**EXHIBIT 10.61****LEASE AGREEMENT**     THIS LEASE, made the 31st day of October 1989 between JOHN ARRILLAGA, Trustee, or hisSuccessor Trustee, UTA dated 7/20/77 (JOHN ARRILLAGA SEPARATE PROPERTY TRUST) as amended, andRICHARD T. PEERY, Trustee, or his Successor Trustee, UTA dated 7/20/77 (RICHARD T. PEERY SEPARATEPROPERTY TRUST) as amended, hereinafter called Landlord and QUANTUM CORPORATION, a Delawarecorporation, hereinafter called Tenant.**WITNESSETH:**     Landlord hereby leases to Tenant and Tenant hereby hires and takes from Landlord those certainpremises (the “Premises”) outlined in red on Exhibit “A” attached hereto and incorporated herein bythis reference thereto more particularly described as follows:All of that land containing approximately 10.531+ acres and that certain155,734+ square foot one and two-story combination building (“Building 1”)and parking appurtenant thereto, to be constructed and landscaping to be installedby Landlord as shown within the area outlined in red (“Lot 1”) on Exhibit A to belocated at the corner of Bellew Drive and Magnolia Drive, Milpitas, California.Said Premises (“Lot 1”) is more particularly shown within the area outlined in redon Exhibit A attached hereto and incorporated herein by this reference. The entireparcel containing approximately 37.096+ acres, of which the Premises is apart, is shown within the area outlined in green on Exhibit A attached hereto andincorporated herein by this reference. The interior of the leased Premises shall beimproved in the configuration as shown in red on Exhibit B to be attached hereto andincorporated herein by this reference. The building shell shall be constructed inaccordance with the shell and site improvement specifications set forth on ExhibitA, and the general building elevation set forth on Exhibit A. See Paragraph 49     The word “Premises” as used throughout this lease is hereby defined to include thenonexclusive use of sidewalks and driveways in front of or adjacent to the Premises and thenonexclusive use of the area directly underneath or over such sidewalks and driveways. The grossleasable area of the building shall be measured from outside of exterior walls to outside ofexterior walls, and shall include any atriums, covered entrances or egresses and covered loadingareas.     Said letting and hiring is upon and subject to the terms, covenants and conditions hereinafterset forth and Tenant covenants as a material part of the consideration for this Lease to performand observe each and all of said terms, covenants and conditions. This Lease is made upon theconditions of such performance and observance.     1. **USE**. Tenant shall use the Premises only in conformance with applicable governmental laws,regulations, rules and ordinances for the purpose of Office, sales, R&D, light manufacturing andrelated uses necessary for the use of Tenant or any approved assignee or subtenant to conduct itsbusiness providing any and all uses of the Premises shall be subject to
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and in conformance with all governmental laws and ordinances, and for no other purpose withoutLandlord’s prior written consent, Tenant shall not do or permit to be done in or about the Premisesnor bring or keep or permit to be brought or kept in or about the Premises anything which isprohibited by or will in any way increase the existing rate of (or otherwise affect) fire or anyinsurance covering the Premises or any part thereof, or any of its contents without the priorwritten consent of Landlord, and provided Tenant bears any cost related to such increased rate, orwill cause a cancellation of any insurance covering the Premises or any part thereof, or any of itscontents Tenant shall not do or permit to be done anything in, on or about the Premises which willin any way obstruct or interfere with the rights of other tenants or occupants of the Premises orneighboring premises or injure or annoy them, or use or allow the Premises to be used for anyimproper, immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain or permitany nuisance in, on or about the Premises. No sale by auction shall be permitted on the Premises.Tenant shall not place any loads upon the floors, walls or ceiling which endanger the structure, orplace any harmful fluids or other materials in the drainage system of the building, or overloadexisting electrical or other mechanical systems. No waste materials or refuse shall be dumped uponor permitted to remain upon any part of the Premises or outside of the building in which thePremises are a part, except in trash containers placed inside exterior enclosures designated byLandlord for that purpose or inside of the building proper where designated by Landlord. Nomaterials, supplies, equipment, finished products or semi-finished products, raw materials orarticles of any nature shall be stored upon or permitted to remain outside the Premises. Tenantshall not place anything or allow anything to be placed near the glass of any window, doorpartition or wall which may appear unsightly from outside the Premises. No loudspeaker or otherdevice system or apparatus which can be heard outside the Premises shall be used in or at thePremises without the prior written consent of Landlord. Tenant shall not commit or suffer to becommitted any waste in or upon the Premises. Tenant shall indemnify, defend and hold Landlordharmless against any loss, expense, damage, reasonable attorneys’ fees, or liability arising out offailure of Tenant to comply with any applicable law that governs, Tenant use of the Premises Tenantshall comply with any covenant, condition, or restriction (“CC&R’s) affecting the Premises. Theprovisions of this paragraph are for the benefit of Landlord only and shall not be construed to befor the benefit of any tenant or occupant of the Premises.     