The Tenant Improvement Allowance shall not be used or useable
by Tenant for any moving or relocation expenses of Tenant, or for any cost or
expense associated with any moveable furniture, trade fixtures, personal
property or any other item or element which, under the applicable provisions of
this Lease, will not become Landlord’s property and remain with the Building
upon expiration or termination of this Lease. Any portion of the Tenant
Improvement Allowance which has not been claimed or drawn by Tenant as of the
later of (i) January 1, 2012 or (ii) the date which is five (5) years after the
Rent Commencement Date shall expire and shall no longer be available to Tenant
thereafter. Additional conditions and procedures relating to the disbursement of
the Tenant Improvement Allowance shall be as set forth in the Workletter or as
otherwise reasonably prescribed in writing by Landlord. The Tenant Improvement
Allowance is provided as part of the basic consideration to Tenant under this
Lease and will not result in any rental adjustment or additional rent beyond the
rental amounts expressly provided in Section 3.1 hereof, nor shall any
expiration of any portion of the Tenant Improvement Allowance as provided above
result in any credit against or other adjustment with respect to the rental
amounts set forth in Section 3.1 hereof.

(c) Landlord warrants to Tenant that the Premises as they exist on the date of
Landlord’s Completion Notice, but without regard to Tenant’s improvements
therein or to the particular use for which Tenant will occupy the Premises,
shall not violate any covenants or restrictions of record, and shall comply and
conform with all applicable laws, building codes, regulations and ordinances in
effect on the date of Landlord’s Completion Notice. Tenant warrants to Landlord
that the Tenant Improvements and any other improvements constructed by Tenant
from time to time shall comply and conform with all applicable laws, building
codes, regulations and ordinances in effect at the time such improvements are
placed in service. Without limiting the generality of the foregoing, the parties
acknowledge that Landlord shall be responsible for ADA and building code
compliance and conformance for all improvements in the Building and Common Areas
as they exist on the date of Landlord’s Completion Notice (except to the extent,
if any, that the compliance and conformance of such improvements in the Building
and/or Common Areas are affected by the improvements constructed by Tenant or by
Tenant’s particular use of the Premises) and that Tenant shall be responsible
for ADA and building code

 

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compliance required in connection with or as a result of improvements
constructed by Tenant. If it is determined that any of these warranties has been
violated, then it shall be the obligation of the warranting party, after written
notice from the other party, to correct the condition(s) constituting such
violation promptly, at the warranting party’s sole cost and expense. TENANT
ACKNOWLEDGES THAT EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE, NEITHER LANDLORD
NOR ANY AGENT OF LANDLORD HAS MADE ANY REPRESENTATION OR WARRANTY AS TO THE
PRESENT OR FUTURE SUITABILITY OF THE CENTER OR THE PREMISES FOR THE CONDUCT OF
TENANT’S BUSINESS OR PROPOSED BUSINESS THEREIN.

(d) Paragraph 2(b) of the Workletter contains various specific provisions
regarding the allocation of certain costs and of certain legal compliance
responsibilities between Landlord and Tenant. The provisions of this Section 2.3
with respect to legal compliance responsibilities and expenses are subject to
such specific allocation provisions set forth in the Workletter, which
provisions are incorporated herein and shall be deemed to be part of this
Section 2.3 as if fully set forth herein.

2.4 Acknowledgment of Rent Commencement Date. Promptly following the Rent
Commencement Date, Landlord and Tenant shall execute a written acknowledgment of
the Rent Commencement Date, Termination Date and related matters, substantially
in the form attached hereto as Exhibit C (with appropriate insertions), which
acknowledgment shall be deemed to be incorporated herein by this reference.
Notwithstanding the foregoing requirement, the failure of either party to
execute such a written acknowledgment shall not affect the determination of the
Rent Commencement Date, Termination Date and related matters in accordance with
the provisions of this Lease.

2.5 Holding Over. If Tenant holds possession of the Premises or any portion
thereof after the term of this Lease with Landlord’s written consent, then
except as otherwise specified in such consent, Tenant shall become a tenant from
month to month at one hundred twenty-five percent (125%) of the minimum rental
and otherwise upon the terms herein specified for the period immediately prior
to such holding over and shall continue in such status until the tenancy is
terminated by either party upon not less than thirty (30) days prior written
notice. If Tenant holds possession of the Premises or any portion thereof after
the term of this Lease without Landlord’s written consent, then Landlord in its
sole discretion may elect (by written notice to Tenant) to have Tenant become a
tenant either from month to month or at will, at one hundred fifty percent
(150%) of the minimum rental (prorated on a daily basis for an at-will tenancy,
if applicable) and otherwise upon the terms herein specified for the period
immediately prior to such holding over, or may elect to pursue any and all legal
remedies available to Landlord under applicable law with respect to such
unconsented holding over by Tenant. Tenant shall indemnify and hold Landlord
harmless from any loss, damage, claim, liability, cost or expense (including
reasonable attorneys’ fees) resulting from any delay by Tenant in surrendering
the Premises or any portion thereof, including but not limited to any claims
made by a succeeding tenant by reason of such delay. Acceptance of rent by
Landlord following expiration or termination of this Lease shall not constitute
a renewal of this Lease.

 

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2.6 Option to Extend Term. Tenant shall have the option to extend the term of
this Lease, at the minimum rental set forth in Section 3.1 (b) or (c) (as
applicable) and otherwise upon all the terms and provisions set forth herein
with respect to the initial term of this Lease, for up to two (2) additional
periods of five (5) years each, the first commencing upon the expiration of the
initial term hereof and the second commencing upon the expiration of the first
extended term hereof. Exercise of such option with respect to the first extended
term shall be by written notice to Landlord at least nine (9) months and not
more than twelve (12) months prior to the expiration of the initial term hereof.
Exercise of such option with respect to the second extended term shall be by
written notice to Landlord at least nine (9) months and not more than twelve
(12) months prior to the expiration of the first extended term hereof. If Tenant
is in default hereunder, beyond any applicable notice and cure periods, on the
date of such notice or on the date the applicable extended term is to commence,
then the exercise of the applicable option shall be of no force or effect, the
extended term shall not commence and this Lease shall expire at the end of the
then current term hereof (or at such earlier time as Landlord may elect pursuant
to the default provisions of this Lease). If Tenant properly exercises one or
both extension options under this Section, then all references in this Lease
(other than in this Section 2.6) to the “term” of this Lease shall be construed
to include the extension term(s) thus elected by Tenant. Except as expressly set
forth in this Section 2.6, Tenant shall have no right to extend the term of this
Lease beyond its prescribed term.

3. RENTAL

3.1 Minimum Rental.

(a) Rental Amounts. Tenant shall pay to Landlord as minimum rental for the
Premises, in advance, without deduction, offset, notice or demand, on or before
the Rent Commencement Date and on or before the first day of each subsequent
calendar month of the initial term of this Lease, the following amounts per
month:

 

Months

   PSF/mo   

Monthly

Minimum Rental

01- 03

   $ 2.869    $ 356,542.11

04- 12

   $ 2.46    $ 305,714.04

13- 24

   $ 2.50    $ 310,685.00

25- 36

   $ 2.54    $ 315,655.96

37- 48

   $ 2.59    $ 321,869.66

49- 60

   $ 2.63    $ 326,840.62

61- 72

   $ 2.68    $ 333,054.32

73- 84

   $ 2.72    $ 338,025.28

85- 96

   $ 2.77    $ 344,238.98

97- 108

   $ 2.82    $ 350,452.68

109- 120

   $ 2.87    $ 356,666.38

If the obligation to pay minimum rental hereunder for the initial term or for
any renewal term commences on other than the first day of a calendar month or if
the initial term or any renewal

 

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term of this Lease terminates on other than the last day of a calendar month,
the minimum rental for such first or last month of the applicable initial or
renewal term of this Lease, as the case may be, shall be prorated based on the
number of days the applicable term of this Lease is in effect during such month.
If an increase in minimum rental becomes effective on a day other than the first
day of a calendar month, the minimum rental for that month shall be a blend of
the two applicable rates, each prorated for the portion of the month during
which such rate is in effect.

(b) Rental Amounts During First Extended Term. If Tenant properly exercises its
first renewal option pursuant to Section 2.6 hereof, then the monthly minimum
rental during the first extended term shall be as follows:

 

Months

   PSF/mo    Monthly
Minimum Rental

01 - 12

   $ 2.93    $ 364,122.82

13- 24

   $ 2.99    $ 371,579.26

25- 36

   $ 3.05    $ 379,035.70

37- 48

   $ 3.11    $ 386,492.14

49- 60

   $ 3.17    $ 393,948.48

(c) Rental Amounts During Second Extended Term. If Tenant properly exercises its
second renewal option pursuant to Section 2.6 hereof, then the monthly minimum
rental during the second extended term shall be as follows:

 

Months

   PSF/mo    Monthly
Minimum Rental

01- 12

   $ 3.23    $ 401,405.02

13- 24

   $ 3.30    $ 410,104.42

25- 36

   $ 3.37    $ 418,803.38

37- 48

   $ 3.43    $ 426,259.82

49- 60

   $ 3.50    $ 434,959.00

(d) Square Footage of Premises. The Building and Premises were fully constructed
prior to the date of this Lease, have been measured by Landlord’s Architect and,
applying the measurement formula customarily used by Landlord to measure square
footage of buildings in the Center, have been determined to contain 124,274
square feet, which measurement is final and binding on the parties, is hereby
accepted by the parties for all purposes under this Lease and is not subject to
remeasurement or adjustment.

3.2 Late Charge. If Tenant fails to pay when due rental or other amounts due
Landlord hereunder, such unpaid amounts shall bear interest for the benefit of
Landlord at a rate equal to the lesser of ten percent (10%) per annum or the
maximum rate permitted by law, from the date due to the date of actual payment.
In addition to such interest, Tenant shall pay to Landlord a late charge in an
amount equal to five percent (5%) of any installment of minimum rental and any
other amounts due Landlord if not paid in full on or before the fifth (5th) day
after

 

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such rental or other amount is due; provided, however, that for the first
instance of late payment during any period of twelve (12) consecutive calendar
months during the term of this Lease, Tenant shall not be required to pay such
late charge unless Tenant has failed to pay the past-due amount within three
(3) days after Landlord has given Tenant written notice that such amount is past
due. Tenant acknowledges that late payment by Tenant to Landlord of rental or
other amounts due hereunder will cause Landlord to incur costs not contemplated
by this Lease, including, without limitation, processing and accounting charges
and late charges which may be imposed on Landlord by the terms of any loan
relating to the Center. Tenant further acknowledges that it is extremely
difficult and impractical to fix the exact amount of such costs and that the
late charge set forth in this Section 3.2 represents a fair and reasonable
estimate thereof. Acceptance of any late charge by Landlord shall not constitute
a waiver of Tenant’s default with respect to overdue rental or other amounts,
nor shall such acceptance prevent Landlord from exercising any other rights and
remedies available to it. Acceptance of rent or other payments by Landlord shall
not constitute a waiver of late charges or interest accrued with respect to such
rent or other payments or any prior installments thereof, nor of any other
defaults by Tenant, whether monetary or non-monetary in nature, remaining
uncured at the time of such acceptance of rent or other payments.

4. TAXES

4.1 Personal Property. From and after the Rent Commencement Date (or, in the
case of items brought onto the Property by Tenant prior to the Rent Commencement
Date, from and after the date such items are brought onto the Property by
Tenant), Tenant shall be responsible for and shall pay prior to delinquency all
taxes and assessments levied against or by reason of any and all alterations,
additions and items existing on or in the Premises from time to time during the
term of this Lease and taxed as personal property rather than as real property,
including (but not limited to) all personal property, trade fixtures and other
property placed by Tenant on or about the Premises. Upon request by Landlord,
Tenant shall furnish Landlord with satisfactory evidence of Tenant’s payment
thereof. If at any time during the term of this Lease any of said alterations,
additions or personal property, whether or not belonging to Tenant, shall be
taxed or assessed as part of the Center, then such tax or assessment shall be
paid by Tenant to Landlord within fifteen (15) days after presentation by
Landlord of copies of the tax bills in which such taxes and assessments are
included and shall, for the purposes of this Lease, be deemed to be personal
property taxes or assessments under this Section 4.1.

4.2 Real Property. To the extent any real property taxes and assessments on the
Premises are assessed directly to Tenant, Tenant shall be responsible for and
shall pay prior to delinquency all such taxes and assessments levied against the
Premises. Upon request by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of Tenant’s payment thereof. To the extent the Premises
are taxed or assessed to Landlord following the Rent Commencement Date, such
real property taxes and assessments shall constitute Operating Expenses (as that
term is defined in Section 5.2 of this Lease) and shall be paid in accordance
with the provisions of Article 5 of this Lease.

 

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5. OPERATING EXPENSES

5.1 Payment of Operating Expenses.

(a) Tenant shall pay to Landlord, at the time and in the manner hereinafter set
forth, as additional rental, Tenant’s Operating Cost Share of the Operating
Expenses defined in Section 5.2, subject to adjustment pursuant to
Section 5.1(b) when applicable. For purposes of this Section 5.1, “Tenant’s
Operating Cost Share” shall be: (i) in the case of Operating Expenses that are
reasonably allocable solely to the Building, one hundred percent (100%); and
(ii) in the case of Operating Expenses that are determined and allocated on a
Center-wide basis, seventeen and eleven-hundredths percent (17.11%).

(b) Tenant’s Operating Cost Share as specified in Section 5.1(a) with respect to
matters allocable to the entire Center is based upon an area of 124,274 square
feet for the Premises and upon an aggregate area of 726,508 square feet for all
of the buildings presently located in the Center. If the actual area of the
Premises or of any of the buildings existing from time to time in the Center
changes for any reason (including, but not limited to, modification of existing
buildings, construction of new buildings in the Center, or construction of new
buildings on any adjacent property owned by Landlord and operated, for common
area purposes, on an integrated basis with the Center), then Tenant’s Operating
Cost Share shall be adjusted proportionately to reflect the new actual areas of
the Premises and/or such other buildings, as applicable, as determined
reasonably and in good faith by Landlord’s architect on the same basis of
measurement as applied in determining the existing square footage of the
Building.

5.2 Definition of Operating Expenses.

(a) Subject to the exclusions and provisions hereinafter contained and the
allocation principles set forth in Section 5.1, the term “Operating Expenses”
shall mean, without duplication, all costs and expenses actually incurred by
Landlord for management, operation and maintenance of the Building and the
Center, including, without limitation, costs and expenses of (i) insurance
(which may include, at Landlord’s option, environmental and seismic insurance as
part of or in addition to any casualty or property insurance policy), property
management, landscaping, and the operation, repair and maintenance of buildings
and Common Areas; (ii) all utilities and services; (iii) real and personal
property taxes and assessments or substitutes therefor levied or assessed
against the Center or any part thereof, including (but not limited to) any
possessory interest, use, business, license or other taxes or fees, any taxes
imposed directly on gross rents or services, any assessments or charges for
police or fire protection, housing, transit, open space, street or sidewalk
construction or maintenance or other similar services from time to time by any
governmental or quasi-governmental entity, and any other new taxes on landlords
in addition to taxes now in effect (except that assessments which are permitted
to be paid over a period of time and are customarily paid over such a period
shall be includable in Operating Expenses on a current basis as if they were
paid over the full period for which such installments would customarily be
paid); (iv) supplies, equipment, utilities and tools used in management,
operation and maintenance of the Center; (v) capital improvements to the Center
or the improvements therein, amortized over the useful life of such capital
improvements as determined reasonably and in good faith by Landlord’s
accountants on the

 

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basis of generally accepted accounting principles, consistently applied, or on
the basis of applicable tax accounting principles, (aa) which reduce or will
cause future reduction of other items of Operating Expenses for which Tenant is
otherwise required to contribute or (bb) which are required by law, ordinance,
regulation or order of any governmental authority (excluding, however, any such
expenses incurred by Landlord in complying with Landlord’s obligations under
Section 2.3 above) or (cc) of which Tenant has use or which benefit Tenant, and
which in either event are reasonably consistent with the nature and quality of
the Center as a first-class office and research and development campus, or (dd)
which constitute capital repairs or replacements made by Landlord pursuant to
Landlord’s responsibilities under Section 8.1(a) hereof; and (vi) any other
costs (including, but not limited to, any parking or utilities fees or
surcharges not otherwise specifically addressed elsewhere in this Lease)
allocable to or paid by Landlord, as owner of the Center, pursuant to any
applicable laws, ordinances, regulations or orders of any governmental or
quasi-governmental authority or pursuant to the terms of the Declaration (as
hereinafter defined) or of any other declarations of covenants, conditions and
restrictions now or hereafter affecting the Center or any other property over
which Tenant has non-exclusive usage rights as contemplated in
Section 1.1(b) hereof. Operating Expenses shall not include any costs
attributable to the initial construction of buildings or Common Area
improvements in the Center, nor any costs attributable to buildings the square
footage of which is not taken into account in determining Tenant’s Operating
Cost Share under Section 5.1 for the applicable period. The distinction between
items of ordinary operating maintenance and repair and items of a capital nature
shall be made in accordance with generally accepted accounting principles
applied on a consistent basis or in accordance with tax accounting principles,
as determined reasonably and in good faith by Landlord’s accountants.

(b) Notwithstanding any other provisions of this Section 5.2, the following
shall not be included within Operating Expenses: (i) rent paid to any ground
lessor; (ii) the cost of constructing tenant improvements for any other tenant
of the Center; (iii) the costs of special services, goods or materials provided
to any other tenant of the Center and not offered or made available to Tenant;
(iv) repairs covered by proceeds of insurance or from funds provided by Tenant
or any other tenant of the Center, or as to which any other tenant of the Center
is obligated to make such repairs or to pay the cost thereof; (v) legal fees,
advertising costs or other related expenses incurred by Landlord in connection
with the leasing of space to individual tenants of the Center; (vi) repairs,
alterations, additions, improvements or replacements needed to rectify or
correct any defects in the design, materials or workmanship of the Building, the
Center or the Common Areas; (vii) damage and repairs necessitated by the
negligence or willful misconduct of Landlord or of Landlord’s employees,
contractors or agents; (viii) executive salaries or salaries of service
personnel to the extent that such personnel perform services other than in
connection with the management, operation, repair or maintenance of the Building
or the Center; (ix) Landlord’s general overhead expenses not related to the
Building or the Center; (x) legal fees, accountants’ fees and other expenses
incurred in connection with disputes with tenants or other occupants of the
Center, or in connection with the enforcement of the terms of any leases with
tenants or the defense of Landlord’s title to or interest in the Center or any
part thereof; (xi) costs incurred due to a violation by Landlord or any other
tenant of the Center of the terms and conditions of any lease; (xii) costs of
any service provided to Tenant or to other occupants of the Center for which
Landlord is reimbursed other than through recovery of

 

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Operating Expenses; (xiii) personal property taxes due and payable by any other
tenant of the Center; (xiv) costs incurred by Landlord in connection with an
event of casualty or condemnation governed by Article 13 of this Lease
(including, but not limited to, any applicable deductible and/or coinsurance
amounts under applicable insurance policies with respect to any seismic event);
(xv) taxes or assessments in the nature of a tax on Landlord’s net income, or in
the nature of an inheritance, gift, estate or death tax; (xvi) costs to comply
with Landlord’s obligations under Section 2.3 of this Lease; (xvii) costs
incurred in connection with the presence of any hazardous substance or hazardous
waste (as such terms are defined in Section 9.6) on, under or about the Property
or the Center (but in the event of any use or release of such a hazardous
substance or hazardous waste by Tenant or related parties as described in
Section 9.6, Tenant’s responsibility therefore shall be determined pursuant to
Section 9.6); (xviii) interest, charges and fees incurred on debt; (xix) costs
in the nature of depreciation, amortization or other expense reserves, except in
connection with any amortization of capital expenditures that is expressly
authorized under any provision of this Lease; (xx) wages, compensation and labor
burden for any employee not stationed at the Center of a substantially full-time
basis; (xxi) costs incurred in connection with any construction of additional
buildings in the Center or any expansion of existing buildings in the Center,
including (but not limited to) any costs to build any parking structure required
to accommodate any necessary additional parking; (xxii) any costs incurred by
Landlord to pave the “recreational area” described in the last sentence of
Section l.l(a); (xxiii) property management fees to the extent they exceed, for
any applicable period, three percent (3%) of the minimum rent and Operating
Expenses payable under this Lease for the same period (provided that during the
period, if any, from the commencement of Tenant’s obligation for payment of
Operating Expenses under Section 5.3 below until the Rent Commencement Date, the
foregoing limitation shall be applied using a deemed minimum rental amount at
the monthly rate that will become payable immediately after the Rent
Commencement Date); and (xxiv) costs or expenditures for capital repairs,
replacements and improvements (as determined pursuant to Section 5.2(a) above)
in excess of the amortized amounts which are expressly authorized to be included
as Operating Expenses under the provisions of clause (v) of Section 5.2(a) above
or under any other applicable provision of this Lease.

