**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 betweenVERISITY 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 ofapproximately 58,242 rentable square feet of space located on the First (1st)and Second (2nd) floors of the building (the “Building”), whichBuilding is located at 331 East Evelyn, in the City of Mountain View, in theState of California 94039.  The Premisesdemised hereunder are a portion of those certain premises (“Master Premises”) containingapproximately 58,242 rentable square feet of office space located on the 1stand 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 theMaster Lease. The Premises are depicted on Exhibit A to thisSublease,

 

**1.2**                               **Master Landlord:** SFERS Real Estate Corp. U, a Delawarecorporation.

 

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

 

**1.4**                               **Term:** Approximately forty-six (46) months, beginning on theCommencement Date and ending on the Expiration Date unless terminated earlierin 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 4.2below.

 

**1.8****                              ****Base Year:**None.

 

**1.9****                              ****Subtenant’s Share of MasterPremises:  **100%.

 

**1.10**                        **Subtenant’s Use**:  Theuses stated in Master Lease Section 1.1, 1,2 and 1.3 together with theright to use the Premises for (i) research, (ii) development, (iii) marketing,(iv) assembly and other associated uses for a medical device operation andfor 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 SubleaseProvisions are used in this Sublease as defined terms and have the meaningsgiven in such sections. Other capitalized words and phrases for which nodefinition is given in this Sublease shall have the meanings given them in theMaster Lease. Unless otherwise indicated, all section references are tothe sections of this Sublease.

 

**2.****                                     ****DEMISE OF PREMISES**

 

**2.1**                               Sublandlord hereby subleases the Premises toSubtenant, and Subtenant hereby subleases the Premises from Sublandlord, on andsubject to the terms and conditions of this Sublease. Within thirty (30) daysof the mutual execution of this Sublease, Subtenant shall have the right at itssole cost and expense to carry out an independent measurement of the Premisesusing a third party licensed architect. If the Subtenant architect identifies adiscrepancy of more than five percent (5%) between the architect’s calculationof the rentable square footage of the Premises compared to the rentable squarefootage stated in Section 1.1 above the Sublandlord and Subtenant agree towork “in good faith” to establish a mutually acceptable rentable square footagefor the Premises. Notwithstanding any

 

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establishmentof a rentable square footage adjustment as set forth above, Subtenant agreesthat it shall take possession of all of the Sublandlord’s premises space asdefined under the terms of the Master Lease. Where the Sublandlord and Subtenantcannot agree upon an adjustment to the rentable square footage of the Premisesfollowing a calculation by Subtenant’s independent architect the parties agreeto be bound by the decision of three arbiters under an arbitration conducted inaccordance with the rules of the American Arbitration Association.Sublandlord and Subtenant shall each elect an arbiter and those two arbitersshall select the third. The costs of each arbiter shall be the responsibilityof each appointing party with the cost of the third arbiter to be dividedbetween Sublandlord and Subtenant.

 

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

 

**2.3**                               Sublandlord reserves the right, on reasonableprior notice and subject to Subtenant’s reasonable security requirements, toinspect the Premises; provided, however, Sublandlord shall not be required to givenotice or comply with Subtenant’s reasonable security requirements in the case ofan entry due to an emergency.

 

**2.4**                               Sublandlord agrees to allow Subtenant, itsemployees, agents, consultants and contractors to have access and early entryto the Premises, from the date Master Landlord consents in writing to a fullyexecuted original of this Sublease prior to the Commencement Date (“Early EntryPeriod”) on reasonable prior written notice, to allow Subtenant to carry outinstallation of Subtenant’s improvements, furniture, fixtures, andtelecommunications equipment thereof as in the reasonable opinion of Subtenantis required to ready the Premises for occupancy; provided, however, such EarlyEntry Period shall immediately cease on twenty four hours notice from Sublandlordand to the extent that Subtenant fails to abide by such notice Sublandlordshall have the right to apply any and all of the Security Deposit to remedy thesame including Sublandlord’s actual legal fees. Subtenant, its employees, agents,consultants and contractors shall take all reasonable and necessary safety andsecurity precautions in connection with the carrying out of the installation ofimprovements, furniture, fixtures, telecommunications equipment and shallobtain all required governmental permits and pay all governmental fees andcharges associated with such work. Subtenant shall indemnify, defend and holdSublandlord and Master Landlord and all Sublandlord’s employees, successors and/orassigns (collectively, the “Indemnitees”) harmless from and against any and allcosts, demands, claims, liabilities, violations, losses or damages which any ofthe Indemnitees, individually or collectively, may at any time hereafter sufferor sustain arising or in any way related to Subtenant’s accessing and enteringthe Premises and carrying out installation of furniture, fixtures,telecommunications equipment or improvements in, on or to the Premises prior tothe Commencement Date of this Sublease.

 

**3.****                                      TERM**

 

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

 

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delivers possession ofthe Premises to Subtenant; provided, however, Subtenant agrees that Subtenantshall be subject to all of the terms and conditions of this Sublease, otherthan the obligation to pay Base Rent to Sublandlord, (including, withoutlimitation 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 possessionof the Premises to Subtenant by the Estimated Commencement Date, Sublandlordshall not be liable therefor, nor shall such failure affect the validity ofthis Sublease or the obligations of Subtenant hereunder (except as providedbelow), or extend the Expiration Date, but in such case the Commencement Datewill not occur and Subtenant shall not be obligated to pay Rent untilpossession of the Premises is tendered to Subtenant, provided that either partymay cancel this Sublease if Sublandlord using “good faith” does not deliverpossession of the Premises (in the required condition) to Subtenant on orbefore 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 Leaseis terminated for any cause whatsoever (and Master Landlord does not requireSubtenant to attorn) and the Term shall end on such earlier termination,provided Sublandlord indemnifies Subtenant for early termination of thisSublease due to Sublandlord’s negligent acts or omissions with respect to theMaster Lease. Provided Subtenant shall intend to remain in the Premises under adirect lease with the Master Landlord to commence after the Sublease expirationdate, then Sublandlord shall waive its right to extend the Master Leaseprovided Subtenant shall have executed a new lease with Master Landlordcontingent upon written notice as described below and Subtenant shall have theright on not less than forty five (45) days written notice prior to the ExpirationDate set forth on the face of this Sublease in Section 1.6 to adjust the dateof surrender of the Premises to Sublandlord to June 30, 2009 upon all ofthe terms and conditions of this Sublease including the requirement to payrent.

 

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

 

**4.****                                      RENT**

 

**4.1**                               Theconsideration payable by Subtenant for the Premises shall consist of the Base Rent under Section 4.2, theAdditional 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 covenantin this Sublease.

 

**4.2**                               TheBase 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 andcontinuing thereafter on the first day of each month during the Term, Subtenantshall pay to Sublandlord in advance, and without notice, demand, deduction oroffset, the monthly Base Rent specified in Section 4.2 above. Base Rentfor any partial month will be prorated, based on a thirty (30) day month. Subtenantshall pay the first full month’s Rent for month seven (7) upon executionand delivery to Sublandlord, and if the Commencement Date is not the first dayof the month, then Subtenant shall pay the prorated Rent for the first partialmonth 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 4.5below).

 

**4.4**                               (a) Throughout the Term, Subtenant shallpay to Sublandlord, as additional rent (“Additional Rent”) an amount equal toSubtenant’s Share of the Pass Through Costs (defined below) in accordance withthis Section 4.3 and Section 4.4. “Pass Through Costs” means, withoutlimitation, the amounts paid by Sublandlord to reimburse Master Landlord fortaxes, insurance, operating expenses, common area maintenance charges,management fees, amortized capital expenditures for required repairs orimprovements (as described in Master Lease Section 4.1.2), and/or other expensesincurred by Master Landlord in connection with the Building or the Master Landlord’sProject. For purposes of calculating Additional Rent, Sublandlord shall be entitledto rely conclusively on Master Landlord’s determination of estimated and actualPass Through Costs, except that Subtenant shall have the same right at its solecost and expense to require Sublandlord upon reasonable prior written notice toaudit 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 4.3of the Master Lease; provided, however, it shall be deemed reasonable forSublandlord to require Subtenant to advance to Sublandlord prior to Sublandlordcommencing upon such audit and challenge of Expense determination Sublandlord’sreasonable estimate of the costs and expenses associated therewith. The Sublandlordand Subtenant agree that within thirty (30) days of the expiration of suchaudit and challenge of the Expense determination to reconcile any costs and expensesassociated therewith and to either reimburse Sublandlord accordingly. A Defaultunder the terms of this section 4.4(a) shall be deemed to be a breachof the terms and conditions of this Sublease. Any unreimbursed sums dueSublandlord shall be deemed “Rent” under this Sublease and all of Sublandlord’srights and remedies to recover such delinquent amount shall be in accordancewith the terms and conditions of this Sublease, including, without limitation,the right to apply the Security Deposit (as described in Sections 1.12 and16.2) against the same.

 

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

 

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Estimate shall be theamount stated in Master Landlord’s estimate of such costs and expenses asdemanded of Sublandlord by Master Landlord. On or about the first day of March ofthe following Sublease Year after the first Sublease Year during the Term, oras soon thereafter as is reasonably practicable, Sublandlord shall furnishSubtenant with a statement of the actual Pass Through Costs for the precedingSublease Year, reconciling the actual amounts paid pursuant to Sublandlord’sEstimate and the actual amounts payable hereunder (“Actual Pass Through CostStatement”). Within thirty (30) days after Sublandlord’s giving of such ActualPass Through Cost Statement, Subtenant shall make a lump sum payment toSublandlord in the amount, if any, by which the actual Subtenant’s Share ofPass Through Costs for such preceding Sublease Year as shown on the Actual PassThrough Cost Statement, exceeds the aggregate of the monthly installments ofthe estimated Subtenant’s Share of Pass Through Costs paid during suchpreceding Sublease Year. If Subtenant’s Share of Pass Through Costs, as shownon Sublandlord’s Actual Pass Through Cost Statement, is less than the aggregateof the monthly installments of Subtenant’s Share of Pass Through Costs actuallypaid by Subtenant during such preceding Sublease Year, then Sublandlord shallapply such amount to the next accruing monthly installment(s) of Subtenant’sShare of Pass Through Costs due from Subtenant until fully credited toSubtenant; provided, however, that if no Rent is due, then Sublandlord shallrefund such amounts to Subtenant within a reasonable period of time. If theTerm ends on a date other than the last day of December, the actual PassThrough Costs for the year in which the Expiration Date occurs, Subtenant’sShare 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 yearfalling within the Term, and the denominator of which is 365. The provisions ofthis Section 4.3 shall survive the Expiration Date or any soonertermination provided for in this Sublease.

 

**4.5**                               Throughoutthe Term, Subtenant also shall pay within five (5) business days after writtennotice from Sublandlord any other fees, charges or other sums due under the MasterLease (collectively, “Other Charges”). To the extent that utility consumptioncosts, including without limitation, electric and other charges incurred inconnection with lighting, and providing electrical power and heating,ventilating and air conditioning service to the Premises are separately meteredand billed directly to Subtenant, Subtenant shall be responsible for paying allsuch costs before delinquency as Other Charges. To the extent such utilitiesare not separately metered to the Premises and billed directly to Subtenantseparately from Additional Rent, Subtenant shall pay its share of such costs inan amount equal to Subtenant’s share of Master Premises as Other Charges. OtherCharges also include, without limitation: (a) excess or after hourselectrical service or heating, ventilating or air conditioning service suppliedto the Premises; (c) services or benefits supplied to the Premises atSubtenant’s request (or with Subtenant’s acquiescence) for which Master Landlordreserves any right to impose a fee or charge separate from the Master LeasePass Through Costs; (d) to reimburse Master Landlord for taxes on personalproperty, equipment and fixtures located in or about the Premises during theTerm; (e) to pay for any damage to the Building resulting from the act or omissionof Subtenant or Subtenant’s agents, employees or invitees; and (f) damagesrecoverable due to a default under the Master Lease which is the result of anyDefault or failure of performance by Subtenant under this Sublease.

 

**4.6**                               AllRent shall be paid to Sublandlord, or to such other person or such other placeas Sublandlord may from time to time designate in writing. If any Rent is notpaid

 

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when due, Subtenant shallpay, at Sublandlord’s discretion, a late charge to Sublandlord equal to thegreater of (a) $50 or (b) three percent (3%) of the delinquent amountand all interest and late charges as Sublandlord would sustain under the MasterLease to the extent caused by the Default of Subtenant in the case ofdelinquent 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) operateto waive any default by Subtenant or provide a substitute for Subtenant’s fulland timely performance of the obligation to pay Rent, or (ii) limit theexercise of any other right or remedy Sublandlord may have under this Subleasein case of Subtenant’s Default.

 

**4.7**                            In theevent of any casualty or condemnation affecting the Premises, Rent payable bySubtenant shall be proportionately abated, but only as to the portion of thePremises damaged or taken; and only to the extent that any amounts payable bySublandlord under the Master Lease (the “Master Lease Rent”) is abated orreduced with respect to the Premises. Subtenant shall have no right toterminate the Sublease in connection with any casualty or condemnation exceptto the extent that the Master Lease also is terminated as to the Premises orany material portion thereof.

 

**5.****                                     ****POSSESSION AND USE**

 

**5.1**                               Sublandlordshall deliver the Premises to Subtenant with all Premises, HVAC, electrical andplumbing systems serving the Premises in operational and good condition and repairas of the Sublease Commencement Date. In addition, Sublandlord shall deliverthe Premises to Subtenant in a broom clean condition, and Sublandlord shallpatch any holes, replace any damage ceiling tiles and repaint where necessaryprior to Sublease Commencement Date. Except as otherwise expressly providedherein, Sublandlord subleases the Premises to Subtenant strictly in theirpresent “as-is” and “with all faults” condition; provided, however, nothing containedin this Section 5.1 shall limit Subtenant’s rights under this Sublease to requireSublandlord to enforce the terms of the Master Lease (in accordance with theterms and conditions stated herein) in the respect of any failure by Master Landlordto maintain and repair the Building as required pursuant to the terms of the MasterLease. Subtenant shall have thirty (30) days after delivery of the Premises to provideSublandlord notice of any Premises condition not conforming to Sublandlordsrequired delivery condition and provided in the reasonable opinion of Sublandlordthe same shall be a Sublandlord obligation. The Sublandlord shall repair thenon-conforming Premises condition within a commercially reasonable time. In allother respects the Subtenant, by acceptance of possession of the Premises, conclusivelyacknowledges the Premises to be in good working order and repair and in atenantable condition.

 

**5.2**                               ThePremises shall be used and occupied solely for Subtenant’s Use as specified in theBasic Sublease Provisions. Sublandlord agrees to use commercially reasonable effortsto seek from the Master Landlord a permitted change of use from the Master Leaseuse, as specified therein, to give effect to the use specified in Section 1.10above, and Subtenant shall have the right to terminate this Sublease inaccordance with Section 3.4 if such approval is not obtained in writingwithin forty five (45) days after an executed copy of this Sublease is receivedby Master Landlord. Subtenant shall not use or suffer or permit the Premises tobe used for any other purpose except with Master Landlord’s and Sublandlord’sdiscretionary consent.

 

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**6.****                                     ****SUBTENANT’S UTILITY,MAINTENANCE AND REPAIR OBLIGATIONS**

 

**6.1**                               Subtenantshall be responsible for and shall pay before delinquency for all maintenance,repairs and replacements to the Premises and its equipment, to the extentSublandlord is obligated to perform the same with respect to the Master Premisesunder the Master Lease.

 

**6.2**                               Subtenantshall comply with all laws and ordinances, and all orders, rules and regulationsof all governmental authorities and of all insurance bodies and their fire preventionengineers at any time in force, applicable to the Premises or to Subtenant’sparticular use or manner of use thereof, to the extent Sublandlord is obligatedto perform the same with respect to the Master Premises under the Master Lease.

 

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

 

**7.****                                     ****SUBTENANT’S INSURANCE ANDINDEMNITY**

 

**7.1**                               Throughoutthe Term, Subtenant shall procure and maintain, at its own cost and expense,such commercial general liability insurance as is required to be carried by Sublandlordunder the Master Lease, naming Sublandlord and Master Landlord, as additionalinsured in the manner required therein, and such property insurance as is requiredto be carried by Sublandlord under the Master Lease to the extent such propertyinsurance pertains to the Premises. If the Master Lease requires Sublandlord toinsure leasehold improvements or alterations, then Subtenant shall insure suchleasehold improvements which are located in the Premises, as well as alterationsin the Premises made by Subtenant. Subtenant shall furnish to Sublandlord acertificate of Subtenant’s insurance required under this Section 7.1 priorto the Commencement Date.

 

**7.2**                               Subtenantwaives claims against Sublandlord for damage to property owned by Subtenantwhere such damage is covered under any policy of property damage insurancemaintained (or required by this Sublease to be maintained) by Subtenant. Sublandlordwaives claims against Subtenant for damage to property owned by Sublandlordwhere such damage is covered under any policy of property damage insurancemaintained (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 19below) shall be the responsibility of Subtenant during the Term of this Subleaseand 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 19and shall replace any damaged or destroyed FF&E at Subtenant’s sole costand expense. Subtenant hereby waives claims against Master Landlord andSublandlord for death, injury, loss or damage of every kind and nature, if andto the extent that Sublandlord waives or releases such claims against MasterLandlord under the Master Lease. Subtenant agrees to obtain, for the benefit ofMaster Landlord and Sublandlord, such waivers of subrogation rights from itsinsurer as are required of Sublandlord under the Master Lease.

 

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**7.3**                               Subtenantagrees to protect, indemnify, defend and hold Sublandlord harmless from alllosses, damages, liabilities and expenses which Sublandlord may incur, or forwhich Sublandlord may be liable to Master Landlord, arising from the acts oromissions of Subtenant, or any events occurring in or about the Premises duringthe Term, which are the subject matter of any indemnity or hold harmless ofSublandlord to Master Landlord under the Master Lease. Subtenant’s obligationsto protect, indemnify, defend and hold harmless Sublandlord under this Section 7.3are in no way conditioned upon either (a) Subtenant’s acts or omissionsbeing a cause of any underlying claim, demand, action, loss or damage, or (b) Sublandlordbeing free of negligence or wrongful conduct in connection therewith.

 

**8.****                                     ****ASSIGNMENT OR SUBLETTING**

 

**8.1**                               Exceptwith the prior written consent of Master Landlord (subject to provisions of 9.1and 9.5 of the Master Lease) and Sublandlord, which consent shall not be withheldor delayed if Master Landlord consents, Subtenant shall not (a) assign, conveyor mortgage this Sublease or any interest under it; (b) allow any transferthereof or any lien upon Subtenant’s interest by operation of law; (c) furthersublet the Premises or any part thereof or (d) permit the occupancy of thePremises or any part thereof by anyone other than Subtenant. Master Landlord’sconsent to any assignment or Sublease of this Sublease shall be in accordancewith the Master Lease Sublandlord shall use reasonable efforts to obtain theconsent of Master Landlord. All costs of obtaining Master Landlord’s andSublandlord’s consent (including legal fees) shall be borne by Subtenant.Sublandlord shall not be required to consent to any assignment or Sublease bySubtenant where Master Landlord withholds its consent.