2. **TERM AND COMMENCEMENT DATE OF LEASE.**See Paragraphs 41, 42 & 43 of this Lease.     3. **POSSESSION**. If Landlord, for any reason whatsoever other than Landlord’s default cannotdeliver possession of said premises to Tenant at the commencement of the said term, as hereinbeforespecified, this Lease shall not be void or voidable; no obligation of Tenant shall be affectedthereby; nor shall Landlord or Landlord’s agents be liable to Tenant for any loss or damageresulting therefrom; but in that event the commencement and termination dates of the Lease, and allother dates affected thereby shall be revised to conform to the date of Landlord’s delivery ofpossession, as specified in Paragraph 28, above; provided, however, it is agreed that in no eventshall this Lease commence sooner than December 15, 1990 unless the parties agree in writing to anearlier date for the Lease to commence. The above is, however, subject to the provision that theperiod of delay of delivery of the Premises shall not exceed 180 days from the commencement dateherein (except those delays caused by Acts of God, strikes, war, utilities, governmental bodies,weather, unavailable materials, and delays beyond Landlord’s control shall
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be excluded in calculating such period) in which instance Tenant, at its option, may, bywritten notice to Landlord, terminate this Lease. See Paragraph 47     4. **RENT**.          A. *Basic Rent*. Tenant agrees to pay to Landlord at such place as Landlord may designatewithout deduction, offset, prior notice, or demand, and Landlord agrees to accept as Basic Rent forthe leased Premises the total sum of the amount to be calculated pursuant to Paragraph 39 in lawfulmoney of the United States of America, payable as follows: See Paragraphs 39 through 43.          B. *Time for Payment*. Full monthly rent is due in advance on the first day of each calendarmonth. In the event that the term of this Lease commences on a date other than the first day of acalendar month, on the date of commencement of the term hereof Tenant shall pay to Landlord as rentfor the period from such date of commencement to the first day of the next succeeding calendarmonth that proportion of the monthly rent hereunder which the number of days between such date ofcommencement and the first day of the next succeeding calendar month bears to thirty (30). In theevent that the term of this Lease for any reason ends on a date other than the last day of acalendar month, on the first day of the last calendar month of the term hereof Tenant shall pay toLandlord as rent for the period from said first day of said last calendar month to and includingthe last day of the term hereof that proportion of the monthly rent hereunder which the number ofdays between said first day of said last calendar month and the last day of the term hereof bearsto thirty (30).          C. *Late Charge*. Notwithstanding any other provision of this Lease, if Tenant is in default inthe payment of rental as set forth in this Paragraph 4 when due, or any part thereof, Tenant agreesto pay Landlord, in addition to the delinquent rental due, a late charge for each rental payment indefault ten (10) days. Said late charge shall equal five percent (5%) of each rental payment so indefault. See Paragraph 50.          D. *Additional Rent*. Beginning with the commencement date of the term of this Lease, Tenantshall pay to Landlord or to Landlord’s designated agent in addition to the Basic Rent and asAdditional Rent the following:               (a) All Taxes relating to the Premises as set forth in paragraph 9, and               (b) All insurance premiums relating to the Premises, as set forth in Paragraph 12, and               (c) All charges, costs and expenses, which Tenant is required to pay hereunder, together withall interest and penalties, costs and expenses including reasonable attorneys’ fees and legalexpenses, that may accrue thereto in the event of Tenant’s failure to pay such amounts, and alldamages, reasonable costs and expenses which Landlord may incur by reason of default of Tenant orfailure on Tenant’s part to comply with the terms of this Lease. In the event of nonpayment byTenant of Additional Rent, Landlord shall have all the rights and remedies with respect thereto asLandlord has for nonpayment of rent.
