Exhibit 10.1

 

SUBLEASE

(331 East Evelyn, Mountain View, California)

 

This Sublease (“Sublease”), dated June 28, 2005 (the “Execution Date”), is
entered into by and between VERISITY DESIGN, INC., a California corporation
(“Sublandlord”), and CONCEPTUS, INC., a Delaware corporation (“Subtenant”).

 

1.                                    BASIC SUBLEASE PROVISIONS

 

1.1                               Premises: The Premises under this Sublease
consist of approximately 58,242 rentable square feet of space located on the
First (1st) and Second (2nd) floors of the building (the “Building”), which
Building is located at 331 East Evelyn, in the City of Mountain View, in the
State of California 94039.  The Premises demised hereunder are a portion of
those certain premises (“Master Premises”) containing approximately 58,242
rentable square feet of office space located on the 1st and 2nd floors of the
Building which forms a part of the project (“Project”) with approximately
266,088 square feet of space and are demised pursuant to the Master Lease. The
Premises are depicted on Exhibit A to this Sublease,

 

1.2                               Master Landlord: SFERS Real Estate Corp. U, a
Delaware corporation.

 

1.3                               Master Lease: Lease Agreement dated April 15,
2004 as amended by that certain First Amendment to Lease dated June     , 2005
entered into by Sublandlord, as “Tenant”, and Master Landlord, as “Landlord”, a
copy of which is attached hereto as Exhibit B.

 

1.4                               Term: Approximately forty-six (46) months,
beginning on the Commencement Date and ending on the Expiration Date unless
terminated earlier in accordance with the terms and conditions of this Sublease.

 

1.5                               Estimated Commencement Date: September 1,
2005.

 

1.6                               Expiration Date: June 15, 2009.

 

1.7                               Base Rent: See Section 4.2 below.

 

1.8                               Base Year: None.

 

1.9                               Subtenant’s Share of Master Premises:  100%.

 

1.10                        Subtenant’s Use:  The uses stated in Master Lease
Section 1.1, 1,2 and 1.3 together with the right to use the Premises for
(i) research, (ii) development, (iii) marketing, (iv) assembly and other
associated uses for a medical device operation and for no other purpose.

 

1.11                        Subtenant’s Address:

 

Prior to the Commencement Date:

 

Conceptus, Inc.

 

 

1021 Howard Avenue

 

 

San Carlos, CA 94070

 

 

Verisity Design, lnc.

331 East Evelyn, Mountain View, California

 

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After the Commencement Date:

 

Premises

 

Sublandlord’s Address:

 

Verisity Design, Inc. c/o

 

 

Cadence Design Systems, Inc.

 

 

2655 Seely Avenue

 

 

San Jose, CA 95134

 

 

Attention: Legal Counsel

 

With a copy to:

 

Verisity Design, Inc. c/o

 

 

Cadence Design Systems, Inc.

 

 

2655 Seely Avenue

 

 

San Jose, CA 95134

 

 

Attention: Vice President of Facilities

 

 

and Real Estate

 

 

 

With a copy of defaults to:

 

Reed Smith LLP

 

 

Two Embarcadero Center

 

 

Suite 2000

 

 

San Francisco, CA 94111

 

 

Attention: Charles H. Seaman, Esq.

 

 

 

With payment to be made to:

 

The Staubach Company

 

 

15601 Dallas Parkway Suite 400

 

 

Addison, Texas 75001

 

 

Attn: Verisity Design, Inc. c/o

 

 

Cadence Lease Administration

 

1.12                        Security Deposit.  $101,826.42

 

1.13

 

Brokers:

 

For Sublandlord:

 

The Staubach Company

 

 

 

 

 

 

 

 

 

 

 

For Subtenant:

 

The Staubach Company

 

1.14                        Definitions: Each of the terms in the Basic Sublease
Provisions are used in this Sublease as defined terms and have the meanings
given in such sections. Other capitalized words and phrases for which no
definition is given in this Sublease shall have the meanings given them in the
Master Lease. Unless otherwise indicated, all section references are to the
sections of this Sublease.

 

2.                                      DEMISE OF PREMISES

 

2.1                               Sublandlord hereby subleases the Premises to
Subtenant, and Subtenant hereby subleases the Premises from Sublandlord, on and
subject to the terms and conditions of this Sublease. Within thirty (30) days of
the mutual execution of this Sublease, Subtenant shall have the right at its
sole cost and expense to carry out an independent measurement of the Premises
using a third party licensed architect. If the Subtenant architect identifies a
discrepancy of more than five percent (5%) between the architect’s calculation
of the rentable square footage of the Premises compared to the rentable square
footage stated in Section 1.1 above the Sublandlord and Subtenant agree to work
“in good faith” to establish a mutually acceptable rentable square footage for
the Premises. Notwithstanding any

 

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establishment of a rentable square footage adjustment as set forth above,
Subtenant agrees that it shall take possession of all of the Sublandlord’s
premises space as defined under the terms of the Master Lease. Where the
Sublandlord and Subtenant cannot agree upon an adjustment to the rentable square
footage of the Premises following a calculation by Subtenant’s independent
architect the parties agree to be bound by the decision of three arbiters under
an arbitration conducted in accordance with the rules of the American
Arbitration Association. Sublandlord and Subtenant shall each elect an arbiter
and those two arbiters shall select the third. The costs of each arbiter shall
be the responsibility of each appointing party with the cost of the third
arbiter to be divided between Sublandlord and Subtenant.

 

2.2                               Sublandlord hereby grants to Subtenant the
right to use on a nonexclusive basis the “Common Area” (as defined in the Master
Lease) in the Building and the “Project” (as such term is defined in the Master
Lease Section 1.3) in compliance with such Rules and Regulations set forth in
Master Lease Exhibit D as Master Landlord may promulgate from time to time.

 

2.3                               Sublandlord reserves the right, on reasonable
prior notice and subject to Subtenant’s reasonable security requirements, to
inspect the Premises; provided, however, Sublandlord shall not be required to
give notice or comply with Subtenant’s reasonable security requirements in the
case of an entry due to an emergency.

 

2.4                               Sublandlord agrees to allow Subtenant, its
employees, agents, consultants and contractors to have access and early entry to
the Premises, from the date Master Landlord consents in writing to a fully
executed original of this Sublease prior to the Commencement Date (“Early Entry
Period”) on reasonable prior written notice, to allow Subtenant to carry out
installation of Subtenant’s improvements, furniture, fixtures, and
telecommunications equipment thereof as in the reasonable opinion of Subtenant
is required to ready the Premises for occupancy; provided, however, such Early
Entry Period shall immediately cease on twenty four hours notice from
Sublandlord and to the extent that Subtenant fails to abide by such notice
Sublandlord shall have the right to apply any and all of the Security Deposit to
remedy the same including Sublandlord’s actual legal fees. Subtenant, its
employees, agents, consultants and contractors shall take all reasonable and
necessary safety and security precautions in connection with the carrying out of
the installation of improvements, furniture, fixtures, telecommunications
equipment and shall obtain all required governmental permits and pay all
governmental fees and charges associated with such work. Subtenant shall
indemnify, defend and hold Sublandlord and Master Landlord and all Sublandlord’s
employees, successors and/or assigns (collectively, the “Indemnitees”) harmless
from and against any and all costs, demands, claims, liabilities, violations,
losses or damages which any of the Indemnitees, individually or collectively,
may at any time hereafter suffer or sustain arising or in any way related to
Subtenant’s accessing and entering the Premises and carrying out installation of
furniture, fixtures, telecommunications equipment or improvements in, on or to
the Premises prior to the Commencement Date of this Sublease.

 

3.                                      TERM

 

3.1                               Subject to the Master Landlord’s consent to
this Sublease, the Term shall commence on the Commencement Date which shall be
the later of (i) the Estimated Commencement Date, or (ii) forty five (45) days
following the date Sublandlord

 

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delivers possession of the Premises to Subtenant; provided, however, Subtenant
agrees that Subtenant shall be subject to all of the terms and conditions of
this Sublease, other than the obligation to pay Base Rent to Sublandlord,
(including, without limitation all of Subtenant’s insurance obligations
contained herein) immediately upon delivery of the Premises by Sublandlord.

 

3.2                               If for any reason Sublandlord cannot deliver
possession of the Premises to Subtenant by the Estimated Commencement Date,
Sublandlord shall not be liable therefor, nor shall such failure affect the
validity of this Sublease or the obligations of Subtenant hereunder (except as
provided below), or extend the Expiration Date, but in such case the
Commencement Date will not occur and Subtenant shall not be obligated to pay
Rent until possession of the Premises is tendered to Subtenant, provided that
either party may cancel this Sublease if Sublandlord using “good faith” does not
deliver possession of the Premises (in the required condition) to Subtenant on
or before November 1, 2005.

 

3.3                               The Term shall end on the Expiration Date.
However, the Sublease may be terminated prior to the Expiration Date if the
Master Lease is terminated for any cause whatsoever (and Master Landlord does
not require Subtenant to attorn) and the Term shall end on such earlier
termination, provided Sublandlord indemnifies Subtenant for early termination of
this Sublease due to Sublandlord’s negligent acts or omissions with respect to
the Master Lease. Provided Subtenant shall intend to remain in the Premises
under a direct lease with the Master Landlord to commence after the Sublease
expiration date, then Sublandlord shall waive its right to extend the Master
Lease provided Subtenant shall have executed a new lease with Master Landlord
contingent upon written notice as described below and Subtenant shall have the
right on not less than forty five (45) days written notice prior to the
Expiration Date set forth on the face of this Sublease in Section 1.6 to adjust
the date of surrender of the Premises to Sublandlord to June 30, 2009 upon all
of the terms and conditions of this Sublease including the requirement to pay
rent.

 

3.4                               In the event that Master Landlord’s consent to
Sublease is not forthcoming by the date that is forty five (45) days after the
delivery of and receipt by Master Landlord of the executed Sublease to Master
Landlord together with all further information reasonably requested by Master
Landlord then, Subtenant or Sublandlord shall have the right to terminate this
Sublease upon written notice to the other party and Sublandlord and Subtenant
shall have no further rights or obligations under this Sublease, unless
specifically reserved in the Sublease.

 

4.                                      RENT

 

4.1                               The consideration payable by Subtenant for the
Premises shall consist of the Base Rent under Section 4.2, the Additional Rent
under Section 4.4 and the Other Charges under Section 4.5. Base Rent, Additional
Rent and Other Charges are collectively referred to as “Rent.” Subtenant’s
covenant to pay Rent shall be independent of every other covenant in this
Sublease.

 

4.2                               The Base Rent shall be paid throughout the
term as follows:

 

Months 1-6                                 $0.00

 

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Months 7-12                          $46,593.60 per month ($9.60 per sq. ft per
annum)

 

Months 13-24                   $47,991.41 per month ($9.88 per sq. ft per annum)

 

Months 25-36                   $49,431.15 per month ($10.18 per sq. ft per
annum)

 

Months 37-46                   $50,913.21 per month ($10.49 per sq. ft per
annum)

 

4.3                               Beginning on the Commencement Date and
continuing thereafter on the first day of each month during the Term, Subtenant
shall pay to Sublandlord in advance, and without notice, demand, deduction or
offset, the monthly Base Rent specified in Section 4.2 above. Base Rent for any
partial month will be prorated, based on a thirty (30) day month. Subtenant
shall pay the first full month’s Rent for month seven (7) upon execution and
delivery to Sublandlord, and if the Commencement Date is not the first day of
the month, then Subtenant shall pay the prorated Rent for the first partial
month on the Commencement Date. During the first 6 months of the Sublease Term,
and thereafter, Subtenant shall pay to the Sublandlord the Additional Rent
(defined in Section 4.4 below) and the Other Charges (defined in Section 4.5
below).

 

4.4                               (a) Throughout the Term, Subtenant shall pay
to Sublandlord, as additional rent (“Additional Rent”) an amount equal to
Subtenant’s Share of the Pass Through Costs (defined below) in accordance with
this Section 4.3 and Section 4.4. “Pass Through Costs” means, without
limitation, the amounts paid by Sublandlord to reimburse Master Landlord for
taxes, insurance, operating expenses, common area maintenance charges,
management fees, amortized capital expenditures for required repairs or
improvements (as described in Master Lease Section 4.1.2), and/or other expenses
incurred by Master Landlord in connection with the Building or the Master
Landlord’s Project. For purposes of calculating Additional Rent, Sublandlord
shall be entitled to rely conclusively on Master Landlord’s determination of
estimated and actual Pass Through Costs, except that Subtenant shall have the
same right at its sole cost and expense to require Sublandlord upon reasonable
prior written notice to audit and challenge the determination of Master
Landlord’s determination of Expenses (as defined in Master Lease Section 4.1.2)
as Sublandlord has under Section 4.3 of the Master Lease; provided, however, it
shall be deemed reasonable for Sublandlord to require Subtenant to advance to
Sublandlord prior to Sublandlord commencing upon such audit and challenge of
Expense determination Sublandlord’s reasonable estimate of the costs and
expenses associated therewith. The Sublandlord and Subtenant agree that within
thirty (30) days of the expiration of such audit and challenge of the Expense
determination to reconcile any costs and expenses associated therewith and to
either reimburse Sublandlord accordingly. A Default under the terms of this
section 4.4(a) shall be deemed to be a breach of the terms and conditions of
this Sublease. Any unreimbursed sums due Sublandlord shall be deemed “Rent”
under this Sublease and all of Sublandlord’s rights and remedies to recover such
delinquent amount shall be in accordance with the terms and conditions of this
Sublease, including, without limitation, the right to apply the Security Deposit
(as described in Sections 1.12 and 16.2) against the same.

 

(b) On the first day of each calendar month during each Sublease Year, Subtenant
shall pay to Sublandlord one-twelfth (1/12th) of Subtenant’s Share of the Pass
Through Costs, as estimated in Sublandlord’s Estimate, which Sublandlord’s

 

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Estimate shall be the amount stated in Master Landlord’s estimate of such costs
and expenses as demanded of Sublandlord by Master Landlord. On or about the
first day of March of the following Sublease Year after the first Sublease Year
during the Term, or as soon thereafter as is reasonably practicable, Sublandlord
shall furnish Subtenant with a statement of the actual Pass Through Costs for
the preceding Sublease Year, reconciling the actual amounts paid pursuant to
Sublandlord’s Estimate and the actual amounts payable hereunder (“Actual Pass
Through Cost Statement”). Within thirty (30) days after Sublandlord’s giving of
such Actual Pass Through Cost Statement, Subtenant shall make a lump sum payment
to Sublandlord in the amount, if any, by which the actual Subtenant’s Share of
Pass Through Costs for such preceding Sublease Year as shown on the Actual Pass
Through Cost Statement, exceeds the aggregate of the monthly installments of the
estimated Subtenant’s Share of Pass Through Costs paid during such preceding
Sublease Year. If Subtenant’s Share of Pass Through Costs, as shown on
Sublandlord’s Actual Pass Through Cost Statement, is less than the aggregate of
the monthly installments of Subtenant’s Share of Pass Through Costs actually
paid by Subtenant during such preceding Sublease Year, then Sublandlord shall
apply such amount to the next accruing monthly installment(s) of Subtenant’s
Share of Pass Through Costs due from Subtenant until fully credited to
Subtenant; provided, however, that if no Rent is due, then Sublandlord shall
refund such amounts to Subtenant within a reasonable period of time. If the Term
ends on a date other than the last day of December, the actual Pass Through
Costs for the year in which the Expiration Date occurs, Subtenant’s Share of
Pass Through Costs for such year shall be represented by a fraction, the
numerator of which shall be the number of days during such fractional year
falling within the Term, and the denominator of which is 365. The provisions of
this Section 4.3 shall survive the Expiration Date or any sooner termination
provided for in this Sublease.

 

4.5                               Throughout the Term, Subtenant also shall pay
within five (5) business days after written notice from Sublandlord any other
fees, charges or other sums due under the Master Lease (collectively, “Other
Charges”). To the extent that utility consumption costs, including without
limitation, electric and other charges incurred in connection with lighting, and
providing electrical power and heating, ventilating and air conditioning service
to the Premises are separately metered and billed directly to Subtenant,
Subtenant shall be responsible for paying all such costs before delinquency as
Other Charges. To the extent such utilities are not separately metered to the
Premises and billed directly to Subtenant separately from Additional Rent,
Subtenant shall pay its share of such costs in an amount equal to Subtenant’s
share of Master Premises as Other Charges. Other Charges also include, without
limitation: (a) excess or after hours electrical service or heating, ventilating
or air conditioning service supplied to the Premises; (c) services or benefits
supplied to the Premises at Subtenant’s request (or with Subtenant’s
acquiescence) for which Master Landlord reserves any right to impose a fee or
charge separate from the Master Lease Pass Through Costs; (d) to reimburse
Master Landlord for taxes on personal property, equipment and fixtures located
in or about the Premises during the Term; (e) to pay for any damage to the
Building resulting from the act or omission of Subtenant or Subtenant’s agents,
employees or invitees; and (f) damages recoverable due to a default under the
Master Lease which is the result of any Default or failure of performance by
Subtenant under this Sublease.

 

4.6                               All Rent shall be paid to Sublandlord, or to
such other person or such other place as Sublandlord may from time to time
designate in writing. If any Rent is not paid

 

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when due, Subtenant shall pay, at Sublandlord’s discretion, a late charge to
Sublandlord equal to the greater of (a) $50 or (b) three percent (3%) of the
delinquent amount and all interest and late charges as Sublandlord would sustain
under the Master Lease to the extent caused by the Default of Subtenant in the
case of delinquent payment of any rent due under the Master Lease. Neither
demand for, nor receipt of, any late charge called for under this Sublease shall
(i) operate to waive any default by Subtenant or provide a substitute for
Subtenant’s full and timely performance of the obligation to pay Rent, or
(ii) limit the exercise of any other right or remedy Sublandlord may have under
this Sublease in case of Subtenant’s Default.

 

4.7                             In the event of any casualty or condemnation
affecting the Premises, Rent payable by Subtenant shall be proportionately
abated, but only as to the portion of the Premises damaged or taken; and only to
the extent that any amounts payable by Sublandlord under the Master Lease (the
“Master Lease Rent”) is abated or reduced with respect to the Premises.
Subtenant shall have no right to terminate the Sublease in connection with any
casualty or condemnation except to the extent that the Master Lease also is
terminated as to the Premises or any material portion thereof.

 

5.                                      POSSESSION AND USE

 

5.1                               Sublandlord shall deliver the Premises to
Subtenant with all Premises, HVAC, electrical and plumbing systems serving the
Premises in operational and good condition and repair as of the Sublease
Commencement Date. In addition, Sublandlord shall deliver the Premises to
Subtenant in a broom clean condition, and Sublandlord shall patch any holes,
replace any damage ceiling tiles and repaint where necessary prior to Sublease
Commencement Date. Except as otherwise expressly provided herein, Sublandlord
subleases the Premises to Subtenant strictly in their present “as-is” and “with
all faults” condition; provided, however, nothing contained in this Section 5.1
shall limit Subtenant’s rights under this Sublease to require Sublandlord to
enforce the terms of the Master Lease (in accordance with the terms and
conditions stated herein) in the respect of any failure by Master Landlord to
maintain and repair the Building as required pursuant to the terms of the Master
Lease. Subtenant shall have thirty (30) days after delivery of the Premises to
provide Sublandlord notice of any Premises condition not conforming to
Sublandlords required delivery condition and provided in the reasonable opinion
of Sublandlord the same shall be a Sublandlord obligation. The Sublandlord shall
repair the non-conforming Premises condition within a commercially reasonable
time. In all other respects the Subtenant, by acceptance of possession of the
Premises, conclusively acknowledges the Premises to be in good working order and
repair and in a tenantable condition.

 

5.2                               The Premises shall be used and occupied solely
for Subtenant’s Use as specified in the Basic Sublease Provisions. Sublandlord
agrees to use commercially reasonable efforts to seek from the Master Landlord a
permitted change of use from the Master Lease use, as specified therein, to give
effect to the use specified in Section 1.10 above, and Subtenant shall have the
right to terminate this Sublease in accordance with Section 3.4 if such approval
is not obtained in writing within forty five (45) days after an executed copy of
this Sublease is received by Master Landlord. Subtenant shall not use or suffer
or permit the Premises to be used for any other purpose except with Master
Landlord’s and Sublandlord’s discretionary consent.

 

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6.                                      SUBTENANT’S UTILITY, MAINTENANCE AND
REPAIR OBLIGATIONS

 

6.1                               Subtenant shall be responsible for and shall
pay before delinquency for all maintenance, repairs and replacements to the
Premises and its equipment, to the extent Sublandlord is obligated to perform
the same with respect to the Master Premises under the Master Lease.

 

6.2                               Subtenant shall comply with all laws and
ordinances, and all orders, rules and regulations of all governmental
authorities and of all insurance bodies and their fire prevention engineers at
any time in force, applicable to the Premises or to Subtenant’s particular use
or manner of use thereof, to the extent Sublandlord is obligated to perform the
same with respect to the Master Premises under the Master Lease.

 

6.3                               Subtenant shall protect, indemnify, defend and
hold Sublandlord harmless from all liability, loss, cost, damage, liens, costs
or expenses imposed on Sublandlord or which Sublandlord may sustain or incur
from Subtenant’s failure to perform its obligations under this Article 6.

 

7.                                      SUBTENANT’S INSURANCE AND INDEMNITY

 

7.1                               Throughout the Term, Subtenant shall procure
and maintain, at its own cost and expense, such commercial general liability
insurance as is required to be carried by Sublandlord under the Master Lease,
naming Sublandlord and Master Landlord, as additional insured in the manner
required therein, and such property insurance as is required to be carried by
Sublandlord under the Master Lease to the extent such property insurance
pertains to the Premises. If the Master Lease requires Sublandlord to insure
leasehold improvements or alterations, then Subtenant shall insure such
leasehold improvements which are located in the Premises, as well as alterations
in the Premises made by Subtenant. Subtenant shall furnish to Sublandlord a
certificate of Subtenant’s insurance required under this Section 7.1 prior to
the Commencement Date.

 

7.2                               Subtenant waives claims against Sublandlord
for damage to property owned by Subtenant where such damage is covered under any
policy of property damage insurance maintained (or required by this Sublease to
be maintained) by Subtenant. Sublandlord waives claims against Subtenant for
damage to property owned by Sublandlord where such damage is covered under any
policy of property damage insurance maintained (or required by the Master Lease
or this Sublease to be maintained) by Sublandlord; provided, however, all of
Sublandlord’s FF&E (defined in Section 19 below) shall be the responsibility of
Subtenant during the Term of this Sublease and as such Sublandlord’s waiver
provided herein shall not apply to the same, it being acknowledged that
Subtenant shall be bound to the terms of Section 19 and shall replace any
damaged or destroyed FF&E at Subtenant’s sole cost and expense. Subtenant hereby
waives claims against Master Landlord and Sublandlord for death, injury, loss or
damage of every kind and nature, if and to the extent that Sublandlord waives or
releases such claims against Master Landlord under the Master Lease. Subtenant
agrees to obtain, for the benefit of Master Landlord and Sublandlord, such
waivers of subrogation rights from its insurer as are required of Sublandlord
under the Master Lease.

 

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7.3                               Subtenant agrees to protect, indemnify, defend
and hold Sublandlord harmless from all losses, damages, liabilities and expenses
which Sublandlord may incur, or for which Sublandlord may be liable to Master
Landlord, arising from the acts or omissions of Subtenant, or any events
occurring in or about the Premises during the Term, which are the subject matter
of any indemnity or hold harmless of Sublandlord to Master Landlord under the
Master Lease. Subtenant’s obligations to protect, indemnify, defend and hold
harmless Sublandlord under this Section 7.3 are in no way conditioned upon
either (a) Subtenant’s acts or omissions being a cause of any underlying claim,
demand, action, loss or damage, or (b) Sublandlord being free of negligence or
wrongful conduct in connection therewith.

 

8.                                      ASSIGNMENT OR SUBLETTING

 

8.1                               Except with the prior written consent of
Master Landlord (subject to provisions of 9.1 and 9.5 of the Master Lease) and
Sublandlord, which consent shall not be withheld or delayed if Master Landlord
consents, Subtenant shall not (a) assign, convey or mortgage this Sublease or
any interest under it; (b) allow any transfer thereof or any lien upon
Subtenant’s interest by operation of law; (c) further sublet the Premises or any
part thereof or (d) permit the occupancy of the Premises or any part thereof by
anyone other than Subtenant. Master Landlord’s consent to any assignment or
Sublease of this Sublease shall be in accordance with the Master Lease
Sublandlord shall use reasonable efforts to obtain the consent of Master
Landlord. All costs of obtaining Master Landlord’s and Sublandlord’s consent
(including legal fees) shall be borne by Subtenant. Sublandlord shall not be
required to consent to any assignment or Sublease by Subtenant where Master
Landlord withholds its consent.

 

8.2                               No permitted assignment shall be effective and
no permitted sublease shall commence unless and until any Default by Subtenant
hereunder has been cured. No permitted assignment or subletting shall relieve
Subtenant from Subtenant’s obligations and agreements under this Sublease and
Subtenant shall continue to be liable as a principal and not as a guarantor or
surety, to the same extent as though no assignment or subletting had been made.
Consent to any assignment or sublease shall not be deemed to release Subtenant
from its requirement to obtain consent for any future assignment or sublease.

 

8.3                               “Bonus Rent” shall mean the excess of (i) all
consideration received by Subtenant from an assignment of this Sublease or a
sublease of all or any portion of the Premises over (ii) the Base Rent and
Additional Rent payable by Subtenant to Sublandlord under this Sublease
(prorated, in the case of a sublease of less than all of the Premises, to
reflect obligations allocable to only the portion of the Premises so sublet). In
determining the total consideration under the foregoing clause (i), Subtenant
shall be entitled to exclude therefrom reasonable leasing commissions paid by
Subtenant to any unaffiliated third party, payments attributable to the
amortization of the cost of improvements Subtenant must make to the Premises at
its cost to ready same for the assignee or sublessee, and other reasonable,
out-of- pocket costs paid by Subtenant which are directly related to Subtenant’s
obtaining the assignment or sublease.

 

8.4                               Any Bonus Rent realized by Subtenant under any
sublease or assignment shall be divided and paid as follows; fifty percent (50%)
to Subtenant and fifty percent (50%) to Sublandlord.

 

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9.                                      ALTERATIONS

 

9.1                               Sublandlord hereby approves the plans for
alterations attached hereto as Exhibit F and agrees to use commercially
reasonable efforts to obtain Master Landlord’s consent thereto. Otherwise,
during the Term Subtenant shall not make any other alterations or improvements
in or additions or improvements to the Premises (“Alterations”) if to do so
would constitute a default under the Master Lease (without regard to any
requirement of notice or cure period). Sublandlord’s consent to such Alterations
shall not be withheld if Master Landlord consents to such Alterations.
Sublandlord shall use reasonable efforts to obtain the consent of Master
Landlord. If Alterations by Subtenant are consented to, Subtenant shall comply
with all of the covenants of Sublandlord contained in the Master Lease
pertaining to the performance of such Alterations. In addition, Subtenant shall
indemnify, defend and hold harmless Sublandlord against liability, loss, cost,
damage, liens and expense imposed on Sublandlord arising out of the performance
of Alterations by Subtenant and/or failure to remove the same at the end of the
Term if Sublandlord is required to surrender the Premises to Master Landlord
with all such alterations removed and the Premises restored to the condition as
of the date of mutual execution of this Sublease.

 

9.2                               Any consented to or actual Alterations shall
be made at Subtenant’s sole cost and expense, including any cost to comply with
applicable laws and regulations and any management or supervision fee charged by
Master Landlord and shall if Master Landlord at the time of consent does not
indicate otherwise in writing to Sublandlord and Subtenant be removed by
Subtenant prior to the end of the Term at Subtenant’s sole cost and expense. The
cost of such removal shall be paid by Subtenant, including restoration of the
Premises to the condition as of the date of mutual execution of this Sublease
and damage due to any part thereof occasioned by such removal.

 

10.                               CASUALTY OR EMINENT DOMAIN

 

10.1                        In the event of a fire or other casualty affecting
the Master Landlord’s Project, the Building or the Premises, or of a taking of
all or a part of the Master Landlord’s Project, the Building or the Premises
under the power of eminent domain, Sublandlord shall be entitled to exercise any
right it may have to terminate the Master Lease without first obtaining the
consent or approval of Subtenant.

 

10.2                        If the Master Lease imposes on Sublandlord the
obligation to repair or restore leasehold improvements or alterations within the
Master Premises, Subtenant shall be responsible for repair or restoration of
leasehold improvements or alterations within the Premises,

 

11.                               SURRENDER

 

11.1                        On the Expiration Date, or upon the earlier
termination of the Sublease or of Subtenant’s right to possession of the
Premises, Subtenant will at once surrender and deliver up the Premises, together
with all improvements thereon (not required to be removed by Sublandlord upon
notice), to Sublandlord in good condition and repair, reasonable wear and tear
excepted; conditions existing because of Subtenant’s failure to perform
maintenance, repairs or replacements as required of Subtenant under this
Sublease shall not be deemed “reasonable wear and tear.”

