EXHIBIT 10.37

 

BUSINESS PARK NET LEASE

 

This Business Park Net Lease (“Lease”) is entered into by and between “Landlord”
and “Tenant” (defined below and collectively the “Parties”) and dated for
reference purposes only as of December 23, 2003.

 

 

ARTICLE 1. SALIENT LEASE TERMS

 

In addition to the terms defined throughout this Lease, the terms set forth
below shall have the following meanings when referred to in this Lease:

 

1.1    Rent Payment Address:    BEDFORD PROPERTY INVESTORS, INC.          
Lockbox No. 73048 (Fourier Avenue)           P.O. Box 60000, San Francisco,
California 94160-3048. 1.2    Landlord & Notice Address:    BEDFORD PROPERTY
INVESTORS, INC.,           a Maryland corporation           270 Lafayette Circle
          Lafayette, California 94549           Attention: Property Management  
        Facsimile Number: (925)283-0896. 1.3    Tenant & Notice Address:   
CENTILLIUM COMMUNICATIONS, INC.           a Delaware corporation          
Notice Address Prior to the Commencement Date:           47211 Lakeview Blvd.  
        Fremont, California 94538           Notice Address From and After the
Commencement Date:           At the Premises. 1.4    Premises:   

215 and 255 Fourier Avenue, Fremont, California

containing approximately 104,400 square feet

(the “Rentable Area”), as outlined in Exhibit B-1.

1.5    Building:    The buildings located at 215 and 255 Fourier Avenue,
Fremont, California in which the Premises are located. 1.6    Complex:    The
two buildings comprising the Building identified above and: (i) that parcel of
real property on which the such buildings are located, (ii) the Common Area, and
(iii) any contiguous parcels owned by Landlord, as more particularly described
in Exhibit A. 1.7    Term:    (A)    March 1, 2004 (the “Estimated Commencement
Date”).

 

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          (B)    Eighty-four (84) months. If the Commencement Date is other than
the first day of a calendar month, the first month shall include the remainder
of the calendar month in which the Commencement Date occurs plus the first full
calendar month thereafter. 1.8    Minimum Monthly Rent:    (A)    Minimum
Monthly          

Months

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Minimum Monthly Rent Amount

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          1 (“Free Rent Period”)    -0-           2 (“Reduced Rent Period”)   
$36,018.00           3 through 12    $72,036.00           13 through 24   
$74,197.08           25 through 36    $76,422.99           37 through 48   
$78,715.68           49 through 60    $81,077.15           61 through 72   
$83,509.47           73 through 84    $86,014.75           If the Commencement
Date occurs on a date other than the first day of a calendar month, then the
first month of the Term will included the partial month in which the
Commencement Date occurs plus the first full calendar month thereafter. However,
the inclusion of any partial month in the first full calendar month shall not
entitled Tenant to any additional free rent or reduced rent. If the Commencement
Date occurs other than on the first day of a calendar month, the Free Rent
Period shall be the first thirty (30) days from and after the Commencement Date
and the Reduced Rent Period shall be the thirty day period from and after the
expiration of the Free Rent Period.           (B)    Advance Rent: $36,018.00
1.9    Security Deposit:    $86,015.00. 1.10    Permitted Use:    General office
and administration, R&D and any other uses incidental thereto that are allowed
by applicable law and are consistent with the character of the Complex. 1.11   
Initial Pro Rata %:    100%. 1.12    Landlord’s Allowance:    $730,800 as
provided in Exhibit C attached hereto. 1.13    CC&Rs:    Declaration of
Protective Covenants and Restrictions, Marathon-Fremont Business Center,
Fremont, Alameda County, dated May 22, 1980. 1.14    Management Fee:    2% of
gross rental revenue. 1.15    Broker:    Landlord: CPS           Tenant: CB
Richard Ellis/Cornish & Carey

 

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1.16   Contents:    This Lease consists of Articles 1 through 34; Addendum #1 —
Option to Renew; as well as the following Exhibits:          Exhibit A — Legal
Description of Complex          Exhibit B — Plan of the Complex          Exhibit
B1 — Floor Plan of the Premises          Exhibit C — Work Letter for
Construction Obligations          Exhibit D — Acknowledgment of Commencement of
Term          Exhibit E — Rules and Regulations

 

 

ARTICLE 2. PREMISES

 

2.1    Demising Clause. Landlord leases to Tenant and Tenant leases from
Landlord the Premises, which includes the interior space of the walls of the
Building, upon the terms and conditions set forth in this Lease. Landlord
reserves the area beneath and above the Building and the exterior thereof
together with the non-exclusive right to install, maintain, use, repair and
replace pipes, ducts, conduits, wires, and structural elements leading through
the Premises serving other parts of the Complex, so long as such items are
concealed by walls, flooring or ceilings and do not unreasonably interfere with
Tenant’s use of the Premises. Except as otherwise provided herein, such
reservation in no way affects the maintenance obligations imposed herein.
Landlord may change the shape, size, location, number and extent of the
improvements to any portion of the Complex, including the exterior of the
Building (but excluding the interior), without the consent of Tenant and without
affecting Tenant’s obligations hereunder if such changes do not have a material
adverse impact on Tenant’s use of, and access to, the Premises. In this Lease
“Landlord Parties” means Landlord’s directors, officers, employees,
shareholders, contractors, property managers, agents, Lenders, and other lien
holders, but excluding other tenants in the Complex, and “Tenant Parties” means
Tenant’s directors, officers, employees, partners, shareholders, agents,
contractors, or subtenants.

 

2.2    Covenants, Conditions and Restrictions. The Parties agree that this Lease
is subject and subordinate to the effect of: (a) any existing (as of the date
hereof) recorded covenants, conditions, restrictions, easements, Security
Instruments, and any other matters or documents of record, including the CC&Rs
(collectively, the “Restrictions”); (b) zoning and other laws of the city,
county and state where the Complex is situated; and (c) general and special
taxes not delinquent. Tenant agrees that as to its leasehold estate, Tenant and
all persons in possession or holding under Tenant will conform to and will not
violate the terms of any Restrictions.

 

2.3    Landlord’s Representation. Landlord represents and warrants to Tenant
that, to the actual knowledge of Landlord as of the date of this Lease:

 

(a) Landlord does not have notice of a violation of any applicable Laws and
Regulations (as defined in Section 16.1 hereof) pertaining to the Complex;

 

(b) Landlord does not have notice that the Premises contain any “Hazardous
Materials” in violation of any applicable “Environmental Laws” (as such terms
are defined in Article 16 of this Lease, except as may be disclosed or referred
to in the Existing Reports (hereinafter defined). The term “Existing Reports”
mean (i) that certain Environmental Assessment report, dated October 22, 1992,
prepared by AllWest Environmental, Inc., (ii) that certain Phase 1 Environmental
Site Assessment, dated April 24, 1996, prepared by Dames & Moore, and (iii) that
certain Structural Evaluation, dated April 11, 1996, prepared by Cabak Rooney
Jordan Associates;

 

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(c) Landlord does not have notice that the current configuration of the Premises
as of the date of this Lease is not in compliance with the Americans With
Disability Act or applicable building codes as interpreted and applied by the
City of Fremont as of the date of this Lease and based on the current physical
condition of the Premises; and

 

(d) The Premises are in good working condition and repair as of the Delivery
Date, and if not, Landlord will cause the required repairs to be made to cause
the Premises to be in good working condition and repair within thirty (30) days
after of the Delivery Date.

 

2.4    Satellite Dish Equipment. Tenant shall have the right to install and
maintain on the Building roof, not more than two satellite dishes of a size not
larger than three feet in diameter unless approved in writing by Landlord, as
necessary for Tenant’s communications and data transmission network, and
equipment to meet Tenant’s excess HVAC needs (if any), while Tenant is occupying
and conducting its business in the Premises, but subject to structural and roof
top support limitations. Tenant shall also have the right to install and remove,
at its sole cost and expense, the cabling and conduit reasonably necessary to
connect the rooftop satellite dishes and equipment to Tenant’s equipment on and
within Tenant’s Premises. The location of all of such equipment, dishes, cabling
and conduit shall be at locations designated by Landlord provided that such
locations will allow Tenant to transmit and receive reception without
interference (“Interference Free Location”). If from time to time a location
designated by Landlord, which initially is acceptable to Tenant as an
Interference Free Location, subsequently becomes unacceptable because of
conditions which create interference, Landlord shall designate and make
available to Tenant a new Interference Free Location. The installation and any
costs relating thereto, and the maintenance, repair, insurance obligations and
liability, with respect to such equipment and dishes, shall be borne completely
by Tenant, although such use of space on the roof and for the cabling and
conduit shall be without any additional rent to Tenant. Landlord, at no cost to
Landlord, agrees to cooperate with Tenant in securing any required approvals,
but shall be solely responsible for obtaining all approvals. Tenant’s rights
under this Section 2.4 above are also expressly conditioned upon, and Tenant, at
its sole cost and expense, also covenants and agrees to comply with, all of the
following:

 

(a) Plans. The installation of all lines, satellite dishes and equipment
(collectively, the “Rooftop Equipment”) to connect and use the Rooftop Equipment
shall be performed in accordance with plans that are subject to the prior
approval of Landlord in its good faith discretion and otherwise in accordance
with the Lease for the construction of Alterations. Landlord may specify the
method of shielding the Rooftop Equipment from view, or other decorative
architectural features required to make the Rooftop Equipment aesthetically
acceptable to Landlord in its reasonable discretion.

 

(b) Construction Schedule. Tenant shall submit to Landlord a construction
schedule for the construction and installation of the Rooftop Equipment, which
schedule shall be subject to Landlord’s prior written approval in its reasonable
discretion, and Tenant thereafter conform to such schedule.

 

(c) Compliance with Laws. The installation, use, operation and maintenance of
the Rooftop Equipment by Tenant shall be in compliance with all statutes, laws,
rules, regulations, ordinances, decrees or orders of any governmental authority,
whether federal, state or local, having jurisdiction in connection therewith,
and must be done in a manner that will not impair, void or adversely affect any
roof warranty that Landlord may have at any time. Without limitation on the
generality of the foregoing, Tenant shall secure and maintain in force and
effect all governmental licenses, permits and approvals required for the
installation and use of the Rooftop Equipment, including any requisite building
permits, and comply with all requirements of any party providing any roof
warranty.

 

(d) Rules and Regulations. Tenant’s access to the roof of the Building for
purposes of installing and maintaining the Rooftop Equipment and related
facilities shall be subject to such procedures, regulations and limitations as
Landlord may impose; provided, however, that any such procedures, regulations
and limitations shall not effectively prohibit or preclude access at all times.

 

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(e) Adjustments. Tenant agrees that if Landlord makes or plans on making any
repairs or maintenance to the Building, or any alterations, modifications,
additions or improvements to the Building or, including any such work to the
electrical, mechanical or other operating systems within the Building, Tenant at
its sole cost shall make any concomitant adjustments or modifications to the
Rooftop Equipment and its related facilities, as such adjustments and
modifications are determined to be necessary by any architect, engineer or other
contractor engaged by Landlord in connection therewith, or, at Tenant’s option,
the Rooftop Equipment and all communication and cable lines connecting the
Rooftop Equipment to the Premises may be removed by Tenant. The making of the
requisite adjustments and modifications for the Rooftop Equipment and its
related facilities shall be made in accordance with plans and specifications
which are prepared, submitted, reviewed and approved by Landlord in its sole and
absolute discretion.

 

(f) Removal. At its sole cost and expense, Tenant must remove or cause the
removal of all lines and related facilities connecting to the Rooftop Equipment
by the expiration or sooner termination of the Term of this Lease. Such removal
shall be done in a good and workmanlike manner, and Tenant at its sole cost and
expense shall repair and restore any resulting injury or damage to the Building
and Common Area. If Tenant fails to complete the removal by the date provided
above, then at Landlord’s election, the Rooftop Equipment and its related
facilities shall be deemed abandoned and at Landlord’s option in its sole and
absolute discretion, shall thereupon become the property of Landlord, in which
case Landlord may possess, use, dispose of and otherwise enjoy the beneficial
incidents of the ownership thereof as Landlord deems appropriate. Tenant hereby
irrevocably waives any rights it has to the contrary under applicable laws.

 

(g) Landlord’s Review. Tenant agrees and understands that the review of all
plans by Landlord is solely to protect the interests of Landlord in the
Building, and Landlord shall not be the guarantor of, nor responsible for, the
correctness, completeness or accuracy of any such plans or compliance of such
plans with applicable laws. Landlord’s approval of any plans, work or any matter
under this section shall not: (i) constitute an opinion or agreement by Landlord
that such plans are in compliance with all applicable laws, (ii) impose any
present or future liability on Landlord; (iii) constitute a waiver of Landlord’s
rights hereunder; (iv) impose on Landlord any responsibility for a design and/or
construction defect or fault in the connection, use or operation of the Rooftop
Equipment or other facilities, (v) constitute a representation or warranty
regarding the accuracy, completeness or correctness thereof of any plans, or
that such plans or any work are in accordance with industry standards or will
allow the use of the Rooftop Equipment to be operational or functional upon
completion. Landlord shall have no responsibility for any deficiencies in the
drawings or any failure thereof to reflect actual conditions (concealed or
apparent) at the Building, including without limitation any failure of the
drawings to reflect existing equipment, walls, or other facilities; in such
case, Landlord may stop the installation work and require that Tenant revise the
drawings.

 

(h) Use. Tenant may use the roof of the Building for the Rooftop Equipment only
for telecommunications purposes for the conduct of Tenant’s business in the
Premises while Tenant is occupying the Premises, and no other purpose
whatsoever. Tenant may not license, lease, sublease, contract or enter into any
other arrangement for the use of the roof the Building or the Rooftop Equipment
by any other party. Tenant use of the Rooftop Equipment, including, without
limitation, the installation, maintenance, repair and removal of the Rooftop
Equipment, may not in any way: (i) interfere with any other use of the rooftop,
(ii) cause any unreasonable or unusual wear and tear to the Building or rooftop,
(iii) create any risk of damage or injury to property or people, or (iv)
adversely detract from the appearance of the Building. If Tenant’s use of the
Rooftop Equipment increases Landlord’s insurance premium, Tenant shall pay any
such increase immediately upon demand.

 

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(i) Waiver. Except to the extent arising from the gross negligence of Landlord,
Landlord shall have no liability for damages arising from, and Landlord does not
warrant that the Tenant’s use of the Use Area or Rooftop Equipment will be free
from, the following (collectively called “Line or Communication Problems”): (i)
any eavesdropping or wire-tapping by unauthorized parties, or (ii) any failure
of any Rooftop Equipment to satisfy Tenant’s requirements, or (iii) any
shortages, failures, variations, interruptions, disconnections, loss or damage
caused by the installation, maintenance, replacement, use or removal of the
Rooftop Equipment by any failure of the environmental conditions or the power
supply for the Building or Complex to conform to any requirements for the
Rooftop Equipment or any associated equipment, or (iv) any interference to the
Rooftop Equipment (or the use thereof) from any other source, including, without
limitation, radio, television, telephone, microwave, short-wave, long wave, or
other signal from any source or cause, or (v) any other problems associated with
any Rooftop Equipment by any other cause. Under no circumstances shall any Line
or Communication Problems be deemed an actual or constructive eviction of
Tenant, render Landlord liable to Tenant for abatement of rent, additional rent
or any other charge, or relieve Tenant from performance of Tenant’s obligations
under this Lease. Landlord in no event shall be liable for damages by reason of
loss of profits, business interruption or other consequential damage arising
from any Line or Communication Problems.

 

(j) Condition of Roof. Tenant agrees that its use of the rooftop of the Building
is in its “AS IS” condition without the construction of any improvements or the
grant of any allowances or concessions by Landlord.

 

(k) Damage or Destruction to Use Area. If the rooftop of the Building or the
Rooftop Equipment, or any portion thereof, is damaged by any casualty, such that
the use is rendered unsuitable for Tenant’s continued use, Tenant and Landlord
shall each have the option to terminate Tenant’s rights to use the rooftop of
the Building upon written notice to the other within thirty (30) days of the
date of such damage, but any such termination shall not cause a termination of
the Lease or otherwise affect or impair the Lease.

 

(l) Personal Property Tax. Tenant shall pay all taxes or other charges assessed
against the Rooftop Equipment or the use thereof. In the event any portion of
the Rooftop Equipment is assessed and billed with the property of Landlord,
Tenant shall pay to Landlord its share of such taxes (based upon a reasonable
determination of Landlord) within thirty (30) days after notice from Landlord of
the amount reasonably determined by Landlord.

 

 

ARTICLE 3. TERM AND POSSESSION

 

3.1    Commencement Date. The parties anticipate that Landlord will deliver
possession of the Premises to Tenant by January 5, 2004 (the “Estimated Delivery
Date”). The actual date Landlord delivers possession of the Premises to Tenant
with reasonable access sufficient to allow Tenant to commence the Tenant
Improvements will be referred to herein as the “Delivery Date”). The
“Commencement Date” will be March 1, 2004. Upon request by Landlord, Tenant
shall execute a written acknowledgment of the date of the actual Commencement
Date in the form of Exhibit D. The failure of Tenant to execute such
acknowledgement or the failure of Landlord to request such acknowledgement shall
not delay or postpone the start of the Commencement Date.

 

3.2    Term. The Term of this Lease shall start on the Commencement Date and
shall be for the term specified in Section 1.7 (B) hereof, plus any partial
month at the commencement of the Term.

 

3.3    Pre-Term Possession. Tenant may have access to and use of the Premises
from and after the Delivery Date to make such improvements, to install fixtures,
supplies, inventory and other property. Tenant will not interfere with the
progress of Landlord’s work by such entry. During any pre-term possession all
terms and conditions of the Lease shall apply, including Tenant indemnities
under the Lease and Tenant’s payment of utilities after the Delivery Date, but
excluding the payment of other Rent.

 

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3.4    Landlord Delay. If the Delivery Date does not occur by the Estimated
Delivery Date, the Lease shall not be void or voidable, nor shall Landlord be
liable for any loss or damage resulting therefrom, except as hereinafter
provided. However, if the Delivery Date does not occur by the Estimated Delivery
Date (as extended for “Force Majeure Delay”) and such delay is not due to any
“Tenant Delay” (as such terms are defined in Exhibit C), then Landlord agrees to
reimburse Tenant for the Holdover Rent (hereinafter defined) that Tenant pays to
the landlord under the existing lease of space at 47211 Lakeview Boulevard,
Fremont, California (“Existing Lease”) for each day of delay beyond the
Estimated Delivery Date, unless caused by a Tenant Delay, until the Delivery
Date. The “Holdover Rent” means the additional holdover rent charged by the
landlord under the Existing Lease and actually paid by Tenant to such landlord
over and above the rent that would otherwise be applicable without such holdover
rent charge during such holdover period. The total amount of the monthly
Holdover Rent under the Existing Lease is $43,500.00 per month. Should the
Delivery Date not occur on or before the Estimated Delivery Date and such delay
causes a delay in Tenant substantially completing construction of the Tenant
Improvements (as defined in Exhibit C attached hereto), then the Commencement
Date shall be delayed for the number of days the Premises is delivered after the
Estimated Delivery Date, except to the extent such delay is due to a Tenant
Delay and except to the extent that Tenant is occupying and conducting its
business in the Premises. If the Delivery Date does not occur within six months
after the Estimated Delivery Date (as extended for Force Majeure Delay) due to a
cause other than a Tenant Delay (defined in Exhibit C, Section 3), Tenant shall
have the right to cancel this Lease upon Notice to Landlord given within ten
days after the expiration of the six-month period. Should Tenant cancel the
Lease as provided above, Tenant shall have no obligation to reimburse Landlord
for the Holdover Rent.