5.3 Determination of Operating Expenses. On or before the Construction Access
Date and during the last month of each calendar year of the term of this Lease
(“Expense Year”), or as soon thereafter as practical, Landlord shall provide
Tenant notice of Landlord’s estimate of the Operating Expenses for the ensuing
Expense Year or applicable portion thereof. On or before the first day of each
month during the ensuing Expense Year or applicable portion thereof, beginning
on January 1, 2007, Tenant shall pay to Landlord Tenant’s Operating Cost Share
of the portion of such estimated Operating Expenses allocable (on a prorata
basis) to such month; provided, however, that if such notice is not given in the
last month of an Expense Year, Tenant shall continue to pay on the basis of the
prior year’s estimate, if any, until the month after such notice is given. If at
any time or times it appears to Landlord that the actual Operating Expenses for
an Expense Year will vary from Landlord’s previous estimate by more than five
percent (5%), Landlord may, by notice to Tenant, revise its estimate for the
applicable Expense Year and subsequent payments by Tenant for such Expense Year
shall be based upon such revised estimate.

 

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5.4 Final Accounting for Expense Year.

(a) Within ninety (90) days after the close of each Expense Year, or as soon
after such 90-day period as practicable, Landlord shall deliver to Tenant a
statement of Tenant’s Operating Cost Share of the Operating Expenses for such
Expense Year prepared by Landlord from Landlord’s books and records. If on the
basis of such statement Tenant owes an amount that is more or less than the
estimated payments for such Expense Year previously made by Tenant, Tenant or
Landlord, as the case may be, shall pay the deficiency to the other party within
thirty (30) days after delivery of the statement. Failure or inability of
Landlord to deliver the annual statement within such ninety (90) day period
shall not impair or constitute a waiver of Tenant’s obligation to pay Operating
Expenses, or cause Landlord to incur any liability for damages.

(b) At any time within three (3) months after receipt of Landlord’s annual
statement of Operating Expenses as contemplated in Section 5.4(a), Tenant shall
be entitled, upon reasonable written notice to Landlord and during normal
business hours at Landlord’s office or such other places as Landlord shall
designate, to inspect and examine those books and records of Landlord relating
to the determination of Operating Expenses for the immediately preceding Expense
Year covered by such annual statement or, if Tenant so elects by written notice
to Landlord, to request an independent audit of such books and records. Any such
independent audit of the books and records shall be conducted by a certified
public accountant reasonably acceptable to both Landlord and Tenant or, if the
parties are unable to agree, by a certified public accountant appointed by the
Presiding Judge of the Santa Clara County Superior Court upon the application of
either Landlord or Tenant (with notice to the other party). In either event,
such certified public accountant shall be one who is not then employed in any
capacity by Landlord or Tenant or by any of their respective affiliates. The
audit shall be limited to the determination of the amount of Operating Expenses
for the subject Expense Year, and shall be based on generally accepted
accounting principles and tax accounting principles, consistently applied. If it
is determined, by mutual agreement of Landlord and Tenant or by independent
audit, that the amount of Operating Expenses billed to or paid by Tenant for the
applicable Expense Year was incorrect, then the appropriate party shall pay to
the other party the deficiency or overpayment, as applicable, within thirty
(30) days after the final determination of such deficiency or overpayment. All
costs and expenses of the audit shall be paid by Tenant unless the audit shows
that Landlord overstated Operating Expenses for the subject Expense Year by more
than five percent (5%), in which case Landlord shall pay all costs and expenses
of the audit. Tenant shall be deemed to have approved Landlord’s annual
statement of Operating Expenses, and shall be barred from raising any claims
regarding Operating Expenses for the period covered by such annual statement,
except to the extent Tenant specifically identifies any objections or claims
based on such annual statement, in reasonable detail, by written notice to
Landlord within four (4) months after Tenant’s receipt of the applicable annual
statement. To the extent Tenant provides Landlord with timely written notice of
any such objections or claims, Landlord and Tenant shall cooperate reasonably
and in good faith to try to resolve the objections or claims raised by Tenant,
which cooperation may include the use of an independent audit initiated by
Tenant as contemplated above. Each party agrees to maintain the confidentiality
of the findings of any audit in accordance with the provisions of this
Section 5.4.

 

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5.5 Proration. If the date on which Tenant’s obligation for payment of Tenant’s
Operating Cost Share commences falls on a day other than the first day of an
Expense Year or if this Lease terminates on a day other than the last day of an
Expense Year, then the amount of Operating Expenses payable by Tenant with
respect to such first or last partial Expense Year shall be prorated on the
basis which the number of days during such Expense Year in which this Lease is
in effect bears to 365. The termination of this Lease shall not affect the
obligations of Landlord and Tenant pursuant to Section 5.4 to be performed after
such termination.

6. UTILITIES

6.1 Payment. Commencing with the Construction Access Date and thereafter
throughout the term of this Lease (including the early possession period under
Section 2.2 above), Tenant shall pay, before delinquency, all charges for water,
gas, heat, light, electricity, power, sewer, telephone, alarm system, janitorial
and other services or utilities supplied to or consumed in or with respect to
the Premises (other than any costs for water, electricity or other services or
utilities furnished with respect to the Common Areas, which costs shall be paid
by Landlord and shall constitute Operating Expenses under Section 5.2 hereof),
including any taxes on such services and utilities. It is the intention of the
parties that all such services shall be separately metered to the Premises. In
the event that any utilities or services supplied to the Premises are not
separately metered, then the amount thereof shall be allocated in a reasonable,
good faith and appropriate manner by Landlord between the Premises and the other
buildings, premises or areas sharing such utilities or services, and the portion
thereof allocable to the Building may, in Landlord’s discretion, either be
included in Operating Expenses allocable to the Building under Section 5.1
hereof or be billed directly to Tenant and paid or reimbursed by Tenant within
ten (10) business days after receipt of Landlord’s statement and request for
payment, accompanied by reasonable supporting documentation evidencing the
calculation or determination of the amount for which payment or reimbursement is
requested. Notwithstanding the foregoing provisions, during any portion of the
period prior to the Rent Commencement Date in which Landlord is performing
repairs or construction of improvements in the Premises, (a) if Tenant is
neither operating its business in the Premises nor performing any material
construction of improvements in the Premises, Landlord shall bear all utilities
charges for the Premises; and (b) if Tenant is operating its business in the
Premises and/or performing any material construction of improvements in the
Premises, utilities charges for the Premises shall be allocated between Landlord
and Tenant on the basis of a reasonable, good faith estimate of their respective
usage of such utilities.

6.2 Interruption. There shall be no abatement of rent or other charges required
to be paid hereunder and Landlord shall not be liable in damages or otherwise
for interruption or failure of any service or utility furnished to or used with
respect to the Premises, the Building or the Center because of accident, making
of repairs, alterations or improvements, severe weather, difficulty or inability
in obtaining services or supplies, labor difficulties or any other cause.
Notwithstanding the foregoing provisions of this Section 6.2, however, in the
event of any interruption or failure of any service or utility to the Premises
that (a) is caused in whole or in material part by the active negligence or
willful misconduct of Landlord or its agents, employees or contractors and
(b) continues for more than three (3) business days and (c) materially impairs
Tenant’s ability to use the Premises for the intended purpose hereunder, then
following such

 

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three (3) business day period, Tenant’s obligations for payment of rent and
other charges under this Lease shall be abated in proportion to the degree of
impairment of Tenant’s use of the Premises, and such abatement shall continue
until Tenant’s use of the Premises is no longer materially impaired thereby.
Tenant expressly waives any benefits of any applicable existing or future law
(including, but not limited to, the provisions of California Civil Code
Section 1932(1)) permitting the termination of a lease due to any such
interruption or failure of any service or utility, it being the intention of the
parties that their respective rights in such circumstances shall be governed
solely by the provisions of this Section 6.2.

7. ALTERATIONS; SIGNS

7.1 Right to Make Alterations. Tenant shall make no alterations, additions or
improvements to the Premises, other than interior non-structural alterations in
the Premises costing less than (i) Twenty-Five Thousand Dollars ($25,000) for
any single alteration or improvement or set of related and substantially
concurrent alterations or improvements, and (ii) Fifty Thousand Dollars
($50,000) in the aggregate during any twelve (12) month period, without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld, conditioned or delayed. All such alterations, additions and
improvements shall be completed with due diligence in a good and workmanlike
manner, in compliance with plans and specifications approved in writing by
Landlord and in compliance with all applicable laws, ordinances, rules and
regulations, and to the extent Landlord’s consent is not otherwise required
hereunder for such alterations, additions or improvements, Tenant shall give
prompt written notice thereof to Landlord. Tenant shall cause any contractors
engaged by Tenant for work in the Building or in the Center to maintain public
liability and property damage insurance, and other customary insurance, with
such terms and in such amounts as Landlord may reasonably require, naming as
additional insureds Landlord and any of its partners, shareholders, property
managers, project managers and lenders designated by Landlord for this purpose,
and shall furnish Landlord with certificates of insurance or other evidence that
such coverage is in effect. Notwithstanding any other provisions of this
Section 7.1, under no circumstances shall Tenant make any structural alterations
or improvements, or any changes to the roof or equipment installations on the
roof, or any alterations materially affecting any building systems, without
Landlord’s prior written consent (which consent shall not be unreasonably
withheld, conditioned or delayed).

7.2 Title to Alterations. All alterations, additions and improvements installed
by Tenant in, on or about the Premises, the Building or the Center (including,
but not limited to, lab benches, fume hoods, clean rooms, cold rooms and other
similar improvements and equipment) shall become part of the Property and shall
become the property of Landlord, unless Landlord elects to require Tenant to
remove the same upon the termination of this Lease; provided, however, that the
foregoing (i) shall not apply to Tenant’s movable furniture, equipment and trade
fixtures, except to the extent any such items are specifically described in the
parenthetical in the initial portion of this sentence, and (ii) shall not apply
to any portable clean rooms (i.e., clean rooms that are designed to be portable
or removable in nature and can be installed and removed without any material
adverse impact on the existing improvements and Building systems in the
Building) which are installed by Tenant without any use of funds from the Tenant
Improvement Allowance and which are either leased from non-affiliated third
parties or owned

 

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by Tenant, but (iii) shall apply to all clean rooms and other improvements
described in the initial portion of this sentence, whether or not designed to be
portable or removable, to the extent such clean rooms or other improvements are
constructed, acquired or installed using any funds from the Tenant Improvement
Allowance. Tenant shall promptly repair any damage caused by its removal of any
such furniture, equipment or trade fixtures.

(a) Notwithstanding any other provisions of this Article 7, (i) under no
circumstances shall Tenant have any right to remove from the Premises or the
Building, at the expiration or termination of this Lease, any lab benches, fume
hoods, clean rooms, cold rooms or other similar improvements and equipment
installed in the Building, even if such equipment and improvements were
installed by Tenant (other than portable or removable clean rooms described in
clause (ii) of the initial portion of Section 7.2 above); (ii) under no
circumstances shall Tenant have any right to remove from the Premises or the
Building, at the expiration or termination of this Lease, any alterations,
additions, improvements or equipment acquired, constructed or installed with the
use, in whole or in part, of any funds from the Tenant Improvement Allowance;
(iii) if Tenant requests Landlord’s written consent to any alterations,
additions or improvements under Section 7.1 hereof and, in requesting such
consent, asks that Landlord specify whether Landlord will require removal of
such alterations, additions or improvements upon termination or expiration of
this Lease, then Landlord shall not be entitled to require such removal unless
Landlord specified its intention to do so at the time of granting of Landlord’s
consent to the requested alterations, additions or improvements; and
(iv) Landlord shall not be entitled to require removal of any element of the
Tenant Improvements initially constructed by Tenant pursuant to the Workletter
upon termination or expiration of this Lease, except to the extent (if any) that
Landlord’s approval of such element of the initial Tenant Improvements under the
Workletter was expressly conditioned upon Tenant’s agreement to remove the same
upon termination or expiration of this Lease. For purposes of clause (iv) of the
preceding sentence, (x) the parties acknowledge that Landlord’s approval of
Tenant Improvements under the Workletter generally may not be unreasonably
withheld, conditioned or delayed; (y) the parties further acknowledge and agree
that it may be reasonable for Landlord to condition its approval of specific
elements of the Tenant Improvements upon Tenant’s agreement to remove the same
upon termination or expiration of this Lease if Landlord believes reasonably and
in good faith that the functionality and marketability of the Premises for
purposes of re-leasing to a successor tenant would be materially and adversely
affected by the presence of such specific elements; and (z) the parties further
acknowledge and agree that unless Landlord reasonably believes in good faith
that the functionality and marketability of the Premises for purposes of re
leasing to a successor tenant would be materially and adversely affected by the
presence of such specific element, Landlord shall not condition its approval of
such element upon Tenant’s agreement to remove the same upon termination or
expiration of this Lease.

(b) Notwithstanding any other provisions of this Article 7, (i) it is the
intention of the parties that Landlord shall be entitled to claim all tax
attributes associated with alterations, additions, improvements and equipment
constructed or installed by Tenant or Landlord with funds provided by Landlord
pursuant to the Tenant Improvement Allowance; and (ii) it is the intention of
the parties that Tenant shall be entitled to claim, during the term of this
Lease, all tax attributes associated with alterations, additions, improvements
and equipment

 

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constructed or installed by Tenant with Tenant’s own funds (and without any
payment or reimbursement by Landlord pursuant to the Tenant Improvement
Allowance), despite the fact that the items described in this clause (ii) are
characterized in this Section 7.2 as becoming Landlord’s property upon
installation, in recognition of the fact that Tenant will have installed and
paid for such items, will have the right of possession of such items during the
term of this Lease and will have the obligation to pay (directly or indirectly)
property taxes on such items, carry insurance on such items to the extent
provided in Article 10 hereof and bear the risk of loss with respect to such
items to the extent provided in Article 13 hereof. If and to the extent it
becomes necessary, in implementation of the foregoing intentions, to identify
(either specifically or on a percentage basis, as may be required under
applicable tax laws) which alterations, additions, improvements and equipment
constructed as part of the Tenant Improvements have been funded through the
Tenant Improvement Allowance and which (if any) have been constructed or
installed with Tenant’s own funds, Landlord and Tenant agree to cooperate
reasonably and in good faith to make such an identification by mutual agreement.

(c) Nothing in this Section 7.2 or in Section 7.1 above shall prohibit Tenant
from altering, relocating or removing during the term of this Lease the Tenant
Improvements or any other alterations, additions or improvements installed by
Tenant, whether or not the same were initially funded in whole or in part
through the Tenant Improvement Allowance, subject to the following:

(i) The Landlord consent requirements set forth in Section 7.1 above shall
remain applicable to any such alteration, relocation or removal of improvements
by Tenant in accordance with their terms; and

(ii) Landlord’s prior written consent shall in all events be required for any
alteration, relocation or removal of any improvements funded in whole or in part
through the Tenant Improvement Allowance. Such written consent under this
subparagraph (ii) shall not be unreasonably withheld, conditioned or delayed,
but the parties expressly acknowledge that Landlord may reasonably condition its
consent to any such alteration, relocation or removal of improvements funded in
whole or in part through the Tenant Improvement Allowance (A) upon Tenant’s
agreement to restore such improvements, upon termination or expiration of this
Lease, to the nature and condition that existed prior to such alteration,
relocation or removal and (B) if the reasonably estimated aggregate cost of
restoration of all improvements that Tenant is required to restore pursuant to
this Section 7.2(c)(ii) upon termination or expiration of this Lease exceeds
$250,000, upon Tenant’s provision to Landlord of a letter of credit, bond or
other security for the performance of such restoration obligation pursuant to
the preceding clause (A), the amount of which security shall be not less than
the estimated aggregate cost of restoration of the applicable improvements as
described above, and the nature (if other than a letter of credit or bond) and
terms of which security shall be reasonably satisfactory to Landlord.

7.3 Tenant Trade Fixtures. Subject to the third sentence of Section 7.2 and to
Section 7.5, Tenant may install, remove and reinstall trade fixtures without
Landlord’s prior written consent, except that installation and removal of any
trade fixtures which are affixed to the

 

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Building or which affect the Building systems or the exterior or structural
portions of the Building shall require Landlord’s written approval, which
approval shall not be unreasonably withheld, conditioned or delayed. Subject to
the provisions of Section 7.5, the foregoing shall apply to Tenant’s signs,
which Tenant shall have the right to place and remove and replace (a) only with
Landlord’s prior written consent as to location, size and composition, which
consent shall not be unreasonably withheld, conditioned or delayed, and (b) only
in compliance with all restrictions and requirements of applicable law and of
any covenants, conditions and restrictions or other written agreements now or
hereafter applicable to the Center. Tenant shall immediately repair any damage
caused by installation and removal of trade fixtures under this Section 7.3.

7.4 No Liens. Tenant shall at all times keep the Building and the Center free
from all liens and claims of any contractors, subcontractors, materialmen,
suppliers or any other parties employed either directly or indirectly by Tenant
in construction work on the Building or the Center. Tenant may contest any claim
of lien, but only if, prior to such contest, Tenant either (i) posts security in
the amount of the claim, plus estimated costs and interest, or (ii) records a
bond of a responsible corporate surety in such amount as may be required to
release the lien from the Building and the Center. Tenant shall indemnify,
defend and hold Landlord harmless against any and all liability, loss, damage,
cost and other expenses, including, without limitation, reasonable attorneys’
fees, arising out of claims of any lien for work performed or materials or
supplies furnished at the request of Tenant or persons claiming under Tenant.