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     The Additional Rent due hereunder shall be paid to Landlord or Landlord’s agent (i) withinfive days after presentation of invoice from Landlord or Landlord’s agent setting forth suchAdditional Rent and/or (ii) at the option of Landlord, Tenant shall pay to Landlord monthly, inadvance, Tenant’s prorata share of an amount estimated by Landlord to be Landlord’s approximateaverage monthly expenditure for such Additional Rent items, which estimated amount shall bereconciled at the end of each calendar year as compared to Landlord’s actual expenditure for saidAdditional Rent items, with Tenant paying to Landlord, upon demand, any amount of actual expensesexpended by Landlord in excess of said estimated amount, or Landlord refunding to Tenant (providingTenant is not in default in the performance of any of the terms, covenants and conditions of theLease in which case such amount shall be held by Landlord as a credit for Tenant’s account untilsuch default has been cured any amount of estimated payments made by Tenant in excess of Landlord’sactual expenditures for said Additional Rent items.     The respective obligations of Landlord and Tenant under this paragraph shall survive theexpiration or other termination of the term of this Lease, and if the term hereof shall expire orshall otherwise terminate on a day other than the last day of a calendar year, the actualAdditional Rent incurred for the calendar year in which the term hereof expires or otherwiseterminates shall be determined and settled on the basis of the statement of actual Additional Rentfor such calendar year and shall be prorated in the proportion which the number of days in suchcalendar year preceding such expiration or termination bears to 365.          E. *Place of Payment of Rent and Additional Rent.*All Basic Rent hereunder and all paymentshereunder for Additional Rent shall be paid to Landlord at the office of Landlord atPerry/Arrillaga, file 1504, P.O. Box 60000, San Francisco, CA 94160 Four Hundred Twenty ThousandFour Hundred Eighty-One Dollars 80/100 Dollars ($420,481.80.) Said sum shall be held by Landlordas a Security Deposit for the faithful performance by Tenant of all of the terms, covenants andconditions of this Lease to be kept and performed by Tenant during the term hereof. If Tenantdefaults with respect to any provision of this Lease, including, but not limited to, the provisionsrelating to the payment of rent and any of the monetary sums due herewith, Landlord may (but shallnot be required to) use, apply or retain all or any part of this Security Deposit for the paymentof any other amount which Landlord may spend by reason of Tenant’s default or to compensateLandlord for any other loss or damage which Landlord may suffer by reason of Tenant’s default. Ifany portion of said Deposit is so used or applied, Tenant shall, within 10 days after writtendemand, therefore, deposit cash with Landlord in the amount sufficient to restore the SecurityDeposit to its original amount. Tenant’s failure to do so shall be a material breach of thisLease. Landlord shall not be required to keep this Security Deposit separate from its generalfunds. Tenant shall not be entitled to interest on such Deposit. If Tenant fully and faithfullyperforms every provision of this Lease to be performed by it the Security Deposit or any balancethereof shall be returned to Tenant or at Landlord’s option, to the last assignee of Tenant’sinterest hereunder at the expiration of Lease term and after Tenant has vacated the Premises. Inthe event of termination of Landlord’s interest in this Lease. Landlord shall transfer saidDeposit Landlord’s successor in interest whereupon Tenant agrees to release Landlord from liabilityfor the return of such Deposit or the accounting therefore. See Paragraph 51.