 

3.5    Tenant Delay. If Landlord cannot deliver possession of the Premises on
the Estimated Delivery Date because of a Tenant Delay, the Estimated Delivery
Date will be delayed one (1) day for each day the Delivery Date is delayed due
to a Tenant Delay. In no event shall a Tenant Delay excuse Tenant’s performance
hereunder. Tenant shall be responsible for, and shall immediately pay upon
demand to Landlord, all reasonable out of pocket costs and expenses incurred by
Landlord in connection with any Tenant Delay.

 

 

ARTICLE 4. RENT

 

4.1    Payment. Tenant shall pay to Landlord the Minimum Monthly Rent specified
in Section 1.8 (A) and the additional rent as set forth in Articles 5 through 8
and elsewhere in this Lease (the “Additional Rent”)(the Minimum Monthly Rent and
the Additional Rent are collectively referred to as “Rent”). Minimum Monthly
Rent is payable in advance on the first day of each month of the Term at the
Rent Payment Address or such other address specified by Landlord. If the Term
commences on other than the first day of the month, the Rent for the first
partial month shall be prorated accordingly. All Rent is payable in lawful money
of the United States.

 

4.2    No Set Off. Rent shall be paid without prior notice, demand, deduction,
setoff, offset, counterclaim, recoupment, suspension or abatement except as
expressly provided in Articles 12 and 20 or elsewhere in this Lease.

 

4.3    Advance Rent. The amount specified in Section 1.8 (B) is paid to Landlord
upon execution of this Lease as Advance Rent; provided, however, that such
amount shall be held by Landlord as a Security Deposit pursuant to the Lease
until it is applied by Landlord to the Minimum Monthly Rent. Said Advance Rent
shall be applied to the first full payment of the Minimum Monthly Rent.

 

4.4    Late Charges; Interest. Tenant acknowledges that late payment of Rent or
other sums due under the Lease will cause Landlord to incur costs not
contemplated by this Lease, the exact amount being extremely difficult and
impractical to fix. Such costs include processing and accounting charges, late
charges that may be

 

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imposed on Landlord by the terms of any encumbrance covering the Premises, and
interest costs. If Landlord does not receive any Rent or other sums due from
Tenant within five (5) days after receipt of written notice to Tenant after the
due date, Tenant shall pay to Landlord an additional sum of ten percent (10%) of
such Rent or other sum as a late charge; provided, however, that this notice and
cure period shall only be applicable for the first two times each calendar year
that Tenant fails to pay any monthly Rent or any additional rent when due. If
Landlord has provided two factually correct notices of a late payment or default
during a calendar year, Landlord shall not be obligated to provide any notice
thereafter for the remainder of such calendar year and such late charge shall be
due if payment is not made when due without any grace period or notice. This
provision shall not relieve Tenant of Tenant’s obligation to pay Rent at the
time and in the manner herein specified. The Parties agree that this late charge
represents a fair and reasonable estimate of the cost Landlord will incur by
reason of Tenant’s late payment. Accepting any late charge does not waive any
Tenant’s default with respect to the overdue amount or prevent Landlord from
exercising any other rights or remedies available to Landlord. In addition to
the late charge, Tenant shall pay interest at the rate of 10 percent per annum
on any Rent or other sum not paid within 30 days of the date due.

 

 

ARTICLE 5. TAXES

 

5.1    Definition. The terms “Real Property Taxes” or “Taxes” as used in this
Lease include all of the following, but do not include any tax levied upon the
income or profits of Landlord:

 

(a) Present and future Real Property Taxes on the Building, the Complex, the
land on which the Building is situated and the various estates in the Building
and the land, including this Lease, as well as all personal property taxes
levied on the property used in the operation of the Building or land by
Landlord;

 

(b) The cost to Landlord of contesting the amount, validity, or applicability of
any Taxes, provided said cost does not exceed the potential saving sought to be
achieved by Landlord contesting said Taxes;

 

(c) General or involuntary special assessments, improvement or other bonds,
commercial and gross rental tax, levy, or tax imposed by any authority having
the direct or indirect power to tax, as against any legal or equitable interest
of Landlord in the Premises or in the real property of which the Premises are a
part, as against Landlord’s right to Rent or other income therefrom;

 

(d) Any governmental tax, fee, or charge with respect to the possession,
leasing, transfer of interest, operation, management, maintenance, alteration,
repair, use, or occupancy by Tenant, of any part of the Premises, Building, or
Complex; and

 

(e) Any tax imposed in substitution, partially or totally, for any tax
previously included within the definition of Taxes herein, or any additional
tax, assessed against the Complex.

 

5.2    Assessments. Only the current amount of any general or special
assessments and statutory interest (prorated for any partial year) that comprise
a part of the Taxes and are paid in annual or semi-annual installments shall be
included within the computation of Taxes for which Tenant is responsible.

 

5.3    Intentionally Deleted.

 

5.4    Proration. Tenant shall pay as Additional Rent to Landlord, within thirty
(30) days after Notice, Tenant’s share of all Real Property Taxes stated in the
tax bill in which the Premises are included, including the parking and Common
Area, as well as the improvements on all of said land, or otherwise arising
under the provisions of this Article. As used in this Section. “Tenant’s share”
is a fraction in which the numerator is the Rentable Area of the Premises and
the denominator is the sum of all rentable areas included within the tax bill.
In no event shall Tenant’s share include Taxes on any property outside of the
Complex.

 

5.5    Estimated Payments. Landlord, at its option, may estimate the Taxes next
due and collect from Tenant on a monthly basis, along with Tenant’s payment of
Minimum Monthly Rent, the amount of Tenant’s

 

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estimated Tax obligation. About May 1 of each year during the Term (or as soon
thereafter as is reasonably practicable, but not to exceed thirty (30) days),
Landlord will provide Tenant with an itemized and reasonably detailed
reconciliation of Tenant’s account with respect to such estimated Tax payments.
If it is established upon such reconciliation that Tenant has not paid enough
estimated Taxes to cover Tenant’s share for the year in question, Tenant shall
pay to Landlord the full amount of such shortage within thirty (30) days of
billing. If it is established that Tenant has overpaid its Tax obligation,
Tenant will receive a credit applicable to the next ensuing estimated Tax
payments or, within thirty (30) days after Landlord’s determination of such
overpayment, a refund of the amount if the Term has expired.

 

5.6    Personal Property Taxes. Tenant shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, equipment and all
other personal property of Tenant contained in the Premises or elsewhere. When
possible, Tenant shall cause such trade fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real
property of Landlord. If any of Tenant’s personal property shall be assessed
with Landlord’s real property, or if any other Taxes or taxes which are payable
by Tenant pursuant to this Lease or otherwise are assessed against Landlord or
Landlord’s real property, Tenant shall pay Landlord the Taxes and other taxes
attributable to Tenant within ten days after receipt of a written statement
setting forth the amount owed.

 

5.7    Net Rent. It is the intention of the Parties that the Rent received by
Landlord be net of any Taxes of any sort to be paid by Landlord. If it is not
lawful for Tenant to reimburse Landlord for any of the Taxes, the Minimum
Monthly Rent shall be increased by the amount equal to the Taxes allocable to
Tenant so as to net to Landlord the amount which it would have received if such
Tax had not been imposed.

 

 

ARTICLE 6. COMMON AREAS AND COMMON AREA COSTS

 

6.1    Definitions

 

(a) “Common Area” include all areas and facilities outside the Premises, within
the exterior boundaries of the Complex, that are provided by Landlord for the
general use and convenience of Tenant and of other Complex tenants and their
authorized representatives and invitees. Common Area includes driveways, parking
areas, sidewalks, and landscaped areas, all as generally described or shown on
Exhibit B attached hereto. Exhibit B is tentative, and Landlord reserves the
right to make alterations to it from time to time, provided the same does not
materially impair Tenant’s use of the Premises or access thereto. Common Area
also includes systems within the Premises that also serve other tenants such as
plumbing, fire sprinkler or non-exclusive HVAC.

 

(b) Subject to 6.1(e) below, “Common Area Costs” are all costs incurred by
Landlord for: (i) maintenance, repair, replacement, improvement or operation of
the Complex, except for Landlord’s maintenance obligation under Section 19.1;
(ii) refuse disposal; (iii) property owner’s association dues or assessments
imposed upon Landlord by any Restrictions; (iv) liability and other insurance
for the Complex required and/or permitted to be carried by Landlord pursuant to
this Lease except to the extent such insurance is billed to Tenant as part of
the Complex Insurance Premium as provided in Article 8 of this Lease; (v)
security services for the Complex; (vi) the Management Fee set forth in Section
1.14; (vii) any other costs or fees reasonably related to the use, operation or
enjoyment of any part of the Complex; (ix) any insurance deductibles in
connection with insurance required and/or permitted to be carried by Landlord
pursuant to this Lease for repairs under Article 12 or elsewhere in the Lease
(but the amount included in Common Area Costs for a deductible shall not to
exceed $25,000 regardless of the actual amount of the deductible); and (x)
permitted amortized Capital Costs. Notwithstanding the foregoing, during the
first two years following the Commencement Date, Tenant shall not have to pay
for its Pro Rata % of Capital Costs, and after the expiration of such two year
period, Tenant’s Pro Rata % of Capital Costs may not exceed $3,132.00 per month
(i.e., $0.03 per square foot of Rentable Area in the Premises on a monthly
basis, unless such Capital Costs are due to a Tenant Activity (hereinafter
defined), in which case Tenant shall be solely responsible for the payment of
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Capital Cost that is required due to (i) Tenant’s particular use or change in
use of the Premises which requires Landlord to perform any work or service to
the Building or Common Area that was not previously required to be performed by
Landlord (such as by way of example, the construction of additional
improvements), or (ii) any Alterations (as defined in Section 18.1) or
improvements (including, without limitation, the Tenant Improvements) made by or
for Tenant, except if a capital improvement is required by the local
governmental authority to construct the initial Tenant Improvements due to the
fact that the existing condition of the Premises as of the date of this Lease
does not comply with Laws and Regulations in existence and as applied by the
local governmental authority as of the date of this Lease and which would be
required to be performed by the local governmental authority regardless of the
type of Tenant Improvements being constructed by Tenant and which is not due to
Tenant’s unique use or change in use of the Premises (“Initial Compliance
Work”). Tenant will promptly notify Landlord if the local governmental authority
will require any Initial Compliance Work and Landlord shall have the right to
deal and negotiate directly with the local governmental authority regarding
whether such Initial Compliance Work will be required and/or the scope of such
work.

 

(c) “Pro Rata %” is a fraction where the numerator is the Rentable Area of the
Premises and the denominator is the sum of the rentable areas of the buildings
in the Complex. Tenant’s Initial Pro Rata % is stated in Section 1.11. The Pro
Rata % may change from time to time.

 

(d) “Capital Costs” are any (i) costs, including financing costs, if any, of any
capital improvement purchased or incurred as a labor-saving measure or to affect
other economics in the operation or maintenance of the Buildings and/or the
Complex (provided that the annual amortized cost does not exceed the actual cost
savings realized and such savings are not primarily for the benefit of any
particular tenant); (ii) costs, including financing costs, if any, incurred by
Landlord after the Commencement Date for any capital improvements installed or
paid for by Landlord and required by any new (or change in) laws, rules or
regulations of any governmental or quasi-governmental authority which are
enacted or changed (which shall include, without limitation, a change in
interpretation or application) after the Commencement Date; and/or (iii) costs,
including financing costs, if any, for replacement of capital improvements or
building service equipment when required because of normal wear and tear, except
for capital improvements to expand the Common Areas (such as the construction of
parking garage) or to construct an additional building or expand an existing
building. The portion of Capital Costs to be included each year in Common Area
Costs is that fraction allocable to the calendar year in question calculated by
amortizing the cost over the useful life of such improvement, as determined
using the applicable useful life years recommended by The Building Owners and
Mangers Association in effect at the time of such improvements or if such
standard is not available, then the useful life shall be in accordance with
generally accepted property management practices, with interest on the
unamortized balance at seven percent (7%) per annum. Tenant’s Operating Costs
for the Complex shall not include the unamortized Capital Costs for capital
improvements made prior to the Delivery Date.

 

(e) Exclusions from Common Area Costs. Notwithstanding anything to the contrary
in the definitions of Common Area Costs in Section 6, Common Area Costs shall
not include any of the following, except to the extent specifically permitted by
an express exception to the following:

 

(1) Any ground lease rental;

 

(2) Costs of items considered capital repairs, replacements, improvements and
equipment under generally accepted accounting principles consistently applied or
otherwise except for Capital Costs;

 

(3) Rentals for items (except when needed in connection with normal repairs and
maintenance of permanent systems) which if purchased, rather than rented, would
constitute a Capital Item;

 

(4) Depreciation of the Building and the Complex or any Capital Items;

 

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(5) Marketing costs including, without limitation, leasing commissions,
attorneys’ fees in connection with the negotiation and preparation of letters,
deal memoranda, letters of intent, leases, subleases and/or assignments, space
planning costs, and other costs and expenses incurred in connection with lease,
sublease and/or assignment negotiations and transactions with present or
prospective tenants or other occupants of the Building or the Complex;

 

(6) Any overhead and profit increment paid to Landlord or to subsidiaries or
affiliates of Landlord for goods and/or services in or to the Building and/or
the Complex to the extent such increment exceeds the costs of such goods and/or
services rendered by unaffiliated third parties on a competitive basis;

 

(7) Interest, principal, points and fees on debts or amortization on any
mortgage or mortgages or any other debt instrument encumbering the Building
and/or the Complex;

 

(8) Landlord’s general corporate overhead and general and administrative
expenses;

 

(9) Tax penalties incurred as a result of Landlord’s negligence or Landlord’s
inability or unwillingness to make payments and/or to file any tax or
informational returns when due;

 

(10) Any and all costs arising from the presence of Hazardous Materials in or
about the Building and/or the Complex not caused or released by Tenant or any of
its employees, agents, contractors or invitees, including, without limitation,
Hazardous Materials in the ground water or soil;

 

(11) Costs arising from Landlord’s charitable or political contributions;

 

(12) Costs arising from latent defects in the structural portion of the Building
(which shall mean the foundation, roof structure and exterior load bearing
walls;

 

(13) Costs for sculpture, paintings or other objects of art; or

 

(14) Costs associated with the operation of the business of the entity which
constitutes Landlord as the same are distinguished from the costs of operation
of the Building and the Complex including accounting and legal matters, costs of
selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s
interest in the Building and/or the Complex, costs of any disputes between
Landlord and its employees, disputes of Landlord with Building and/or the
Complex management or outside fees paid in connection with disputes with other
tenants.

 

(15) Costs incurred in connection with upgrading the Complex or any portion
thereof to comply with disability, fire and life safety codes, ordinances,
statutes, or other laws in effect prior to the Delivery Date, including without
limitation, The Americans With Disability Act, including penalties incurred due
to noncompliance with any such laws or regulations, as the same is applied by
the City of Fremont as of the date the Delivery Date based on the condition of
the Complex prior to the construction of any additional improvements or work.

 

6.2    Rights and Duties of Landlord. Landlord shall maintain the Common Area,
establish and enforce reasonable rules and regulations therefor (to the extent
not in conflict with the terms and conditions of this Lease), close any of the
Common Area to whatever extent required in Landlord’s opinion to prevent a
dedication of or the accrual of any rights of any person or of the public to the
Common Area, close temporarily any of the Common Area for maintenance purposes,
and make changes to the Common Area including changes in the location of
driveways, entrances, exits, vehicular parking spaces, parking area, the
designation of areas for the exclusive use of others, the direction of the flow
of traffic or construction of additional buildings thereupon, in a manner
Landlord deems reasonably proper in its opinion, provided the same does not
materially impair Tenant’s use of, or access to, the Premises. Tenant hereby
acknowledges that Landlord is under no obligation to provide security for the
Common Area but may do so at its option as a Common Area Cost.

 

 

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6.3    Payments by Tenant. As Additional Rent, Tenant shall pay Landlord its
“Pro Rata Share”, being the product of the Pro Rata % times Common Area Costs,
within thirty (30) days of receiving a bill from Landlord, but no more
frequently than monthly. Landlord shall have the right to estimate Tenant’s
future Pro Rata Share and to collect it from Tenant on a monthly basis along
with Tenant’s payment of Minimum Monthly Rent. Landlord will provide an itemized
and reasonably detailed reconciliation of Tenant’s account, no later than May
1st of each year. If the reconciliation shows Tenant’s account does not cover
Tenant’s Pro Rata Share for the period estimated, Tenant shall within thirty
(30) days after Landlord’s demand, pay Landlord any deficiency. Any excess
indicated by the reconciliation shall be credited to Tenant’s account to reduce
the estimated payments for the next ensuing period, or if excess is determined
at the end of the Term, it shall be refunded to Tenant within thirty (30) days
after Landlord’s determination of such excess.

 

6.4    Inspection. Tenant shall have the right at its own expense to inspect and
photocopy the books and records of Landlord pertaining to Common Area Costs and
Taxes once in any calendar year by any employee of Tenant or by a certified
public accountant mutually acceptable to Landlord and Tenant (provided such
certified public accountant charges for its service on an hourly basis and not
based on a percentage of any recovery or similar incentive method) at reasonable
times, and upon reasonable written notice to Landlord. Within ninety (90) days
after receipt of Landlord’s annual reconciliation, Tenant shall have the right,
after at least thirty (30) days prior written notice to Landlord, to inspect at
the offices of Landlord or its property manager, the books and records of
Landlord pertaining solely to the Common Area Costs and Taxes for the
immediately preceding calendar year covered in such annual reconciliation
statement. All expenses of the inspection shall be borne by Tenant and must be
completed within fifteen (15) days after commencement of the inspection. If
Tenant’s inspection reveals a discrepancy in the comparative annual
reconciliation statement, Tenant shall deliver a copy of the inspection report
and supporting calculations to Landlord within thirty (30) days after completion
of the inspection. If Tenant and Landlord are unable to resolve the discrepancy
within thirty (30) days after Landlord’s receipt of the inspection report,
either party may upon written notice to the other have the matter decided by an
inspection by an independent certified public accounting firm approved by Tenant
and Landlord (the “CPA Firm”), which approval shall not be unreasonably withheld
or delayed. If the inspection by the CPA Firm shows that the actual amount of
Common Area Costs payable by Tenant is greater than the amount previously paid
by Tenant for such accounting period, Tenant shall immediately pay Landlord the
difference. If the inspection by the CPA Firm shows that the actual amount is
less than the amount paid by Tenant, then the difference shall be applied in
payment of the next estimated monthly installments of Common Area Costs owing by
Tenant, or in the event such accounting occurs following the expiration of the
Term hereof, such difference shall be refunded to Tenant. Tenant shall pay for
the cost of the inspection by the CPA Firm, unless such inspection shows that
Landlord overstated Common Area Costs by more than five percent (5%), in which
case Landlord shall pay for the cost of the inspection by the CPA Firm.

 

6.5    Refuse Disposal. Tenant shall pay Landlord, within ten days of being
billed therefor, for the removal from the Common Area, the Complex, or the
Building of any amounts of refuse or rubbish that Tenant has generated in excess
of amounts typically generated by other tenants of the Complex.