7.5 Signs. Without limiting the generality of the provisions of Section 7.3
hereof, Tenant shall have the right to install, at Tenant’s expense, (a) signage
substantially equivalent to that maintained by the preceding tenant of the
Premises and (b) additional exterior signage generally similar to signage
presently existing for other tenants on other buildings in the Center, subject
in each instance to Landlord’s prior approval as to location, size, design and
composition (which approval shall not be unreasonably withheld or delayed), to
any reasonable sign criteria promulgated by Landlord for the Center from time to
time, and to all restrictions and requirements of applicable law and of any
covenants, conditions and restrictions now or hereafter applicable to the
Center.

8. MAINTENANCE AND REPAIRS

8.1 Landlord’s Obligation for Maintenance.

(a) Repairs and Maintenance. Landlord shall repair and maintain or cause to be
repaired and maintained the Common Areas of the Center and the roof, exterior
walls and other structural portions of the Building. The cost of all work
performed by Landlord under this Section 8.1 shall be an Operating Expense
hereunder, except to the extent such work (i) is required due to the negligence
of Landlord; (ii) involves the repair or correction of a condition or defect
that Landlord is required to correct pursuant to Section 2.3 hereof; (iii) is a
capital expense not includible (or in excess of the amounts includible on an
amortized basis) as an Operating Expense under Section 5.2 hereof, or is
otherwise expressly excluded from treatment as an Operating Expense under any
other applicable provision of Section 5.2 hereof; (iv) results from an event of
casualty or condemnation covered by Article 13 hereof (in which event the

 

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provisions of such Article 13 shall govern the parties’ rights and obligations);
or (v) is required due to the negligence or willful misconduct of Tenant or its
agents, employees or invitees (in which event Tenant shall bear the full cost of
such work pursuant to the indemnification provided in Section 10.6 hereof,
subject to the release set forth in Section 10.4 hereof). Tenant knowingly and
voluntarily waives the right to make repairs at Landlord’s expense (except as
specifically provided in paragraph (b) below), or to offset the cost thereof
against rent, under any law, statute, regulation or ordinance now or hereafter
in effect.

(b) Tenant’s Remedy. If (i) Landlord fails to perform promptly any repair,
maintenance or replacement required to be performed by Landlord on the Building
or Premises under Section 8.1(a) and (ii) such failure creates a material risk
to health and safety or a material risk of damage to property or a material
impairment of Tenant’s ability to conduct its business in the Premises and
(iii) such failure continues for more than thirty (30) days after Tenant gives
Landlord written notice of such failure (or, if such repairs or maintenance
cannot reasonably be performed within such 30-day period, then if Landlord fails
to commence performance within such 30-day period and thereafter to pursue such
performance diligently to completion), then Tenant shall have the right to
perform such repairs or maintenance and Landlord shall reimburse Tenant for the
reasonable cost thereof within fifteen (15) days after written notice from
Tenant of the completion and cost of such work, accompanied by copies of
invoices or other documentation reasonably supporting the costs for which Tenant
is requesting reimbursement. Under no circumstances, however, shall Tenant have
any right to offset or deduct the cost of any such work against rent or other
charges falling due from time to time under this Lease.

8.2 Tenant’s Obligation for Maintenance.

(a) Good Order, Condition and Repair. Except as provided in Section 8.1 hereof,
and subject to the provisions of Article 13 hereof (which shall be controlling
in the event of any casualty or condemnation covered by such Article 13) and to
Landlord’s obligations under Section 2.3 hereof, Tenant at its sole cost and
expense shall keep and maintain in good and sanitary order, condition and repair
the Premises and every part thereof, wherever located, including but not limited
to the signs, interior, ceiling, electrical system, plumbing system, telephone
and communications systems serving the Premises, the HVAC equipment and related
mechanical systems serving the Premises (for which equipment and systems Tenant
shall enter into a service contract with a person or entity approved by
Landlord, such approval not to be unreasonably withheld or delayed), all doors,
door checks, windows, plate glass, door fronts, exposed plumbing and sewage and
other utility facilities, fixtures, lighting, wall surfaces, floor surfaces and
ceiling surfaces of the Premises and all other interior repairs, foreseen and
unforeseen, with respect to the Premises, as required. To the extent Landlord
has any third-party warranties or service contracts on any improvements or
systems in the Premises which are Tenant’s obligation to maintain during the
term of this Lease, Landlord agrees to assign such warranties or service
contracts to Tenant, to the extent practicable, and to use reasonable efforts to
enforce for Tenant’s benefit (and at Tenant’s expense) any such warranties or
service contracts which it is not practicable to assign to Tenant.

(b) Landlord’s Remedy. If Tenant fails to make or perform promptly any repairs
or maintenance which are the obligation of Tenant hereunder and such failure
continues

 

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for more than ten (10) days after written notice from Landlord specifying the
required repairs (except in case of emergency, in which event no such prior
notice shall be required, and except that in the case of repairs or maintenance
which cannot reasonably be performed within such 10-day period, the provisions
of this paragraph shall apply only if Tenant fails to commence performance
within such 10-day period and thereafter to pursue such performance diligently
to completion), Landlord shall have the right, but shall not be required, to
enter the Premises and make the repairs or perform the maintenance necessary to
restore the Premises to good and sanitary order, condition and repair.
Immediately on demand from Landlord, the cost of such repairs shall be due and
payable by Tenant to Landlord.

(c) Condition upon Surrender. At the expiration or sooner termination of this
Lease, Tenant shall surrender the Premises and Building and the improvements
located therein, including any additions, alterations and improvements thereto
(except for items which Tenant is permitted and elects to remove, or is required
to remove, pursuant to the provisions of this Lease), broom clean, in good and
sanitary order, condition and repair, ordinary wear and tear and casualty damage
(the latter of which shall be governed by the provisions of Article 13 hereof)
excepted, first, however, removing all goods and effects of Tenant and all
fixtures and items required to be removed or specified to be removed at
Landlord’s election pursuant to this Lease (including, but not limited to, any
such removal required as a result of an election duly made by Landlord to
require such removal as contemplated in Section 7.2), and repairing any damage
caused by such removal. Tenant expressly waives any and all interest in any
personal property and trade fixtures not removed from the Center by Tenant at
the expiration or termination of this Lease, agrees that any such personal
property and trade fixtures may, at Landlord’s election, be deemed to have been
abandoned by Tenant, and authorizes Landlord (at its election and without
prejudice to any other remedies under this Lease or under applicable law) to
remove and either retain, store or dispose of such property at Tenant’s cost and
expense, and Tenant waives all claims against Landlord for any damages resulting
from any such removal, storage, retention or disposal.

9. USE OF PROPERTY

9.1 Permitted Use. Subject to Sections 9.3, 9.4 and 9.6 hereof, Tenant shall use
the Premises solely for an office, research and development, engineering,
laboratory, manufacturing (including, but not limited to, the manufacturing of
medical devices), assembly and warehousing facility, including (but not limited
to) clean rooms, administrative offices, and other lawful purposes reasonably
related to or incidental to such specified uses (subject in each case to receipt
of all necessary approvals from the City of Mountain View and all other
governmental agencies having jurisdiction over the Premises), and for no other
purpose, unless Landlord in its reasonable discretion otherwise consents in
writing.

9.2 [Intentionally Deleted.]

9.3 No Nuisance. Tenant shall not use the Premises for or carry on or permit
within the Center or any part thereof any offensive, noisy or dangerous trade,
business, manufacture, occupation, odor or fumes, or any nuisance or anything
against public policy, nor interfere with the rights or business of Landlord in
the Building or the Center, nor commit or allow to be

 

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committed any waste in, on or about the Center. Tenant shall not do or permit
anything to be done in or about the Center, nor bring nor keep anything therein,
which will in any way cause the Center or any portion thereof to be uninsurable
with respect to the insurance required by this Lease or with respect to standard
fire and extended coverage insurance with vandalism, malicious mischief and riot
endorsements.

9.4 Compliance with Laws. Tenant shall not use the Premises, the Building or the
Center or permit the Premises, the Building or the Center to be used in whole or
in part for any purpose or use that is in violation of any applicable laws,
ordinances, regulations or rules of any governmental agency or public authority.
Tenant shall keep the Premises equipped with all safety appliances required by
law, ordinance or insurance on the Center, or any order or regulation of any
public authority, because of Tenant’s particular use of the Premises. Tenant
shall procure all licenses and permits required for Tenant’s particular use of
the Premises. Tenant shall use the Premises in strict accordance with all
applicable ordinances, rules, laws and regulations and shall comply with all
requirements of all governmental authorities now in force or which may hereafter
be in force pertaining to the particular use of the Premises and the Center by
Tenant, including, without limitation, regulations applicable to noise, water,
soil and air pollution, and making such nonstructural alterations and additions
thereto as may be required from time to time by such laws, ordinances, rules,
regulations and requirements of governmental authorities or insurers of the
Center (collectively, “Requirements”) because of Tenant’s construction of
improvements in or other particular use of the Premises or the Center. Any
structural alterations or additions required from time to time by applicable
Requirements because of Tenant’s construction of improvements in the Premises or
other particular use of the Center shall, at Landlord’s election, either (i) be
made by Tenant, at Tenant’s sole cost and expense, in accordance with the
procedures and standards set forth in Section 7.1 for alterations by Tenant, or
(ii) be made by Landlord at Tenant’s sole cost and expense, in which event
Tenant shall pay to Landlord as additional rent, within thirty (30) days after
demand by Landlord, an amount equal to all reasonable costs incurred by Landlord
in connection with such alterations or additions. The judgment of any court, or
the admission by Tenant in any proceeding against Tenant, that Tenant has
violated any law, statute, ordinance or governmental rule, regulation or
requirement shall be conclusive of such violation as between Landlord and
Tenant.

9.5 Liquidation Sales. Tenant shall not conduct or permit to be conducted any
auction, bankruptcy sale, liquidation sale, or going out of business sale, in,
upon or about the Center, whether said auction or sale be voluntary, involuntary
or pursuant to any assignment for the benefit of creditors, or pursuant to any
bankruptcy or other insolvency proceeding.

9.6 Environmental Matters.

(a) For purposes of this Section, “hazardous substance” shall mean (i) the
substances included within the definitions of the term “hazardous substance”
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. §§ 9601 et seq., and the regulations promulgated
thereunder, as amended, (ii) the substances included within the definition of
“hazardous substance” under the California Carpenter-Presley-Tanner Hazardous
Substance Account Act, California Health & Safety Code §§ 25300 et seq., and
regulations promulgated thereunder, as amended, (iii) the substances

 

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included within the definition of “hazardous materials” under the Hazardous
Materials Release Response Plans and Inventory Act, California Health & Safety
Code §§ 25500 et seq., and regulations promulgated thereunder, as amended,
(iv) the substances included within the definition of “hazardous substance”
under the Underground Storage of Hazardous Substances provisions set forth in
California Health & Safety Code §§ 25280 et seq., and (v) petroleum or any
fraction thereof; “hazardous waste” shall mean (i) any waste listed as or
meeting the identified characteristics of a “hazardous waste” under the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 et seq., and
regulations promulgated pursuant thereto, as amended (collectively, “RCRA”),
(ii) any waste meeting the identified characteristics of “hazardous waste,”
“extremely hazardous waste” or “restricted hazardous waste” under the California
Hazardous Waste Control Law, California Health & Safety Code §§ 25100 et seq.,
and regulations promulgated pursuant thereto, as amended (collectively, the
“CHWCL”), and/or (iii) any waste meeting the identified characteristics of
“medical waste” under California Health & Safety Code §§ 25015-25027.8, and
regulations promulgated thereunder, as amended; “hazardous waste facility” shall
mean a hazardous waste facility as defined under the CHWCL; and “pollutant”
shall mean all substances defined as a “pollutant,” “pollution,” “waste,”
“contamination” or “hazardous substance” under the Porter-Cologne Water Quality
Control Act, California Water Code §§ 13000 et seq.

(b) Without limiting the generality of the obligations set forth in Section 9.4
of this Lease:

(i) Tenant shall not cause or permit any hazardous substance or hazardous waste
to be brought upon, kept, stored or used in or about the Center without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld, except that Tenant, in connection with its permitted use of the
Premises and the Center as provided in Section 9.1, may, without the prior
written consent of Landlord, keep, store and use materials that constitute
hazardous substances which are customary for such permitted use, provided such
hazardous substances are kept, stored and used in quantities which are customary
for such permitted use and are kept, stored and used in full compliance with
clauses (ii) and (iii) immediately below.

(ii) Tenant shall comply with all applicable laws, rules, regulations, orders,
permits, licenses and operating plans of any governmental authority with respect
to the receipt, use, handling, generation, transportation, storage, treatment
and/or disposal of hazardous substances or wastes by Tenant or its agents or
employees, and Tenant will provide Landlord with copies of all permits,
licenses, registrations and other similar documents that authorize Tenant to
conduct any such activities in connection with its authorized use of the
Premises and the Center from time to time.

(iii) Tenant shall not (A) operate on or about the Center any facility required
to be permitted or licensed as a hazardous waste facility or for which interim
status as such is required, nor (B) store any hazardous wastes on or about the
Center for ninety (90) days or more, nor (C) conduct any other activities on or
about the Center that could result in the Center or any portion thereof being
deemed to be a “hazardous waste facility” (including, but not limited to, any
storage or treatment of hazardous substances

 

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or hazardous wastes which could have such a result), nor (D) store any hazardous
wastes on or about the Center in violation of any federal or California laws or
in violation of the terms of any federal or state licenses or permits held by
Tenant.

(iv) Tenant shall not install any underground storage tanks on the Property
without the prior written consent of Landlord and prior approval by all
applicable governmental authorities. If and to the extent that Tenant obtains
all such required consents and approvals and installs any underground storage
tanks on the Property, Tenant shall comply with all applicable laws, rules,
regulations, orders and permits relating to such underground storage tanks
(including any installation, monitoring, maintenance, closure and/or removal of
such tanks) as such tanks are defined in California Health & Safety Code §
25281(x), including, without limitation, complying with California Health &
Safety Code §§ 25280-25299.7 and the regulations promulgated thereunder, as
amended. Tenant shall furnish to Landlord copies of all registrations and
permits issued to or held by Tenant from time to time for any and all
underground storage tanks located on or under the Property.

(v) If applicable, Tenant shall provide Landlord in writing the following
information and/or documentation within fifteen (15) days after the Rent
Commencement Date, and shall update such information at least annually, on or
before each anniversary of the Rent Commencement Date, to reflect any change in
or addition to the required information and/or documentation (provided, however,
that in the case of the materials described in subparagraphs (B), (C) and
(E) below, Tenant shall not be required to deliver copies of such materials to
Landlord but shall maintain copies of such materials to such extent and for such
periods as may be required by applicable law and shall permit Landlord or its
representatives to inspect and copy such materials during normal business hours
at any time and from time to time upon reasonable notice to Tenant); and
provided further, however, that Landlord shall keep all such materials reviewed
by Landlord confidential, except to the extent disclosure of such materials or
of the contents thereof (x) to Landlord’s employees, counsel, managers and/or
consultants is necessary or appropriate in the course of the employment or their
representation of or advice to Landlord or in the enforcement of Landlord’s
rights and Tenant’s obligations under this Lease, or (y) to any prospective
lender or purchaser of the Center is necessary or appropriate in connection with
any proposed sale or financing of the Center, or (z) is compelled by any
governmental or quasi-governmental authority or by applicable law):

(A) A list of all hazardous substances, hazardous wastes and/or pollutants that
Tenant receives, uses, handles, generates, transports, stores, treats or
disposes of from time to time in connection with its operations in the Center.

(B) All Material Safety Data Sheets (“MSDS’s”), if any, required to be completed
with respect to operations of Tenant at the Center from time to time in
accordance with Title 26, California Code of Regulations § 8-5194 or 42 U.S.C. §
11021, or any amendments thereto, and any Hazardous Materials Inventory Sheets
that detail the MSDS’s.

 

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(C) All Hazardous Waste Manifests, if any, that Tenant is required to complete
from time to time under California Health & Safety Code § 25160, any regulations
promulgated thereunder, any similar successor provisions and/or any amendments
to any of the foregoing, in connection with its operations in the Center.

(D) Any Hazardous Materials Management Plan required from time to time with
respect to Tenant’s operations in the Center, pursuant to California Health &
Safety Code §§ 25500 et seq., any regulations promulgated thereunder, any
similar successor provisions and/or any amendments to any of the foregoing.

(E) Any Air Toxics Emissions Inventory Plan required from time to time with
respect to Tenant’s operations in the Center, pursuant to California Health &
Safety Code §§ 44340 et seq., any regulations promulgated thereunder, any
similar successor provisions and/or any amendments to any of the foregoing.

(F) Any biennial Hazardous Waste Generator reports or notifications furnished by
Tenant to the California Department of Toxic Substances Control or other
applicable governmental authorities from time to time pursuant to California
Code of Regulations Title 22, § 66262.41, any similar successor provisions
and/or any amendments to any of the foregoing, in connection with Tenant’s
operations in the Center.

(G) Any Hazardous Waste Generator Reports regarding source reductions, as
required from time to time pursuant to California Health & Safety Code §§
25244.20 et seq., any regulations promulgated thereunder, any similar successor
provisions and/or any amendments to any of the foregoing, in connection with
Tenant’s operations in the Center.

(H) Any Hazardous Waste Generator Reports or notifications not otherwise
described in the preceding subparagraphs and required from time to time pursuant
to California Health & Safety Code § 25153.6, California Code of Regulations
Title 22, Division 4.5, Chapter 12, §§66262.10 et seq. (“Standards Applicable to
Generators of Hazardous Waste”), any other regulations promulgated thereunder,
any similar successor provisions and/or any amendments to any of the foregoing,
in connection with Tenant’s operations in the Center.

(I) All industrial wastewater discharge permits issued to or held by Tenant from
time to time in connection with its operations in the Center, and all air
quality management district permits issued to or held by Tenant from time to
time in connection with its operations in the Center.

(J) Copies of any other lists or inventories of hazardous substances, hazardous
wastes and/or pollutants on or about the Center that Tenant

 

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is otherwise required to prepare and file from time to time with any
governmental or regulatory authority.

(vi) Tenant shall secure Landlord’s prior written approval for any proposed
receipt, storage, possession, use, transfer or disposal of “radioactive
materials” or “radiation,” as such materials are defined in Title 26, California
Code of Regulations § 17-30100, and/or any other materials possessing the
characteristics of the materials so defined, which approval Landlord may
withhold in its sole and absolute discretion; provided, that such approval shall
not be required for any radioactive materials (x) for which Tenant has secured
prior written approval of the Nuclear Regulatory Commission and delivered to
Landlord a copy of such approval (if applicable), or (y) which Tenant is
authorized to use pursuant to the terms of any radioactive materials license
issued by the State of California. Tenant, in connection with any such
authorized receipt, storage, possession, use, transfer or disposal of
radioactive materials or radiation, shall:

(A) Comply with all federal, state and local laws, rules, regulations, orders,
licenses and permits issued to or applicable to Tenant with respect to its
operations in the Center;

(B) Maintain, to such extent and for such periods as may be required by
applicable law, and permit Landlord and its representatives to inspect during
normal business hours at any time and from time to time upon reasonable notice
to Tenant, a list of all radioactive materials or radiation received, stored,
possessed, used, transferred or disposed of by Tenant or in connection with
Tenant’s operations in the Center from time to time, to the extent not already
disclosed through delivery of a copy of a Nuclear Regulatory Commission approval
with respect thereto as contemplated above; and

(C) Maintain, to such extent and for such periods as may be required by
applicable law, and permit Landlord or its representatives to inspect during
normal business hours at any time and from time to time upon reasonable notice
to Tenant, all licenses, registration materials, inspection reports,
governmental orders and permits in connection with the receipt, storage,
possession, use, transfer or disposal of radioactive materials or radiation by
Tenant or in connection with Tenant’s operations in the Center from time to
time.