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     5. **ACCEPTANCE AND SURRENDER OF PREMISES**. By entry hereunder, Tenant accepts the premises asbeing in good and sanitary order, conditions and repair and accepts the building and improvementsincluded in the Premises in their present condition and without representation or warranty byLandlord as to the condition of such building or as to the use or occupancy which may be madethereof. Any exceptions to the foregoing must be by written agreement executed by Landlord andTenant. Tenant agrees on the last day of the Lease term, or on the sooner termination of thisLease, to surrender the Premises promptly and peaceably to Landlord in good condition and repair(damage by Acts of God, fire, normal wear and tear excepted), with all interior walls cleaned sothat they appear freshly painted, and repaired and replaced, if damaged; all floors cleaned andwaxed; all carpets cleaned and shampooed, all broken, marred or nonconforming acoustical ceilingtiles replaced; all windows washed, the air conditioning and heating systems serviced by areputable and licensed service firm and in good operating condition and repair; the plumbing andelectrical systems and lighting in good order and repair, including replacement of any burned outor broken light bulbs or ballasts; the lawn and shrubs in good condition including the replacementof any dead or damaged plantings; the sidewalk, driveways and parking areas in good order,condition and repair together with all alterations, additions, and improvements which may have beenmade in, to, or on the Premises (except movable trade fixtures installed at the expense of Tenant)except that Tenant shall ascertain from Landlord within ninety (90) days before the end of the termof this Lease whether Landlord desires to have the Premises or any part or parts thereof restoredto their condition and configuration as when the Premises were delivered to Tenant and if Landlordshall so desire, then Tenant shall restore said Premises or such part or parts thereof before theend of this Lease at Tenant’s sole cost and expense. Tenant, on or before the end of the term orsooner termination of this Lease, shall remove all of Tenant’s personal property and trade fixturesfrom the Premises, and all property not so removed on or before the end of the term or soonertermination of this Lease shall be deemed abandoned by Tenant and title to same shall thereuponpass to Landlord without compensation to Tenant. Landlord may, upon termination of this Lease,remove all movable furniture and equipment so abandoned by Tenant, at Tenant’s sole cost, andrepair any damage caused by such removal at Tenant’s sole cost. If the Premises be not surrenderedat the end of the term or sooner termination of this Lease, Tenant shall indemnify Landlord againstloss or liability resulting from the delay by Tenant in so surrendering the Premises including,without limitation, any claims made by any succeeding tenant founded on such delay. Nothingcontained herein shall be construed as an extension of the term hereof or as a consent of Landlordto any holding over by Tenant. The voluntary or other surrender of this Lease or the Premises byTenant or a mutual cancellation of this Lease shall not work as a merger and, at the option ofLandlord, shall either terminate all or any existing subleases or subtenancies or operate as anassignment to Landlord of all or any such subleases or subtenancies. See Paragraph 52     6. **ALTERATIONS AND ADDITIONS**. Tenant shall not make, or suffer to be made, any alteration oraddition to the Premises, or any part thereof, without the written consent of Landlord first hadand obtained by Tenant (such consent not to be unreasonably withheld), but at the cost of Tenant,and any addition to, or alteration of, the Premises, except moveable furniture and trade fixtures,shall at once become a part of the Premises and belong to Landlord. Landlord reserves the right toapprove all contractors and mechanics proposed by Tenant to make such alterations and additions.Tenant shall retain title to all moveable furniture and trade fixtures placed in the Premises. Allheating, lighting, electrical, airconditioning, partitioning,
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drapery, carpeting, and floor installations made by Tenant, together with all property thathas become an integral part of the Premises, shall not be deemed trade fixtures. Tenant agreesthat it will not proceed to make such alteration or additions, without having obtained consent fromLandlord to do so, and until five (5) days from the receipt of such consent, in order that Landlordmay post appropriate notices to avoid any liability to contractors or material suppliers forpayment for Tenant’s improvements. Tenant will at all times permit such notices to be posted andto remain posted until the completion of work. Tenant shall, if required by Landlord, secure atTenant’s own cost and expense, a completion and lien indemnity bond, satisfactory to Landlord, forsuch