 

 

ARTICLE 7. ASSIGNMENT AND SUBLETTING

 

7.1    Restriction on Transfer. Except as expressly provided in Article 7,
Tenant will not, either voluntarily or by operation of law, assign, mortgage,
hypothecate, encumber or otherwise transfer this Lease or any interest herein or
sublet or license the Premises or any part thereof, or permit the use or
occupancy of the Premises by any party other than Tenant (any of which are
referred to as a “Transfer”), without the prior written consent of Landlord. For
purposes of this Article, if Tenant is a corporation, limited liability company,
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entity any transfer, assignment, encumbrance or hypothecation of fifty percent
or more (individually or in the aggregate) of any stock or other ownership or
beneficial interest in such entity, and/or any transfer, assignment,
hypothecation or encumbrance of any controlling ownership, beneficial or voting
interest in such entity, will be deemed a Transfer and will be subject to all of
the restrictions and provisions contained in this Article. The immediately
preceding sentence will not apply to public corporations, the stock of which is
traded through a public exchange or over the counter system.

 

7.2    Transfer Notice. If Tenant desires to effect a Transfer, at least 15 days
prior to the date when Tenant desires the Transfer to be effective (the
“Transfer Date”), Tenant will give Notice (the “Transfer Notice”), stating the
name, address and business of the proposed assignee, subtenant or other
transferee (the “Transferee”). The Notice must contain information in such
detail as Landlord may reasonably require concerning the character, ownership,
and financial condition of Transferee (including references), the Transfer Date,
any relationship between Tenant and Transferee, and a draft of the “Transfer
Agreement” showing the consideration and other terms of the proposed Transfer.

 

7.3    Landlord’s Options. Within fifteen days of receipt of a Transfer Notice,
and any additional information reasonably requested by Landlord concerning the
Transferee’s financial responsibility, Landlord will notify Tenant of its
election to do one of the following: (i) consent to the proposed Transfer
subject to such reasonable conditions as Landlord may impose in providing such
consent; (ii) refuse such consent, which refusal shall be on reasonable grounds;
or (iii) terminate this Lease as to the portion of the Premises which is
proposed to be sublet or assigned and recapture that portion of the Premises for
reletting by Landlord. Notwithstanding the above, should Landlord elect to
recapture said Premises and the proposed Transfer is a sublease that
individually or in the aggregate with all other existing subleases is for less
than 51% of the square footage of the Premises and for less than the remaining
Lease Term, Tenant shall have the right, exercisable within ten (10) days of
Landlord’s election, to retract its Transfer request and in which case Tenant
shall be prohibited from such Transfer and the Lease shall remain in full force
and effect. Tenant agrees that it is reasonable for Landlord to deny consent to
a proposed Transfer on any of the following grounds, which list is not
exclusive:

 

(a) The financial strength of the proposed Transferee is not reasonably adequate
to meet such Transferee’s applicable obligations under this Lease or sublease if
such Transfer is a sublease;

 

(b) A proposed Transferee whose impact on the common facilities or the
efficiency or effectiveness of any utility or telecommunication system serving
the Building or Complex, or other tenants of the Complex would be adverse and
significant;

 

(c) A proposed Transferee whose occupation will require a variation in the terms
of this Lease;

 

(d) The existence of any uncured default by Tenant (provided Tenant has been
given written notice of such default) under any provision of this Lease;

 

(e) The proposed Transfer, or Landlord’s consent thereto, would result in
Landlord’s breach of an existing agreement with a third party.

 

7.4    Additional Conditions. A condition precedent to any Transfer will be the
delivery to Landlord of a true copy of the fully executed Transfer Agreement
that does not differ materially from that provided pursuant to Section 7.2.
Tenant undertaking the transfer (“Transferor”) agrees to pay Landlord, as
Additional Rent, 50 percent of all sums and other consideration paid to and for
the benefit of Tenant by the Transferee in excess of the Rent payable under the
Lease for the same period and portion of the Premises. In calculating excess
Rent or other consideration which may be payable to Landlord under this
paragraph, Tenant will be entitled to deduct commercially reasonable third party
brokerage commissions and attorney’s fees and other amounts reasonably and
actually expended by Tenant in connection with the Transfer, including a
reasonable tenant improvement allowance for improvements permanently affixed to
the portion of the Premises that is the subject of the Transfer, if acceptable
written evidence of such expenditures is provided to Landlord. No Transfer will
release Transferor (or any prior Transferor) of Tenant’s obligations under this
Lease or alter the primary liability of Transferor

 

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(or any prior Transferor) to perform all obligations to be performed by Tenant
hereunder. Landlord may require that Transferee remit directly to Landlord on a
monthly basis, all monies due Landlord under the terms of this Section. Consent
by Landlord to one Transfer will not be deemed consent to any subsequent
Transfer. In the event of default by Transferee, Tenant or any successor of
Tenant in the performance of any other terms hereof, Landlord may proceed
directly against Transferor (or any prior Transferor) without the necessity of
exhausting remedies against Transferee or successor. If Tenant requests the
consent of Landlord to a Transfer, Tenant will pay Landlord an administrative
fee of Seven Hundred Fifty Dollars ($750.00) concurrent with the request.

 

7.5    Permitted Transfer. Tenant shall have the right to enter into the
following types of Transfers without Landlord’s consent but after providing at
least thirty (30) days prior written notice to Landlord of the transaction,
together with reasonable supporting information confirming that such a Transfer
falls within one of the following categories (herein referred to as a “Permitted
Transfer”):

 

(1) Tenant may assign this Lease or sublet all of the Premises to an “affiliate”
of Tenant. An “affiliate” of Tenant shall mean any trust, corporation, entity or
partnership (i) which owns the majority of the ownership interests of Tenant,
(ii) the majority of whose ownership interests is owned by Tenant, (iii) the
majority of whose ownership interests is owned by Tenant’s parent corporation,
or (iv) the majority of whose ownership interest are owned by the same
shareholders of Tenant as of the date hereof; or

 

(2) Tenant may transfer shares of stock in Tenant to another party in connection
with any merger, consolidation, or sale of Tenant as a going concern and not as
part of a single transaction involving or affecting only the Premises to avoid
the restrictions on Transfer, provided that if there is such transfer of shares
of stock to a successor corporation or entity in connection with any merger of
Tenant into such successor corporation or entity, then such successor
corporation or entity must have a tangible net worth equal to or greater than
tangible net worth of Tenant as of the date of this Lease or immediate prior to
the Transfer, whichever is greater. The immediately preceding sentence shall not
apply to the normal and customary sale and transfer of stock in Tenant provided
Tenant is a public corporation, the stock of which is traded through a public
exchange or over the counter system.

 

 

ARTICLE 8. LANDLORD INSURANCE

 

8.1    Landlord’s Insurance. Landlord shall maintain in effect at all times fire
and hazard “Special Form Causes of Loss” insurance covering one hundred percent
(100%) of the full replacement cost of the Buildings (exclusive of the
foundation, site improvements and other portions typically not covered with this
type of insurance), the Tenant Improvements (only to the extent the Tenant
Improvements are affixed to the Building(s) and owned by Landlord at the time of
installation, but excluding any special equipment or improvements made or
installed for Tenant’s particular use), subject to commercially reasonable
deductibles that is consistent with Landlord’s underwriting criteria, in the
event of fire, lightning, windstorm, vandalism, malicious mischief and all other
risks normally covered by “Special Form Causes of Loss” policies carried by
Landlord. Landlord shall also obtain and keep in full force and effect (i) a
policy of commercial general liability and property damage insurance, (ii) loss
of rent insurance and (iii) workers’ compensation insurance (if necessary), all
such insurance being in amounts determined by Landlord to be reasonably
adequate. Landlord may also elect to carry earthquake insurance.

 

8.2    Use of Premises. No specific type of use shall be made or permitted to be
made on the Premises, nor acts done, by Tenant or any of its invitees,
contractors or agents which will increase the existing rate of insurance upon
the Building in which the Premises are located or upon any other building or
improvement in the Complex, unless Tenant agrees to pay such increase or cause
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Building, or any other building or improvement in the Complex, or any part
thereof. Tenant or Tenant Parties shall not sell, or permit to be kept, used or
sold, in or about the Premises, any article that may be prohibited by standard
commercial property insurance, special form policies. At its sole cost and
expense, Tenant shall comply with all reasonable requirements of any insurance
company necessary to maintain reasonable property damage and commercial general
liability insurance covering the Premises, Building, or Complex. Notwithstanding
any express or implied provision in this Lease to the contrary, if Tenant pays
the Rent and continues to perform all of its other obligations under this Lease,
Tenant shall at all times and from time-to-time have the right to cease business
operations from the Premises.

 

8.3    Increase in Premiums. Tenant agrees to pay to Landlord, as Additional
Rent, any increase in premiums on policies required herein to be carried by
Landlord on the Premises, the Building or the Complex, or any blanket policies
which include the Building or Complex as required herein, covering damage
thereto and loss of Rent caused by fire and other perils resulting from the
nature of Tenant’s occupancy or any act or omission of Tenant. All payments of
Additional Rent by Tenant to Landlord pursuant to this Section shall be made
within thirty (30) days after receipt by Tenant of Landlord’s billing therefor.

 

8.4    Pro Rata Share of Premiums. Tenant shall pay to Landlord, as Additional
Rent, Tenant’s pro rata share of the cost for all insurance premiums for the
property damage insurance, loss or rent insurance, earthquake insurance and
commercial general liability insurance (to the extent not included in Common
Area Costs) carried by Landlord for the Complex (the “Complex Insurance
Premium”). Tenant will pay such costs as set forth in Section 8.5. Such pro rata
share is defined as a fraction of the insurance premiums in which the numerator
is the Rentable Area of the Premises and the denominator is the total rentable
areas in all premises to which the Complex Insurance Premium is applicable. If
any insurance carried by Landlord for the Complex is a blanket policy covering
other properties not related to the Complex, the Complex Insurance Premium shall
be calculated as that portion of such blanket policy insurance premium which, in
Landlord’s good faith judgment, is properly allocable to the Complex. These sums
due shall be in addition to sums due under the previous Section of this Lease.

 

8.5    Estimated Payments. Landlord may, at its option, estimate the amount of
insurance premiums for property insurance to be due in the future from Tenant
and collect from Tenant on a monthly basis, along with payment of Tenant’s
Minimum Monthly Rent, the amount of Tenant’s estimated insurance premium
obligation. Prior to May 1 of each year (or as soon thereafter as reasonably
practicable, but not to exceed thirty (30) days), Landlord shall provide Tenant
with an itemized and reasonably detailed reconciliation of Tenant’s account
along with a billing for any shortage in the event of a deficiency or statement
for credit applicable to the next ensuing insurance premium payments, if an
overpayment has been made by Tenant, or refund if no further premiums are to be
paid by Tenant.

 

 

ARTICLE 9. TENANT’S INSURANCE

 

At its expense, Tenant shall obtain and keep in force during the Term, and
provide coverage after expiration of the Term for events occurring during the
Term, the following insurance, on an occurrence basis, against claims for
injuries to persons or damages to property that may arise from or in connection
with the Tenant’s operation and use of the Premises:

 

(a) Commercial Property policy with Special Form causes of loss covering: (i)
business personal property, Alterations and any Tenant Improvements (that are
not permanently affixed to the Premises, or is special equipment or improvements
made or installed for Tenant’s particular use or which are owned by Landlord
under this Lease as of the date of installation) on a replacement cost basis,
subject to a deductible no greater than $25,000.00; which policy shall include
waiver of subrogation rights of insurer against Landlord consistent with Section
11.2.

 

(b) Commercial General Liability policy for bodily injury, personal injury and
property damage with limits of not less than $1,000,000 per occurrence and
$2,000,000 annual aggregates on a per location

 

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basis. Endorsements satisfying the following requirements shall be affixed: (i)
Landlord, Lender and any other party designated by Landlord (including
Landlord’s property manager) shall be named as additional insureds; (ii)
Tenant’s policy shall be primary, not contributing with, and not in excess of
any other applicable insurance carried by Landlord; (iii) Tenant’s policy shall
extend to and include injuries to persons and damage to property arising in
connection with any alterations or improvements to or about the Premises
performed by or on behalf of Tenant (excluding Landlord Work); and (iv) Tenant’s
policy shall include contractual liability coverage (with standard policy
exclusions).

 

(c) Business Auto Liability covering all owned, non-owned and hired vehicles
with a limit of $1,000,000 per accident.

 

(d) Workers’ Compensation on a statutory basis and Employers’ Liability with
$1,000,000 per accident for bodily injury and diseases.

 

(e) Umbrella Liability with a $3,000,000 per occurrence/annual aggregate limit.

 

 

ARTICLE 10. INSURANCE POLICY REQUIREMENTS

 

All insurance policies to be carried by Tenant hereunder shall conform to the
following requirements:

 

(a) The insurer in each case shall carry a designation in “Best’s Insurance
Reports” as issued from time to time throughout the Term as follows:
Policyholders’ rating of A-; financial rating of not less than VII;

 

(b) The insurer shall be qualified to do business in the State;

 

(c) The policy shall be in a form and include such endorsements as are
reasonably acceptable to Landlord;

 

(d) Certificates of insurance shall be delivered to Landlord at commencement of
the term and certificates of renewal at least 30 days prior to the expiration of
each policy; and

 

(e) Each policy shall require that Landlord be notified in writing by the
insurer at least 30 days prior to any cancellation or expiration of such policy,
or any reduction in the amounts of insurance carried.

 

 

ARTICLE 11. INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION

 

11.1    Intent and Purpose. The Parties intend to completely assign the risk of
loss, whether resulting from negligence of the Parties or otherwise, to the
party who the Lease obligates to cover the risk of such loss with insurance. The
object of the indemnity and waiver of claims provisions of this Lease is to
assign the risk for a particular casualty to the party obligated to carry the
insurance for such risk (which is not a limitation of the assignment of the
risk), without respect to the causation thereof.

 

11.2    Waiver of Subrogation. The Parties release each other from any claims
for damage to the Premises, Building and Complex, and to the furniture,
fixtures, and other business personal property, Tenant’s improvements and
alterations of either Landlord or Tenant, in or on the Premises, Building and
Complex, and for loss of income, to the extent such damages or loss are actually
covered by property insurance policies maintained by the Parties or that would
have been covered by insurance policies required of the Parties under this
Lease. The Parties shall require their respective insurers to waive all clams of
subrogation under such property damage insurance policies to the extent required
under such policies to waive claims of subrogation thereunder.

 

11.3    Tenant’s Indemnity. Tenant shall indemnify, defend, protect and hold
harmless Landlord from and against all actions, claims, demands, damages,
liabilities, losses, penalties, or expenses of any kind (“Claims”) which may be
brought or imposed upon Landlord or which Landlord may pay or incur by reason of
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person or property arising from the use of the Premises, Tenant Improvements,
Alterations, other improvements or personal property therein or thereon, by
Tenant or its agents, employees and contractors, or due to said parties
negligence or intentional misconduct, including any liability or injury to the
person or property of Tenant or Tenant Parties, except to the extent caused by
Landlord’s and its agents, employees and contractors negligence or willful acts.

 

11.4    Waiver of Claims. Except as arising from the negligence or willful
misconduct of Landlord, Tenant releases and waives all claims against Landlord
for damage to any property, including damages to goods, wares, merchandise and
loss of business in, upon or about the Premises or Complex and injury to Tenant,
its agents, employees, invitees or third persons, in, upon, or about the
Premises or Complex due to the failure of Landlord to provide security for the
Complex or the negligence of any vendor in providing such security.

 

11.5    References. Wherever the term Landlord, Tenant or the Parties is used in
this Article, and such party is to receive the benefit of a provision of this
Article, such term shall also refer also to the Party’s officers, directors,
shareholders, employees, partners, agents, mortgagees and other lienholders.

 

11.6    Landlord’s Indemnity. Landlord shall indemnify, defend, protect and hold
harmless Tenant from and against all actions, claims, demands, damages,
liabilities, losses, penalties, or expenses of any kind (“Claims”) which may be
brought or imposed upon Tenant or which Tenant may pay or incur by reason of
injury to person or property arising from the negligence or intentional
misconduct of Landlord or its employees, agents or contractors.

 

 

ARTICLE 12. DESTRUCTION

 

12.1    Rights of Termination. If the Premises suffers an Uninsured Property
Loss or a property loss which cannot be repaired within 195 days from the date
of destruction, as reasonably determined by Landlord, Landlord may terminate
this Lease as of the date of the damage (the “Loss Date”) upon Notice to Tenant.
If the Premises cannot be repaired within 195 days of the Loss Date, as
determined by Landlord and stated in Landlord’s Notice to Tenant, Tenant may
elect to terminate this Lease by Notice to Landlord given within 20 days of
Landlord’s Notice that the restoration time will exceed 195 days. Landlord’s
Notice shall be given within 45 days of the Loss Date or as soon thereafter as
the restoration time can be determined. “Uninsured Property Loss” is any damage
or destruction exceeding ten percent (10%) of the replacement cost of the
Premises and for which the insurance proceeds available to Landlord are
insufficient to pay for the repair or reconstruction of the Premises and such
insufficiency of proceeds is not due to Landlord failing to carry the insurance
required herein or due to any deductible required to be paid by Landlord other
than the deductible under any earthquake insurance.

 

12.2    Repairs. In the event of a casualty that may be repaired within 195 days
from the Loss Date, or if the Parties do not elect to terminate this Lease under
Section 12.1, this Lease shall continue in full force and effect and Landlord
shall promptly undertake to make repairs to reconstitute the Premises to as near
as practicable to the condition as existed prior to the Loss Date. The partial
destruction shall in no way void this Lease except, Tenant shall be entitled to
a proportionate reduction of Minimum Monthly Rent and any Additional Rent
following the property loss until the time the Premises are restored. The
reduction amount will reflect the degree of interference with Tenant’s business.
As long as Tenant conducts business in the Premises, there shall be no abatement
until the Parties agree on the amount thereof. If the Parties cannot agree
within 45 days of the Loss Date, the matter shall be submitted to arbitration
under the rules of the American Arbitration Association. Upon the resolution of
the dispute, the settlement shall be retroactive and Landlord shall within ten
days thereafter refund to Tenant any sums due in respect of the reduced Rent
from the date of the property loss. Landlord’s obligations to restore shall in
no way include any construction originally performed by Tenant or subsequently
undertaken by Tenant, but shall include solely that property constructed by
Landlord prior to commencement of the Term.

 

12.3    Repair Costs. The cost of any repairs to be made by Landlord pursuant to
Section 12.2 shall be paid by Landlord using available insurance proceeds (and
any deductible), except for the deductible under earthquake insurance.

 

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12.4    Waiver. Tenant hereby waives all statutory or common law rights of
termination in respect to any partial destruction or property loss which
Landlord is obligated to repair or may elect to repair under the terms of this
Article. Further, in event of a property loss occurring during the last year of
the original term hereof or of any extension, Landlord need not undertake any
repairs and may cancel this Lease unless Tenant has the right under the terms of
this Lease to extend the term for an additional period of at least five years
and does so within 30 days of the date of the property loss.

 

12.5    Landlord’s Election. If the Complex or Building is destroyed by more
than 50 percent of the replacement cost, Landlord may elect to terminate this
Lease, whether the Premises are damaged or not, as set forth in Section 12.1.

 

 

ARTICLE 13. ACCORD AND SATISFACTION

 

No payment by Tenant or receipt by Landlord of less than the full Rent due
hereunder shall be deemed to be other than on account of the earliest due Rent.
No endorsement or statement on any check or any letter accompanying any such
check or payment will be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord’s right to recover
the balance of such Rent or pursue any other remedy available in this Lease, at
law or in equity. Landlord may accept partial payment from Tenant without
invalidation of any contractual notice required to be given herein (to the
extent such contractual notice is required) and without invalidation of any
notice required to be given pursuant to California Code of Civil Procedure
(“CCP”) Section 1161, et seq., or any successor statute.