(vii) Tenant shall comply with any and all applicable laws, rules, regulations
and orders of any governmental authority with respect to the release into the
environment of any hazardous wastes, hazardous substances, pollutants, radiation
or radioactive materials by Tenant or its agents or employees. If and to the
extent Tenant becomes aware of any unauthorized release of any such hazardous
wastes, hazardous substances, pollutants, radiation or radioactive materials
into the environment and such release (x) creates a significant risk to human
health or safety, (y) creates a significant risk of contamination of any of the
improvements, soil or groundwater on or under the Property, or (z) is required
to be reported to any governmental authority (including, but not limited to, any
release of a Reportable Quantity, under the Emergency Planning and

 

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Community Right to Know Act, of any hazardous substance, hazardous waste,
pollutant, radiation or radioactive material), then in each such event Tenant
shall give Landlord verbal notice of such release as immediately as practicable,
shall follow such verbal notice with written notice to Landlord of such release
within one (1) business day after Tenant became aware of such release, and shall
provide Landlord with a copy of any written report or disclosure filed by Tenant
with any governmental authority with respect to such release, substantially
concurrently with Tenant’s filing of such written report or disclosure with the
applicable governmental authority.

(viii) Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all claims, losses (including, but not limited to, loss of
rental income), damages, liabilities, costs, legal fees and expenses of any sort
arising out of or relating to (A) any failure by Tenant to comply with any
provisions of this Section 9.6(b), or (B) any receipt, use handling, generation,
transportation, storage, treatment, release and/or disposal of any hazardous
substance, hazardous waste, pollutant, radioactive material or radiation on or
about the Center as a proximate result of Tenant’s use of the Center or as a
result of any intentional or negligent acts or omissions of Tenant or of any
agent, employee or invitee of Tenant. Notwithstanding the foregoing provisions,
Landlord acknowledges and agrees that losses of rental or other income
compensable under the preceding sentence do not include any actual or alleged
loss of rental or other income arising from another tenant’s or prospective
tenant’s or prospective purchaser’s objection to the mere fact of Tenant’s use
of hazardous substances or materials on or about the Premises, absent any
material violation by Tenant or its agents or employees of the provisions of
this Lease or of applicable law in the course of such use.

(ix) Tenant shall cooperate with Landlord in furnishing Landlord with complete
information regarding Tenant’s receipt, handling, use, storage, transportation,
generation, treatment and/or disposal of any hazardous substances, hazardous
wastes, pollutants, radiation or radioactive materials in or about the Center.
Upon request, but subject to Tenant’s reasonable operating and security
procedures, Tenant shall grant Landlord reasonable access at reasonable times to
the Premises to inspect Tenant’s receipt, handling, use, storage,
transportation, generation, treatment and/or disposal of hazardous substances,
hazardous wastes, pollutants, radiation and radioactive materials, without
Landlord thereby being deemed guilty of any disturbance of Tenant’s use or
possession or being liable to Tenant in any manner.

(x) Notwithstanding Landlord’s rights of inspection and review under this
Section 9.6(b), Landlord shall have no obligation or duty to so inspect or
review, and no third party shall be entitled to rely on Landlord to conduct any
sort of inspection or review by reason of the provisions of this Section 9.6(b).

(xi) Landlord has made available for review by Tenant, prior to execution of
this Lease, copies of all third-party studies and reports in Landlord’s
possession regarding environmental conditions in the Building and/or the
Property. Once the Premises have been vacated by the existing tenant, Landlord
shall engage an environmental consultant, at Landlord’s sole expense, to conduct
a further environmental

 

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study of the Building, evaluating the presence or absence of hazardous
substances, hazardous wastes, pollutants, radiation and radioactive materials in
and under the Building, and Landlord shall provide a copy of such study to
Tenant. The purpose of this study is to provide evidence of the “baseline”
condition of the Building prior to Tenant’s occupancy and use thereof, although
such evidence is not intended to be conclusive or irrebuttable. Tenant shall
also have the right (but not the obligation), if it so elects and at its own
expense, to conduct its own environmental study of the Premises prior to or at
the time of Tenant’s occupancy, in which event Tenant shall provide a copy of
such study to Landlord; provided, that prior to any drilling, excavation or
other physically invasive testing on the Building or Property in connection with
any such study, Tenant or its consultant shall provide Landlord with a detailed
scope of work and such work shall be subject to Landlord’s prior written
approval (which approval shall not be unreasonably withheld or delayed, but may
be conditioned upon compliance by Tenant and its consultant with reasonable
insurance requirements and upon other reasonable and customary requirements).

(xii) If Tenant or its employees, agents, contractors, vendors, customers or
guests receive, handle, use, store, transport, generate, treat and/or dispose of
any hazardous substances or wastes or radiation or radioactive materials on or
about the Center at any time during the term of this Lease, then (A) Tenant
shall be solely responsible for obtaining, at Tenant’s sole expense, any
environmental tests, studies or reports required by any governmental authority
for site or permit closure purposes or other similar purposes, and shall provide
a copy of all such tests, studies and reports to Landlord; and (B) unless
Landlord and Tenant mutually agree (in their respective sole discretion) that
the tests, studies and reports (if any) required under the foregoing clause
(A) are adequate to serve the purposes contemplated by this clause (B), then
within thirty (30) days after the termination or expiration of this Lease,
Landlord shall obtain a further environmental study, performed by a reputable
environmental consultant selected by Landlord, evaluating the presence or
absence of hazardous substances, hazardous wastes, pollutants, radiation and
radioactive materials on and about those portions of the Center affected by
Tenant’s operations in the Center and attributable or potentially attributable
to such operations (the “Exit Study”). Such Exit Study shall be at least a Phase
I study (and shall be a Phase II study to the extent the results of the Phase I
study reasonably suggest the necessity or desirability of a Phase II level
investigation in any areas), and shall be based on a reasonable and prudent
level of tests and investigations of the Center (if appropriate), which tests
shall be conducted no earlier than the date of termination or expiration of this
Lease. Liability for any remedial actions required or recommended on the basis
of the Exit Study shall be allocated in accordance with Sections 9.4, 9.6,10.6
and other applicable provisions of this Lease. The cost of the Exit Study shall
be borne by Landlord, except that if the Exit Study identifies any required or
recommended remedial work that is Tenant’s responsibility under the applicable
provisions of this Lease, then Tenant shall reimburse Landlord for the cost of
the Exit Study, which reimbursement shall be paid within thirty (30) days after
written demand by Landlord, accompanied by a copy of the invoice(s) reflecting
the cost of the Exit Study.

 

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(xiii) The parties acknowledge and agree that nothing in this Section 9.6 or in
any other applicable provisions of this Lease (including, without limitation,
any provisions relating to compliance with applicable laws) is intended to make
Tenant responsible or liable to Landlord, as a matter of contract, for any
environmental conditions, or for any related claims, losses, damages,
liabilities, costs, legal fees or expenses, to the extent arising out of or in
connection with (A) any migration of hazardous substances, hazardous wastes or
pollutants onto or under the Property, except to the extent (if any) that such
migration is caused or materially exacerbated by any intentional or actively
negligent acts or omissions of Tenant or its employees, agents or invitees,
and/or (B) any release of hazardous substances, hazardous wastes or pollutants
into the environment (including, but not limited to, the Property) by any person
or from any cause other than as a proximate result of Tenant’s use of the
Property, or as a result of any intentional or negligent acts or omissions of
Tenant or its employees, agents or invitees, or as a result of any breach of
Tenant’s obligations under this Lease.

(c) Landlord shall indemnify, defend and hold Tenant harmless from and against
any and all claims, losses, damages, liabilities, costs, legal fees and expenses
of any sort arising out of or relating to (i) the presence on the Center of any
hazardous substances, hazardous wastes, pollutants, radiation or radioactive
materials present on the Center as of the Rent Commencement Date (other than as
a result of any intentional or negligent acts or omissions of Tenant or of any
agent, employee or invitee of Tenant), and/or (ii) any unauthorized release into
the environment (including, but not limited to, the Center) of any hazardous
substances’ hazardous wastes, pollutants, radiation or radioactive materials to
the extent such release results from the negligence of or willful misconduct or
omission by Landlord or its agents or employees.

(d) The provisions of this Section 9.6 shall survive the termination of this
Lease.

10. INSURANCE AND INDEMNITY

10.1 Insurance.

(a) Tenant shall procure and maintain in full force and effect at all times
during the term of this Lease, from and after the Construction Access Date, at
Tenant’s cost and expense, commercial general liability insurance to protect
against liability to the public, or to any invitee of Tenant or Landlord,
arising out of or related to the use of or resulting from any accident occurring
in, upon or about the Premises, with limits of liability of not less than
(i) Three Million Dollars ($3,000,000.00) per occurrence for bodily injury,
personal injury and death, and Five Hundred Thousand Dollars ($500,000.00) per
occurrence for property damage, or (ii) a combined single limit of liability of
not less than Five Million Dollars ($5,000,000.00) per occurrence for bodily
injury (including personal injury and death) and property damage. Such insurance
shall name Landlord, its general partners, its property manager and any lender
holding a deed of trust on the Center from time to time (as designated in
writing by Landlord to Tenant from time to time) as additional insureds
thereunder. The amount of such insurance shall not be construed to limit any
liability or obligation of Tenant under this Lease. Tenant shall also procure
and maintain in full force and effect at all times during the term of this
Lease, at

 

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Tenant’s cost and expense, products/completed operations coverage, on terms and
in amounts (A) customary in Tenant’s industry for companies engaged in the
marketing of products on a scale comparable to that in which Tenant is engaged
from time to time and (B) mutually satisfactory to Landlord and Tenant in their
respective reasonable discretion, provided that such coverage is reasonably
available to Tenant on commercially reasonable terms.

(b) Landlord shall procure and maintain in full force and effect at all times
during the term of this Lease, at Landlord’s cost and expense (but reimbursable
as an Operating Expense under Section 5.2 hereof), commercial general liability
insurance to protect against liability arising out of or related to the use of
or resulting from any accident occurring in, upon or about the Center, with a
combined single limit of liability of not less than Five Million Dollars
($5,000,000.00) per occurrence for bodily injury (including personal injury and
death) and property damage.

(c) Landlord shall procure and maintain in full force and effect at all times
during the term of this Lease, at Landlord’s cost and expense (but reimbursable
as an Operating Expense under Section 5.2 hereof), policies of property
insurance providing protection against “all risk of direct physical loss” (as
defined by and detailed in the Insurance Service Office’s Commercial Property
Program “Cause of Loss—Special Form [CP1030]” or its equivalent) for the shell
of the Building and for the improvements in the Common Areas of the Center, on a
full replacement cost basis (with no co-insurance or, if coverage without
co-insurance is not reasonably available, then on an “agreed amount” basis or
with a commercially reasonable margin clause). Such insurance may include
earthquake and/or environmental coverage, as part of the same policy or as a
separate policy or policies, to the extent Landlord in its sole discretion
elects to carry such coverage, and shall have such commercially reasonable
deductibles and other terms as Landlord in its discretion determines to be
appropriate. Landlord shall have no obligation to carry property damage
insurance for any alterations, additions or improvements installed by Tenant in
the Building or on or about the Center.

(d) Landlord shall procure and maintain in full force and effect at all times
during the term of this Lease, at Landlord’s cost and expense (but reimbursable
as an Operating Expense under Section 5.2 hereof), policies of property
insurance providing protection against “all risk of direct physical loss” (as
defined by and detailed in the Insurance Service Office’s Commercial Property
Program “Cause of Loss—Special Form [CP1030]” or its equivalent) for the tenant
improvements existing in the Premises on the Construction Access Date and for
all Tenant Improvements constructed pursuant to the Workletter (but excluding
Tenant’s Property as defined in paragraph (e) below, which it shall be Tenant’s
responsibility to insure pursuant to such paragraph), on a full replacement cost
basis (with no co-insurance or, if coverage without co-insurance is not
reasonably available, then on an “agreed amount” basis or with a commercially
reasonable margin clause). Such insurance may have such commercially reasonable
deductibles and other terms as Landlord in its reasonable discretion determines
to be appropriate. The coverage required to be maintained under this paragraph
(d) may, in Landlord’s discretion, be added to or combined with Landlord’s
master policy carried under paragraph (c) above. Tenant shall cooperate with
Landlord in the preparation of a mutually approved initial list or schedule of
such existing improvements and Tenant Improvements, for purposes of identifying
the items Landlord is responsible for insuring under this paragraph (d), and
Tenant

 

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shall thereafter provide to Landlord from time to time, upon request by Landlord
annually or at other reasonable intervals, an updated version of such list or
schedule (the intended purpose of such updating being to reflect any
modification or removal of any such items that would have the effect of
eliminating them from the scope of Landlord’s insurance obligation under this
paragraph (d)). In addition, Tenant shall provide Landlord with final
construction cost figures for the Tenant Improvements (or for each phase
thereof, if constructed in phases), for Landlord’s use in determining
appropriate insurance coverage for the Tenant Improvements. Landlord, in its
discretion, may elect from time to time to obtain appraisals of any or all
alterations, additions, improvements and tenant improvements (if any) which
Landlord is required to insure hereunder.

(e) Tenant shall procure and maintain in full force and effect at all times
during the term of this Lease, from and after the Construction Access Date, at
Tenant’s cost and expense, policies of property insurance providing protection
against “all risk of direct physical loss” (as defined by and detailed in the
Insurance Service Office’s Commercial Property Program “Cause of Loss-Special
Form [CP1030]” or its equivalent) for Tenant’s movable personal property, office
furniture, movable equipment and trade fixtures, and for all other alterations,
additions and improvements placed or installed by Tenant from time to time in or
about the Premises other than Tenant Improvements constructed pursuant to the
Workletter (collectively, “Tenant’s Property,” which term is not intended to
imply any conclusion regarding ultimate ownership of alterations, additions and
improvements that are otherwise covered by Article 7 above, but is used solely
as a defined term for purposes of the specific contexts in which it is used as
such in this Lease), on a full replacement cost basis (with no co-insurance or,
if coverage without co-insurance is not reasonably available, then on an “agreed
amount” basis or with a commercially reasonable margin clause). Such insurance
may have such commercially reasonable deductibles and other terms as Tenant in
its discretion determines to be appropriate, and shall name both Tenant and
Landlord as insureds as their interests may appear.

(f) During the construction of the Tenant Improvements, Tenant shall also
procure and maintain in full force and effect, at its sole cost and expense, a
policy of builder’s risk insurance on the Tenant Improvements, in such amounts
and with such commercially reasonable deductibles as Landlord and Tenant may
mutually and reasonably determine to be appropriate with respect to such
insurance. Without limiting the generality of the foregoing provisions, Tenant’s
builder’s risk insurance with respect to the Tenant Improvements shall in all
events include earthquake insurance in an amount at least equal to the
cumulative amount of the Tenant Improvement Allowance paid by Landlord from time
to time in connection with the construction of such Tenant Improvements.

10.2 Quality of Policies and Certificates. All policies of insurance required
hereunder shall be issued by responsible insurers and, in the case of policies
carried or required to be carried by Tenant, shall be written as primary
policies not contributing with and not in excess of any coverage that Landlord
may carry. Tenant shall deliver to Landlord copies of policies or certificates
of insurance showing that said policies are in effect. The coverage provided by
such policies shall include the clause or endorsement referred to in
Section 10.4. If Tenant fails to acquire, maintain or renew any insurance
required to be maintained by it under this Article 10 or to pay the premium
therefor, then Landlord, at its option and in addition to its other remedies,
but without obligation so to do, may procure such insurance, and any sums
expended by it to procure

 

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any such insurance on behalf of or in place of Tenant shall be repaid upon
demand, with interest as provided in Section 3.2 hereof. Tenant shall give
Landlord at least thirty (30) days prior written notice of any cancellation or
nonrenewal of insurance required to be maintained under this Article 10, and
shall obtain written undertakings from each insurer under policies required to
be maintained by it to endeavor to notify all insureds thereunder at least
thirty (30) days prior to cancellation of coverage (or ten (10) days prior to
cancellation of coverage due to failure to pay a premium).

10.3 Workers’ Compensation; Employees. Tenant shall maintain in full force and
effect during the term of this Lease workers’ compensation insurance in at least
the minimum amounts required by law, covering all of Tenant’s employees working
at or about the Premises. In addition, Tenant shall maintain in full force and
effect during the term of this Lease employer’s liability coverage with limits
of liability of not less than One Hundred Thousand Dollars ($100,000) per
accident, One Hundred Thousand Dollars ($100,000) per employee for disease, and
Five Hundred Thousand Dollars ($500,000) policy limit for disease.

10.4 Waiver of Subrogation. Notwithstanding anything to the contrary contained
in this Lease, to the extent permitted by law, Landlord and Tenant each waive
any right to recover against the other with respect to (i) damage to property,
(ii) damage to the Center or any part thereof, or (iii) claims arising by reason
of any of the foregoing, but only to the extent that any of the foregoing
damages and claims under clauses (i)-(iii) hereof are covered, and only to the
extent of such coverage, by property insurance actually carried or required to
be carried hereunder by either Landlord or Tenant. This provision is intended to
waive fully, and for the benefit of each party, any rights and claims which
might give rise to a right of subrogation in any insurance carrier. Each party
shall procure a clause or endorsement on any property insurance policy denying
to the insurer rights of subrogation against the other party to the extent
rights have been waived by the insured prior to the occurrence of injury or
loss. Coverage provided by insurance maintained by Landlord or Tenant shall not
be limited, reduced or diminished by virtue of the subrogation waiver herein
contained.

10.5 Increase in Premiums. Tenant shall do all acts and pay all expenses
necessary to ensure that the Premises are not used for purposes prohibited by
any applicable fire insurance, and that Tenant’s use of the Premises, Building
and Center complies with all requirements necessary to obtain any such
insurance. If Tenant uses or permits the Premises, Building or Center to be used
in a manner which increases the existing rate of any insurance carried by
Landlord on the Center and such use continues for longer than a reasonable
period specified in any written notice from Landlord to Tenant identifying the
rate increase and the factors causing the same, then Tenant shall pay the amount
of the increase in premium caused thereby, and Landlord’s costs of obtaining
other replacement insurance policies, including any increase in premium, within
ten (10) days after demand therefor by Landlord.

10.6 Indemnification.

(a) Except as otherwise expressly provided for in this Lease, Tenant shall
indemnify, defend and hold Landlord and its members, partners, shareholders,
officers, directors, agents, employees and contractors harmless from any and all
liability for injury to or death of

 

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any person, or loss of or damage to the property of any person, and all actions,
claims, demands, costs (including, without limitation, reasonable attorneys’
fees), damages or expenses of any kind arising therefrom which may be brought or
made against Landlord or which Landlord may pay or incur by reason of the use,
occupancy and enjoyment of the Center by Tenant or any invitees, sublessees,
licensees, assignees, employees, agents or contractors of Tenant or holding
under Tenant (including, but not limited to, any such matters arising out of or
in connection with any early entry upon the Center by Tenant pursuant to
Section 2.2 hereof) from any cause whatsoever other than (i) negligence or
willful misconduct or omission by Landlord or its agents, employees or
contractors or (ii) Landlord’s material breach of its obligations under this
Lease. Except as otherwise expressly provided for in this Lease, Landlord and
its members, partners, shareholders, officers, directors, agents, employees and
contractors shall not be liable for, and Tenant hereby waives all claims against
such persons for, damages to goods, wares and merchandise in or upon the Center,
or for injuries to Tenant, its agents or third persons in or upon the Center,
from any cause whatsoever other than (x) negligence or willful misconduct or
omission by Landlord or its agents, employees or contractors or (y) Landlord’s
material breach of its obligations under this Lease. Tenant shall give prompt
notice to Landlord of any casualty or accident in, on or about the Center.