 

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Said improvements shall include all plumbing, lighting, electrical, heating,
cooling and ventilating fixtures and equipment. Subtenant shall surrender to
Sublandlord all keys to the Premises and make known to Sublandlord the
combination of all combination locks which Subtenant is permitted to leave on
the Premises.

 

11.2                        If Subtenant performs any Alterations, Subtenant
shall be obligated to remove such Alterations and restore the Premises to the
condition existing on the Execution Date if the Master Lease requires such
removal and restoration by Sublandlord. If the Master Lease requires Sublandlord
to remove the same upon surrender of the Premises space to Master Landlord then
Subtenant shall remove all alterations and improvements as described more fully
in section 9.1 above and Exhibit F attached hereto. All other Alterations in or
upon the Premises made by Subtenant shall become a part of and shall remain upon
the Premises upon such termination without compensation, allowance or credit to
Subtenant. Said right shall be exercisable by Sublandlord’s giving written
notice thereof to Subtenant not less than five (5) days prior to such Expiration
Date or more than a reasonable period of time after any earlier termination.
Subtenant shall repair any damage occasioned by such removal or restoration. If
Sublandlord or Master Landlord requires removal of any Alteration made by
Subtenant, or a portion thereof, and Subtenant does not make such removal in
accordance with this Section, Sublandlord may remove the same (and repair any
damage occasioned thereby), and dispose thereof, or at its election, warehouse
the same. Subtenant shall pay the costs of such removal, repair and warehousing
on demand.

 

11.3                        Subtenant shall not be required to remove any
alterations performed by Sublandlord prior to the Execution Date or to restore
the Premises to their condition prior to Sublandlord’s making of such
alterations. If Sublandlord is required under the Master Lease to remove any
alterations performed by Sublandlord prior to the Execution Date, Subtenant
shall permit Sublandlord to enter the Premises for a reasonable period of time,
subject to such conditions as Subtenant may reasonably impose, for the purpose
of removing such alterations and restoring the Premises as required by the
Master Lease. However, if either Sublandlord or Subtenant reasonably determines
that Sublandlord’s entry prior to the Expiration Date is not compatible with
Subtenant’s continued use of the Premises, then either party may terminate this
Lease upon not less than ten (10) days written notice to the other, with such
termination to be effective on the date of Sublandlord’s re-entry into the
Premises for the purpose of removing such alterations and restoring the
Premises.

 

11.4                        On the Expiration Date, or upon the earlier
termination of the Sublease or of Subtenant’s right to possession of the
Premises, Subtenant shall remove Subtenant’s articles of personal property,
fixtures and equipment incident to Subtenant’s business (“Subtenant’s
Property”), including the FF&E referenced in Section 19 hereof only if purchased
by Subtenant; provided, however that Subtenant shall at Subtenant’s sole cost
and expense repair any injury or damage to the Premises which may result from
such removal, and shall restore the Premises to the same condition as prior to
the installation thereof. If Subtenant does not remove Subtenant’s Property from
the Premises on or before the Expiration Date or the earlier termination of this
Sublease, Sublandlord may, at its option, remove the same (and repair any damage
occasioned thereby and restore the Premises as aforesaid) and dispose thereof or
warehouse the same, and Subtenant shall pay the cost of such removal, repair,
restoration or warehousing to Sublandlord on demand, or Sublandlord may treat
said Subtenant’s Property as having been conveyed to

 

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Sublandlord with this Sublease acting as a bill of sale therefor, without
further payment or credit by Sublandlord to Subtenant.

 

12.                               HOLDING OVER.

 

12.1                        Subtenant has no right to occupy the Premises or any
portion thereof after the Expiration Date or after the termination of this
Sublease or of Subtenant’s right to possession hereunder. In the event Subtenant
or any party claiming by, through or under Subtenant holds over, Sublandlord may
exercise any and all remedies available to it at law or in equity to recover
possession of the Premises, and to recover damages, including without
limitation, damages payable by Sublandlord to Master Landlord by reason of such
holdover.

 

12.2                        Without limiting Sublandlord’s rights under
Section 12.1, for each and every month or partial month that Subtenant or any
party claiming by, through or under Subtenant remains in occupancy of all or any
portion of the Premises after the Expiration Date or after the earlier
termination of this Sublease or of Subtenant’s right to possession, Subtenant
shall pay, as minimum damages and not as a penalty, monthly rental at a rate
equal to the rate of monthly holdover rent payable by Sublandlord for the
Premises pursuant to the Master Lease (and all Sublandlord’s legal fees
associated with any holding over discussions, negotiations, disputes,
settlements or agreements, if any). The acceptance by Sublandlord of any lesser
sum shall be construed as payment on account and not in satisfaction of damages
for such holding over.

 

13.                               ENCUMBERING TITLE

 

13.1                        Subtenant shall not do any act which in any way
encumbers the title of Master Landlord in and to the Building or Master
Landlord’s Project nor shall the interest or estate of Master Landlord or
Sublandlord be in any way subject to any claim by way of lien or encumbrance,
whether by operation of law or by virtue of any express or implied contract by
Subtenant, or by reason of any other act or omission of Subtenant. Any claim to,
or lien upon, the Premises, or the Building, or Master Landlord’s Project
arising from any act or omission of Subtenant shall accrue only against the
subleasehold estate of Subtenant and shall be subject and subordinate to the
paramount title and rights of Master Landlord in and to the Building and the
Master Landlord’s Project and the interest of Sublandlord in the Master Lease
Premises.

 

13.2                        Without limiting the generality of Section 13.1,
Subtenant shall not permit the Premises, or the Building, or the Master
Landlord’s Project to become subject to any mechanics’, laborers’ or
materialmen’s lien on account of labor or material furnished to Subtenant or
claimed to have been furnished to Subtenant in connection with work of any
character performed or claimed to have been performed on the Premises by, or at
the direction or sufferance of, Subtenant.

 

14.                               SUBTENANT’S DEFAULT

 

14.1                        Any one or more of following events shall be
considered a “Default” by Subtenant, as such term is used in this Sublease:

 

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(a)                                 Subtenant shall be adjudged an involuntary
bankrupt, or a decree or order approving, as properly filed, a petition or
answer filed against Subtenant asking reorganization of Subtenant under the
Federal bankruptcy laws as now or hereafter amended, or under the laws of any
State, shall be entered; or

 

(b)                                 Subtenant shall file, or admit the
jurisdiction of the court and the material allegations contained in, any
petition in bankruptcy, or any petition pursuant or purporting to be pursuant to
the Federal Bankruptcy laws now or hereafter amended, or Subtenant shall
institute any proceedings for relief of Subtenant under any bankruptcy or
insolvency laws or any laws relating to the relief of debtors, readjustment of
indebtedness, re-organization, arrangements, composition or extension; or

 

(c)                                  Subtenant shall make any assignment for the
benefit of creditors or shall apply for or consent to the appointment of a
receiver for Subtenant or any of the property of Subtenant; or

 

(d)                                 Subtenant shall admit in writing its
inability to pay its debts as they become due; or

 

(e)                                  The Premises are levied on by any revenue
officer or similar officer; or

 

(f)                                   A decree or order appointing a receiver of
the property of Subtenant shall be made; or

 

(g)                                  Subtenant shall assign this Sublease or
further sublet the Premises other than in strict accordance with Article 8; or

 

(h)                                 Subtenant fails to make any payment of Rent
required to be made by Subtenant after three (3) days of receipt by Subtenant of
written notice that Sublandlord has not received such payment due; or

 

(i)                                     Subtenant fails to secure insurance or
to provide proper evidence of insurance as set forth in Article 7 of this
Sublease or fails to keep the Premises, or the Building, or the Master
Landlord’s Project free of lien claims as set forth in Article 13 of this
Sublease; or

 

(j)                                    Subtenant, by its act or omission, causes
an event or condition under the Master Lease which either is a default
thereunder or, subject only to the delivery of any required notice or passage of
any cure or grace period, would constitute a default thereunder; or

 

(k)                                 Subtenant fails to fulfill, keep, observe or
perform any of the other covenants and obligations herein contained to be
fulfilled, kept, observed and performed by Subtenant, and such failure continues
for more than fifteen (15) days after notice thereof to Subtenant.

 

14.2                      Upon the occurrence of any one or more Default(s),
Sublandlord may exercise any remedy against Subtenant which Master Landlord may
exercise for default by Sublandlord under the Master Lease. Without limiting the
generality of the foregoing, Sublandlord may exercise the damage remedies
available under any

 

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statute and the California Civil Code Sections 1951.2 and 1951.4 which provides
that a lessor may continue a lease in effect and recover damages as they become
due.

 

15.                               PROVISIONS REGARDING MASTER LEASE

 

15.1                        This Sublease and all rights of the parties
hereunder, are subject and subordinate to all of the terms, covenants and
conditions of the Master Lease. In the event of any conflict between the terms
of this Sublease and the Master Lease, the terms of the Master Lease shall
control. Each party agrees that it will not, by its act or omission to act,
cause a default under the Master Lease. In furtherance of the foregoing, the
parties hereby acknowledge, each to the other, that it is not practical in this
Sublease to enumerate all of the rights and obligations of the various parties
under the Master Lease and specifically to allocate those rights and obligations
in this Sublease. Accordingly, in order to afford to Subtenant the benefits of
this Sublease and of those provisions of the Master Lease which by their nature
are intended to benefit the party in possession of the Premises, and in order to
protect Sublandlord against a Default by Subtenant which might cause a default
by Sublandlord under the Master Lease, Sublandlord and Subtenant covenant and
agree as set forth in Sections 15.2 through 15.9 below.

 

15.2                        Provided Subtenant shall timely pay all Rent as and
when due under this Sublease, Sublandlord shall pay, as and when due, all Master
Lease Rent.

 

15.3                        Except as otherwise expressly provided in this
Sublease, Sublandlord shall perform its covenants and obligations under the
Master Lease which do not require for their performance possession of the
Premises and which are not otherwise to be performed hereunder by Subtenant on
behalf of Sublandlord. For example, Sublandlord shall perform its covenants and
obligations as tenant under the Master Lease which pertain to the remainder of
the Master Premises.

 

15.4                        Except as otherwise expressly provided in this
Sublease, Subtenant shall perform all affirmative covenants and shall refrain
from performing any act which is prohibited by the negative covenants of the
Master Lease, where the obligation to perform or refrain from performing is by
its nature imposed upon the party in possession of the Premises. If practicable,
Subtenant shall perform affirmative covenants which are also covenants of
Sublandlord under the Master Lease at least five (5) days prior to the date when
Sublandlord’s performance is required under the Master Lease. Sublandlord shall
have the right to enter the Premises to cure any Default by Subtenant for its
failure to act in accordance with this Section 15.4.

 

15.5                        Except as otherwise expressly provided in this
Sublease, Sublandlord shall not agree to an amendment to the Master Lease which
materially adversely affects Subtenant’s occupancy of the Premises, unless
Sublandlord shall first obtain Subtenant’s prior written approval to such
amendment. However, it is expressly agreed that: (a) the foregoing shall not
prevent Sublandlord from entering into any agreement or amendment with Master
Landlord which terminates the Master Lease with respect to the Premises in lieu
of Master Landlord granting its consent to this Sublease; (b) if without the
fault of Sublandlord the Master Lease should terminate prior to the Expiration
Date, Sublandlord shall have no liability to Subtenant; and (c) to the extent
the Master Lease grants Sublandlord any discretionary right to terminate the
Master Lease, whether due to casualty, condemnation, or otherwise,

 

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Sublandlord shall be entitled to exercise or not exercise such right in its sole
and absolute discretion, provided it shall give Subtenant reasonable prior
notice and a right to elect to keep the Master Lease and the Sublease in effect;
provided Subtenant shall meet all costs associated with such election including
all of Sublandlord’s costs and expenses. Subject to the limitations expressed
above or elsewhere in this Sublease, so long as Subtenant is not in Default,
Subtenant’s quiet and peaceable enjoyment of the Premises shall not be disturbed
or interfered with by Sublandlord, or by any person claiming by, through, or
under Sublandlord.

 

15.6                        Sublandlord grants to Subtenant the right, so long
as Subtenant is not in Default, to receive all of the services and benefits with
respect to the Premises which are to be provided by Master Landlord under the
Master Lease. Sublandlord shall have no duty to perform any obligations of
Master Landlord which are, by their nature, the obligation of an owner or
manager of real property. By way of illustration and not limitation, Sublandlord
shall not be required to provide any services (including janitorial, utilities,
HVAC service, security, or use of common areas or parking facilities) or to
perform any maintenance or repairs which Master Landlord is or may be required
to provide or perform under the Master Lease. Sublandlord shall have no
responsibility for or be liable to Subtenant for any default, failure or delay
on the part of Master Landlord in the performance or observance by Master
Landlord of any of its obligations under the Master Lease, nor shall such
default by Master Landlord affect this Sublease or waive or defer the
performance of any of Subtenant’s obligations under this Sublease, including
without limitation the obligation to pay Rent; and Subtenant hereby expressly
waives the provisions of any statute, ordinance or judicial decision, now or
hereafter in effect, which would give Subtenant the right to make repairs at the
expense of Sublandlord, or to claim any actual or constructive eviction by
virtue of any interruption in access, services or utilities to, or any failure
to make repairs in or to, the Premises, or the Building, or the Master
Landlord’s Project. Notwithstanding the foregoing, the parties do contemplate
that Master Landlord will, in fact, perform its obligations under the Master
Lease and in the event of any default or failure of such performance by Master
Landlord, Sublandlord agrees that it will, upon notice from Subtenant, make
demand upon Master Landlord to perform its obligations under the Master Lease
and, provided that Subtenant specifically agrees to pay all costs and expenses
of Sublandlord and provides Sublandlord with security reasonably satisfactory to
Sublandlord to pay such costs and expenses, Sublandlord will take appropriate
legal action to enforce the Master Lease.

 

15.7                        Any non-liability, release, indemnity or hold
harmless provision in the Master Lease for the benefit of Master Landlord shall
be deemed to apply under this Sublease and inure to the benefit of both
Sublandlord and Master Landlord.

 

15.8                        If Subtenant desires to take any action which
requires the consent of Master Landlord under the terms of the Master Lease,
then, notwithstanding anything to the contrary herein: (a) Sublandlord,
independently, shall have the same rights of approval or disapproval as Master
Landlord has under the Master Lease; (b) Subtenant shall not take any such
action until it obtains the consent of both Sublandlord (whose consent shall not
be unreasonably withheld) and Master Landlord; and (c) Subtenant shall request
that Sublandlord obtain Master Landlord’s consent on Subtenant’s behalf and
Sublandlord shall use commercially reasonable efforts to obtain such consent.
Subtenant shall pay all costs reasonably incurred by Sublandlord in seeking or
procuring Master Landlord’s consent, except Sublandlord

 

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shall pay all such costs of Master Landlord related to the creation and approval
of this Sublease. Any approval or consent required of Sublandlord conclusively
shall be deemed reasonably withheld if approval or consent also is required of
the Master Landlord, and Master Landlord fails to give Master Landlord’s
approval or consent.

 

15.9                        Subtenant shall protect, defend, indemnify and hold
harmless Sublandlord from any and all liability, damages, liabilities, claims
proceedings, actions, demands and costs (including reasonable attorneys’ fees)
resulting, directly or indirectly, from Subtenant’s Default under the Sublease.

 

15.10                 Sublandlord shall protect, defend, indemnify and hold
harmless Subtenant from any and all liability, damages, liabilities, claims
proceedings, actions, demands and costs (including reasonable attorneys’ fees)
resulting, directly or indirectly, from Sublandlord’s breach of this Sublease or
the Master Lease.

 

16.                               EXCLUDED PROVISIONS; INCORPORATION BY
REFERENCE

 

16.1                        Notwithstanding any other provision of this
Sublease, Subtenant shall not have any rights hereunder that are available only
to Sublandlord as expressly provided in the Master Lease. In addition, the
rights and duties of Sublandlord as Tenant under the Master Lease contained in
the following provisions of the Master Lease shall not be applicable to
Subtenant under this Sublease:

 

Sections 4.2, 4.3, 26.1, 26.2, 27;

 

Articles 2, 3, 5, 6, 9, 14, 15, 18, 29, 33, 39, 42, 43, 44;

 

Exhibit B

Exhibit C

Exhibit E

Exhibit F

 

16.2                        The following Paragraphs of the Master Lease are
incorporated herein by reference, with “Sublandlord” substituted for “Landlord,”
“Subtenant” substituted for “Tenant,” and “Sublease” substituted for “Lease”:

 

Sections 4.1.2, 4,1.3, 7.2, 7.3, 17.2

 

Articles 1, 8, 10, 11, 12, 19, 20, 25, 28, 31, 32, 34, 35, 45

 

17.                               MASTER LANDLORD’S CONSENT

 

17.1                        This Sublease and the obligations of the parties
hereunder are expressly conditioned upon Sublandlord’s obtaining prior written
consent hereto by Master Landlord in substantially the form provided in
Exhibit D attached hereto. Subtenant shall promptly deliver to Sublandlord any
information reasonably requested by Master Landlord (in connection with Master
Landlord’s approval of this Sublease) with respect to the nature and operation
of Subtenant’s business and/or the financial condition of Subtenant.

 

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17.2                      Sublandlord and Subtenant hereby agree, for the
benefit of Master Landlord, that this Sublease and Master Landlord’s consent
hereto shall not (a) create privity of contract between Master Landlord and
Subtenant; (b) be deemed to have amended the Master Lease in any regard (unless
Master Landlord shall have expressly agreed writing to such amendment); or
(c) be construed as a waiver of Master Landlord’s right to consent to any
assignment of the Master Lease by Sublandlord or any further subletting of the
Master Premises, or as a waiver of Master Landlord’s right to consent to any
assignment by Subtenant of this Sublease or any sub-subletting of the Premises
or any part thereof. Master Landlord’s consent shall, however, be deemed to
evidence Master Landlord’s agreement that Subtenant shall be entitled to waiver
of claims and of the right of subrogation for damage to Master Landlord’s
property if and to the extent that the Master Lease provides such waivers for
the benefit of Sublandlord.

 

18.                               NOTICES

 

18.1                        All notices which may or are required to be given by
either party to the other shall be in writing and shall be deemed given when
received or refused if personally delivered, or if sent by United States
registered or certified mail, postage prepaid, return receipt requested, or if
sent by a nationally recognized overnight commercial courier service providing
receipted delivery, in any such case (a) if to Subtenant, addressed to Subtenant
at the address specified in the Basic Sublease Provisions or at such other place
as Subtenant may from time to time designate by notice in writing to Sublandlord
(provided, however, if Subtenant has abandoned the Premises, any such notice may
be properly sent to Subtenant’s agent for service of process), or (b) if for
Sublandlord, addressed to Sublandlord at the address specified in the Basic
Sublease Provisions or at such other place as Sublandlord may from time to time
designate by notice in writing to Subtenant.  Each party agrees promptly to
deliver a copy of any notice, demand, request, consent or approval received from
Master Landlord.

 

18.2                        Any notice delivered by Sublandlord in connection
with, or as a precondition to, a Default by Subtenant shall be in lieu of and
not in addition to any notice to pay rent or notice to perform any covenant
required under law.

 

19.                               FURNITURE, FIXTURES AND EQUIPMENT

 

During the Term, Subtenant shall be allowed to use any or all of Sublandlord’s
furniture, trade fixtures and equipment (the “FF&E”) located in the Premises and
described more fully in Exhibit C to this Sublease. Sublandlord shall remove any
of Sublandlord’s personal property within the Premises not forming part of the
FF&E which Subtenant does not want to remain on the Premises provided Subtenant
shall have identified the same in writing to Sublandlord prior to the actual
Commencement Date, in which event the Sublandlord and Subtenant agree to
substitute a revised initialed Exhibit C schedule of FF&E in place of the
Exhibit C attached hereto as of the date of this Sublease. Subtenant’s right to
identify FF&E to be removed by Sublandlord shall be a one (1) time right. To the
extent that Subtenant identifies any other FF&E to be removed after Subtenant
has provided Sublandlord its written notice to remove such FF&E as described
above, Subtenant shall be, at Subtenant’s sole cost and expense, reimburse
Sublandlord the actual costs and expenses of such FF&E removal. Sublandlord
shall remove the FF&E requested in writing by Subtenant within a reasonable
period of time. Sublandlord shall incur no liability to Subtenant for any delay
in such removal. Sublandlord shall have no obligation to remove

 

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any FF&E from the Premises where any Subtenant written notice requesting removal
of FF&E is delivered and received by Subtenant after the Commencement Date. The
FF&E is made available for Subtenant’s use on an “as is” and “with all faults”
basis, and Sublandlord shall have no obligation to alter or repair the FF&E in
anticipation of Subtenant’s use, except that the data cabling shall be
operational and labeled as of the Commencement Date. No separate charge shall be
payable for Subtenant’s use of the FF&E, but such right of use shall end upon
early termination of this Sublease or Subtenant’s right to possession of the
Premises. During the Term, Subtenant shall (a) maintain the FF&E in good
condition and repair, (b) not remove the FF&E from the Premises except with
Sublandlord’s prior within consent, and (c) bear all risk of loss to the FF&E.
Six (6) months prior to the end of the term Subtenant shall have the option to
purchase the FF&E identified on Exhibit C as the same may have been substituted
by the parties upon the Expiration Date of this Sublease for $10.00 by giving
written notice to Sublandlord that Subtenant desires to purchase such FF&E. In
the absence of such written notice, Sublandlord shall have no obligation to sell
the FF&E to Subtenant. Upon valid exercise of Subtenant’s option to purchase the
FF&E, Sublandlord shall upon the Expiration Date execute a Bill of Sale in the
form attached hereto at Exhibit E to this Sublease. This option to purchase
shall be binding on both parties upon receipt of the written notice of exercise
by Sublandlord. Immediately following the Expiration Date and provided no
earlier termination of this Sublease has taken place, or Subtenant has validly
exercised Subtenant’s option to purchase the FF&E, Subtenant shall upon
Sublandlord’s request repair any damage to or replace any FF&E. Sublandlord
shall have no obligation to sell Subtenant any FF&E removed by Sublandlord, or
with Sublandlord’s consent by any other party.

 

20.                               MISCELLANEOUS

 

20.1                        Sublandlord, as the tenant under the Master Lease
identified in Section 1.3 above, represents and warrants to Subtenant that:
(a) Exhibit B to this Sublease is a full and complete copy of the Master Lease;
(b) the Master Lease, as of the Execution Date, is in full force and effect and
constitutes the entire agreement of Master Landlord and Sublandlord relating to
the lease of the Premises, and (c) to the current actual knowledge of
Sublandlord (without duty of inquiry), there exists no event of default under
the Master Lease and there exists no event which would constitute an event of
default under the Master Lease but for the giving of any required notice and
passage of any applicable grace or cure period; (d) the person or persons
executing this Sublease for Sublandlord are fully authorized to so act and no
other action is required to bind Sublandlord to this Sublease; and
(e) Sublandlord has the right and power to execute and deliver this Sublease and
to perform its obligations hereunder, subject only to Master Landlord’s consent.

 

20.2                        Subtenant represents and warrants to Sublandlord
that: (a) Subtenant is familiar with the provisions of the Master Lease insofar
as they pertain to the Premises and Subtenant’s use and occupation thereof under
this Sublease; (b) Subtenant has the right and power to execute and deliver this
Sublease and to perform its obligations hereunder; (c) the person or persons
executing this Sublease for Subtenant are fully authorized to so act and no
other action is required to bind Subtenant to this Sublease; and (d) Subtenant
is duly organized and in good standing in its state of formation and is
authorized to conduct business in the state where the Premises are located.

 

20.3                        Upon execution and delivery of this Sublease to
Sublandlord, Subtenant shall deposit with Sublandlord the Security Deposit in
the amount specified in the Basic

 

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Sublease Provisions, as security for the full and faithful performance of every
provision of this Sublease to be performed by Subtenant, it being expressly
understood and agreed that the Security Deposit is not an advance deposit for
Rent or a measure of Sublandlord’s damages in case of Subtenant’s default. If
Subtenant Defaults with respect to any provision of this Sublease, including but
not limited to the provisions relating to the payment of Rent, Sublandlord may
use, apply or retain all or any part of the Security Deposit for the payment of
any Rent or any other amount which Sublandlord may spend or become obligated to
spend by reason of Subtenant’s Default, to repair damages to any part of the
Premises or the Building, to clean the Premises or to compensate Sublandlord for
any other loss or damage which Sublandlord may suffer by reason of Subtenant’s
Default. Sublandlord shall not be required to keep the Security Deposit separate
from its general funds, and Subtenant shall not be entitled to interest on the
Security Deposit. If any portion of the Security Deposit is so used or applied,
Subtenant shall, within ten (10) days after written demand therefor, deposit
cash with Sublandlord in an amount sufficient to restore the Security Deposit to
the full amount required hereunder, and Subtenant’s failure to do so shall be a
material breach of this Lease. If Subtenant shall fully and faithfully perform
every provision of this Sublease to be performed by it, the Security Deposit or
any balance thereof shall be returned to Subtenant within three weeks of the
Expiration Date or such earlier termination of this Sublease.

 

20.4                        Subtenant agrees to comply with all rules and
regulations that Master Landlord has made or may hereafter from time to time
make for the Building and the “Project”. Sublandlord shall not be liable in any
way for damage caused by the non-observance by any of the other tenants of such
similar covenants in their leases or of such rules and regulations.

 

20.5                        Each party warrants to the other that it has had no
dealings with any broker or agent in connection with this Sublease, except those
Brokers specified in the Basic Sublease Provisions. Each party covenants to
protect, defend, indemnify and hold harmless the other party from and against
any and all costs (including reasonable attorneys’ fees), expense or liability
for any compensation, commission and charges claimed by any broker or other
agent, other than the Brokers, with respect to this Sublease or the negotiation
thereof on behalf of such party.

 

20.6                        Sublandlord shall not be deemed in default with
respect to any of the terms, covenants and conditions of this Sublease on
Sublandlord’s part to be performed, if Sublandlord’s failure to timely perform
the same is due in whole or in part to any strike, lockout, labor trouble
(whether legal or illegal), civil disorder, failure of power, restrictive
governmental laws and regulations, riots, insurrections, war, shortages
accidents, casualties, acts of God, acts caused directly by Subtenant or
Subtenant’s agents, employees and invitees or any other cause beyond that
reasonable control of Sublandlord, except that this force majeure provision
shall not apply to Subtenant’s right to terminate under Section 3 for late
delivery of the Premises.

 

20.7                        Subtenant shall have the right at no additional
charge to use four (4) non-reserved parking spaces per 1000 rentable square feet
available to Sublandlord under the terms of the Master Lease,

 

20.8                        This Sublease shall be subject to the laws of the
State of California.

 

19

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20.9                        Sublandlord shall use commercially reasonable
efforts to seek the Master Landlord’s consent to building signage, building
entrance signage and signage on one ground mounted monument sign for Subtenant
in accordance with Article 41 of the Master Lease; provided, however, the cost
of the same, instillation, removal at the end of the Term and repair to any
damage occasioned by such removal and refinishing of surfaces to match
surrounding surfaces shall be at Subtenant’s sole cost and expense.

 

20.10                 Without any obligation on Sublandlord or Master Landlord
to provide the same, Sublandlord shall use commercially reasonable efforts to
seek a non-disturbance right for Subtenant from Master Landlord.

 

[*** SIGNATURES ON NEXT PAGE ***]

 

20

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IN WITNESS WHEREOF, Sublandlord and Subtenant have executed this Sublease on the
dates set forth below, intending to be bound hereby.

 

SUBLANDLORD:

 

 

SUBTENANT:

 

 

 

 

 

 

VERISITY DESIGN, INC.,

 

 

CONCEPTUS, INC.,

 

a California corporation

 

 

a Delaware corporation

 

 

 

 

 

 

By:

/s/ James J. Cowie

 

 

By:

/s/ Mark M Sieczkarek

 

 

Name:

James J. Cowie

 

 

 

Name:

MARK M SIECZKAREK

 

 

Its:

Assistant Secretary

 

 

 

Its:

    CEO/PRESIDENT

 

[must be CEO, chairman of the board, president

 

 

 

 

[must be CEO, chairman of the board,

 

or vice president]

 

 

 

 

president or vice president]

 

 

 

 

 

 

 

 

Date:

June 29, 2005

 

 

 

 

Date:

6/27/05

 

 

21

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EXHIBIT A

 

DESIGNATION OF PREMISES

 

 

Exhibit A

 

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

 

[g126961kc01i001.jpg]

 

Exhibit A

 

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

 

[g126961kc01i002.jpg]

 

Exhibit A

 

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

 

EXHIBIT B

 

MASTER LEASE

 

[*** Attach Master Lease Here ***]

 

 

Exhibit B

 

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

 

TABLE OF CONTENTS

 

1.