 

**8.2**                               No permittedassignment shall be effective and no permitted sublease shall commence unlessand until any Default by Subtenant hereunder has been cured. No permitted assignmentor subletting shall relieve Subtenant from Subtenant’s obligations andagreements under this Sublease and Subtenant shall continue to be liable as aprincipal and not as a guarantor or surety, to the same extent as though noassignment or subletting had been made. Consent to any assignment or subleaseshall not be deemed to release Subtenant from its requirement to obtain consentfor any future assignment or sublease.

 

**8.3**                               “BonusRent” shall mean the excess of (i) all consideration received by Subtenantfrom an assignment of this Sublease or a sublease of all or any portion of the Premisesover (ii) the Base Rent and Additional Rent payable by Subtenant to Sublandlordunder this Sublease (prorated, in the case of a sublease of less than all ofthe Premises, to reflect obligations allocable to only the portion of thePremises so sublet). In determining the total consideration under the foregoingclause (i)*,*Subtenant shall beentitled to exclude therefrom reasonable leasing commissions paid by Subtenantto any unaffiliated third party, payments attributable to the amortization ofthe cost of improvements Subtenant must make to the Premises at its cost toready same for the assignee or sublessee, and other reasonable, out-of- pocketcosts paid by Subtenant which are directly related to Subtenant’s obtaining theassignment or sublease.

 

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

 

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**9.****                                     ****ALTERATIONS**

 

**9.1**                               Sublandlordhereby approves the plans for alterations attached hereto as Exhibit F andagrees to use commercially reasonable efforts to obtain Master Landlord’s consentthereto. Otherwise, during the Term Subtenant shall not make any other alterationsor improvements in or additions or improvements to the Premises (“Alterations”)if to do so would constitute a default under the Master Lease (without regard toany requirement of notice or cure period). Sublandlord’s consent to suchAlterations shall not be withheld if Master Landlord consents to such Alterations.Sublandlord shall use reasonable efforts to obtain the consent of MasterLandlord. If Alterations by Subtenant are consented to, Subtenant shall complywith all of the covenants of Sublandlord contained in the Master Lease pertainingto 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 ofAlterations by Subtenant and/or failure to remove the same at the end of the Termif Sublandlord is required to surrender the Premises to Master Landlord withall such alterations removed and the Premises restored to the condition as ofthe date of mutual execution of this Sublease.

 

**9.2**                               Anyconsented 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 managementor supervision fee charged by Master Landlord and shall if Master Landlord at thetime of consent does not indicate otherwise in writing to Sublandlord andSubtenant be removed by Subtenant prior to the end of the Term at Subtenant’ssole 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 mutualexecution of this Sublease and damage due to any part thereof occasioned bysuch removal.

 

**10.****                              ****CASUALTY OR EMINENT DOMAIN**

 

**10.1**                        In theevent of a fire or other casualty affecting the Master Landlord’s Project, the Buildingor 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, Sublandlordshall be entitled to exercise any right it may have to terminate the MasterLease without first obtaining the consent or approval of Subtenant.

 

**10.2**                        If theMaster Lease imposes on Sublandlord the obligation to repair or restore leaseholdimprovements or alterations within the Master Premises, Subtenant shall beresponsible for repair or restoration of leasehold improvements or alterations withinthe Premises,

 

**11.****                               SURRENDER**

 

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

 

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Said improvements shallinclude all plumbing, lighting, electrical, heating, cooling and ventilatingfixtures and equipment. Subtenant shall surrender to Sublandlord all keys tothe Premises and make known to Sublandlord the combination of all combinationlocks which Subtenant is permitted to leave on the Premises.

 

**11.2**                        IfSubtenant performs any Alterations, Subtenant shall be obligated to remove suchAlterations and restore the Premises to the condition existing on the ExecutionDate if the Master Lease requires such removal and restoration by Sublandlord. Ifthe Master Lease requires Sublandlord to remove the same upon surrender of the Premisesspace to Master Landlord then Subtenant shall remove all alterations and improvementsas described more fully in section 9.1 above and Exhibit Fattached hereto. All other Alterations in or upon the Premises made bySubtenant shall become a part of and shall remain upon the Premises upon suchtermination without compensation, allowance or credit to Subtenant. Said rightshall be exercisable by Sublandlord’s giving written notice thereof toSubtenant not less than five (5) days prior to such Expiration Date ormore than a reasonable period of time after any earlier termination. Subtenantshall repair any damage occasioned by such removal or restoration. IfSublandlord or Master Landlord requires removal of any Alteration made bySubtenant, or a portion thereof, and Subtenant does not make such removal inaccordance with this Section, Sublandlord may remove the same (and repair anydamage occasioned thereby), and dispose thereof, or at its election, warehousethe same. Subtenant shall pay the costs of such removal, repair and warehousingon demand.

 

**11.3**                        Subtenantshall not be required to remove any alterations performed by Sublandlord priorto the Execution Date or to restore the Premises to their condition prior to Sublandlord’smaking of such alterations. If Sublandlord is required under the Master Leaseto remove any alterations performed by Sublandlord prior to the Execution Date,Subtenant shall permit Sublandlord to enter the Premises for a reasonableperiod of time, subject to such conditions as Subtenant may reasonably impose,for the purpose of removing such alterations and restoring the Premises as requiredby the Master Lease. However, if either Sublandlord or Subtenant reasonablydetermines that Sublandlord’s entry prior to the Expiration Date is not compatiblewith Subtenant’s continued use of the Premises, then either party may terminatethis Lease upon not less than ten (10) days written notice to the other, withsuch termination to be effective on the date of Sublandlord’s re-entry into thePremises for the purpose of removing such alterations and restoring thePremises.

 

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

 

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Sublandlord with thisSublease acting as a bill of sale therefor, without further payment or creditby Sublandlord to Subtenant.

 

**12.****                              ****HOLDING OVER.**

 

**12.1**                        Subtenanthas no right to occupy the Premises or any portion thereof after the ExpirationDate or after the termination of this Sublease or of Subtenant’s right to possessionhereunder. In the event Subtenant or any party claiming by, through or underSubtenant holds over, Sublandlord may exercise any and all remedies available toit at law or in equity to recover possession of the Premises, and to recover damages,including without limitation, damages payable by Sublandlord to Master Landlordby reason of such holdover.

 

**12.2****                       **Without limitingSublandlord’s rights under Section 12.1, for each and every month orpartial month that Subtenant or any party claiming by, through or under Subtenantremains in occupancy of all or any portion of the Premises after the ExpirationDate or after the earlier termination of this Sublease or of Subtenant’s rightto possession, Subtenant shall pay, as minimum damages and not as a penalty, monthlyrental at a rate equal to the rate of monthly holdover rent payable by Sublandlordfor the Premises pursuant to the Master Lease (and all Sublandlord’s legal feesassociated with any holding over discussions, negotiations, disputes, settlementsor agreements, if any). The acceptance by Sublandlord of any lesser sum shallbe construed as payment on account and not in satisfaction of damages for suchholding over.

 

**13.****                              ****ENCUMBERING TITLE**

 

**13.1**                        Subtenantshall not do any act which in any way encumbers the title of Master Landlord inand to the Building or Master Landlord’s Project nor shall the interest or estateof Master Landlord or Sublandlord be in any way subject to any claim by way oflien or encumbrance, whether by operation of law or by virtue of any express orimplied 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’sProject arising from any act or omission of Subtenant shall accrue only againstthe subleasehold estate of Subtenant and shall be subject and subordinate to theparamount title and rights of Master Landlord in and to the Building and the MasterLandlord’s Project and the interest of Sublandlord in the Master Lease Premises.

 

**13.2**                        Withoutlimiting 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 toSubtenant or claimed to have been furnished to Subtenant in connection with workof any character performed or claimed to have been performed on the Premisesby, or at the direction or sufferance of, Subtenant.

 

**14.****                              ****SUBTENANT’S DEFAULT**

 

**14.1**                        Any one ormore of following events shall be considered a “Default” by Subtenant, as suchterm is used in this Sublease:

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)                                  Subtenantshall assign this Sublease or further sublet the Premises other than in strictaccordance with Article 8; or

 

(h)                                 Subtenantfails to make any payment of Rent required to be made by Subtenant after three (3) daysof receipt by Subtenant of written notice that Sublandlord has not receivedsuch payment due; or

 

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

 

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

 

(k)                                 Subtenantfails to fulfill, keep, observe or perform any of the other covenants andobligations herein contained to be fulfilled, kept, observed and performed bySubtenant, and such failure continues for more than fifteen (15) days afternotice thereof to Subtenant.

 

**14.2**                     Upon theoccurrence of any one or more Default(s), Sublandlord may exercise any remedyagainst Subtenant which Master Landlord may exercise for default by Sublandlordunder 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 theCalifornia Civil Code Sections 1951.2 and 1951.4 which provides that a lessormay continue a lease in effect and recover damages as they become due.

 

**15.****                              ****PROVISIONS REGARDING MASTERLEASE**

 

**15.1**                        ThisSublease and all rights of the parties hereunder, are subject and subordinateto all of the terms, covenants and conditions of the Master Lease. In the eventof any conflict between the terms of this Sublease and the Master Lease, theterms of the Master Lease shall control. Each party agrees that it will not, byits act or omission to act, cause a default under the Master Lease. Infurtherance of the foregoing, the parties hereby acknowledge, each to theother, that it is not practical in this Sublease to enumerate all of the rightsand obligations of the various parties under the Master Lease and specificallyto allocate those rights and obligations in this Sublease. Accordingly, inorder to afford to Subtenant the benefits of this Sublease and of thoseprovisions of the Master Lease which by their nature are intended to benefitthe party in possession of the Premises, and in order to protect Sublandlord againsta Default by Subtenant which might cause a default by Sublandlord under theMaster Lease, Sublandlord and Subtenant covenant and agree as set forth in Sections15.2 through 15.9 below.

 

**15.2**                        ProvidedSubtenant shall timely pay all Rent as and when due under this Sublease, Sublandlordshall pay, as and when due, all Master Lease Rent.

 

**15.3**                        Except asotherwise expressly provided in this Sublease, Sublandlord shall perform itscovenants and obligations under the Master Lease which do not require for theirperformance possession of the Premises and which are not otherwise to be performedhereunder by Subtenant on behalf of Sublandlord. For example, Sublandlord shallperform its covenants and obligations as tenant under the Master Lease whichpertain to the remainder of the Master Premises.

 

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

 

**15.5**                        Except asotherwise expressly provided in this Sublease, Sublandlord shall not agree to anamendment to the Master Lease which materially adversely affects Subtenant’s occupancyof the Premises, unless Sublandlord shall first obtain Subtenant’s priorwritten approval to such amendment. However, it is expressly agreed that: (a) theforegoing shall not prevent Sublandlord from entering into any agreement oramendment with Master Landlord which terminates the Master Lease with respectto 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 priorto the Expiration Date, Sublandlord shall have no liability to Subtenant; and(c) to the extent the Master Lease grants Sublandlord any discretionary rightto terminate the Master Lease, whether due to casualty, condemnation, orotherwise,

 

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Sublandlord shall beentitled to exercise or not exercise such right in its sole and absolutediscretion, provided it shall give Subtenant reasonable prior notice and aright to elect to keep the Master Lease and the Sublease in effect; providedSubtenant shall meet all costs associated with such election including all ofSublandlord’s costs and expenses. Subject to the limitations expressed above orelsewhere in this Sublease, so long as Subtenant is not in Default, Subtenant’squiet and peaceable enjoyment of the Premises shall not be disturbed orinterfered with by Sublandlord, or by any person claiming by, through, or underSublandlord.

 

**15.6**                        Sublandlordgrants to Subtenant the right, so long as Subtenant is not in Default, to receiveall of the services and benefits with respect to the Premises which are to be providedby Master Landlord under the Master Lease. Sublandlord shall have no duty toperform any obligations of Master Landlord which are, by their nature, the obligationof 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 berequired to provide or perform under the Master Lease. Sublandlord shall have noresponsibility for or be liable to Subtenant for any default, failure or delayon the part of Master Landlord in the performance or observance by MasterLandlord of any of its obligations under the Master Lease, nor shall suchdefault by Master Landlord affect this Sublease or waive or defer theperformance of any of Subtenant’s obligations under this Sublease, includingwithout limitation the obligation to pay Rent; and Subtenant hereby expresslywaives the provisions of any statute, ordinance or judicial decision, now orhereafter in effect, which would give Subtenant the right to make repairs atthe expense of Sublandlord, or to claim any actual or constructive eviction byvirtue of any interruption in access, services or utilities to, or any failureto make repairs in or to, the Premises, or the Building, or the Master Landlord’sProject. Notwithstanding the foregoing, the parties do contemplate that MasterLandlord will, in fact, perform its obligations under the Master Lease and inthe event of any default or failure of such performance by Master Landlord,Sublandlord agrees that it will, upon notice from Subtenant, make demand uponMaster Landlord to perform its obligations under the Master Lease and, providedthat Subtenant specifically agrees to pay all costs and expenses of Sublandlordand provides Sublandlord with security reasonably satisfactory to Sublandlordto pay such costs and expenses, Sublandlord will take appropriate legal actionto enforce the Master Lease.

 

**15.7**                        Anynon-liability, release, indemnity or hold harmless provision in the MasterLease for the benefit of Master Landlord shall be deemed to apply under thisSublease and inure to the benefit of both Sublandlord and Master Landlord.

 

**15.8**                        IfSubtenant desires to take any action which requires the consent of Master Landlordunder the terms of the Master Lease, then, notwithstanding anything to thecontrary herein: (a) Sublandlord, independently, shall have the samerights of approval or disapproval as Master Landlord has under the MasterLease; (b) Subtenant shall not take any such action until it obtains theconsent of both Sublandlord (whose consent shall not be unreasonably withheld) andMaster Landlord; and (c) Subtenant shall request that Sublandlord obtainMaster Landlord’s consent on Subtenant’s behalf and Sublandlord shall usecommercially reasonable efforts to obtain such consent. Subtenant shall pay allcosts reasonably incurred by Sublandlord in seeking or procuring MasterLandlord’s consent, except Sublandlord

 

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shall pay all such costsof Master Landlord related to the creation and approval of this Sublease. Anyapproval or consent required of Sublandlord conclusively shall be deemedreasonably withheld if approval or consent also is required of the MasterLandlord, and Master Landlord fails to give Master Landlord’s approval orconsent.

 

**15.9**                        Subtenantshall protect, defend, indemnify and hold harmless Sublandlord from any and allliability, damages, liabilities, claims proceedings, actions, demands and costs(including reasonable attorneys’ fees) resulting, directly or indirectly, from Subtenant’sDefault under the Sublease.

 

**15.10**                 Sublandlord shallprotect, defend, indemnify and hold harmless Subtenant from any and allliability, damages, liabilities, claims proceedings, actions, demands and costs(including reasonable attorneys’ fees) resulting, directly or indirectly, from Sublandlord’sbreach of this Sublease or the Master Lease.

 

**16.****                              ****EXCLUDED PROVISIONS; INCORPORATIONBY REFERENCE**

 

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

 

Sections4.2, 4.3, 26.1, 26.2, 27;

 

Articles2, 3, 5, 6, 9, 14, 15, 18, 29, 33, 39, 42, 43, 44;

 

Exhibit B

Exhibit C 

Exhibit E 

Exhibit F

 

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

 

Sections4.1.2, 4,1.3, 7.2, 7.3, 17.2

 

Articles1, 8, 10, 11, 12, 19, 20, 25, 28, 31, 32, 34, 35, 45

 

**17.****                              ****MASTER LANDLORD’S CONSENT**

 

**17.1**                        ThisSublease and the obligations of the parties hereunder are expressly conditionedupon Sublandlord’s obtaining prior written consent hereto by Master Landlord insubstantially the form provided in Exhibit D attached hereto.Subtenant shall promptly deliver to Sublandlord any information reasonablyrequested by Master Landlord (in connection with Master Landlord’s approval ofthis Sublease) with respect to the nature and operation of Subtenant’s businessand/or the financial condition of Subtenant.

 

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**17.2**                     Sublandlordand Subtenant hereby agree, for the benefit of Master Landlord, that thisSublease and Master Landlord’s consent hereto shall not (a) create privityof contract between Master Landlord and Subtenant; (b) be deemed to haveamended the Master Lease in any regard (unless Master Landlord shall haveexpressly agreed writing to such amendment); or (c) be construed as awaiver of Master Landlord’s right to consent to any assignment of the MasterLease by Sublandlord or any further subletting of the Master Premises, or as awaiver of Master Landlord’s right to consent to any assignment by Subtenant ofthis Sublease or any sub-subletting of the Premises or any part thereof. MasterLandlord’s consent shall, however, be deemed to evidence Master Landlord’sagreement that Subtenant shall be entitled to waiver of claims and of the rightof subrogation for damage to Master Landlord’s property if and to the extentthat the Master Lease provides such waivers for the benefit of Sublandlord.