(b) Except as otherwise expressly provided for in this Lease, Landlord shall
indemnify, defend and hold Tenant and its partners, shareholders, officers,
directors, agents, employees and contractors harmless from any and all liability
for injury to or death of any person, or loss of or damage to the property of
any person, and all actions, claims, demands, costs (including, without
limitation, reasonable attorneys’ fees), damages or expenses of any kind arising
therefrom which may be brought or made against Tenant or which Tenant may pay or
incur, to the extent such liabilities or other matters arise by reason of any
negligence or willful misconduct or omission by Landlord or its agents,
employees or contractors.

10.7 Blanket Policy. Any policy required to be maintained hereunder may be
maintained under a so-called “blanket policy” insuring other parties and other
locations so long as the amount of insurance required to be provided hereunder
is not thereby diminished. Without limiting the generality of the requirement
set forth at the end of the preceding sentence, property insurance provided
under a blanket policy shall provide full replacement cost coverage and
liability insurance provided under a blanket policy shall include per location
aggregate limits meeting or exceeding the limits required under this Article 10.

11. SUBLEASE AND ASSIGNMENT

11.1 Assignment and Sublease of Building. Except in the case of a Permitted
Transfer, Tenant shall not have the right or power to assign its interest in
this Lease, or make any sublease of the Premises or any portion thereof, nor
shall any interest of Tenant under this Lease be assignable involuntarily or by
operation of law, without on each occasion obtaining the prior written consent
of Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed. Any purported sublease or assignment of Tenant’s interest in this Lease
requiring but not having received Landlord’s consent thereto (to the extent such
consent is required hereunder) shall be void. Without limiting the generality of
the foregoing provisions, Landlord may withhold consent to any proposed
subletting or assignment solely on the ground, if applicable,

 

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that the use by the proposed subtenant or assignee is not a permitted use
hereunder and is reasonably likely to be incompatible with Landlord’s use of the
balance of the Center. Except in the case of a Permitted Transfer, any
dissolution, consolidation, merger or other reorganization of Tenant, or any
sale or transfer of substantially all of the stock or assets of Tenant in a
single transaction or series of related transactions, shall be deemed to be an
assignment hereunder and shall be void without the prior written consent of
Landlord as required above. Notwithstanding the foregoing, (i) neither an
initial public offering of the common stock of Tenant, nor any other sale of
Tenant’s capital stock through any public securities exchange or market, nor any
other issuance of Tenant’s capital stock for bona fide financing purposes, nor
any consolidation, merger or reorganization in which Tenant is the surviving
entity, shall be deemed to be an assignment, subletting or transfer hereunder;
and (ii) Tenant shall have the right to assign this Lease or sublet the
Premises, or any portion thereof, without Landlord’s consent (but with prior or
concurrent written notice by Tenant to Landlord), to any Affiliate of Tenant, or
to any entity which results from a merger or consolidation involving Tenant, or
to any entity which acquires substantially all of the stock or assets of Tenant
as a going concern (each, a “Permitted Transfer”). For purposes of the preceding
sentence, an “Affiliate” of Tenant shall mean any entity in which Tenant owns at
least a fifty percent (50%) equity interest, any entity which owns at least a
fifty percent (50%) equity interest in Tenant, and/or any entity which is
related to Tenant by a chain of ownership interests involving at least a fifty
percent (50%) equity interest at each level in the chain. Landlord shall have no
right to terminate this Lease in connection with, and shall have no right to any
sums or other economic consideration resulting from, any Permitted Transfer.
Except as expressly set forth in this Section 11.1, however, the provisions of
Section 11.2 shall remain applicable to any Permitted Transfer and the
transferee under such Permitted Transfer shall be and remain subject to all of
the terms and provisions of this Lease.

11.2 Rights of Landlord.

(a) Consent by Landlord to one or more assignments of this Lease, or to one or
more sublettings of the Premises or any portion thereof, or collection of rent
by Landlord from any assignee or sublessee, shall not operate to exhaust
Landlord’s rights under this Article 11, nor constitute consent to any
subsequent assignment or subletting. No assignment of Tenant’s interest in this
Lease and no sublease shall relieve Tenant of its obligations hereunder,
notwithstanding any waiver or extension of time granted by Landlord to any
assignee or sublessee, or the failure of Landlord to assert its rights against
any assignee or sublessee, and regardless of whether Landlord’s consent thereto
is given or required to be given hereunder. In the event of a default by any
assignee, sublessee or other successor of Tenant in the performance of any of
the terms or obligations of Tenant under this Lease, Landlord may proceed
directly against Tenant without the necessity of exhausting remedies against any
such assignee, sublessee or other successor. In addition, Tenant immediately and
irrevocably assigns to Landlord, as security for Tenant’s obligations under this
Lease, all rent from any subletting of all or a part of the Premises as
permitted under this Lease, and Landlord, as Tenant’s assignee, or any receiver
for Tenant appointed on Landlord’s application, may collect such rent and apply
it toward Tenant’s obligations under this Lease; except that, until the
occurrence and during the continuance of an event of default by Tenant, Tenant
shall have the right to collect such rent and to retain all sublease profits
(subject to the provisions of Section 11.2(c), below).

 

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(b) Upon any assignment of Tenant’s interest in this Lease for which Landlord’s
consent is required under Section 11.1 hereof, Tenant shall pay to Landlord,
within ten (10) days after receipt thereof by Tenant from time to time, one-half
( 1/2) of all cash sums and other economic considerations received by Tenant in
connection with or as a result of such assignment, after first deducting
therefrom (i) any costs incurred by Tenant for leasehold improvements
(including, but not limited to, third-party architectural and space planning
costs) in the Premises in connection with such assignment, amortized over the
remaining term of this Lease, (ii) any reasonable real estate commissions and/or
reasonable attorneys’ fees actually incurred by Tenant in connection with such
assignment, and (iii) the unamortized cost (assuming straight-line amortization
over the entire initial term of this Lease) of any alterations, additions and
improvements made to the Premises at Tenant’s expense and remaining in the
Premises at the time of such assignment.

(c) Upon any sublease of all or any portion of the Premises for which Landlord’s
consent is required under Section 11.1 hereof, Tenant shall pay to Landlord,
within ten (10) days after receipt thereof by Tenant from time to time, one-half
( 1/2) of all cash sums and other economic considerations received by Tenant in
connection with or as a result of such sublease, after first deducting therefrom
(i) the minimum rental due hereunder for the corresponding period, prorated (on
the basis of the average per-square-foot cost paid by Tenant for the Premises
for the applicable period under this Lease) to reflect the size of the subleased
portion of the Premises, (ii) any costs incurred by Tenant for leasehold
improvements in the subleased portion of the Premises (including, but not
limited to, third-party architectural and space planning costs) for the specific
benefit of the sublessee in connection with such sublease, amortized over the
remaining term of this Lease, (iii) any reasonable real estate commissions
and/or reasonable attorneys’ fees actually incurred by Tenant in connection with
such sublease, amortized over the term of such sublease, and (iv) amortized over
the term of such sublease, the portion allocable to the sublease term of the
unamortized cost (assuming straight-line amortization over the entire initial
term of this Lease) of any alterations, additions and improvements made to the
Premises at Tenant’s expense and reasonably allocable to the subleased portion
of the Premises at the time of such sublease. Notwithstanding anything to the
contrary contained in this paragraph (c), in no event shall the economic
considerations required to be shared by Tenant with Landlord hereunder include
the reasonable, good faith value of any goods or services provided by Tenant to
any sublessee in connection with any subletting, including, but not limited to,
any shipping, receiving, security, reception, facilities management or
laboratory, repair, maintenance, utilities and other similar goods and services
provided to the sublessee in excess of the goods and services provided by
Landlord to Tenant under this Lease.

12. RIGHT OF ENTRY AND QUIET ENJOYMENT

12.1 Right of Entry. Landlord and its authorized representatives shall have the
right, subject to Tenant’s reasonable operating and security procedures, to
enter the Premises at any time during the term of this Lease during normal
business hours and upon not less than twenty-four (24) hours prior notice,
except in the case of emergency (in which event no notice shall be required and
entry may be made at any time), for the purpose of inspecting and determining
the condition of the Premises and Building or for any other proper purpose
including, without limitation, to make repairs, replacements or improvements
which Landlord

 

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may deem necessary, to show the Premises and Building to prospective purchasers,
to show the Premises and Building to prospective tenants (but only during the
final year of the term of this Lease), and to post notices of nonresponsibility.
Landlord shall not be liable for inconvenience, annoyance, disturbance, loss of
business, quiet enjoyment or other damage or loss to Tenant by reason of making
any repairs or performing any work upon the Building or the Center or by reason
of erecting or maintaining any protective barricades in connection with any such
work, and the obligations of Tenant under this Lease shall not thereby be
affected in any manner whatsoever, provided, however, Landlord shall use
reasonable efforts to minimize the inconvenience to Tenant’s normal business
operations caused thereby.

12.2 Quiet Enjoyment. Landlord covenants that Tenant, upon paying the rent and
performing its obligations hereunder and subject to all the terms and conditions
of this Lease, shall peacefully and quietly have, hold and enjoy the Premises
and the Center throughout the term of this Lease, or until this Lease is
terminated as provided by this Lease.

13. CASUALTY AND TAKING

13.1 Damage or Destruction.

(a) If the Premises or any portion of the Common Areas of the Center necessary
for Tenant’s use and occupancy of the Premises is damaged or destroyed in whole
or in any substantial part during the term of this Lease, Landlord shall obtain
from Landlord’s architect, as soon as practicable (and in all events within
forty-five (45) days) following the damage or destruction, (i) the architect’s
reasonable, good faith estimate of the time within which repair and restoration
of the Premises and Common Areas (if applicable) can reasonably be expected to
be completed to the extent necessary to enable Tenant to resume its full
business operations in the Premises without material impairment and (ii) the
architect’s reasonable, good faith opinion as to whether repair and restoration
to that extent will be permitted under applicable governmental laws, regulations
and building codes then in effect (collectively, the “Architect’s Estimate”). If
the damage or destruction materially impairs Tenant’s ability to conduct its
business operations in the Premises, and if either (A) the estimated repair time
specified in the Architect’s Estimate exceeds nine (9) months (or, in the case
of an occurrence during the final year of the term of this Lease, sixty
(60) days, provided that if Landlord elects to terminate this Lease under this
clause (A) on the basis of an Architect’s Estimate showing an estimated repair
time of more than sixty (60) days but not more than nine (9) months with respect
to a casualty occurring during the final year of the initial term or first
extended term [if applicable] of this Lease but prior to a valid exercise by
Tenant of its option to extend the then-current term of this Lease, and if
Tenant, with ten (10) days after receipt of written notice of Landlord’s
election to terminate, validly exercises in writing any then-exercisable option
of Tenant to extend the term of this Lease under Section 2.6 above, then
Landlord’s election to terminate shall be void and of no force or effect and the
rights and obligations of the parties shall be determined under this Article 13
without regard to such purported termination by Landlord) or (B) the Architect’s
Estimate states that repair and restoration of the affected areas to the extent
necessary to enable Tenant to resume its full business operations in the
Premises without material impairment will not be permitted under applicable
governmental laws, regulations and building codes then in effect, then in either
such event either Landlord or Tenant may terminate this Lease as of the date

 

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of the occurrence by giving written notice to the other party within thirty
(30) days after the date of the occurrence or fifteen (15) days after delivery
of the Architect’s Estimate, whichever is later. In addition, Landlord shall
have a similar termination right if the damage or destruction arises from a risk
that is not required to be insured against (and is not actually insured against)
by Landlord under this Lease and if Landlord’s architect reasonably estimates
that the uninsured cost to restore the portions of the Premises and Building for
which Landlord is responsible to the condition required above would exceed five
percent (5%) of the then applicable replacement cost of the entire Premises,
unless Tenant agrees in writing, within ten (10) days after being notified of
Landlord’s exercise of its termination right, to bear the restoration costs in
excess of such five percent (5%) limit and, if reasonably requested by Landlord,
agrees to provide security in an amount and on terms reasonably satisfactory to
Landlord for Tenant’s performance of such payment obligation. If the
circumstances creating a termination right under the preceding two sentences do
not exist, or if such circumstances exist but neither party timely exercises any
applicable termination right, then this Lease shall remain in full force and
effect and (x) Landlord, as to the Common Areas of the Center and as to the
shell of the Building and the alterations, additions and improvements that
Landlord is required to insure under Section 10.1(d) above, and (y) Tenant, as
to the alterations, additions and improvements that Tenant is required to insure
under Section 10.1 (e) above, shall respectively commence and complete, with all
due diligence and as promptly as is reasonably practicable under the conditions
then existing, the repair and restoration of such respective portions of the
Property and Premises to a condition substantially comparable to that which
existed immediately prior to the damage or destruction; provided, however, that
Tenant in its discretion may elect not to repair, rebuild or replace any or all
of the items which would otherwise be Tenant’s responsibility under clause
(y) of this sentence to the extent such items were constructed or installed at
Tenant’s sole expense and without any use of funds from the Tenant Improvement
Allowance.

(b) If this Lease is terminated pursuant to the foregoing provisions of this
Section 13.1 following an occurrence which is a peril actually insured or
required to be insured against pursuant to Section 10.1(c), (d) and/or (e),
Landlord and Tenant agree (and any Lender shall be asked to agree) that such
insurance proceeds shall be allocated between Landlord and Tenant in a manner
which fairly and reasonably reflects their respective ownership rights under
this Lease, as of the termination or expiration of the term of this Lease, with
respect to the improvements, fixtures, equipment and other items to which such
insurance proceeds are attributable.

(c) From and after the date of an occurrence resulting in damage to or
destruction of the Premises or of Common Areas necessary for Tenant’s use and
occupancy of the Premises, and continuing until repair and restoration thereof
are completed to the extent necessary to enable Tenant to resume operation of
its business in the Premises without material impairment, there shall be an
equitable abatement of minimum rental and of Tenant’s Operating Cost Share of
Operating Expenses based upon the degree to which Tenant’s ability to conduct
its business in the Premises is impaired.

(d) Each party expressly waives the provisions of California Civil Code Sections
1932(2), 1933(4) and any other applicable existing or future law permitting the
termination of a lease agreement in the event of damage to or destruction of the
leased property,

 

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it being the intention of the parties that their respective rights in such
circumstances shall be governed solely by the provisions of this Article 13.

13.2 Condemnation.

(a) If during the term of this Lease the Premises or any Common Areas of the
Center that are necessary for Tenant’s use and occupancy of the Premises, or any
substantial part of either of them, is taken by eminent domain or by reason of
any public improvement or condemnation proceeding, or in any manner by exercise
of the right of eminent domain (including any transfer in lieu of or in
avoidance of an exercise of the power of eminent domain), or receives
irreparable damage by reason of anything lawfully done by or under color of any
public authority, then (i) this Lease shall terminate as to the entire Premises
at Landlord’s election by written notice given to Tenant within thirty (30) days
after the taking has occurred, and (ii) this Lease shall terminate as to the
entire Premises at Tenant’s election, by written notice given to Landlord within
thirty (30) days after the nature and extent of the taking have been finally
determined, if the portion of the Building or Center taken is of such extent and
nature as substantially to handicap, impede or permanently impair Tenant’s use
of the Premises. If Tenant elects to terminate this Lease, Tenant shall also
notify Landlord of the date of termination, which date shall not be earlier than
thirty (30) days nor later than ninety (90) days after Tenant has notified
Landlord of Tenant’s election to terminate, except that this Lease shall
terminate on the date of taking if such date falls on any date before the date
of termination designated by Tenant. If neither party elects to terminate this
Lease as hereinabove provided, this Lease shall continue in full force and
effect (except that there shall be an equitable abatement of minimum rental and
of Tenant’s Operating Cost Share of Operating Expenses based upon the degree to
which Tenant’s ability to conduct its business in the Premises is impaired),
Landlord shall restore the improvements for which Landlord is responsible under
clause (x) of Section 13.1 (a) above to a complete architectural whole and a
functional condition and as nearly as reasonably possible to the condition
existing before the taking, and Tenant shall restore the improvements for which
Tenant is responsible under clause (y) of Section 13.1 (a) above to a complete
architectural whole and a functional condition and as nearly as reasonably
possible to the condition existing before the taking; provided, however, that
Tenant in its discretion may elect not to repair, restore or replace any or all
of the items which would otherwise be Tenant’s responsibility to the extent such
items were constructed or installed at Tenant’s sole expense and without any use
of funds from the Tenant Improvement Allowance. In connection with any such
restoration, each party shall use reasonable efforts (including, without
limitation, any necessary negotiation or intercession with its respective
lender, if any) to ensure that any severance damages or other condemnation
awards intended to provide compensation for rebuilding or restoration costs are
promptly collected and made available to Landlord and Tenant in portions
reasonably corresponding to the cost and scope of their respective restoration
obligations, subject only to such payment controls as either party or its lender
may reasonably require in order to ensure the proper application of such
proceeds toward the restoration of the Building and the Center. Each party
expressly waives the provisions of California Code of Civil Procedure
Section 1265.130 and of any other existing or future law allowing either party
to terminate (or to petition the Superior Court to terminate) a lease in the
event of a partial condemnation or taking of the leased

 

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property, it being the intention of the parties that their respective rights in
such circumstances shall be governed solely by the provisions of this Article
13.

(b) If this Lease is terminated pursuant to the foregoing provisions of this
Section 13.2, or if this Lease remains in effect but any condemnation awards or
other proceeds become available as compensation for the loss or destruction of
the Building and/or the Center, then Landlord and Tenant agree (and any Lender
shall be asked to agree) that such proceeds shall be allocated between Landlord
and Tenant, respectively, in the respective proportions in which Landlord and
Tenant would have shared, under Section 13.1(b), the proceeds of any applicable
insurance following damage to or destruction of the applicable improvements due
to an insured casualty.

13.3 Reservation of Compensation. Landlord reserves, and Tenant waives and
assigns to Landlord, all rights to any award or compensation for damage to the
Center, the improvements located therein and the leasehold estate created
hereby, accruing by reason of any taking in any public improvement, condemnation
or eminent domain proceeding or in any other manner by exercise of the right of
eminent domain or of anything lawfully done by public authority, except that
(a) Tenant shall be entitled to pursue recovery from the applicable public
authority for Tenant’s moving expenses, trade fixtures and equipment and any
leasehold improvements installed by Tenant in the Premises or Building at its
own sole expense, but only to the extent Tenant would have been entitled to
remove such items at the expiration of the term of this Lease and then only to
the extent of the then remaining unamortized value of such improvements computed
on a straight-line basis over the term of this Lease, and (b) any condemnation
awards or proceeds described in Section 13.2(b) shall be allocated and disbursed
in accordance with the provisions of Section 13.2(b), notwithstanding any
contrary provisions of this Section 13.3.