USE AND RESTRICTIONS ON USE

 

2.

TERM

 

3.

RENT

 

4.

RENT ADJUSTMENTS

 

5.

SECURITY DEPOSIT

 

6.

ALTERATIONS

 

7.

REPAIR

 

8.

LIENS

 

9.

ASSIGNMENT AND SUBLETTING

 

10.

INDEMNIFICATION

 

11.

INSURANCE

 

12.

WAIVER OF SUBROGATION

 

13.

SERVICES AND UTILITIES

 

14.

HOLDING OVER

 

15.

SUBORDINATION

 

16.

RULES AND REGULATIONS

 

17.

REENTRY BY LANDLORD

 

18.

DEFAULT

 

19.

REMEDIES

 

20.

TENANT’S BANKRUPTCY OR INSOLVENCY

 

21.

QUIET ENJOYMENT

 

22.

CASUALTY

 

23.

EMINENT DOMAIN

 

24.

SALE BY LANDLORD

 

25.

ESTOPPEL CERTIFICATES

 

26.

SURRENDER OF PREMISES

 

27.

NOTICES

 

28.

TAXES PAYABLE BY TENANT

 

29.

RELOCATION OF TENANT

 

30.

DEFINED TERMS AND HEADINGS

 

31.

TENANT’S AUTHORITY

 

32.

FINANCIAL STATEMENTS AND CREDIT REPORTS

 

33.

COMMISSIONS

 

34.

TIME AND APPLICABLE LAW

 

35.

SUCCESSORS AND ASSIGNS

 

36.

ENTIRE AGREEMENT

 

37.

EXAMINATION NOT OPTION

 

38.

RECORDATION

 

 

i

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

 

39.

OPTION TO RENEW

 

40.

SIGNAGE

 

41.

CAFETERIA

 

42.

ADDITIONAL SPACE IN PROJECT

 

43.

IMPROVEMENT OF EXTERIOR OF PROJECT

 

44.

LIMITATION OF LANDLORD’S LIABILITY

 

 

EXHIBIT A - FLOOR PLAN DEPICTING THE PREMISES

EXHIBIT A-l - SITE PLAN

EXHIBIT A-2 - DEPICTION OF VISITOR PARKING SPACES

EXHIBIT B - INITIAL ALTERATIONS

EXHIBIT C - COMMENCEMENT DATE MEMORANDUM

EXHIBIT D - RULES AND REGULATIONS

EXHIBIT E - FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

EXHIBIT F-FORM OF GUARANTY

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

ii

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MULTI-TENANT INDUSTRIAL NET LEASE

REFERENCE PAGES

 

BUILDING:

 

Mountain View Corporate Center

 

 

 

LANDLORD:

 

SFERS REAL ESTATE CORP. U, a Delaware corporation

 

 

 

LANDLORD’S ADDRESS:

 

1310 Tully Road, Suite 110

 

 

San Jose, California 95122

 

 

 

WIRE INSTRUCTIONS AND/OR ADDRESS FOR

 

SFERS Real Estate Corp. U

RENT PAYMENT:

 

Dept. #44631

 

 

P.O. Box 44000
San Francisco, California 94144

 

 

 

LEASE REFERENCE DATE:

 

April 14, 2004

 

 

 

TENANT:

 

VERISITY DESIGN, INC., a California corporation

 

 

 

TENANT’S NOTICE ADDRESS:

 

 

 

 

 

(a) As of beginning of Term:

 

331 East Evelyn, Mountain View, California 94039

 

 

 

(b) Prior to beginning of Term (if different):

 

2041 Landings Drive, Building N

 

 

Mountain View, California 94043

 

 

 

PREMISES ADDRESS:

 

331 East Evelyn, Mountain View, California 94039

 

 

 

PREMISES RENTABLE AREA:

 

Approximately 58,242 sq. ft. (for outline of Premises see Exhibit A)

 

 

 

BUILDING PROJECT RENTABLE AREA:

 

Approximately 266,088 sq. ft.

 

 

 

USE:

 

Research, development, marketing, assembly and distribution of software and
computer components and general office use

 

 

 

SCHEDULED COMMENCEMENT DATE:

 

July 1, 2004

 

 

 

TERM OF LEASE:

 

Approximately five (5) years beginning on the Commencement Date and ending on
the Termination Date. The period from the Commencement Date to the last day of
the same month is the “Commencement Month.”

 

 

 

TERMINATION DATE:

 

June 30, 2009

 

/s/ [ILLEGIBLE]

Initials

iii

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

 

ANNUAL RENT and MONTHLY INSTALLMENT OF RENT (Article 3):

 

7/1/2004

 

6/30/2005

 

58,242

 

$

 

$

$

 

7/1/2005

 

6/30/2006

 

58,242

 

$

 

$

$

 

7/1/2006

 

6/30/2007

 

58,242

 

$

 

$

$

 

7/1/2007

 

6/30/2008

 

58,242

 

$

 

$

$

 

7/1/2008

 

6/30/2009

 

58,242

 

$

 

$

$

 

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

*                 Subject to abatement pursuant to Section 3.1.1 of the Lease.

 

INITIAL ESTIMATED MONTHLY INSTALLMENT

 

$                commencing 7/1/2004

OF RENT ADJUSTMENTS (Article 4)

 

 

 

 

 

TENANT’S PROPORTIONATE SHARE:

 

21.89%

 

 

 

TENANT’S PROPORTIONATE SHARE FOR

 

4 parking spaces per 1,000 rentable square feet of the

PARKING:

 

Premises

 

 

 

SECURITY DEPOSIT:

 

$

 

 

 

ASSIGNMENT/SUBLETTING FEE

 

$

 

 

 

REAL ESTATE BROKER DUE COMMISSION:

 

Cornish & Carey Commercial

 

 

 

GUARANTOR:

 

Verisity Ltd, a corporation organized under the laws of the State of Israel.
Concurrent with Tenant’s execution and delivery of this Lease, Tenant shall
cause the Guarantor to execute and deliver to Landlord a Guaranty in the form
attached hereto as Exhibit F.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

/s/ [ILLEGIBLE]

Initials

 

iv

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

 

TENANT’S SIC CODE:

 

5045

 

 

 

AMORTIZATION RATE:

 

N/A

 

The Reference Pages information is incorporated into and made a part of the
Lease. In the event of any conflict between any Reference Pages information and
the Lease, the Lease shall control. This Lease includes Exhibits A through F,
all of which are made a part of this Lease.

 

LANDLORD:

 

 

TENANT:

 

 

 

 

 

 

SFERS REAL ESTATE CORP. U,

 

 

VERISITY DESIGN, INC.,

 

a Delaware corporation

 

 

a California corporation

 

 

 

 

 

 

By:

RREEF Management Company, a

 

 

 

 

 

Delaware corporation

 

 

 

 

 

 

 

 

 

By:

/s/ James H. Ida

 

 

By:

/s/ Charles Alvarez

 

Name: James H. Ida

 

 

Name:

Charles Alvarez

 

Title: District Manager

 

 

Title:

Vice President of Finance and

 

 

 

 

 

Chief Financial Officer

 

 

 

 

 

 

 

Dated:

4/15/04

 

 

Dated:

4/15/04

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

 

v

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LEASE

 

By this Lease Landlord leases to Tenant and Tenant leases from Landlord the
Premises in the Building as set forth and described on the Reference Pages. The
Premises are depicted on the floor plan attached hereto as Exhibit A, and the
Building is depicted on the site plan attached hereto as Exhibit A-l. The
Reference Pages, including all terms defined thereon, are incorporated as part
of this Lease.

 

1.             USE AND RESTRICTIONS ON USE.

 

1.1           The Premises are to be used solely for the purposes set forth on
the Reference Pages. Tenant shall not do or permit anything to be done in or
about the Premises which will in any way obstruct or interfere with the rights
of other tenants or occupants of the Building or injure, annoy, or disturb them,
or allow the Premises to be used for any improper, immoral, unlawful, or
objectionable purpose, or commit any waste. Tenant shall not do, permit or
suffer in, on, or about the Premises the sale of any alcoholic liquor without
the written consent of Landlord first obtained. Tenant shall comply with all
governmental laws, ordinances and regulations applicable to the use of the
Premises and its occupancy and shall promptly comply with all governmental
orders and directions for the correction, prevention and abatement of any
violations in the Building or appurtenant land, caused or permitted by, or
resulting from the specific use by, Tenant, or in or upon, or in connection
with, the Premises, all at Tenant’s sole expense. Tenant shall not do or permit
anything to be done on or about the Premises or bring or keep anything into the
Premises which will in any way increase the rate of, invalidate or prevent the
procuring of any insurance protecting against loss or damage to the Building or
any of its contents by fire or other casualty or against liability for damage to
property or injury to persons in or about the Building or any part thereof.

 

1.2           Tenant shall not, and shall not direct, suffer or permit any of
its agents, contractors, employees, licensees or invitees (collectively, the
“Tenant Entities”) to at any time handle, use, manufacture, store or dispose of
in or about the Premises or the Building any (collectively “Hazardous
Materials”) flammables, explosives, radioactive materials, hazardous wastes or
materials, toxic wastes or materials, or other similar substances, petroleum
products or derivatives or any substance subject to regulation by or under any
federal, state and local laws and ordinances, relating to the protection of the
environment or the keeping, use or disposition of environmentally hazardous
materials, substances, or wastes, presently in effect or hereafter adopted, all
amendments to any of them, and all rules and regulations issued pursuant to any
of such laws or ordinances (collectively “Environmental Laws”), nor shall Tenant
suffer or permit any Hazardous Materials to be used in any manner not fully in
compliance with all Environmental Laws, in the Premises or the Building and
appurtenant land or allow the environment to become contaminated with any
Hazardous Materials. Notwithstanding the foregoing, Tenant may handle, store,
use or dispose of products containing small quantities of Hazardous Materials
(such as aerosol cans containing insecticides, toner for copiers, paints, paint
remover and the like) to the extent customary and necessary for the use of the
Premises for general office purposes; provided that tenant shall always handle,
store, use, and dispose of any such Hazardous Materials in a safe and lawful
manner and never allow such Hazardous Materials to contaminate the Premises,
Building and appurtenant land or the environment. Tenant shall protect, defend,
indemnify and hold each and all of the Landlord Entities (as defined in
Article 30) harmless from and against any and all loss, claims, liability or
costs (including court costs and attorney’s fees) incurred by reason of any
actual or asserted failure of Tenant to fully comply with all applicable
Environmental Laws, or the presence, handling, use or disposition in or from the
Premises of any Hazardous Materials by Tenant or any Tenant Entity (even though
permissible under all applicable Environmental Laws or the provisions of this
Lease), or by reason of any actual or asserted failure of Tenant to keep,
observe, or perform any provision of this Section 1.2. As of the date hereof,
Landlord has not received written notice from any governmental agencies that the
Building is in violation of any Environmental Laws. Further, to Landlord’s
actual knowledge, there are no Hazardous Materials at the Building other than
small quantities of Hazardous Materials (such as aerosol cans containing
insecticides, toner for copiers, paints, paint remover and the like) to the
extent customary and necessary for the use of the Premises for general office
purposes. For purposes of this Section, “Landlord’s actual knowledge” shall be
deemed to mean and limited to the current actual knowledge of James Ida,
District Manager of Rreef Management Company, a Delaware corporation, at the
time of execution of this Lease and not any implied, imputed, or constructive
knowledge of said individual or of Landlord or any parties related to or
comprising Landlord and without any independent investigation or inquiry having
been made or any implied duty to investigate or make any inquiries; it being
understood and agreed that such individual shall have no personal liability in
any manner whatsoever hereunder or otherwise related to the transactions
contemplated hereby.

 

1.3             Tenant and the Tenant Entities will be entitled to the
non-exclusive use of the common areas of the Building as they exist from time to
time during the Term, including the parking facilities, subject to Landlord’s
rules and regulations regarding such use. However, in no event will Tenant or
the Tenant Entities park more vehicles in the parking facilities than Tenant’s
Proportionate Share of the total parking spaces available for common use. The
foregoing shall not be deemed to provide Tenant with an exclusive right to any
parking spaces or any guaranty of the availability of any particular parking
spaces or any specific number of parking spaces. Lessee shall be allotted five
(5) designated visitor parking spaces,

 

1

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

 

as depicted on the site plan attached hereto as Exhibit A-2, provided that such
designated spaces shall be inclusive of and not in addition to Tenant’s
Proportionate Share of the total parking spaces available for common use.
Landlord shall not allot to any other tenant of the Building or of the project
in which the Building is located (the “Project”) the right to use parking spaces
in excess of such tenant’s proportionate share of the total parking spaces
available for common use.

 

2.             TERM.

 

2.1            The Term of this Lease shall begin on the date (“Commencement
Date”) which shall be the later of the Scheduled Commencement Date as shown on
the Reference Pages and the date that Landlord shall lender possession of the
Premises to Tenant, and shall terminate on the date as shown on the Reference
Pages (“Termination Date”), unless sooner terminated by the provisions of this
Lease. Anything to the contrary notwithstanding, in the event that Tenant’s
completion of the Initial Alterations (as defined in Exhibit B attached hereto)
is delayed due to strikes, acts of God, shortages of labor or materials, war,
terrorist acts, civil disturbances and other causes beyond the reasonable
control of the performing party (each a “Force Majeure”) beyond July 1, 2004,
the Scheduled Commencement Date and Termination Date shall be delayed by an
equal period of time, provided that in no event shall such delay exceed thirty
(30) days. Tenant shall, at Landlord’s request, execute and deliver a memorandum
agreement provided by Landlord in the form of Exhibit C attached hereto, setting
forth the actual Commencement Date, Termination Date and, if necessary, a
revised rent schedule. Should Tenant fail to do so within thirty (30) days after
Landlord’s request, the information set forth in such memorandum provided by
Landlord shall be conclusively presumed to be agreed and correct.

 

2.2           Tenant agrees that in the event of the inability of Landlord to
deliver possession of the Premises on the date immediately following the date
this Lease is fully executed by Landlord and Tenant and Tenant has delivered to
Landlord the fully executed Guaranty, all prepaid rental for the seventh (7th)
month of the Term, the Security Deposit, and insurance certificates required
hereunder (the “Effective Date”) for any reason, Landlord shall not be liable
for any damage resulting from such inability, but Tenant shall not be liable for
any rent until the time when Landlord can, after notice to Tenant, deliver
possession of the Premises to Tenant. No such failure to give possession on the
date immediately following the Effective Date shall affect the other obligations
of Tenant under this Lease, except that if the Effective Date occurs on or
before April 15, 2004, and Landlord is unable to deliver possession of the
Premises on or before April 19, 2004, Tenant shall have the option to terminate
this Lease with the written notice of such termination delivered to Landlord no
later than April 23, 2004.

 

2.3           Tenant shall be permitted to occupy the Premises for purposes of
performing the Initial Alterations, installing furniture, data cabling,
equipment or other personal property and for the purposes set forth on the
Reference Pages as of the date that Landlord delivers possession of the Premises
to Tenant, which delivery Tenant acknowledges will not occur prior to the
Effective Dale. Such possession prior to the Commencement Date shall be subject
to all of the terms and conditions of this Lease, including, without limitation,
Tenant’s compliance with the insurance requirements of Article 11, except that
Tenant shall not be required to pay Monthly Installments of Rent or Tenant’s
Proportionate Share of Expenses and Taxes with respect to the period of time
prior to the Commencement Date during which Tenant occupies the Premises for
such purposes. However, Tenant shall be liable for any parking or special or
after hour services provided to Tenant during such period. Said early possession
shall not advance the Termination Date.

 

2.4           Notwithstanding anything to the contrary set forth herein, except
to the extent caused by Tenant or any Tenant Entity, the base Building
electrical, heating, ventilation and air conditioning systems, mechanical
systems, plumbing systems, and fire sprinkler, fire alarm monitoring and smoke
detector systems (collectively, the “Life Safety Systems”) and the Building roof
shall be in good and working order as of the date Landlord delivers possession
of the Premises to Tenant, subject to completion of the Landlord Work (as
defined in Exhibit B attached hereto). If the foregoing are not in good and
working order as provided above, Landlord shall be responsible for repairing or
restoring same at its cost and expense promptly, provided that Tenant has
delivered written notice thereof to Landlord not later than sixty (60) days
following the date Tenant substantially completes construction of the Initial
Alterations, but in no event later than August 1, 2004. Notwithstanding the
foregoing, Tenant, and not Landlord, shall be responsible, at its cost, for any
repairs and for the correction of any defects that arise out of or in connection
with the specific nature of Tenant’s business, the acts or omissions of Tenant
or any Tenant Entity, Tenant’s arrangement of any furniture, equipment or other
property in the Premises, any repairs, alterations, additions or improvements
performed by or on behalf of Tenant, including the Initial Alterations (as
defined in Exhibit B hereto), and any design or configuration of the Premises
created by or for Tenant which specifically results in such defect in the
mechanical or electrical systems in the Premises. Tenant further acknowledges
that no representations as to the condition or repair of the Premises nor
promises to alter, remodel or improve the Premises have been made by Landlord or
any agents of Landlord unless such are expressly set forth in this Lease. By
taking possession of the Premises, Tenant accepts them as being in good order,
condition and repair and in the condition in which Landlord is obligated to
deliver them, subject to completion of the Landlord Work, and except as set
forth in any notice from Tenant to

 

2

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

 

Landlord delivered within sixty (60) days following the date Tenant
substantially completes construction of the Initial Alterations, but in no event
later than August 1, 2004. It is hereby understood and agreed that no
representations respecting the condition of the Premises or the Building have
been made by Landlord to Tenant, except as specifically set forth in this Lease.

 

2.5           Except to the extent properly included in Expenses, Landlord shall
be responsible for the cost of correcting any violations of governmental laws,
ordinances and regulations, including without limitation, Title III of the
Americans with Disabilities Act (the “ADA”) (collectively, “Laws”) with respect
to the exterior common areas of the Building and the second floor balconies of
the Building, at its sole cost and expense. Notwithstanding the foregoing,
Landlord shall have the right to contest any alleged violation in good faith,
including, without limitation, the right to apply for and obtain a waiver or
deferment of compliance, the right to assert any and all defenses allowed by
applicable law and the right to appeal any decisions, judgments or rulings to
the fullest extent permitted by applicable law. Landlord, after the exhaustion
of any and all rights to appeal or contest, will make all repairs, additions,
alterations or improvements necessary to comply with the terms of any final
order or judgment. Notwithstanding the foregoing, Tenant, not Landlord, shall be
responsible for the correction of any violations that arise out of or in
connection with any claims brought under any Laws, including any provision of
the ADA other than Title III, the specific nature of Tenant’s business in the
Premises (other than general office use), the acts or omissions of Tenant or any
Tenant Entity, Tenant’s arrangement of any furniture, equipment or other
property in the Premises, any repairs, alterations, additions or improvements
performed by or on behalf of Tenant, including the Initial Alterations, and any
design or configuration of the Premises specifically requested by Tenant after
being informed that such design or configuration may not be in strict compliance
with the ADA.

 

3.             RENT.

 

3.1           Tenant agrees to pay to Landlord the Annual Rent in effect from
time to time by paying the Monthly Installment of Rent then in effect on or
before the first day of each full calendar month during the Term, except that
the first full month’s rent shall be paid upon the execution of this Lease. The
Monthly Installment of Rent in effect at any time shall be one-twelfth (1/12) of
the Annual Rent in effect at such time. Rent for any period during the Term
which is less than a full month shall be a prorated portion of the Monthly
Installment of Rent based upon the number of days in such month. Said rent shall
be paid to Landlord, without deduction or offset and without notice or demand,
at the Rent Payment Address, as set forth on the Reference Pages, or to such
other person or at such other place as Landlord may from time to time designate
in writing. If an Event of Default occurs, Landlord may require by notice to
Tenant that all subsequent rent payments be made by an automatic payment from
Tenant’s bank account to Landlord’s account, without cost to Landlord, Tenant
must implement such automatic payment system prior to the next scheduled rent
payment or within ten (10) days after Landlord’s notice, whichever is later.
Unless specified in this Lease to the contrary, all amounts and sums payable by
Tenant to Landlord pursuant to this Lease shall be deemed additional rent.

 

3.1.1        Notwithstanding anything in this Lease to the contrary, so long as
Tenant is not in default under this Lease, Tenant shall be entitled to an
abatement of Monthly Installment of Rent with respect to the Premises, as
originally described in this Lease, in the amount of (a) $           per month
for the period commencing on July 1, 2004 and continuing through December 31,
2004, and (b) $         per month for the period commencing on January 1, 2005
and continuing through June 30, 2005 (collectively, the “Abated Monthly
Installment of Rent”). The maximum total amount of Abated Monthly Installment of
Rent abated with respect to the Premises in accordance with the foregoing shall
equal $              .  Only Monthly Installment of Rent shall be abated
pursuant to this Section, as more particularly described herein, and all other
rent and other costs and charges specified in this Lease, including without
limitation. Tenant’s Proportionate Share of Expenses and Taxes, shall remain as
due and payable pursuant to the provisions of this Lease. In the event of a
delay in the Scheduled Commencement Date as set forth in the second sentence of
Section 2.1 above, each of the rent abatement periods set forth in clauses
(a) and (b) above shall be delayed by an equal period of time.

 

3.2           Tenant recognizes that late payment of any rent or other sum due
under this Lease will result in administrative expense to Landlord, the extent
of which additional expense is extremely difficult and economically impractical
to ascertain. Tenant therefore agrees that if rent or any other sum is not paid
within three (3) days of the date due and payable pursuant to this Lease, a late
charge shall be imposed in an amount equal to the greater of: (a) Fifty Dollars
($50.00), or (b) three percent (3%) of the unpaid rent or other payment. The
amount of the late charge to be paid by Tenant shall be reassessed and added to
Tenant’s obligation for each successive month until paid. The provisions of this
Section 3.2 in no way relieve Tenant of the obligation to pay rent or other
payments on or before the date on which they are due, nor do the terms of this
Section 3.2 in any way affect Landlord’s remedies pursuant to Article 19 of this
Lease in the event said rent or other payment is unpaid after date due.

 

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4.             RENT ADJUSTMENTS.

 

4.1           For the purpose of this Article 4, the following terns are defined
as follows:

 

4.1.1        Lease Year: Each fiscal year (as determined by Landlord from time
to time in Landlord’s reasonable discretion) falling partly or wholly within the
Term.

 

4.1.2        Expenses: All costs of operation, maintenance, repair, replacement
and management of the Building (including the amount of any credits which
Landlord may grant to particular tenants of the Building in lieu of providing
any standard services or paying any standard costs described in this
Section 4.1.2 for similar tenants), as determined in accordance with generally
accepted accounting principles, including the following costs by way of
illustration, but not limitation: water and sewer charges; insurance charges of
or relating to all insurance policies and endorsements deemed by Landlord to be
reasonably necessary or desirable and relating in any manner to the protection,
preservation, or operation of the Building or any part thereof; utility costs,
including, but not limited to, the cost of heat, light, power, steam, gas; waste
disposal; the cost of janitorial services; the cost of security and alarm
services (including any central station signaling system); costs of cleaning,
repairing, replacing and maintaining the common areas, including parking and
landscaping, window cleaning costs; labor costs; costs and expenses of managing
the Building including management and/or administrative fees; air conditioning
maintenance costs; elevator maintenance fees and supplies; material costs;
equipment costs including the cost of maintenance, repair and service agreements
and rental and leasing costs; purchase costs of equipment; current rental and
leasing costs of items which would be capital items if purchased; tool costs;
licenses, permits and inspection fees; wages and salaries; employee benefits and
payroll taxes; accounting and legal fees; any sales, use or service taxes
incurred in connection therewith. In addition, Landlord shall be entitled to
recover, as additional rent (which, along with any other capital expenditures
constituting Expenses, Landlord may either include in Expenses or cause to be
billed to Tenant along with Expenses and Taxes but as a separate item), Tenant’s
Proportionate Share of: (i) an allocable portion of the cost of capital
improvement items which are reasonably calculated to reduce operating expenses;
(ii) the cost of fire sprinklers and suppression systems and other life safety
systems; and (iii) other capital expenses which are required under any
governmental laws, regulations or ordinances which were not applicable to the
Building at the time it was constructed; but the costs described in this
sentence shall be amortized over the reasonable life of such expenditures in
accordance with such reasonable life and amortization schedules as shall be
determined by Landlord in accordance with generally accepted accounting
principles, with interest on the unamortized amount at one percent (1%) in
excess of the Wall Street Journal prime lending rate announced from time to
time. Expenses shall not include depreciation or amortization of the Building or
equipment in the Building except as provided herein, loan principal payments,
costs of alterations of tenants’ premises, leasing commissions, interest
expenses on long-term borrowings or advertising costs. The following items are
also excluded from Expenses and in no event shall Tenant have any obligation to
perform, pay directly or reimburse Landlord for any of the following except to
the extent expressly provided herein:

 

(a)                                  Marketing costs, including leasing
commissions, attorneys’ fees in connection with the negotiation and preparation
or enforcement of letters, deal memos, 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.

 

(b)                                 Attorney’s fees and other expenses incurred
in connection with negotiations or disputes with prospective tenants or tenants
or other occupants of the Building.

 

(c)                                  Any expenses for which Landlord has
received actual reimbursement (other than through Expenses).

 

(d)                                 Sums paid to subsidiaries or other
affiliates of Landlord for services on or to the Building and/or Premises, but
only to the extent that the costs of such services exceed the competitive cost
for such services rendered by persons or entities of similar skill, competence
and experience.

 

(e)                                  Ground lease rental.

 

(f)                                    Interest (except as provided in this
Lease for the amortization of capital improvements and except to the extent
incurred as a result of any act or omission of Tenant).

 

(g)                                 Costs incurred by Landlord in connection
with the correction of latent defects in the construction of the Building.

 

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(h)                                 Any fines, penalties or interest resulting
from the gross negligence or willful misconduct of the Landlord or its agents or
employees.

 

(i)                                     Landlord’s charitable and political
contributions.

 

(j)                                     Fines, costs or penalties incurred as a
result and to the extent of a violation by Landlord or other tenants of the
project of which Building is a part of any applicable laws.

 

(k)                                  The cost or expense of any services or
benefits provided generally to other tenants in the Building and not provided or
available to Tenant.

 

(1)                                  All costs of purchasing or leasing major
sculptures, paintings or other major works or objects of art (as opposed to
decorations purchased or leased by Landlord for display in the common areas of
the Building).

 

(m)                               Principal payments of mortgage and other
non-operating debts of Landlord.

 

(n)                                 The cost of operating any commercial
concession which is operated by Landlord in the Building, including, without
limitation, any compensation paid to clerks, attendants or other persons
operating such commercial concessions on behalf of Landlord, but only to the
extent revenues from any such commercial concessions exceed such costs and
compensation.

 

(o)                                 Landlord’s costs of electricity and other
services sold or provided to tenants in the Building and for which Landlord is
reimbursed by such tenants as a separate additional charge or rental over and
above the base rental or additional base rental payable under the lease with
such tenant.

 

(p)                                 All items (including repairs) and services
for which Tenant or other tenants pay directly to third parties or for which
Tenant or other tenants reimburse Landlord (other than through Expenses).

 

(q)                                 Except to the extent caused by the acts or
omissions of Tenant or any Tenant Entity, any costs associated with the full
replacement of the roof of the Building.

 

(r)                                    Except to the extent caused by the acts
or omissions of Tenant or any Tenant Entity, Landlord’s costs to repair and
maintain the roof of the Building in excess of Four Thousand Dollars ($4,000.00)
per Lease Year.

 

4.1.3        Taxes: Real estate taxes and any other taxes, charges and
assessments which are levied with respect to the Building or the land
appurtenant to the Building, or with respect to any improvements, fixtures and
equipment or other property of Landlord, real or personal, located in the
Building and used in connection with the operation of the Building and said
land, any payments to any ground lessor in reimbursement of tax payments made by
such lessor; and all fees, expenses and costs incurred by Landlord in
investigating, protesting, contesting or in any way seeking to reduce or avoid
increase in any assessments, levies or the tax rate pertaining to any Taxes to
be paid by Landlord in any Lease Year. Taxes shall not include any corporate
franchise, or estate, inheritance or net income tax, or tax imposed upon any
transfer by Landlord of its interest in this Lease or the Building or any taxes
to be paid by Tenant pursuant to Article 28.

 

4.2           Tenant shall pay as additional rent for each Lease Year Tenant’s
Proportionate Share of Expenses and Taxes incurred for such Lease Year.