 

**18.****                               NOTICES**

 

**18.1**                        Allnotices which may or are required to be given by either party to the othershall be in writing and shall be deemed given when received or refused ifpersonally delivered, or if sent by United States registered or certified mail,postage prepaid, return receipt requested, or if sent by a nationallyrecognized overnight commercial courier service providing receipted delivery,in any such case (a) if to Subtenant, addressed to Subtenant at theaddress specified in the Basic Sublease Provisions or at such other place asSubtenant may from time to time designate by notice in writing to Sublandlord (provided,however, if Subtenant has abandoned the Premises, any such notice may beproperly sent to Subtenant’s agent for service of process), or (b) if forSublandlord, addressed to Sublandlord at the address specified in the BasicSublease Provisions or at such other place as Sublandlord may from time to timedesignate 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 noticedelivered by Sublandlord in connection with, or as a precondition to, a Defaultby Subtenant shall be in lieu of and not in addition to any notice to pay rent ornotice 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, tradefixtures and equipment (the “FF&E”) located in the Premises and describedmore fully in Exhibit C to this Sublease. Sublandlord shall removeany of Sublandlord’s personal property within the Premises not forming part ofthe FF&E which Subtenant does not want to remain on the Premises providedSubtenant shall have identified the same in writing to Sublandlord prior to theactual Commencement Date, in which event the Sublandlord and Subtenant agree tosubstitute a revised initialed Exhibit C schedule of FF&E inplace 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 aone (1) time right. To the extent that Subtenant identifies any otherFF&E to be removed after Subtenant has provided Sublandlord its writtennotice to remove such FF&E as described above, Subtenant shall be, atSubtenant’s sole cost and expense, reimburse Sublandlord the actual costs andexpenses of such FF&E removal. Sublandlord shall remove the FF&Erequested 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 thePremises where any Subtenant written notice requesting removal of FF&E isdelivered and received by Subtenant after the Commencement Date. The FF&Eis 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&Ein anticipation of Subtenant’s use, except that the data cabling shall beoperational and labeled as of the Commencement Date. No separate charge shallbe payable for Subtenant’s use of the FF&E, but such right of use shall endupon early termination of this Sublease or Subtenant’s right to possession ofthe Premises. During the Term, Subtenant shall (a) maintain the FF&Ein good condition and repair, (b) not remove the FF&E from thePremises except with Sublandlord’s prior within consent, and (c) bear allrisk of loss to the FF&E. Six (6) months prior to the end of the termSubtenant shall have the option to purchase the FF&E identified on Exhibit Cas the same may have been substituted by the parties upon the Expiration Dateof this Sublease for $10.00 by giving written notice to Sublandlord thatSubtenant desires to purchase such FF&E. In the absence of such writtennotice, Sublandlord shall have no obligation to sell the FF&E to Subtenant.Upon valid exercise of Subtenant’s option to purchase the FF&E, Sublandlordshall upon the Expiration Date execute a Bill of Sale in the form attachedhereto at Exhibit E to this Sublease. This option to purchase shallbe binding on both parties upon receipt of the written notice of exercise bySublandlord. Immediately following the Expiration Date and provided no earliertermination of this Sublease has taken place, or Subtenant has validlyexercised Subtenant’s option to purchase the FF&E, Subtenant shall uponSublandlord’s request repair any damage to or replace any FF&E. Sublandlordshall 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, representsand warrants to Subtenant that: (a) Exhibit B to this Subleaseis a full and complete copy of the Master Lease; (b) the Master Lease, asof the Execution Date, is in full force and effect and constitutes the entireagreement of Master Landlord and Sublandlord relating to the lease of thePremises, and (c) to the current actual knowledge of Sublandlord (withoutduty of inquiry), there exists no event of default under the Master Lease andthere exists no event which would constitute an event of default under theMaster Lease but for the giving of any required notice and passage of anyapplicable grace or cure period; (d) the person or persons executing thisSublease for Sublandlord are fully authorized to so act and no other action is requiredto bind Sublandlord to this Sublease; and (e) Sublandlord has the rightand power to execute and deliver this Sublease and to perform its obligationshereunder, subject only to Master Landlord’s consent.

 

**20.2**                        Subtenantrepresents and warrants to Sublandlord that: (a) Subtenant is familiar withthe provisions of the Master Lease insofar as they pertain to the Premises and Subtenant’suse and occupation thereof under this Sublease; (b) Subtenant has the rightand 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 authorizedto 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 formationand is authorized to conduct business in the state where the Premises are located.

 

**20.3**                        Uponexecution and delivery of this Sublease to Sublandlord, Subtenant shall depositwith Sublandlord the Security Deposit in the amount specified in the Basic

 

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Sublease Provisions, assecurity for the full and faithful performance of every provision of thisSublease to be performed by Subtenant, it being expressly understood and agreedthat the Security Deposit is not an advance deposit for Rent or a measure ofSublandlord’s damages in case of Subtenant’s default. If Subtenant Defaultswith respect to any provision of this Sublease, including but not limited tothe provisions relating to the payment of Rent, Sublandlord may use, apply orretain all or any part of the Security Deposit for the payment of any Rent orany other amount which Sublandlord may spend or become obligated to spend byreason of Subtenant’s Default, to repair damages to any part of the Premises orthe Building, to clean the Premises or to compensate Sublandlord for any otherloss or damage which Sublandlord may suffer by reason of Subtenant’s Default.Sublandlord shall not be required to keep the Security Deposit separate fromits general funds, and Subtenant shall not be entitled to interest on theSecurity 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 SecurityDeposit to the full amount required hereunder, and Subtenant’s failure to do soshall be a material breach of this Lease. If Subtenant shall fully andfaithfully perform every provision of this Sublease to be performed by it, theSecurity Deposit or any balance thereof shall be returned to Subtenant withinthree weeks of the Expiration Date or such earlier termination of thisSublease.

 

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

 

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

 

**20.6**                        Sublandlordshall not be deemed in default with respect to any of the terms, covenants andconditions of this Sublease on Sublandlord’s part to be performed, if Sublandlord’sfailure 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 ofpower, restrictive governmental laws and regulations, riots, insurrections,war, shortages accidents, casualties, acts of God, acts caused directly bySubtenant or Subtenant’s agents, employees and invitees or any other causebeyond that reasonable control of Sublandlord, except that this force majeure provisionshall not apply to Subtenant’s right to terminate under Section 3 for latedelivery of the Premises.

 

**20.7**                        Subtenantshall have the right at no additional charge to use four (4) non-reserved parkingspaces per 1000 rentable square feet available to Sublandlord under the termsof the Master Lease,

 

**20.8**                        ThisSublease shall be subject to the laws of the State of California.

 

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**20.9**                        Sublandlord shall use commercially reasonableefforts to seek the Master Landlord’s consent to building signage, buildingentrance signage and signage on one ground mounted monument sign for Subtenantin accordance with Article 41 of the Master Lease; provided, however, thecost of the same, instillation, removal at the end of the Term and repair toany damage occasioned by such removal and refinishing of surfaces to matchsurrounding surfaces shall be at Subtenant’s sole cost and expense.

 

**20.10**                 Without any obligation on Sublandlord orMaster Landlord to provide the same, Sublandlord shall use commerciallyreasonable efforts to seek a non-disturbance right for Subtenant from MasterLandlord.

 

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

 

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**INWITNESS WHEREOF**, Sublandlord and Subtenant have executed thisSublease 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 |   |
|                                                 |                    |                     |                        |            |  |  |  |  |  |  |  |

 

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**EXHIBIT A**

 

**DESIGNATION OF PREMISES**

 

 

Exhibit A

 

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Exhibit A

 

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Exhibit A

 

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**EXHIBIT B**

 

**MASTER LEASE**

 

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

 

 

Exhibit B

 

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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                              |   |

 

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| 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 OFGUARANTY

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

ii

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**MULTI-TENANTINDUSTRIAL NET LEASE**

**REFERENCEPAGES**

 
| 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

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ANNUALRENT 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 |   | $ |   | $ | $ |   |

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*                 Subject to abatement pursuant to Section 3.1.1of 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

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| TENANT’S SIC CODE: |   | 5045   |
|-------------------------|--------|--------|
|                    |   |   |
| AMORTIZATION RATE:      |   | N/A    |

 

The Reference Pages informationis incorporated into and made a part of the Lease. In the event of any conflictbetween any Reference Pages information and the Lease, the Lease shallcontrol. This Lease includes Exhibits A through F, all of which are made a partof 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 |   |
|                                |                              |            |                               |                                |  |  |  |  |  |

 

**[REMAINDEROF PAGE INTENTIONALLY LEFT BLANK)**

 

v

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**LEASE**

 

Bythis Lease Landlord leases to Tenant and Tenant leases from Landlord thePremises in the Building as set forth and described on the Reference Pages. ThePremises 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 aspart of this Lease.

 

**1.             USE AND RESTRICTIONS ON USE.**

 

1.1           The Premises are tobe used solely for the purposes set forth on the Reference Pages. Tenant shallnot do or permit anything to be done in or about the Premises which will in anyway obstruct or interfere with the rights of other tenants or occupants of theBuilding or injure, annoy, or disturb them, or allow the Premises to be usedfor any improper, immoral, unlawful, or objectionable purpose, or commit anywaste. Tenant shall not do, permit or suffer in, on, or about the Premises thesale of any alcoholic liquor without the written consent of Landlord firstobtained. Tenant shall comply with all governmental laws, ordinances andregulations applicable to the use of the Premises and its occupancy and shallpromptly 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 orupon, or in connection with, the Premises, all at Tenant’s sole expense. Tenantshall not do or permit anything to be done on or about the Premises or bring orkeep anything into the Premises which will in any way increase the rate of,invalidate or prevent the procuring of any insurance protecting against loss ordamage to the Building or any of its contents by fire or other casualty oragainst liability for damage to property or injury to persons in or about theBuilding or any part thereof.

 

1.2           Tenant shall not, andshall not direct, suffer or permit any of its agents, contractors, employees,licensees or invitees (collectively, the “Tenant Entities”) to at any timehandle, use, manufacture, store or dispose of in or about the Premises or theBuilding any (collectively “Hazardous Materials”) flammables, explosives,radioactive materials, hazardous wastes or materials, toxic wastes ormaterials, or other similar substances, petroleum products or derivatives orany substance subject to regulation by or under any federal, state and locallaws and ordinances, relating to the protection of the environment or thekeeping, use or disposition of environmentally hazardous materials, substances,or wastes, presently in effect or hereafter adopted, all amendments to any ofthem, and all rules and regulations issued pursuant to any of such laws orordinances (collectively “Environmental Laws”), nor shall Tenant suffer orpermit any Hazardous Materials to be used in any manner not fully in compliancewith all Environmental Laws, in the Premises or the Building and appurtenantland or allow the environment to become contaminated with any Hazardous Materials.Notwithstanding the foregoing, Tenant may handle, store, use or dispose ofproducts containing small quantities of Hazardous Materials (such as aerosolcans containing insecticides, toner for copiers, paints, paint remover and thelike) to the extent customary and necessary for the use of the Premises forgeneral office purposes; provided that tenant shall always handle, store, use,and dispose of any such Hazardous Materials in a safe and lawful manner andnever allow such Hazardous Materials to contaminate the Premises, Building andappurtenant land or the environment. Tenant shall protect, defend, indemnifyand 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 orasserted failure of Tenant to fully comply with all applicable EnvironmentalLaws, or the presence, handling, use or disposition in or from the Premises ofany Hazardous Materials by Tenant or any Tenant Entity (even though permissibleunder all applicable Environmental Laws or the provisions of this Lease), or byreason of any actual or asserted failure of Tenant to keep, observe, or performany provision of this Section 1.2. As of the date hereof, Landlord has notreceived written notice from any governmental agencies that the Building is inviolation of any Environmental Laws. Further, to Landlord’s actual knowledge,there are no Hazardous Materials at the Building other than small quantities ofHazardous Materials (such as aerosol cans containing insecticides, toner forcopiers, paints, paint remover and the like) to the extent customary andnecessary for the use of the Premises for general office purposes. For purposesof this Section, “Landlord’s actual knowledge” shall be deemed to mean andlimited to the current actual knowledge of James Ida, District Manager of RreefManagement Company, a Delaware corporation, at the time of execution of thisLease and not any implied, imputed, or constructive knowledge of saidindividual or of Landlord or any parties related to or comprising Landlord andwithout any independent investigation or inquiry having been made or anyimplied duty to investigate or make any inquiries; it being understood andagreed that such individual shall have no personal liability in any mannerwhatsoever hereunder or otherwise related to the transactions contemplatedhereby.

 

1.3             Tenant and the Tenant Entities willbe entitled to the non-exclusive use of the common areas of the Building asthey 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 theparking facilities than Tenant’s Proportionate Share of the total parkingspaces available for common use. The foregoing shall not be deemed to provideTenant with an exclusive right to any parking spaces or any guaranty of theavailability of any particular parking spaces or any specific number of parkingspaces. Lessee shall be allotted five (5) designated visitor parkingspaces,

 

1

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

 

**2.             TERM.**

 

2.1            The Term of this Lease shall beginon the date (“Commencement Date”) which shall be the later of the ScheduledCommencement Date as shown on the Reference Pages and the date thatLandlord shall lender possession of the Premises to Tenant, and shall terminateon the date as shown on the Reference Pages (“Termination Date”), unlesssooner terminated by the provisions of this Lease. Anything to the contrarynotwithstanding, in the event that Tenant’s completion of the InitialAlterations (as defined in Exhibit B attached hereto) is delayeddue to strikes, acts of God, shortages of labor or materials, war, terroristacts, civil disturbances and other causes beyond the reasonable control of theperforming party (each a “Force Majeure”) beyond July 1, 2004, theScheduled Commencement Date and Termination Date shall be delayed by an equalperiod of time, provided that in no event shall such delay exceed thirty (30)days. Tenant shall, at Landlord’s request, execute and deliver a memorandumagreement provided by Landlord in the form of Exhibit C attachedhereto, setting forth the actual Commencement Date, Termination Date and, ifnecessary, a revised rent schedule. Should Tenant fail to do so within thirty(30) days after Landlord’s request, the information set forth in suchmemorandum provided by Landlord shall be conclusively presumed to be agreed andcorrect.

 

2.2           Tenant agrees that in the event ofthe inability of Landlord to deliver possession of the Premises on the date immediatelyfollowing the date this Lease is fully executed by Landlord and Tenant andTenant has delivered to Landlord the fully executed Guaranty, all prepaidrental for the seventh (7th) month of the Term, the SecurityDeposit, and insurance certificates required hereunder (the “Effective Date”)for any reason, Landlord shall not be liable for any damage resulting from suchinability, but Tenant shall not be liable for any rent until the time whenLandlord can, after notice to Tenant, deliver possession of the Premises toTenant. No such failure to give possession on the date immediately followingthe Effective Date shall affect the other obligations of Tenant under thisLease, 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 beforeApril 19, 2004, Tenant shall have the option to terminate this Lease withthe written notice of such termination delivered to Landlord no later thanApril 23, 2004.

 

2.3           Tenant shall be permitted to occupythe Premises for purposes of performing the Initial Alterations, installingfurniture, data cabling, equipment or other personal property and for thepurposes set forth on the Reference Pages as of the date that Landlord deliverspossession of the Premises to Tenant, which delivery Tenant acknowledges willnot occur prior to the Effective Dale. Such possession prior to theCommencement Date shall be subject to all of the terms and conditions of thisLease, including, without limitation, Tenant’s compliance with the insurancerequirements of Article 11, except that Tenant shall not be required topay Monthly Installments of Rent or Tenant’s Proportionate Share of Expenses andTaxes with respect to the period of time prior to the Commencement Date duringwhich Tenant occupies the Premises for such purposes. However, Tenant shall beliable for any parking or special or after hour services provided to Tenantduring such period. Said early possession shall not advance the TerminationDate.

 

2.4           Notwithstanding anything to thecontrary set forth herein, except to the extent caused by Tenant or any TenantEntity, the base Building electrical, heating, ventilation and air conditioningsystems, mechanical systems, plumbing systems, and fire sprinkler, fire alarmmonitoring and smoke detector systems (collectively, the “Life Safety Systems”)and the Building roof shall be in good and working order as of the dateLandlord delivers possession of the Premises to Tenant, subject to completionof the Landlord Work (as defined in Exhibit B attached hereto). Ifthe foregoing are not in good and working order as provided above, Landlordshall be responsible for repairing or restoring same at its cost and expense promptly,provided that Tenant has delivered written notice thereof to Landlord not laterthan sixty (60) days following the date Tenant substantially completesconstruction 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 repairsand for the correction of any defects that arise out of or in connection with thespecific nature of Tenant’s business, the acts or omissions of Tenant or anyTenant Entity, Tenant’s arrangement of any furniture, equipment or otherproperty in the Premises, any repairs, alterations, additions or improvementsperformed by or on behalf of Tenant, including the Initial Alterations (as definedin Exhibit B hereto), and any design or configuration of thePremises created by or for Tenant which specifically results in such defect inthe mechanical or electrical systems in the Premises. Tenant furtheracknowledges that no representations as to the condition or repair of thePremises nor promises to alter, remodel or improve the Premises have been madeby Landlord or any agents of Landlord unless such are expressly set forth inthis Lease. By taking possession of the Premises, Tenant accepts them as beingin good order, condition and repair and in the condition in which Landlord isobligated to deliver them, subject to completion of the Landlord Work, andexcept as set forth in any notice from Tenant to

 

2

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Landlorddelivered within sixty (60) days following the date Tenant substantiallycompletes construction of the Initial Alterations, but in no event later than August 1,2004. It is hereby understood and agreed that no representations respecting thecondition 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 properlyincluded in Expenses, Landlord shall be responsible for the cost of correctingany violations of governmental laws, ordinances and regulations, includingwithout limitation, Title III of the Americans with Disabilities Act (the “ADA”)(collectively, “Laws”) with respect to the exterior common areas of theBuilding and the second floor balconies of the Building, at its sole cost andexpense. Notwithstanding the foregoing, Landlord shall have the right tocontest any alleged violation in good faith, including, without limitation, theright to apply for and obtain a waiver or deferment of compliance, the right toassert any and all defenses allowed by applicable law and the right to appealany decisions, judgments or rulings to the fullest extent permitted byapplicable law. Landlord, after the exhaustion of any and all rights to appealor contest, will make all repairs, additions, alterations or improvementsnecessary to comply with the terms of any final order or judgment.Notwithstanding the foregoing, Tenant, not Landlord, shall be responsible forthe correction of any violations that arise out of or in connection with anyclaims brought under any Laws, including any provision of the ADA other thanTitle III, the specific nature of Tenant’s business in the Premises (other thangeneral office use), the acts or omissions of Tenant or any Tenant Entity,Tenant’s arrangement of any furniture, equipment or other property in thePremises, any repairs, alterations, additions or improvements performed by oron behalf of Tenant, including the Initial Alterations, and any design orconfiguration of the Premises specifically requested by Tenant after beinginformed that such design or configuration may not be in strict compliance withthe ADA.

 

**3.             RENT.**

 

3.1           Tenant agrees to pay to Landlord theAnnual Rent in effect from time to time by paying the Monthly Installment ofRent then in effect on or before the first day of each full calendar monthduring the Term, except that the first full month’s rent shall be paid upon theexecution of this Lease. The Monthly Installment of Rent in effect at any timeshall be one-twelfth (1/12) of the Annual Rent in effect at such time. Rent forany period during the Term which is less than a full month shall be a proratedportion of the Monthly Installment of Rent based upon the number of days insuch month. Said rent shall be paid to Landlord, without deduction or offsetand without notice or demand, at the Rent Payment Address, as set**forth on the Reference Pages, or to suchother person or at such other place as Landlord may from time to time designatein writing. If an Event of Default occurs, Landlord may require by notice toTenant that all subsequent rent payments be made by an automatic payment fromTenant’s bank account to Landlord’s account, without cost to Landlord, Tenantmust implement such automatic payment system prior to the next scheduled rentpayment or within ten (10) days after Landlord’s notice, whichever islater. Unless specified in this Lease to the contrary, all amounts and sumspayable by Tenant to Landlord pursuant to this Lease shall be deemed additionalrent.

 

3.1.1        Notwithstanding anything in this Leaseto the contrary, so long as Tenant is not in default under this Lease, Tenantshall be entitled to an abatement of Monthly Installment of Rent with respectto the Premises, as originally described in this Lease, in the amount of (a) $          per month for theperiod commencing on July 1, 2004 and continuing through December 31,2004, and (b) $         per monthfor the period commencing on January 1, 2005 and continuing through June 30,2005 (collectively, the “Abated Monthly Installment of Rent”). The maximumtotal amount of Abated Monthly Installment of Rent abated with respect to thePremises in accordance with the foregoing shall equal $              .  Only Monthly Installment of Rent shall beabated pursuant to this Section, as more particularly described herein, and allother rent and other costs and charges specified in this Lease, includingwithout limitation. Tenant’s Proportionate Share of Expenses and Taxes, shallremain as due and payable pursuant to the provisions of this Lease. In theevent of a delay in the Scheduled Commencement Date as set forth in the secondsentence of Section 2.1 above, each of the rent abatement periods setforth in clauses (a) and (b) above shall be delayed by an equalperiod of time.