 

 

ARTICLE 14. SECURITY DEPOSIT

 

14.1    Payment on Lease Execution. On execution of the Lease Tenant shall pay
Landlord the Security Deposit. This sum is a deposit securing Tenant’s
performance of the Lease and shall remain the sole and separate property of
Landlord until actually repaid to Tenant (or at Landlord’s option the last
assignee, if any, of Tenant’s interest hereunder). Tenant does not earn said sum
until all conditions precedent for its payment to Tenant have been fulfilled, at
which time the Security Deposit shall be returned to Tenant within thirty (30)
days. As this sum both in equity and at law is Landlord’s separate property,
Landlord is not required to keep it separate from its general accounts or pay
interest for its use. If, after written notice and the expiration of any
applicable cure period, Tenant fails to pay Rent or other charges when due
hereunder, or otherwise defaults with respect to any provision of this Lease,
including and not limited to Tenant’s obligation to restore or clean the
Premises following vacation thereof, at Landlord’s election, Tenant shall be
deemed not to have earned the right to repayment of the Security Deposit, except
those portions not used by Landlord for the payment of any Rent or other charges
in default, or for the payment of any other sum to which Landlord may become
obligated by reason of Tenant’s default, or to compensate Landlord for any loss
or damage which Landlord may suffer thereby. Landlord may retain such portion of
the Security Deposit as it reasonably deems necessary to restore or clean the
Premises (to the extent required of Tenant under the Lease) following vacation
by Tenant and to remedy any other default of Tenant to the extent permitted by
Law. The Security Deposit is not to be characterized as Rent until and unless so
applied to a default by Tenant. Tenant hereby waives any restriction on the uses
to which the Security Deposit may be put contained in California Civil Code
Section 1950.7, it being agreed that Landlord may, in addition, claim those sums
reasonably necessary to compensate Landlord for any other loss or damage,
foreseeable or unforeseeable, caused by the act or omission of Tenant or any
officer, employee, agent or invitee of Tenant.

 

14.2    Restoration of Deposit. If Landlord elects to use or apply all or any
portion of the Security Deposit as provided in Section 14.1, Tenant shall within
ten (10) business days after written demand therefor pay to Landlord in cash, an
amount equal to that portion of the Security Deposit used or applied by
Landlord, and Tenant’s failure to so do shall be a material breach of this
Lease. The ten (10) business day notice specified in the preceding sentence
shall insofar as not prohibited by law, constitute full satisfaction of notice
of default provisions required by law or ordinance.

 

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ARTICLE 15. USE

 

The Premises may be used and occupied only for the purposes specified in Section
1.10 and for no other purpose. Subject to Tenant’s rights to use the Premises as
provided herein, Tenant shall not use or permit the use of the Premises in any
manner that will unreasonably disturb any other tenant in the Building or
Complex, or unreasonably obstruct or interfere with the rights of other tenant
or occupants of the Building or Complex, or injure or create any unreasonable
smells, noise or vibrations (taking into account the nature and tenant-mix of
the Building). Tenant shall not allow the Premises to be used for any unlawful
purpose, nor shall Tenant cause, maintain, or permit any nuisance or waste in,
on or about the Premises, Building or Complex. Tenant shall be granted access to
the Building and the Premises twenty-four (24) hours per day, seven (7) days per
week, every day of the year, except in an emergency or due to a casualty or
condemnation under Articles 12 or 20 of this Lease.

 

 

ARTICLE 16. COMPLIANCE WITH LAWS AND REGULATIONS

 

16.1    Tenant’s Obligations. Except as other wise provided in this Lease with
respect to Landlord’s obligations regarding the condition of the Complex as
contained in Section 16.2 of this Lease, at its sole cost and expense, Tenant
shall comply with all of the requirements of all municipal, state, federal, and
quasi-governmental authorities and utility providers now in force, or which may
hereafter be in force, affecting the Premises and/or Tenant’s use of the
Premises, including those uses pertaining to Tenant Parties, and faithfully
observe in the use of the Premises all municipal ordinances and state and
federal statutes, laws and regulations now or hereafter in force, including the
Environmental Laws and the Americans with Disabilities Act, 42 U.S.C. §§
12101-12213 (to the extent of the Tenant Improvements and Alterations)
(collectively the “Laws and Regulations”). A final non-appealable judgment of
any court of competent jurisdiction, or the admission of Tenant in any action or
proceeding against Tenant, whether Landlord be a party thereto or not, that any
Laws and Regulations pertaining to the Premises have been violated by Tenant, is
conclusive of that fact as between Landlord and Tenant. Notwithstanding the
foregoing, Tenant shall not be required to make a capital improvement to the
structural portions of a Building or to the Common Area located outside of the
Buildings to comply with such laws, unless such work to a Building is required
in connection with the construction of the Tenant Improvements, Alterations or
Tenant Activity (as defined in Section 6.1(b) hereof).

 

16.2    Condition of Premises. Subject to performance of Landlord’s Work (as
defined in Exhibit C attached hereto) and except as otherwise provided in this
Lease, Tenant hereby accepts the Premises in “AS IS” condition as of the date of
occupancy, subject to all applicable Laws and Regulations, Restrictions, and
requirements in effect during any part of the Term regulating the Premises, and
without representation, warranty or covenant by Landlord, express or implied, as
to the condition, habitability or safety of the Premises, the suitability or
fitness thereof for their intended purposes, except as expressly provided in
Section 2.3 hereof. Any upgrades or improvements that may be required by local
governmental authority as part of, or in connection with or as a condition to
the approval for the initial Tenant Improvements to be constructed by Tenant
shall be performed by Tenant at its expense. Any upgrades or improvements to the
exterior of the Building or exterior Common Areas that may be required by the
local governmental authority as part of, or in connection with or as a condition
to the approval of Landlord’s Work, or any capital improvement required to be
made to the Premises to comply with any Law or Regulation as currently applied
by the City of Fremont and existing as of the Delivery Date and which are not
required due to the Tenant Improvements or Tenant’s Alterations or other Tenant
Activity, shall be performed by Landlord at its sole expense.

 

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16.3    Hazardous Materials.

 

(a) Definitions.

 

(i) “Environmental Laws” means any federal, State, local or administrative
agency ordinance, law, rule or regulation, order or requirement relating to
Hazardous Materials, radioactive materials, medical wastes, or which deal with
air or water quality, air emissions, soil or ground conditions or other
environmental matters of any kind.

 

(ii) “Hazardous Materials” mean any substance, chemical, waste or material which
is listed, defined or otherwise identified as “hazardous” or “toxic” under any
of the Environmental Laws, including formaldehyde, urea, polychlorinated
biphenyls, petroleum, petroleum products, crude oil, natural gas, radioactive
materials, radon, asbestos or any by-product of same.

 

(iii) “Losses” mean claims, liability, damages (whether consequential, direct or
indirect, known or unknown, foreseen or unforeseen), penalties, fines,
liabilities, losses (including property damage, diminution in value of
Landlord’s interest in the Premises, Building or Complex, damages for the loss
of use of any space or amenity within the Premises, Building, or Complex,
damages arising from any adverse impact on marketing space in the Complex, sums
paid in settlement of claims and any costs and expenses associated with injury,
illness or death to or of any person), suits, administrative proceedings, costs
and fees, including Professional Fees and expenses.

 

(iv) “Release” means generation, discharge, disposal, release, deposit,
transport, or storage of Hazardous Materials.

 

(b) Use of Hazardous Materials. Tenant shall use and store in the Premises and
Complex only ordinary and general office and cleaning supplies in normal and
customary amounts, and such other Hazardous Materials as have been previously
approved by Landlord in writing (which approval may be withheld in Landlord’s
sole and absolute discretion) and which are reasonably necessary for Tenant’s
business. All such Hazardous Materials shall be limited to quantities consistent
with the approved use of the Premises and shall be used, stored and disposed of
in full compliance with all Environmental Laws. Tenant shall not install any
tanks under or on the Premises for the storage of Hazardous Materials without
the written consent of Landlord, which may be given or withheld in Landlord’s
sole discretion. Upon the expiration or earlier termination of this Lease,
Tenant shall promptly remove from the Premises, Building and Complex all
Hazardous Materials brought on, stored, used, generated or Released on the
Premises, Building or Complex by Tenant or any Tenant Parties.

 

(c) Release of Hazardous Materials. Tenant shall promptly give Landlord Notice
of any Release of Hazardous Materials in the Premises, Building or Complex of
which Tenant becomes aware during the Term whether caused by Tenant or others.
At its sole cost and expense, Tenant shall investigate, clean up and remediate
any Release of Hazardous Materials that were caused or created by Tenant or any
of Tenant Parties. Investigation, clean up and remediation may be performed only
after Tenant has Landlord’s written approval of the remediation plan. Tenant may
respond immediately to an emergency without first obtaining Landlord’s written
consent. All clean up and remediation shall be done in compliance with
Environmental Laws and to the reasonable satisfaction of Landlord.

 

(d) Inspection and Testing by Landlord. At reasonable times during the term of
this Lease, Landlord may inspect the Premises and conduct tests to determine
whether Tenant is in compliance with the provisions of this Article 16. Except
in case of emergency, Landlord shall give reasonable notice to Tenant before
conducting any inspections or tests (no less than 24 hours except in an
emergency). Tenant shall pay the cost of any inspections or tests that discloses
any violation by Tenant or Tenant Parties of the terms and provisions of Article
16.

 

(e) Liability. It is the express intention of the Parties that Tenant shall be
liable under Section 16.3 to the extent of any and all conditions which were
caused or created by Tenant or any Tenant Parties, whenever created or caused.
Tenant shall not enter into any settlement agreement, consent decree or other
compromise with respect to any claims relating to any Hazardous Materials in any
way connected to the Premises without first (i) notifying Landlord of Tenant’s
intention to do so and affording Landlord the opportunity to participate in any
such proceedings, and (ii) obtaining Landlord’s written consent.

 

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16.4    Indemnity. Except to the extent of Landlord or its agents, employees and
contractors, negligence or intentional misconduct, Tenant shall indemnify and
hold harmless Landlord and its agents, employees and contractors, from and
against all Losses arising from or related to (a) any violation by Tenant or any
Tenant Parties of any Laws and Regulations or the Environmental Laws; (b) any
liability under any Laws and Regulations or the Environmental Laws arising out
of Hazardous Materials that were “Released” or otherwise brought onto the
Complex by Tenant or any Tenant Parties; (c) any breach of the provisions of
Article 16 by Tenant or any Tenant Parties; or (d) any Release of Hazardous
Materials on the Premises, Building or Complex by Tenant or Tenant Parties.
Tenant shall also reimburse Landlord the actual costs of cleanup, remediation,
removal and restoration that are in any way related to any matter covered by the
foregoing indemnity. Tenant’s obligations under this Section survive the
expiration or termination of the Lease.

 

 

ARTICLE 17. UTILITIES

 

17.1    Payment by Tenant. Tenant, from the earlier of the time it first enters
the Premises for the purpose of setting fixtures, or from the commencement of
this Lease, and throughout the Term, shall pay all actual charges including
connection fees for water, gas, heat, sewer, power, cable, telephone cabling and
services and any other utility supplied to or consumed in or on the Premises.
Tenant shall not allow refuse, garbage or trash to accumulate outside of the
Premises except on the day of scheduled scavenger pick-up services, and then
only in areas designated for that purpose by Landlord. Landlord shall not be
responsible or liable for any interruption or failure in utility, refuse or
telecommunication services, nor shall such interruption or failure affect the
continuation or validity of this Lease. Notwithstanding the foregoing, if there
is any such interruption in electrical services (1) that materially impairs
Tenant’s use of or access to the Premises (or portion thereof) or Complex
parking and Tenant does not use the Premises (or portion thereof), (2) that was
caused solely by the negligence of Landlord and not as a result of any act or
omission or Tenant or any other party or the utility company providing such
service, and (3) continues for three (3) consecutive business days after
Landlord’s receipt of notice of such interruption (a “Material Interruption”),
then Minimum Monthly Rent and Additional Rent shall abate in proportion that the
rentable area of the affected portion of the Premises so impaired and not used
by Tenant bears to the rentable area of the Premises until such service is
restored, except that if the Material Interruption is caused by a casualty or
condemnation, then the abatement provided under this Section 17.1 will not be
applicable and the rights and remedies of the Parties will be governed by the
applicable provisions of Article 12 or Article 20 of this Lease.

 

17.2    Separate Meters. Separate meters are available at the Premises for
existing utility services, except for water and sewer which may be covered under
one meter for both Buildings containing the Premises. Tenant shall make
payments, when due, directly to the utility involved.

 

 

ARTICLE 18. ALTERATIONS

 

18.1    Consent of Landlord; Ownership. Tenant shall not make or allow
alterations, additions or improvements, including any that result in increased
telecommunication demands or require the addition of new conduit, communication
or computer wires, cables or related devises or expand the number of telephone
or communication lines dedicated to the Premises by the Building’s
telecommunication design, (“Alterations”) to the Premises without the prior
written consent of Landlord. Tenant may not make any Alterations that affect
structural elements of the Building. Upon expiration or termination of this
Lease, any Alterations except trade fixtures shall become a part of the realty
and belong to Landlord. Except as otherwise provided in this Lease, Tenant shall
have the right to remove its trade fixtures placed upon the Premises provided
that Tenant restores the Premises as indicated below.

 

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Notwithstanding the foregoing Landlord’s consent shall not be required for an
Alteration to the interior of the Premises that complies with the following
requirements: (a) is cosmetic in nature such as painting or carpet, (b) does not
affect the roof or any area outside of the Premises; (c) does not affect the
structural parts of any Building or electrical, plumbing, HVAC, mechanical,
sprinkler or other life safety system in any Building; and (d) costs less than
$50,000.00 in the aggregate for all of such Alterations during a calendar year
(herein referred to as “Minor Alteration”). Tenant shall provide Landlord with
prior written notice of any Minor Alteration that requires a building permit.

 

18.2    Requirements. Landlord may condition its consent for any Alterations
upon Tenant complying at its sole cost and expense with reasonable conditions
and requirements, including the preparation of all construction plans, drawings
and specifications for approval by Landlord; the use of contractors and
subcontractors approved by Landlord; and the delivery to Landlord of duplicate
originals of all as-built drawings. Notwithstanding anything to the contrary in
this Lease, Tenant shall not be required to obtain or provide any completion
bond in connection with any construction, alteration or improvement work
performed by Tenant or on Tenant’s behalf; however, the benefit shall only be
applicable to the original party signing this Lease as Tenant and any successor
of Tenant through a Permitted Transfer, but not to any assignee, sublesseee or
other transferee under a Transfer. Tenant shall obtain all necessary permits as
its sole obligation and expense, and strictly comply with the following
requirements:

 

(a) Following approval by Landlord of Alterations, Tenant shall give Landlord at
least ten days’ prior Notice of commencement of work in the Premises so that
Landlord may post notices of non-responsibility in or upon the Premises as
provided by law;

 

(b) The Alterations (including any Minor Alteration) must use materials of at
least equal quality to Tenant Improvements at the Commencement Date, and must be
performed in compliance with all laws, ordinances, rules and regulation now or
hereafter in effect and in a manner such that they will not interfere with the
quiet enjoyment of the other tenants in the Complex; and

 

(c) All costs and expenses incurred by Landlord in altering, repairing or
replacing any portion of the Premises, Building or Complex in connection with
approving any Alterations shall be paid solely by Tenant to Landlord prior to
commencing any Alterations.

 

18.3    Liens. Tenant will keep the Premises and the Complex free from any liens
arising out of any Alterations done by Tenant. If a mechanic’s or other lien is
filed against the Premises, Building or Complex through Tenant, Landlord may
demand that Tenant furnish a satisfactory lien release bond of one hundred fifty
percent of the amount of the contested lien claim. Such bond must be posted ten
days after Notice from Landlord. In addition, Landlord may require Tenant to pay
Landlord’s attorneys’ fees and costs in participating in any action contesting
such lien, or the foreclosure thereof, if Landlord elects to do so. Landlord may
pay the claim prior to the enforcement thereof, in which event Tenant shall
reimburse Landlord in full, including attorneys’ fees, for any such expense, as
Additional Rent, with the next due Rent payment.

 

18.4    Tenant’s Right to Install Security System. If Tenant wishes to establish
or install any automated and/or non-automated security system in, on or about
the Premises in addition to or as a replacement of the security system existing
in the Premises as of the Delivery Date, Tenant shall first notify Landlord of
Tenant’s plan for any such system, and such plan shall be subject to the review
and reasonable approval of Landlord. Such systems must not adversely affect or
impair any fire or sprinkler alarm or other life safety system that may be in
the Premises or any structural portions of a Building. If Landlord approves any
such plan and Tenant establishes or installs any automated and/or non-automated
security system in, on or about the Premises, and should such system adversely
affect the Premises or the Building or any fire or sprinkler alarm or other life
safety system, Landlord shall subsequently have the right to review Tenant’s
security system from time to time and require Tenant to make reasonable changes
in personnel and/or equipment. Tenant shall make such requested changes within a
reasonable time thereafter.

 

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ARTICLE 19. MAINTENANCE AND REPAIRS

 

19.1    Obligations of Landlord and Tenant. Subject to Landlord’s repair and
maintenance obligations under this Lease, at Tenant’s cost and expense, Tenant
shall maintain the Premises in good condition and repair including all necessary
replacements. Tenant shall maintain the appearance of the Premises in a manner
consistent with the character, use and appearance of the Complex. Subject to
Tenant’s repair and maintenance obligations under this Lease, Landlord will make
all necessary repairs, maintenance and replacement of the foundation, roof and
structural parts of the Building. Landlord shall pay the costs thereof and
Tenant shall reimburse Landlord for Tenant’s Pro Rata Share of such costs,
including amortization of Capital Costs, within ten days of receipt of billing,
to the extent required under this Lease. At its expense, Tenant shall maintain
all utilities, fixtures and mechanical equipment within, or otherwise serving,
the Premises in good order, condition and repair. In the case of equipment
installed by Landlord for Tenant, or installed by Tenant to be the property of
Landlord, such as heating, ventilating and air conditioning equipment, or other
mechanical equipment, at its expense, Tenant shall maintain a service contract
for its regular maintenance with a service company acceptable to Landlord.
Tenant shall not place anything on the roof or penetrate the roof without the
consent of Landlord, which consent may be withheld in Landlord’s sole
discretion.

 

19.2    HVAC System. Notwithstanding the provisions of Section 19.1, Landlord
may elect at any time upon Notice to Tenant to perform the maintenance of the
heating, ventilating and air conditioning system (hereinafter “HVAC”) for the
account of Tenant. In such event, Tenant shall pay as Additional Rent the full
cost of the maintenance contract for the Premises HVAC within ten days of
receipt of billing from Landlord, as well as for costs of necessary repair or
replacement of parts, in the reasonable judgment of Landlord. Landlord may, at
its option, elect to have the HVAC in the Premises maintained in common with
other equipment in the Complex. If so, Tenant shall pay its Pro Rata Share of
the maintenance costs.

 

The maintenance contract on the HVAC, extended warranties and any repairs and
replacements not covered by the maintenance contract or warranty shall be
included in the charges allocated to Tenant. Landlord may elect to replace the
HVAC system, if necessary, and in such event the cost thereof shall be treated
as provided in Article 6. Tenant shall pay as Additional Rent to Landlord,
within ten days after receipt of billing, its pro rata share of such
amortization, established on an equitable basis as set forth in the prior
paragraph.