 

4.3           The annual determination of Expenses shall be made by Landlord and
shall be binding upon Landlord and Tenant, subject to the provisions of this
Section 4.3. During the Term, Tenant may review, at Tenant’s sole cost and
expense, the books and records supporting such determination in an office of
Landlord, or Landlord’s agent, during normal business hours, upon giving
Landlord five (5) days advance written notice within sixty (60) days after
receipt of such determination, but in no event more often than once in any one
(1) year period, subject to execution of a confidentiality agreement acceptable
to Landlord, and provided that if Tenant utilizes an independent accountant to
perform such review it shall be one of national standing which is reasonably
acceptable to Landlord, is not compensated on a contingency basis and is also
subject to such confidentiality agreement. If Tenant fails to object to
Landlord’s determination of Expenses within ninety (90) days after receipt, or
if any such objection fails to state with specificity the reason for the
objection, Tenant shall be deemed to have approved such determination and shall
have no further right to object to or contest such determination. In the event
that during all or any portion of any Lease Year or Base Year, the Building is
not fully rented and occupied Landlord

 

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shall make an appropriate adjustment in occupancy-related Expenses for such year
for the purpose of avoiding distortion of the amount of such Expenses to be
attributed to Tenant by reason of variation in total occupancy of the Building,
by employing consistent and sound accounting and management principles to
determine Expenses that would have been paid or incurred by Landlord had the
Building been at least ninety-five percent (95%) rented and occupied, and the
amount so determined shall be deemed to have been Expenses for such Lease Year.

 

4.4           Prior to the actual determination thereof for a Lease Year,
Landlord may from time to time estimate Tenant’s liability for Expenses and/or
Taxes under Section 4.2, Article 6 and Article 28 for the Lease Year or portion
thereof. Landlord will give Tenant written notification of the amount of such
estimate and Tenant agrees that it will pay, by increase of its Monthly
Installments of Rent due in such Lease Year, additional rent in the amount of
such estimate. Any such increased rate of Monthly Installments of Rent pursuant
to this Section 4.4 shall remain in effect until further written notification to
Tenant pursuant hereto. Landlord shall use commercially reasonable efforts to
(i) provide such estimate to Tenant within ninety (90) days after the beginning
of each calendar year and (ii) to provide earlier notice to Tenant in the event
that Landlord becomes aware, prior to delivery of such estimate, of any event or
condition which is likely to cause a material increase in Landlord’s estimate of
Tenant’s Proportionate Share of Expenses and Taxes over those due in the
previous calendar year.

 

4.5           When the above mentioned actual determination of Tenant’s
liability for Expenses and/or Taxes is made for any Lease Year and when Tenant
is so notified in writing, then:

 

4.5.1        If the total additional rent Tenant actually paid pursuant to
Section 4.3 on account of Expenses and/or Taxes for the Lease Year is less than
Tenant’s liability for Expenses and/or Taxes, then Tenant shall pay such
deficiency to Landlord as additional rent in one lump sum within thirty (30)
days of receipt of Landlord’s bill therefor; and

 

4.5.2        If the total additional rent Tenant actually paid pursuant to
Section 4.3 on account of Expenses and/or Taxes for the Lease Year is more than
Tenant’s liability for Expenses and/or Taxes, then Landlord shall credit the
difference against the then next due payments to be made by Tenant under this
Article 4, or, if the Lease has terminated, refund the difference in cash.

 

4.6           If the Commencement Date is other than January 1 or if the
Termination Date is other than December 31, Tenant’s liability for Expenses and
Taxes for the Lease Year in which said Date occurs shall be prorated based upon
a three hundred sixty-five (365) day year.

 

5.             SECURITY DEPOSIT. Tenant shall deposit the Security Deposit with
Landlord upon the execution of this Lease. Said sum shall be held by Landlord as
security for the faithful performance by Tenant of all the terms, covenants and
conditions of this Lease to be kept and performed by Tenant and not as an
advance rentel deposit or as a measure of Landlord’s damage in case of Tenant’s
default. If Tenant defaults with respect to any provision of this Lease,
Landlord may use any part of the Security Deposit for the payment of any rent or
any other sum in default, or for the payment of any amount which Landlord may
spend or become obligated to spend by reason of Tenant’s default, or to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of Tenant’s default. If any portion is so used, Tenant shall within five
(5) days after written demand therefor, deposit with Landlord an amount
sufficient to restore the Security Deposit to its original amount and Tenant’s
failure to do so shall be a material breach of this Lease. Except to such
extent, if any, as shall be required by law, Landlord shall not be required to
keep the Security Deposit separate from its general funds, and Tenant shall not
be entitled to interest on such deposit. If Tenant shall fully and faithfully
perform every provision of this Lease to be performed by it, the Security
Deposit or any balance thereof shall be returned to Tenant at such time after
termination of this Lease when Landlord shall have determined that all of
Tenant’s obligations under this Lease have been fulfilled. Notwithstanding
anything to the contrary contained herein or in Article 23 hereof, Tenant hereby
waives the provisions of Section 1950.7 of the California Civil Code, or any
similar or successor Regulations or other laws now or hereinafter in effect.

 

6.             ALTERATIONS.

 

6.1           Except for the Initial Alterations (as defined and subject to the
limitations set forth in Exhibit B to this Lease), Tenant shall not make or
suffer to be made any alterations, additions, or improvements, including, but
not limited to, the attachment of any fixtures or equipment in, on, or to the
Premises or any part thereof or the making of any improvements as required by
Article 7, without the prior written consent of Landlord. When applying for such
consent, Tenant shall, if requested by Landlord, furnish complete plans and
specifications for such alterations, additions and improvements. Landlord’s
consent shall not be unreasonably withheld with respect to alterations which
(i) are not structural in nature, (ii) are not visible from the exterior of the
Building, (iii) do not affect or require modification of the Building’s
electrical,

 

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mechanical, plumbing, HVAC or other systems, and (iv) in aggregate do not cost
more than $5.00 per rentable square foot of that portion of the Premises
affected by the alterations in question.

 

6.2           In the event Landlord consents to the making of any such
alteration, addition or improvement by Tenant, the same shall be, at Tenant’s
option, made by using either Landlord’s contractor or a contractor reasonably
approved by Landlord, in either event at Tenant’s sole cost and expense. If
Tenant shall employ any contractor other than Landlord’s contractor and such
other contractor or any subcontractor of such other contractor shall employ any
non-union labor or supplier, Tenant shall be responsible for and hold Landlord
harmless from any and all delays, damages and extra costs suffered by Landlord
as a result of any dispute with any labor unions concerning the wage, hours,
terms or conditions of the employment of any such labor. In any event Landlord
may charge Tenant a construction management fee not to exceed five percent (5%)
of the cost of such work to cover its overhead as it relates to such proposed
work, plus third-party costs actually incurred by Landlord in connection with
the proposed work and the design thereof, with all such amounts being due five
(5) days after Landlord’s demand. Notwithstanding the foregoing, no construction
management fee shall be due in connection with the construction of the Initial
Alterations.

 

6.3           All alterations, additions or improvements proposed by Tenant
shall be constructed in accordance with all government laws, ordinances,
rules and regulations, using Building standard materials where applicable, and
Tenant shall, prior to construction, provide the additional insurance required
under Article 11 in such case, and also all such assurances to Landlord as
Landlord shall reasonably require to assure payment of the costs thereof,
including but not limited to, notices of non-responsibility, waivers of lien,
surety company performance bonds and funded construction escrows and to protect
Landlord and the Building and appurtenant land against any loss from any
mechanic’s, materialmen’s or other liens. Tenant shall pay in addition to any
sums due pursuant to Article 4, any increase in real estate taxes attributable
to any such alteration, addition or improvement for so long, during the Term, as
such increase is ascertainable; at Landlord’s election said sums shall be paid
in the same way as sums due under Article 4. Landlord may, as a condition to its
consent to any particular alterations or improvements, require Tenant to deposit
with Landlord the amount reasonably estimated by Landlord as sufficient to cover
the cost of removing such alterations or improvements and restoring the
Premises, to the extent required under Section 26.2

 

6.4           Notwithstanding anything to the contrary contained herein, so long
as Tenant’s written request for consent for a proposed alteration or
improvements contains the following statement in large, bold and capped font
“PURSUANT TO SECTION 6 OF THE LEASE, IF LANDLORD CONSENTS TO THE SUBJECT
ALTERATION, LANDLORD SHALL NOTIFY TENANT IN WRITING WHETHER OR NOT LANDLORD WILL
REQUIRE SUCH ALTERATION TO BE REMOVED AT THE EXPIRATION OR EARLIER TERMINATION
OF THE LEASE.”, at the time Landlord gives its consent for any alterations or
improvements, if it so does, Tenant shall also be notified whether or not
Landlord will require that such alterations or improvements be removed upon the
expiration or earlier termination of this Lease. Notwithstanding anything to the
contrary contained in this Lease, at the expiration or earlier termination of
this Lease and otherwise in accordance with Article 26 hereof, Tenant shall be
required to remove all alterations or improvements made to the Premises except
for the Initial Alterations and any such alterations or improvements which
Landlord expressly indicates or is deemed to have indicated shall not be
required to be removed from the Premises by Tenant. If Tenant’s written notice
strictly complies with the foregoing and if Landlord fails to notify Tenant
within ten (10) business days of Landlord’s receipt of such notice whether
Tenant shall be required to remove the subject alterations or improvements at
the expiration or earlier termination of this Lease, it shall be assumed that
Landlord shall require the removal of the subject alterations or improvements.

 

7.             REPAIR.

 

7.1           Landlord shall have no obligation to alter, remodel, improve,
repair, decorate or paint the Premises, except as specified in Exhibit B if
attached to this Lease and except that Landlord shall repair and maintain all
structural portions of the Building and the Building envelope, including the
roof, foundation walls, water heaters, skylights, windows, glass, plate glass,
and Life Safety Systems, as well as all outdoor areas and specifically any
terrace and deck areas. In addition, Landlord shall also maintain the common
areas of the Building and the Building systems generally servicing the common
areas of the Building (including, without limitation, any heating, ventilating
and air conditioning units); provided, however, that the costs and expenses
associated with the foregoing shall be a part of Expenses and subject to the
terms and conditions of Article 4 of this Lease. Landlord shall not be liable
for any failure to make any repairs or to perform any maintenance unless such
failure shall persist for an unreasonable time after written notice of the need
of such repairs or maintenance is given to Landlord by Tenant.

 

7.2           Tenant shall periodically inspect the Premises to identify any
conditions that are in need of maintenance or repair. Tenant shall provide
Landlord with notice of any such conditions and Landlord shall make any such
repairs within a

 

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reasonable period of time following the receipt of such notice. All sums paid by
Landlord and ail expenses incurred by it in connection with such repairs, which
are not expressly obligations of Landlord, as provided herein, shall be payable
to Landlord by Tenant within ten (10) business days of Landlord’s demand. Tenant
as part of its obligations hereunder shall keep the Premises in a clean and
sanitary condition. Tenant will, use commercially reasonable efforts to keep all
such parts of the Premises in such a manner to minimize deterioration due to
ordinary wear and from falling temporarily out of repair, and upon termination
of this Lease in any way Tenant will yield up the Premises to Landlord in good
condition and repair, ordinary wear and tear and loss by fire or other casualty
excepted (but not excepting any damage to glass). Notwithstanding anything to
the contrary contained herein and except to the extent caused by Tenant or any
of the Tenant Entities’ acts and/or omissions or as a result of casualty, to the
extent Landlord is made aware and Landlord determines in its reasonable
discretion that expenditures for the full replacement of any of the heating,
ventilating and air conditioning units solely servicing the Premises (as opposed
to the replacement of components or repair thereof) must be made, Landlord shall
cause such work to be completed at its sole cost and expense, which cost shall
not be included in Expenses. However, except to the extent caused by Tenant or
any of the Tenant Entities' acts and/or omissions, to the extent Landlord is
made aware and Landlord determines in its reasonable discretion that
expenditures to repair or replace components of any of the heating, ventilating
and air conditioning units solely servicing the Premises (as opposed to the full
replacement thereof) must be made, Landlord shall cause such work to be
completed and all such costs and expenses incurred by Landlord in connection
with such repairs or replacement of components shall be payable to Landlord by
Tenant within ten (10) business days of Landlord’s demand, provided that except
to the extent caused by the acts or omissions of Tenant or any Tenant Entity,
Tenant shall not be required to pay more than Three Thousand Dollars ($3000.00)
per Lease Year for such repair or replacement of components (excluding the costs
associated with the maintenance/service contract described in Section 7.4
below). Tenant shall, at its own cost and expense, repair any damage to the
Premises or the Building resulting from and/or caused in whole or in part by the
negligence or misconduct of Tenant, its agents, employees, contractors,
invitees, or any other person entering upon the Premises as a result of Tenant’s
business activities or caused by Tenant’s default hereunder.

 

7.3           Except as provided in Article 22, there shall be no abatement of
rent and no liability of Landlord by reason of any injury to or interference
with Tenant’s business arising from the making of any repairs, alterations or
improvements in or to any portion of the Building or the Premises or to
fixtures, appurtenances and equipment in the Building. Tenant hereby waives any
and all rights under and benefits of subsection 1 of Section1932 and Sections
1941 and 1942 of the California Civil Code, or any similar or successor
Regulations or other laws now or hereinafter in effect.

 

7.4           Landlord shall, on behalf of Tenant, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
for servicing all heating and air conditioning systems and equipment serving the
Premises. All costs and expenses paid by Landlord in connection therewith shall
be payable to Landlord by Tenant within ten (10) days of Landlord’s demand.

 

8.             LIENS. Tenant shall keep the Premises, the Building and
appurtenant land and Tenant’s leasehold interest in the Premises free from any
liens arising out of any services, work or materials performed, furnished, or
contracted for by Tenant, or obligations incurred by Tenant. In the event that
Tenant fails, within ten (10) days following the imposition of any such lien, to
either cause the same to be released of record or provide Landlord with
insurance against the same issued by a major title insurance company or such
other protection against the same as Landlord shall accept (such failure to
constitute an Event of Default), Landlord shall have the right to cause the same
to be released by such means as it shall deem proper, including payment of the
claim giving rise to such lien. All such sums paid by Landlord and all expenses
incurred by it in connection therewith shall be payable to it by Tenant within
five (5) business days of Landlord’s demand.

 

9.             ASSIGNMENT AND SUBLETTING.

 

9.1           Tenant shall not have the right to assign or pledge this Lease or
to sublet the whole or any part of the Premises whether voluntarily or by
operation of law, or permit the use or occupancy of the Premises by anyone other
than Tenant, and shall not make, suffer or permit such assignment, subleasing or
occupancy without the prior written consent of Landlord, such consent not to be
unreasonably withheld, and said restrictions shall be binding upon any and all
assignees of the Lease and subtenants of the Premises. In the event Tenant
desires to sublet, or permit such occupancy of, the Premises, or any portion
thereof, or assign this Lease, Tenant shall give written notice thereof to
Landlord at least thirty (30) days but no more than one hundred twenty (120)
days prior to the proposed commencement date of such subletting or assignment,
which notice shall set forth the name of the proposed subtenant or assignee, the
relevant terms of any sublease or assignment and copies of financial reports and
other relevant financial information of the proposed subtenant or assignee.

 

9.2           Notwithstanding any assignment or subletting, permitted or
otherwise, Tenant shall at all times remain directly, primarily and fully
responsible and liable for the payment of the rent specified in this Lease and
for compliance with all of its other obligations under the terms, provisions and
covenants of this Lease. Notwithstanding any assignment or

 

8

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subletting, permitted or otherwise, so long as the Guaranty (as defined in the
Reference Pages) shall be in full force and effect, Guarantor (as defined in the
Reference Pages) shall remain directly, primarily and fully responsible and
liable for its obligations under the Guaranty. Upon the occurrence of an Event
of Default, if the Premises or any part of them are then assigned or sublet,
Landlord, in addition to any other remedies provided in this Lease or provided
by law, may, at its option, collect directly from such assignee or subtenant all
rents due and becoming due to Tenant under such assignment or sublease and apply
such rent against any sums due to Landlord from Tenant under this Lease, and no
such collection shall be construed to constitute a novation or release of Tenant
from the further performance of Tenant’s obligations under this Lease. Without
limiting the foregoing, no assignment or subletting by Tenant, permitted or
otherwise, shall relieve Guarantor of any liability under the Guaranty.

 

9.3           Intentionally Omitted.

 

9.4           In the event that Tenant sells, sublets, assigns or transfers this
Lease, Tenant shall pay to Landlord as additional rent an amount equal to fifty
percent (50%) of any Increased Rent (as defined below), less the Costs Component
(as defined below), when and as such Increased Rent is received by Tenant. As
used in this Section, “Increased Rent” shall mean the excess of (i) all rent and
other consideration which Tenant is entitled to receive by reason of any sale,
sublease, assignment or other transfer of this Lease, over (ii) the rent
otherwise payable by Tenant under this Lease at such time. For purposes of the
foregoing, any consideration received by Tenant in form other than cash shall be
valued at its fair market value as determined by Landlord in good faith. The
“Costs Component” is that amount which, if paid monthly, would fully amortize on
a straight-line basis, over the entire period for which Tenant is to receive
Increased Rent, the reasonable costs incurred by Tenant for leasing commissions,
legal fees and tenant improvements in connection with such sublease, assignment
or other transfer.

 

9.5           Notwithstanding any other provision hereof, it shall be considered
reasonable for Landlord to withhold its consent to any assignment of this Lease
or sublease of any portion of the Premises if at the time of either Tenant’s
notice of the proposed assignment or sublease or the proposed commencement date
thereof, there shall exist any uncured default of Tenant or matter which will
become a default of Tenant with passage of time unless cured, or if the proposed
assignee or sublessee is an entity: (a) with which Landlord is already in
negotiation; (b) is already an occupant of the Building unless Landlord is
unable to provide the amount of space required by such occupant; (c) is a
governmental agency; (d) is incompatible with the character of occupancy of the
Building; (e) with which the payment for the sublease or assignment is
determined in whole or in part based upon its net income or profits; or
(f) would subject the Premises to a use which would: (i) involve increased
personnel or wear upon the Building; (ii) violate any exclusive right granted to
another tenant of the Building; (iii) require any addition to or modification of
the Premises or the Building in order to comply with building code or other
governmental requirements; or, (iv) involve a violation of Section 1.2. Tenant
expressly agrees that for the purposes of any statutory or other requirement of
reasonableness on the part of Landlord, Landlord’s refusal to consent to any
assignment or sublease for any of the reasons described in this Section 9.5,
shall be conclusively deemed to be reasonable.

 

9.6           Upon any request to assign or sublet, Tenant will pay to Landlord
the Assignment/Subletting Fee plus, on demand, a sum equal to all of Landlord’s
costs, including reasonable attorney’s fees, incurred in investigating and
considering any proposed or purported assignment or pledge of this Lease or
sublease of any of the Premises, regardless of whether Landlord shall consent
to, refuse consent, or determine that Landlord’s consent is not required for,
such assignment, pledge or sublease. Notwithstanding the foregoing, provided
that neither the Tenant nor the proposed transferee requests any changes to this
Lease or Landlord’s standard form of consent (other than minor and immaterial
changes) in connection with the proposed transfer, the attorney’s fees payable
by Tenant pursuant to this Section 9.6 shall not exceed $1500.00 for such
proposed transfer. Any purported sale, assignment, mortgage, transfer of this
Lease or subletting which does not comply with the provisions of this Article 9
shall be void.

 

9.7           If Tenant is a corporation, limited liability company, partnership
or trust, any transfer or transfers of or change or changes within any twelve
(12) month period in the number of the outstanding voting shares of the
corporation or limited liability company, the general partnership interests in
the partnership or the identity of the persons or entities controlling the
activities of such partnership or trust resulting in the persons or entities
owning or controlling a majority of such shares, partnership interests or
activities of such partnership or trust at the beginning of such period no
longer having such ownership or control shall be regarded as equivalent to an
assignment of this Lease to the persons or entities acquiring such ownership or
control and shall be subject to all the provisions of this Article 9 to the same
extent and for all intents and purposes as though such an assignment.

 

9.8           So long as Tenant is not entering into the Permitted Transfer (as
defined below) for the purpose of avoiding or otherwise circumventing the
remaining terms of this Article 9, Tenant may assign its entire interest under
this Lease, without the consent of Landlord, to (a) an affiliate, subsidiary, or
parent of Tenant, or a corporation, partnership or other legal

 

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entity wholly owned by Tenant (collectively, an “Affiliated Party”), or (b) a
successor to Tenant by purchase, merger, consolidation or reorganization,
provided that all of the following conditions are satisfied (each such Transfer
a “Permitted Transfer” and any such assignee or sublessee of a Permitted
Transfer, a “Permitted Transferee”): (i) Tenant is not in default under this
Lease; (ii) the Permitted Use does not allow the Premises to be used for retail
purposes; (iii) Tenant shall give Landlord written notice at least thirty (30)
days prior to the effective date of the proposed Permitted Transfer; (iv) with
respect to a proposed Permitted Transfer to an Affiliated Party, Tenant and
Guarantor have a consolidated net worth which is at least equal to or greater
than three (3) times the then outstanding obligations of Tenant for Annual Rent
and Tenant’s Proportionate Share of Expenses and Taxes from the date of such
Permitted Transfer through the Termination Date of this Lease; and (v) with
respect to a purchase, merger, consolidation or reorganization or any Permitted
Transfer which results in Tenant ceasing to exist as a separate legal entity,
(A) Tenant’s successor shall own all or substantially all of the assets of
Tenant, and (B) Tenant’s successor and Guarantor shall have a consolidated net
worth which is at least equal to three (3) times the then outstanding
obligations of Tenant for Annual Rent and Tenant’s Proportionate Share of
Expenses and Taxes from the date of such permitted Transfer through he
Termination Date of this Lease. Tenant’s notice to Landlord shall include
information and documentation showing that each of the above conditions has been
satisfied. If requested by Landlord, Tenant’s successor shall sign a
commercially reasonable form of assumption agreement. As used herein,
(1) “parent” shall mean a company which owns a majority of Tenant’s voting
equity; (2) “subsidiary” shall mean an entity wholly owned by Tenant or at least
fifty-one percent (51%) of whose voting equity is owned by Tenant; and
(3) “affiliate” shall mean an entity controlled, controlling or under common
control with Tenant.

 

10.          INDEMNIFICATION. None of the Landlord Entities shall be liable and
Tenant hereby waives all claims against them for any damage to any property or
any injury to any person in or about the Premises or the Building by or from any
cause whatsoever (including without limiting the foregoing, rain or water
leakage of any character from the roof, windows, walls, basement, pipes,
plumbing works or appliances, the Building not being in good condition or
repair, gas, fire, oil, electricity or theft), except to the extent caused by or
arising from the gross negligence or willful misconduct of Landlord or its
agents, employees or contractors. Tenant shall protect, indemnify and hold the
Landlord Entities harmless from and against any and all loss, claims, liability
or costs (including court costs and attorney’s fees) incurred by reason of
(a) any damage to any property (including but not limited to property of any
Landlord Entity) or any injury (including but not limited to death) to any
person occurring in, on or about the Premises or the Building to the extent that
such injury or damage shall be caused by or arise from any actual or alleged
act, neglect, fault, or omission by or of Tenant or any Tenant Entity to meet
any standards imposed by any duty with respect to the injury or damage; (b) the
conduct or management of any work or thing whatsoever done by the Tenant in or
about the Premises or from transactions of the Tenant concerning the Premises;
(c) Tenant’s failure to comply with any and all governmental laws, ordinances
and regulations applicable to the condition or use of the Premises or its
occupancy; or (d) any breach or default on the part of Tenant in the performance
of any covenant or agreement on the part of the Tenant to be performed pursuant
to this Lease. The provisions of this Article shall survive the termination of
this Lease with respect to any claims or liability accruing prior to such
termination.

 

11.          INSURANCE.

 

11.1         Tenant shall keep in force throughout the Term: (a) a Commercial
General Liability insurance policy or policies to protect the Landlord Entities
against any liability to the public or to any invitee of Tenant or a Landlord
Entity incidental to the use of or resulting from any accident occurring in or
upon the Premises with a limit of not less than $1,000,000 per occurrence and
not less than $2,000,000 in the annual aggregate, or such larger amount as
Landlord may prudently require from time to time, covering bodily injury and
property damage liability and $1,000,000 products/completed operations
aggregate; (b) Business Auto Liability covering owned, non-owned and hired
vehicles with a limit of not less than $1,000,000 per accident; (c) insurance
protecting against liability under Worker’s Compensation Laws with limits at
least as required by statute with Employers Liability with limits of $500,000
each accident, $500,000 disease policy limit, $500,000 disease-each employee;
(d) All Risk or Special Form coverage protecting Tenant against loss of or
damage to Tenant’s alterations, additions, improvements, carpeting, floor
coverings, panelings, decorations, fixtures, inventory and other business
personal property situated in or about the Premises to the full replacement
value of the property so insured; and, (e) Business Interruption Insurance with
limit of liability representing loss of at least approximately six (6) months of
income.

 

11.2         The aforesaid policies shall (a) be provided at Tenant’s expense;
(b) name the Landlord Entities as additional insureds (General Liability) and
loss payee (Property—Special Form); (c) be issued by an insurance company with a
minimum Best’s rating of “A:VII” during the Term; and (d) provide that said
insurance shall not be canceled unless thirty (30) days prior written notice
(ten days for non-payment of premium) shall have been given to Landlord; a
certificate of Liability insurance on ACORD Form 25 and a certificate of
Property insurance on ACORD Form 27 shall be delivered to Landlord by Tenant
upon the Commencement Date and at least thirty (30) days prior to each renewal
of said insurance.

 

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11.3         Whenever Tenant shall undertake any alterations, additions or
improvements in, to or about the Premises (“Work”) the aforesaid insurance
protection must extend to and include injuries to persons and damage to property
arising in connection with such Work, without limitation including liability
under any applicable structural work act, and such other insurance as Landlord
shall require; and the policies of or certificates evidencing such insurance
must be delivered to Landlord prior to the commencement of any such Work.

 

12.          WAIVER OF SUBROGATION. So long as their respective insurers so
permit, Tenant and Landlord hereby mutually waive their respective rights of
recovery against each other for any loss insured by fire, extended coverage, All
Risks or other insurance now or hereafter existing for the benefit of the
respective party but only to the extent of the net insurance proceeds payable
under such policies. Each party shall obtain any special endorsements required
by their insurer to evidence compliance with the aforementioned waiver.

 

13.          SERVICES AND UTILITIES. Tenant shall pay for all water, gas, heat,
light, power, telephone, sewer, and other utilities and services used on or from
the Premises, together with any taxes, penalties, and surcharges or the like
pertaining thereto and any maintenance charges for utilities. In the event that
any electric light bulbs, tubes and ballasts servicing the Premises require
replacement, Landlord shall provide such replacement within a reasonable period
of time and notice from Tenant and Tenant shall pay all costs and expenses
incurred by Landlord in connection therewith within ten (10) business days of
Landlord’s demand. Landlord shall furnish all battery packs for emergency
lighting and fire extinguishers and Tenant shall pay all costs and expenses
incurred by Landlord in connection therewith within ten (10) business days of
Landlord’s demand. If any such services are not separately metered to Tenant,
Tenant shall pay such proportion of all charges jointly metered with other
premises as determined by Landlord, in its sole discretion, to be reasonable.
Any such charges paid by Landlord and assessed against Tenant shall be
immediately payable to Landlord on demand and shall be additional rent
hereunder. Tenant will not, without the written consent of Landlord, contract
with a utility provider to service the Premises with any utility, including, but
not limited to, telecommunications, electricity, water, sewer or gas, which is
not previously providing such service to other tenants in the Building. In the
event that Landlord establishes a cafeteria in the Building, upon Tenant’s
request, Landlord shall, at its sole cost and expense, arrange for such
cafeteria to be separately metered. Landlord shall in no event be liable for any
interruption or failure of utility services on or to the Premises.

 

14.          HOLDING OVER. Tenant shall pay Landlord for each day Tenant retains
possession of the Premises or part of them after termination of this Lease by
lapse of time or otherwise at the rate (“Holdover Rate”) which shall be One
Hundred Fifty Percent (150%) of the greater of (a) the amount of the Annual Rent
for the last period prior to the date of such termination plus all Rent
Adjustments under Article 4; and (b) the then market rental value of the
Premises as determined by Landlord assuming a new lease of the Premises of the
then usual duration and other terms, in either case, prorated on a daily basis,
and also pay all damages sustained by Landlord by reason of such retention. If
Landlord gives notice to Tenant of Landlord’s election to such effect, such
holding over shall constitute renewal of this Lease for a period from month to
month or one (1) year, whichever shall be specified in such notice, in either
case at the Holdover Rate, but if the Landlord does not so elect, no such
renewal shall result notwithstanding acceptance by Landlord of any sums due
hereunder after such termination; and instead, a tenancy at sufferance at the
Holdover Rate shall be deemed to have been created. In any event, no provision
of this Article 14 shall be deemed to waive Landlord’s right of reentry or any
other right under this Lease or at law.