 

3.2           Tenant recognizes that late paymentof any rent or other sum due under this Lease will result in administrativeexpense to Landlord, the extent of which additional expense is extremelydifficult and economically impractical to ascertain. Tenant therefore agreesthat if rent or any other sum is not paid within three (3) days of thedate due and payable pursuant to this Lease, a late charge shall be imposed inan amount equal to the greater of: (a) Fifty Dollars ($50.00), or (b) threepercent (3%) of the unpaid rent or other payment. The amount of the late chargeto be paid by Tenant shall be reassessed and added to Tenant’s obligation foreach successive month until paid. The provisions of this Section 3.2 in noway relieve Tenant of the obligation to pay rent or other payments on or beforethe date on which they are due, nor do the terms of this Section 3.2 inany way affect Landlord’s remedies pursuant to Article 19 of this Lease inthe event said rent or other payment is unpaid after date due.

 

3

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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 reasonablediscretion) falling partly or wholly within the Term.

 

4.1.2        **Expenses**: Allcosts of operation, maintenance, repair, replacement and management of the Building(including the amount of any credits which Landlord may grant to particulartenants of the Building in lieu of providing any standard services or payingany 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: waterand sewer charges; insurance charges of or relating to all insurance policiesand endorsements deemed by Landlord to be reasonably necessary or desirable andrelating in any manner to the protection, preservation, or operation of theBuilding or any part thereof; utility costs, including, but not limited to, thecost of heat, light, power, steam, gas; waste disposal; the cost of janitorialservices; the cost of security and alarm services (including any centralstation signaling system); costs of cleaning, repairing, replacing andmaintaining the common areas, including parking and landscaping, windowcleaning costs; labor costs; costs and expenses of managing the Buildingincluding management and/or administrative fees; air conditioning maintenancecosts; elevator maintenance fees and supplies; material costs; equipment costsincluding the cost of maintenance, repair and service agreements and rental andleasing costs; purchase costs of equipment; current rental and leasing costs ofitems which would be capital items if purchased; tool costs; licenses, permits andinspection fees; wages and salaries; employee benefits and payroll taxes;accounting and legal fees; any sales, use or service taxes incurred inconnection therewith. In addition, Landlord shall be entitled to recover, asadditional rent (which, along with any other capital expenditures constitutingExpenses, Landlord may either include in Expenses or cause to be billed toTenant along with Expenses and Taxes but as a separate item), Tenant’sProportionate Share of: (i) an allocable portion of the cost of capitalimprovement items which are reasonably calculated to reduce operating expenses;(ii) the cost of fire sprinklers and suppression systems and other lifesafety systems; and (iii) other capital expenses which are required under anygovernmental laws, regulations or ordinances which were not applicable to theBuilding at the time it was constructed; but the costs described in thissentence shall be amortized over the reasonable life of such expenditures inaccordance with such reasonable life and amortization schedules as shall bedetermined by Landlord in accordance with generally accepted accountingprinciples, with interest on the unamortized amount at one percent (1%) inexcess of the Wall Street Journal prime lending rate announced from time totime. Expenses shall not include depreciation or amortization of the Buildingor equipment in the Building except as provided herein, loan principalpayments, costs of alterations of tenants’ premises, leasing commissions,interest expenses on long-term borrowings or advertising costs. The followingitems are also excluded from Expenses and in no event shall Tenant have anyobligation to perform, pay directly or reimburse Landlord for any of thefollowing except to the extent expressly provided herein:

 

(a)                                  Marketing costs, including leasingcommissions, attorneys’ fees in connection with the negotiation and preparationor enforcement of letters, deal memos, letters of intent, leases, subleasesand/or assignments, space planning costs, and other costs and expenses incurredin connection with lease, sublease and/or assignment negotiations andtransactions with present or prospective tenants or other occupants of theBuilding.

 

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

 

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

 

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

 

(e)                                  Ground lease rental. 

 

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

 

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

 

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(h)                                 Any fines, penalties or interest resultingfrom the gross negligence or willful misconduct of the Landlord or its agentsor employees.

 

(i)                                     Landlord’s charitable and politicalcontributions.

 

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

 

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

 

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

 

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

 

(n)                                 The cost of operating any commercialconcession which is operated by Landlord in the Building, including, withoutlimitation, any compensation paid to clerks, attendants or other personsoperating such commercial concessions on behalf of Landlord, but only to theextent revenues from any such commercial concessions exceed such costs andcompensation.

 

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

 

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

 

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

 

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

 

4.1.3        **Taxes**: Realestate taxes and any other taxes, charges and assessments which are levied withrespect to the Building or the land appurtenant to the Building, or withrespect to any improvements, fixtures and equipment or other property ofLandlord, real or personal, located in the Building and used in connection withthe operation of the Building and said land, any payments to any ground lessorin reimbursement of tax payments made by such lessor; and all fees, expensesand costs incurred by Landlord in investigating, protesting, contesting or inany way seeking to reduce or avoid increase in any assessments, levies or thetax 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 netincome tax, or tax imposed uponany transfer by Landlord of its interest in this Lease or the Building or anytaxes to be paid by Tenant pursuant to Article 28.

 

4.2*          *Tenant shall pay as additional rent for eachLease Year Tenant’s Proportionate Share of Expenses and Taxes incurred for suchLease Year.

 

4.3           The annual determination of Expensesshall 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 mayreview, at Tenant’s sole cost and expense, the books and records supportingsuch determination in an office of Landlord, or Landlord’s agent, during normalbusiness hours, upon giving Landlord five (5) days advance written notice within sixty (60) daysafter receipt of such determination, but in no event more often than once inany one (1) year period, subject to execution of a confidentiality agreement acceptableto Landlord, and provided that if Tenant utilizes an independent accountant toperform such review it shall be one of national standing which is reasonablyacceptable to Landlord, is not compensated on a contingency basis and is also subjectto such confidentiality agreement. If Tenant fails to object to Landlord’sdetermination of Expenses within ninety (90) days after receipt, or if any suchobjection fails to state with specificity the reason for the objection, Tenantshall be deemed to have approved such determination and shall have no furtherright to object to or contest such determination. In the event that during allor any portion of any Lease Year or Base Year, the Building is not fully rentedand occupied Landlord

 

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

 

4.4           Prior to the actual determinationthereof for a Lease Year, Landlord may from time to time estimate Tenant’sliability for Expenses and/or Taxes under Section 4.2, Article 6 and Article 28for the Lease Year or portion thereof. Landlord will give Tenant writtennotification 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 ofMonthly Installments of Rent pursuant to this Section 4.4 shall remain ineffect until further written notification to Tenant pursuant hereto. Landlordshall use commercially reasonable efforts to (i) provide such estimate to Tenantwithin ninety (90) days after the beginning of each calendar year and (ii) toprovide earlier notice to Tenant in the event that Landlord becomes aware,prior to delivery of such estimate, of any event or condition which is likelyto cause a material increase in Landlord’s estimate of Tenant’s ProportionateShare of Expenses and Taxes over those due in the previous calendar year.

 

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

 

4.5.1        If the total additional rent Tenantactually paid pursuant to Section 4.3 on account of Expenses and/or Taxesfor 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 onelump sum within thirty (30) days of receipt of Landlord’s bill therefor; and

 

4.5.2        If the total additional rent Tenantactually paid pursuant to Section 4.3 on account of Expenses and/or Taxesfor 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 tobe made by Tenant under this Article 4, or, if the Lease has terminated, refundthe difference in cash.

 

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

 

**5.             SECURITY DEPOSIT**. Tenant shall deposit the Security Depositwith Landlord upon the execution of this Lease. Said sum shall be held byLandlord 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 andnot as an advance rentel deposit or as a measure of Landlord’s damage in caseof Tenant’s default. If Tenant defaults with respect to any provision of thisLease, Landlord may use any part of the Security Deposit for the payment of anyrent or any other sum in default, or for the payment of any amount whichLandlord 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 maysuffer by reason of Tenant’s default. If any portion is so used, Tenant shall withinfive (5) days after written demand therefor, deposit with Landlord anamount sufficient to restore the Security Deposit to its original amount andTenant’s failure to do so shall be a material breach of this Lease. Except tosuch extent, if any, as shall be required by law, Landlord shall not berequired to keep the Security Deposit separate from its general funds, and Tenantshall not be entitled to interest on such deposit. If Tenant shall fully andfaithfully perform every provision of this Lease to be performed by it, theSecurity Deposit or any balance thereof shall be returned to Tenant at suchtime after termination of this Lease when Landlord shall have determined thatall of Tenant’s obligations under this Lease have been fulfilled.Notwithstanding anything to the contrary contained herein or in Article 23hereof, Tenant hereby waives the provisions of Section 1950.7 of theCalifornia Civil Code, or any similar or successor Regulations or other lawsnow or hereinafter in effect.

 

**6.             ALTERATIONS.**

 

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

 

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

 

6.2           In the event Landlord consents to themaking of any such alteration, addition or improvement by Tenant, the sameshall be, at Tenant’s option, made by using either Landlord’s contractor or acontractor reasonably approved by Landlord, in either event at Tenant’s solecost and expense. If Tenant shall employ any contractor other than Landlord’scontractor and such other contractor or any subcontractor of such othercontractor shall employ any non-union labor or supplier, Tenant shall beresponsible for and hold Landlord harmless from any and all delays, damages andextra costs suffered by Landlord as a result of any dispute with any laborunions concerning the wage, hours, terms or conditions of the employment of anysuch labor. In any event Landlord may charge Tenant a construction managementfee not to exceed five percent (5%)**of the cost of such work to coverits overhead as it relates to such proposed work, plus third-party costs actuallyincurred by Landlord in connection with the proposed work and the designthereof, with all such amounts being due five (5) days after Landlord’sdemand. Notwithstanding the foregoing, no construction management fee shall bedue in connection with the construction of the Initial Alterations.

 

6.3           All alterations, additions orimprovements proposed by Tenant shall be constructed in accordance with all governmentlaws, ordinances, rules and regulations, using Building standard materialswhere applicable, and Tenant shall, prior to construction, provide theadditional insurance required under Article 11 in such case, and also allsuch assurances to Landlord as Landlord shall reasonably require to assurepayment of the costs thereof, including but not limited to, notices of non-responsibility,waivers of lien, surety company performance bonds and funded constructionescrows and to protect Landlord and the Building and appurtenant land againstany loss from any mechanic’s, materialmen’s or other liens. Tenant shall pay inaddition to any sums due pursuant to Article 4, any increase in realestate taxes attributable to any such alteration, addition or improvement forso long, during the Term, as such increase is ascertainable; at Landlord’selection 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 orimprovements, require Tenant to deposit with Landlord the amount reasonablyestimated by Landlord as sufficient to cover the cost of removing suchalterations or improvements and restoring the Premises, to the extent required underSection 26.2

 

6.4           Notwithstanding anything to thecontrary contained herein, so long as Tenant’s written request for consent fora proposed alteration or improvements contains the following statement inlarge, bold and capped font **“PURSUANT TO SECTION 6OF THE LEASE, IF LANDLORD CONSENTS TO THE SUBJECT ALTERATION, LANDLORD SHALLNOTIFY TENANT IN WRITING WHETHER OR NOT LANDLORD WILL REQUIRE SUCH ALTERATIONTO BE REMOVED AT THE EXPIRATION OR EARLIER TERMINATION OF THE LEASE.”**,at the time Landlord gives its consent for any alterations or improvements, ifit so does, Tenant shall also be notified whether or not Landlord will requirethat such alterations or improvements be removed upon the expiration or earliertermination of this Lease. Notwithstanding anything to the contrary containedin this Lease, at the expiration or earlier termination of this Lease andotherwise in accordance with Article 26 hereof, Tenant shall be requiredto remove all alterations or improvements made to the Premises except for theInitial Alterations and any such alterations or improvements which Landlordexpressly indicates or is deemed to have indicated shall not be required to beremoved from the Premises by Tenant. If Tenant’s written notice strictlycomplies with the foregoing and if Landlord fails to notify Tenant within ten (10) businessdays of Landlord’s receipt of such notice whether Tenant shall be required toremove the subject alterations or improvements at the expiration or earliertermination of this Lease, it shall be assumed that Landlord shall require theremoval of the subject alterations or improvements.

 

**7.             REPAIR.**

 

7.1           Landlord shall have no obligation toalter, remodel, improve, repair, decorate or paint the Premises, except asspecified in Exhibit B if attached to this Lease and except thatLandlord shall repair and maintain all structural portions of the Building andthe Building envelope, including the roof, foundation walls, water heaters,skylights, windows, glass, plate glass, and Life Safety Systems, as well as alloutdoor areas and specifically any terrace and deck areas. In addition,Landlord shall also maintain the common areas of the Building and the Buildingsystems 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 foregoingshall be a part of Expenses and subject to the terms and conditions of Article 4of this Lease. Landlord shall not be liable for any failure to make any repairsor to perform any maintenance unless such failure shall persist for anunreasonable time after written notice of the need of such repairs ormaintenance is given to Landlord by Tenant.

 

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

 

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reasonableperiod of time following the receipt of such notice. All sums paid by Landlordand ail expenses incurred by it in connection with such repairs, which are notexpressly obligations of Landlord, as provided herein, shall be payable toLandlord by Tenant within ten (10) business days of Landlord’s demand.Tenant as part of its obligations hereunder shall keep the Premises in a cleanand sanitary condition. Tenant will, use commercially reasonable efforts tokeep all such parts of the Premises in such a manner to minimize deteriorationdue to ordinary wear and from**falling temporarily out of repair,and upon termination of this Lease in any way Tenant will yield up the Premisesto Landlord in good condition and repair, ordinary wear and tear and loss byfire or other casualty excepted (but not excepting any damage to glass).Notwithstanding anything to the contrary contained herein and except to the extentcaused by Tenant or any of the Tenant Entities’ acts and/or omissions or as aresult of casualty, to the extent Landlord is made aware and Landlorddetermines in its reasonable discretion that expenditures for the fullreplacement of any of the heating, ventilating and air conditioning unitssolely servicing the Premises (as opposed to the replacement of components orrepair thereof) must be made, Landlord shall cause such work to be completed atits 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 Landlorddetermines in its reasonable discretion that expenditures to repair or replacecomponents of any of the heating, ventilating and air conditioning units solelyservicing the Premises (as opposed to the full replacement thereof) must bemade, Landlord shall cause such work to be completed and all such costs andexpenses incurred by Landlord in connection with such repairs or replacement ofcomponents shall be payable to Landlord by Tenant within ten (10) businessdays of Landlord’s demand, provided that except to the extent caused by theacts or omissions of Tenant or any Tenant Entity, Tenant shall not be requiredto pay more than Three Thousand Dollars ($3000.00) per Lease Year for suchrepair or replacement of components (excluding the costs associated with themaintenance/service contract described in Section 7.4 below). Tenantshall, at its own cost and expense, repair any damage to the Premises or theBuilding resulting from and/or caused in whole or in part by the negligence ormisconduct of Tenant, its agents, employees, contractors, invitees, or anyother person entering upon the Premises as a result of Tenant’s businessactivities 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 ofany injury to or interference with Tenant’s business arising from the making ofany repairs, alterations or improvements in or to any portion of the Buildingor the Premises or to fixtures, appurtenances and equipment in the Building.Tenant hereby waives any and all rights under and benefits of subsection 1of Section1932**and**Sections 1941 and 1942 of the CaliforniaCivil Code, or any similar or successor Regulations or other laws now orhereinafter in effect.

 

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

 

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

 

**9.             ASSIGNMENT ANDSUBLETTING.**

 

9.1           Tenant shall not have the right toassign or pledge this Lease or to sublet the whole or any part of the Premiseswhether voluntarily or by operation of law, or permit the use or occupancy ofthe Premises by anyone other than Tenant, and shall not make, suffer or permitsuch assignment, subleasing or occupancy without the prior written consent of Landlord,such consent not to be unreasonably withheld, and said restrictions shall bebinding 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, thePremises, or any portion thereof, or assign this Lease, Tenant shall givewritten notice thereof to Landlord at least thirty (30) days but no more thanone hundred twenty (120) days prior to the proposed commencement date of suchsubletting or assignment, which notice shall set forth the name of the proposedsubtenant or assignee, the relevant terms of any sublease or assignment and copiesof financial reports and other relevant financial information of the proposedsubtenant or assignee.

 

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

 

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subletting,permitted or otherwise, so long as the Guaranty (as defined in the ReferencePages) shall be in full force and effect, Guarantor (as defined in theReference Pages) shall remain directly, primarily and fully responsible andliable for its obligations under the Guaranty. Upon the occurrence of an Eventof 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 providedby law, may, at its option, collect directly from such assignee or subtenantall rents due and becoming due to Tenant under such assignment or sublease andapply 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 releaseof Tenant from the further performance of Tenant’s obligations under thisLease. Without limiting the foregoing, no assignment or subletting by Tenant,permitted or otherwise, shall relieve Guarantor of any liability under theGuaranty.

 

9.3           Intentionally Omitted.

 

9.4           In the event that Tenant sells,sublets, assigns or transfers this Lease, Tenant shall pay to Landlord as additionalrent an amount equal to fifty percent (50%) of anyIncreased 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 otherconsideration which Tenant is entitled to receive by reason of any sale,sublease, assignment or other transfer of this Lease, over (ii) the rentotherwise payable by Tenant under this Lease at such time. For purposes of theforegoing, any consideration received by Tenant in form other than cash shallbe 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 amortizeon a straight-line basis, over the entire period for which Tenant is to receiveIncreased Rent, the reasonable costs incurred by Tenant for leasingcommissions, legal fees and tenant improvements in connection with suchsublease, assignment or other transfer.

 

9.5           Notwithstanding any other provisionhereof, it shall be considered reasonable for Landlord to withhold its consentto any assignment of this Lease or sublease of any portion ofthe Premises if at the time of either Tenant’s notice of the proposedassignment or sublease or the proposed commencement date thereof, there shallexist any uncured default of Tenant or matter which will become a default ofTenant with passage of time unless cured, or if the proposed assignee or sublesseeis an entity: (a) with which Landlord is already in negotiation; (b) isalready an occupant of the Building unless Landlord is unable to provide theamount of space required by such occupant; (c) is a governmental agency; (d) isincompatible with the character of occupancy of the Building; (e) withwhich the payment for the sublease or assignment is determined in whole or inpart based upon its net income or profits; or (f) would subject thePremises to a use which would: (i) involve increased personnel or wearupon the Building; (ii) violate any exclusive right granted to anothertenant of the Building; (iii) require any addition to or modification ofthe Premises or the Building in order to comply with building code or othergovernmental requirements; or, (iv) involve a violation of Section 1.2.Tenant expressly agrees that for the purposes of any statutory or otherrequirement of reasonableness on the part of Landlord, Landlord’s refusal toconsent 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, asum equal to all of Landlord’s costs, includingreasonable attorney’s fees, incurred in investigating and considering anyproposed or purported assignment or pledge of this Lease or sublease of any ofthe Premises, regardless of whether Landlord shall consent to, refuse consent,or determine that Landlord’s consent is not required for, such assignment, pledgeor sublease. Notwithstanding the foregoing, provided that neither the Tenantnor the proposed transferee requests any changes to this Lease or Landlord’s standardform of consent (other than minor and immaterial changes) in connection with theproposed transfer, the attorney’s fees payable by Tenant pursuant to this Section 9.6shall not exceed $1500.00 for such proposed transfer. Any purported sale,assignment, mortgage, transfer of this Lease or subletting which does notcomply with the provisions of this Article 9 shall be void.