 

19.3    Waiver. Tenant waives all rights it may have under law or at equity to
make repairs or to perform any obligation of Landlord arising under this Lease
and deduct or offset such expense against any rent due Landlord under this
Lease. However, if Landlord fails to perform its obligations under Section 19.1
within thirty (30) days after Landlord’s receipt of written notice from Tenant
specifying where Landlord has failed to perform such obligation (unless the
nature of the work is such that more than thirty (30) days are required for
performance and Landlord has commenced and is proceeding with due diligence to
complete such work), then Tenant may perform such work and bill Landlord for the
reasonable cost thereof, which Landlord will pay to Tenant within thirty (30)
days after receipt of such request for payment and reasonable supporting
documentation.

 

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ARTICLE 20. CONDEMNATION

 

20.1    Definitions.

 

(a) “Condemnation” means (i) the exercise of any governmental power, whether by
legal proceedings or otherwise, by a Condemnor and/or (ii) a voluntary sale by
Landlord to a Condemnor, under threat of Condemnation or while legal proceedings
for Condemnation are pending.

 

(b) “Date of Taking” means the date the condemnor has the right to possession of
the property being condemned.

 

(c) “Award” means all compensation, sums or anything of value awarded, paid or
received on a total or partial condemnation.

 

(d) “Condemnor” means any person or entity having the power of condemnation.

 

20.2    Total Taking. If the Premises are totally taken by condemnation, this
Lease shall terminate on the Date of Taking.

 

20.3    Partial Taking; Common Area.

 

(a) If a portion of the Premises is taken by condemnation, this Lease shall
remain in effect, except that Tenant can elect to terminate this Lease if ten
percent (10%) or more of the total number of square feet in the Premises is
taken.

 

(b) If any part of the Common Area of the Complex is taken by condemnation, this
Lease shall remain in full force and effect so long as there is no material
interference with the access to the Premises, except that if thirty-five percent
(35%) or more of the Common Area is taken by condemnation, either party shall
have the election to terminate this Lease pursuant to this Section.

 

(c) If thirty percent (30%) or more of the Building in which the Premises are
located is taken, Landlord shall have the election to terminate this Lease in
the manner prescribed herein.

 

20.4    Termination or Abatement. If either party elects to terminate this Lease
under the provisions of Section 20.3 (such party is hereinafter referred to as
the “Terminating Party”), it must terminate by giving Notice to the other party
(the “Nonterminating Party”) within 30 days after the nature and extent of the
taking have been determined (the “Decision Period”). The Terminating Party shall
notify the Nonterminating Party of the date of termination, which date shall not
be earlier than sixty days after the Terminating Party given Notice of its
election to terminate nor later than the date of taking. If Notice of
Termination is not given within the Decision Period, the Lease shall continue in
full force and effect. The Minimum Monthly Rent shall be computed as the Minimum
Monthly Rent in effect prior to the taking times a fraction of which the
numerator is the number of square feet taken remaining in the Premises and the
denominator is the number of square feet in the Premises prior to the taking.

 

20.5    Restoration. If there is a partial taking of the Premises and this Lease
remains in full force and effect, Landlord shall make all necessary restoration
so that the Premises is returned as near as practical to its condition
immediately prior to the taking, but in no event shall Landlord be obligated to
expend more for such restoration than the extent of funds actually paid to
Landlord by the condemnor.

 

20.6    Award. Any award arising from the condemnation or the settlement thereof
shall belong and be paid to Landlord, including any award for the leasehold
value. Tenant may seek a separate award for Tenant’s trade fixtures, tangible
personal property and relocation expenses, if specified in the award by the
condemning authority and so long as it does not reduce Landlord’s award.

 

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ARTICLE 21. PARKING

 

21.1    Parking. There currently exists surface parking in the Common Area
outside of the Building for parking of automobiles. As part of Landlord’s
obligation to maintain the Common Area, Landlord shall maintain such parking
areas. Tenant, its employees, customers and invitees shall have the right to
park in the parking areas at no additional charge (other than Tenant’s
obligation to pay its pro rata share of applicable Common Area Costs, Taxes and
insurance). In the event that the parking area is renovated or replaced, in
whole or in part, Landlord shall have the right to relocate Tenant’s parking
privileges to other parking facilities on a temporary basis. If only a portion
of the parking area is renovated or replaced, during such temporary period of
renovation or replacement Landlord shall also have the right to temporarily
relocate Tenant’s parking privileges within other parking areas in the Complex,
either by allocating different parking spaces to Tenant, re-striping the parking
areas within the parking area or by any other reasonable means, provided
however, such replacement parking shall be well lit during evening hours, and be
in reasonable proximity to the Premises.

 

21.2    Parking Rules. Tenant shall at all times comply with all applicable
ordinances, rules, regulations, codes, laws, statutes and requirements of all
federal, state, county and municipal governmental bodies or their subdivisions
respecting the use of the parking areas. Landlord reserves the right to adopt
from time to time, modify and enforce reasonable rules governing the use of the
parking areas including any key-card, sticker or other identification or
entrance system and hours of operation; provided, however, that Tenant shall
always have the right to use the Parking Facility twenty-four (24) hours a day,
seven (7) days a week, every day of the year.

 

21.3    Maintenance and Repairs. Landlord reserves the right to close all or any
portion of the parking areas (i) in order to make repairs or perform maintenance
services or to alter, modify, re-stripe or renovate the parking areas or (ii) if
required by casualty, strike, condemnation, act of God, governmental law or
requirement or other reason beyond Landlord’s reasonable control; provided,
however, that in any such instance Landlord shall be required to provide
adequate substitute parking reasonably proximate to the Premises and reasonably
satisfactory to Tenant.

 

 

ARTICLE 22. ENTRY BY LANDLORD

 

Tenant shall permit Landlord and any mortgagee under a mortgage or beneficiary
under a deed of trust encumbering the Building and their agents (each a
“Lender”) to enter the Premises at all reasonable times, on no less than twenty
four (24) hours notice, except in cases of an emergency, for the purpose of (a)
inspecting them, (b) maintaining the Building, (c) making repairs, replacements,
alterations or additions to any portion of the Building, including the erection
and maintenance of such scaffolding, canopies, fences and props as may be
required, (d) posting notices of non-responsibility for alterations, additions
or repairs, (e) placing upon the Building any usual or ordinary “for sale” signs
and showing the space to prospective purchasers, investors and lenders, or (f)
placing on the Premises “to lease” signs or marketing and showing the Premises
to prospective tenants at any time Tenant is in default hereunder (after Notice
and the expiration of the applicable cure period) or otherwise within 180 days
prior to the expiration of this Lease, without any rebate of Rent (except as
otherwise provided in the Lease) and without any liability to Tenant for any
loss of occupation or quiet enjoyment of the Premises thereby occasioned,
provided Tenant’s ability to use the Premises is not unreasonably disturbed and
such access is scheduled to prevent as little inconvenience to Tenant as
commercially reasonable.

 

Tenant may designate certain areas of the Premises as “Secured Areas” should
Tenant require such areas for the purpose of securing certain valuable property
or confidential information. Landlord may not enter such Secured Areas except in
the case of emergency or in the event of a Landlord inspection or repairs, in
which case Landlord shall provide Tenant with ten (10) days prior written notice
of the specific date and time of such Landlord inspection.

 

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ARTICLE 23. SIGNS

 

Tenant shall not place on the Premises or Complex any exterior signs or
advertisements nor any interior signs or advertisements that are visible from
the exterior of the Premises, without Landlord’s prior written consent. However,
Tenant may have an illuminated sign on the Building (to the extent permitted by
all applicable laws) and a monument sign outside the Building with each such
sign identifying Tenant’s name, provided, that Tenant obtains all governmental
approvals and all such signage complies with all applicable laws and ordinances
and is otherwise approved in writing by Landlord. Tenant shall be solely
responsible for obtaining all governmental approvals in connection with such
signage. The cost of installation and maintenance of any approved signs shall be
at the sole expense of Tenant and Tenant will be solely responsible for the
repair and maintenance of such signs. At the end of the Term, Tenant shall
remove all its signs and damage caused by the removal shall be repaired at
Tenant’s expense.

 

 

ARTICLE 24. DEFAULT

 

24.1    Tenant Default. The occurrence of any of the following shall constitute
a default and breach of this Lease by Tenant:

 

(a) Any failure by Tenant to pay when due the Rent or any other required payment
within five (5) days after written Notice from Landlord;

 

(b) Tenant’s failure to observe or perform any Lease provision where such
failure continues for thirty (30) days after Notice thereof to Tenant; provided,
if the nature of the default is such that it cannot reasonably be cured within
the thirty (30) day period, Tenant shall not be deemed in default if, in the
thirty (30) day period, Tenant commences to cure and thereafter diligently
prosecute the cure to completion;

 

(c) If at any time during the Term there shall be filed by or against Tenant a
petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of all or a portion of Tenant’s property
and the same is not dismissed within sixty (60) days, or if a receiver or
trustee takes possession of any of the assets of Tenant, or if the leasehold
interest herein passes to a receiver, or if Tenant makes an assignment for the
benefit of creditors;

 

(d) Any attempted Transfer in violation of Article 7 after Tenant’s failure to
cure the same after thirty (30) days prior written Notice; or

 

(e) Tenant abandons the Premises and fails to comply with all of the terms and
conditions herein.

 

24.2    Landlord Default. Landlord shall be in default if it fails to observe or
perform any of the covenants, conditions or provisions of this Lease for a
period longer than 30 days after Notice from Tenant; provided, however, that if
more than 30 days is required for performance, Landlord shall not be in default
if it commences performance within 30 days of Tenant’s Notice and thereafter
completes such performance diligently and within a reasonable time.

 

 

ARTICLE 25. REMEDIES UPON DEFAULT

 

25.1    Termination and Damages. In the event of any Tenant default (after
written Notice and the expiration of the applicable cure period under Section
24.1 above), in addition to any other remedies available to Landlord herein or
at law or in equity, Landlord shall have the immediate option to terminate this
Lease and all rights of Tenant hereunder by giving Notice of such intention to
terminate. If Landlord shall elect to so terminate this Lease, then Landlord may
recover from Tenant:

 

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(a) The worth at the time of award of any unpaid Rent which had been earned at
the time of such termination; plus

 

(b) The worth at the time of award of the amount by which the unpaid Rent which
would have been earned after termination until the time of award exceeds the
amount of such Rent loss Tenant proves could have been reasonably avoided. As
used in subsections 25.1(a) and (b) the “worth at the time of award” is computed
by including interest at ten percent per annum; plus

 

(c) The worth at the time of award (computed by discounting such amount at the
discount rate at the time of award of the Federal Reserve Bank for the State
plus one percent) of the amount by which the unpaid Rent for the balance of the
term after the time of award exceeds the amount of such Rent loss that Tenant
proves could be reasonably avoided; plus

 

(d) Any other amount reasonably necessary to compensate Landlord for the
detriment proximately caused by Tenant’s failure to perform its obligations
under this Lease; and

 

(e) At Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted by applicable State law.

 

25.2    Personal Property. In the event of default by Tenant (after written
Notice and the expiration of the applicable cure period under Section 24.1
above), Landlord shall have the right, with or without terminating this Lease,
to reenter the Premises and remove all persons and property from the Premises.
Such property may be stored in a public warehouse at the cost of and for the
account of Tenant.

 

25.3    Recovery of Rent; Reletting.

 

(a) In the event of the abandonment (as defined by law) of the Premises by
Tenant or if Landlord elects to either reenter as provided in Section 25.2 or
take possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, then if Landlord does not elect to terminate this Lease
as provided in Section 25.1, this Lease shall continue in effect, and Landlord
may enforce all its rights and remedies under this Lease, including Landlord’s
right from time to time, without terminating this Lease, to either recover all
Rent as it becomes due or relet the Premises or any part thereof for such term
or terms and at such Rent and upon such other terms and conditions as Landlord,
in its sole discretion may deem reasonably advisable with the right to make
alterations and repairs to the Premises. Acts of maintenance or preservation or
efforts to relet the Premises or the appointment of a receiver upon initiation
of Landlord or other legal proceeding granting Landlord or its agent possession
to protect Landlord’s interest under this Lease shall not constitute a
termination of Tenant’s right to possession.

 

(b) If Landlord elects to relet, the Rent received by Landlord from reletting
shall be applied in the following order: (1) to the payment of any indebtedness
other than Rent due hereunder from Tenant; (2) to the payment of any reasonable
cost of reletting, including brokerage fees; (3) to the reasonable payment of
the actual cost of any alterations and repairs to the Premises; (4) to the
payment of Rent due and unpaid hereunder; and (5) any residue shall be held by
Landlord and applied in payment of future Rent as the same may become due and
payable hereunder. If the portion of Rent received under clause (b) (4) is less
than the Rent payable during that month by Tenant hereunder, Tenant shall pay
such deficiency to Landlord immediately upon demand. Tenant shall also pay to
Landlord when ascertained, any costs and expenses incurred by Landlord in such
reletting or in making such alterations and repairs not covered by the Rents
received from such reletting.

 

(c) No reentry or taking possession of the Premises or any other action under
this Section shall be construed as an election to terminate this Lease unless a
Notice of such intention be given to Tenant or unless the termination thereof be
decreed by a court of competent jurisdiction. Notwithstanding any reletting
without termination by Landlord because of any default by Tenant, Landlord may
at any time after such reletting elect to terminate this Lease for any such
default (after written Notice and the expiration of the applicable cure period
under Section 24.1 above).

 

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(d) Landlord has the remedy described in California Civil Code (“Code”) Section
1951.4 (Landlord may continue Lease in effect after Tenant’s breach and
abandonment and recover Rent as it becomes due, if Tenant has right to sublet or
assign, subject only to reasonable limitations).

 

25.4    No Waiver. Efforts by Landlord to mitigate the damages caused by
Tenant’s default in this Lease shall not constitute a waiver of Landlord’s right
to recover damages hereunder (except to the extent of the mitigation).

 

25.5    Curing Defaults. If Tenant fails to repair, maintain, keep clean, or
service any of the Premises or fails to perform any other Lease obligation, then
after having given Tenant reasonable Notice of any failure and a reasonable
opportunity to remedy the failure, which in no case shall be less than thirty
(30) days, Landlord may enter upon the Premises and perform or contract for the
performance of the repair, maintenance, or other Tenant obligation, and Tenant
shall pay Landlord as Additional Rent all reasonable, out of pocket costs
incurred in connection therewith within ten days of receiving a bill therefor
from Landlord.

 

25.6    Cumulative Remedies. The various rights, options, election powers, and
remedies of Landlord contained in this Article and elsewhere in this Lease are
cumulative. None of them is exclusive of any others or of any legal or equitable
remedy that Landlord might otherwise have in the event of breach or default, and
the exercise of one right or remedy by Landlord will not in any way impair its
right to any other right or remedy.

 

 

ARTICLE 26. FORFEITURE OF PROPERTY

 

Tenant agrees that as of the date of termination of this Lease or repossession
of the Premises by Landlord, by way of default or otherwise, Tenant shall remove
all personal property in accordance with applicable law. Notwithstanding
anything to the contrary in this Lease, all articles of personal property and
all business and trade fixtures, machinery and equipment, furniture and movable
partitions owned by Tenant in the Premises shall remain the property of Tenant
and may be removed by Tenant at any time during the Term of this. Tenant shall
remove all of its effects from the Premises upon the expiration or earlier
termination of this Lease.

 

 

ARTICLE 27. SURRENDER OF LEASE

 

The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, shall not work as a merger. At the election of Landlord,
it shall either terminate all or any existing subleases or subtenancies or
operate as an assignment to Landlord of any or all such subleases or
subtenancies. Tenant shall return the Premises to Landlord at the expiration or
earlier termination of this Lease in good and sanitary order, condition and
repair, free of rubble and debris, broom clean, reasonable casualty, and wear
and tear excepted. At the time Tenant requests Landlord’s consent to the
construction or installation of any Alteration, Tenant may also request in
writing whether Landlord will require all or portions of such Alteration to be
removed by Tenant at the expiration or earlier termination of this Lease and
Landlord shall advise Tenant at the time it provides its consent (if consent is
granted by Landlord) whether all or any part of such Alteration must be removed,
in which case Tenant will only have to remove the Alteration that Landlord so
advised Tenant would have to be removed by Tenant. If Tenant does not make such
request, then Tenant shall ascertain from Landlord at least 30 days prior to the
termination of this Lease, whether Landlord desires the Premises, or any part
thereof, restored to its condition prior to the making of Alterations,
installations and improvements, and if Landlord shall so desire, then Tenant
shall forthwith restore said Premises or the designated portions thereof, as the
case may be, to its original condition, entirely at its own expense, excepting
normal wear and tear. All damage to the Premises caused by the removal of trade
fixtures and personal property that Tenant is permitted to remove under the
terms of this Lease shall be promptly repaired by Tenant at its sole cost and
expense, wear and tear excepted.

 

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ARTICLE 28. LANDLORD’S EXCULPATION

 

In the event of default, breach, or violation by Landlord or Landlord Parties of
any of Landlord’s obligations under this Lease, Landlord’s liability to Tenant
shall be limited to its ownership interest in the Building (which interest shall
include all rents and profits, and all proceeds from the sale of the Building,
all insurance awards, and all condemnation awards) or the proceeds of a public
sale of such interest pursuant to foreclosure of a judgment against Landlord.
Landlord shall not be personally liable for any deficiency beyond its interest
in the Building.

 

 

ARTICLE 29. NOTICES

 

All notices required or permitted to be given under this Lease (“Notice”), shall
be in writing and shall be given or made to the respective party at the address
or number set forth in Sections 1.2 and 1.3 of this Lease by (i) personal
service; (ii) mailing by registered or certified mail, return receipt requested,
postage prepaid; or (iii) reputable courier which provides written evidence of
delivery. Either Party may change its address for Notice by a Notice sent to the
other. Each Notice shall be deemed given or made upon the actual receipt or
refusal to receive said Notice.

 

 

ARTICLE 30. SUBORDINATION

 

30.1    Priority of Encumbrances. This Lease shall be subordinate to any ground
lease, first mortgage, or first deed of trust now existing or hereafter placed
upon the real property of which the Premises are a part (each a “Security
Instrument”) and to any and all advances made on the security thereof and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Tenant’s right to quiet possession of the
Premises shall not be disturbed if Tenant is not in default (beyond Notice and
the expiration of the applicable cure period under this Lease) and so long as
Tenant shall pay the Rent and observe and perform all the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If a
Lender or ground lessor gives Tenant Notice of its election to have this Lease
prior to the lien of its Security Instrument, this Lease shall be deemed prior
to such Security Instrument, whether this Lease is dated prior or subsequent to
the date of said Security Instrument or the date of recording thereof. With
respect to a subordination to any Security Instrument hereafter placed on the
Complex, Tenant’s agreement to such subordination is conditioned upon the holder
or servicer of such future Security Instrument issuance of a commercially
reasonable subordination, not-disturbance and attornment agreement (“SNDA”).

 

Landlord agrees to use its commercially reasonable efforts to obtain a SNDA from
the holder or servicer of the existing Security Instrument encumbering the
Complex as of the date of this Lease, but Landlord shall not be obligated to pay
any fee or charge or other expense in connection therewith. Obtaining the SNDA
from such existing holder or servicer is not a condition precedent or subsequent
to this Lease, nor a breach of Landlord’s obligation. The failure of such holder
or servicer to issue such SNDA shall not relieve Tenant of any of its
obligations under the Lease.

 

30.2    Execution of Documents. Subject to Section 30.1, Tenant agrees that no
documentation other than this Lease is required to evidence such subordination,
however, Tenant agrees to execute any commercially reasonable documents required
to effectuate such subordination and any attornment or to make this Lease prior
to the lien of any Security Instrument, as the case may be. Tenant agrees that
its failure to execute these documents may cause Landlord serious financial
damage by causing the failure of a financing or sale transaction.