work. Tenant further covenants and agrees that any mechanic’s lien filed against the Premisesfor work claimed to have been done for, or materials claimed to have been furnished to Tenant, willbe discharged by Tenant, by bond or otherwise, within ten (10) days after Tenant receives notice ofthe filing thereof, at the cost and expense of Tenant. Any exceptions to the foregoing must bemade in writing and executed by both Landlord and Tenant. See Paragraph 52     7. **TENANT MAINTENANCE**. Tenant shall, at its sole cost and expense, keep and maintain thePremises (including appurtenances) and every part thereof in a high standard of maintenance andrepair, or replacement, and in good and sanitary condition. Tenant’s maintenance and repairresponsibilities herein referred to include, but are not limited to, janitorization, all windows(interior and exterior), window frames, plate glass and glazing (destroyed by accident or act ofthird parties), truck doors, plumbing systems (such as water and drain lines, sinks, toilets,faucets, drains, showers and water fountains), electrical systems (such as panels, conduits,outlets, lighting fixtures, lamps, bulbs, tubes and ballasts), heating and airconditioning systems(such as compressors, fans, air handlers, ducts, mixing boxes, thermostats, time clocks, boilers,heaters, supply and return grills), structural elements and exterior surfaces of the building,store fronts, roofs, downspouts, all interior improvements within the premises including but notlimited to wall coverings, window coverings, carpet, floor coverings, partitioning, ceilings, doors(both interior and exterior), including closing mechanisms, latches, locks, skylights (if any),automatic fire extinguishing systems, and elevators and all other interior improvements of anynature whatsoever, and all exterior improvements including but not limited to landscaping,sidewalks, driveways, parking lots including striping and sealing, sprinkler systems, lighting,ponds, fountains, waterways, and drains. Tenant agrees to provide carpet shields under all rollingchairs or to otherwise be responsible for wear and tear of the carpet caused by such rolling chairsif such wear and tear exceeds that caused by normal foot traffic in surrounding areas. Areas ofexcessive wear shall be replaced at Tenant’s sole expense upon Lease termination. Tenant herebywaives all rights under, and benefits of, Subsection 1 of Section 1932 and Section 1941 and 1942 ofthe California Civil Code and under any similar law, statute or ordinance now or hereafter ineffect. In the event any of the above maintenance responsibilities apply to any other tenant(s) ofLandlord where there is common usage with other tenant(s), such maintenance responsibilities andcharges shall be allocated to the leased Premises by square footage or other equitable basis ascalculated and determined by Landlord. See Paragraph 53     8. **UTILITIES**. Tenant shall pay promptly, as the same become due, all charges for water, gas,electricity, telephone, telex and other electronic communication service, sewer service, wastepick-up and any other utilities, materials or services furnished directly to or used by Tenant onor about the Premises during the term of this Lease, including, without limitation,
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any temporary or permanent utility surcharge or other exactions whether or not hereinafterimposed. In the event the above charges apply to any other tenant(s) of Landlord where there iscommon usage with other tenant(s), such charges shall be allocated to the leased Premises by squarefootage or other equitable basis as calculated and determined by Landlord.     Landlord shall not be liable for and Tenant shall not be entitled to any abatement orreduction of rent by reason of any interruption or failure of utility services to the Premises whensuch interruption or failure is caused by accident, breakage, repair, strikes, lockouts, or otherlabor disturbances or labor disputes of any nature, or by any other cause, similar or dissimilar,beyond the reasonable control of Landlord.     9. **TAXES**.          A. As Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall pay toLandlord, or if Landlord so directs, directly to the Tax Collector, all Real Property Taxesrelating to the Premises. In the event the Premises leased hereunder consist of only a portion ofthe entire tax parcel. Tenant shall pay to Landlord Tenant’s proportionate share of such realestate taxes allocated to the leased Premises by square footage or other reasonable basis ascalculated and determined by Landlord cancellation of or nonresponsibility for payment of penaltiesfor nonpayment or late payment by Tenant. The term “Real Property Taxes” as used herein, shallmean (i) all taxes, assessments, levies and other charges of any kind or nature whatsoever, generaland special, foreseen and unforeseen (including all installments of principal and interest requiredto pay any general or special assessments for public improvements and