 

9.7           If Tenant is a corporation, limitedliability company, partnership or trust, any transfer or transfers of or changeor changes within any twelve (12) month period in the number of the outstandingvoting shares of the corporation or limited liability company, the generalpartnership interests in the partnership or the identity of the persons orentities controlling the activities of such partnership or trust resulting inthe persons or entities owning or controlling a majority of such shares,partnership interests or activities of such partnership or trust at thebeginning of such period no longer having such ownership or control shall beregarded as equivalent to an assignment of this Lease to the persons orentities acquiring such ownership or control and shall be subject to all theprovisions of this Article 9 to the same extent and for all intents and purposesas though such an assignment.

 

9.8           So long as Tenant is not enteringinto the Permitted Transfer (as defined below) for the purpose of avoiding orotherwise circumventing the remaining terms of this Article 9, Tenant mayassign 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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entitywholly owned by Tenant (collectively, an “Affiliated Party”), or (b) a successorto Tenant by purchase, merger, consolidation or reorganization, provided thatall of the following conditions are satisfied (each such Transfer a “PermittedTransfer” and any such assignee or sublessee of a Permitted Transfer, a “PermittedTransferee”): (i) Tenant is not in default under this Lease; (ii) thePermitted Use does not allow the Premises to be used for retail purposes; (iii) Tenantshall give Landlord written notice at least thirty (30) days prior to theeffective date of the proposed Permitted Transfer; (iv) with respect to aproposed Permitted Transfer to an Affiliated Party, Tenant and Guarantor have aconsolidated net worth which is at least equal to or greater than three (3) timesthe then outstanding obligations of Tenant for Annual Rent and Tenant’sProportionate Share of Expenses and Taxes from the date of such PermittedTransfer through the Termination Date of this Lease; and (v) with respectto a purchase, merger, consolidation or reorganization or any PermittedTransfer which results in Tenant ceasing to exist as a separate legal entity, (A) Tenant’ssuccessor shall own all or substantially all of the assets of Tenant, and (B) Tenant’ssuccessor and Guarantor shall have a consolidated net worth which is at leastequal to three (3) times the then outstanding obligations of Tenant forAnnual Rent and Tenant’s Proportionate Share of Expenses and Taxes from thedate of such permitted Transfer through he Termination Date of this Lease.Tenant’s notice to Landlord shall include information and documentation showingthat each of the above conditions has been satisfied. If requested by Landlord,Tenant’s successor shall sign a commercially reasonable form of assumptionagreement. As used herein, (1) “parent” shall mean a company which owns amajority of Tenant’s voting equity; (2) “subsidiary” shall mean an entitywholly owned by Tenant or at least fifty-one percent (51%) of whose votingequity is owned by Tenant; and (3) “affiliate” shall mean an entitycontrolled, controlling or under common control with Tenant.

 

**10.          INDEMNIFICATION**. None of the Landlord Entities shall beliable and Tenant hereby waives all claims against them for any damage to anyproperty or any injury to any person in or about the Premises or the Buildingby or from any cause whatsoever (including without limiting the foregoing, rainor water leakage of any character from the roof, windows, walls, basement,pipes, plumbing works or appliances, the Building not being in good conditionor repair, gas, fire, oil, electricity or theft), except to the extent causedby or arising from the gross negligence or willful misconduct of Landlord or itsagents, employees or contractors. Tenant shall protect, indemnify and hold theLandlord Entities harmless from and against any and all loss, claims, liabilityor costs (including court costs and attorney’s fees) incurred by reason of (a) anydamage to any property (including but not limited to property of any LandlordEntity) or any injury (including but not limited to death) to any personoccurring in, on or about the Premises or the Building to the extent that suchinjury 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 anystandards imposed by any duty with respect to the injury or damage; (b) theconduct or management of any work or thing whatsoever done by the Tenant in orabout the Premises or from transactions of the Tenant concerning the Premises;(c) Tenant’s failure to comply with any and all governmental laws, ordinancesand regulations applicable to the condition or use of the Premises or itsoccupancy; or (d) any breach or default on the part of Tenant in theperformance of any covenant or agreement on the part of the Tenant to be performedpursuant to this Lease. The provisions of this Article shall survive the terminationof this Lease with respect to any claims or liability accruing prior to suchtermination.

 

**11.          INSURANCE.**

 

11.1         Tenant shall keep in force throughoutthe Term: (a) a Commercial General Liability insurance policy or policiesto protect the Landlord Entities against any liability to the public or to anyinvitee of Tenant or a Landlord Entity incidental to the use of or resultingfrom any accident occurring in or upon the Premises with a limit of not lessthan $1,000,000 per occurrence and not less than $2,000,000 in the annualaggregate, or such larger amount as Landlord may prudently require from time totime, covering bodily injury and property damage liability and $1,000,000products/completed operations aggregate; (b) Business Auto Liabilitycovering owned, non-owned and hired vehicles with a limit of not less than$1,000,000 per accident; (c) insurance protecting against liability underWorker’s Compensation Laws with limits at least as required by statute withEmployers Liability with limits of $500,000 each accident, $500,000 diseasepolicy limit, $500,000 disease-each employee; (d) All Risk or Special Form coverageprotecting 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 thePremises to the full replacement value of the property so insured; and, (e) BusinessInterruption Insurance with limit of liability representing loss of at leastapproximately six (6) months of income.

 

11.2         The aforesaid policies shall (a) beprovided at Tenant’s expense; (b) name the Landlord Entities as additionalinsureds (General Liability) and loss payee (Property—Special Form); (c) beissued by an insurance company with a minimum Best’s rating of “A:VII” duringthe Term; and (d) provide that said insurance shall not be canceled unlessthirty (30) days prior written notice (ten days for non-payment of premium)shall have been given to Landlord; a certificate of Liability insurance onACORD Form 25 and a certificate of Property insurance on ACORD Form 27shall 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 anyalterations, additions or improvements in, to or about the Premises (“Work”)the aforesaid insurance protection must extend to and include injuries topersons and damage to property arising in connection with such Work, withoutlimitation including liability under any applicable structural work act, andsuch other insurance as Landlord shall require; and the policiesof or certificates evidencing such insurance must be delivered to Landlordprior to the commencement of any such Work.

 

**12.          WAIVER OF SUBROGATION**. So long as their respective insurers sopermit, Tenant and Landlord hereby mutually waive their respective rights ofrecovery against each other for any loss insured by fire, extended coverage,All Risks or other insurance now or hereafter existing for the benefit of therespective party but only to the extent of the net insurance proceeds payableunder such policies. Each party shall obtain any special endorsements requiredby 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 orfrom the Premises, together with any taxes, penalties, and surcharges or thelike pertaining thereto and any maintenance charges for utilities. In the eventthat any electric light bulbs, tubes and ballasts servicing the Premisesrequire replacement, Landlord shall provide such replacement within areasonable period of time and notice from Tenant and Tenant shall pay all costsand expenses incurred by Landlord in connection therewith within ten (10) businessdays of Landlord’s demand. Landlord shall furnish all battery packs foremergency lighting and fire extinguishers and Tenant shall pay all costs andexpenses incurred by Landlord in connection therewith within ten (10) businessdays of Landlord’s demand. If any such services are not separately metered toTenant, Tenant shall pay such proportion of all charges jointly metered withother premises as determined by Landlord, in its sole discretion, to bereasonable. Any such charges paid by Landlord and assessed against Tenant shallbe immediately payable to Landlord on demand and shall be additional renthereunder. Tenant will not, without the written consent of Landlord, contractwith a utility provider to service the Premises with any utility, including,but not limited to, telecommunications, electricity, water, sewer or gas, whichis not previously providing such service to other tenants in the Building. Inthe event that Landlord establishes a cafeteria in the Building, upon Tenant’srequest, Landlord shall, at its sole cost and expense, arrange for suchcafeteria to be separately metered. Landlord shall in no event be liable forany interruption or failure of utility services on or to the Premises.

 

**14.          HOLDING OVER**. Tenant shall pay Landlord for each dayTenant retains possession of the Premises or part of them after termination ofthis Lease by lapse of time or otherwise at the rate (“Holdover Rate”) whichshall be One Hundred Fifty Percent (150%) of the greater of (a) the amountof the Annual Rent for the last period prior to the date of such terminationplus all Rent Adjustments under Article 4; and (b) the then marketrental value of the Premises as determined by Landlord assuming a new lease ofthe 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 byreason of such retention. If Landlord gives notice to Tenant of Landlord’selection to such effect, such holding over shall constitute renewal of thisLease for a period from month to month or one (1) year, whichever shall bespecified in such notice, in either case at the Holdover Rate, but if theLandlord does not so elect, no such renewal shall result notwithstandingacceptance by Landlord of any sums due hereunder after such termination; andinstead, a tenancy at sufferance at the Holdover Rate shall be deemed to havebeen created. In any event, no provision of this Article 14 shall bedeemed to waive Landlord’s right of reentry or any other right under this Leaseor at law.

 

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

 

**16.          RULES AND REGULATIONS**. Tenant shall faithfully observe and complywith all the rules and regulations as set forth in Exhibit Dto this Lease and all reasonable and non-discriminatory modifications of andadditions to them from time to time put into effect by Landlord. Landlord shallnot be responsible to Tenant for the non-performance by any other tenant oroccupant of the Building of any such rules and regulations.

 

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**17.          REENTRY BY LANDLORD.**

 

17.1         Landlord reserves and shall at alltimes have the right to re-enter the Premises to inspect the same, to show saidPremises to prospective purchasers, mortgagees or tenants, and to alter,improve or repair the Premises and any portion of the Building, withoutabatement of rent, and may for that purpose erect, use and maintainscaffolding, pipes, conduits and other necessary structures and open any wall,ceiling or floor in and through the Building and Premises where reasonablyrequired by the character of the work to be performed, provided entrance to thePremises shall not be blocked thereby, and further provided that the businessof Tenant shall not be interfered with unreasonably. Notwithstanding theforegoing, except (a) to the extent requested by Tenant, (b) inconnection with regular scheduled maintenance programs, and/or (c).in the eventof an emergency, Landlord shall provide to Tenant reasonable prior notice(either written or oral) before Landlord enters the Premises to perform anyrepairs therein. Landlord shall have the right at any time to change thearrangement and/or locations of entrances, or passageways, doors and doorways,and corridors, windows, elevators, stairs, toilets or other public parts of theBuilding and to change the name, number or designation by which the Building iscommonly known. In the event that Landlord damages any portion of any wall orwall covering, ceiling, or floor or floor covering within the Premises,Landlord shall repair or replace the damaged portion to match the original asnearly as commercially reasonable but shall not be required to repair orreplace more than the portion actually damaged. Tenant hereby waives any claimfor damages for any injury or inconvenience to or interference with Tenant’sbusiness, any loss of occupancy or quiet enjoyment of the Premises, and anyother 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 ofthe doors in the Premises, excluding Tenant’s vaults and safes or specialsecurity areas (designated in advance), and Landlord shall have the right touse any and all means which Landlord may deem proper to open said doors in anemergency to obtain entry to any portion of the Premises. As to any portion towhich 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 andthe cost of repairing any damage occurring in doing so shall be borne by Tenantand 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 sumof money becoming due to be paid to Landlord under this Lease, whether such sumbe any installment of the rent reserved by this Lease, any other amount treatedas additional rent under this Lease, or any other payment or reimbursement toLandlord required by this Lease, whether or not treated as additional rentunder this Lease, and such failure shall continue for a period of five (5) daysafter written notice that such payment was not made when due, but if any suchnotice shall be given, for the twelve (12) month period commencing with thedate of such notice, the failure to pay within five (5) days after due anyadditional sum of money becoming due to be paid to Landlord under this Leaseduring such period shall be an Event of Default, without notice. The noticerequired pursuant to this Section 18.1.1 shall replace rather thansupplement any statutory notice required under California Code of CivilProcedure Section 1161 or any similar or successor statute. The fact thatunder certain circumstances no notice is required to be delivered by Landlordto Tenant pursuant to this Section 18.1.1, shall not be deemed to constitutea waiver by Tenant of any right Tenant may have to receive statutory noticerequired under California Code of Civil Procedure Section 1161 or anysimilar 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 ofthis Article and shall not cure such failure within thirty (30) days(forthwith, if the failure involves a hazardous condition) after written noticeof such failure to Tenant provided, however, that such failure shall not be anevent of default if such failure could not reasonably be cured during suchthirty (30) day period, Tenant has commenced the cure within such thirty (30)day period and thereafter is diligently pursuing such cure to completion, butthe total aggregate cure period shall not exceed ninety (90) days.

 

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

 

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

 

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

 

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

 

**19.          REMEDIES.**

 

19.1         Upon the occurrence of any Event orEvents of Default under this Lease, whether enumerated in Article 18 ornot, Landlord shall have the option to pursue any one or more of the followingremedies without any notice (except as expressly prescribed herein) or demandwhatsoever (and without limiting the generality of the foregoing, Tenant herebyspecifically waives notice and demand for payment of rent or other obligationsand waives any and all other notices or demand requirements imposed by applicablelaw):

 

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

 

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

 

19.1.1.2   The Worth at the Time of Award of the amountby which the unpaid rent which would have been earned after termination untilthe time of award exceeds the amount of such rent loss that Tenant affirmativelyproves could have been reasonably avoided;

 

19.1.1.3   The Worth at the Time of Award of the amountby which the unpaid rent for the balance of the Term after the time of awardexceeds the amount of such rent loss that Tenant affirmatively proves could be reasonablyavoided;

 

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

 

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

 

The“Worth at the Time of Award” of the amounts referred to in parts 19.1.1.1 and19.1.1.2 above, shall be computed by allowing interest at the lesser of a perannum rate equal to: (i) the greatest per annum rate of interest permittedfrom 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 ratepublicly announced as its prime or base rate by a federally insured bankselected by Landlord in the State of California. The “Worth at the Time ofAward” of the amount referred to in part 19.1.1.3, above, shall be computed bydiscounting such amount at the discount rate of the Federal Reserve Bank of SanFrancisco at the time of award plus 1%;

 

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

 

19.1.3      Notwithstanding Landlord’s exercise of theremedy described in California Civil Code § 1951.4 in respect of an Eventor 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 andrecover an award of damages as provided above in Section 19.1.1.

 

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

 

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

 

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

 

19.5         This Article 19 shall beenforceable to the maximum extent such enforcement is not prohibited by applicablelaw, and the unenforceability of any portion thereof shall not thereby renderunenforceable any other portion..

 

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

 

19.7         If, on account of any breach or defaultby 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 withan attorney or collection agency concerning or to enforce or defend any ofLandlord’s rights or remedies arising under this Lease or to collect any sumsdue from Tenant, Tenant agrees to pay all costs and fees so incurred byLandlord, including, without limitation, reasonable attorneys’ fees and costs.TENANT EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY. Tenant hereby specificallyalso waives notice and demand for payment of rent or other obligations, exceptfor those notices specifically required pursuant to the terms of this Lease andnotices 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 ofDefault, Landlord may (but shall not be obligated to) cure such default atTenant’s sole expense. Without limiting the generality of the foregoing,Landlord may*,*at Landlord’soption, enter into and upon the Premises if Landlord determines in its solediscretion that Tenant is not acting within a commercially reasonable time tomaintain, repair or replace anything for which Tenant is responsible under thisLease or to otherwise effect compliance with its obligations under this Leaseand correct the same, without being deemed in any manner guilty of trespass,eviction or forcible entry and detainer and without incurring any liability forany damage or interruption of Tenant’s business resulting therefrom and Tenantagrees to reimburse Landlord within five (5) days of Landlord’s demand as additionalrent, for any expenses which Landlord may incur in thus effecting compliancewith Tenant’s obligations under this Lease, plus interest from the date ofexpenditure by Landlord at the Wall Street Journal prime rate.

 

**20.          TENANT’S BANKRUPTCYOR INSOLVENCY.**

 

20.1         If at any time and for so long astenant shall be subjected to the provisions of the United States BankruptcyCode or other law of the United States or any state thereof for the protectionof 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 inthis 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. Withoutlimitation of the generality of the foregoing, any right of any Tenant’sRepresentative to assume or assign this Lease or to sublease any of thePremises shall be subject to the conditions that:

 

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

 

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20.1.1.2   Tenant’s Representative or the proposedassignee, as the case shall be, shall have deposited with Landlord as securityfor 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 Landlordwith adequate other assurance of the future performance of the obligations ofthe Tenant under this Lease. Without limitation, such assurances shall include,at least, in the case of assumption of this Lease, demonstration to thesatisfaction of the Landlord that Tenant’s Representative has and will continueto have sufficient unencumbered assets after the payment of all securedobligations and administrative expenses to assure Landlord that Tenant’sRepresentative will have sufficient funds to fulfill the obligations of Tenantunder this Lease; and, in the case of assignment, submission of currentfinancial statements of the proposed assignee, audited by an independentcertified public accountant reasonably acceptable to Landlord and showing a networth and working capital in amounts determined by Landlord to be sufficient toassure the future performance by such assignee of all of the Tenant’sobligations under this Lease.

 

20.1.1.3   The assumption or any contemplated assignmentof 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 agreementor other agreement by which Landlord is bound.

 

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

 

**21.          QUIET ENJOYMENT**. Landlord represents and warrants that ithas full right and authority to enter into this Lease and that Tenant, whilepaying the rental and performing its other covenants and agreements containedin this Lease, shall peaceably and quietly have, hold and enjoy the Premisesfor the Term without hindrance or molestation from Landlord subject to theterms and provisions of this Lease. Landlord shall not be liable for anyinterference or disturbance by other tenants or third persons, nor shall Tenantbe released from any of the obligations of this Lease because of suchinterference or disturbance.

 

**22.          CASUALTY.**

 

22.1         In the event the Premises or theBuilding are damaged by fire or other cause and in Landlord’s reasonable estimationsuch damage can be materially restored within two hundred ten (210) days afterthe date of such damage, Landlord shall forthwith repair the same and thisLease shall remain in full force and effect, except that Tenant shall be entitledto a proportionate abatement in rent from the date of such damage. Suchabatement of rent shall be made pro rata in accordance with the extent to whichthe damage and the making of such repairs shall interfere with the use andoccupancy 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, ofLandlord’s reasonable estimation of the length of time within which materialrestoration can be made, and Landlord’s determination shall be binding onTenant. For purposes of this Lease, the Building or Premises shall be deemed “materiallyrestored” if they are in such condition as would not prevent or materiallyinterfere with Tenant’s use of the Premises for the purpose for which it wasbeing used immediately before such damage.