 

15.          SUBORDINATION. Without the necessity of any additional document
being executed by Tenant for the purpose of effecting a subordination, this
Lease shall be subject and subordinate at all times to ground or underlying
leases and to the lien of any mortgages or deeds of trust now or hereafter
placed on, against or affecting the Building, Landlord’s interest or estate in
the Building, or any ground or underlying lease; provided, however, that if the
lessor, mortgagee, trustee, or holder of any such mortgage or deed of trust
elects to have Tenant’s interest in this Lease be superior to any such
instrument, then, by notice to Tenant, this Lease shall be deemed superior,
whether this Lease was executed before or after said instrument. Notwithstanding
the foregoing, Tenant covenants and agrees to execute and deliver within ten
(10) days of Landlord’s request such further instruments evidencing such
subordination or superiority of this Lease as may be required by Landlord. As of
the date hereof, a lien encumbers Landlord’s interest in the Building in favor
of Sumitomo Mitsui Banking Corporation. At Tenant’s cost, Landlord shall provide
Tenant with a non-disturbance, subordination, and attornment agreement in favor
of Tenant in the form attached hereto as Exhibit E (the “SNDA”) within sixty
(60) days following Tenant’s execution and delivery thereof to Landlord.

 

16.          RULES AND REGULATIONS. Tenant shall faithfully observe and comply
with all the rules and regulations as set forth in Exhibit D to this Lease and
all reasonable and non-discriminatory modifications of and additions to them
from time to time put into effect by Landlord. Landlord shall not be responsible
to Tenant for the non-performance by any other tenant or occupant of the
Building of any such rules and regulations.

 

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17.          REENTRY BY LANDLORD.

 

17.1         Landlord reserves and shall at all times have the right to re-enter
the Premises to inspect the same, to show said Premises to prospective
purchasers, mortgagees or tenants, and to alter, improve or repair the Premises
and any portion of the Building, without abatement of rent, and may for that
purpose erect, use and maintain scaffolding, pipes, conduits and other necessary
structures and open any wall, ceiling or floor in and through the Building and
Premises where reasonably required by the character of the work to be performed,
provided entrance to the Premises shall not be blocked thereby, and further
provided that the business of Tenant shall not be interfered with unreasonably.
Notwithstanding the foregoing, except (a) to the extent requested by Tenant,
(b) in connection with regular scheduled maintenance programs, and/or (c).in the
event of an emergency, Landlord shall provide to Tenant reasonable prior notice
(either written or oral) before Landlord enters the Premises to perform any
repairs therein. Landlord shall have the right at any time to change the
arrangement and/or locations of entrances, or passageways, doors and doorways,
and corridors, windows, elevators, stairs, toilets or other public parts of the
Building and to change the name, number or designation by which the Building is
commonly known. In the event that Landlord damages any portion of any wall or
wall covering, ceiling, or floor or floor covering within the Premises, Landlord
shall repair or replace the damaged portion to match the original as nearly as
commercially reasonable but shall not be required to repair or replace more than
the portion actually damaged. Tenant hereby waives any claim for damages for any
injury or inconvenience to or interference with Tenant’s business, any loss of
occupancy or quiet enjoyment of the Premises, and any other loss occasioned by
any action of Landlord authorized by this Article 17.

 

17.2         For each of the aforesaid purposes, Landlord shall at all times
have and retain a key with which to unlock all of the doors in the Premises,
excluding Tenant’s vaults and safes or special security areas (designated in
advance), and Landlord shall have the right to use any and all means which
Landlord may deem proper to open said doors in an emergency to obtain entry to
any portion of the Premises. As to any portion to which access cannot be had by
means of a key or keys in Landlord’s possession, Landlord is authorized to gain
access by such means as Landlord shall elect and the cost of repairing any
damage occurring in doing so shall be borne by Tenant and paid to Landlord
within five (5) days of Landlord’s demand.

 

18.          DEFAULT.

 

18.1         Except as otherwise provided in Article 20, the following events
shall be deemed to be Events of Default under this Lease:

 

18.1.1      Tenant shall fail to pay when due any sum of money becoming due to
be paid to Landlord under this Lease, whether such sum be any installment of the
rent reserved by this Lease, any other amount treated as additional rent under
this Lease, or any other payment or reimbursement to Landlord required by this
Lease, whether or not treated as additional rent under this Lease, and such
failure shall continue for a period of five (5) days after written notice that
such payment was not made when due, but if any such notice shall be given, for
the twelve (12) month period commencing with the date of such notice, the
failure to pay within five (5) days after due any additional sum of money
becoming due to be paid to Landlord under this Lease during such period shall be
an Event of Default, without notice. The notice required pursuant to this
Section 18.1.1 shall replace rather than supplement any statutory notice
required under California Code of Civil Procedure Section 1161 or any similar or
successor statute. The fact that under certain circumstances no notice is
required to be delivered by Landlord to Tenant pursuant to this Section 18.1.1,
shall not be deemed to constitute a waiver by Tenant of any right Tenant may
have to receive statutory notice required under California Code of Civil
Procedure Section 1161 or any similar or successor statute.

 

18.1.2      Tenant shall fail to comply with any term, provision or covenant of
this Lease which is not provided for in another Section of this Article and
shall not cure such failure within thirty (30) days (forthwith, if the failure
involves a hazardous condition) after written notice of such failure to Tenant
provided, however, that such failure shall not be an event of default if such
failure could not reasonably be cured during such thirty (30) day period, Tenant
has commenced the cure within such thirty (30) day period and thereafter is
diligently pursuing such cure to completion, but the total aggregate cure period
shall not exceed ninety (90) days.

 

18.1.3      Tenant shall fail to vacate the Premises immediately upon
termination of this Lease, by lapse of time or otherwise, or upon termination of
Tenant’s right to possession only.

 

18.1.4      Tenant or Guarantor shall become insolvent, admit in writing its
inability to pay its debts generally as they become due, file a petition in
bankruptcy or a petition to take advantage of any insolvency statute, make an
assignment for the benefit of creditors, make a transfer in fraud of creditors,
apply for or consent to the appointment of a receiver of itself or of the whole
or any substantial part of its property, or file a petition or answer seeking
reorganization or

 

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arrangement under the federal bankruptcy laws, as now in effect or hereafter
amended, or any other applicable law or statute of the United States or any
state thereof.

 

18.1.5      A court of competent jurisdiction shall enter an order, judgment or
decree adjudicating Tenant bankrupt, or appointing a receiver of Tenant, or of
the whole or any substantial part of its property, without the consent of
Tenant, or approving a petition filed against Tenant seeking reorganization or
arrangement of Tenant under the bankruptcy laws of the United States, as now in
effect or hereafter amended, or any state thereof and such order, judgment or
decree shall not be vacated or set aside or stayed within sixty (60) days from
the date of entry thereof.

 

19.          REMEDIES.

 

19.1         Upon the occurrence of any Event or Events of Default under this
Lease, whether enumerated in Article 18 or not, Landlord shall have the option
to pursue any one or more of the following remedies without any notice (except
as expressly prescribed herein) or demand whatsoever (and without limiting the
generality of the foregoing, Tenant hereby specifically waives notice and demand
for payment of rent or other obligations and waives any and all other notices or
demand requirements imposed by applicable law):

 

19.1.1      Terminate this Lease and Tenant’s right to possession of the
Premises and recover from Tenant an award of damages equal to the sum of the
following:

 

19.1.1.1   The Worth at the Time of Award of the unpaid rent which had been
earned at the time of termination;

 

19.1.1.2   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 that Tenant affirmatively proves could have been
reasonably avoided;

 

19.1.1.3   The Worth at the Time of Award of the amount by which the unpaid rent
for the balance of the Term after the time of award exceeds the amount of such
rent loss that Tenant affirmatively proves could be reasonably avoided;

 

19.1.1.4   Any other amount necessary to compensate Landlord for all the
detriment either proximately caused by Tenant’s failure to perform Tenant’s
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom; and

 

19.1.1.5   All such other amounts in addition to or in lieu of the foregoing as
may be permitted from time to time under applicable law.

 

The “Worth at the Time of Award” of the amounts referred to in parts 19.1.1.1
and 19.1.1.2 above, shall be computed by allowing interest at the lesser of a
per annum rate equal to: (i) the greatest per annum rate of interest permitted
from time to time under applicable law, or (ii) the Prime Rate plus 5%. For
purposes hereof, the “Prime Rate” shall be the per annum interest rate publicly
announced as its prime or base rate by a federally insured bank selected by
Landlord in the State of California. The “Worth at the Time of Award” of the
amount referred to in part 19.1.1.3, above, shall be computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San Francisco at
the time of award plus 1%;

 

19.1.2      Employ the remedy described in California Civil Code § 1951.4
(Landlord may continue this Lease in effect after Tenant’s breach and
abandonment and recover rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations); or

 

19.1.3      Notwithstanding Landlord’s exercise of the remedy described in
California Civil Code § 1951.4 in respect of an Event or Events of Default, at
such time thereafter as Landlord may elect in writing, to terminate this Lease
and Tenant’s right to possession of the Premises and recover an award of damages
as provided above in Section 19.1.1.

 

19.2         The subsequent acceptance of rent hereunder by Landlord shall not
be deemed to be a waiver of any preceding breach by Tenant of any term, covenant
or condition of this Lease, other than the failure of Tenant to pay the
particular rent so accepted, regardless of Landlord’s knowledge of such
preceding breach at the time of acceptance of such rent. No waiver by Landlord
of any breach hereof shall be effective unless such waiver is in writing and
signed by Landlord.

 

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19.3        TENANT HEREBY WAIVES ANY AND ALL RIGHTS CONFERRED BY SECTION 3275 OF
THE CIVIL CODE OF CALIFORNIA AND BY SECTIONS 1174 (c) AND 1179 OF THE CODE OF
CIVIL PROCEDURE OF CALIFORNIA AND ANY AND ALL OTHER REGULATIONS AND RULES OF LAW
FROM TIME TO TIME IN EFFECT DURING THE TERM PROVIDING THAT TENANT SHALL HAVE ANY
RIGHT TO REDEEM, REINSTATE OR RESTORE THIS LEASE FOLLOWING ITS TERMINATION BY
REASON OF TENANT’S BREACH. TENANT ALSO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF OR
RELATING TO THIS LEASE.

 

19.4         No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy, and each and every right
and remedy shall be cumulative and in addition to any other right or remedy
given hereunder or now or hereafter existing by agreement, applicable law or in
equity. In addition to other remedies provided in this Lease, Landlord shall be
entitled, to the extent permitted by applicable law, to injunctive relief, or to
a decree compelling performance of any of the covenants, agreements, conditions
or provisions of this Lease, or to any other remedy allowed to Landlord at law
or in equity. Forbearance by Landlord to enforce one or more of the remedies
herein provided upon an Event of Default shall not be deemed or construed to
constitute a waiver of such Default.

 

19.5         This Article 19 shall be enforceable to the maximum extent such
enforcement is not prohibited by applicable law, and the unenforceability of any
portion thereof shall not thereby render unenforceable any other portion..

 

19.6         If more than one (1) Event of Default occurs during the term or any
renewal thereof, Tenant’s renewal options, expansion options, purchase options
and rights of first offer and/or refusal, if any are provided for in this Lease,
shall be null and void.

 

19.7         If, on account of any breach or default by Tenant in Tenant’s
obligations under the terms and conditions of this Lease, it shall become
necessary or appropriate for Landlord to employ or consult with an attorney or
collection agency concerning or to enforce or defend any of Landlord’s rights or
remedies arising under this Lease or to collect any sums due from Tenant, Tenant
agrees to pay all costs and fees so incurred by Landlord, including, without
limitation, reasonable attorneys’ fees and costs. TENANT EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY. Tenant hereby specifically also waives notice and demand
for payment of rent or other obligations, except for those notices specifically
required pursuant to the terms of this Lease and notices which may be required
under California Code of Civil Procedure Section 1161, as described in
Section 18.1.1 above.

 

19.8         Upon the occurrence of an Event of Default, Landlord may (but shall
not be obligated to) cure such default at Tenant’s sole expense. Without
limiting the generality of the foregoing, Landlord may, at Landlord’s option,
enter into and upon the Premises if Landlord determines in its sole discretion
that Tenant is not acting within a commercially reasonable time to maintain,
repair or replace anything for which Tenant is responsible under this Lease or
to otherwise effect compliance with its obligations under this Lease and correct
the same, without being deemed in any manner guilty of trespass, eviction or
forcible entry and detainer and without incurring any liability for any damage
or interruption of Tenant’s business resulting therefrom and Tenant agrees to
reimburse Landlord within five (5) days of Landlord’s demand as additional rent,
for any expenses which Landlord may incur in thus effecting compliance with
Tenant’s obligations under this Lease, plus interest from the date of
expenditure by Landlord at the Wall Street Journal prime rate.

 

20.          TENANT’S BANKRUPTCY OR INSOLVENCY.

 

20.1         If at any time and for so long as tenant shall be subjected to the
provisions of the United States Bankruptcy Code or other law of the United
States or any state thereof for the protection of debtors as in effect at such
time (each a “Debtor’s Law”):

 

20.1.1      Tenant, Tenant as debtor-in-possession, and any trustee or receiver
of Tenant’s assets (each a “Tenant’s Representative”) shall have no greater
right to assume or assign this Lease or any interest in this Lease, or to
sublease any of the Premises than accorded to Tenant in Article 9, except to the
extent Landlord shall be required to permit such assumption, assignment or
sublease by the provisions of such Debtor’s Law. Without limitation of the
generality of the foregoing, any right of any Tenant’s Representative to assume
or assign this Lease or to sublease any of the Premises shall be subject to the
conditions that:

 

20.1.1.1   Such Debtor’s Law shall provide to Tenant’s Representative a right of
assumption of this Lease which Tenant’s Representative shall have timely
exercised and Tenant’s Representative shall have fully cured any default of
Tenant under this Lease.

 

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20.1.1.2   Tenant’s Representative or the proposed assignee, as the case shall
be, shall have deposited with Landlord as security for the timely payment of
rent an amount equal to the larger of: (a) three (3) months’ rent and other
monetary charges accruing under this Lease; and (b) any sum specified in
Article 5; and shall have provided Landlord with adequate other assurance of the
future performance of the obligations of the Tenant under this Lease. Without
limitation, such assurances shall include, at least, in the case of assumption
of this Lease, demonstration to the satisfaction of the Landlord that Tenant’s
Representative has and will continue to have sufficient unencumbered assets
after the payment of all secured obligations and administrative expenses to
assure Landlord that Tenant’s Representative will have sufficient funds to
fulfill the obligations of Tenant under this Lease; and, in the case of
assignment, submission of current financial statements of the proposed assignee,
audited by an independent certified public accountant reasonably acceptable to
Landlord and showing a net worth and working capital in amounts determined by
Landlord to be sufficient to assure the future performance by such assignee of
all of the Tenant’s obligations under this Lease.

 

20.1.1.3   The assumption or any contemplated assignment of this Lease or
subleasing any part of the Premises, as shall be the case, will not breach any
provision in any other lease, mortgage, financing agreement or other agreement
by which Landlord is bound.

 

20.1.1.4   Landlord shall have, or would have had absent the Debtor’s Law, no
right under Article 9 to refuse consent to the proposed assignment or sublease
by reason of the identity or nature of the proposed assignee or sublessee or the
proposed use of the Premises concerned.

 

21.          QUIET ENJOYMENT. Landlord represents and warrants that it has full
right and authority to enter into this Lease and that Tenant, while paying the
rental and performing its other covenants and agreements contained in this
Lease, shall peaceably and quietly have, hold and enjoy the Premises for the
Term without hindrance or molestation from Landlord subject to the terms and
provisions of this Lease. Landlord shall not be liable for any interference or
disturbance by other tenants or third persons, nor shall Tenant be released from
any of the obligations of this Lease because of such interference or
disturbance.

 

22.          CASUALTY.

 

22.1         In the event the Premises or the Building are damaged by fire or
other cause and in Landlord’s reasonable estimation such damage can be
materially restored within two hundred ten (210) days after the date of such
damage, Landlord shall forthwith repair the same and this Lease shall remain in
full force and effect, except that Tenant shall be entitled to a proportionate
abatement in rent from the date of such damage. Such abatement of rent shall be
made pro rata in accordance with the extent to which the damage and the making
of such repairs shall interfere with the use and occupancy by Tenant of the
Premises from time to time, Within forty-five (45) days from the date of such
damage, Landlord shall notify Tenant, in writing, of Landlord’s reasonable
estimation of the length of time within which material restoration can be made,
and Landlord’s determination shall be binding on Tenant. For purposes of this
Lease, the Building or Premises shall be deemed “materially restored” if they
are in such condition as would not prevent or materially interfere with Tenant’s
use of the Premises for the purpose for which it was being used immediately
before such damage.

 

22.2         If such repairs cannot, in Landlord’s reasonable estimation, be
made within two hundred ten (210) days after the date of such damage, Landlord
and Tenant shall each have the option of giving the other, at any time within
ninety (90) days after such damage, notice terminating this Lease as of the date
of such damage. In the event of the giving of such notice, this Lease shall
expire and all interest of the Tenant in the Premises shall terminate as of the
date of such damage as if such date had been originally fixed in this Lease for
the expiration of the Term. In the event that neither Landlord nor Tenant
exercises its option to terminate this Lease, then Landlord shall repair or
restore such damage, this Lease continuing in full force and effect, and the
rent hereunder shall be proportionately abated as provided in Section 22.1.

 

22.3         Landlord shall not be required to repair or replace any damage or
loss by or from fire or other cause to any panelings, decorations, partitions,
additions, railings, ceilings, floor coverings, office fixtures or any other
property or improvements installed on the Premises by, or belonging to, Tenant.
Any insurance which may be carried by Landlord or Tenant against loss or damage
to the Building or Premises shall be for the sole benefit of the party carrying
such insurance and under its sole control.

 

22.4         In the event that Landlord should fail to complete such repairs and
material restoration within sixty (60) days after the date estimated by Landlord
therefor as extended by this Section 22.4, Tenant may at its option and as its
sole remedy terminate this Lease by delivering written notice to Landlord,
within fifteen (15) days after the expiration of said period of time, whereupon
the Lease shall end on the date of such notice or such later date fixed in such
notice as if the date of such notice was the date originally fixed in this Lease
for the expiration of the Term; provided, however, that if

 

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construction is delayed because of changes, deletions or additions in
construction requested by Tenant, strikes, lockouts, casualties, Acts of God,
war, material or labor shortages, government regulation or control or other
causes beyond the reasonable control of Landlord, the period for restoration,
repair or rebuilding shall be extended for the amount of time Landlord is so
delayed.

 

22.5         Notwithstanding anything to the contrary contained in this Article:
(a) Landlord shall not have any obligation whatsoever to repair, reconstruct, or
restore the Premises when the damages resulting from any casualty covered by the
provisions of this Article 22 occur during the last twelve (12) months of the
Term or any extension thereof, but if Landlord determines not to repair such
damages Landlord shall notify Tenant and if such damages shall render any
material portion of the Premises untenantable Tenant shall have the right to
terminate this Lease by notice to Landlord within fifteen (15) days after
receipt of Landlord’s notice; and (b) in the event the holder of any
indebtedness secured by a mortgage or deed of trust covering the Premises or
Building requires that any insurance proceeds be applied to such indebtedness,
then Landlord shall have the right to terminate this Lease by delivering written
notice of termination to Tenant within fifteen (15) days after such requirement
is made by any such holder, whereupon this Lease shall end on the date of such
damage as if the date of such damage were the date originally fixed in this
Lease for the expiration of the Term.

 

22.6         In the event of any damage or destruction to the Building or
Premises by any peril covered by the provisions of this Article 22, it shall be
Tenant’s responsibility to properly secure the Premises and upon notice from
Landlord to remove forthwith, at its sole cost and expense, such portion of all
of the property belonging to Tenant or its licensees from such portion or all of
the Building or Premises as Landlord shall request.

 

22.7         Tenant hereby waives any and all rights under and benefits of
Sections 1932(2) and 1933(4) of the California Civil Code, or any similar or
successor Regulations or other laws now or hereinafter in effect.

 

23.          EMINENT DOMAIN. If all or any substantial part of the Premises
shall be taken or appropriated by any public or quasi-public authority under the
power of eminent domain, or conveyance in lieu of such appropriation, either
party to this Lease shall have the right, at its option, of giving the other, at
any time within thirty (30) days after such taking, notice terminating this
Lease, except that Tenant may only terminate this Lease by reason of taking or
appropriation, if such taking or appropriation shall be so substantial as to
materially interfere with Tenant’s use and occupancy of the Premises. If neither
party to this Lease shall so elect to terminate this Lease, the rental
thereafter to be paid shall be adjusted on a fair and equitable basis under the
circumstances. In addition to the rights of Landlord above, if any substantial
part of the Building shall be taken or appropriated by any public or
quasi-public authority under the power of eminent domain or conveyance in lieu
thereof, and regardless of whether the Premises or any part thereof are so taken
or appropriated, Landlord shall have the right, at its sole option, to terminate
this Lease. Landlord shall be entitled to any and all income, rent, award, or
any interest whatsoever in or upon any such sum, which may be paid or made in
connection with any such public or quasi-public use or purpose, and Tenant
hereby assigns to Landlord any interest it may have in or claim to all or any
part of such sums, other than any separate award which may be made with respect
to Tenant’s trade fixtures and moving expenses; Tenant shall make no claim for
the value of any unexpired Term. Tenant hereby waives any and all rights under
and benefits of Section 1265.130 of the California Code of Civil Procedure, or
any similar or successor Regulations or other laws now or hereinafter in effect.

 

24.          SALE BY LANDLORD. In event of a sale or conveyance by Landlord of
the Building, the same shall operate to release Landlord from any future
liability upon any of the covenants or conditions, expressed or implied,
contained in this Lease in favor of Tenant, and in such event Tenant agrees to
look solely to the responsibility of the successor in interest of Landlord in
and to this Lease. Except as set forth in this Article 24, this Lease shall not
be affected by any such sale and Tenant agrees to attorn to the purchaser or
assignee. If any security has been given by Tenant to secure the faithful
performance of any of the covenants of this Lease, Landlord may transfer or
deliver said security, as such, to Landlord’s successor in interest and
thereupon Landlord shall be discharged from any further liability with regard to
said security.

 

25.          ESTOPPEL CERTIFICATES. Within ten (10) days following any written
request which Landlord may make from time to time, Tenant shall execute and
deliver to Landlord or mortgagee or prospective mortgagee a sworn statement
certifying: (a) the date of commencement of this Lease; (b) the fact that this
Lease is unmodified and in full force and effect (or, if there have been
modifications to this Lease, that this lease is in full force and effect, as
modified, and stating the date and nature of such modifications); (c) the date
to which the rent and other sums payable under this Lease have been paid; (d)
the fact that there arc no current defaults under this Lease by either Landlord
or Tenant except as specified in Tenant’s statement; and (e) such other matters
as may be requested by Landlord. Landlord and Tenant intend that any statement
delivered pursuant to this Article 25 may be relied upon by any mortgagee,
beneficiary or purchaser, and Tenant shall be liable for all loss, cost or
expense resulting from the failure of any sale or funding of any loan caused by
any material misstatement contained in such estoppel certificate. Tenant
irrevocably agrees that if Tenant fails to execute and deliver such

 

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certificate within such ten (10) day period Landlord or Landlord’s beneficiary
or agent may execute and deliver such certificate on Tenant’s behalf, and that
such certificate shall be fully binding on Tenant.

 

26.          SURRENDER OF PREMISES.

 

26.1         Tenant shall arrange to meet Landlord for two (2) joint inspections
of the Premises, the first to occur at least thirty (30) days (but no more than
sixty (60) days) before the last day of the Term, and the second to occur not
later than forty-eight (48) hours after Tenant has vacated the Premises. In the
event of Tenant’s failure to arrange such joint inspections and/or participate
in either such inspection, Landlord’s inspection at or after Tenant’s vacating
the Premises shall be conclusively deemed correct for purposes of determining
Tenant’s responsibility for repairs and restoration.

 

26.2         All alterations, additions, and improvements in, on, or to the
Premises made or installed by or for Tenant, including carpeting (collectively,
“Alterations”), shall be and remain the property of Tenant during the Term. Upon
the expiration or sooner termination of the Term, all Alterations, except
Tenant’s furniture and cubicles that are de-mountable and non-hardwalled
(collectively, “Tenant’s Removable Furniture”) which shall remain Tenant’s
property, shall become a part of the realty and shall belong to Landlord without
compensation, and title shall pass to Landlord under this Lease as by a bill of
sale. At the end of the Term or any renewal of the Term or other sooner
termination of this Lease, Tenant will peaceably deliver up to Landlord
possession of the Premises, together with all Alterations, except Tenant’s
Removable Furniture which shall remain Tenant’s property, by whomsoever made, in
the same conditions received or first installed, broom clean and free of all
debris, excepting only ordinary wear and tear and damage by fire or other
casualty. Notwithstanding the foregoing, subject to Section 6.4, if Landlord
elects by notice given to Tenant at least ten (10) days prior to expiration of
the Term, Tenant shall, at Tenant’s sole cost, remove any Alterations, including
carpeting, so designated by Landlord’s notice, and repair any damage caused by
such-removal. If Landlord elects by notice given to Tenant at least ten
(10) days prior to the expiration of the Term, Tenant shall, at Tenant’s sole
cost, remove any door hardware or access devices installed by Tenant and restore
the locks and/or access devices to a standard type similar to those existing in
the Premises as of the date Landlord delivers possession of the Premises to
Tenant. Tenant must, at Tenant’s sole cost, remove upon termination of this
Lease, any and all of Tenant’s furniture, furnishings, movable partitions of
less than full height from floor to ceiling and other trade fixtures and
personal property (collectively, “Personalty”). Personalty not so removed shall
be deemed abandoned by the Tenant and title to the same shall thereupon pass to
Landlord under this Lease as by a bill of sale, but Tenant shall remain
responsible for the cost of removal and disposal of such Personalty, as well as
any damage caused by such removal. In lieu of requiring Tenant to remove
Alterations and Personalty and repair the Premises as aforesaid, Landlord may,
by written notice to Tenant delivered at least thirty (30) days before the
Termination Date, require Tenant to pay to Landlord, as additional rent
hereunder, the cost of such removal and repair in an amount reasonably estimated
by Landlord.

 

26.3         All obligations of Tenant under this Lease not fully performed as
of the expiration or earlier termination of the Term shall survive the
expiration or earlier termination of the Term Upon the expiration or earlier
termination of the Term, Tenant shall pay to Landlord the amount, as estimated
by Landlord, necessary to repair and restore the Premises as provided in this
Lease and/or to discharge Tenant’s obligation for unpaid amounts due or to
become due to Landlord. All such amounts shall be used and held by Landlord for
payment of such obligations of Tenant, with Tenant being liable for any
additional costs upon demand by Landlord, or with any excess to be returned to
Tenant after all such obligations have been determined and satisfied. Any
otherwise unused Security Deposit shall be credited against the amount payable
by Tenant under this Lease.

 

27.          NOTICES. Any notice or document required or permitted to be
delivered under this Lease shall be addressed to the intended recipient, by
fully prepaid registered or certified United States Mail return receipt
requested, or by reputable independent contract delivery service furnishing a
written record of attempted or actual delivery, and shall be deemed to be
delivered when tendered for delivery to the addressee at its address set forth
on the Reference Pages, or at such other address as it has then last specified
by written notice delivered in accordance with this Article 27, or if to Tenant
at either its aforesaid address or its last known registered office or home of a
general partner or individual owner, whether or not actually accepted or
received by the addressee. Any such notice or document may also be personally
delivered if a receipt is signed by and received from, the individual, if any,
named in Tenant’s Notice Address.

 

28,          TAXES PAYABLE BY TENANT.  In addition to rent and other charges to
be paid by Tenant under this Lease, Tenant shall reimburse to Landlord, upon
demand, any and all taxes payable by Landlord (other than net income taxes)
whether or not now customary or within the contemplation of the parties to this
Lease: (a) upon, allocable to, or measured by or on the gross or net rent
payable under this Lease, including without limitation any gross income tax or
excise tax levied by the State, any political subdivision thereof, or the
Federal Government with respect to the receipt of such rent; (b) upon or with
respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy of the

 

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Premises or any portion thereof including any sales, use or service tax imposed
as a result thereof; (c) upon or measured by the tenant’s gross receipts or
payroll or the value of Tenant’s equipment, furniture, fixtures and other
personal property of Tenant or leasehold improvements, alterations or additions
located in the Premises; or (d) upon this transaction or any document to which
Tenant is a party creating or transferring any interest of Tenant in this Lease
or the Premises. In addition to the foregoing, Tenant agrees to pay, before
delinquency, any and all taxes levied or assessed against Tenant and which
become payable during the term hereof upon Tenant’s equipment, furniture,
fixtures and other personal property of Tenant located in the Premises.