any increases resulting fromreassessments caused by any change in ownership of the Premises) now or hereafter imposed by anygovernmental or quasi-governmental authority or special district having the direct or indirectpower to tax or levy assessments, which are levied or assessed against, or with respect to thevalue, occupancy or use of, all or any portion of the Premises (as now constructed or as may at anytime hereafter be constructed, altered, or otherwise changed) or Landlord’s interest therein; anyimprovements located within the Premises (regardless of ownership); the fixtures, equipment andother property of Landlord, real or personal, that are an integral part of and located in thePremises; or parking areas, public utilities, or energy within the premises; (ii) all charges,levies or fees imposed by reason of environmental regulation or other governmental control of thePremises; and (iii) all costs and fees (including reasonable attorney’s fees) incurred by Landlordin reasonably contesting any Real Property Tax and in negotiating with public authorities as to anyReal Property Tax. If at any time during the term of this Lease the taxation or assessment of thePremises prevailing as of the commencement date of this Lease shall be altered so that in lieu ofor in addition to any Real Property Tax described above there shall be levied, assessed or imposed(whether by reason of a change in the method of taxation or assessment, creation of a new tax orcharge, or any other cause) an alternate or additional tax or charge (i) on the value, use oroccupancy of the Premises or Landlord’s interest therein or (ii) on or measured by the grossreceipts, income or rentals from the Premises, on Landlord’s business of leasing the Premises, orcomputed in any manner with respect to the operation of the Premises, then any such tax or charge,however designated, shall be included within the meaning of the term “Real Property Taxes” forpurposes of this Lease. If any Real Property Tax is based upon the property or rents unrelated tothe Premises, then only that part of such Real Property Tax that is fairly allocable to thePremises shall be included within the meaning of the term “Real Property Taxes”. Notwithstandingthe foregoing, the term “Real Property Taxes” shall not
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include estate, inheritance, gift or franchise taxes of Landlord or the federal or state netincome tax imposed on Landlord’s income from all sources. See Paragraph 54.          B. *Taxes on Tenant’s Property*. Tenant shall be liable for and shall pay ten days beforedelinquency, taxes levied against any personal property or trade fixtures placed by Tenant in orabout the Premises. If any such taxes on Tenant’s personal property or trade fixtures are leviedagainst Landlord or Landlord’s property or if the assessed value of the Premises is increased bythe inclusion thereof on a value placed upon such personal property or trade fixtures of Tenant andif Landlord, after written notice to Tenant, pays the taxes based on such increased assessment,which Landlord shall have the right to do regardless of the validity thereof, but only under properprotest if requested by Tenant. Tenant shall upon demand, as the case may be, repay to Landlordthe taxes so levied against Landlord, or the proportion of such taxes resulting from such increasein the assessment; provided that in any event Tenant shall have the right, in the name of Landlordand with Landlord’s full cooperation, to bring suit in any court of competent jurisdiction torecover the amount of such taxes so paid under protest, and any amount so recovered shall belong toTenant.     10. **LIABILITY INSURANCE**. Tenant at Tenant’s expense, agrees to keep in force during the termof this Lease a policy of comprehensive general liability insurance for bodily injury and propertydamage occurring in, on or about the Premises, including parking and landscaped areas, in theamount of $2,000,000 combined single limit. Such insurance shall be primary and noncontributory asrespects any insurance carried by Landlord. The policy or policies effecting such insurance shallname Landlord as additional insureds, and shall insure any liability of Landlord, contingent orotherwise, as respects acts or omissions of Tenant, its agents, employees or invitees or otherwiseby any conduct or transactions of any of said persons in or about or concerning the Premisesincluding any failure of Tenant to observe or perform any of its obligations hereunder; shall beissued by an insurance company admitted to transact business in the State of California; and shallprovide that the insurance effected thereby shall not be canceled, except upon thirty (30) days’prior written notice to Landlord. A copy of said policy shall be delivered to Landlord. If,during the term of this Lease, in the considered opinion of Landlord’s Lender, insurance advisor,or counsel, the amount of insurance described in this Paragraph 10 is not adequate, Tenant agreesto increase said coverage to such reasonable amount as Landlord’s Lender, insurance advisor, orcounsel shall deem adequate.     