 

30.3    Attornment. If a Lender or ground lessor enforces its remedies provided
by law or under the pertinent Security Instrument and succeeds to Landlord’s
interest in the Premises (a “Successor-in-Interest”), Tenant shall, upon request
of any Successor-in-Interest, automatically become the tenant of said
Successor-in-Interest without change in the terms or other provisions of this
Lease. The Successor-in-Interest shall not be (i)

 

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bound by any payment of Rent for more than 30 days in advance; (ii) bound by any
modification or amendment of this Lease to shorten the term or decrease the
Minimum Monthly Rent without the consent of the Lender or ground lessor; (iii)
liable for any act or omission of Landlord or any previous landlord except for
any continuing defaults by the successor in interest as the “Landlord” under
this Lease from and after the date the successor in interest acquires the
Complex for which such successor has received prior written notice of such
obligation; (v) subject to any offset, defense, recoupment or counterclaim that
Tenant may against Landlord or any previous landlord; or (vi) liable for any
deposit that Tenant may have with respect to Landlord or previous landlord that
has not been transferred to the Successor-in-Interest. Within twenty (20) days
after Notice of a request by Successor-in-Interest, Tenant shall deliver an
executed commercially reasonable attornment agreement in a form required by such
Successor-in-Interest.

 

 

ARTICLE 31. ESTOPPEL CERTIFICATES

 

31.1    Execution by Tenant. Within fifteen (15) days after receipt of Notice by
Landlord, Tenant shall execute and deliver to Landlord an estoppel certificate
acknowledging such facts regarding this Lease as Landlord may reasonably
require, including that (i) this Lease is in full force and effect, binding and
enforceable in accordance with its terms and unmodified (or if modified,
specifying the written modification documents); (ii) to the best of Tenant’s
current, actual knowledge, no default exists on the part of Landlord or Tenant
under this Lease (or if a default is claimed, specifying such default); (iii) to
the best of Tenant’s current, actual knowledge, there are no events which with
the passage of time, or the giving of notice, or both, would create a default
under this Lease (or if a default may occur, stating the possible default); (iv)
whether Rent in excess of one month’s Rent has been paid in advance; (v) whether
Tenant has sold, assigned, transferred, mortgaged or pledged this Lease or the
Rent or has it received notice of same; (vi) whether Tenant has a defense,
setoff, recoupment or counterclaim against Landlord, and (vi) such other matters
as Landlord may reasonably request. Landlord, any Lender, or any prospective
purchaser of the Building or Complex may rely upon such estoppel certificate.
Failure to comply with this Article after an additional five (5) business days
notice to Tenant shall be a breach of this Lease by Tenant giving Landlord all
rights and remedies under Article 25 hereof. In lieu thereof, if Tenant fails to
provide such estoppel certificate within five (5) business days after receipt of
such second notice, then the information contained in the estoppel certificate
delivered to Tenant for execution shall be deemed correct and binding against
Tenant and may be relied upon by Landlord and any purchaser and lender.

 

31.2    Financing, Sale or Transfer. If Landlord desires to finance, refinance,
sell, ground lease or otherwise transfer the Premises, Building or Complex, or
any part thereof, Tenant agrees, within ten days after receipt of written
request therefor by Landlord, to deliver to Landlord and to any lender or to any
prospective buyer, ground lessor or other transferee designated by Landlord
public financial statements (or other financial statement if Tenant is not a
public company at the time) of Tenant and any parent company as may be
reasonably required by such party. Such statements shall include the past three
years’ financial statements of Tenant. All such financial statements shall be
received by Landlord in confidence and shall be used only for the purposes
herein set forth.

 

 

ARTICLE 32. LENDER PROTECTION

 

Tenant agrees to give any Lender, by registered mail, a copy of any notice of
default served upon Landlord, provided that prior to such notice Tenant has been
given Notice of the address of such Lender. Tenant agrees that if Landlord fails
to cure the default within the time provided for in this Lease, Lender shall
have an additional 30 days within which to cure the default or, if the default
cannot be cured within that time, then such additional time as may be necessary
if, within the 30 days, Lender has commenced and is diligently pursuing the
remedies necessary to cure the default (including commencement of foreclosure
proceedings, if necessary). This Lease shall not be terminated while such
remedies are being pursued.

 

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ARTICLE 33. BANKRUPTCY

 

If at any time during the Term (1) there shall be filed by or against Tenant, in
any court, pleadings to initiate a bankruptcy petition of any kind, or the
appointment of a receiver or trustee of all or a portion of Tenant’s assets, or
(2) if a receiver or trustee takes possession of any of the assets of Tenant, or
if the leasehold interest herein passes to a receiver or trustee, or (3) if
Tenant makes an assignment for the benefit of creditors or petitions for or
enters into an arrangement with creditors (any of which are referred to herein
as a “Bankruptcy Event”), then the following provisions shall apply:

 

(a) Any receiver, assignee for the benefit of creditors (“assignee”), trustee of
any kind, or Tenant as debtor-in-possession (“debtor”) shall either expressly
assume or reject this Lease within sixty days following the assignment to the
Assignee or the filing of the pleading initiating the receivership or bankruptcy
case. All such parties agree that they will not seek Court permission to extend
such time for assumption or rejection. Failure to assume or reject in the time
set forth herein shall mean that the Lease may be terminated at Landlord’s
option.

 

(b) If the Lease is assumed by a debtor, receiver, assignee or trustee, such
party shall immediately after such assumption (1) cure any default or provide
adequate assurances that defaults will be promptly cured; (2) pay Landlord for
actual pecuniary loss or provide adequate assurances that compensation will be
made for such loss; and (3) provide adequate assurance of future performance.

 

(c) Where a default exists under the Lease, the party assuming the Lease may not
require Landlord to provide services or supplies incidental to the Lease before
its assumption by such trustee or debtor, unless Landlord is compensated under
the terms of the Lease for such services and supplies provided before the
assumption of such Lease.

 

(d) Landlord reserves all remedies available to Landlord in Article 26 or at law
or in equity in respect of a Bankruptcy Event by Tenant, to the extent such
remedies are permitted by law.

 

 

ARTICLE 34. MISCELLANEOUS PROVISIONS

 

34.1    Captions. The captions of this Lease are for convenience only and are
not a part of this Lease and do not in any way limit or amplify the terms and
provisions of this Lease.

 

34.2    Construction. Whenever the singular number is used in this Lease and
when required by the context, the same shall include the plural, the plural
shall include the singular. Items following the terms “include” or “including”
are descriptive only and not by way of limitation. All approvals and consents to
be given by any party to the Lease are not to be unreasonably withheld,
conditioned or delayed unless specifically indicated to the contrary in the
Lease.

 

34.3    Modifications. This instrument contains all the agreements, conditions
and representations made between the Parties and may only be modified by a
written agreement signed by all of the Parties.

 

34.4    Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.

 

34.5    No Offer. The preparation and submission of a draft of this Lease by
either party to the other shall not constitute an offer, nor shall either party
be bound to any terms of this Lease or the entirety of the Lease itself until
the Parties have fully executed a final document and an original signature
document has been received by the Parties. Until such time as described in the
previous sentence, either party is free to terminate negotiations with no
obligation to the other.

 

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34.6    Light, Air and View. No diminution of light, air, or view by any
structure, whether or not erected by Landlord, shall entitle Tenant to any
reduction of Rent, result in any liability of Landlord to Tenant, or in any
other way affect this Lease or Tenant’s obligations hereunder.

 

34.7    Public Transportation Information. If required by law, Tenant shall
establish and maintain a program to encourage maximum use of public
transportation by Tenant personnel employed on the Premises. Tenant shall comply
with all requirements of any local transportation management ordinance.

 

34.8    Rules and Regulations. Tenant will comply with all reasonable Rules and
Regulations adopted and promulgated by Landlord and applicable to all tenants in
the Building or Complex, provided the same do not conflict with the remaining
provisions of this Lease. The “Rules and Regulations” concerning the Complex are
attached hereto as Exhibit E. Landlord reserves the right to change the Rules
and Regulations affecting the Complex, provided the same do not conflict with
the remaining provisions of this Lease or unreasonably interfere with Tenant’s
permitted use of the Premises set forth in Section 1.10. Landlord shall have no
liability for violation of any Rules or Regulations by any other tenant in the
Complex. All delivery and dispatch of supplies, fixtures, equipment and
furniture shall be by means and during hours established by Landlord.

 

34.9    Joint and Several Liability. Should Tenant consist of more than one
person or entity, they shall be jointly and severally liable on this Lease.

 

34.10    Survival. All obligations of Tenant or Landlord which may accrue or
arise during the Term of this Lease or as a result of any act or omission of
said party during the Term shall, to the extent they have not been fully
performed, satisfied or discharged, survive the expiration or termination of
this Lease.

 

34.11    Brokers. Landlord and Tenant each represent and warrant to the other
party that it has not authorized or employed, or acted by implication to
authorize or employ, any real estate broker or salesman to act for it in
connection with this Lease, except for the Broker identified in Article 1.
Landlord and Tenant shall each indemnify, defend and hold the other party
harmless from and against any and all claims by any real estate broker or
salesman, other than those identified in Article 1, whom the indemnifying party
authorized or employed, or acted by implication to authorize or employ, to act
for the indemnifying party in connection with this Lease.

 

34.12    Non-liability of Landlord. Except as otherwise expressly stated in this
Lease, and only to the extent so stated, the consent or approval, whether
express or implied, by Landlord in connection with any plan, specification,
drawing, proposal, request, act, omission, notice or communication (collectively
“act”) by or for, or prepared by or for, Tenant, shall not constitute a
representation by Landlord, with respect to the completeness, sufficiency,
efficacy, propriety, quality or legality of such act.

 

34.13    Attorneys’ Fees. In the event of litigation or arbitration between the
Parties with respect to this Lease, then all costs and expenses, including all
reasonable fees of appraisers, accountants, experts, consultants and attorneys
(collectively “Professional Fees”) incurred by the prevailing party shall be
paid by the other party.

 

34.14    Effect of Waiver. A party’s waiver of any breach of a Lease provision
is not a waiver of such Lease provision or any subsequent breach of the same or
any other term, covenant or condition of the Lease. Subsequent acceptance of
Rent by Landlord is not a waiver of any preceding breach by Tenant of any
provision of this Lease, other than the failure of Tenant to pay the particular
Rent so accepted, regardless of Landlord’s knowledge the preceding breach at the
time of acceptance of Rent.

 

34.15    Holding-Over. If Tenant remains in possession of the Premises after the
expiration of the Term or the Extended Term as provided in Addendum No. 1
attached hereto, then such holding over shall be construed as a month-to-month
tenancy, subject to all the conditions, provisions and obligations of this Lease
(as applicable to a month-to-month tenancy) as existed during the last month of
the Term, except the Minimum Monthly Rent shall be equal to one hundred
twenty-five percent (125%) the Minimum Monthly Rent then payable. Such tenancy
may be terminated by either party upon thirty (30) days’ Notice prior to the end
of any monthly period. Any option or right to extend, renew or expand shall not
be applicable. Landlord’s acceptance of Rent after such expiration or
termination shall not constitute a holdover hereunder or result in a renewal of
this Lease.

 

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34.16    Binding Effect. The covenants and conditions of this Lease, subject to
the provisions as to assignment, apply to and bind the heirs, successors,
executors, administrators and assigns the Parties.

 

34.17    Time of the Essence. Time is of the essence of this Lease.

 

34.18    Release of Landlord. If Landlord sells its interest in the Building or
Complex, then from and after the effective date of the sale or conveyance,
Landlord shall be released and discharged from any and all obligations and
responsibilities under this Lease arising after said date, except those already
accrued.

 

34.19    Intentionally Omitted.

 

34.20    Waiver by Tenant. The Parties have negotiated numerous provisions of
this Lease, some of which are covered by statute. Whenever a provision of this
Lease and a provision of any statute or other law cover the same matter, the
provisions of this Lease shall control. Therefore, Tenant waives (for itself and
all persons claiming under Tenant) the provisions of Code Sections 1932(2) and
1933(4) with respect to the destruction of the Premises; Code Sections 1941 and
1942 with respect to Landlord’s repair duties and Tenant’s right to repair; Code
Section 3275 and CCP Section 1179 relating to rights of redemption; and CCP
Section 1265.130, allowing either party a Court petition to terminate this Lease
in the event of a partial taking of the Premises by condemnation. This waiver
applies to future statutes enacted in addition to or in substitution for the
statutes specified.

 

34.21    Waiver of Jury Trial. Landlord and Tenant hereby waive trial by jury in
any action, proceeding or counterclaim brought by either of the Parties against
the other on any matters whatsoever arising out of this Lease, or any other
claims.

 

34.22    Authorization. If Tenant is a corporation, partnership or limited
liability company, each person executing this Lease on behalf of such entity
represents and warrants (i) that he or she is duly authorized to execute this
Lease on behalf of such entity, (a) if a corporation, in accordance with either
a duly adopted resolution of its Board of Directors or its Bylaws; (b) if a
partnership, in accordance with its partnership agreement; or (c) if a limited
liability company, in accordance with its limited liability company agreement
and (ii) that this Lease is binding upon Tenant in accordance with its terms.

 

34.23    Conversion to a Limited Liability Entity. If Tenant is a partnership
(either general or limited), joint venture, cotenancy, joint tenancy or an
individual, Tenant may not convert (the “Conversion”) the Tenant entity or
person into any type of entity which possesses the characteristic of limited
liability such as, by way of example only, a corporation, a limited liability
company, limited liability partnership or limited liability limited partnership
(a “Limited Entity”) without the consent of Landlord, subject to fulfillment of
the conditions below. The following are conditions precedent to Landlord’s
obligation to act reasonably with respect to a Conversion to a Limited Entity:
(i) the Limited Entity assumes all of Tenant’s liabilities and is assigned all
of Tenant’s assets as of the effective date of the Conversion; (ii) as of the
effective date of the Conversion, the Limited Entity shall have a net worth
(“Net Worth”), which is not less than either (a) Tenant’s Net Worth on the date
of execution of the Lease or (b) Tenant’s Net Worth as of the date Tenant
requests consent to the Conversion; (iii) Tenant is not in default under the
Lease; (iv) Tenant delivers to Landlord a satisfactory agreement, executed by
each equity interest holder of Tenant, wherein each agrees to remain personally
liable for all of the terms, covenants and conditions of the Lease; and (v)
Tenant reimburses Landlord within ten days of Landlord’s written demand for any
and all reasonable costs and expenses that may be incurred by Landlord in
connection with the Conversion including, without limitation, reasonable
attorneys’ fees (such costs not to exceed One Thousand Five Hundred Dollars
($1,500.00).

 

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In Witness Whereof, the Parties have executed this Lease as of the date first
written above.

 

“Landlord”

 

BEDFORD PROPERTY INVESTORS, INC.,

a Maryland corporation

     

Tenant”

 

CENTILLIUM COMMUNICATIONS, INC.,

a Delaware corporation

By:           By:        

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Name:           Name:        

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Title:           Title:        

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Date:           Date:        

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FOR OFFICE USE ONLY: PREPARED BY:        

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REVIEWED BY:        

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APPROVED BY:        

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APPENDIX

 

Index to Defined Terms

 

Term   Section No.

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Advance Rent   Section 1.8 (B) Alterations   Section 18.1 Award   Section 20.1
(c) Bankruptcy Event   Article 33 Broker   Section 1.15 Building   Section 1.5
Capital Costs   Section 6.1 (d) CCP   Article 13 CC&Rs   Section 1.13 Claims  
Section 11.3 Commencement Date   Section 3.1 Common Area   Section 6.1 (a)
Common Area Costs   Section 6.1 (b) Complex   Section 1.6 Complex Insurance
Premium   Section 8.4 Condemnation   Section 20.1 (a) Condemnor   Section 20.1
(d) Construction Budget   Section 3 of Exhibit C Construction Costs   Section 3
of Exhibit C Construction Plans   Section 3 of Exhibit C Conversion   Section
34.23 Code   Section 25.4 (d) Date of Taking   Section 20.1 (b) Decision Period
  Section 20.4 Environmental Laws   Section 16.3 (a) (i) Estimated Commencement
Date   Section 1.7 (A) Force Majeure Delay   Section 3 of Exhibit C Hazardous
Materials   Section 16.3 (a) (ii) HVAC   Section 19.2 Initial Pro Rata %  
Section 1.11 Landlord   Section 1.2 Landlord’s Allowance   Section 1.12 Landlord
Parties   Section 2.1 Laws and Regulations   Section 16.1 Lease   Introduction
Lender   Article 22 Limited Entity   Section 34.23 Loss Date   Section 12.1
Losses   Section 16.3 (a) (iii) Management Fee   Section 1.14

 

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Term   Section No.

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Minimum Monthly Rent   Section 1.8 (A) Net Worth   Section 34.23 Nonterminating
Party   Section 20.4 Notice   Article 29 Parties   Introduction Permitted Use  
Section 1.11 Premises   Section 1.4 Pro Rata %   Section 6.1 (c) Pro Rata Share
  Section 6.3 Professional Fees   Section 34.13 Real Property Taxes   Section
5.1 Release   Section 16.3 (a) (iv) Rent   Section 4.1 Rent Payment Address  
Section 1.1 Rentable Area   Section 1.4 Restrictions   Section 2.2 Rules and
Regulations   Section 34.8 Security Deposit   Section 1.9 Security Instrument  
Section 30.1 Space Plan   Section 3 of Exhibit C State   Section 1.6
Successor-in-Interest   Section 30.3 Taxes   Section 5.1 Tenant   Section 1.3
Tenant Delay   Section 3 of Exhibit C Tenant Improvements   Section 3 of Exhibit
C Tenant Parties   Section 2.1 Term   Section 1.7 Terminating Party   Section
20.4 Transfer   Section 7.1 Transfer Agreement   Section 7.2 Transfer Date  
Section 7.2 Transfer Notice   Section 7.2 Transferee   Section 7.2 Transferor  
Section 7.4 Uninsured Property Loss   Section 12.1

 

 

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ADDENDUM No. 1

OPTION TO EXTEND THE TERM-NEGOTIATED RENTAL-

THREE ARBITRATORS

 

1.    Notice of Exercise. Tenant shall have the right to extend the initial Term
hereof for one (1) additional period of five (5) years upon the same terms and
conditions as stated herein, except that (a) Minimum Monthly Rent shall be
established as provided in this Addendum, (b) any allowance, work, free rent or
other concession that may have been provided in connection with the commencement
of the initial Term will not be applicable, and (c) Tenant shall not have
further option or right to extend. Such extension is herein referred to as the
“Extended Term.” Tenant must exercise its right, if at all, by written Notice
(the “Notice of Exercise”) to Landlord not less than two hundred seventy (270)
nor more than three hundred sixty-five (365) days prior to the expiration of the
initial Term hereof, provided that Tenant is not in default (after Notice and
the expiration of the applicable cure period) of any of the provisions of this
Lease at the time of the Notice of Exercise.

 

2.    Option is Personal to Tenant. The option to extend granted herein is
personal to the original Tenant executing this Lease and any transferee of a
Permitted Transfer, and notwithstanding anything to the contrary contained in
the Lease, the rights contained in this Addendum are not assignable or
transferable by such original Tenant. Landlord grants the rights contained
herein to Tenant in consideration of Tenant’s strict compliance with the
provisions hereof, including, without limitation, the manner of exercise of this
option.