13.4 Restoration of Improvements. In connection with any repair or restoration
of improvements by either party following a casualty or taking as hereinabove
set forth, the party responsible for such repair or restoration shall, to the
extent possible, return such improvements to a condition substantially equal to
that which existed immediately prior to the casualty or taking. To the extent
such party wishes to make material modifications to such improvements, such
modifications shall be subject to the prior written approval of the other party
(not to be unreasonably withheld or delayed), except that no such approval shall
be required for modifications that are required by applicable governmental
authorities as a condition of the repair or restoration, unless such required
modifications would impair or impede Tenant’s conduct of its business in the
Premises (in which case any such modifications in Landlord’s work shall require
Tenant’s consent, not unreasonably withheld or delayed) or would materially and
adversely affect the exterior appearance, the structural integrity or the
mechanical or other operating systems of the Premises or Building (in which case
any such modifications in Tenant’s work shall require Landlord’s consent, not
unreasonably withheld or delayed).

 

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14. DEFAULT

14.1 Events of Default. The occurrence of any of the following shall constitute
an event of default on the part of Tenant:

(a) Abandonment. Abandonment of the Premises. “Abandonment” is hereby defined to
include, but is not limited to, any absence by Tenant from the Premises for
fifteen (15) consecutive days or more while Tenant is in default, beyond any
applicable notice and cure periods, under any other provision of this Lease;

(b) Nonpayment. Failure to pay, when due, any amount payable to Landlord
hereunder, such failure continuing for a period of five (5) business days after
written notice of such failure; provided, however, that any such notice shall be
in lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161 et seq., as amended from time to time, so long as
such notice is served in the manner required by California Code of Civil
Procedure Section 1162;

(c) Other Obligations. Failure to perform any obligation, agreement or covenant
under this Lease other than those matters specified in subsection (b) hereof
(including, but not limited to, any breach by Tenant of the Declaration as
provided in Section 15.4 below), such failure continuing for thirty (30) days
after written notice of such failure; provided, however, that if such failure is
curable in nature but cannot reasonably be cured within such 30-day period, then
Tenant shall not be in default if, and so long as, Tenant promptly (and in all
events within such 30-day period) commences such cure and thereafter diligently
pursues such cure to completion; and provided further, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 et seq., as amended from time to
time, so long as such notice is served in the manner required by California Code
of Civil Procedure Section 1162;

(d) General Assignment. A general assignment by Tenant for the benefit of
creditors;

(e) Bankruptcy. The filing of any voluntary petition in bankruptcy by Tenant, or
the filing of an involuntary petition by Tenant’s creditors, which involuntary
petition remains undischarged for a period of sixty (60) days. In the event that
under applicable law the trustee in bankruptcy or Tenant has the right to affirm
this Lease and continue to perform the obligations of Tenant hereunder, such
trustee or Tenant shall, in such time period as may be permitted by the
bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder
outstanding as of the date of the affirmance of this Lease and provide to
Landlord such adequate assurances as may be necessary to ensure Landlord of the
continued performance of Tenant’s obligations under this Lease. Specifically,
but without limiting the generality of the foregoing, such adequate assurances
must include assurances that the Premises continue to be operated only for the
use permitted hereunder. The provisions hereof are to assure that the basic
understandings between Landlord and Tenant with respect to Tenant’s use of the
Center and the benefits to Landlord therefrom are preserved, consistent with the
purpose and intent of applicable bankruptcy laws;

(f) Receivership. The employment of a receiver appointed by court order to take
possession of substantially all of Tenant’s assets or the Premises, if such
receivership remains undissolved for a period of sixty (60) days;

 

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(g) Attachment. The attachment, execution or other judicial seizure of all or
substantially all of Tenant’s assets or the Premises, if such attachment or
other seizure remains undismissed or undischarged for a period of thirty
(30) days after the levy thereof; or

(h) Insolvency. The admission by Tenant in writing of its inability to pay its
debts as they become due, the filing by Tenant of a petition seeking any
reorganization or arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, the filing by Tenant of an answer admitting or failing timely to
contest a material allegation of a petition filed against Tenant in any such
proceeding or, if within sixty (60) days after the commencement of any
proceeding against Tenant seeking any reorganization or arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, such proceeding shall not have
been dismissed.

14.2 Remedies upon Tenant’s Default.

(a) Upon the occurrence of any event of default described in Section 14.1
hereof, Landlord, in addition to and without prejudice to any other rights or
remedies it may have, shall have the right either (i) to terminate this Lease
and recover from Tenant all damages incurred by Landlord as a result of Tenant’s
default, as hereinafter provided, or (ii) to continue this Lease in effect and
recover rent and other charges and amounts as they become due.

(b) Even if Tenant has breached this Lease and abandoned the Premises, this
Lease shall continue in effect for so long as Landlord does not terminate
Tenant’s right to possession under subsection (a) hereof and Landlord may
enforce all of its rights and remedies under this Lease, including the right to
recover rent as it becomes due, and Landlord, without terminating this Lease,
may exercise all of the rights and remedies of a lessor under 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 right to
sublet or assign, subject only to reasonable limitations), or any successor Code
section. Acts of maintenance, preservation or efforts to relet the Premises or
the appointment of a receiver upon application of Landlord to protect Landlord’s
interests under this Lease shall not constitute a termination of Tenant’s right
to possession.

(c) If Landlord terminates this Lease pursuant to this Section 14.2, Landlord
shall have all of the rights and remedies of a landlord provided by
Section 1951.2 of the Civil Code of the State of California, or any successor
Code section, which remedies include Landlord’s right to recover from Tenant
(i) the worth at the time of award of the unpaid rent and additional rent which
had been earned at the time of termination, (ii) the worth at the time of award
of the amount by which the-unpaid rent and additional rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided, (iii) the
worth at the time of award of the amount by which the unpaid rent and additional
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, and (iv) any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or which
in the ordinary

 

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course of things would be likely to result therefrom, including, but not limited
to, the cost of recovering possession of the Premises, expenses of reletting,
including necessary repair, renovation and alteration of the Premises,
reasonable attorneys’ fees, and other reasonable costs. The “worth at the time
of award” of the amounts referred to in clauses (i) and (ii) above shall be
computed by allowing interest at ten percent (10%) per annum from the date such
amounts accrued to Landlord. The “worth at the time of award” of the amounts
referred to in clause (iii) above shall be computed by discounting such amount
at one percentage point above the discount rate of the Federal Reserve Bank of
San Francisco at the time of award.

14.3 Remedies Cumulative. All rights, privileges and elections or remedies of
Landlord contained in this Article 14 are cumulative and not alternative to the
extent permitted by law and except as otherwise provided herein.

15. SUBORDINATION, ATTORNMENT AND SALE

15.1 Subordination to Mortgage. This Lease, and any sublease entered into by
Tenant under the provisions of this Lease, shall be subject and subordinate to
any ground lease, mortgage, deed of trust, sale/leaseback transaction or any
other hypothecation for security now or hereafter placed upon the Premises, the
Building, the Center, or any of them, and the rights of any assignee of Landlord
or of any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor
under any of the foregoing, and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof; provided, however, that such subordination in the case of
any future ground lease, mortgage, deed of trust, sale/leaseback transaction or
any other hypothecation for security placed upon the Premises, the Building, the
Center, or any of them shall be conditioned on Tenant’s receipt from the ground
lessor, mortgagee, trustee, beneficiary or leaseback lessor of a Non-Disturbance
Agreement in a form reasonably acceptable to Tenant (i) confirming that so long
as Tenant is not in material default hereunder beyond any applicable cure period
(for which purpose the occurrence and continuance of any event of default under
Section 14.1 hereof shall be deemed to be “material”), Tenant’s rights hereunder
shall not be disturbed by such person or entity and (ii) agreeing that the
benefit of such Non-Disturbance Agreement shall be transferable to any
transferee under a Permitted Transfer and to any other assignee or subtenant
that is acceptable to the ground lessor, mortgagee, trustee, beneficiary or
leaseback lessor at the time of transfer. If any mortgagee, trustee,
beneficiary, ground lessor, sale/leaseback lessor or assignee elects to have
this Lease be an encumbrance upon the Center prior to the lien of its mortgage,
deed of trust, ground lease or leaseback lease or other security arrangement and
gives notice thereof to Tenant, this Lease shall be deemed prior thereto,
whether this Lease is dated prior or subsequent to the date thereof or the date
of recording thereof. Tenant, and any sublessee, shall execute such documents as
may reasonably be requested by any mortgagee, trustee, beneficiary, ground
lessor, sale/leaseback lessor or assignee to evidence the subordination herein
set forth, subject to the conditions set forth above, or to make this Lease
prior to the lien of any mortgage, deed of trust, ground lease, leaseback lease
or other security arrangement, as the case may be. Upon any default by Landlord
in the performance of its obligations under any mortgage, deed of trust, ground
lease, leaseback lease or assignment, Tenant (and any sublessee) shall,
notwithstanding any subordination hereunder, attorn to the mortgagee, trustee,
beneficiary, ground lessor, leaseback lessor or assignee thereunder upon demand
and become the tenant of the successor in interest to Landlord,

 

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at the option of such successor in interest, and shall execute and deliver any
instrument or instruments confirming the attornment herein provided for.
Landlord represents and warrants to Tenant that as of the date of this Lease,
neither the Premises nor the Building nor the Center is subject to any existing
ground lease, mortgage, deed of trust, sale/leaseback transaction or any other
hypothecation for security.

15.2 Sale of Landlord’s Interest. Upon sale, transfer or assignment of
Landlord’s entire interest in the Building and the Center, Landlord shall be
relieved of its obligations hereunder with respect to liabilities accruing from
and after the date of such sale, transfer or assignment.

15.3 Estoppel Certificates. Tenant or Landlord (the “responding party”), as
applicable, shall at any time and from time to time, within ten (10) business
days after written request by the other party (the “requesting party”), execute,
acknowledge and deliver to the requesting party a certificate in writing
stating: (i) that this Lease is unmodified and in full force and effect, or if
there have been any modifications, that this Lease is in full force and effect
as modified and stating the date and the nature of each modification; (ii) the
date to which rental and all other sums payable hereunder have been paid;
(iii) that the requesting party is not in default in the performance of any of
its obligations under this Lease, that the certifying party has given no notice
of default to the requesting party and that no event has occurred which, but for
the expiration of the applicable time period, would constitute an event of
default hereunder, or if the responding party alleges that any such default,
notice or event has occurred, specifying the same in reasonable detail; and
(iv) such other matters as may reasonably be requested by the requesting party
or by any institutional lender, mortgagee, trustee, beneficiary, ground lessor,
sale/leaseback lessor or prospective purchaser of the Center, or prospective
sublessee or assignee of this Lease. Any such certificate provided under this
Section 15.3 may be relied upon by any lender, mortgagee, trustee, beneficiary,
assignee or successor in interest to the requesting party, by any prospective
purchaser, by any purchaser on foreclosure or sale, by any grantee under a deed
in lieu of foreclosure of any mortgage or deed of trust on the Property, by any
subtenant or assignee, or by any other third party. Failure to execute and
return within the required time any estoppel certificate requested hereunder, if
such failure continues for five (5) days after a second written request by the
requesting party for such estoppel certificate, shall be deemed to be an
admission of the truth of the matters set forth in the form of certificate
submitted to the responding party for execution.

15.4 Subordination to CC&R’s. This Lease, and any permitted sublease entered
into by Tenant under the provisions of this Lease, and the interests in real
property conveyed hereby and thereby shall be subject and subordinate (a) to any
declarations of covenants, conditions and restrictions or other recorded
restrictions affecting the Center or any portion thereof from time to time,
provided that the terms of such declarations or restrictions are reasonable (or,
to the extent they are not reasonable, are mandated by applicable law), do not
materially impair Tenant’s ability to conduct the uses permitted hereunder on
the Premises and in the Center, and do not discriminate against Tenant relative
to other similarly situated tenants occupying the portion(s) of the Center
covered by such declarations or restrictions, and (b) to the Declaration of
Covenants, Conditions and Restrictions of Shoreline Technology Park, Mountain
View, California, dated October 24, 1986 and recorded on October 24, 1986 as
Instrument

 

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No. 8997310, Book J895, Page 456, Official Records of Santa Clara County, as the
same may be amended from time to time (the “Declaration”), the provisions of
which Declaration are an integral part of this Lease. Tenant agrees to execute,
upon request by Landlord, any documents reasonably required from time to time to
evidence the foregoing subordination.

15.5 Mortgagee Protection. If, following a default by Landlord under any
mortgage, deed of trust, ground lease, leaseback lease or other security
arrangement covering the Building, the Center, or any portion of them, the
Building and/or the Center, as applicable, is acquired by the mortgagee,
beneficiary, master lessor or other secured party, or by any other successor
owner, pursuant to a foreclosure, trustee’s sale, sheriff’s sale, lease
termination or other similar procedure (or deed in lieu thereof), then any such
person or entity so acquiring the Building and/or the Center shall not be:

(a) liable for any act or omission of a prior landlord or owner of the Center
(including, but not limited to, Landlord), except that such person or entity
shall be liable for the cure or correction of any continuing defaults, such as a
continuing failure to repair or maintain;

(b) subject to any offsets or defenses that Tenant may have against any prior
landlord or owner of the Center (including, but not limited to, Landlord),
except for offsets expressly set forth in this Lease;

(c) bound by any rent or additional rent that Tenant may have paid in advance to
any prior landlord or owner of the Center (including, but not limited to,
Landlord) for a period in excess of one month, or by any security deposit,
cleaning deposit or other prepaid charge that Tenant may have paid in advance to
any prior landlord or owner (including, but not limited to, Landlord), except to
the extent such deposit or prepaid amount has been expressly turned over to or
credited to the successor owner thus acquiring the Center;

(d) liable for any warranties or representations of any nature whatsoever,
whether pursuant to this Lease or otherwise, by any prior landlord or owner of
the Center (including, but not limited to, Landlord) with respect to the use,
construction, zoning, compliance with laws, title, habitability, fitness for
purpose or possession, or physical condition (including, without limitation,
environmental matters) of the Building or the Center, except for any then
remaining obligations of Landlord arising under Section 2.3(a) or (c) of this
Lease; or

(e) liable to Tenant in any amount beyond the interest of such mortgagee,
beneficiary, master lessor or other secured party or successor owner in the
Center as it exists from time to time and in the proceeds from any disposition
of such interest, it being the intent of this provision that Tenant shall look
solely to the interest of any such mortgagee, beneficiary, master lessor or
other secured party or successor owner in the Center, and in the proceeds from
any disposition of such interest, for the payment and discharge of the
landlord’s obligations under this Lease and that such mortgagee, beneficiary,
master lessor or other secured party or successor owner shall have no separate
personal liability for any such obligations.

 

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16. SECURITY

16.1 Deposit.

(a) Cash Security Deposit. Within ten (10) days after mutual execution of this
Lease, Tenant shall deposit with Landlord the sum of Five Hundred Thousand and
No/100 Dollars ($500,000.00), which sum, subject to and including any adjustment
thereto pursuant to Section 16.1(c) below (as so adjusted, if applicable, the
“Security Deposit”) shall be held by Landlord as security for the faithful
performance of all of the terms, covenants and conditions of this Lease to be
kept and performed by Tenant during the term hereof. If Tenant defaults (beyond
any applicable cure period) with respect to any provision of this Lease,
including, without limitation, the provisions relating to the payment of rental
and other sums due hereunder, Landlord shall have the right, but shall not be
required, to use, apply or retain all or any part of the Security Deposit for
the payment of rental or any other amount which Landlord may spend or become
obligated to spend by reason of Tenant’s default or to compensate Landlord for
any other loss or damage which Landlord may suffer by reason of Tenant’s
default. If any portion of the Security Deposit is so used or applied, Tenant
shall, within ten (10) days after written demand therefor, deposit cash with
Landlord in an amount sufficient to restore the Security Deposit to its original
amount and Tenant’s failure to do so shall be a material breach of this Lease.
Landlord shall not be required to keep any deposit under this Section separate
from Landlord’s general funds, and Tenant shall not be entitled to interest
thereon. Provided that no uncured event of default by Tenant then exists under
this Lease, the Security Deposit and the Letter of Credit as defined below (if
applicable), or any balance thereof, shall be returned to Tenant or, at
Landlord’s option, to the last assignee of Tenant’s interest hereunder, at the
expiration of the term of this Lease and after Tenant has vacated the Property.
In the event of termination of Landlord’s interest in this Lease, Landlord shall
transfer all deposits then held by Landlord under this Section to Landlord’s
successor in interest, whereupon Tenant agrees to release Landlord from all
liability for the return of such deposit or the accounting thereof.

(b) Letter of Credit. As an alternative to the cash Security Deposit described
in Section 16.1(a), Tenant may instead deliver to Landlord, within ten (10) days
after mutual execution of this Lease, an irrevocable standby letter of credit
(the “Letter of Credit”) issued in favor of Landlord by a federally insured
commercial bank or trust company approved in writing by Landlord (which approval
shall not be unreasonably withheld), in form and substance reasonably
satisfactory to Landlord, to be held by Landlord as security for the faithful
performance of all the obligations of Tenant under this Lease, subject to the
following terms and conditions:

(i) The amount of the Letter of Credit shall be at least Five Hundred Thousand
and No/100 Dollars ($500,000.00), subject to and including any adjustment
thereto pursuant to the provisions of Section 16.1(c) below (as so adjusted, if
applicable, the “Required Amount”), and Tenant shall maintain the Letter of
Credit in the Required Amount in full force and effect throughout the term of
this Lease (including any extensions thereof) and until thirty (30) days after
the expiration of the term of this Lease, unless Tenant elects at any time to
replace the Letter of Credit with a full cash Security Deposit in compliance
with Section 16.1(a). The Letter of Credit may be for an initial

 

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one-year term, with automatic renewal provisions, provided that Landlord shall
be given at least thirty (30) days prior written notice if the Letter of Credit
will not be renewed as of any otherwise applicable renewal date and shall be
entitled to draw against the expiring Letter of Credit if a replacement Letter
of Credit is not furnished to Landlord at least twenty (20) days prior to the
scheduled expiration date, as provided in Section 16.1(b)(iii)(A) below. The
Letter of Credit must provide that it is transferable to any successor in
interest to Landlord under this Lease. In the event Landlord requests the
transfer of the Letter of Credit to another party, Tenant shall pay any transfer
fees and other related costs and expenses payable in connection with the first
two (2) such transfers during the term of this Lease, and Landlord shall pay any
such transfer fees and other related costs and expenses associated with any
further transfers after the first two (2) such transfers during the term of this
Lease.

(ii) Landlord shall be entitled (but shall not be required) to draw against the
Letter of Credit and receive and retain the proceeds thereof upon any default
(beyond any applicable cure period) by Tenant in the payment of any rent or
other amounts required to be paid by Tenant under this Lease, or upon the
occurrence of any other event of default (beyond any applicable cure period)
under this Lease, by presenting to the issuer a written statement by Landlord
that Landlord is entitled to draw the requested amount under the Letter of
Credit pursuant to the terms of this Lease. The amount of the draw shall not
exceed the amount of the payments (if any) as to which Tenant is then in default
and/or the amount reasonably necessary to cure any non-monetary events of
default by Tenant, and shall be applied by Landlord to the cure of the
applicable default(s). Following any partial draw under this paragraph (ii), if
Tenant fully cures all outstanding defaults and provides Landlord with a new
Letter of Credit in the full Required Amount under this Section 16.1, Landlord
shall surrender and return to Tenant, within ten (10) days after Tenant’s
satisfaction of the foregoing conditions, the Letter of Credit under which the
partial draw was made.