 

29.          [INTENTIONALLY OMITTED)

 

30.          DEFINED TERMS AND HEADINGS. The Article headings shown in this
Lease are for convenience of reference and shall in no way define, increase,
limit or describe the scope or intent of any provision of this Lease. Any
indemnification or insurance of Landlord shall apply to and inure to the benefit
of all the following “Landlord Entities”, being Landlord, Landlord’s investment
manager, and the trustees, boards of directors, officers, general partners,
beneficiaries, stockholders, employees and agents of each of them. Any option
granted to Landlord shall also include or be exercisable by Landlord’s trustee,
beneficiary, agents and employees, as the case may be. In any case where this
Lease is signed by more than one person, the obligations under this Lease shall
be joint and several. The terms “Tenant” and “Landlord” or any pronoun used in
place thereof shall indicate and include the masculine or feminine, the singular
or plural number, individuals, firms or corporations, and their and each of
their respective successors, executors, administrators and permitted assigns,
according to the context hereof. The term “rentable area” shall mean the
rentable area of the Premises or the Building as calculated by the Landlord on
the basis of the plans and specifications of the Building including a
proportionate share of any common areas. Tenant hereby accepts and agrees to be
bound by the figures for the rentable square footage of the Premises and
Tenant’s Proportionate Share shown on the Reference Pages; however, Landlord may
adjust either or both figures if there is manifest error, addition or
subtraction to the Building or any business park or complex of which the
Building is a part, remeasurement or other circumstance reasonably justifying
adjustment. The term “Building” refers to the structure in which the Premises
are located and the common areas (parking lots, sidewalks, landscaping, etc.)
appurtenant thereto. If the Building is part of a larger complex of structures,
the term “Building” may include the entire complex, where appropriate (such as
shared Expenses or Taxes) and subject to Landlord’s reasonable discretion.

 

31.          TENANT’S AUTHORITY. If Tenant signs as a corporation, partnership,
trust or other legal entity each of the persons executing this Lease on behalf
of Tenant represents and warrants that Tenant has been and is qualified to do
business in the state in which the Building is located, that the entity has full
right and authority to enter into this Lease, and that all persons signing on
behalf of the entity were authorized to do so by appropriate actions. Tenant
agrees to deliver to Landlord, simultaneously with the delivery of this Lease, a
corporate resolution, proof of due authorization by partners, opinion of counsel
or other appropriate documentation reasonably acceptable to Landlord evidencing
the due authorization of Tenant to enter into this Lease.

 

32.          FINANCIAL STATEMENTS AND CREDIT REPORTS. At Landlord’s request,
Tenant shall deliver to Landlord a copy, certified by an officer of Tenant as
being a true and correct copy, of Tenant’s most recent audited financial
statement, or, if unaudited, certified by Tenant’s chief financial officer as
being true, complete and correct in all material respects. So long as Tenant and
Guarantor file consolidated public annual reports, the foregoing may be
satisfied by delivery by Tenant to Landlord of each such current public annual
report for such applicable year. The immediately preceding sentence is personal
to Tenant and shall not be applicable to any successor or assign of Tenant.
Tenant hereby authorizes Landlord to obtain one or more credit reports on Tenant
at any time, and shall execute such further authorizations as Landlord may
reasonably require in order to obtain a credit report.  At the request of
Landlord from time to time, Tenant shall provide to Landlord Guarantor’s current
financial statements or other information discussing financial worth of
Guarantor as reasonably requested by Landlord.

 

33.          COMMISSIONS. Each of the parties represents and warrants to the
other that it has not dealt with any broker or finder in connection with this
Lease, except as described on the Reference Pages.

 

34.          TIME AND APPLICABLE LAW. Time is of the essence of this Lease and
all of its provisions. This Lease shall in all respects be governed by the laws
of the state in which the Building is located.

 

35.          SUCCESSORS AND ASSIGNS. Subject to the provisions of Article 9, the
terms, covenants and conditions contained in this Lease shall be binding upon
and inure to the benefit of the heirs, successors, executors, administrators and
assigns of the parties to this Lease.

 

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36.          ENTIRE AGREEMENT. This Lease, together with its exhibits, contains
all agreements of the parties to this Lease and supersedes any previous
negotiations. There have been no representations made by the Landlord or any of
its representatives or understandings made between the parties other than those
set forth in this Lease and its exhibits. This Lease may not be modified except
by a written instrument duly executed by the parties to this Lease.

 

37.          EXAMINATION NOT OPTION. Submission of this Lease shall not be
deemed to be a reservation of the Premises. Landlord shall not be bound by this
Lease until it has received a copy of this Lease duly executed by Tenant and has
delivered to Tenant a copy of this Lease duly executed by Landlord, and until
such delivery Landlord reserves the right to exhibit and lease the Premises to
other prospective tenants. Notwithstanding anything contained in this Lease to
the contrary, Landlord may withhold delivery of possession of the Premises from
Tenant until such time as Tenant has paid to Landlord any security deposit
required by Article 5, the first month’s rent as set forth in Article 3 and any
sum owed pursuant to this Lease.

 

38.          RECORDATION. Tenant shall not record or register this Lease or a
short form memorandum hereof without the prior written consent of Landlord, and
then shall pay all charges and taxes incident such recording or registration.

 

39.          OPTION TO RENEW.

 

39.1         Tenant shall, provided the Lease is in full force and effect and
Tenant is not in default under any of the other terms and conditions of the
Lease at the time of notification or commencement, have one (1) option to renew
(the “Renewal Option”) this Lease for a term of five (5) years (the “Renewal
Term”), for the portion of the Premises being leased by Tenant as of the date
the Renewal Term is to commence, on the same terms and conditions set forth in
this Lease, except as modified by the terms, covenants and conditions as set
forth below:

 

39.1.1      If Tenant elects to exercise the Renewal Option, then Tenant shall
provide Landlord with written notice no later than the date which is one hundred
eighty (180) days prior to the expiration of the Term of this Lease but no
earlier than the date which is two hundred seventy (270) days prior to the
expiration of the Term of this Lease. If Tenant fails to provide such notice,
Tenant shall have no further right to extend or renew the Term of this Lease.

 

39.1.2      The Annual Rent and Monthly Installment of Rent in effect at the
expiration of the initial Term of this Lease shall be increased to reflect the
current fair market rental for comparable Space in the Building and in other
similar buildings in the same rental market as of the date the Renewal Term is
to commence, taking into account the specific provisions of this Lease which
will remain constant. Landlord shall advise Tenant of the new Annual Rent and
Monthly Installment of Rent for the Premises no later than thirty (30) days
after receipt of Tenant’s written request therefor. Said request shall be made
no earlier than thirty (30) days prior to the first date on which Tenant may
exercise its Renewal Option under this Article 39. Said notification of the new
Annual Rent may include a provision for its escalation to provide for a change
in fair market rental between the time of notification and the commencement of
the Renewal Term. In no event shall the Annual Rent and Monthly Installment of
Rent for the Renewal Term be less than the Annual Rent and Monthly Installment
of Rent in the preceding period.

 

39.1.3      This Renewal Option is not transferable and the parties hereto
acknowledge and agree that they intend that the Renewal Option shall be
“personal” to Tenant as set forth above and that in no event will any assignee
or sublessee have any rights to exercise the Renewal Option.

 

39.1.4      As the Renewal Option is exercised, Tenant shall have no further
right to extend the term of this Lease.

 

39.1.5      Notwithstanding anything herein to the contrary, Tenant’s Renewal
Option is subject and subordinate to the expansion rights (whether such rights
are designated as a right of first offer, right of first refusal, expansion
option or otherwise) of any tenant of the Building existing on the date hereof.

 

40.           Intentionally Omitted.

 

41.          SIGNAGE.

 

41.1.1      During the Term and provided that Tenant leases and occupies the
Premises, Tenant, at Tenant’s sole cost, but subject to governmental approval,
shall have the right to place its name on the Building’s monument sign located
on East Evelyn (the “Monument Sign”). The design, size and color of the signage
with Tenant’s name to be included on the Monument Sign, and the manner in which
it is attached to the Monument Sign, shall be subject to the reasonable approval
of Landlord and all applicable governmental authorities, and Landlord shall have
the right to require that all names

 

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on the Monument Sign be of the same size and style. Tenant, at its cost, shall
be responsible for the maintenance, repair or replacement of Tenant’s signage on
the Monument Sign, which shall be maintained in a manner reasonably satisfactory
to Landlord. Tenant’s right to place its name on the Monument Sign, and the
location of Tenant’s name on the Monument Sign, shall be subject to the existing
rights of existing tenants in the Building and Project, and the location of
Tenant’s name on the Monument Sign shall be further subject to Landlord’s
reasonable approval. Although the Monument Sign will be maintained by Landlord,
Tenant shall pay its proportionate share of the cost of any maintenance and
repair associated with the Monument Sign. Upon expiration or earlier termination
of the Lease or Tenant’s right to possession of the Premises, or if Tenant
ceases to lease or occupy the Premises, Landlord, at Tenant’s cost, payable as
additional rent within five (5) business days after demand therefor, shall have
the right to remove Tenant’s signage from the Monument Sign and restore the
Monument Sign to the condition it was in prior to installation of Tenant’s
signage thereon, ordinary wear and tear excepted. The rights provided in this
Article 41 shall be non-transferable unless otherwise agreed by Landlord in
writing.

 

41.1.2  During the term and provided that Tenant leases and occupies the
Premises, Tenant, at Tenant’s sole cost, but subject to governmental approvals,
shall be entitled to one exclusive sign to be located near the top of the
exterior wall of the Building on the East side of the Building (i.e., the side
of the Building which faces Highway 237) (“Building Signage”). The design, size,
color and exact location of the Building Signage shall be subject to the
approval of all applicable governmental authorities and Landlord’s prior written
approval, which approval shall not be unreasonably withheld, provided that the
location does not detract from the first-class quality of the Building or the
Project.  Such right to Building Signage is personal to Tenant and is subject to
the following terms and conditions:

 

41.1.2.1   Tenant shall submit plans and drawings for the Building Signage to
the City of Mountain View and to any other public authorities having
jurisdiction and shall obtain written approval from each such jurisdiction prior
to installation, and shall fully comply with all applicable laws.

 

41.1.2.2   Tenant shall, at Tenant’s sole cost and expense, design, construct
and install the Building Signage.

 

41.1.2.3   The Building Signage shall be subject to Landlord’s prior written
approval, which Landlord shall have the right to withhold in its reasonable
discretion.

 

41.1.2.4   Tenant shall periodically inspect the Building Signage to identify
any conditions that are in need of maintenance or repair. Tenant shall provide
Landlord with notice of any such conditions and Landlord shall make any such
repairs within a reasonable period of time following the receipt of such notice.
All sums paid by Landlord and all expenses incurred by it in connection with
such repairs shall be payable to Landlord by Tenant within ten (10) business
days of Landlord’s demand. Tenant shall be responsible for any electrical energy
used in connection with the Building Signage. Notwithstanding the foregoing,
Tenant shall not be liable for any fee in connection with Tenant’s right to
display the Building Signage in accordance with the Lease. At Landlord’s option,
Tenant’s right to the Building Signage may be revoked and terminated upon
occurrence of any of the following events:

 

41.1.2.4.1                Tenant shall be in default under this Lease beyond any
applicable cure period.

 

41.1.2.4.2                Tenant does not occupy the Premises.

 

41.1.2.4.3                This Lease shall terminate or otherwise no longer be
in effect.

 

Upon the expiration or earlier termination of this Lease or at such other time
that Tenant’s signage rights are terminated pursuant to the terms hereof, if
Tenant fails to remove its signage and repair the Building in accordance with
the terms of this Lease, Landlord shall cause Tenant’s signage to be removed
from the Building and the Building to be repaired and restored to the condition
which existed prior to the installation of Tenant’s signage (including, if
necessary, the replacement of any precast concrete panels), all at the sole cost
and expense of Tenant and otherwise in accordance with this Lease, without
further notice from Landlord notwithstanding anything to the contrary contained
in this Lease. Tenant shall pay all costs and expenses for such removal and
restoration within five (5) business days following delivery of an invoice
therefor. The rights provided in this Section 41.1.2 shall be non-transferable,
except in connection with an assignment of this Lease approved by Landlord, a
Permitted Transfer, or as otherwise agreed by Landlord in writing in its sole
discretion.

 

42.          CAFETERIA. Subject to tenant demand and market conditions, Landlord
shall use commercially reasonable efforts to establish a cafeteria in the
Building. In the event that Landlord is unwilling or unable to establish a
cafeteria in the Building or to maintain the existence of a cafeteria which it
may establish, Landlord shall not be liable for any damages

 

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resulting therefrom and the absence of the same shall have no effect on or
diminish the rights, obligations and liabilities of Landlord and Tenant under
this Lease or be considered to be a default by Landlord hereunder, nor shall
Tenant be entitled to any abatement of Rent due to the absence of a cafeteria in
the Building.

 

43.          ADDITIONAL SPACE IN PROJECT. In the event that Tenant requires
additional space within the Project (each, an “Additional Space”), Tenant may
inform Landlord of the size, type and location of the space that Tenant desires
to lease and so long as no Event of Default has occurred and is continuing,
Landlord agrees to use good faith efforts to offer available space within the
Project to Tenant to the extent such space substantially meets Tenant’s needs,
is not subject to any renewal or expansion rights of any existing tenant of the
Project, and Landlord, is not otherwise in negotiations to lease such space to a
third party. Notwithstanding the foregoing, nothing set forth in this Article 43
shall diminish or otherwise affect Tenant’s obligations under this Lease and in
no event shall Landlord be liable to Tenant if Landlord is unable to offer any
additional space within the Project to Tenant pursuant to the terms of
Article 43.

 

44.          IMPROVEMENT OF EXTERIOR OF PROJECT. Landlord shall use commercially
reasonable efforts to improve the landscaping, signage, and building exteriors
at the Project, as determined to be necessary or desirable by Landlord, in its
sole and absolute discretion.

 

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21

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45.          LIMITATION OF LANDLORD’S LIABILITY. Redress for any claim against
Landlord under this Lease shall be limited to and enforceable only against and
to the extent of Landlord’s interest in the Building. The obligations of
Landlord under this Lease are not intended to be and shall not be personally
binding on, nor shall any resort be had to the private properties of, any of its
or its investment manager’s trustees, directors, officers, partners,
beneficiaries, members, stockholders, employees, or agents, and in no case shall
Landlord be liable to Tenant hereunder for any lost profits, damage to business,
or any form of special, indirect or consequential damages.

 

LANDLORD:

 

 

TENANT:

 

 

 

 

 

 

SFERS REAL ESTATE CORP. U,

 

 

VERISITY DESIGN, INC.,

 

a Delaware corporation

 

 

a California corporation

 

 

 

 

 

 

By:

RREEF Management Company, a

 

 

 

 

 

Delaware corporation

 

 

 

 

 

 

 

 

 

By:

/s/ James H. Ida

 

 

By:

/s/ Charles Alvarez

 

Name: James H. Ida

 

 

Name:

Charles Alvarez

 

Title: District Manager

 

 

Title:

Vice President of Finance and

 

 

 

 

 

Chief Financial Officer

 

 

 

 

 

 

 

 

4/15/04

 

 

Dated:

4/15/04

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

22

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

 

EXHIBIT A - FLOOR PLAN DEPICTING THE PREMISES

 

attached to and made a part of Lease bearing the

Lease Reference Date of April 14, 2004 between

 

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and

VERISITY DESIGN, INC., a California corporation, as Tenant

 

Exhibit A is intended only to show the general layout of the Premises as of the
beginning of the Term of this Lease. It does not in any way supersede any of
Landlord’s rights set forth in Article 17 with respect to arrangements and/or
locations of public parts of the Building and changes in such arrangements
and/or locations. It is not to be scaled; any measurements or distances shown
should be taken as approximate.

 

 

/s/ ILLEGIBLE

Initials

 

A-1

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

 

[g126961kc03i001.jpg]

 

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

 

EXHIBIT A-2 - DEPICTION OF VISITOR PARKING SPACES

 

attached to and made a part of Lease bearing the

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and

VERISITY DESIGN, INC., a California corporation, as Tenant

 

Exhibit A-2 is intended only to show the general layout of the Visitor Parking
Spaces as of the beginning of the Term of this Lease. It does not in any way
supersede any of Landlord’s rights set forth in Article 17 with respect to
arrangements and/or locations of public parts of the Building and changes in
such arrangements and/or locations. It is not to be scaled; any measurements or
distances shown should be taken as approximate.

 

 

/s/ ILLEGIBLE

Initials

 

A-3

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

 

[g126961kc03i002.jpg]

 

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

 

EXHIBIT B – INITIAL ALTERATIONS

 

attached to and made a part of Lease bearing the

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and

VERISITY DESIGN, INC., a California corporation, as Tenant

 

1.                                       Tenant, following the delivery of the
Premises, as originally described in the Lease, by Landlord to Tenant and the
full and final execution and delivery of the Lease and the Guaranty to Landlord,
shall have the right to perform alterations and improvements in the Premises
(the “Initial Alterations”), subject to the terms of this Exhibit
Notwithstanding the foregoing, Tenant and its contractors shall not have the
right to perform Initial Alterations in the Premises unless and until Tenant has
complied with all of the terms and conditions of Article 6 of the Lease,
including, without limitation, approval by Landlord of the final plans for the
Initial Alterations, as applicable, and the contractors to be retained by Tenant
to perform such Initial Alterations. Tenant shall be responsible for all
elements of the design of Tenant’s plans (including, without limitation,
compliance with law, functionality of design, the structural integrity of the
design, the configuration of the premises and the placement of Tenant’s
furniture, appliances and equipment), and Landlord’s approval of Tenant’s plans
shall in no event relieve Tenant of the responsibility for such design. The
general contractor and any Major Trade Subcontractor (defined below) with whom
Tenant or Tenant’s general contractor shall contract to construct the Initial
Alterations are subject to approval by Landlord, which approval shall not be
unreasonably withheld or delayed. For purposes of this Exhibit B a “Major Trade
Subcontractor” shall mean any subcontractor responsible for heating, ventilation
and air conditioning, plumbing, or electrical systems in the Premises. Tenant’s
general contractor (a) shall maintain insurance as required pursuant to the
terms of the Lease and (b) be licensed as a contractor in the state/municipality
in which the Premises are located. Landlord hereby approves Integrity Office
Solutions, Inc. as the construction manager for the construction of the Initial
Alterations (the “Construction Manager”) and the general contractors and Major
Trade Subcontractors listed on Scheduled B-4 attached hereto. Upon request by
Landlord, Tenant shall deliver to Landlord financial statements for any general
contractor or Major Trade Subcontractor for which Tenant has obtained or desires
to obtain Landlord’s approval

 

2.                                       Tenant agrees that the Initial
Alterations shall be constructed in accordance with the construction budget
attached hereto as Schedule B-3 (the “Approved Budget”). Tenant shall not modify
the amount allocated to each line item of the Approved Budget by more than three
percent (3%) without Landlord’s prior written approval, which approval shall not
be unreasonably withheld.

 

3.                                       Provided Tenant is not in default under
the Lease, Landlord agrees to contribute the sum of $        (the “Allowance”)
toward the cost of performing the Initial Alterations in preparation of Tenant’s
occupancy of the Premises, as originally described in the Lease. The Allowance
may only be used for (a) hard costs in connection with the Initial Alterations,
(b) costs associated with moving Tenant from its existing location into the
Premises, including, without limitation, the cost of telephone, data and
computer cabling, consulting fees, reprinting stationery on hand, moving
Tenant’s furniture, equipment and other personal property into the Premises, and
the cost of space improvements performed in the Premises not otherwise included
in the Initial Alterations, and (c) the cost of purchasing furniture and
fixtures for use solely in the Premises; but excluding office supplies
(including without limitation, letterhead and business cards) and computer
equipment. The Allowance, less a ten percent (10%) retainage (which retainage
shall be payable as part of the final draw), shall be paid to Tenant or the
Construction Manager or, in the event that Landlord reasonably believes that
Tenant or the Construction Manager is not timely paying the contractors, at
Landlord’s option, to the order of the general contractor that performs the
Initial Alterations, in periodic disbursements within thirty (30) days after
receipt of the following documentation: (a) an application for payment and sworn
statement of contractor substantially in the form of AIA Document G-702 covering
all work for which disbursement is to be made to a date specified therein;
(b) Contractor’s, subcontractor’s and material supplier’s full or partial
waivers of liens, as applicable, which shall cover all Initial Alterations for
which disbursement is being requested and all other statements and forms
required for compliance with the mechanics’ lien laws of the state in which the
Premises is located, (c) copies of all construction contracts for the Initial
Alterations, together with copies of all change orders, if any; and (d) a
request to disburse from Tenant containing an approval by Tenant of the work
done and a good faith estimate of the cost to complete the Initial Alterations.
Upon completion of the Initial Alterations, and prior to final disbursement of
the Allowance, Tenant shall furnish Landlord with: (i) general contractor and
architect’s

 

 

/s/ ILLEGIBLE

Initials

 

B-1

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

 

completion affidavits, (ii) full and final waivers of lien, (iii) receipted
bills covering all labor and materials expended and used, (iv) as-built plans of
the Initial Alterations, and (v) the certification of Tenant and its architect
that the Initial Alterations have been installed in a good and workmanlike
manner in accordance with the approved plans, and in accordance with applicable
laws, codes and ordinances. In no event shall Landlord be required to disburse
the Allowance more than one time per month. If the Initial Alterations exceed
the Allowance, Tenant shall be entitled to the Allowance in accordance with the
terms hereof, but each individual disbursement of the Allowance shall be
disbursed in the proportion that the Allowance bears to the total cost for the
Initial Alterations, less the ten percent (10%) retainage referenced above.
Notwithstanding anything herein to the contrary, Landlord shall not be obligated
to disburse any portion of the Allowance during the continuance of an uncured
default under the Lease, and Landlord’s obligation to disburse shall only resume
when and if such default is cured.

 

4.                                       Except as expressly provided in
Paragraph 3 above, in no event shall the Allowance be used for the purchase of
equipment, furniture or other items of personal property of Tenant. If Tenant
does not submit a request for payment of the entire Allowance to Landlord in
accordance with the provisions contained in this Exhibit by October 31, 2004
(which date shall be subject to extension equal to the number of days of delay
in construction actually experienced by Tenant due to Force Majeure (as defined
in the Lease), provided that such extension shall in no event exceed thirty (30)
days) any unused amount shall accrue to the sole benefit of Landlord, it being
understood that Tenant shall not be entitled to any credit, abatement or other
concession in connection therewith. Tenant shall be responsible for all
applicable state sales or use taxes, if any, payable in connection with the
Initial Alterations and/or the Allowance.

 

5.                                       Tenant agrees to accept the Premises in
its “as-is” condition and configuration, it being agreed that Landlord shall not
be required to perform any work, other than the Landlord Work (as defined below)
or, except as provided herein with respect to the Allowance, the Landlord HVAC
Allowance (as defined below) or the Tenant HVAC Allowance (as defined below)
incur any costs in connection with the construction or demolition of any
improvements in the Premises.

 

6.                                       Any unused portion of the Allowance
that is in excess of the costs incurred by Tenant for construction of the
Initial Alterations and any unused portions of the Landlord HVAC Upgrade
Allowance and the Tenant HVAC Upgrade Allowance that are in excess of the costs
of the HVAC Upgrade shall accrue to the sole benefit of Landlord, it being
understood and agreed that Tenant shall not be entitled to receive any credit or
abatement in connection therewith. In no event shall Landlord have any
obligation to disburse any portion of the Allowance, Landlord HVAC Upgrade
Allowance or Tenant HVAC Upgrade Allowance after October 31, 2004 (which date
shall be subject to extension equal to the number of days of delay in
construction actually experienced by Tenant due to Force Majeure, provided that
such extension shall in no event exceed thirty (30) days).

 

7.                                       Provided Tenant is not in default under
the Lease, Landlord agrees to contribute an amount not to exceed $           
(the “Landlord HVAC Upgrade Allowance”) toward the cost of performing certain
upgrades to the heating, ventilation and air conditioning systems exclusively
serving the Premises, in accordance with Schedule B-l attached hereto and made a
part hereof (the “HVAC Upgrade”), which Landlord HVAC Upgrade Allowance shall be
in addition to, not in lieu of the Allowance. The Landlord HVAC Upgrade
Allowance shall be paid to Tenant, the Construction Manager, or in the event
that Landlord reasonably believes that the Tenant or Construction Manager is not
timely paying the contractors, at Landlord’s option, to the order of the
contractor that performs such HVAC Upgrades in monthly disbursements according
to the procedure set forth in Paragraph 3 above, with Tenant and Landlord
contributing to the costs of HVAC Upgrades on a pari passu basis (i.e., for
every dollar that Tenant applies of the Tenant HVAC Upgrade Allowance (defined
in Paragraph 8 below) on the HVAC Upgrade, Landlord shall pay a dollar of the
Landlord HVAC Allowance). The Landlord HVAC Upgrade Allowance will be a part of
the regular monthly disbursement and requisition for the Allowance, and not a
separate requisition; however the Landlord HVAC Upgrade Allowance will be a
separate line item on such requisition.

 

8.                                       Provided Tenant is not in default under
the Lease, Landlord agrees to contribute an amount not to exceed $            
(the “Tenant HVAC Upgrade Allowance”) in order to finance the Tenant’s
contribution toward the performance of the HVAC Upgrades, which Tenant HVAC
Upgrade Allowance shall be in addition to, not in lieu of the Allowance and the
Landlord HVAC Upgrade Allowance. The Tenant HVAC Upgrade Allowance shall be paid
to Tenant, the Construction Manager, or in the event that Landlord reasonably
believes that the Tenant or Construction Manager is not timely paying the
contractors, at Landlord’s option, to the order of the contractor that performs
the HVAC Upgrades, in monthly disbursements according to the procedure set forth
in Paragraph 3 above, with the Tenant HVAC Upgrade Allowance and the Landlord
HVAC Upgrade Allowance being paid on a pari passu basis, as described in

 

 

/s/ ILLEGIBLE

Initials

 

B-2

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

 

Paragraph 7 above. Any Tenant HVAC Upgrade Allowance paid to or on behalf of
Tenant hereunder shall be repaid to Landlord as additional rent in equal monthly
installments throughout the initial Term of the Lease at an interest rate equal
to eight and one-half percent (8.5%) per annum. If Tenant is in default under
the Lease after the expiration of applicable cure periods, the entire unpaid
balance of the Tenant HVAC Upgrade Allowance paid to or on behalf of Tenant
shall be come immediately due and payable and, except to the extent required by
applicable law, shall not be subject to mitigation or reduction in connection
with a reletting of the Premises by Landlord. Upon request of Landlord, Tenant
shall execute an amendment to the Lease or other appropriate agreement, prepared
by Landlord, evidencing the amount of the Tenant HVAC Upgrade Allowance required
by Tenant and the repayment schedule relating to Tenant’s repayment of the
Tenant HVAC Upgrade Allowance, as described herein. By way of example only, if
at the end of the second (2nd) month of the Term of the Lease, Landlord
disburses to Tenant (or its contractors) the sum of Dollars ($              )
constituting the Tenant HVAC Upgrade Allowance, then beginning on the first
(1st) day of the fourth (4th) month of the Term and continuing each succeeding
month of the initial Term, Tenant shall pay to Landlord the sum of             
100ths Dollars ($        as additional rent, in accordance with the terms of
Article 3 of the Lease. Anything to the contrary notwithstanding, Tenant shall
have the right at any time to prepay the Tenant HVAC Upgrade Allowance plus any
accrued and unpaid interest in full or in part without penalty or premium.

 

9.                                       Landlord, at its sole cost and expense
(subject to the terms hereof) shall perform improvements to the Premises and the
Building in accordance with the following work list (the “Work List”) using
Building standard methods, materials and finishes. The improvements to be
performed in accordance with the Work List are hereinafter referred to as the
“Landlord Work”. Landlord shall enter into a direct contract for the Landlord
Work with a general contractor selected by Landlord. In addition, Landlord shall
have the right to select and/or approve any subcontractors used in connection
with the Landlord Work.

 

WORK LIST

 

A.           Perform the repair and maintenance work to the currently existing
heating, ventilation and air conditioning units exclusively serving the Premises
which is recommended in the report prepared by Barker Mechanical Services, Inc.,
dated as of March 30, 2004 and attached hereto as Schedule B-2 (the “Barker
Report”).

 

B.             Perform repairs to the Building roof, fire sprinkler systems,
and/or other causes of leaks reasonably necessary to remedy the cause of ceiling
tile discoloration in the Premises.