 

22.2         If such repairs cannot, in Landlord’sreasonable estimation, be made within two hundred ten (210) days after the dateof such damage, Landlord and Tenant shall each have the option of giving theother, at any time within ninety (90) days after such damage, noticeterminating this Lease as of the date of such damage. In the event of thegiving of such notice, this Lease shall expire and all interest of the Tenantin the Premises shall terminate as of the date of such damage as if such datehad been originally fixed in this Lease for the expiration of the Term. In theevent that neither Landlord nor Tenant exercises its option to terminate thisLease, then Landlord shall repair or restore such damage, this Lease continuingin full force and effect, and the rent hereunder shall be proportionatelyabated as provided in Section 22.1.

 

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

 

22.4         In the event that Landlord should failto complete such repairs and material restoration within sixty (60) days afterthe 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 bydelivering written notice to Landlord, within fifteen (15) days after theexpiration of said period of time, whereupon the Lease shall end on the date ofsuch notice or such later date fixed in such notice as if the date of suchnotice was the date originally fixed in this Lease for the expiration of theTerm; provided, however, that if

 

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

 

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

 

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

 

22.7         Tenant hereby waives any and all rightsunder and benefits of Sections 1932(2) and 1933(4) of the CaliforniaCivil Code, or any similar or successor Regulations or other laws now orhereinafter in effect.

 

**23.          EMINENT DOMAIN**. If all or any substantial part of thePremises shall be taken or appropriated by any public or quasi-public authorityunder 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 theother, at any time within thirty (30) days after such taking, notice terminatingthis Lease, except that Tenant may only terminate this Lease by reason oftaking or appropriation, if such taking or appropriation shall be sosubstantial as to materially interfere with Tenant’s use and occupancy of thePremises. If neither party to this Lease shall so elect to terminate thisLease, the rental thereafter to be paid shall be adjusted on a fair andequitable basis under the circumstances. In addition to the rights of Landlordabove, if any substantial part of the Building shall be taken or appropriatedby any public or quasi-public authority under the power of eminent domain orconveyance in lieu thereof, and regardless of whether the Premises or any partthereof are so taken or appropriated, Landlord shall have the right, at itssole option, to terminate this Lease. Landlord shall be entitled to any and allincome, rent, award, or any interest whatsoever in or upon any such sum, whichmay be paid or made in connection with any such public or quasi-public use orpurpose, and Tenant hereby assigns to Landlord any interest it may have in orclaim to all or any part of such sums, other than any separate award which maybe made with respect to Tenant’s trade fixtures and moving expenses; Tenantshall make no claim for the value of any unexpired Term. Tenant hereby waivesany and all rights under and benefits of Section 1265.130 of the CaliforniaCode of Civil Procedure, or any similar or successor Regulations or other lawsnow or hereinafter in effect.

 

**24.          SALE BY LANDLORD**. In event of a sale or conveyance by Landlordof the Building, the same shall operate to release Landlord from any futureliability upon any of the covenants or conditions, expressed or implied,contained in this Lease in favor of Tenant, and in such event Tenant agrees tolook solely to the responsibility of the successor in interest of Landlord inand to this Lease. Except as set forth in this Article 24, this Leaseshall not be affected by any such sale and Tenant agrees to attorn to thepurchaser or assignee. If any security has been given by Tenant to secure thefaithful performance of any of the covenants of this Lease, Landlord maytransfer or deliver said security, as such, to Landlord’s successor in interestand thereupon Landlord shall be discharged from any further liability withregard to said security.

 

**25.          ESTOPPEL CERTIFICATES**. Within ten (10) days following anywritten request which Landlord may make from time to time, Tenant shall executeand deliver to Landlord or mortgagee or prospective mortgagee a sworn statementcertifying: (a) the date of commencement of this Lease; (b) the factthat this Lease is unmodified and in full force and effect (or, if there havebeen 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) thedate 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 eitherLandlord or Tenant except as specified in Tenant’s statement; and (e) suchother matters as may be requested by Landlord. Landlord and Tenant intend thatany statement delivered pursuant to this Article 25 may be relied upon byany mortgagee, beneficiary or purchaser, and Tenant shall be liable for allloss, cost or expense resulting from the failure of any sale or funding of anyloan caused by any material misstatement contained in such estoppelcertificate. Tenant irrevocably agrees that if Tenant fails to execute anddeliver such

 

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certificatewithin such ten (10) day**period Landlord or Landlord’sbeneficiary or agent may execute and deliver such certificate on Tenant’sbehalf, and that such certificate shall be fully binding on Tenant.

 

**26.          SURRENDER OF PREMISES.**

 

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

 

26.2         All alterations, additions, andimprovements in, on, or to the Premises made or installed by or for Tenant, includingcarpeting (collectively, “Alterations”), shall be and remain the property ofTenant during the Term. Upon the expiration or sooner termination of the Term,all Alterations, except Tenant’s furniture and cubicles that are de-mountable andnon-hardwalled (collectively, “Tenant’s Removable Furniture”) which shallremain Tenant’s property, shall become a part of the realty and shall belong toLandlord without compensation, and title shall pass to Landlord under thisLease as by a bill of sale. At the end of the Term or any renewal of the Termor other sooner termination of this Lease, Tenant will peaceably deliver up toLandlord possession of the Premises, together with all Alterations, exceptTenant’s Removable Furniture which shall remain Tenant’s property, bywhomsoever made, in the same conditions received or first installed, broomclean and free of all debris, excepting only ordinary wear and tear and damageby 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 toexpiration of the Term, Tenant shall, at Tenant’s sole cost, remove anyAlterations, including carpeting, so designated by Landlord’s notice, andrepair any damage caused by such-removal. If Landlord elects by notice given toTenant at least ten (10) days prior to the expiration of the Term, Tenantshall, at Tenant’s sole cost, remove any door hardware or access devices installedby Tenant and restore the locks and/or access devices to a standard typesimilar to those existing in the Premises as of the date Landlord deliverspossession 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 ceilingand other trade fixtures and personal property (collectively, “Personalty”).Personalty not so removed shall be deemed abandoned by the Tenant and title tothe same shall thereupon pass to Landlord under this Lease as by a bill ofsale, but Tenant shall remain responsible for the cost of removal and disposalof such Personalty, as well as any damage caused by such removal. In lieu ofrequiring Tenant to remove Alterations and Personalty and repair the Premisesas aforesaid, Landlord may, by written notice to Tenant delivered at leastthirty (30) days before the Termination Date, require Tenant to pay toLandlord, as additional rent hereunder, the cost of such removal and repair inan amount reasonably estimated by Landlord.

 

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

 

**27.          NOTICES**. Any notice or document required orpermitted to be delivered under this Lease shall be addressed to the intendedrecipient, by fully prepaid registered or certified United States Mail returnreceipt requested, or by reputable independent contract delivery servicefurnishing a written record of attempted or actual delivery, and shall bedeemed to be delivered when tendered for delivery to the addressee at itsaddress set forth on the Reference Pages, or at such other address as it hasthen 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 registeredoffice or home of a general partner or individual owner, whether or notactually accepted or received by the addressee. Any such notice or document mayalso be personally delivered if a receipt is signed by and received from, theindividual, if any, named in Tenant’s Notice Address.

 

**28,          TAXES PAYABLE BY TENANT**.  Inaddition to rent and other charges to be paid by Tenant under this Lease, Tenantshall reimburse to Landlord, upon demand, any and all taxes payable by Landlord(other than net income taxes) whether or not now customary or within thecontemplation of the parties to this Lease: (a) upon, allocable to, ormeasured by or on the gross or net rent payable under this Lease, includingwithout limitation any gross income tax or excise tax levied by the State, anypolitical subdivision thereof, or the Federal Government with respect to thereceipt 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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Premisesor any portion thereof including any sales, use or service tax imposed as aresult thereof; (c) upon or measured by the tenant’s gross receipts orpayroll or the value of Tenant’s equipment, furniture, fixtures and otherpersonal property of Tenant or leasehold improvements, alterations or additionslocated in the Premises; or (d) upon this transaction or any document towhich Tenant is a party creating or transferring any interest of Tenant in thisLease or the Premises. In addition to the foregoing, Tenant agrees to pay,before delinquency, any and all taxes levied or assessed against Tenant andwhich become payable during the term hereof upon Tenant’s equipment, furniture,fixtures and other personal property of Tenant located in the Premises.

 

**29.          [INTENTIONALLYOMITTED)**

 

**30.          DEFINED TERMS AND HEADINGS.** The Article headings shown in thisLease 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. Anyindemnification or insurance of Landlord shall apply to and inure to thebenefit of all the following “Landlord Entities”, being Landlord, Landlord’sinvestment manager, and the trustees, boards of directors, officers, generalpartners, beneficiaries, stockholders, employees and agents of each of them.Any option granted to Landlord shall also include or be exercisable by Landlord’strustee, beneficiary, agents and employees, as the case may be. In any casewhere this Lease is signed by more than one person, the obligations under thisLease shall be joint and several. The terms “Tenant” and “Landlord” or anypronoun used in place thereof shall indicate and include the masculine orfeminine, the singular or plural number, individuals, firms or corporations,and their and each of their respective successors, executors, administratorsand permitted assigns, according to the context hereof. The term “rentable area”shall mean the rentable area of the Premises or the Building as calculated bythe Landlord on the basis of the plans and specifications of the Buildingincluding a proportionate share of any common areas. Tenant hereby accepts andagrees to be bound by the figures for the rentable square footage of thePremises 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 ofwhich the Building is a part, remeasurement or other circumstance reasonablyjustifying adjustment. The term “Building” refers to the structure in which thePremises are located and the common areas (parking lots, sidewalks,landscaping, etc.) appurtenant thereto. If the Building is part of a largercomplex of structures, the term “Building” may include the entire complex,where appropriate (such as shared Expenses or Taxes) and subject to Landlord’sreasonable discretion.

 

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

 

**32.          FINANCIAL STATEMENTS AND CREDITREPORTS**. At Landlord’srequest, Tenant shall deliver to Landlord a copy, certified by an officer ofTenant as being a true and correct copy, of Tenant’s most recent auditedfinancial statement, or, if unaudited, certified by Tenant’s chief financialofficer as being true, complete and correct in all material respects. So longas Tenant and Guarantor file consolidated public annual reports, the foregoingmay be satisfied by delivery by Tenant to Landlord of each such current publicannual report for such applicable year. The immediately preceding sentence ispersonal to Tenant and shall not be applicable to any successor or assign ofTenant. Tenant hereby authorizes Landlord to obtain one or more credit reportson Tenant at any time, and shall execute such further authorizations asLandlord 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 orother information discussing financial worth of Guarantor as reasonablyrequested by Landlord.

 

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

 

**34.          TIME AND APPLICABLE LAW**. Time is of the essence of this Lease andall of its provisions. This Lease shall in all respects be governed by the lawsof 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 bindingupon 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 anyprevious negotiations. There have been no representations made by the Landlordor any of its representatives or understandings made between the parties otherthan those set forth in this Lease and its exhibits. This Lease may not bemodified except by a written instrument duly executed by the parties to thisLease.

 

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

 

**38.          RECORDATION**. Tenant shall not record or register thisLease or a short form memorandum hereof without the prior written consent ofLandlord, and then shall pay all charges and taxes incident such recording orregistration.

 

**39.          OPTION TO RENEW.**

 

39.1         Tenant shall, provided the Lease is infull force and effect and Tenant is not in default under any of the other termsand conditions of the Lease at the time of notification or commencement, haveone (1) option to renew (the “Renewal Option”) this Lease for a term offive (5) years (the “Renewal Term”), for the portion of the Premises beingleased by Tenant as of the date the Renewal Term is to commence, on the sameterms 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 RenewalOption, then Tenant shall provide Landlord with written notice no later thanthe date which is one hundred eighty (180) days prior to the expiration of the Termof 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 toprovide such notice, Tenant shall have no further right to extend or renew theTerm of this Lease.

 

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

 

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

 

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

 

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

 

40.           Intentionally Omitted.

 

**41.          SIGNAGE.**

 

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

 

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onthe Monument Sign be of the same size and style. Tenant, at its cost, shall beresponsible for the maintenance, repair or replacement of Tenant’s signage onthe Monument Sign, which shall be maintained in a manner reasonablysatisfactory to Landlord. Tenant’s right to place its name on the MonumentSign, and the location of Tenant’s name on the Monument Sign, shall be subjectto the existing rights of existing tenants in the Building and Project, and thelocation of Tenant’s name on the Monument Sign shall be further subject toLandlord’s reasonable approval. Although the Monument Sign will be maintainedby Landlord, Tenant shall pay its proportionate share of the cost of anymaintenance and repair associated with the Monument Sign. Upon expiration or earliertermination of the Lease or Tenant’s right to possession of the Premises, or ifTenant ceases to lease or occupy the Premises, Landlord, at Tenant’s cost,payable as additional rent within five (5) business days after demandtherefor, shall have the right to remove Tenant’s signage from the MonumentSign and restore the Monument Sign to the condition it was in prior toinstallation of Tenant’s signage thereon, ordinary wear and tear excepted. Therights provided in this Article 41 shall be non-transferable unlessotherwise agreed by Landlord in writing.

 

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

 

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

 

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

 

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

 

41.1.2.4   Tenant shall periodically inspect theBuilding Signage to identify any conditions that are in need of maintenance orrepair. Tenant shall provide Landlord with notice of any such conditions andLandlord shall make any such repairs within a reasonable period of timefollowing the receipt of such notice. All sums paid by Landlord and all expensesincurred by it in connection with such repairs shall be payable to Landlord byTenant within ten (10) business days of Landlord’s demand. Tenant shall beresponsible for any electrical energy used in connection with the BuildingSignage. Notwithstanding the foregoing, Tenant shall not be liable for any fee in connection with Tenant’s right todisplay the Building Signage in accordance with the Lease. At Landlord’soption, Tenant’s right to the Building Signage may be revoked and terminatedupon occurrence of any of the following events:

 

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

 

41.1.2.4.2                Tenant does not occupy thePremises.

 

41.1.2.4.3                This Lease shall terminate orotherwise no longer be in effect.

 

Uponthe expiration or earlier termination of this Lease or at such other time thatTenant’s signage rights are terminated pursuant to the terms hereof, if Tenantfails to remove its signage and repair the Building in accordance with theterms of this Lease, Landlord shall cause Tenant’s signage to be removed fromthe Building and the Building to be repaired and restored to the conditionwhich existed prior to the installation of Tenant’s signage (including, ifnecessary, the replacement of any precast concrete panels), all at the solecost and expense of Tenant and otherwise in accordance with this Lease, withoutfurther notice from Landlord notwithstanding anything to the contrary containedin this Lease. Tenant shall pay all costs and expenses for such removal andrestoration within five (5) business days following delivery of an invoicetherefor. The rights provided in this Section 41.1.2 shall benon-transferable, except in connection with an assignment of this Leaseapproved by Landlord, a Permitted Transfer, or as otherwise agreed by Landlordin writing in its sole discretion.

 

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

 

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resultingtherefrom and the absence of the same shall have no effect on or diminish therights, obligations and liabilities of Landlord and Tenant under this Lease orbe considered to be a default by Landlord hereunder, nor shall Tenant beentitled to any abatement of Rent due to the absence of a cafeteria in theBuilding.

 

**43.          ADDITIONAL SPACE IN PROJECT**. In the event that Tenant requiresadditional space within the Project (each, an “Additional Space”), Tenant mayinform Landlord of the size, type and location of the space that Tenant desiresto 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 theProject 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 theProject, and Landlord, is not otherwise in negotiations to lease such space toa third party. Notwithstanding the foregoing, nothing set forth in this Article 43shall diminish or otherwise affect Tenant’s obligations under this Lease and inno event shall Landlord be liable to Tenant if Landlord is unable to offer anyadditional space within the Project to Tenant pursuant to the terms of Article 43.

 

**44.          IMPROVEMENT OF EXTERIOR OF PROJECT**. Landlord shall use commercially reasonableefforts to improve the landscaping, signage, and building exteriors at theProject, as determined to be necessary or desirable by Landlord, in its soleand absolute discretion.