(iii) Landlord shall also be entitled (but shall not be required) to draw
against the Letter of Credit in full and to receive the entire proceeds thereof
under either of the following circumstances:

(A) If the Letter of Credit will expire as of a date prior to the date thirty
(30) days after the expiration of the term of this Lease and Tenant fails to
provide to Landlord an extension or replacement of such Letter of Credit, in at
least the minimum Required Amount, at least twenty (20) days prior to the
scheduled expiration date of the Letter of Credit; or

(B) If, as a result of a draw against the Letter of Credit by Landlord or for
any other reason, the amount of the Letter of Credit falls below the minimum
Required Amount and Tenant has failed to cause the Letter of Credit to be
restored to at least the minimum Required Amount within ten (10) days after
written demand by Landlord or, in lieu thereof, has failed to put up cash in an
amount equal to the amount required to be restored (which cash, if put up by

 

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Tenant, shall be retained by Landlord as a cash security deposit in accordance
with Section 16.1 (a) hereof).

(iv) If Landlord draws against the Letter of Credit in any of the circumstances
described in subparagraph (iii) above, Landlord may use, apply and/or retain the
amount drawn for the cure of any then existing defaults under this Lease. Any
amount drawn that is not immediately so used or applied by Landlord shall be
retained by Landlord as a cash Security Deposit, subject to and in accordance
with the provisions of Section 16.1(a).

(v) Any actual or purported withdrawal, rescission, termination or revocation of
the Letter of Credit by the issuer thereof prior to the expiration of the term
of this Lease (except when replaced prior to the effectiveness of such
withdrawal, rescission, termination or revocation by a replacement Letter of
Credit as contemplated in Section 16.1(b)(iii)(A) hereof or by a cash Security
Deposit in the Required Amount) shall be a material breach of this Lease.

(vi) The Letter of Credit shall provide that it is governed by the International
Standby Practices (ISP98), ICC Publication No. 590.

(c) Adjustment of Security Deposit. If on the third (3rd) anniversary of the
Rent Commencement Date there is no uncured event of default by Tenant under this
Lease, and no event which, if remaining uncured after notice and/or passage of
time, would constitute an event of default by Tenant under this Lease, then
effective as of the third (3rd) anniversary of the Rent Commencement Date, the
required amount of the Security Deposit under Section 16.1 (a) above and the
Required Amount for purposes of the Letter of Credit (if any) under
Section 16.1(b) above shall each be reduced to Two Hundred Fifty Thousand and
No/100 Dollars ($250,000.00). If Landlord is holding a Letter of Credit in a
larger amount at the time any such reduction becomes effective, Landlord agrees
to cooperate reasonably with Tenant and the issuer in (x) surrendering such
Letter of Credit upon Landlord’s receipt of a replacement Letter of Credit in
not less than the adjusted minimum amount required pursuant to this paragraph or
(y) amending the existing Letter of Credit to reflect such reduced amount.

17. MISCELLANEOUS

17.1 Notices. All notices, consents, waivers and other communications which this
Lease requires or permits either party to give to the other shall be in writing
and shall be deemed given when delivered personally (including delivery by
private same-day or overnight courier or express delivery service), effective
upon personal delivery to or refusal of delivery by the recipient, to the
parties at their respective addresses as follows:

 

To Tenant:

  

FoxHollow Technologies, Inc.

740 Bay Road

Redwood City, CA 94063

Attn: Vice President and CFO

 

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with a copy to:

  

Wilson Sonsini Goodrich & Rosati

650 Page Mill Road

Palo Alto, CA 94304

Attn: Real Estate Dept/NRC

To Landlord:

  

Britannia Hacienda VIII LLC

c/o Slough Estates USA Inc.

444 North Michigan Avenue, Suite 3230

Chicago, IL 60611

Attn: Randy Rohner

with a copy to:

  

Britannia Management Services, Inc.

555 Twelfth Street, Suite 1650

Oakland, CA 94607

Attn: Magdalena Shushan

and a copy to:

  

Folger Levin & Kahn LLP

Embarcadero Center West

275 Battery Street, 23rd Floor

San Francisco, CA 94111

Attn: Donald E. Kelley, Jr.

or to such other address(es) as may be contained in a notice of address change
given by either party to the other pursuant to this Section, effective no
earlier than fifteen (15) days after delivery of such notice to the receiving
party. Rental payments and other sums required by this Lease to be paid by
Tenant shall be delivered to Landlord in care of Britannia Management Services,
Inc., 555 Twelfth Street, Suite 1650, Oakland, CA 94607, or at such other
address as Landlord may from time to time specify in writing to Tenant, and
shall be deemed to be paid only upon actual receipt.

17.2 Successors and Assigns. The obligations of this Lease shall run with the
land, and this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
original Landlord named herein and each successive Landlord under this Lease
shall be liable only for obligations accruing during the period of its ownership
of the Center, and any liability for obligations accruing after termination of
such ownership shall terminate as of the date of such termination of ownership
and shall pass to the successor lessor.

17.3 No Waiver. The failure of either party to seek redress for violation, or to
insist upon the strict performance, of any covenant or condition of this Lease
shall not be deemed a waiver of such violation, or prevent a subsequent act
which would originally have constituted a violation from having all the force
and effect of an original violation.

17.4 Severability. If any provision of this Lease or the application thereof is
held to be invalid or unenforceable, the remainder of this Lease or the
application of such provision to persons or circumstances other than those as to
which it is invalid or unenforceable shall not be

 

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affected thereby, and each of the provisions of this Lease shall be valid and
enforceable, unless enforcement of this Lease as so invalidated would be
unreasonable or grossly inequitable under all the circumstances or would
materially frustrate the purposes of this Lease.

17.5 Litigation Between Parties. In the event of any litigation or other dispute
resolution proceedings between the parties hereto arising out of or in
connection with this Lease, the prevailing party shall be reimbursed for all
reasonable costs, including, but not limited to, reasonable accountants’ fees
and attorneys’ fees, incurred in connection with such proceedings (including,
but not limited to, any appellate proceedings relating thereto) or in connection
with the enforcement of any judgment or award rendered in such proceedings.
“Prevailing party” within the meaning of this Section shall include, without
limitation, a party who dismisses an action for recovery hereunder in exchange
for payment of the sums allegedly due, performance of covenants allegedly
breached or consideration substantially equal to the relief sought in the
action.

17.6 Surrender. A voluntary or other surrender of this Lease by Tenant, or a
mutual termination thereof between Landlord and Tenant, shall not result in a
merger but shall, at the option of Landlord, operate either as an assignment to
Landlord of any and all existing subleases and subtenancies, or a termination of
all or any existing subleases and subtenancies. This provision shall be
contained in any and all assignments or subleases made pursuant to this Lease.

17.7 Interpretation. The provisions of this Lease shall be construed as a whole,
according to their common meaning, and not strictly for or against Landlord or
Tenant. The captions preceding the text of each Section and subsection hereof
are included only for convenience of reference and shall be disregarded in the
construction or interpretation of this Lease.

17.8 Entire Agreement. This written Lease, together with the exhibits hereto,
contains all the representations and the entire understanding between the
parties hereto with respect to the subject matter hereof. Any prior
correspondence, memoranda or agreements are replaced in total by this Lease and
the exhibits hereto. This Lease may be modified only by an agreement in writing
signed by each of the parties.

17.9 Governing Law. This Lease and all exhibits hereto shall be construed and
interpreted in accordance with and be governed by all the provisions of the laws
of the State of California.

17.10 No Partnership. The relationship between Landlord and Tenant is solely
that of a lessor and lessee. Nothing contained in this Lease shall be construed
as creating any type or manner of partnership, joint venture or joint enterprise
with or between Landlord and Tenant.

17.11 Financial Information. From time to time Tenant shall promptly provide
directly to prospective lenders and purchasers of the Center designated by
Landlord such financial information pertaining to the financial status of Tenant
as Landlord may reasonably request; provided, Tenant shall be permitted to
provide such financial information in a manner which Tenant deems reasonably
necessary to protect the confidentiality of such information. In

 

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addition, from time to time, Tenant shall provide Landlord with such financial
information pertaining to the financial status of Tenant as Landlord may
reasonably request. Landlord agrees that all financial information supplied to
Landlord by Tenant shall be treated as confidential material, and shall not be
disseminated to any party or entity (including any entity affiliated with
Landlord) without Tenant’s prior written consent, except that Landlord shall be
entitled to provide such information, subject to reasonable precautions to
protect the confidential nature thereof, (i) to Landlord’s partners and
professional advisors, solely to use in connection with Landlord’s execution and
enforcement of this Lease, and (ii) to prospective lenders and/or purchasers of
the Center, solely for use in connection with their bona fide consideration of a
proposed financing or purchase of the Center, provided that such prospective
lenders and/or purchasers are not then engaged in businesses directly
competitive with the business then being conducted by Tenant. For purposes of
this Section, without limiting the generality of the obligations provided
herein, it shall be deemed reasonable for Landlord to request copies of Tenant’s
most recent audited annual financial statements, or, if audited statements have
not been prepared, unaudited financial statements for Tenant’s most recent
fiscal year, accompanied by a certificate of Tenant’s chief financial officer
that such financial statements fairly present Tenant’s financial condition as of
the date(s) indicated. Notwithstanding any other provisions of this
Section 17.11, during any period in which Tenant has outstanding a class of
publicly traded securities and is filing with the Securities and Exchange
Commission, on a regular basis, Forms 10Q and 10K and any other periodic filings
required under the Securities Exchange Act of 1934, as amended, it shall
constitute sufficient compliance under this Section 17.11 for Tenant to furnish
Landlord with copies of such periodic filings substantially concurrently with
the filing thereof with the Securities and Exchange Commission.

Landlord and Tenant recognize the need of Tenant to maintain the confidentiality
of information regarding its financial status and the need of Landlord to be
informed of, and to provide to prospective lenders and purchasers of the Center
financial information pertaining to, Tenant’s financial status. Landlord and
Tenant agree to cooperate with each other in achieving these needs within the
context of the obligations set forth in this Section.

17.12 Costs. If Tenant requests the consent of Landlord under any provision of
this Lease for any act that Tenant proposes to do hereunder, including, without
limitation, assignment or subletting of the Premises, Tenant shall, as a
condition to doing any such act and the receipt of such consent, reimburse
Landlord promptly for any and all reasonable costs and expenses incurred by
Landlord in connection therewith, including, without limitation, reasonable
attorneys’ fees.

17.13 Time. Time is of the essence of this Lease, and of every term and
condition hereof.

17.14 Rules and Regulations. Tenant shall observe, comply with and obey, and
shall cause its employees, agents and, to the best of Tenant’s ability, invitees
to observe, comply with and obey such reasonable rules and regulations for the
safety, care, cleanliness, order and use of the Building and the Center as
Landlord may promulgate and deliver to Tenant from time to time.

 

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17.15 Brokers. Landlord agrees to pay a brokerage commission in connection with
the consummation of this Lease (a) to Landlord’s broker, CB Richard Ellis, Inc.,
and (b) to Tenant’s broker, CRES A Partners, each in accordance with a separate
written agreement. Each party represents and warrants that no other broker
participated in the consummation of this Lease and agrees to indemnify, defend
and hold the other party harmless against any liability, cost or expense,
including, without limitation, reasonable attorneys’ fees, arising out of any
claims for brokerage commissions or other similar compensation in connection
with any conversations, prior negotiations or other dealings by the indemnifying
party with any other broker.

17.16 Memorandum of Lease. At any time during the term of this Lease, either
party, at its sole expense, shall be entitled to record a memorandum of this
Lease and, if either party so requests, both parties agree to cooperate in the
preparation, execution, acknowledgment and recordation of such document in
reasonable form. If such a memorandum of lease is recorded, then upon expiration
or termination of this Lease, Tenant agrees promptly to execute, acknowledge and
deliver to Landlord, upon written request by Landlord, a Termination of
Memorandum of Lease in such form as Landlord may reasonably request, for the
purpose of terminating any continuing effect of the previously recorded
memorandum of lease as a cloud upon title to the Property.

17.17 Corporate Authority. Each party to this Lease represents and warrants that
the person signing this Lease on behalf of such respective party is fully
authorized to do so and, by so doing, to bind such party.

17.18 Execution and Delivery. Submission of this Lease for examination or
signature by Tenant does not constitute an agreement or reservation of or option
for lease of the Premises. This instrument shall not be effective or binding
upon either party, as a lease or otherwise, until executed and delivered by both
Landlord and Tenant. This Lease may be executed in one or more counterparts and
by separate parties on separate counterparts, but each such counterpart shall
constitute an original and all such counterparts together shall constitute one
and the same instrument.

17.19 Survival. Without limiting survival provisions which would otherwise be
implied or construed under applicable law, the provisions of Sections 2.5, 5.4,
7.2, 7.3, 7.4, 8.2, 9.6,10.6, 16.1(a), 17.5, 17.11 and 17.16 hereof shall
survive the termination of this Lease with respect to matters occurring prior to
the expiration of this Lease.

17.20 Parking. Landlord agrees that the Common Areas, taken as a whole, shall
include parking in amounts sufficient to satisfy the minimum parking
requirements of the City of Mountain View applicable to the Center from time to
time; that Tenant shall have the non-exclusive and non-reserved use of
approximately 3.2 automobile parking stalls per 1,000 rentable square feet of
space in the Premises; and that there shall be no additional cost or charge to
Tenant for the nonexclusive use of such parking by Tenant and its employees and
invitees. Landlord shall not agree with any other tenant of the Center that such
tenant may have the use of parking spaces in excess of such tenant’s
proportional share of the available parking spaces in the Center as it exists
from time to time.

 

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17.21 Approvals. Whenever this Lease requires an approval, consent, designation,
determination, selection or judgment by either Landlord or Tenant, then except
to the extent a different standard is expressly provided in the applicable
provision where such requirement is set forth, such approval, consent,
designation, determination, selection or judgment shall not be unreasonably
withheld, conditioned or delayed.

[rest of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day
and year first set forth above.

 

  “Landlord”     “Tenant”

BRITANNIA HACIENDA VIII LLC, a Delaware

limited liability company

   

FOXHOLLOW TECHNOLOGIES, INC.,

a Delaware corporation

By:

 

Slough Estates USA Inc., Its

Operations Manager and Member

   

By:

 

LOGO [g14944img002.jpg]

       

Name:

 

Ronald T. Steckel

 

By:

 

LOGO [g14944img001.jpg]

   

Title:

 

SR. VP. OPS. & R.D

   

Jonathan M. Bergschneider

Vice President

           

By:

 

LOGO [g14944img003.jpg]

       

Name:

 

Matthew Ferguson

       

Title:

 

CFO

 

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EXHIBITS

 

EXHIBIT A-1    Site Plan (The Center) EXHIBIT A-2    Building Plan EXHIBIT A-3
   Clean Room Priority Construction Area EXHIBIT B    Workletter EXHIBIT C   
Form of Acknowledgment of Rent Commencement Date

 

- 57 -

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EXHIBIT A-1

SITE PLAN (THE CENTER)

[See attached.]

EXHIBIT A-1 TO LEASE

 

[DIAGRAM OF SITE PLAN (THE CENTER) OMITTED]

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EXHIBIT A-2

BUILDING PLAN

[See attached.]

EXHIBIT A-2 TO LEASE

 

[DIAGRAM OF BUILDING PLAN OMITTED]

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EXHIBIT A-3

CLEAN ROOM PRIORITY CONSTRUCTION AREA

[See attached.]

EXHIBIT A-3 TO LEASE

 

[DIAGRAM OF CLEAN ROOM PRIORITY CONSTRUCTION AREA OMITTED]

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EXHIBIT B

WORKLETTER

This Workletter (“Workletter”) constitutes part of the Lease dated as of
November 1, 2005 (the “Lease”) between BRITANNIA HACIENDA VIII LLC, a Delaware
limited liability company (“Landlord”), and FOXHOLLOW TECHNOLOGIES, INC., a
Delaware corporation (“Tenant”). The terms of this Workletter are incorporated
in the Lease for all purposes.

NOTE: The provisions of this Workletter are intended to apply only to Tenant
Improvements constructed by Tenant in the Premises. The work that Landlord is
required to perform under Section 2.3 of the Lease (such work being defined in
the Lease as “Landlord’s Work”) shall be governed solely by such Section 2.3 and
any other applicable provisions of the main Lease, and not by this Workletter.

1. Defined Terms. As used in this Workletter, the following capitalized terms
have the following meanings:

(a) Approved Plans: Plans and specifications prepared by the Architect for the
Tenant Improvements and approved by Landlord in accordance with Paragraph 2 of
this Workletter, subject to further modification from time to time to the extent
provided in and in accordance with such Paragraph 2.

(b) Architect: The Architect for the Tenant Improvements shall be selected by
Tenant with the written approval of Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed.

(c) Cost of Improvement: See definition in Paragraph 2(b) hereof.

(d) Final Working Drawings: See definition in Paragraph 2(a) hereof.

(e) General Contractor: The General Contractor for the Tenant Improvements shall
be selected by Tenant with the written approval of Landlord, which approval
shall not be unreasonably withheld, conditioned or delayed, as contemplated in
Paragraph 4(a) hereof.

(f) Project Manager: Project Management Advisors, Inc., or any other project
manager designated by Landlord in its sole discretion from time to time by
written notice to Tenant to act in an oversight and coordinating capacity on
behalf of Landlord, as contemplated in Paragraph 2(d) below, in connection with
the design and construction of the Tenant Improvements.

(g) Tenant Improvements: The improvements to or within the Premises as shown on
the Approved Plans from time to time and to be constructed by Tenant pursuant to
the Lease and this Workletter.

(h) Capitalized terms not otherwise defined in this Workletter shall have the
definitions set forth in the Lease.

 

B – 1

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2. Plans, Cost of Improvements and Construction. Landlord and Tenant shall
comply with the procedures set forth in this Paragraph 2 in preparing,
delivering and approving matters relating to the Tenant Improvements.

(a) Approved Plans and Working Drawings for Tenant’s Work. Tenant shall promptly
and diligently cause to be prepared and delivered to Landlord for approval
(which approval shall not be unreasonably withheld, conditioned or delayed by
Landlord) a space plan and outline specifications for the Tenant Improvements
that Tenant wishes to construct in the Premises (the “Schematic Plans”).
Following mutual approval of the Schematic Plans, Tenant shall then promptly and
diligently cause to be prepared and delivered to Landlord for approval (which
approval shall not be unreasonably withheld, conditioned or delayed by Landlord)
final working drawings and specifications for the Tenant Improvements, including
any applicable life safety, mechanical and electrical working drawings and final
architectural drawings (collectively, the “Final Working Drawings”). The Final
Working Drawings shall substantially conform to the approved Schematic Plans.
Landlord shall either approve the Final Working Drawings or set forth in writing
with particularity any changes necessary to bring the Final Working Drawings
into substantial conformity with the approved Schematic Plans or into a form
which will be acceptable to Landlord. Upon approval of the Final Working
Drawings by Landlord and Tenant, the Final Working Drawings shall constitute the
“Approved Plans,” superseding (to the extent of any inconsistencies) any
inconsistent features of the previously approved Schematic Plans. Landlord’s
failure to respond with its written approval or disapproval of any plans and
specifications within ten (10) business days after they are submitted to
Landlord for approval shall be deemed to be Landlord’s approval thereof.