 

10.                                 Landlord and Tenant agree to cooperate with
each other in order to enable the Landlord Work and the Initial Alterations to
be performed in a timely manner and with as little inconvenience to the
operation of each party’s business as is reasonable possible (and Landlord and
Tenant hereby agree to coordinate with each other’s construction schedules so as
to avoid delays therein). Notwithstanding anything herein to the contrary, no
delay in the completion of the Landlord Work or inconvenience suffered by Tenant
during the performance of Landlord Work shall subject Landlord to any liability
for any loss of damage resulting therefrom Or entitle Tenant to any credit,
abatement or adjustment of rent or other sums payable under the Lease; provided
that Landlord uses commercially reasonable efforts to complete the Landlord Work
within thirty (30) days of the date upon which Landlord delivers possession of
the Premises to Tenant, subject to extension equal to the number of days of
delay actually experienced by Landlord due to Tenant Delay (as defined below) or
Force Majeure, and further provided if the Landlord Work cannot reasonably be
completed within such thirty (30) period, that Landlord commences the Landlord
Work within such thirty (30) day period and diligently prosecutes the Landlord
Work to completion. For the purposes of this Exhibit B, “Tenant Delay” shall
mean a delay in the performance of the Landlord Work as a result of the acts or
omissions of Tenant, any Tenant Entity or their respective contractors or
vendors, including, without limitation, Tenant’s failure to comply with any of
its obligations under the Lease.

 

11.                                 This Exhibit shall not be deemed applicable
to any additional space added to the Premises at any time or from time to time,
whether by any options under the Lease or otherwise, or to any portion of the
original Premises or any additions to the Premises in the event of a renewal or
extension of the Term of the Lease, whether by any options under the Lease or
otherwise, unless expressly so provided in the Lease or any amendment or
supplement to the Lease.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

 

 

/s/ ILLEGIBLE

Initials

 

B-3

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

 

SCHEDULE B-l - HVAC UPGRADE SPECIFICATIONS

 

attached to and made a part of Lease bearing the

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and

VERISITY DESIGN, INC., a California corporation, as Tenant

 

 

/s/ ILLEGIBLE

Initials

 

 

Schedule B-1

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

 

BUDGET ESTIMATE

 

BUILDING HVAC SYSTEM (does not include server room HVAC requirements)

 

 

 

 

ITEM

 

Model

 

Cost

 

 

 

 

 

 

 

 

 

 

1

 

ADDITIONAL HVAC UNITS

 

 

 

$

0

 

 

 

 

 

 

 

 

 

 

 

1.1

Four 10 ton split systems to supplement Building HVAC****

 

 

 

 

 

 

 

1.2

Structural supports for condensing units on the roof

 

 

 

 

 

 

 

1.3

Lifting and installation of condensing units

 

 

 

 

 

 

 

1.4

Installation of the fan-coll units in the ceiling

 

 

 

 

 

 

 

1.5

Refrigerant Piping

 

 

 

 

 

 

 

1.6

Refrigerant Piping Insulation

 

 

 

 

 

 

 

1.7

Refrigeration piping: air evacuation, presure testing, refrigerant charging

 

 

 

 

 

 

 

1.8

Supply and return air ductwork, diffusers, balancing dampers and duct insulation
(associated with split systems zones only)

 

 

 

 

 

 

 

1.9

Testing and balancing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

RE-ZONING OF EXISTING SYSTEM SO

 

 

 

$

0

 

 

 

 

 

 

 

 

 

 

 

2.1

Demolition, removal of discarted ductwork and existing duct patching

 

 

 

 

 

 

 

2.2

62 Total Building VAV zones including all new low pressure distribution ductwork
installation and difussers

 

 

 

 

 

 

 

2.3

62 New VAV boxes

 

 

 

 

 

 

 

2.3

Hot water piping and insulation for 30 New VAV reheat boxes

 

 

 

 

 

 

 

2.4

Air and water balancing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

Controls

 

 

 

$

0

 

 

 

 

 

 

 

 

 

 

 

3.1

Upgrade of the control boards at four existing roof-top package units

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.2

DDC controls for additional 4 split systems

 

 

 

 

 

 

 

3.3

DDC controls for existing boiler and hot water pump

 

 

 

 

 

 

 

3.4

New DDC controls for 62 new VAV boxes, Including controller, thermostat, damper
actuator, control valve and all associated wiring

 

 

 

 

 

 

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

 

 

 

3.5

“TRANE” Tracer Sumit controller with all associated programming

 

 

 

 

 

 

 

3.6

Replacement of existing control valves at 15 existing VAV boxes

 

 

 

 

 

 

 

3.7

Start-up and commissioning

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

MISC

 

 

 

$

0

 

 

 

 

 

 

 

 

 

 

 

 

4.1

Servicing and Overhaul of existing four roof-top AC-units

 

 

 

 

 

 

 

4.2

Testing of existing building medium pressure ductwork that is to be reused
including all repairs, replacement. and all related work as required.

 

 

 

 

 

 

 

4.3

Servicing and cleaning of existing heating water system

 

 

 

 

 

 

 

4.4

Ceiling grid, tile, and lights be removed and replaced as required (Approx 50%)

 

 

 

 

 

 

 

4.5

Installation of new combination fire/smoke dampers (16 total)

 

 

 

 

 

 

 

4.6

Removal of the existing air compressor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

all and all related electrical and other work related to the above HVAC upgrade
must be included

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated Cost

 

 

 

$

0

 

 

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

 

SCHEDULE B-2 -BARKER REPORT

 

attached to and made a part of Lease bearing the
Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and
VERISITY DESIGN, INC., a California corporation, as Tenant

 

 

/s/ [ILLEGIBLE]

 

Initials

 

Schedule B-2

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

 

[g126961kc05i001.gif]

 

 

 

 

 

 

6800 SIERRA CT, SUITE L, DUBLIN CA 94568

 

925-560-0280

 

fax 925-560-0288

 

 

 

www.barkermech.com

 

March 30, 2004

 

Rreef

1310 Tully Road, Suite 110

San Jose, Ca

Attn:       Sylvia Salamant

 

Re:          HP Building #331

331 E Evelyn

Mt. View, CA 95134

 

Barker Mechanical Services, Inc., has performed an inspection of all units at
the above referenced address.  Below are our findings:

 

AC#1 –  Unit is in good condition considering age and has 5-10 years life
expectancy before normal replacement.  We recommend the following:

 

1.             Install 2 belts (BX87)

2.             Replace worn compressor contactor’s (40 amp 220 volt)

3.             Chemically clean both evaporator and condenser coils

4.             Replace 1 belt (BX81) on the economizer

5.             Install 5 pneumatic thermostats and grease fittings..

 

AC#2 – Unit is in good condition considering age and has 5-10 years life
expectancy before normal replacement.  We recommend the following:

 

1.             Install 2 belts (AX72)

2.             Install 2 belts (5VX900)

3.             Chemically clean both evaporator and condenser coils

4.             Replace the suction king valve.

5.             Grease fittings.

 

AC#3 – Unit is in good condition considering age and has 5-10 years life
expectancy before normal replacement.  We recommend the following:

 

1.             Install 2 belts (BX66)

2.             Install 2 belts (A72)

3.             Chemically clean both evaporator and condenser coils

4.             Grease fittings.

 

AC#4 – Unit is in good condition considering age and has 5-10 years life
expectancy before normal replacement.  We recommend the following:

 

1.             Install 2 belts (BX66)

2.             Install 2 belts (A72)

3.             Chemically clean both evaporator and condenser coils

4.             Replace the suction king valve

5.             Grease fittings.

6.             Install new blower motor breaker

 

LIC. #747039

 

NO FINE PRINT

 

24 HR EMERGENCY SERVICE

 

 

SATISFACTION GUARANTEED

 

 

 

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

 

[g126961kc05i002.jpg]

 

PRELIMINARY BUDGET ESTIMATE

 

Project:

Verisity

 

331 East Evelyn Avenue

 

Mountain View, CA

 

 

Date:

4/9/2004

 

 

 

 

Rentable Square Footage:

58,000

 

Number of people:

234

 

 

 

Description

 

Quantity

 

Unit

 

Unit Cost

 

Cost

 

Soft Costs

 

Architect

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

Engineer

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

Expeditor

 

58,000

 

SF

 

 

 

$

—

 

 

 

DOB/Permit Fees

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

Building Costs/Elevator Charges

 

58,000

 

SF

 

 

 

$

—

 

 

 

Audio/Visual Consultant

 

58,000

 

SF

 

 

 

$

—

 

 

 

Security Consultant

 

58,000

 

SF

 

 

 

$

—

 

 

 

Technology Move and Design Consultant

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

Art Consultant

 

58,000

 

SF

 

 

 

$

—

 

 

 

Project Reimbursables

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hard Costs

 

Construction

 

48,000

 

SF

 

$

 

 

$

 

 

 

 

HVAC Upgrade & Related Work

 

58,000

 

 

 

$

 

 

$

 

 

 

 

Construction Sublease Space

 

10,000

 

 

 

$

 

 

$

 

 

 

 

Audio/Visual (Relocate Only)

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

Security

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

Signage

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

Art/Furnishings

 

58,000

 

SF

 

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Workstations

 

182

 

PP

 

$

 

 

$

 

 

 

 

Training

 

1

 

 

 

$

 

 

$

 

 

 

 

1st Floor Pantry

 

1

 

 

 

$

 

 

$

 

 

 

 

Conference rooms

 

8

 

 

 

$

 

 

$

 

 

 

 

Customer Reception and Lounge Area

 

1

 

 

 

$

 

 

$

 

 

 

 

2nd Floor Breakout room

 

1

 

 

 

$

 

 

$

 

 

 

 

Private Offices

 

49

 

PP

 

$

 

 

$

 

 

 

 

Team Room

 

5

 

PP

 

$

 

 

$

 

 

 

 

Lunch room

 

1

 

 

 

$

 

 

$

 

 

 

 

Reception Area

 

1

 

 

 

$

 

 

$

 

 

 

 

Information Technology

 

 

 

 

 

 

 

 

 

 

 

Cabling (Dual Run)

 

350

 

DR

 

$

 

 

$

 

 

 

 

PBX/Phones/Voice Mail

 

234

 

PP

 

 

 

$

—

 

 

 

Cabling and Fiber for Server Room

 

1

 

PP

 

$

 

 

$

 

 

 

 

Desktop PC’s

 

234

 

PP

 

 

 

$

—

 

 

 

4

 

234

 

PP

 

 

 

$

—

 

 

 

New Cabinets

 

1

 

EA

 

$

 

 

$

 

 

 

 

UPS

 

1

 

LS

 

$

 

 

$

 

 

 

 

Server Room 24/7 Supp. AC

 

1

 

 

 

$

 

 

 

 

 

 

Misc IT and Server Room

 

 

 

 

 

 

 

 

 

 

 

Move - Physical Relocation of.

 

 

 

 

 

 

 

 

 

 

 

Office Contents

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

PBX Relocation/Reprogram

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

Server Room/PC’s

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

Copiers

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

Lab Equipment

 

58,000

 

SF

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal:

 

 

 

 

 

 

 

$

 

 

 

 

Contingency

 

5

%

 

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

 

 

 

 

 

 

$

 

 

 

Integrity Office Solutions

4/13/2004

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

 

SCHEDULE B-3 -APPROVED BUDGET

 

attached to and made a part of Lease bearing the
Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and
VERISITY DESIGN, INC., a California corporation, as Tenant

 

 

/s/ [ILLEGIBLE]

 

Initials

 

Schedule B-3

 

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

 

 

AIR COMPRESSOR – Unit is in good condition considering age and has 5-10 years
life expectancy before normal replacement. We recommend the following:

Ingersol Rand

Model #2-242E5

Serial # 30T6243098

1.   Install 4 belts (AX68)

2.   Auto water bleed

3.   No oil found at randomly selected pneumatic controls

4.   Need to change oil in compressors and pressure wash.

 

BOILER – Unit is in good condition considering age and has 5-10 years life
expectancy before normal replacement. We recommend the following:

Ajax

Model #WGFD1275

Serial #87-64532-2-1

1. Clean fire eye and adjust gas valve linkage.

 

AIR DRYER – Unit is operating in poor condition. We recommend the following:

Perma

Medal #35HSBA100

Serial #21318-4

1. Replacement of air dryer before failure

 

EXHAUST FANS are all in good condition considering age and have 5-10 years life
expectancy before normal replacement.

 

We hope this meets with your approval. Please do not hesitate to contact us for
any further information. You may contact Charles Hazzell at (925) 766-1985.

 

Thank you,

 

 

/s/ Janay Santos

 

Janay Santos

Service Manager

 

 

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

 

SCHEDULE B-4 -APPROVED GENERAL CONTRACTORS AND MAJOR TRADE SUBCONTRACTORS

 

attached to and made a part of Lease bearing the
Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and
VERISITY DESIGN, INC, a California corporation, as Tenant

 

General Contractors

 

Electrical

 

HVAC

 

Plumbers

Baycor

 

Cupertino

 

ACCO

 

Cobra Mechanical

NOVO

 

Elcor

 

Air Systems

 

D & M Plumbing

Skyline

 

Foley

 

All Air

 

KDS Plumbing

Syl-Mar

 

Frank

 

Cal-Air

 

Lyons Brothers

Team Construction

 

Howell

 

DelCon

 

Madlem Mechanical

 

 

Marke

 

Foothill

 

Metro

 

 

Mission

 

Helwig

 

Novotec

 

 

Palmer

 

Michael D Burns Company

 

Ramcon Plumbing

 

 

Redwood City Electric

 

SVM

 

Terry Mechanical

 

 

RK

 

Terry

 

 

 

 

WBE

 

Therma

 

 

 

 

 

 

Western Allied

 

 

 

 

/s/ [ILLEGIBLE]

 

Initials

 

Schedule B-4

 

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

 

EXHIBIT C - COMMENCEMENT DATE MEMORANDUM

 

attached to and made a part of Lease bearing the

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and

VERISITY DESIGN, INC., a California corporation, as Tenant

 

COMMENCEMENT DATE MEMORANDUM

 

THIS MEMORANDUM, made as of            , 2004, by and between SFERS REAL ESTATE
CORP. U, a Delaware corporation (“Landlord”) and VERISITY DESIGN, INC., a
California corporation (“Tenant”).

 

Recitals:

 

A.            Landlord and Tenant are parties to that certain Lease, dated for
reference February _, 2004 (the “Lease”)
for certain premises (the “Premises”) consisting of approximately 58,242 square
feet at the building
commonly known as Mountain View Corporate Center.

 

B.            Tenant is in possession of the Premises and the Term of the Lease
has commenced.

 

C.            Landlord and Tenant desire to enter into this Memorandum
confirming the Commencement Date, the
Termination Date and other matters under the Lease.

 

NOW, THEREFORE, Landlord and Tenant agree as follows:

 

1.             The actual Commencement Date is

 

2.             The actual Termination Date is

 

3.             The schedule of the Annual Rent and the Monthly Installment of
Rent set forth on the Reference Pages is deleted in its entirety, and the
following is substituted therefor:

 

(insert rent schedule]

 

4.             Capitalized terms not defined herein shall have the same meaning
as set forth in the Lease.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date and year first above written.

 

LANDLORD:

TENANT:

 

 

 

 

SFERS REAL ESTATE CORP. U,
a Delaware corporation

VERISITY DESIGN, INC.,
a California corporation

 

 

 

 

By:

RREEF Management Company, a Delaware
corporation

 

 

 

 

 

 

By:

                     DO   NOT   SIGN                  

 

By:

                     DO   NOT   SIGN                  

 

Name:

 

 

Name:

Charles Alvarez

 

Title:

 

 

Title:

Vice President of Finance and

 

 

 

 

 

Chief Financial Officer

 

 

 

 

 

 

Dated:

 

 

Dated:

 

 

 

 

/s/ [ILLEGIBLE]

 

Initials

 

C-1

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

 

EXHIBIT D - RULES AND REGULATIONS

 

attached to and made a part of Lease bearing the

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and
VERISITY DESIGN, INC., a California corporation, as Tenant

 

1.             No sign, placard, picture, advertisement, name or notice
(collectively referred to as “Signs”) shall be installed or displayed on any
part of the outside of the Building without the prior written consent of the
Landlord which consent shall be in Landlord’s sole discretion. All approved
Signs shall be printed, painted, affixed or inscribed at Tenant’s expense by a
person or vendor approved by Landlord and shall be removed by Tenant at Tenant’s
expense upon vacating the Premises. Landlord shall have the right to remove any
Sign installed or displayed in violation of this rule at Tenant’s expense and
without notice.

 

2.             If Landlord objects in writing to any curtains, blinds, shades or
screens attached to or hung in or used in connection with any window or door of
the Premises or Building, Tenant shall immediately discontinue such use. No
awning shall be permitted on any part of the Premises. Except as approved by
Landlord with respect to the Initial Alterations (as defined in the Lease)
Tenant shall not place anything or allow anything to be placed against or near
any glass partitions or doors or windows which may appear unsightly, in the
opinion of Landlord, from outside the Premises.

 

3.             Tenant shall not alter any lock or other access device or install
a new or additional lock or access device or bolt on any door of its Premises
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld; provided, however, Tenant shall be permitted to install
door hardware that meets standard industry practice for security services as
required by Tenant. Tenant, upon the termination of its tenancy, shall deliver
to Landlord the keys or other means of access to all doors.

 

4.             If Tenant requires telephone, data, burglar alarm or similar
service, the cost of purchasing, installing and maintaining such service shall
be borne solely by Tenant. No boring or cutting for wires will be allowed
without the prior written consent of Landlord. Landlord shall direct
electricians as to where and how telephone, data, and electrical wires are to be
introduced or installed. The location of burglar alarms, telephones, call boxes
or other office equipment affixed to the Premises shall be subject to the prior
written approval of Landlord, which consent shall not be unreasonably withheld.

 

5.             Tenant shall not place a load upon any floor of its Premises,
including mezzanine area, if any, which exceeds the load per square foot that
such floor was designed to carry and that is allowed by law. Heavy objects shall
stand on such platforms as determined by Landlord to be necessary to properly
distribute the weight. Landlord will not be responsible for loss of or damage to
any such equipment or other property from any cause, and all damage done to the
Building by maintaining or moving such equipment or other property shall be
repaired at the expense of Tenant.

 

6.             Tenant shall not install any radio or television antenna,
satellite dish, loudspeaker or other device on the roof or exterior walls of the
Building without Landlord’s prior written consent which consent shall be in
Landlord’s sole discretion.

 

7.             Tenant shall not mark, drive nails, screw or drill into the
partitions, woodwork, plaster or drywall (except for pictures and general office
uses) or in any way deface the Premises or any part thereof.  Tenant shall not
affix any floor covering to the floor of the Premises or paint or seal any
floors in any manner except as approved by Landlord. Tenant shall repair any
damage resulting from noncompliance with this rule.

 

8.             No cooking shall be done or permitted on the Premises, except
that Underwriters’ Laboratory approved microwave ovens or equipment for brewing
coffee, tea, hot chocolate and similar beverages shall be permitted, provided
that such equipment and use is in accordance with all applicable federal, state
and city laws, codes, ordinances, rules and regulations.

 

9.             Tenant shall not use any hand trucks except those equipped with
the rubber tires and side guards, and may use such other material-handling
equipment as Landlord may approve. Tenant shall not bring any other vehicles of
any kind into the Building. Forklifts which operate on asphalt areas shall only
use tires that do not damage the asphalt.

 

10.           Tenant shall not use the name of the Building or any photograph or
other likeness of the Building in connection with or in promoting or advertising
Tenant’s business except that Tenant may include the Building name in Tenant’s
address.

 

 

/s/ [ILLEGIBLE]

 

Initials

 

D-1

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

 

Landlord shall have the right, exercisable without notice and without liability
to any tenant, to change the name and address of the Building.

 

11.           All trash and refuse shall be contained in suitable receptacles at
locations approved by Landlord. Tenant shall not place in the trash receptacles
any personal trash or material that cannot be disposed of in the ordinary and
customary manner of removing such trash without violation of any law or
ordinance governing such disposal.

 

12.           Tenant shall comply with all safety, fire protection and
evacuation procedures and regulations established by Landlord or any governing
authority.

 

13.           Tenant assumes all responsibility for securing and protecting its
Premises and its contents including keeping doors locked and other means of
entry to the Premises closed.

 

14.           Tenant shall not use any method of heating or air conditioning
other than that supplied by Landlord without Landlord’s prior written consent.

 

15.           No person shall go on the roof without Landlord’s permission.

 

16.           Tenant shall not permit any animals, other than seeing-eye dogs,
to be brought or kept in or about the Premises or any common area of the
property.

 

17.           Tenant shall not permit any motor vehicles to be washed or
mechanical work or maintenance of motor vehicles to be performed on any portion
of the Premises or parking lot without Landlord’s prior consent.

 

18.           These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease of any premises in the
Building. Landlord may waive any one or more of these Rules and Regulations for
the benefit of any tenant or tenants, and any such waiver by Landlord shall not
be construed as a waiver of such Rules and Regulations for any or all tenants.

 

19.           Landlord reserves the right to make such other and reasonable
rules and regulations as in its judgment may from time to time be needed for
safety and security, for care and cleanliness of the Building and for the
preservation of good order in and about the Building. Tenant agrees to abide by
all such rules and regulations herein stated and any additional rules and
regulations which are adopted. Tenant shall be responsible for the observance of
all of the foregoing rules by Tenant’s employees, agents, clients, customers,
invitees and guests.

 

20.           Any toilet rooms, toilets, urinals, wash bowls and other apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown into
them. The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose employees or
invitees, shall have caused it.

 

21.           Tenant shall not permit smoking or carrying of lighted cigarettes
or cigars in areas reasonably designated by Landlord or any applicable
governmental agencies as non-smoking areas.

 

22.           Any directory of the Building or project of which the Building is
a part (“Project Area”), if provided, will be exclusively for the display of the
name and location of tenants only and Landlord reserves the right to charge for
the use thereof and to exclude any other names.

 

23.           Canvassing, soliciting, distribution of handbills or any other
written material in the Building or Project Area is prohibited and each tenant
shall cooperate to prevent the same. No tenant shall solicit business from other
tenants or permit the sale of any goods or merchandise in the Building or
Project Area without the written consent of Landlord.

 

24.           Any equipment belonging to Tenant which causes noise or vibration
that may be transmitted to the structure of the Building or to any space therein
to such a degree as to be objectionable to Landlord or to any tenants in the
Building shall be placed and maintained by Tenant, at Tenant’s expense, on
vibration eliminators or other devices sufficient to eliminate the noise or
vibration.

 

 

/s/ [ILLEGIBLE]

 

Initials

 

D-2

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

 

25.           Driveways, sidewalks, halls, passages, exits, entrances and
stairways (“Access Areas”) shall not be obstructed by tenants or used by tenants
for any purpose other than for ingress to and egress from their respective
premises. Access areas 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 judgement of Landlord, shall be prejudicial to
the safety, character, reputation and interests of the Building or its tenants.

 

26.           Landlord reserves the right to designate the use of parking areas
and spaces. Tenant shall not park in visitor, reserved, or unauthorized parking
areas. Tenant and Tenant’s guests shall park between designated parking lines
only and shall not park motor vehicles in those areas designated by Landlord for
loading and unloading. Vehicles in violation of the above shall be subject to
being towed at the vehicle owner’s expense. Vehicles parked more than seven
(7) nights without prior written consent of the Landlord shall be deemed
abandoned and shall be subject to being towed at vehicle owner’s expense. Tenant
will from time to time, upon the request of Landlord, supply Landlord with a
list of license plate numbers of vehicles owned or operated by its employees or
agents.

 

27.           No trucks, tractors or similar vehicles can be parked anywhere
other than in Tenant’s own truck dock area. Tractor-trailers which must be
unhooked or parked with dolly wheels beyond the concrete loading areas must use
steel plates or wood blocks under the dolly wheels to prevent damage to the
asphalt paving surfaces. No parking or storing of such trailers will be
permitted in the parking areas or on streets adjacent thereto.

 

28.           During periods of loading and unloading, Tenant shall not
unreasonably interfere with traffic flow and loading and unloading areas of
other tenants. All products, materials or goods must be stored within the
Tenant’s Premises and not in any exterior areas, including, but not limited to,
exterior dock platforms, against the exterior of the Building, parking areas and
driveway areas. Tenant agrees to keep the exterior of the Premises clean and
free of nails, wood, pallets, packing materials, barrels and any other debris
produced from their operation.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

/s/ [ILLEGIBLE]

 

Initials

 

D-3

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

 

EXHIBIT E- FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

 

attached to and made a part of Lease bearing the

Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATE CORP. U, a Delaware corporation, as Landlord and
VERISITY DESIGN, INC., a California corporation, as Tenant

 

This SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (“Agreement”) is
entered into as of this              day of             , 2004, by and among
                          (“Tenant”), SUMITOMO MITSUI BANKING CORPORATION
(“Agent”) and SFERS REAL ESTATE CORP. U (“Landlord”).

 

A.            Pursuant to a lease dated           (the “Lease”) between Landlord
and Tenant, Tenant is a tenant of a certain building (the “Building”) on that
certain real property described on Exhibit A annexed hereto located in
                             , State of California (the “Land”). Borrower’s
interest in the Building and the Land shall be referred to herein as
“Property”).

 

B.            Agent is Administrative Agent on behalf of Lenders party to a
Credit Agreement dated as of           (the “Credit Agreement”) with respect to,
among other things, making a Loan to Landlord in the amount of $            
with interest thereon, evidenced by a certain Promissory Note secured by, among
other things, a Mortgage, Assignment of Leases and Security Agreement (the
“Mortgage”) constituting a valid lien upon the Property, and secured by an
Assignment of Landlord’s interest in the Lease as more particularly set forth in
a certain Assignment of Leases and Rents.

 

C.            As a condition precedent to obtaining the Loan, Agent has required
that Landlord and Tenant make certain agreements with Agent with respect to the
Lease for the benefit of the Lenders party to the Credit Agreement.

 

NOW, THEREFORE, in consideration of the foregoing facts and mutual covenants
contained herein, the parties hereto do hereby agree as follows:

 

1.             Assignment: Tenant hereby acknowledges and agrees that it has
notice that the Lease and the rent and all other sums due thereunder have been
assigned or are to be assigned to Agent as security for the obligations secured
by the Mortgage and agrees to such assignment. In the event Agent forwards
written notice to Tenants of the occurrence of an Event of Default Under the
Mortgage and demands that Tenant pay its sums due under the Lease directly to
Agent, Tenant shall honor such demand and pay such sums due under the Lease
directly to Agent or as otherwise directed pursuant to such notice. In complying
with these provisions, Tenant shall be entitled to rely solely upon the notices
given by Agent and Landlord hereby permits said direct payments to be made and
further agrees to indemnify and hold Tenant harmless from and against any and
all loss, claim, damage or liability arising out of Tenants compliance with such
notice. Tenant shall be entitled to full credit under the Lease for any rents
paid to Agent in accordance with the provisions of this Paragraph to the same
extent as if such rents were paid directly to Landlord.

 

2.             Subordination. Subject to the terms hereof and by its execution
hereof Tenant acknowledges that the Mortgage in favor of Agent, and any
renewals, modifications, consolidations, replacements and extensions thereof
shall remain a lien on the Property until such time when fully paid or otherwise
disposed of pursuant to the terms thereof prior and superior to the Lease
(including specifically, without limitation, any option to purchase or rights of
first refusal affecting the Property, or any portion thereof contained therein),
the leasehold estate created thereby and Tenant’s right, title and interest in
the Property as if the Mortgage had been executed, delivered and duly recorded
in the appropriate land records prior to the execution and delivery of the
Lease.

 

3.             ATTORNMENT. If the interest of Landlord in the Property and under
the Lease shall be acquired by Agent by reason of foreclosure of the Mortgage or
any other act or proceeding(s) made or brought to enforce the rights of the
Agent, including, but not limited to, by deed in lieu of foreclosure or as a
result of any other means, then the Lease and all terms therein, and the rights
of Tenant thereunder, shall continue in full force and effect and shall not be
altered, terminated, or disturbed, except in accordance with the terms of the
lease, and Tenant shall be bound to Agent and Agent shall be bound to Tenant,
subject to the terms hereof under all of the terms, covenants and conditions of
the Lease for the balance of the terms, and any renewals thereof with the same
force and effect as if the Agent were the Landlord under the Lease. In the event
Agent acquires the interest of Landlord, Tenant hereby agrees to attorn to Agent
as his landlord, said attornment to be effective and self-operative without the
execution of any other instruments on the part of either party hereto,
immediately upon Agent succeeding to the interest of Landlord under the Lease
with written notice of same being delivered to Tenant. Upon receipt by Tenant of
said written notice from Agent that Agent has succeeded to the interest of
Landlord under the Lease, Tenant will make all payments of monetary obligations
due by Tenant under the Lease at the address provided by

 

 

/s/ [ILLEGIBLE]

 

Initials

 

E-1

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

 

Agent in the notice. Tenant agrees, however, upon the election of and written
demand by Agent within sixty (60) days after Agent receives title to Property,
to execute an instrument in confirmation of the foregoing provisions,
satisfactory to Agent and Tenant, in which Tenant shall acknowledge this
agreement to attorn which shall set forth the terms and conditions hereof and
shall not be deemed or construed, in any way, as expanding or modifying Tenant’s
obligations as tenant under the Lease, except where specifically set forth
herein.