 

**[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]**

 

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**45.          LIMITATION OF LANDLORD’S LIABILITY**. Redress for any claim against Landlordunder this Lease shall be limited to and enforceable only against and to theextent of Landlord’s interest in the Building. The obligations of Landlordunder 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’strustees, directors, officers, partners, beneficiaries, members, stockholders,employees, or agents, and in no case shall Landlord be liable to Tenanthereunder 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 |   |
|                                 |                              |            |                               |                                |  |  |  |  |  |

 

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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 Delawarecorporation, as Landlord and 

VERISITY DESIGN, INC., a Californiacorporation, as Tenant

 

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

 

 

/s/ ILLEGIBLE

Initials

 

A-1

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

 

 

/s/ ILLEGIBLE

Initials

 

A-3

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EXHIBIT B– INITIAL ALTERATIONS

 

attached to and made a part of Lease bearing the

LeaseReference 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 thePremises, as originally described in the Lease, by Landlord to Tenant and the fulland 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 Notwithstandingthe foregoing, Tenant and its contractors shall not have the right to performInitial Alterations in the Premises unless and until Tenant has complied withall of the terms and conditions of Article 6 of the Lease, including,without limitation, approval by Landlord of the final plans for the InitialAlterations, as applicable, and the contractors to be retained by Tenant toperform such Initial Alterations. Tenant shall be responsible for all elementsof the design of Tenant’s plans (including, without limitation, compliance withlaw, functionality of design, the structural integrity of the design, theconfiguration of the premises and the placement of Tenant’s furniture,appliances and equipment), and Landlord’s approval of Tenant’s plans shall inno event relieve Tenant of the responsibility for such design. The generalcontractor and any Major Trade Subcontractor (defined below) with whom Tenantor Tenant’s general contractor shall contract to construct the InitialAlterations are subject to approval by Landlord, which approval shall not beunreasonably withheld or delayed. For purposes of this Exhibit B a “MajorTrade Subcontractor” shall mean any subcontractor responsible for heating,ventilation and air conditioning, plumbing, or electrical systems in thePremises. Tenant’s general contractor (a) shall maintain insurance asrequired pursuant to the terms of the Lease and (b) be licensed as acontractor in the state/municipality in which the Premises are located.Landlord hereby approves Integrity Office Solutions, Inc. as theconstruction manager for the construction of the Initial Alterations (the “ConstructionManager”) and the general contractors and Major Trade Subcontractors listed onScheduled B-4 attached hereto. Upon request by Landlord, Tenant shall deliverto Landlord financial statements for any general contractor or Major TradeSubcontractor for which Tenant has obtained or desires to obtain Landlord’sapproval

 

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

 

3.                                       Provided Tenant is not in default under theLease, Landlord agrees to contribute the sum of $        (the “Allowance”) toward the cost ofperforming 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) hardcosts in connection with the Initial Alterations, (b) costs associatedwith moving Tenant from its existing location into the Premises, including, withoutlimitation, the cost of telephone, data and computer cabling, consulting fees,reprinting stationery on hand, moving Tenant’s furniture, equipment and otherpersonal property into the Premises, and the cost of space improvementsperformed in the Premises not otherwise included in the Initial Alterations,and (c) the cost of purchasing furniture and fixtures for use solely inthe Premises; but excluding office supplies (including without limitation,letterhead and business cards) and computer equipment. The Allowance, less aten percent (10%) retainage (which retainage shall be payable as part of thefinal draw), shall be paid to Tenant or the Construction Manager or, in theevent that Landlord reasonably believes that Tenant or the Construction Manageris not timely paying the contractors, at Landlord’s option, to the order of thegeneral contractor that performs the Initial Alterations, in periodic disbursementswithin thirty (30) days after receipt of the following documentation: (a) anapplication for payment and sworn statement of contractor substantially in theform of AIA Document G-702 covering all work for which disbursement is to bemade to a date specified therein; (b) Contractor’s, subcontractor’s andmaterial supplier’s full or partial waivers of liens, as applicable, whichshall cover all Initial Alterations for which disbursement is being requestedand 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 allconstruction contracts for the Initial Alterations, together with copies of allchange orders, if any; and (d) a request to disburse from Tenantcontaining an approval by Tenant of the work done and a good faith estimate ofthe cost to complete the Initial Alterations. Upon completion of the InitialAlterations, and prior to final disbursement of the Allowance, Tenant shallfurnish Landlord with: (i) general contractor and architect’s

 

 

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Initials

 

B-1

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completion affidavits, (ii) full and finalwaivers of lien, (iii) receipted bills covering all labor and materialsexpended and used, (iv) as-built plans of the Initial Alterations, and (v) thecertification of Tenant and its architect that the Initial Alterations havebeen installed in a good and workmanlike manner in accordance with the approvedplans, and in accordance with applicable laws, codes and ordinances. In noevent shall Landlord be required to disburse the Allowance more than one timeper month. If the Initial Alterations exceed the Allowance, Tenant shall beentitled to the Allowance in accordance with the terms hereof, but eachindividual disbursement of the Allowance shall be disbursed in the proportionthat the Allowance bears to the total cost for the Initial Alterations, lessthe ten percent (10%) retainage referenced above. Notwithstanding anythingherein to the contrary, Landlord shall not be obligated to disburse any portionof the Allowance during the continuance of an uncured default under the Lease,and Landlord’s obligation to disburse shall only resume when and if suchdefault is cured.

 

4.                                       Except as expressly provided in Paragraph 3above, 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 notsubmit a request for payment of the entire Allowance to Landlord in accordancewith the provisions contained in this Exhibit by October 31, 2004 (whichdate shall be subject to extension equal to the number of days of delay inconstruction actually experienced by Tenant due to Force Majeure (as defined inthe 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 beingunderstood that Tenant shall not be entitled to any credit, abatement or otherconcession in connection therewith. Tenant shall be responsible for all applicablestate sales or use taxes, if any, payable in connection with the InitialAlterations 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 berequired to perform any work, other than the Landlord Work (as defined below)or, except as provided herein with respect to the Allowance, the Landlord HVACAllowance (as defined below) or the Tenant HVAC Allowance (as defined below)incur any costs in connection with the construction or demolition of anyimprovements in the Premises.

 

6.                                       Any unused portion of the Allowance that isin excess of the costs incurred by Tenant for construction of the Initial Alterationsand any unused portions of the Landlord HVAC Upgrade Allowance and the TenantHVAC Upgrade Allowance that are in excess of the costs of the HVAC Upgradeshall accrue to the sole benefit of Landlord, it being understood and agreedthat Tenant shall not be entitled to receive any credit or abatement inconnection therewith. In no event shall Landlord have any obligation todisburse any portion of the Allowance, Landlord HVAC Upgrade Allowance orTenant HVAC Upgrade Allowance after October 31, 2004 (which date shall besubject to extension equal to the number of days of delay in constructionactually experienced by Tenant due to Force Majeure, provided that suchextension 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 certainupgrades to the heating, ventilation and air conditioning systems exclusivelyserving the Premises, in accordance with Schedule B-l attached hereto and madea part hereof (the “HVAC Upgrade”), which Landlord HVAC Upgrade Allowance shallbe in addition to, not in lieu of the Allowance. The Landlord HVAC UpgradeAllowance shall be paid to Tenant, the Construction Manager, or in the eventthat Landlord reasonably believes that the Tenant or Construction Manager isnot timely paying the contractors, at Landlord’s option, to the order of thecontractor that performs such HVAC Upgrades in monthly disbursements accordingto the procedure set forth in Paragraph 3 above, with Tenant and Landlordcontributing to the costs of HVAC Upgrades on a *pari passu*basis (i.e., for every dollar that Tenant appliesof the Tenant HVAC Upgrade Allowance (defined in Paragraph 8 below) on the HVACUpgrade, Landlord shall pay a dollar of the Landlord HVAC Allowance). TheLandlord HVAC Upgrade Allowance will be a part of the regular monthlydisbursement and requisition for the Allowance, and not a separate requisition;however the Landlord HVAC Upgrade Allowance will be a separate line item onsuch requisition.

 

8.                                       Provided Tenant is not in default under theLease, Landlord agrees to contribute an amount not to exceed $            (the “Tenant HVAC Upgrade Allowance”) in order to finance the Tenant’scontribution toward the performance of the HVAC Upgrades, which Tenant HVACUpgrade Allowance shall be in addition to, not in lieu of the Allowance and theLandlord HVAC Upgrade Allowance. The Tenant HVAC Upgrade Allowance shall bepaid to Tenant, the Construction Manager, or in the event that Landlordreasonably believes that the Tenant or Construction Manager is not timelypaying the contractors, at Landlord’s option, to the order of the contractorthat performs the HVAC Upgrades, in monthly disbursements according to theprocedure set forth in Paragraph 3 above, with the Tenant HVAC UpgradeAllowance and the Landlord HVAC Upgrade Allowance being paid on a *pari passu* basis, as described in

 

 

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Initials

 

B-2

----

 

Paragraph 7 above. Any Tenant HVAC Upgrade Allowancepaid to or on behalf of Tenant hereunder shall be repaid to Landlord asadditional rent in equal monthly installments throughout the initial Term ofthe Lease at an interest rate equal to eight and one-half percent (8.5%) perannum. If Tenant is in default under the Lease after the expiration ofapplicable cure periods, the entire unpaid balance of the Tenant HVAC UpgradeAllowance paid to or on behalf of Tenant shall be come immediately due andpayable and, except to the extent required by applicable law, shall not besubject to mitigation or reduction in connection with a reletting of thePremises by Landlord. Upon request of Landlord, Tenant shall execute anamendment to the Lease or other appropriate agreement, prepared by Landlord,evidencing the amount of the Tenant HVAC Upgrade Allowance required by Tenantand the repayment schedule relating to Tenant’s repayment of the TenantHVAC Upgrade Allowance, as described herein. By way of example only, if at theend of the second (2nd) month of the Term of the Lease, Landlord disburses toTenant (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 succeedingmonth of the initial Term, Tenant shall pay to Landlord the sum of             100ths Dollars ($        as additionalrent, in accordance with the terms of Article 3 of the Lease. Anything tothe contrary notwithstanding, Tenant shall have the right at any time to prepaythe Tenant HVAC Upgrade Allowance plus any accrued and unpaid interest in fullor 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 andthe Building in accordance with the following work list (the “Work List”) usingBuilding standard methods, materials and finishes. The improvements to beperformed in accordance with the Work List are hereinafter referred to as the “LandlordWork”. Landlord shall enter into a direct contract for the Landlord Work with ageneral contractor selected by Landlord. In addition, Landlord shall have theright to select and/or approve any subcontractors used in connection with theLandlord Work.

 

WORK LIST

 

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

 

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

 

10.                                 Landlord and Tenant agree to cooperate witheach other in order to enable the Landlord Work and the Initial Alterations tobe performed in a timely manner and with as little inconvenience to the operationof each party’s business as is reasonable possible (and Landlord and Tenanthereby agree to coordinate with each other’s construction schedules so as toavoid delays therein). Notwithstanding anything herein to the contrary, nodelay in the completion of the Landlord Work or inconvenience suffered byTenant during the performance of Landlord Work shall subject Landlord to anyliability 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; providedthat Landlord uses commercially reasonable efforts to complete the LandlordWork within thirty (30) days of the date upon which Landlord deliverspossession of the Premises to Tenant, subject to extension equal to the numberof days of delay actually experienced by Landlord due to Tenant Delay (asdefined below) or Force Majeure, and further provided if the Landlord Workcannot reasonably be completed within such thirty (30) period, that Landlordcommences the Landlord Work within such thirty (30) day period and diligentlyprosecutes 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 resultof the acts or omissions of Tenant, any Tenant Entity or their respectivecontractors or vendors, including, without limitation, Tenant’s failure tocomply with any of its obligations under the Lease.

 

11.                                 This Exhibit shall not be deemedapplicable to any additional space added to the Premises at any time or fromtime to time, whether by any options under the Lease or otherwise, or to anyportion of the original Premises or any additions to the Premises in the eventof a renewal or extension of the Term of the Lease, whether by any options underthe Lease or otherwise, unless expressly so provided in the Lease or anyamendment or supplement to the Lease.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

 

 

/s/ ILLEGIBLE

Initials

 

B-3

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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

----

 
|        |                                      |   |               |   |             |
|--------|-------------------------------------------|--------|--------------------|--------|------------------|
|   | 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 MechanicalServices, Inc., has performed an inspection of all units at the abovereferenced address.  Below are ourfindings:

 

**AC#1** –  Unit is in good condition considering age andhas 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 evaporatorand condenser coils

4.             Replace 1 belt (BX81) on theeconomizer

5.             Install 5 pneumatic thermostats andgrease fittings..

 

**AC#2** – Unitis in good condition considering age and has 5-10 years life expectancy beforenormal replacement.  We recommend thefollowing:

 

1.             Install 2 belts (AX72)

2.             Install 2 belts (5VX900)

3.             Chemically clean both evaporatorand condenser coils

4.             Replace the suction king valve.

5.             Grease fittings.

 

**AC#3** – Unitis in good condition considering age and has 5-10 years life expectancy beforenormal replacement.  We recommend thefollowing:

 

1.             Install 2 belts (BX66)

2.             Install 2 belts (A72)

3.             Chemically clean both evaporatorand condenser coils

4.             Grease fittings.

** **

**AC#4** – Unitis in good condition considering age and has 5-10 years life expectancy beforenormal replacement.  We recommend thefollowing:

 

1.             Install 2 belts (BX66)

2.             Install 2 belts (A72)

3.             Chemically clean both evaporatorand 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 |   |                    |

 

----

 

 

**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 theLease 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 expectancybefore normal replacement. We recommend the following:

Ingersol Rand

Model #2-242E5

Serial # 30T6243098

1.   Install4 belts (AX68)

2.   Autowater bleed

3.   Nooil found at randomly selected pneumatic controls

4.   Needto change oil in compressors and pressure wash.

 

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

Ajax

Model #WGFD1275

Serial #87-64532-2-1

1. Clean fire eye andadjust gas valve linkage.

 

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

Perma

Medal #35HSBA100

Serial #21318-4

1. Replacement of airdryer before failure

 

EXHAUST FANSare all in good condition considering age and have 5-10 years life expectancybefore normal replacement.

 

We hope this meets withyour 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 andmade a part of Lease bearing the Lease Reference Date of April 14, 2004 between

SFERS REAL ESTATECORP. 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 thatcertain Lease, dated for reference February _, 2004 (the “Lease”)for certain premises (the “Premises”) consisting of approximately 58,242 squarefeet at the buildingcommonly known as Mountain View Corporate Center.

 

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

 

C.            Landlord and Tenant desire to enter into thisMemorandum confirming the Commencement Date, theTermination 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 theMonthly Installment of Rent set forth on the Reference Pages is deleted in its entirety, and the following issubstituted therefor:

 

*(insert rent schedule]*

* *

4.*            *Capitalizedterms 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 beexecuted 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, nameor notice (collectively referred to as “Signs”) shall be installed or displayedon any part of the outside of the Building without the prior written consent ofthe Landlord which consent shall be in Landlord’s sole discretion. All approvedSigns shall be printed, painted, affixed or inscribed at Tenant’s expense by a personor vendor approved by Landlord and shall be removed by Tenant at Tenant’sexpense upon vacating the Premises. Landlord shall have the right to remove anySign installed or displayed in violation of this rule at Tenant’s expenseand without notice.

 

2.             If Landlord objects in writing to anycurtains, blinds, shades or screens attached to or hung in or used inconnection with any window or door of the Premises or Building, Tenant shallimmediately discontinue such use. No awning shall be permitted on any part ofthe Premises. Except as approved by Landlord with respect to the InitialAlterations (as defined in the Lease) Tenant shall not place anything or allowanything to be placed against or near any glass partitions or doors or windowswhich may appear unsightly, in the opinion of Landlord, from outside thePremises.

 

3.             Tenant shall not alter any lock or otheraccess device or install a new or additional lock or access device or bolt on anydoor of its Premises without the prior written consent of Landlord, whichconsent shall not be unreasonably withheld; provided, however, Tenant shall bepermitted to install door hardware that meets standard industry practice forsecurity services as required by Tenant. Tenant, upon the termination of itstenancy, shall deliver to Landlord the keys or other means of access to alldoors.

 

4.             If Tenant requires telephone, data, burglaralarm or similar service, the cost of purchasing, installing and maintainingsuch service shall be borne solely by Tenant. No boring or cutting for wireswill be allowed without the prior written consent of Landlord. Landlord shalldirect electricians as to where and how telephone, data, and electrical wiresare to be introduced or installed. The location of burglar alarms, telephones,call boxes or other office equipment affixed to the Premises shall be subjectto the prior written approval of Landlord, which consent shall not beunreasonably withheld.

 

5.             Tenant shall not place a load upon any floorof its Premises, including mezzanine area, if any, which exceeds the load persquare 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 benecessary to properly distribute the weight. Landlord will not be responsiblefor 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 orother property shall be repaired at the expense of Tenant.

 

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

 

7.             Tenant shall not mark, drive nails, screw ordrill into the partitions, woodwork, plaster or drywall (except for picturesand general office uses) or in any way deface the Premises or any partthereof.  Tenant shall not affix anyfloor covering to the floor of the Premises or paint or seal any floors in anymanner except as approved by Landlord. Tenant shall repair any damage resultingfrom noncompliance with this rule.

 

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

 

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

 

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

 
|   | /s/ [ILLEGIBLE] |
|--------|-----------------|
|   | Initials        |

 

D-1

----

 

Landlordshall have the right, exercisable without notice and without liability to anytenant, to change the name and address of the Building.

 

11.           All trash and refuse shall be contained insuitable receptacles at locations approved by Landlord. Tenant shall not placein the trash receptacles any personal trash or material that cannot be disposedof in the ordinary and customary manner of removing such trash withoutviolation of any law or ordinance governing such disposal.

 

12.           Tenant shall comply with all safety, fireprotection and evacuation procedures and regulations established by Landlord orany governing authority.

 

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

 

14.           Tenant shall not use any method of heating orair conditioning other than that supplied by Landlord without Landlord’s priorwritten consent.

 

15.           No person shall go on the roof withoutLandlord’s permission.

 

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

 

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

 

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

 

19.           Landlord reserves the right to make such otherand reasonable rules and regulations as in its judgment may from time totime be needed for safety and security, for care and cleanliness of theBuilding and for the preservation of good order in and about the Building.Tenant agrees to abide by all such rules and regulations herein stated andany additional rules and regulations which are adopted. Tenant shall beresponsible 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 bowlsand other apparatus shall not be used for any purpose other than that for whichthey were constructed and no foreign substance of any kind whatsoever shall be throwninto them. The expense of any breakage, stoppage or damage resulting fromthe violation of this rule shall be borne by the Tenant who, or whoseemployees or invitees, shall have caused it.

 

21.           Tenant shall not permit smoking or carrying oflighted cigarettes or cigars in areas reasonably designated by Landlord or anyapplicable governmental agencies as non-smoking areas.

 

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

 

23.           Canvassing, soliciting, distribution ofhandbills or any other written material in the Building or Project Area is prohibitedand each tenant shall cooperate to prevent the same. No tenant shall solicitbusiness from other tenants or permit the sale of any goods or merchandise inthe Building or Project Area without the written consent of Landlord.

 

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

 
|   | /s/ [ILLEGIBLE] |
|--------|-----------------|
|   | Initials        |

 

D-2

----

 

25.           Driveways, sidewalks, halls, passages, exits,entrances and stairways (“Access Areas”) shall not be obstructed by tenants orused by tenants for any purpose other than for ingress to and egress from theirrespective premises. Access areas are not for the use of the general public andLandlord shall in all cases retain the right to control and prevent accessthereto by all persons whose presence, in the judgement of Landlord, shall beprejudicial to the safety, character, reputation and interests of the Buildingor its tenants.

 

26*.**          *Landlordreserves the right to designate the use of parking areas and spaces. Tenantshall not park in visitor, reserved, or unauthorized parking areas. Tenant andTenant’s guests shall park between designated parking lines only and shall notpark motor vehicles in those areas designated by Landlord for loading andunloading. Vehicles in violation of the above shall be subject to being towedat the vehicle owner’s expense. Vehicles parked more than seven (7) nightswithout prior written consent of the Landlord shall be deemed abandoned andshall be subject to being towed at vehicle owner’s expense. Tenant will fromtime to time, upon the request of Landlord, supply Landlord with a list oflicense plate numbers of vehicles owned or operated by its employees or agents.

 

27.           No trucks, tractors or similar vehicles can beparked anywhere other than in Tenant’s own truck dock area. Tractor-trailerswhich must be unhooked or parked with dolly wheels beyond the concrete loadingareas must use steel plates or wood blocks under the dolly wheels to preventdamage to the asphalt paving surfaces. No parking or storing of such trailerswill 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 unloadingareas of other tenants. All products, materials or goods must be stored withinthe Tenant’s Premises and not in any exterior areas, including, but not limitedto, exterior dock platforms, against the exterior of the Building, parkingareas and driveway areas. Tenant agrees to keep the exterior of the Premisesclean and free of nails, wood, pallets, packing materials, barrels and anyother debris produced from their operation.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 
|   | /s/ [ILLEGIBLE] |
|--------|-----------------|
|   | Initials        |

 

D-3

----

 

EXHIBIT E- FORM OF SUBORDINATION, NON-DISTURBANCE ANDATTORNMENT 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

 

ThisSUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (“Agreement”) isentered into as of this             dayof             ,2004, by and among                         (“Tenant”), SUMITOMO MITSUI BANKING CORPORATION (“Agent”) and SFERS REAL ESTATECORP. U (“Landlord”).