 

3.    Fair Market Rent. If Tenant exercises the right to extend the term then
the Minimum Monthly Rent shall be adjusted to equal the greater of (i)
ninety-five percent (95%) of the Fair Market Rent for the Premises as of the
date of the determination of the Fair Market Rent under this Addendum, pursuant
to the procedures hereinafter set forth, or (ii) Minimum Monthly Rent in effect
immediately prior to the commencement of the Extended Term. The Fair Market Rent
evaluation may include provision for further rent adjustment during the Extended
Term, if such adjustments are commonly required in the market place for similar
types of leases.

 

4.    Determination of Fair Market Rent. For purposes of this Lease, the term
“Fair Market Rent” shall mean the minimum monthly rent generally applicable to
triple net commercial leases of comparable size, age, quality of the Premises in
the Fremont, California location determined projected as of the first day of the
Extension Period by giving due consideration for the quality of the Building and
improvements therein (including the quality of the then existing improvements in
the Premises), the quality for credit tenants, for a term comparable to the
Extension Period at the time the commencement of the Extension Period is
scheduled to commence, without any deduction for amortization of tenant
improvements or commissions not incurred by Landlord, and otherwise subject to
the terms and conditions of this Lease that will be applicable during the
Extension Period

 

5.    Determination. Landlord shall provide written notice of the Fair Market
Rent amount within thirty (30) days after Landlord’s receipt of the Notice of
Exercise. Tenant shall have thirty (30) days (“Tenant’s Review Period”) after
receipt of Landlord’s notice of the new rental within which to accept such
rental or to reasonably object thereto in writing. In the event Tenant objects,
Landlord and Tenant shall attempt to agree upon such Fair Market Rent using
their good faith efforts. If Landlord and Tenant fail to reach agreement within
fifteen (15) days following Tenant’s Review Period (“Outside Agreement Date”),
then each party shall place in a separate sealed envelope their final proposal
as to Fair Market Rent and such determination shall be submitted to arbitration
as provided below. Failure of Tenant to so elect in writing within Tenant’s
Review Period shall conclusively be deemed its disapproval of the Fair Market
Rent determined by Landlord.

 

6.    Arbitration. In the event that Landlord fails to timely generate the
initial written notice of Landlord’s opinion of the Fair Market Rent, then
Tenant may commence such negotiations by providing the initial notice, in which
event Landlord shall have thirty (30 days (“Landlord’s Review Period”) after
receipt of Tenant’s

 

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notice of the new rental within which to accept such rental. In the event
Landlord fails to accept in writing such rental proposed by Tenant, then such
proposal shall be deemed rejected, and Landlord and Tenant shall attempt in good
faith to agree upon such Fair Market Rent using their good faith efforts. If
Landlord and Tenant fail to reach agreement within fifteen (15) days following
Landlord’s Review Period (which shall be, in such event, the “Outside Agreement
Date” in lieu of the above definition of such date), then each party shall place
in a separate sealed envelope their final proposal as to the Fair Market Rent
and such determination shall be submitted to arbitration as provided below.

 

(i) Within ten (10) business days after the applicable Outside Agreement Date,
Landlord and Tenant shall agree upon and jointly appoint a single arbitrator who
shall by profession be a real estate appraiser, lawyer or broker who shall have
been active over the five (5) year period ending on the date of such appointment
in the leasing of commercial properties in the vicinity of the Building. Neither
Landlord nor Tenant shall consult with such designated arbitrator as to his or
her opinion as to Fair Market Rent prior to the appointment. The determination
of the arbitrator shall be limited solely to the issue of whether Landlord’s or
Tenant’s submitted Fair Market Rent for the Premises is the closest to the
actual Fair Market Rent for the Premises as determined by the arbitrator, taking
into account the requirements of this Addendum. Such arbitrator may hold such
hearings and require such briefs as the arbitrator, in his or her sole
discretion, determines is necessary. In addition, each of Landlord and Tenant
may submit to the arbitrator, with a copy to the other party, within five (5)
business days after the appointment of the arbitrator any market data and
additional information that such party deems relevant to the determination of
the Fair Market Rent (“FMR Data”) and the other party may submit a reply in
writing within five (5) business days after receipt of such FMR Data.

 

(ii) The arbitrator shall, within thirty (30) days of his or her appointment,
reach a decision as to whether the parties shall use Landlord’s or Tenant’s
submitted Fair Market Rent and shall notify Landlord and Tenant of such
determination. The arbitrator shall not state his own opinion of Fair Market
Rent, but shall be strictly limited to the selection of either Landlord’s or
Tenant’s Fair Market Rent determination. The Arbitrator shall have no right to
propose a middle ground or any modification of either of the proposed
valuations, and shall have no power to modify this Lease. The decision of the
arbitrator shall be binding upon Landlord and Tenant except as provided below.
If Landlord and Tenant fail to agree upon and appoint an arbitrator, then the
appointment of the arbitrator shall be made by the Presiding Judge of the
Alameda County Superior Court, or, if he or she refuses to act, by any judge
having jurisdiction over the parties.

 

(iii) The cost of the third party arbitrator shall be paid by Landlord and
Tenant equally. Landlord and Tenant shall bear its own attorneys’ fees and other
expenses.

 

 

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EXHIBIT A

LEGAL DESCRIPTION

 

REAL PROPERTY in the City of Fremont, County of Alameda, State of California,
described as follows:

 

Lot 10, tract 4464, filed July 11, 2980, Book 120, Page 9, of Maps, Alameda
County Records.

 

A.P. No. 519-1681-002

 

 

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EXHIBIT B

PLAN OF THE COMPLEX

 

 

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EXHIBIT B-1

FLOOR PLAN OF THE PREMISES

 

 

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EXHIBIT C

WORK LETTER FOR CONSTRUCTION OBLIGATIONS

 

This Exhibit C forms a part of that certain Business Park Net Lease (the
“Lease”) by and between Bedford Property Investors, Inc., as Landlord, and
Centillium Communications, Inc., as Tenant, to which this Exhibit is attached.
If there is any conflict between this Exhibit and the Lease regarding the
construction of the Tenant Improvements (hereinafter defined), this Exhibit
shall govern. All capitalized terms referred to in this Exhibit shall have the
same meaning provided in the Lease, except where expressly provided to the
contrary in this Exhibit B.

 

 

ARTICLE 1 DEFINITIONS

 

1.    Additional Definitions. Each of the following terms shall have the
following meaning:

 

Architect: The architectural firm selected by Tenant and approved by Landlord in
its reasonable discretion to prepare the “Preliminary Plans” and “Final Plans”
(as such terms are hereinafter defined).

 

Contractor: The general contractor selected by Tenant and approved by Landlord
in its reasonable discretion to construct the Tenant Improvements. The general
contractor must be licensed and bondable in the State of California. Tenant may
request that Landlord approve three (3) or more Contractors prior to competitive
bidding, in which case Tenant may select any one of the Contractors approved by
Landlord.

 

Construction Contract: The construction contract to be entered into by Tenant
and its Contractor in form, scope and substance satisfactory to Tenant and
approved by Landlord in its good faith discretion.

 

Landlord’s Allowance: The total amount provided in Section 1.12 of the Lease to
be paid by Landlord to Tenant as provided in for the Construction Costs for the
Tenant Improvements as provided in Section 3.2 of this Exhibit.

 

Substantial Completion, Substantially Complete, and Substantially Completed (or
similar phrase): The foregoing shall mean when the following have occurred or
would have occurred but for any delay cause by Tenant:

 

(a) Tenant has delivered to Landlord a certificate from the Architect, in a form
reasonably approved by Landlord, that the Tenant Improvements have been
Substantially Completed substantially in accordance with the Final Plans, except
“punch list” items which may be completed within thirty (30) days without
impairing Tenant’s use of the Premises or a material portion thereof, and
Landlord has approved of the work in its reasonable discretion; and

 

(b) Tenant has obtained from the appropriate governmental authority a final
certificate of occupancy (or all building permits with all inspections approved
or the equivalent) and all other approvals and permits for the Premises
permitting occupancy and use of the Premises for its permitted use under the
Lease.

 

Tenant Improvements: The improvements to be constructed in accordance with the
Final Plans. Said work shall include architectural, mechanical and electrical
work and life safety systems, and shall be in accordance with the criteria,
procedures and schedules referred to in this Exhibit. The Tenant Improvements
shall comply in all respects with all applicable laws, statutes, ordinances,
building codes and regulations (collectively, “Applicable Laws”).

 

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Construction Costs: All costs, expenses, fees, taxes and charges to construct
the Tenant Improvements, including, without limitation, the following:

 

(1) architects, engineers and consultants in the preparation of the Preliminary
Plans and the Final Plans, including mechanical, electrical, plumbing and
structural drawings and of all other aspects of such plans for the Tenant
Improvements, and for processing governmental applications and applications for
payment, observing construction of the work, and other customary engineering,
architectural, interior design and space planning services;

 

(2) surveys, reports, environmental and other tests and investigations of the
site and any improvements thereon;

 

(3) labor, materials, equipment and fixtures supplied by the Contractor, its
subcontractors and/or materialmen, including, without limitation, charges for a
job superintendent and project representative;

 

(4) the furnishing and installation of all heating, ventilation and air
conditioning duct work, terminal boxes, distributing defusers and accessories
required for completing the heating, ventilation and air-conditioning system in
the Premises, including costs of meter and key control for after-hour usage;

 

(5) all electrical circuits, wiring, lighting fixtures, and tube outlets
furnished and installed throughout the Premises, including costs of meter;

 

(6) all window and floor coverings in the Premises, including, without
limitation, all treatment and preparatory work required for the installation of
floor coverings over the concrete or other structural floor;

 

(7) all fire and life safety control systems, such as fire walls, wiring and
accessories installed within the Building;

 

(8) all plumbing, fixtures, pipes and accessories installed within the Building;

 

(9) fees charged by the city and/or county where the Building is located
(including, without limitation, fees for building permits and approvals and plan
checks) required for the work in the Building;

 

(10) Supervision and administrative expenses;

 

(11) all taxes, fees, charges and levies by governmental and quasi-governmental
agencies for authorization, approvals, licenses and permits; and all sales, use
and excise taxes for the materials supplied and services rendered in connection
with the installation and construction of the Tenant Improvements; and

 

(12) all costs and expenses incurred to comply with all Applicable Laws of any
governmental authority for any work at the Project in order to construct the
Tenant Improvements.

 

 

ARTICLE 2 CONSTRUCTION OF TENANT IMPROVEMENTS

 

2.1    Preparation of Plans.

 

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(a) Preliminary Plans. The preliminary plans prepared by Hoover Associates, a
copy of which is attached as Exhibit B to the Lease (the “Preliminary Plans”).
Landlord and Tenant approve of the Preliminary Plans.

 

(b) Final Plans. Tenant shall cause the Architect to prepare final working
drawings, which shall be consistent with the Preliminary Plans, compatible with
the design, construction and equipment of the Building, comply with all
Applicable Laws, capable of logical measurement and construction, and contain
all such information as may be required for obtaining all permits and other
governmental approvals for the construction of the Tenant Improvements (the
“Working Drawings”). As soon as is commercially reasonable after the Preliminary
Plans are approved by the parties as provided above, Tenant shall submit two
copies of the Working Drawings to Landlord for its review and approval in its
good faith discretion. Within ten (10) days after receipt of the preliminary
plans, Landlord shall notify Tenant in writing that (i) Landlord approves of
such Working Drawings, or (ii) Landlord reasonably disapproves of such Working
Drawings, the basis for disapproval and the changes requested by Landlord.
Tenant shall cause the Working Drawings to be revised and shall submit the
revised Working Drawings to Landlord for its review and approval as provided in
this section. The Working Drawings approved in writing by the parties shall be
referred to as the “Final Plans.”

 

(c) General. It is the responsibility of Tenant to assure that the Final Plans
and the Tenant Improvements constructed thereunder conform to all of the
Applicable Laws. Tenant shall submit to Landlord one (1) reproducible and four
(4) prints of the Final Plans. Landlord shall not be entitled to any supervision
or administrative fees in connection with the Tenant Improvements.

 

2.2    Selection and Approval of Certain Contractors. Any subcontractor
performing any work on the life safety or alarm systems or work affecting the
roof shall be subject to Landlord’s prior written approval in its reasonable
discretion and Landlord may require the Tenant use Landlord’s contractor or a
specific subcontractor for any such work provided the same charge competitive
rates (as reasonably determined by Tenant in its sole, good faith and reasonable
discretion) and are reasonably available. Landlord shall provide written notice
of approval or disapproval within five (5) business days after Tenant’s request
for such approval. The Construction Contract shall be subject to the prior
written reasonable approval of Landlord and shall require, among other things,
that the Contractor (a) obtain and deliver to Landlord evidence of insurance
required by Landlord (which requirements shall be no more onerous than the
requirement of Tenant hereunder), and (b) execute, obtain and deliver to Tenant
lien waivers in the form required under Applicable Law from the Contractor and
all of its subcontractors and suppliers, and (c) monthly progress payments, with
a ten percent (10%) retention, and (d) such other documents as the lender under
any deed of trust may require.

 

2.3    Information Provided by Landlord. Acceptance or approval of any plan,
drawing or specification, including, without limitation, the Preliminary Plans
and the Final Plans, by Landlord shall not constitute the assumption of any
responsibility by Landlord for the accuracy or sufficiency of such plans and
material, and Tenant shall be solely responsible therefor. Tenant agrees and
understands that the review of all plans pursuant to the Lease or this Exhibit
by Landlord is to protect the interests of Landlord in the Building, and
Landlord shall not be the guarantor of, nor responsible for, the correctness,
completeness or accuracy of any such plans or compliance of such plans with
Applicable Laws. Any information that may have been furnished to Tenant by
Landlord or others about the mechanical, electrical, structural, plumbing or
geological (including soil and sub-soil) characteristics of the Building or
Project (hereinafter referred to as the “Site Characteristics”) are for Tenant’s
convenience only, and Landlord does not represent or warrant that the Site
Characteristics are accurate, complete or correct or that the Site
Characteristics are as indicated. Any information that has been furnished by
Landlord to Tenant has been delivered on the expressed condition and
understanding that Tenant will independently verify whether such information is
accurate, complete or correct and not rely on such information provided by
Landlord.

 

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2.4    No Responsibility of Landlord. Landlord’s approval of any plans,
including, without limitation, the Preliminary Plans or the Final Plans, shall
not: (i) constitute an opinion or agreement by Landlord that such plans and
Tenant Improvements are in compliance with all Applicable Laws, (ii) impose any
present or future liability on Landlord; (iii) constitute a waiver of Landlord’s
rights hereunder or under the Lease or this Exhibit; (iv) impose on Landlord any
responsibility for a design and/or construction defect or fault in the Tenant
Improvements, or (v) constitute a representation or warranty regarding the
accuracy, completeness or correctness thereof.

 

2.5    Actual Review Costs. Tenant shall not be required to pay to Landlord its
actual costs incurred by its architect in reviewing and approving the
Preliminary Plans, Working Drawings and Final Plans.

 

2.6    Changes. After approval of the Preliminary Plans or Final Plans by
Landlord and Tenant, any changes in the Preliminary Plans or Final Plans shall
require the prior written consent of Landlord in its reasonable discretion and
the parties shall follow the same process as was required under Section 2.1 for
approval of plans. Any change requested by Tenant that is approved in writing by
Landlord shall be prepared by the Architect and shall be subject to the review
and approval of Landlord’s architect in its reasonable discretion. The cost of
such changes, including the cost to revise such plans, obtain any additional
permits and construct any additional improvements required as a result thereof,
and the cost for materials and labor, and all other additional costs incurred by
Landlord from resulting delays in completing the Tenant Improvements, shall be
included as part of the Construction Costs for the Tenant Improvements.

 

2.7    Construction Budget for Tenant Improvements. After approval of the Final
Plans by Landlord and Tenant as provided above, Tenant shall prepare a detailed
estimate of the Construction Costs for the Tenant Improvements. Tenant shall
deliver a copy of the construction budget to Landlord.

 

2.8    Building Permits and Approvals. Not later than after approval by Landlord
and Tenant of the Final Plans and Construction Budget as provided above, Tenant
or its Contractor shall submit the Final Plans to the appropriate governmental
body for plan checking and all building permits and other governmental and
quasi-governmental approvals.

 

2.9    Conduct of Work. Tenant shall confine the construction activity to within
the Premises as much as possible and shall work in an orderly manner removing
trash and debris from the project on a daily basis. At no time will pipes,
wires, boards or other construction materials cross public areas where harm
could be caused to the public. All such work shall be undertaken in strict
compliance with all Applicable Laws and reasonable Landlord rules and
regulations. If Tenant fails to comply with these requirements, Landlord shall
have the right, but not the obligation, to cause remedial action (at Tenant’s
cost) as deemed necessary by Landlord to protect the public. Tenant shall
complete construction of the Tenant Improvements free and clear of all liens,
security interests and encumbrances of any kind.

 

(a) Pre-construction Submittals to Landlord. A minimum of ten (10) days prior to
the commencement of construction, Tenant shall submit the following items to
Landlord:

 

(1) A certificate setting forth the proposed commencement date of construction
and the estimated completion dates of construction work, fixturing work and
projected opening date;

 

(2) Certificates of all insurance required under the Lease and this Exhibit;

 

(3) Copies of all building permits, and all other permits and approvals required
by governmental agencies to construct the Tenant Improvements; and

 

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(4) Copies of the construction contract with Tenant’s Contractor.

 

(b) Delays. Tenant shall with reasonable diligence prosecute construction of the
Tenant Improvements to complete all work by the Commencement Date. The time for
performance of any obligation of Tenant to construct the Tenant Improvements
under this Work Letter or the Lease, shall be extended at Tenant’s election by
the period of any delay caused by a Force Majeure Delay (as defined below) or a
Landlord Delay (as further defined below). In addition, the Commencement Date
shall be delayed one (1) day for each day of delay caused by a Force Majeure
Delay or a Landlord Delay, except to the extent such delay has already been
included as provided in Section 3.4 of the Lease. For purposes of this
paragraph, the term “Landlord Delay” shall mean a delay in the Tenant
Substantially Completing the Tenant Improvements due to: (1) a delay in the
giving of authorizations or approvals or a response to same by Landlord within
the applicable time period provided in this Exhibit C; (2) unreasonable
interference of Landlord, its agents or contractors with the construction of the
Tenant Improvements at the Premises; or (3) the unreasonable failure or refusal
of Landlord to permit Tenant, its agents or contractors, reasonable access to
and reasonable use of the Building or any Building facilities or services when
such access is permissible under this Lease, which access and use are required
for the orderly and continuous performance of the work necessary to complete the
Tenant Improvements. However, the extension of the Commencement Date as provided
above shall be reduced or rendered inoperative to the extent of any Tenant Delay
or because of a prior, concurrent, or subsequent delay resulting from any action
or inaction of Tenant or its contractors or agents. Tenant shall notify Landlord
promptly after Tenant knows of an event constituting a Landlord Delay and of
Tenant’s good faith estimate of the length of the Landlord Delay, which shall be
subject to the reasonable approval of Landlord.

 

(c) Correction of Work. Landlord may reject any portion of the Tenant
Improvements which is defective or not in conformity with the Final Plans.
Landlord shall not be responsible for correcting the portions of the Tenant
Improvements which were defective or not in compliance with the Final Plans; all
such work shall be the responsibility of Tenant at its sole cost and expense.