11. **TENANT’S PERSONAL PROPERTY INSURANCE AND WORKMAN’S COMPENSATION INSURANCE**. Tenant shallmaintain a policy or policies of fire and property damage insurance in “all risk” form with asprinkler leakage endorsement insuring the personal property, inventory, trade fixtures, andleasehold improvements within the leased Premises for the full replacement value thereof. Theproceeds from any of such policies shall be used for the repair or replacement of such items soinsured.     Tenant shall also maintain a policy or policies of workman’s compensation insurance and anyother employee benefit insurance sufficient to comply with all laws.     12. **PROPERTY INSURANCE**. Landlord shall purchase and keep in force, and as Additional Rent andin accordance with Paragraph 4D of this Lease, Tenant shall pay to Landlord Tenant’s proportionateshare (allocated to the leased premises by square footage or
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other equitable basis as calculated and determined by Landlord) of the cost of, policy orpolicies of insurance covering loss or damage to the Premises (excluding routine maintenance andrepairs and incidental damage or destruction caused by accidents or vandalism for which Tenant isresponsible under Paragraph 7) in the amount of the full replacement value thereof, providingprotection against those perils included within the classification of “all risks” insurance andflood and/or earthquake insurance, if available, plus a policy of rental income insurance in theamount of one hundred (100%) percent of twelve (12) months Basic Rent, plus sums paid as AdditionalRent. If such insurance cost is increased due to Tenant’s use of the Premises, Tenant agrees topay to Landlord the full cost of such increase. Tenant shall have no interest in nor any right tothe proceeds of any insurance procured by Landlord for the Premises. See Paragraph 55.     Landlord and Tenant do each hereby respectively release the other, to the extent of insurancecoverage of the releasing party, from any liability for loss or damage caused by fire or any of theextended coverage casualties included in the releasing party’s insurance policies, irrespective ofthe cause of such fire or casualty; provided, however, that if the insurance policy of eitherreleasing party prohibits such waiver, then this waiver shall not take effect until consent to suchwaiver is obtained. If such waiver is so prohibited, the insured party affected shall promptlynotify the other party thereof.     13. **INDEMNIFICATION**. Landlord shall not be liable to Tenant and Tenant hereby waives allclaims against Landlord for any injury to or death of any person or damage to or destruction ofproperty in or about the Premises by or from any cause whatsoever, including, without limitation,gas, fire, oil, electricity or leakage of any character from the roof, walls, basement or otherportion of the Premises but excluding, however, the negligence of Landlord, its agents, servants,employees, invitees, contractors of which negligence Landlord has knowledge and reasonable time tocorrect. Except as injury to persons or damage of property the principal cause of which is thenegligence of the Landlord and subject to the last two sentences of Paragraph 12, Tenant shall holdLandlord harmless from and defend Landlord against any and all expenses, including reasonableattorney’s fees, in connection therewith, arising out of any injury to or death of any person ordamage to or destruction of property occurring in, on or about the Premises, or any part thereof,from any cause whatsoever.     14. **COMPLIANCE**. Tenant at its sole cost and expense, shall promptly comply with all laws,statutes, ordinances and governmental rules, regulations or requirements now or hereafter ineffect; with the requirements of any board of fire underwriters of other similar body now orhereafter constituted; and with any direction or occupancy certificate issued pursuant to law byany public officer; provided, however, that no such failure shall be deemed a breach of theprovisions if Tenant, immediately upon notification, commences to remedy or rectify said failure.The judgment of any court of competent jurisdiction or the admission of Tenant in any actionagainst Tenant, whether Landlord be a party thereto or not, that Tenant has violated any such law,statute, ordinance or governmental rule, regulation, requirement direction or provision shall beconclusive of that fact as between Landlord and Tenant. Tenant shall, at its sole cost andexpense, comply with any and all requirements pertaining to said Premises, of any insuranceorganization or company, necessary for the maintenance of reasonable fire and public liabilityinsurance covering requirements pertaining to said Premises, of any insurance organization orcompany, necessary for the maintenance of reasonable fire and public liability insurance coveringthe Premises. See Paragraph 45 & 53.