 

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

 

B.            Agent is Administrative Agent on behalf ofLenders party to a Credit Agreement dated as of          (the “Credit Agreement”) with respect to, among other things, making a Loan toLandlord in the amount of$             with interestthereon, 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 ofLandlord’s interest in the Lease as more particularly set forth in a certainAssignment of Leases and Rents.

 

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

 

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

 

1.             Assignment: Tenant hereby acknowledges andagrees that it has notice that the Lease and the rent and all other sums duethereunder have been assigned or are to be assigned to Agent as security forthe obligations secured by the Mortgage and agrees to such assignment. In theevent Agent forwards written notice to Tenants of the occurrence of an Event ofDefault Under the Mortgage and demands that Tenant pay its sums due under theLease directly to Agent, Tenant shall honor such demand and pay such sums dueunder the Lease directly to Agent or as otherwise directed pursuant to suchnotice. In complying with these provisions, Tenant shall be entitled to relysolely upon the notices given by Agent and Landlord hereby permits said directpayments to be made and further agrees to indemnify and hold Tenant harmlessfrom**and against any and allloss, claim, damage or liability arising out of Tenants compliance with suchnotice. Tenant shall be entitled to full credit under the Lease for any rentspaid to Agent in accordance with the provisions of this Paragraph to the sameextent as if such rents were paid directly to Landlord.

 

2.             Subordination. Subject to the terms hereof andby its execution hereof Tenant acknowledges that the Mortgage in favor ofAgent, and any renewals, modifications, consolidations, replacements andextensions thereof shall remain a lien on the Property until such time whenfully paid or otherwise disposed of pursuant to the terms thereof prior andsuperior to the Lease (including specifically, without limitation, any optionto purchase or rights of first refusal affecting the Property, or any portionthereof contained therein), the leasehold estate created thereby and Tenant’sright, title and interest in the Property as if the Mortgage had been executed,delivered and duly recorded in the appropriate land records prior to theexecution and delivery of the Lease.

 

3.             ATTORNMENT. If the interest of Landlord in theProperty and under the Lease shall be acquired by Agent by reason offoreclosure of the Mortgage or any other act or proceeding(s) made or broughtto enforce the rights of the Agent, including, but not limited to, by deed inlieu of foreclosure or as a result of any other means, then the Lease and allterms therein, and the rights of Tenant thereunder, shall continue in fullforce and effect and shall not be altered, terminated, or disturbed, except inaccordance with the terms of the lease, and Tenant shall be bound to Agent andAgent shall be bound to Tenant, subject to the terms hereof under all of theterms, covenants and conditions of the Lease for the balance of the terms, andany renewals thereof with the same force and effect as if the Agent were theLandlord 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 effectiveand self-operative without the execution of any other instruments on the partof either party hereto, immediately upon Agent succeeding to the interest ofLandlord under the Lease with written notice of same being delivered to Tenant.Upon receipt by Tenant of said written notice from Agent that Agent hassucceeded to the interest of Landlord under the Lease, Tenant will make allpayments of monetary obligations due by Tenant under the Lease at the addressprovided by

 
|   | /s/ [ILLEGIBLE] |
|--------|-----------------|
|   | Initials        |

 

E-1

----

 

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

 

4.             Nondisturbance.If it becomes necessary to foreclose the Mortgage, Mortgagee will not terminatethe Lease nor join Tenant in summary or foreclosure proceedings so long asTenant is not in default under any of the terms, covenants or conditions ofsaid Lease without corresponding default of Landlord beyond applicable graceperiods after notice thereof or if in default, same shall be cured. If Agentshall succeed to the interests of Landlord under the Lease, Agent shall bebound to the Tenant under all of the terms, covenant and conditions of theLease, and Agent agrees to recognize Tenant and further agrees that Tenantshall not be disturbed in its possession or use, of the Property, saidnondisturbance to be effective and self-operative without the execution of anyother instrument(s) on the part of either party hereto, immediately upon Agentsucceeding to the interest of Landlord under the Lease, of the Property for anyreason our than one which would entitle Landlord to terminate the lease underits terms or would cause, without any further action by Landlord, thetermination of the Lease or would entitle Landlord to dispossess Tenant from theProperty. Tenant shall, from and after Agent’s succession to the interests ofLandlord under the Lease, have the same remedies against Agent for the breachof any provision contained in the Lease that Tenant might have had under theLease against Landlord if Agent had not succeeded to the interests of Landlordunder the Lease; provided further, however, that Agent except as expressly setforth 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 anyprior landlord (including, but not limited to, Landlord); or

 

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

 

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

 

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

 

(f)            obligated to commence or complete anyconstruction or contribute toward construction or installation of anyimprovements required under the Lease, or expand or rehabilitate existingimprovements thereon, or restore improvements following any casualty notrequired to be insured under the Lease or pay the costs of any restoration inexcess of**the proceeds recoveredunder any insurance required to be carried under the Lease, provided howeverthat Agent shall cause to be applied to restoration required under the Leaseall 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 orpatent defects in construction; or

 

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

 

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

 

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

 

Additionally,in such event, Tenant shall be bound to Agent, and Agent shall be bound toTenant, subject to the terms hereof under all of the terms, covenants andconditions of the Lease, and Agent and Tenant shall, from and after Agent’ssuccession to the interest of Landlord under the Lease, have the same remediesagainst each other for the breach of any provision contained in the Lease thatthey might have had under the Lease against each other if Agent were theoriginal Landlord under the Lease.

 
|   | /s/ [ILLEGIBLE] |
|--------|-----------------|
|   | Initials        |

 

E-2

----

 

 

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

 

Anythingherein or in the Lease to the contrary notwithstanding, in the event that Agentshall acquire title to the leased premises, Agent shall have no obligation, norincur any liability beyond the then-existing interest, if any, of Agent theleased premises and Tenant shall look exclusively to such interest of Agent inthe leased premises for the payment and discharge of any obligations imposedupon Agent hereunder or under the Lease, and Agent is hereby released andrelieved of any other liability hereunder and under the Lease. As regardsAgent, Tenant shall look solely to the estate or interest owned by Agent in theleased premises and Tenant will not collect or attempt to collect any judgmentout of any other assets of Agent. By executing this Agreement, Landlordspecifically acknowledges and agrees that nothing contained in this Section shallimpair, limit, affect, lessen, abrogate or otherwise modify the obligations ofLandlord to Tenant under the Lease. Agent’s interest (as such term is usedherein) in the leased premises shall include Agent’s equity in the leasedpremises, rents, protests and issues from the leased premises and proceeds fromcasualty or condemnation affecting the leased premises.

 

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

 

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

 

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

 

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

 

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

 

(e)           to promptly certify in writing to Agent, in connection with any proposedassignment of the Mortgage, whether or not any default on the part of Landlordis claimed to exist under the Lease, and what any such claimed defaultfactually involves; and

 

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

 

7.             No Waiver. Notwithstanding any other provisionof this Agreement, where Agent acquires Landlord’s interest in and possessionof the Premises and a Landlord default has occurred and is continuing, Tenantshall not be considered as having waived its rights to require that Agent remedysuch default it the Landlord default Continues after the dale Agent acquires Landlord’sinterest in and possession of the Premises. In that case, Agent shall have noliability for Landlord’s default as it applies to the period before Agent’sacquisition of Landlord’s interest in and possession of the Property, but shallbe liable for any failure to cure such continuing default thereafter, providedonly that Agent receives the benefit of any notice and cure period required *by*the Lease or hereunder.

 

8.             Governing Law. This Agreement shall begoverned by and construed in accordance with the internal laws of the State ofNew Jersey.

 

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

 
|   | /s/ [ILLEGIBLE] |
|--------|-----------------|
|   | Initials        |

 

E-3

----

 

theobligation) to cure such default. Tenant further agrees that if Landlord shallhave 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 oraccess to the Premises for which Tenant may exercise self-help shall have anadditional thirty (30) days within which to cure such default or if suchdefault cannot be cured within that time, then such additional time as may benecessary to cure such default shall be granted if within such thirty (30) daysAgent has commenced and is diligently pursuing the remedies necessary to curesuch default (including, but not limited to, commencement of foreclosureproceedings, if necessary to effect such cure), in which event the Lease shallnot be terminated while such remedies are being so diligently pursued.Specifically preserved hereby are any rights Tenant may have to cure in theevent of an emergency, or otherwise, and to set-off and deduct the cost of samefrom rent, as may be provided in the Lease; provided prior written notice ofthe exercise of such rights is delivered to Agent, and it is expresslyunderstood by Leader that Agent’s permission is not, in any way, required.

 

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

 

11.           Entire Agreement.  This Agreement shall be the whole and onlyagreement between the parties hereto with regard to the subordination of theLease 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 prioragreements as to such, or any, subordination, including, but not limited to,those provisions, if any, contained in the Lease, which provide for thesubordination of the lease and leasehold interest of Tenant to a deed or deedsof trust or to a mortgage or mortgages to be thereafter executed, and shall notbe modified or amended except writing signed by all parties hereto.

 

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

 

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

 

14.           Number and Gender. The use of the neutergender 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 thesense requires.

 

15.           Notice. Any notice required or allowed by thisAgreement shall be in writing and shall be (i) hand-delivered, effectiveupon receipt, or (ii) sent by United States Express Mail or by privateovernight courier, effective upon receipt, or (iii) served by certifiedmail, postage prepaid, return receipt requested, deemed effective on the day ofactual delivery as shown by the addressee’s return receipt or the expiration ofthree (3) business days after the date of mailing, whichever is theearlier in time; addressed to the parry intended to receive the same at theaddress set forth below:

 

Ifto Tenant:

 

If to Landlord:

 
|   | /s/ [ILLEGIBLE] |
|--------|-----------------|
|   | Initials        |

 

E-4

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Ifto Agent:

 

Theparties may, by written notice to the others, designate a different mailingaddress for notices.

 

INWITNESS WHEREOF, the parties have executed this Agreement as of the date firstabove 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, MountainView, California

 

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| 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                          |   |

 

----

 

**EXHIBIT C**

 

**FURNITURE, TRADE FIXTURES AND EQUIPMENT**

 

SECURITYSYSTEM

 

----

 

**EXHIBIT D**

 

**MASTER LANDLORD CONSENT TO SUBLEASE**

 

**[*** AttachMaster Landlord Consent Form Here ***]**

 

Exhibit D

 

Verisity Design, Inc.

331 East Evelyn, MountainView, California

 

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**LANDLORD CONSENT TO SUBLEASE**

 

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

 

**RECITALS:**

 

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

 

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

 

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

 

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

 

**NOW THEREFORE,**in consideration of the foregoing preambleswhich by this reference are incorporated herein and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,Landlord hereby consents to the Sublease subject to the following terms andconditions, all of which are hereby acknowledged and agreed to by Sublandlordand Subtenant:

 

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

 

2.             Representations.  Sublandlordhereby represents and warrants that Sublandlord (i) has full power andauthority to sublease the Sublet Premises to Subtenant, (ii) has nottransferred or conveyed its interest in the Lease to any person or entitycollaterally or otherwise, and (iii) has full power and authority to enterinto the Sublease and this Consent Agreement.

 
|   |     |
|--------|----------|
|   | Initials |

 

1

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Subtenanthereby represents and warrants that Subtenant has full power and authority toenter into the Sublease and this Consent Agreement.

 

3.             Indemnity and Insurance.  Subtenanthereby assumes, with respect to Landlord, all of the indemnity and insuranceobligations of the Sublandlord under the Lease with respect to the SubletPremises, provided that the foregoing shall not be construed as relieving or releasingSublandlord from any such obligations. Notwithstanding the foregoing, to the extentthe same is legally permissable, Sublandlord may satisfy such insuranceobligation for itself and on behalf of Subtenant.

 

4.             No Release.  Nothing contained in theSublease or this Consent Agreement shall be construed as relieving or releasingSublandlord from any of its obligations under the Lease, it being expresslyunderstood and agreed that Sublandlord shall remain liable for such obligationsnotwithstanding anything contained in the Sublease or this Consent Agreement orany subsequent assignment(s), sublease(s) or transfer(s) of the interest of thetenant under the Lease. Sublandlord shall be responsible for the collection ofall rent due it from Subtenant, and for the performance of all the other termsand conditions of the Sublease, it being understood that Landlord is not aparty to the Sublease and, notwithstanding anything to the contrary containedin the Sublease, is not bound by any terms, provisions, representations orwarranties contained in the Sublease and is not obligated to Sublandlord orSubtenant for any of the duties and obligations contained therein.

 

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

 

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

 

7.             Lease. The parties agree that the Sublease is subject and subordinate to theterms of the Lease, and all terms of the Lease, other than Sublandlord’sobligation to pay Monthly Installments of Rent **[CHECK DEFINED TERM],**are incorporated into the Sublease. Inno event shall the Sublease or this Consent Agreement be construed as grantingor conferring upon the Sublandlord or the Subtenant any greater rights thanthose contained in the Lease nor shall there be any diminution of the rightsand privileges of the Landlord under the Lease, nor shall the Lease be deemedmodified in any respect.    Without limitingthe scope of the preceding sentence, any construction or alterations performedin or to the Sublet Premises shall be performed with Landlord’s prior writtenapproval and in accordance with the terms and conditions of the Lease. It ishereby acknowledged and agreed that any provisions in the Sublease which limitthe manner in which Sublandlord may amend the Lease are binding only uponSublandlord 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 uponSublandlord’s execution of any agreements amending or terminating the Leasesubsequent to the date hereof notwithstanding any contrary provisions in theSublease.

 

8.             Parking and Services. Any parking rights granted to Subtenantpursuant to the Sublease shall be satisfied out of the parking rights, if any,granted to Sublandlord under the Lease. Sublandlord hereby authorizesSubtenant, as agent for Sublandlord, to obtain services and materials for orrelated to the Sublet Premises, and Sublandlord agrees to pay for such servicesand 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 anyportion thereof, in which event Subtenant shall pay for the services andmaterials so billed upon written demand, provided that such billing shall notrelieve Sublandlord from its primary obligation to pay for such services andmaterials.

 

9.             Attornment.  If the Lease or Sublandlord’sright to possession thereunder terminates for any reason prior to expiration ofthe Sublease, Subtenant agrees, at the written election of Landlord, to attornto Landlord upon the then executory terms and conditions of the Sublease forthe remainder of the term of the Sublease. In the event of any such election byLandlord, Landlord will not be (a) liable for any rent paid by Subtenantto Sublandlord more than one month in advance, or any security deposit paid bySubtenant to Sublandlord, unless same has been transferred to Landlord bySublandlord; (b) liable for any act or omission of Sublandlord under theLease, Sublease or any other agreement between Sublandlord and Subtenant or forany default of Sublandlord under any such documents which occurred prior to theeffective date of the attornment; (c) subject to any defenses or offsetsthat Subtenant may have against Sublandlord which arose prior to the effectivedate of the attornment; (d) bound by any changes or modifications made tothe Sublease without the written consent of Landlord, (e) obligated in anymanner with respect to the transfer, delivery, use or condition of anyfurniture, equipment or other personal property in the Sublet Premises whichSublandord agreed would be transferred to Subtenant or which Sublandlord agreedcould be used by the Subtenant during the term of the Sublease, or (f) liablefor the payment of any improvement allowance, or any other payment, credit,offset or amount due from Sublandlord to Subtenant under the Sublease. IfLandlord does not elect to have Subtenant attorn to Landlord as describedabove, the Sublease and all rights of Subtenant in the Sublet Premises shallterminate upon the date of termination of the Lease or Sublandlord’s right topossession thereunder. The terms of this Section 9 supercede any contraryprovisions in the Sublease.

 

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

 
|   |     |
|--------|----------|
|   | Initials |

 

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suchorder of priority as required under the Lease or, if the Lease is silent insuch regard, then in such order of priority as Landlord deems appropriate. Thereceipt of such funds by Landlord shall in no manner be deemed to create adirect lease or sublease between Landlord and Subtenant. If Subtenant fails todeliver its Sublease payments directly to Landlord as required herein followingreceipt of written notice from Landlord as described above, then Landlord shallhave the right to remove any signage of Subtenant, at Subtenant’s cost, locatedoutside the Premises or in the Building lobby or elsewhere in the Building andto pursue any other rights or remedies available to Landlord at law or inequity.

 

11.           Excess Rent. If Landlord is entitled to any excess rent from Sublandlord pursuantto the terms of the Lease, then, in addition to all rent otherwise payable bySublandlord to Landlord under the Lease, Sublandlord shall also pay to Landlordthe 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 Sublandlordfor, or to otherwise collect, such sums shall in no manner be deemed a waiverby Landlord of its right to collect such sums in accordance with the Lease.

 

12.           Sublandlord Notice Address.    IfSublandlord is subleasing the entire Premises or otherwise vacating thePremises, Sublandlord’s new address for notices to Sublandlord under the Leaseshall be as follows:                                           : and if no address is filled in at the preceding blank (or if a post officebox address is used for the preceding blank), then Landlord may continue tosend notices to Sublandlord at the address(es) provided in, and in accordancewith the terms of, the Lease.

 

13.           Authority.   Each signatory of thisConsent Agreement represents hereby that he or she has the authority to executeand deliver the same on behalf of the party hereto for which such signatory isacting.

 

14.           Limitation Of Landlord’s Liability.  Redress for any claim against Landlord under this Consent Agreementshall be limited to and enforceable only against and to the extent of Landlords interest in the building of which the Sublet Premises is a part. Theobligations of Landlord under this Consent Agreement, if any, are not intendedto be and shall not be personally binding on, nor shall any resort be had tothe 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 shallLandlord be liable to Sublandlord and/or Subtenant hereunder for any lostprofits, damage to business, or any form of special, indirect or consequentialdamages.

 
|   |     |
|--------|----------|
|   | Initials |

 

----

 

IN **WITNESS WHEREOF,**Landlord,Sublandlord and Subtenant have executed this Consent Agreement as of the dateset 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 |

 

----

 

**EXHIBIT E**

 

**BILL OF SALE**

 

For valuable consideration, receipt and sufficiency of which isacknowledged, VERISITY DESIGN, INC., a California corporation (“**Seller**”) grants, sells, transfers andassigns convey and deliver to CONCEPTUS, INC., a Delware corporation (“**Purchaser**”) all right, title and interestof 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 describedin 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 natureor sort, including, without limitation, any implied or express warranty ofmerchantability, fitness of use for a particular purpose, or otherwise;provided, however Seller represents to Purchaser that Seller has good title tothe FF&E and conveyed all of Seller’s right, title and interest in theFF&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 costand sales tax charged thereon for the FF&E,

 

Each individual executing this Bill of Sale represents and warrants thatthey are duly authorized to execute and deliver this Bill of Sale on behalf ofSeller and in accordance with any duly adopted resolution of the Board ofDirectors 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 andtheir 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 BeApproved by Sublandlord andMaster Landlord Here ***]**

 

----

 

 

Exhibit A

 

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