 

4.             Nondisturbance. If it becomes necessary to foreclose the
Mortgage, Mortgagee will not terminate the Lease nor join Tenant in summary or
foreclosure proceedings so long as Tenant is not in default under any of the
terms, covenants or conditions of said Lease without corresponding default of
Landlord beyond applicable grace periods after notice thereof or if in default,
same shall be cured. If Agent shall succeed to the interests of Landlord under
the Lease, Agent shall be bound to the Tenant under all of the terms, covenant
and conditions of the Lease, and Agent agrees to recognize Tenant and further
agrees that Tenant shall not be disturbed in its possession or use, of the
Property, said nondisturbance to be effective and self-operative without the
execution of any other instrument(s) on the part of either party hereto,
immediately upon Agent succeeding to the interest of Landlord under the Lease,
of the Property for any reason our than one which would entitle Landlord to
terminate the lease under its terms or would cause, without any further action
by Landlord, the termination of the Lease or would entitle Landlord to
dispossess Tenant from the Property. Tenant shall, from and after Agent’s
succession to the interests of Landlord under the Lease, have the same remedies
against Agent for the breach of any provision contained in the Lease that Tenant
might have had under the Lease against Landlord if Agent had not succeeded to
the interests of Landlord under the Lease; provided further, however, that Agent
except as expressly set forth in the Lease shall not be:

 

(a)           personally liable for any acts or omissions of any prior landlord
(including, but not limited to, Landlord); or

 

(b)           subject to any offsets or defenses which Tenant may have against
any prior landlord (including, but not limited to, Landlord); or

 

(c)           liable for any consequential damages attributable to any acts or
omissions of any prior landlord (including, but not limited to, Landlord); or

 

(d)           obligated to give Tenant a credit for or acknowledge any rent or
any other sums not delivered to Agent which Tenant has paid to Landlord in
excess of the rent due under the Lease at the time Agent gave Tenant notice of
its succession to the Landlord’s interest; or

 

(e)           liable for the repayment of any monies paid by Tenant under the
Lease except that Agent as a successor to Landlord shall be liable for the
repayment of a security deposit if payable to Tenant and Landlord fails to pay
even if Agent as successor to Landlord has not received the security deposit; or

 

(f)            obligated to commence or complete any construction or contribute
toward construction or installation of any improvements required under the
Lease, or expand or rehabilitate existing improvements thereon, or restore
improvements following any casualty not required to be insured under the Lease
or pay the costs of any restoration in excess of the proceeds recovered under
any insurance required to be carried under the Lease, provided however that
Agent shall cause to be applied to restoration required under the Lease all
proceeds of casualty insurance received by or under the control of Agent; or

 

(g)           liable for any damages or other relief attributable to any latent
or patent defects in construction; or

 

(h)           liable for any costs or expenses related to any indemnification
provided by any prior landlord (including, but not limited to, Landlord) with
respect to the presence or clean-up of any hazardous substances or materials in,
on, under or about the leased premises; or

 

(i)            obligated to enforce any restriction on competition beyond the
Building or Property; or

 

(j)            bound by any amendment or modification of the Lease made without
its consent and knowledge.

 

Additionally, in such event, Tenant shall be bound to Agent, and Agent shall be
bound to Tenant, subject to the terms hereof under all of the terms, covenants
and conditions of the Lease, and Agent and Tenant shall, from and after Agent’s
succession to the interest of Landlord under the Lease, have the same remedies
against each other for the breach of any provision contained in the Lease that
they might have had under the Lease against each other if Agent were the
original Landlord under the Lease.

 

 

/s/ [ILLEGIBLE]

 

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5.             Limitations on Liability.  Neither this Agreement, the
Assignment, nor anything to the contrary in the Lease shall, prior to Agent’s
acquisition of Landlord’s interest in and possession of the Property, operate to
give rise to or create any responsibility or liability for the control, care,
management or repair of the Property upon Agent, or impose responsibility for
the carrying out by Agent of any of the covenants, terms and conditions of the
Lease, or constitute Agent a “mortgagee in possession,” nor shall said
instrument operate to make Agent responsible or liable for any waste committed
on the Property by any person whatsoever, or for any dangerous or defective
condition of the Property, or for any negligence in the management, upkeep,
repair or control of the Property resulting in loss, injury or death to any
tenant, licensee, invoice, guest, employee, agent or stranger unless Agent
becomes Landlord. In the event Agent becomes substitute landlord, Leader may
assign its interest as substitute landlord without notice to, the consent of or
the assumption of any liability to any other party hereto, so long as Landlord’s
obligations under the Lease and this Agreement, are fully assumed by said
Assignee, who shall be deemed by Agent to be a commercially reasonable Assignee,
provided however that Agent as successor Landlord shall be responsible for the
performance of continuing obligations of Landlord existing after such
acquisition.

 

Anything herein or in the Lease to the contrary notwithstanding, in the event
that Agent shall acquire title to the leased premises, Agent shall have no
obligation, nor incur any liability beyond the then-existing interest, if any,
of Agent the leased premises and Tenant shall look exclusively to such interest
of Agent in the leased premises for the payment and discharge of any obligations
imposed upon Agent hereunder or under the Lease, and Agent is hereby released
and relieved of any other liability hereunder and under the Lease. As regards
Agent, Tenant shall look solely to the estate or interest owned by Agent in the
leased premises and Tenant will not collect or attempt to collect any judgment
out of any other assets of Agent. By executing this Agreement, Landlord
specifically acknowledges and agrees that nothing contained in this Section
shall impair, limit, affect, lessen, abrogate or otherwise modify the
obligations of Landlord to Tenant under the Lease. Agent’s interest (as such
term is used herein) in the leased premises shall include Agent’s equity in the
leased premises, rents, protests and issues from the leased premises and
proceeds from casualty or condemnation affecting the leased premises.

 

6.             Warranties and Representations.  Tenant hereby warrants,
represents, covenants and agrees to and with Agent:

 

(a)           not to alter, modify, cancel, terminate or surrender Lease, except
as provided therein or herein;

 

(b)           after the date hereof (except as otherwise expressly provided in
the Lease), not to enter into any agreement with Landlord, its successors or
assigns, which grants any concession with respect to the Lease or which reduces
the rent called for thereunder without the express written consent of Agent;

 

(c)           after the date hereof (except as otherwise expressly provided in
the Lease), not to create any offset or claims against rents, or prepay rent
more than thirty (30) days in advance

 

(d)           that Tenant is now lessee of the leasehold estate created by the
Lease and shall not hereafter assign the Lease except as permitted by the terms
thereof

 

(e)           to promptly certify in writing to Agent, in connection with any
proposed assignment of the Mortgage, whether or not any default on the part of
Landlord is claimed to exist under the Lease, and what any such claimed default
factually involves; and

 

(f)            not to voluntarily subordinate the Lease to any other lien or
encumbrance without Agent’s prior written consent (except as otherwise expressly
provided in the Lease).

 

7.             No Waiver. Notwithstanding any other provision of this Agreement,
where Agent acquires Landlord’s interest in and possession of the Premises and a
Landlord default has occurred and is continuing, Tenant shall not be considered
as having waived its rights to require that Agent remedy such default it the
Landlord default Continues after the dale Agent acquires Landlord’s interest in
and possession of the Premises. In that case, Agent shall have no liability for
Landlord’s default as it applies to the period before Agent’s acquisition of
Landlord’s interest in and possession of the Property, but shall be liable for
any failure to cure such continuing default thereafter, provided only that Agent
receives the benefit of any notice and cure period required by the Lease or
hereunder.

 

8.             Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New Jersey.

 

9.             Notice and Cure.  In the event that Landlord shall default in the
performance or observance of any of the terms, conditions or agreement in the
Lease, Tenant shall give written notice thereof to Agent and Agent shall have
the right but not

 

 

/s/ [ILLEGIBLE]

 

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E-3

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the obligation) to cure such default. Tenant further agrees that if Landlord
shall have failed to cure such default within the time provided for in the
Lease, then the Agent provided such is not a failure to provide Essential
Services or access to the Premises for which Tenant may exercise self-help shall
have an additional thirty (30) days within which to cure such default or if such
default cannot be cured within that time, then such additional time as may be
necessary to cure such default shall be granted if within such thirty (30) days
Agent has commenced and is diligently pursuing the remedies necessary to cure
such default (including, but not limited to, commencement of foreclosure
proceedings, if necessary to effect such cure), in which event the Lease shall
not be terminated while such remedies are being so diligently pursued.
Specifically preserved hereby are any rights Tenant may have to cure in the
event of an emergency, or otherwise, and to set-off and deduct the cost of same
from rent, as may be provided in the Lease; provided prior written notice of the
exercise of such rights is delivered to Agent, and it is expressly understood by
Leader that Agent’s permission is not, in any way, required.

 

10.           Binding Effect; Definitions. The provisions of this Agreement
shall be covenants running with the Property, and shall be binding upon and
inure to the benefit of the respective parties hereto and their respective
heirs, legatees, executors, administrators, beneficiaries, successors and
assigns, including without limitation (a) any person who shall obtain, directly
or by assignment or conveyance, any interest in the Mortgage, (b) any
transferee; or (c) any person who shall obtain any interest in the Property,
whether through foreclosure or otherwise. Furthermore, the provisions of this
Agreement shall be binding upon any guarantor of Tenants obligations under the
Lease. As used herein the term “Tenant” shall include Tenant, its successors and
assigns; the words “foreclosures and “foreclosure sale” as used herein shall be
deemed to include the acquisition of Landlord’s estate in the Property by
voluntary deed (or assignment) in lieu of foreclosure; and the word “Agent”
shall include Agent herein specifically named in its capacity as Administrative
Agent under the Credit Agreement and any successor Administrative Agent
thereunder, and anyone who shall have succeeded to Landlord’s interest in the
Property by, through or under-foreclosure of the Mortgage.

 

11.           Entire Agreement.  This Agreement shall be the whole and only
agreement between the parties hereto with regard to the subordination of the
Lease and leasehold interest of Tenant to the Mortgage in favor of Agent, and,
with respect to Agent and Tenant only, shall supersede and cancel any prior
agreements as to such, or any, subordination, including, but not limited to,
those provisions, if any, contained in the Lease, which provide for the
subordination of the lease and leasehold interest of Tenant to a deed or deeds
of trust or to a mortgage or mortgages to be thereafter executed, and shall not
be modified or amended except writing signed by all parties hereto.

 

12.           Consideration. Tenant declares, agrees and acknowledges that it
intentionally and unconditionally waives, relinquishes and subordinates the
Lease and leasehold interest in favor of the Mortgage above mentioned to the
extent set forth in this Agreement, and, in consideration of this waiver,
relinquishment and subordination, specific loans and advances are being and will
be made and, as part and parcel thereof specific monetary and other obligations
are being and will be entered into which would not be made or entered into but
for said reliance upon this waiver, relinquishment and subordination.

 

13.           Invalidity or Unenforceability. If any term, covenants or
condition of this Agreement other than the effectiveness of the non-disturbance
intention is held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be construed without such provision.

 

14.           Number and Gender. The use of the neuter gender in this Agreement
shall be deemed to include any other gender, and, words in the singular number
shall be held to include the plural, when the sense requires.

 

15.           Notice. Any notice required or allowed by this Agreement shall be
in writing and shall be (i) hand-delivered, effective upon receipt, or (ii) sent
by United States Express Mail or by private overnight courier, effective upon
receipt, or (iii) served by certified mail, postage prepaid, return receipt
requested, deemed effective on the day of actual delivery as shown by the
addressee’s return receipt or the expiration of three (3) business days after
the date of mailing, whichever is the earlier in time; addressed to the parry
intended to receive the same at the address set forth below:

 

If to Tenant:

 

If to Landlord:

 

 

/s/ [ILLEGIBLE]

 

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If to Agent:

 

The parties may, by written notice to the others, designate a different mailing
address for notices.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

 

/s/ [ILLEGIBLE]

 

Initials

 

E-5

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EXHIBIT C

 

FURNITURE, TRADE FIXTURES AND EQUIPMENT

 

17

 

SIDE CHAIRS

 

296

 

ROLLING DESK CHAIRS

 

32

 

KITCHEN CHAIRS

 

9

 

36” RD. KITCHEN TABLES

 

 

 

 

 

 

 

MAPLE FURNITURE

 

2

 

MAPLE RT RETURN DESK

 

4

 

MAPLE LFT RETURN DESK

 

2

 

MAPLE 8’ BOAT CONFERENCE TABLES

 

3

 

MAPLE 42-48” RD. TABLES

 

2

 

MAPLE 2’ SQ. TABLES

 

1

 

MAPLE 3’ ROUND

 

2

 

MAPLE CREDENZAS

 

1

 

MAPLE 12’ CONFERENCE ROOM TABLE

 

5

 

MAPLE LATERAL FILES

 

4

 

MAPLE SHORT BOOKCASES

 

1

 

MAPLE RECEPTION DESK

 

3

 

MAPLE BLK LEATHER STUFFED CHAIRS

 

8

 

MAPLE BLUE STUFFED CHAIRS

 

 

 

 

 

 

 

OAK FURNITURE

 

7

 

OAK 51/2’ DESKS

 

1

 

OAK 6’ RT RETURN DESK

 

6

 

OAK TALL BOOKCASES

 

 

 

 

 

 

 

MAHOGANY FURNITURE

 

9

 

MAHOGANY 51/2 LEFTHAND RETURN DESKS

 

3

 

MAHOGANY 51/2 RIGHTHAND RETURN DESKS

 

1

 

MAHOGANY 8’ BOAT CONFERENCE TABLE

 

1

 

MAHOGANY 12’ BOAT CONFERENCE TABLE

 

1

 

MAHOGANY 5’ CREDENZA

 

10

 

MAHOGANY TALL BOOKCASES

 

5

 

MAHOGANY SHORT BOOKCASES

 

 9

 

MAHOGANY LATERAL FILES

 

 

Exhibit C

 

Verisity Design, Inc.

331 East Evelyn, Mountain View, California

 

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

 

 

5

 

MAHOGANY 42” ROUND TABLES

 

32

 

MAHOGANY SIDE CHAIRS

 

 

 

 

 

 

 

LAMINATED GREY FURNITURE

 

2

 

GREY 8’ BOAT CONFERENCE TABLES

 

 7

 

GREY OFFICE DESK WORKSTATIONS

 

 

 

 

 

 

 

BLACK FURNITURE

 

1

 

BLACK 8’ CONFERENCE ROOM TABLE

 

 

 

 

 

 

 

CHERRY FURNITURE

 

7

 

CHERRY 6’ RIGHT RETURN DESKS

 

8

 

CHERRY 6’ LEFT RETURN DESKS

 

 1

 

CHERRY RECEPTION DESK

 

10

 

CHERRY 42” ROUND TABLES

 

8

 

CHERRY SHORT BOOKCASES

 

15

 

CHERRY LATERAL FILES

 

57

 

CHERRY SIDE CHAIRS

 

1

 

CHERRY 22” SQUARE SIDE TABLE

 

1

 

CHERRY 4’ COFFEE TABLE

 

3

 

CHERRY BLUE STUFFED CHAIRS

 

 

 

 

 

 

 

CUBICLES

 

64

 

1ST FLOOR ALL WITH LATERAL FILES

 

105

 

2ND FLOOR ALL WITH LATERAL FILES

 

12

 

IN STORAGE

 

 

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EXHIBIT C

 

FURNITURE, TRADE FIXTURES AND EQUIPMENT

 

SECURITY SYSTEM

 

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EXHIBIT D

 

MASTER LANDLORD CONSENT TO SUBLEASE

 

[*** Attach Master Landlord Consent Form Here ***]

 

Exhibit D

 

Verisity Design, Inc.

331 East Evelyn, Mountain View, California

 

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

 

LANDLORD CONSENT TO SUBLEASE

 

THIS LANDLORD CONSENT TO SUBLEASE (“Consent Agreement”) is entered into as
of              ,     , by and among
                       (“Landlord”),                            (“Sublandlord”),
and                       (“Subtenant”).

 

RECITALS:

 

A.            Landlord, as landlord, and Sublandlord, as tenant, are parties to
that certain lease agreement dated                    , (as the same may have
been amended, the “Lease”) pursuant to which Landlord has leased to Sublandlord
certain premises containing approximately                         rentable
square feet (the “Premises”) of the building commonly known as located
at                    (the “Building”).

 

B.            Sublandlord and Subtenant have entered into (or are about to enter
into) that certain sublease agreement dated as of attached hereto as Exhibit A
(the “Sublease”) pursuant to which Sublandlord has agreed to sublease to
Subtenant certain premises described as follows:
                                          , California comprising rentable
square feet (the Sublet Premises”) constituting all or a part of the Premises.

 

C.            Sublandlord and Subtenant have requested Landlord’s consent to the
Sublease.

 

D.            Landlord has agreed to give such consent upon the terms and
conditions contained in this Consent Agreement.

 

NOW THEREFORE, in consideration of the foregoing preambles which by this
reference are incorporated herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Landlord hereby
consents to the Sublease subject to the following terms and conditions, all of
which are hereby acknowledged and agreed to by Sublandlord and Subtenant:

 

1.             Sublease Agreement.  Sublandlord and Subtenant hereby represent
that a true and complete copy of the Sublease is attached hereto and made a part
hereof as Exhibit A, and Sublandlord and Subtenant agree that the Sublease with
respect to Landlord and/or the Sublet Premises shall not be modified without
Landlord’s prior written consent, which consent shall not be unreasonably
withheld.  Landlord consents to the following: (i) the Subtenant’s Use, as
described in Section 1.10 of the Sublease, and (ii) the tenant improvements and
alterations described in Exhibit F of the Sublease, and agrees that Subtenant
and Tenant do no have to remove or modify said improvements prior to or at the
end of the Term.

 

2.             Representations.  Sublandlord hereby represents and warrants that
Sublandlord (i) has full power and authority to sublease the Sublet Premises to
Subtenant, (ii) has not transferred or conveyed its interest in the Lease to any
person or entity collaterally or otherwise, and (iii) has full power and
authority to enter into the Sublease and this Consent Agreement.

 

 

 

 

Initials

 

1

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Subtenant hereby represents and warrants that Subtenant has full power and
authority to enter into the Sublease and this Consent Agreement.

 

3.             Indemnity and Insurance.  Subtenant hereby assumes, with respect
to Landlord, all of the indemnity and insurance obligations of the Sublandlord
under the Lease with respect to the Sublet Premises, provided that the foregoing
shall not be construed as relieving or releasing Sublandlord from any such
obligations. Notwithstanding the foregoing, to the extent the same is legally
permissable, Sublandlord may satisfy such insurance obligation for itself and on
behalf of Subtenant.

 

4.             No Release.  Nothing contained in the Sublease or this Consent
Agreement shall be construed as relieving or releasing Sublandlord from any of
its obligations under the Lease, it being expressly understood and agreed that
Sublandlord shall remain liable for such obligations notwithstanding anything
contained in the Sublease or this Consent Agreement or any subsequent
assignment(s), sublease(s) or transfer(s) of the interest of the tenant under
the Lease. Sublandlord shall be responsible for the collection of all rent due
it from Subtenant, and for the performance of all the other terms and conditions
of the Sublease, it being understood that Landlord is not a party to the
Sublease and, notwithstanding anything to the contrary contained in the
Sublease, is not bound by any terms, provisions, representations or warranties
contained in the Sublease and is not obligated to Sublandlord or Subtenant for
any of the duties and obligations contained therein.

 

5.             Administrative Fee.  Upon Sublandlord’s execution and delivery of
this Consent Agreement, Sublandlord shall pay to Landlord the sum of
$              in consideration for Landlord’s review of the Sublease and the
preparation and delivery of this Consent Agreement and shall deliver such amount
to Landlord concurrent with Sublandlord’s delivery of the executed.

 

6.             No Transfer.  Subtenant shall not further sublease the Sublet
Premises, assign its interest as the Subtenant under the Sublease or otherwise
transfer its interest in the Sublet Premises or the Sublease to any person or
entity without the written consent of Landlord, which Landlord may withhold in
its sole discretion.

 

7.             Lease. The parties agree that the Sublease is subject and
subordinate to the terms of the Lease, and all terms of the Lease, other than
Sublandlord’s obligation to pay Monthly Installments of Rent [CHECK DEFINED
TERM], are incorporated into the Sublease. In no event shall the Sublease or
this Consent Agreement be construed as granting or conferring upon the
Sublandlord or the Subtenant any greater rights than those contained in the
Lease nor shall there be any diminution of the rights and privileges of the
Landlord under the Lease, nor shall the Lease be deemed modified in any
respect.    Without limiting the scope of the preceding sentence, any
construction or alterations performed in or to the Sublet Premises shall be
performed with Landlord’s prior written approval and in accordance with the
terms and conditions of the Lease. It is hereby acknowledged and agreed that any
provisions in the Sublease which limit the manner in which Sublandlord may amend
the Lease are binding only upon Sublandlord and Subtenant as between such

 

 

 

 

Initials

 

2

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parties. Landlord shall not be bound in any manner by such provisions and may
rely upon Sublandlord’s execution of any agreements amending or terminating the
Lease subsequent to the date hereof notwithstanding any contrary provisions in
the Sublease.

 

8.             Parking and Services. Any parking rights granted to Subtenant
pursuant to the Sublease shall be satisfied out of the parking rights, if any,
granted to Sublandlord under the Lease. Sublandlord hereby authorizes Subtenant,
as agent for Sublandlord, to obtain services and materials for or related to the
Sublet Premises, and Sublandlord agrees to pay for such services and materials
as additional Rent under the Lease upon written demand from Landlord.   However,
as a convenience to Sublandlord, Landlord may bill Subtenant directly for such
services and materials, or any portion thereof, in which event Subtenant shall
pay for the services and materials so billed upon written demand, provided that
such billing shall not relieve Sublandlord from its primary obligation to pay
for such services and materials.

 

9.             Attornment.  If the Lease or Sublandlord’s right to possession
thereunder terminates for any reason prior to expiration of the Sublease,
Subtenant agrees, at the written election of Landlord, to attorn to Landlord
upon the then executory terms and conditions of the Sublease for the remainder
of the term of the Sublease. In the event of any such election by Landlord,
Landlord will not be (a) liable for any rent paid by Subtenant to Sublandlord
more than one month in advance, or any security deposit paid by Subtenant to
Sublandlord, unless same has been transferred to Landlord by Sublandlord;
(b) liable for any act or omission of Sublandlord under the Lease, Sublease or
any other agreement between Sublandlord and Subtenant or for any default of
Sublandlord under any such documents which occurred prior to the effective date
of the attornment; (c) subject to any defenses or offsets that Subtenant may
have against Sublandlord which arose prior to the effective date of the
attornment; (d) bound by any changes or modifications made to the Sublease
without the written consent of Landlord, (e) obligated in any manner with
respect to the transfer, delivery, use or condition of any furniture, equipment
or other personal property in the Sublet Premises which Sublandord agreed would
be transferred to Subtenant or which Sublandlord agreed could be used by the
Subtenant during the term of the Sublease, or (f) liable for the payment of any
improvement allowance, or any other payment, credit, offset or amount due from
Sublandlord to Subtenant under the Sublease. If Landlord does not elect to have
Subtenant attorn to Landlord as described above, the Sublease and all rights of
Subtenant in the Sublet Premises shall terminate upon the date of termination of
the Lease or Sublandlord’s right to possession thereunder. The terms of this
Section 9 supercede any contrary provisions in the Sublease.

 

10.           Payments Under the Sublease. If at any time Sublandlord is in
default under the terms of the Lease, Landlord shall have the right to contact
Subtenant and require Subtenant to pay all rent due under the Sublease directly
to Landlord until such time as Sublandlord has cured such default.    Subtenant
agrees to pay such sums directly to Landlord if requested by Landlord, and
Sublandlord agrees that any such sums paid by Subtenant shall be deemed applied
against any sums owed by Subtenant under the Sublease.  Any such sums received
by Landlord from Subtenant shall be received by Landlord on behalf of
Sublandlord and shall be applied by Landlord to any sums past due under the
Lease, in

 

 

 

 

Initials

 

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such order of priority as required under the Lease or, if the Lease is silent in
such regard, then in such order of priority as Landlord deems appropriate. The
receipt of such funds by Landlord shall in no manner be deemed to create a
direct lease or sublease between Landlord and Subtenant. If Subtenant fails to
deliver its Sublease payments directly to Landlord as required herein following
receipt of written notice from Landlord as described above, then Landlord shall
have the right to remove any signage of Subtenant, at Subtenant’s cost, located
outside the Premises or in the Building lobby or elsewhere in the Building and
to pursue any other rights or remedies available to Landlord at law or in
equity.

 

11.           Excess Rent. If Landlord is entitled to any excess rent from
Sublandlord pursuant to the terms of the Lease, then, in addition to all rent
otherwise payable by Sublandlord to Landlord under the Lease, Sublandlord shall
also pay to Landlord the portion of the excess rent to which Landlord is
entitled under the Lease, in the manner described in the Lease. Landlord’s
failure to bill Sublandlord for, or to otherwise collect, such sums shall in no
manner be deemed a waiver by Landlord of its right to collect such sums in
accordance with the Lease.

 

12.           Sublandlord Notice Address.    If Sublandlord is subleasing the
entire Premises or otherwise vacating the Premises, Sublandlord’s new address
for notices to Sublandlord under the Lease shall be as follows:
                                            : and if no address is filled in at
the preceding blank (or if a post office box address is used for the preceding
blank), then Landlord may continue to send notices to Sublandlord at the
address(es) provided in, and in accordance with the terms of, the Lease.

 

13.           Authority.   Each signatory of this Consent Agreement represents
hereby that he or she has the authority to execute and deliver the same on
behalf of the party hereto for which such signatory is acting.

 

14.           Limitation Of Landlord’s Liability.   Redress for any claim
against Landlord under this Consent Agreement shall be limited to and
enforceable only against and to the extent of Landlord s interest in the
building of which the Sublet Premises is a part. The obligations of Landlord
under this Consent Agreement, if any, are not intended to be and shall not be
personally binding on, nor shall any resort be had to the private properties of,
any of its or its investment manager’s trustees, directors, officers, partners,
beneficiaries, members, stockholders,  employees,  or agents,  and in no case
shall Landlord be liable to Sublandlord and/or Subtenant hereunder for any lost
profits, damage to business, or any form of special, indirect or consequential
damages.

 

 

 

 

Initials

 

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IN WITNESS WHEREOF, Landlord, Sublandlord and Subtenant have executed this
Consent Agreement as of the date set forth above.

 

 

LANDLORD:

 

 

 

By: RREEF Management Company, a Delaware
corporation, its Property Manager

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title: District Manager

 

 

 

SUBLANDLORD:

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

SUBTENANT:

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Initials

 

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EXHIBIT A

 

SUBLEASE AGREEMENT

 

 

 

 

Initials

 

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EXHIBIT E

 

BILL OF SALE

 

For valuable consideration, receipt and sufficiency of which is acknowledged,
VERISITY DESIGN, INC., a California corporation (“Seller”) grants, sells,
transfers and assigns convey and deliver to CONCEPTUS, INC., a Delware
corporation (“Purchaser”) all right, title and interest of Seller in and to the
furniture, trade fixtures and equipment (the “FF&E”) owned by Seller and located
in the Premises, the address of which is at 331 E. Evelyn, City of Mountain
View, State of California, which FF&E is described in Exhibit 1 attached hereto
and incorporated herein by reference.

 

The FF&E is conveyed by Seller “as is,” “where is,” “with all faults” and
without any warranty or representation, express or implied, of any nature or
sort, including, without limitation, any implied or express warranty of
merchantability, fitness of use for a particular purpose, or otherwise;
provided, however Seller represents to Purchaser that Seller has good title to
the FF&E and conveyed all of Seller’s right, title and interest in the FF&E free
and clear of any encumbrance or lien.

 

Seller acknowledges the delivery by Purchaser of the sum of Ten Dollar ($10.00),
in immediately available U.S. funds, representing the current cost and sales tax
charged thereon for the FF&E,

 

Each individual executing this Bill of Sale represents and warrants that they
are duly authorized to execute and deliver this Bill of Sale on behalf of Seller
and in accordance with any duly adopted resolution of the Board of Directors of
Seller, as required, and in accordance with the bylaws of Seller, as required.
This Bill of Sale shall be binding upon the Seller and Purchaser and their
successors and assigns.

 

Dated:                                  , 2009.

 

- DO NOT EXECUTE -

 

SELLER:

 

VERISITY DESIGN, INC.

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

ACKNOWLEDGE AND AGREED BY:

 

 

PURCHASER:

 

CONCEPTUS, INC.,

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

Exhibit E

 

Verisity Design, Inc.
331 East Evelyn, Mountain View, California

 

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

 

 

EXHIBIT 1 TO EXHIBIT E

 

DESCRIPTION OF

FURNITURE, TRADE FIXTURES AND EQUIPMENT

TO BE ATTACHED HERE ON OR BEFORE THE

SALE DATE

 

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

 

EXHIBIT F

 

PLANS AND ALTERATIONS

 

[*** Attach Subtenant’s Plans and Alterations to Be Approved by Sublandlord and
Master Landlord Here ***]

 

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Exhibit A

 

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