 

2.10    Notice of Completion; Copy of Record set of Plans. Within twenty (20)
days after completion of construction of the Tenant Improvements, Tenant shall
cause a notice of completion (or the equivalent notice required under local law
to provide notice to all contractors, subcontractors and materialmen that the
work is completed and the time for filing any mechanic’s lien is running) to be
recorded in the Official Records of the County where the Building is located,
and shall furnish a copy thereof to Landlord upon such recordation. If Tenant
fails to do so, Landlord may execute and file the same on behalf of Tenant as
Tenant’s agent for such purpose, at Tenant’s sole cost and expense. At the
conclusion of construction: (i) Tenant shall cause the Architect and Contractor
(A) to update the Final Plans as necessary to reflect all changes made to the
Final Plans during the course of construction, (B) to certify to the best of
their knowledge that the “record-set” of as-built drawings are true and correct,
which certification shall survive the expiration or termination of this Lease,
and (C) to deliver to Landlord two (2) sets of copies of such record set of
drawings within ninety (90) days following issuance of a certificate of
occupancy for the Premises; and (ii) Tenant shall deliver to Landlord a copy of
all signed building permits and certificates of occupancy, and all warranties,
guaranties, and operating manuals and information relating to the improvements,
equipment and systems in the Premises.

 

2.11    Tenant’s Parties and Insurance. The Contractor and all subcontractors,
laborers, materialmen, and suppliers used by Tenant at the Premises collectively
shall be referred to as “Tenant’s Parties”.

 

(a) Indemnity. Tenant’s indemnity of Landlord as set forth in the Lease shall
also apply with respect to any and all costs, losses, damages, injuries and
liabilities related in any way to any act or omission of Tenant or Tenant’s
Parties, or in connection with Tenant’s non-payment of any amount arising out of
the Tenant Improvements and/or Tenant’s disapproval of all or any portion of any
request for payment.

 

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(b) Requirements of Tenant’s Parties. Each of Tenant’s Parties shall guarantee
to Tenant and for the benefit of Landlord that the portion of the Tenant
Improvements for which it is responsible shall be free from any defects in
workmanship and materials for a period of not less than one (1) year from the
date of completion thereof. Each of Tenant’s Parties shall be responsible for
the replacement or repair, without additional charge, of all work done or
furnished in accordance with its contract that shall become defective within one
(1) year after the later to occur of (i) completion of the work performed by
such contractor or subcontractors, and (ii) the date when the Tenant
Improvements have been Substantially Completed. The correction of such work
shall include, without additional charge, all additional expenses and damages
incurred in connection with such removal or replacement of all or any part of
the Tenant Improvements, and/or the Building and/or common areas that may be
damaged or disturbed thereby. All such warranties or guarantees as to material
or workmanship of or with respect to the Tenant Improvements shall be contained
in the construction contract or subcontract and shall be written such that such
guarantees or warranties shall inure to the benefit of both Landlord and Tenant,
as their respective interests may appear, and can be directly enforced by
either. Tenant covenants to give to Landlord any assignment or other assurances
which may be necessary to effect such right of direct enforcement.

 

(c) Insurance Requirements. In addition to the insurance requirements set forth
in the Lease, Tenant shall comply with the following requirements:

 

(1) General Coverages. All of Tenant’s Parties shall carry worker’s compensation
insurance covering all of their respective employees, and shall also carry
commercial liability insurance, including property damage, all with limits, in
form and with companies as are required to be carried by Tenant as set forth in
the Lease.

 

(2) Special Coverage. Tenant shall carry “Builder’s All Risk” insurance in an
amount approved by Landlord covering the construction of the Tenant
Improvements, and such other commercially reasonable insurance as Landlord may
require. Such insurance shall be in amounts and shall include such extended
coverage endorsements as may be reasonably required by Landlord including, but
not limited to, the requirement that all of Tenant’s Parties shall carry excess
liability and Products and Completed Operation Coverage insurance, each in
amounts not less than $1,000,000 per incident, $2,000,000 in aggregate, and in
form and with companies as are required to be carried by Tenant as set forth in
the Lease.

 

(3) General Terms. Certificates for all insurance carried pursuant to the
foregoing sections shall be delivered to Landlord before the commencement of
construction of the Tenant Improvements and before the Contractor’s equipment is
moved onto the site. All such policies of insurance must contain a provision
that the company writing said policy will give Landlord thirty (30) days’ prior
written notice of any cancellation or lapse of the effective date or any
reduction in the amounts of such insurance. In the event that the Tenant
Improvements are damaged by any cause during the course of the construction
thereof (except to the extent of Landlord’s gross negligence or intentional
misconduct, but subject to the waiver of subrogation provisions in the Lease),
Tenant shall immediately repair the same at Tenant’s sole cost and expense.
Tenant’s Parties shall maintain all of the foregoing insurance coverage in force
until the Tenant Improvements are fully completed and accepted by Landlord. All
liability policies carried under this section by Tenant’s Parties shall name
Landlord and Tenant as additional insured, as their interests may appear. All
property insurance maintained by Tenant’s Parties shall preclude or waive
subrogation claims by the insurer against anyone insured thereunder. Such
insurance shall provide that it is primary insurance as respects the Landlord
(in connection with the acts or omissions of Tenant’s Parties and that any other
insurance maintained by Landlord is excess and noncontributing with the
insurance required hereunder. The requirements for the foregoing insurance shall
not derogate from the provisions for indemnification of Landlord by Tenant under
the Lease or this Exhibit.

 

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2.12    Temporary Facilities During Construction. Tenant shall obtain in its
name and pay for all temporary utility facilities, and the removal of debris, as
necessary and required in connection with the construction of the Premises.
Storage of Tenant’s contractors’ construction material, tools, equipment and
debris shall be confined to the Premises and any other areas which may be
designated for such purposes by Landlord. Landlord shall not be responsible for
any loss or damage to Tenant’s and/or Tenant’s contractors’ equipment. In no
event shall any materials or debris be stored in the malls or service or exit
corridors of the Project.

 

2.13    Miscellaneous. The Tenant Improvements shall be subject to the
inspection and reasonable approval of Landlord and its supervisory personnel.
All contractors engaged by Tenant shall be bondable, licensed contractors,
possessing good labor relations, capable of performing quality workmanship.

 

2.14    Tenant’s Representative. Tenant shall provide Landlord with a name of a
representative of Tenant to act on its behalf and represents its interests with
respect to all matters which pertain to the construction of Tenant Improvements,
and to make decisions binding upon Tenant with respect to such matters.

 

 

ARTICLE 3 PAYMENT OF CONSTRUCTIONS COSTS

 

3.1    Payment of Costs. Tenant shall pay for the Tenant Improvements, except
for the Landlord’s Allowance which Landlord shall advance as hereinafter
provided. Landlord shall only be responsible for payment of up to the amount of
Landlord’s Allowance. If the Construction Costs for the Tenant Improvements are
greater than the amount of the Landlord’s Allowance, Tenant shall be solely
responsible for such additional costs.

 

3.2    Payment by Landlord. Landlord shall make three equal progress payments of
Landlord’s Allowance as follows: (a) the first payment will be due on the
Delivery Date; (b) the second payment will be due thirty (30) days after the
Delivery Date, and (c) the last payment will be made on the Commencement Date.
Tenant may use Landlord’s Allowance for payment of any and all costs and
expenses incurred by Tenant in connection with the Lease, including, without
limitation, for obligations incurred (a) to move from its existing lease to the
Premises and to pay all costs and expenses incurred by Tenant in connection
therewith, and (b) to design, construct and install the Tenant Improvements in
the Premises, and (c) to pay for any additional charges or rent for the Other
Possible FFE (as defined in Section 5.3 of this Exhibit).

 

 

ARTICLE 4 LANDLORD’S WORK AND FFE

 

4.1    Landlord’s Work. Landlord agrees to construct to the areas outside the
Building the improvements depicted in the list of plans attached hereto as
Exhibit C-1 attached hereto (“Landlord’s Work”). Landlord shall use its good
faith efforts to substantially complete Landlord’s Work by March 1, 2004,
subject to any “Tenant Delay” and “Force Majeure Delay” (as such terms are
hereinafter defined).

 

(a) Tenant Delay. The term “Tenant Delay” shall mean any delay incurred by
Landlord in substantially completing Landlord’s Work due to (a) a delay by
Tenant, or by any person employed or engaged by Tenant, in approving (to the
extent Tenant’s approval is required under this Exhibit or otherwise requested
by Landlord) or delivering to Landlord any plans, schedules or information
beyond the applicable time period set forth in this Exhibit, if any; (b) any
delay in providing any reasonable information or authorization requested by the
lender providing financing to Landlord, provided that Tenant is given a
reasonable time period to supply such information, but not to exceed ten (10)
days; (c) any delay attributable to the failure of Tenant to pay, when due, any
amounts required to be paid by Tenant pursuant to this Exhibit or otherwise
provided in the Lease; (d) any changes requested by Tenant in or to previously
approved work or in the construction plans; (e) delays in delivery of any
materials specified by Tenant through change orders that are approved in writing
by Landlord in its reasonable discretion; or (f) interference with the
construction of Landlord’s Work by Tenant or any of its employees, contractors,
subcontractors, agents or invitees.

 

 

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(b) Force Majeure Delays. The term “Force Majeure Delay” shall mean any delay by
reason of (i) any strike, lockout or other labor trouble or industry wide
disturbance (whether or not on the part of the employees of either party
hereto), (ii) governmental preemption of priorities or other controls in
connection with a national or other public emergency, civil disturbance, riot,
war, sabotage, blockade, embargo, inability to secure customary materials,
supplies or labor through ordinary sources by reason of regulation or order of
any government or regulatory body, or (iii) shortages of fuel, materials,
supplies or labor, (iv) lightning, earthquake, fire, storm, tornado, flood,
washout explosion, inclement weather or any other similar industry-wide or
Building-wide cause beyond the reasonable control of Landlord, or (v) any other
cause, whether similar or dissimilar to the above, beyond parties’ reasonable
control.

 

4.2    Condition of Landlord’s Work. The Landlord’s Work shall be deemed
substantially complete when Landlord has notified Tenant that Landlord’s Work
has been substantially completed, except for “punch list” items which shall be
completed within thirty (30) days thereafter, without materially affecting the
ability of Tenant’s contractor to construct the Tenant Improvements, as
determined by Landlord’s architect in its reasonable discretion, or unreasonably
interfering with Tenant’s use or occupancy of the Premises if the Tenant
Improvements have been completed.

 

4.3    Furniture, Fixtures and Equipment. There are currently 360 workstations
systems (“Cubes”) that are currently located in the Premises and Landlord agrees
to deliver possession of the Premises to Tenant with the Cubes in place for
Tenant’s ownership and use during the Term of the Lease without the payment of
additional rent by Tenant (other than the payment of personal property taxes).
Landlord and the existing tenant of the Premises have been discussing terms by
which such existing tenant may leave certain other property in the Premises,
such as chairs and racking, security systems and cabling (“Possible Other FFE”).
Any additional charge to or cost incurred by Landlord for the Possible Other FFE
that has been approved by Tenant shall be paid by Tenant to Landlord as and when
such payment is due the existing tenant. If the existing tenant (or equipment
lessor or lender) does not impose any charge on Landlord for the Possible Other
FFE, Tenant may use such equipment without additional rent or charge to Tenant
(other than the payment of personal property taxes). Landlord does not warrant
or covenant that any of the Possible Other FFE will be made available, and the
availability or condition of such Possible Other FFE is not a condition to
Tenant’s obligations under the Lease. The Cubes and Possible Other FFE that is
made available will be done so on an AS IS basis and Landlord does not warrant
the condition or utility of any of such property. Tenant shall be responsible
for the repair, maintenance or replacement of any of the Cubes or Possible Other
FFE, and Landlord shall have no obligation or liability in connection therewith.

 

 

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EXHIBIT C-1

LANDLORD’S WORK

 

The plans for Landlord’s Work entitled “215-255 Fourier Avenue Exterior Upgrade,
Fremont, CA,” prepared by Hoover Associates, dated December 5, 2003, including
the following sheets:

 

  GO.1 — Index to Drawings

  GO.2 — Site Details

  D1.1 — Demolition Plan

  A1.1 — Overall Site Plan

  A2.1 — Enlarged Front Plans and Elevations

  A2.2 — Enlarged Loading Dock Plan and Elevations

  A3.1 — Colonnade Details

  A3.2 — Misc. Details

  S-1 — Colonnade Foundation Plan and Details

  S-2 — Truck Door Plan, Details and General Notes

  L1.0 — Landscape Plan

  L2.0 — Layout Plan

  L3.0 — Irrigation Plan

  C1 — Grading and Drainage Plan

  C2 — Details

  E1 — Electrical Site Plan”

 

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EXHIBIT D

ACKNOWLEDGEMENT OF COMMENCEMENT

 

This Acknowledgement is made as of                         ,              with
reference to that certain Business Park Net Lease (hereinafter referred to as
the “Lease”) dated                         ,             , by and between
BEDFORD PROPERTY INVESTORS, INC., a Maryland corporation “Landlord” therein, and
CENTILLIUM COMMUNICATIONS, INC., a Delaware corporation “Tenant”, for the Leased
Premises situated at 215 and 255 Fourier Avenue, FREMONT, CALIFORNIA 94538.

 

The undersigned hereby confirms as of the date hereof, the following:

 

1.    That Landlord delivered and Tenant accepted possession of the Premises (as
described in said Lease) on                         , and acknowledges that the
Leased Premises are, to the best of Tenant’s current, actual knowledge, (i) as
represented by the Landlord and (ii) in good order, condition and repair, and
that the improvements, if any, required to be constructed for Tenant by Landlord
under this Lease have been so constructed and are, to the best of Tenant’s
current, actual knowledge, satisfactorily completed in all respects.

 

2.    That all conditions of said Lease to be performed by Landlord prerequisite
to the full effectiveness of said Lease have been satisfied and that Landlord
has fulfilled all of its duties of an inducement nature.

 

3.    That in accordance with the provisions of said Lease the Commencement Date
of the Term is                         , and that, unless sooner terminated, the
original term thereof expires on                         .

 

4.    That said Lease is in full force and effect and that the same represents
the entire agreement between Landlord and Tenant concerning said Lease.

 

5.    That to the best of Tenant’s current, actual knowledge, there are no
existing defenses which Tenant has against the enforcement of said Lease by
Landlord, and no offsets or credits against rentals.

 

6.    That the minimum rental obligations of said Lease is presently in effect
and that all rentals, charges and other obligations on the part of Tenant under
said Lease commenced to accrue on                         .

 

7.    That the undersigned has not made any prior assignment, hypothecation or
pledge of said Lease or of the rents hereunder.

 

TENANT:

 

CENTILLIUM COMMUNICATIONS, INC.,

A DELAWARE CORPORATION

 

 

BY:        

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(PRINT):        

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ITS:        

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DATE:        

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EXHIBIT E

RULES AND REGULATIONS ATTACHED TO AND MADE

A PART OF THIS LEASE

 

1. Except as provided in the Lease, no sign, placard, picture, advertisement,
name of notice shall be inscribed, displayed or printed or affixed on the
Building or to any part thereof, or which is visible from the outside of the
Building, without the written consent of Landlord, first had and obtained and
Landlord shall have the right to remove any such sign, placard, picture,
advertisement, name or notice without notice and at the expense of Tenant.

 

All approved signs or lettering on doors shall be printed, affixed or inscribed
at the expense of Tenant by a person approved by Landlord.

 

Tenant shall not place anything or allow anything to be placed near the glass of
any window, door, partition or wall which may appear unsightly from outside the
Premises.

 

2. The sidewalks, passages, exits, entrances, and stairways in and around the
Building shall not be obstructed by Tenant or used by it for any purpose other
than for ingress to and egress from the Premises. The passages, exits,
entrances, stairways, and roof are not for the use of the general public and
Landlord shall in all cases retain the right to control and prevent access
thereto by all persons whose presence in the judgment of Landlord shall be
prejudicial to the safety of the Building and its Tenants, provided that nothing
herein contained shall be construed to prevent such access to person with whom
Tenant normally deals in the ordinary course of Tenant’s business unless such
persons are engaged in illegal activities. Neither Tenant nor any employees or
invitees of Tenant shall go upon the roof of the Building.

 

3. Tenant shall not be permitted to install any additional lock or locks on any
door in the Building unless written consent of Landlord shall have first been
obtained. Two keys will be furnished by Landlord for every room.

 

4. The toilets and urinals shall not be used for any purpose other than those
for which they were constructed, and no rubbish, newspapers or other substances
of any kind shall be thrown into them. Wastes and excessive or unusual use of
water shall not be allowed. Tenant shall be responsible for any breakage,
stoppage or damage resulting from the violation of this rule by Tenant or its
employees or invitees.

 

5. Tenant shall not overload the floor of the Premises or in any way deface the
Premises or any part thereof.

 

6. Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the Premises.

 

7. The Premises shall not be used for the storage of merchandise, for washing
clothes, for lodging, or for any improper or objectionable purposes inconsistent
with Tenant’s permitted use of the Building.

 

8. Tenant shall not use or keep in the Premises or the Building any kerosene,
gasoline, or inflammable or combustible fluid or material, or use any method of
heating or air conditioning other than that supplied by Landlord.

 

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9. Landlord will direct electricians as to the manner and location in which
telephone and telegraph wires are to be introduced. No boring or cutting for
wires will be allowed without the consent of Landlord. The location of
telephones, call boxes and other office equipment affixed to the Premises shall
be subject to the approval of Landlord.

 

10. Tenant shall not lay linoleum, tile, carpet or other similar floor covering
so that the same shall be affixed to the floor of the Premises in any manner
except as approved by Landlord. The expense of repairing any damage resulting
from a violation of this rule or removal of any floor covering shall be borne by
Tenant.

 

11. Any window covering desired by Tenant shall be approved by Landlord.

 

12. Landlord reserves the right to exclude or expel from the Building any person
who, in the judgment of Landlord, is intoxicated or under the influence of
liquor or drugs, or who shall in any manner do any act in violation of any of
the rules and regulations of the Building.

 

13. Without the written consent of Landlord, Tenant shall not use the name of
the Building in connection with or in promoting or advertising the business of
Tenant except as Tenant’s address.

14. Tenant shall be liable for and shall pay the expense of any additional
cleaning or other maintenance required to be performed by Landlord as a result
of the transportation or storage of materials or work performed within the
Building by or for Tenant.

 

15. Tenant shall be entitled to use parking spaces in the Common Areas subject
to such reasonable conditions and regulations as may be imposed from time to
time by Landlord. Tenant agrees that vehicles of Tenant or its employees or
agents shall not park in driveways nor occupy parking spaces or other areas
reserved for any use such as Visitors, Delivery, Loading. Landlord or its agents
shall have the right to cause to be removed any car of Tenant, or its employees
or agents, that may be parked in emergency areas, and Tenant agrees to save and
hold harmless Landlord, its agents and employees from any and all claims,
losses, damages and demands asserted or arising in respect to or in connection
with the removal of any such vehicle. Tenant, its employees, or agents shall not
park campers, trucks or cars on the Building parking areas overnight or over
weekends. Tenant will from time to time, upon request of Landlord, supply
Landlord with a list of license plate numbers of vehicles owned or operated by
its employees and agents.

 

16. Landlord reserves the right to make modifications hereto and such other and
further rules and regulations as in its sole judgment may be required, provided
the same do not conflict with the terms of this Lease, for the safety, care and
cleanliness of the Premises and the Building and for the preservation of good
order therein. Tenant agrees to abide by all such rules and regulations,
provided the same do not conflict with the terms of this Lease and are uniformly
imposed.

 

17. Landlord may waive any one or more of these rules, however such waiver shall
be construed as a waiver of Landlord’s right to enforce these rules against
Tenant.

 

21. Tenant is responsible for purchasing and installing a security system if
required by the City of Fremont. The cost of purchasing and installation of any
such system is the sole costs and expense of the Tenant.

 

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