(b) Cost of Improvements. “Cost of Improvement” shall mean, with respect to any
item or component for which a cost must be determined in order to allocate such
cost, or an increase in such cost, to Landlord and/or Tenant pursuant to this
Workletter, the sum of the following (unless otherwise agreed in writing by
Landlord and Tenant with respect to any specific item or component or any
category of items or components): (i) all sums paid to contractors or
subcontractors for labor and materials furnished in connection with construction
of such item or component; (ii) all costs, expenses, payments, fees and charges
(other than penalties) paid or incurred to or at the direction of any city,
county or other governmental or quasi-governmental authority or agency which are
required to be paid in order to obtain all necessary governmental permits,
licenses, inspections and approvals relating to construction of such item or
component; (iii) engineering and architectural fees for services rendered in
connection with the design and construction of such item or component
(including, but not limited to, the Architect for such item or component and an
electrical engineer, mechanical engineer and civil engineer, if applicable);
(iv) sales and use taxes; (v) testing and inspection costs; (vi) the cost of
power, water and other utility facilities and the cost of collection and removal
of debris required in connection with construction of such item or component;
(vii) costs for builder’s risk insurance; and (viii) all other “hard” and “soft”
costs incurred in the construction of such item or component in accordance with
the Approved Plans and this Workletter.

(i) Notwithstanding the foregoing, Cost of Improvement shall not include,
Landlord shall be solely responsible for, and the Tenant Improvement Allowance
shall not be used for any of the following: (A) costs incurred to remove from
the Premises, the Building and

 

B – 2

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the Center hazardous substances, hazardous wastes and pollutants existing
therein prior to the Rent Commencement Date, except to the extent (if any) that
such hazardous substances, hazardous wastes or pollutants were brought onto or
released onto the Premises, the Building or the Center through the acts or
omissions of Tenant or its employees, agents or contractors; and (B) costs
incurred to perform Landlord’s Work and related obligations of Landlord under
Section 2.3 of the Lease.

(ii) For purposes of this paragraph 2(b) and of Section 2.3 of the Lease, the
parties wish to clarify their intention with respect to certain situations as
follows:

(A) If there are code requirements or other legal compliance requirements which
are in existence at or prior to the Rent Commencement Date and are not met by
the Building and existing improvements but have not previously been applicable
to or enforced against the Building (such as, but not limited to, what are
commonly referred to as “grandfathered” compliance situations), and such
requirements become applicable to or enforceable against the Building and
existing improvements in the course of Tenant’s construction of the initial
phase of the Tenant Improvements solely because of the extent, cost or value of
such Tenant Improvements and/or because of the fact that Tenant is obtaining
permits for such Tenant Improvements, without regard to the particular nature of
such Tenant Improvements, then Landlord shall be responsible for complying with
such requirements and bearing the cost of such compliance, without any charge
against the Tenant Improvement Allowance and without any inclusion of such cost
in the Cost of Improvements for the Tenant Improvements; and conversely,

(B) If there are code requirements or other legal compliance requirements which
become applicable to or enforceable against the Building or existing
improvements therein as a result of the particular nature of the Tenant
Improvements (such as, but not limited to, installation of manufacturing or
other equipment which triggers seismic, vibration, firewall, sprinkler, life
safety, ventilation or other requirements that would not apply in the absence of
the installation and use of such equipment), or which become applicable to or
enforceable against the Building or existing improvements only as a result of or
in connection with later phases of the Tenant Improvements constructed after
substantial completion of the initial phase of the Tenant Improvements, then
Tenant shall be responsible for complying with such requirements and the cost of
such compliance shall be part of the Cost of Improvements for the Tenant
Improvements.

(c) Changes. If Tenant at any time desires to make any changes, alterations or
additions to the Approved Plans, such changes, alterations or additions shall be
subject to approval by Landlord in the same manner as the original Approved
Plans as provided above, except that Landlord shall be deemed to have approved
such changes, alterations or additions if Landlord fails to respond with its
written approval or disapproval thereof within five (5) business days after they
are submitted to Landlord for approval.

 

B – 3

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(d) Project Management. Unless and until revoked by Landlord by written notice
delivered to Tenant, Landlord hereby (i) delegates to Project Manager the
authority to exercise all approval rights, supervisory rights and other rights
and powers of Landlord under this Workletter with respect to the design and
construction of the Tenant Improvements, and (ii) requests that Tenant work with
Project Manager with respect to any logistical or other coordination matters
arising in the course of construction of the Tenant Improvements, including (but
not limited to) reviewing and processing Tenant’s requests for disbursement of
the Tenant Improvement Allowance, monitoring Tenant’s and Landlord’s compliance
with their respective obligations under this Workletter and under the Lease with
respect to the design and construction of the Tenant Improvements, and
addressing any coordination issues that may arise from any concurrent
performance of Landlord’s Work under Section 2.3 of the Lease and Tenant’s
construction of the Tenant Improvements. Tenant acknowledges the foregoing
delegation and request, and agrees to cooperate reasonably with Project Manager
as Landlord’s representative pursuant to such delegation and request. As between
Landlord and Tenant, however, Landlord shall be bound by and be fully
responsible for all acts and omissions of Project Manager and for the
performance of all of Landlord’s obligations under the Lease and this
Workletter, notwithstanding such delegation of authority to Project Manager.
Notwithstanding the preceding sentence, neither Landlord’s delegation of
authority to Project Manager nor Project Manager’s performance of the functions
and responsibilities contemplated in this paragraph shall cause Landlord or
Project Manager to incur any obligations or responsibilities for the design,
construction or delivery of the Tenant Improvements, except to the extent of the
specific obligations and responsibilities expressly set forth in the Lease and
in this Workletter. A project management fee of Seventy-Five Cents ($0.75) per
square foot (total fee of $93,205.50) for Project Manager’s services shall be
charged against the Tenant Improvement Allowance; all other fees and charges of
Project Manager for services rendered to or on behalf of Landlord under this
Workletter shall be at Landlord’s sole expense.

3. Payment of Costs.

(a) Except as otherwise expressly provided in this Workletter, in the Lease or
by mutual written agreement of Landlord and Tenant, the cost of construction of
the Tenant Improvements shall be paid or reimbursed by Landlord up to a maximum
contribution by Landlord equal to Nine Million Nine Hundred Forty-One Thousand
Nine Hundred Twenty and No/100 Dollars ($9,941,920.00) toward the Cost of
Improvements for such Tenant Improvements (the “Tenant Improvement Allowance”),
less any reduction in or charge against such sums pursuant to any applicable
provisions of the Lease or of this Workletter. Except as otherwise expressly
provided in this Workletter or in the Lease, Tenant shall be responsible, at its
sole cost and expense, for payment of the entire Cost of Improvements of the
Tenant Improvements in the Premises in excess of the Tenant Improvement
Allowance or such portion thereof as Tenant elects to use (if any such excess
occurs), including (but not limited to) any costs or cost increases incurred as
a result of unavoidable delays, governmental requirements or unanticipated
conditions, but Tenant shall be entitled to utilize the entire Tenant
Improvement Allowance (or so much thereof as Tenant elects to use) for the
Tenant Improvements prior to being required to expend any of Tenant’s own funds
on an unreimbursed basis for the Tenant Improvements (except to the extent any
costs are incurred which are not eligible for payment or reimbursement out of
the Tenant Improvement Allowance under the express provisions governing the
Tenant Improvement Allowance, including, without limitation, the express

 

B – 4

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restrictions set forth below in this paragraph). The funding of the Tenant
Improvement Allowance (or so much thereof as Tenant elects to use) shall be made
on a monthly basis or at other convenient intervals mutually approved by
Landlord and Tenant, and in all other respects shall be based on such
commercially reasonable disbursement conditions and procedures as Landlord,
Project Manager and Landlord’s lender (if any) may reasonably prescribe (which
conditions may include, without limitation, delivery of invoices, architect’s
certifications and/or other evidence reasonably satisfactory to Landlord or
Project Manager that expenses have been incurred for the design and construction
of alterations and improvements for which the Tenant Improvement Allowance is
eligible to be expended or applied, and delivery of conditional or unconditional
lien releases from all parties performing the applicable work). Notwithstanding
the foregoing provisions, (i) under no circumstances shall the Tenant
Improvement Allowance or any portion thereof be used or useable for any moving
or relocation expenses of Tenant, or for any Cost of Improvement (or any other
cost or expense) associated with any moveable furniture, trade fixtures,
personal property or any other item or element which, under the applicable
provisions of the Lease, will not become Landlord’s property and remain with the
Building upon expiration or termination of the Lease (provided, however, that
the Tenant Improvement Allowance may be used for Costs of Improvement associated
with clean rooms that are portable or removable in nature [i.e., may be
installed and removed without any material adverse impact on the existing
improvements and Building systems in the Building], but any such portable or
removable clean rooms for which any portion of the Tenant Improvement Allowance
is used shall be required to become Landlord’s property and remain with the
Building upon expiration or termination of the Lease), and (ii) any portion of
the Tenant Improvement Allowance which has not been claimed or drawn by Tenant
as of the later to occur of (A) January 1, 2012 or (B) the date which is five
(5) years after the Rent Commencement Date shall expire and shall no longer be
available to Tenant thereafter. The Tenant Improvement Allowance is provided as
part of the basic consideration to Tenant under the Lease and will not result in
any rental adjustment or additional rent beyond the rental amounts expressly
provided in Section 3.1 of the Lease.

(b) Landlord acknowledges that Landlord’s prompt disbursement of the Tenant
Improvement Allowance will be critical to achieve the timely completion of the
Tenant Improvements and that Tenant would not execute the Lease but for
Landlord’s commitment to fund the Tenant Improvement Allowance in accordance
with the provisions of the Lease and of this Workletter. If, therefore, Landlord
fails to make any timely disbursement of the Tenant Improvement Allowance when
required to do so, and such failure continues for more than five (5) business
days after Tenant gives written notice to Landlord specifying such failure and
demanding funding of the applicable payment(s) by Landlord, then Tenant shall
have the right (in addition to any and all other rights or remedies available to
Tenant under the Lease, this Workletter and applicable law) to pay out of
Tenant’s own funds any undisbursed amounts for which payment should have been
made from the Tenant Improvement Allowance, in which event (i) Tenant shall
thereafter be entitled to reimbursement from Landlord, within thirty (30) days
after written notice from Tenant to Landlord that such payment has been made by
Tenant, for the amount of all such payments by Tenant that should have been
funded from the Tenant Improvement Allowance, together with interest on such
disbursements by Tenant at the rate of ten percent (10%) per annum from the date
of disbursement to the date of reimbursement by Landlord, and (ii) to the extent
any such reimbursement owed by Landlord to Tenant pursuant to the foregoing
provisions remains unpaid more than thirty (30) days after Tenant’s written
notice to Landlord pursuant to clause (i) above, Tenant shall be entitled to
deduct the aggregate unpaid

 

B – 5

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reimbursement amount, together with interest thereon as provided in clause
(i) above, from payments of minimum rental, Operating Expenses and other amounts
thereafter becoming due from Tenant under the Lease and this Workletter.

4. Tenant’s Work. Tenant shall construct and install the Tenant Improvements in
the Premises substantially in accordance with the Approved Plans. Tenant’s
construction of the Tenant Improvements shall be performed in accordance with,
and shall in all respects be subject to, the terms and conditions of the Lease
(to the extent not inconsistent with this Workletter), and shall also be subject
to the following conditions:

(a) Contractor Requirements. The general contractor engaged by Tenant for
construction of the Tenant Improvements, and any subcontractors, shall be duly
licensed in California and shall be subject to Landlord’s prior written approval
(in accordance with and to the extent provided in Paragraph l(e) above). Tenant
shall engage only union contractors for the construction of the Tenant
Improvements and for the installation of Tenant’s fixtures and equipment in the
Building, and shall require all such contractors engaged by Tenant, and all of
their subcontractors, to use only union labor on or in connection with such
work, except to the extent Landlord determines, in its reasonable discretion,
that the use of non-union labor would not create a material risk of labor
disputes, picketing or work interruptions at the Center, in which event Landlord
shall, to that extent, waive such union labor requirement at Tenant’s request.

(b) Costs and Expenses of Tenant Improvements. Subject to Landlord’s payment or
reimbursement obligations under Paragraph 3 hereof with respect to Landlord’s
share of the Cost of Improvements for the Tenant Improvements, Tenant shall
promptly pay all costs and expenses arising out of the design and construction
of the Tenant Improvements (including the costs of permits) and shall furnish
Landlord with evidence of payment on request. Tenant shall provide Landlord with
ten (10) days prior written notice before commencing any construction activities
on the Property. Upon completion of construction of the Tenant Improvements,
Tenant shall deliver to Landlord a release and unconditional lien waiver
executed by each contractor, subcontractor and materialman involved in the
design or construction of the Tenant Improvements.

(c) Tenant’s Indemnification. Tenant shall indemnify, defend (with counsel
reasonably satisfactory to Landlord) and hold Landlord harmless from all suits,
claims, actions, losses, costs and expenses (including, but not limited to,
claims for workers’ compensation, attorneys’ fees and costs) based on personal
injury or property damage or contract claims (including, but not limited to,
claims for breach of warranty) arising from the design and construction of the
Tenant Improvements from any cause whatsoever, except to the extent any such
claims or other matters arise from negligence or willful misconduct or omission
by Landlord or its agents, employees or contractors. Tenant shall repair or
replace (or, at Landlord’s election, reimburse Landlord for the cost of
repairing or replacing) any portion of the buildings or other existing
improvements on the Property and/or any of Landlord’s real or personal property
or equipment that is damaged, lost or destroyed in the course of or in
connection with the construction of the Tenant Improvements, except to the
extent (i) any such damage, loss or destruction is caused by negligence or
willful misconduct or omission by

 

B – 6

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Landlord or its agents, employees or contractors, or (ii) any demolition or
removal of existing improvements is explicitly contemplated in the Approved
Plans as approved by Landlord.

(d) Insurance. With respect to the construction of the Tenant Improvements,
Tenant’s contractors shall obtain and provide to Landlord certificates
evidencing workers’ compensation, employer’s liability, public liability and
property damage insurance in amounts and forms and with companies reasonably
satisfactory to Landlord, and Tenant shall provide to Landlord certificates
evidencing Tenant’s compliance with the insurance requirements of Article 10 of
the Lease (except to the extent any such requirements by their nature or terms
are clearly relevant only after Tenant’s commencement of business operations on
the Premises). In addition, to the extent Landlord or Project Manager advises
Tenant of any specific insurance requirements that are commercially reasonable
and customary during a “course of construction” period (such as, but not limited
to, designation of specified “additional insureds” who would not ordinarily be
required to be named in that capacity during the Lease term under Article 10 of
the Lease), Tenant shall comply with and/or cause its contractors (as
applicable) to comply with such additional requirements.

(e) Rules and Regulations. Tenant and Tenant’s contractors shall comply with any
rules, regulations and requirements that Landlord, Project Manager or Landlord’s
property manager or general contractor (if any) may reasonably impose with
respect to the construction of the Tenant Improvements. Tenant’s agreement with
Tenant’s contractors shall require each contractor to provide reasonable and
customary daily cleanup of the construction area to the extent that such cleanup
is necessitated by the performance of such contractor’s activities in connection
with the construction of the Tenant Improvements.

(f) Risk of Loss. All materials, work, installations and decorations of any
nature brought onto or installed in the Building, by or at the direction of
Tenant or in connection with the construction of the Tenant Improvements, prior
to the Rent Commencement Date shall be at Tenant’s risk, and neither Landlord
nor any party acting on Landlord’s behalf shall be responsible for any damage,
loss or destruction thereof.

(g) Condition of Tenant’s Work. All work performed by Tenant shall be performed
in a good and workmanlike manner, shall be free from defects in design,
materials and workmanship, and shall be completed in compliance with the
Approved Plans in all material respects and in compliance with all applicable
governmental laws, ordinances, codes and regulations in force at the time such
work is completed. Without limiting the generality of the foregoing, Tenant
shall be responsible (i) for obtaining all permits and approvals necessary for
the construction of the Tenant Improvements, and (ii) for compliance of all
Tenant Improvements with the requirements of the ADA and all similar or related
requirements under federal, state or local laws pertaining to access by persons
with disabilities.

(h) Phases. Tenant may construct the Tenant Improvements in phases, at Tenant’s
discretion, subject to the limitations set forth above with respect to the
period of time within which the Tenant Improvement Allowance is available for
use.

5. No Agency. Nothing contained in this Workletter shall make or constitute
Tenant as the agent of Landlord.

 

B – 7

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6. Survival. Without limiting any survival provisions which would otherwise be
implied or construed under applicable law, the provisions of Paragraph 4(c) of
this Workletter shall survive the termination of the Lease with respect to
matters occurring prior to expiration of the Lease.

7. Miscellaneous. All references in this Workletter to a number of days shall be
construed to refer to calendar days, unless otherwise specified herein. If any
item requiring approval by Landlord is disapproved by Landlord in a timely
manner, the procedure for preparation and approval of that item shall be
repeated.

IN WITNESS WHEREOF, the parties have executed this Workletter concurrently with
and as of the date of the Lease.

 

“Landlord”     “Tenant”

BRITANNIA HACIENDA VIII LLC, a Delaware

limited liability company

   

FOXHOLLOW TECHNOLOGIES, INC.,

a Delaware corporation

By:

 

Slough Estates USA Inc., Its

Operations Manager and Member

   

By:

 

LOGO [g14944img002.jpg]

       

Its:

 

SR. VP. OPS. & R.D

 

By:

 

LOGO [g14944img001.jpg]

         

Jonathan M. Bergschneider

Vice President

   

By:

 

LOGO [g14944img003.jpg]

     

Its:

 

CFO

 

B – 8

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EXHIBIT C

ACKNOWLEDGMENT OF RENT COMMENCEMENT DATE

This Acknowledgment is executed as of                      , 200   , by
BRITANNIA HACIENDA VIII LLC, a Delaware limited liability company (“Landlord”),
and FOXHOLLOW TECHNOLOGIES, INC., a Delaware corporation (“Tenant”), pursuant to
Section 2.4 of the Lease dated November 1, 2005 between Landlord and Tenant (the
“Lease”) covering premises located at 2081 Stierlin Court, Mountain View, CA
94043 (the “Premises”).

Landlord and Tenant hereby acknowledge and agree as follows:

1. The Rent Commencement Date under the Lease is                      , 200  .

2. The termination date under the Lease shall be                      , 201   ,
subject to any applicable provisions of the Lease for extension or early
termination thereof.

3. The square footage of the Premises is 124,274 square feet.

4. Tenant accepts the Premises, subject only to Landlord’s warranties,
representations and obligations expressly set forth in Section 2.3 of the Lease.

This Acknowledgment is executed as of the date first set forth above.

 

“Landlord”     “Tenant”

BRITANNIA HACIENDA VIII LLC, a Delaware

limited liability company

    FOXHOLLOW TECHNOLOGIES, INC., a Delaware corporation

By:

 

Slough Estates USA Inc., Its

Operations Manager and Member

   

By:

            

Its:

      

By:

              

Jonathan M. Bergschneider

Vice President

   

By:

            

Its:

    

EXHIBIT C TO LEASE