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     15. **LIENS**. Tenant shall keep the Premises free from any liens arising out of any workperformed, materials furnished or obligation incurred by Tenant. In the event that Tenant shallnot, within ten (10) days following Tenant’s receipt of notice of the imposition of such lien,cause the same to be released of record. Landlord shall have, in addition to all other remediesprovided herein and by law, the right, but no obligation, to cause the same to be released by suchmeans as it shall deem proper, including payment of the claim giving rise to such lien. All sumspaid by Landlord for such purpose, and all expenses incurred by it in connection therewith shall bepayable to Landlord by Tenant on demand with interest at the prime rate of interest as quoted bythe Bank of America.     16. **ASSIGNMENT AND SUBLETTING**Tenant shall not assign, transfer, or hypothecate the leaseholdestate under this Lease, or any interest therein, and shall not sublet the Premises, or any partthereof, or any right or privilege appurtenant thereto, or suffer any other person or entity tooccupy or use the Premises, or any portion thereof, without, in each case, the prior writtenconsent of Landlord which consent will not be unreasonably withheld. In the event Tenant isallowed to assign, transfer or sublet the whole or any part of the premises, with the prior writtenconsent of Landlord, no assignee, transferee or subtenant shall assign or transfer this Lease,either in whole or in part, or sublet the whole or any part of the Premises, without also havingobtained the prior written consent of Landlord. A consent of Landlord to one assignment, transfer,hypothecation, subletting, occupation or use by any other person shall not release Tenant from anyof Tenant’s obligations hereunder or be deemed to be a consent to any subsequent similar ordissimilar assignment, transfer, hypothecation, subletting, occupation or use by any other person.Any such assignment, transfer, hypothecation, subletting, occupation or use without such consentshall be void and shall constitute a breach of this Lease by Tenant and shall, at the option ofLandlord exercised by written notice to Tenant, terminate this Lease. The leasehold estate underthis Lease shall not, nor shall any interest therein, be assignable for any purpose by operation oflaw without the written consent of Landlord. As a condition to its consent, Landlord may requireTenant to pay all reasonable expenses in connection with the assignment, and Landlord may requireTenant’s assignee or transferee (or other assignees or transferees) to assume in writing all of theobligations under this Lease and for Tenant to remain liable to Landlord under the Lease. SEEPARAGRAPHS 56 AND 57.     17. **SUBORDINATION AND MORTGAGES**. In the event Landlord’s title or leasehold interest is nowor hereafter encumbered by a deed of trust, upon the interest of Landlord in the land and buildingsin which the demised Premises are located, to secure a loan from a lender (hereinafter referred toas “Lender”) to Landlord, Tenant shall, at the request of Landlord or Lender, execute in writing anagreement subordinating its rights under this Lease to the lien of such deed or trust, or, if sorequested, agreeing that the lien of Lender’s deed of trust shall be or remain subject andsubordinate to the rights of Tenant under this Lease. Notwithstanding any such subordination,Tenant’s possession under this Lease shall not be disturbed if Tenant is not in default and so longas Tenant shall pay all rent and observe and perform all of the provisions set forth in this Lease.See Paragraph 58.     18. **ENTRY BY LANDLORD**. Landlord reserves, and shall at all reasonable times have, the rightto enter the Premises to inspect them; to perform any services to be provided by Landlordhereunder; to make repairs or provide any services to a contiguous tenant(s): to submit thePremises to prospective purchasers, mortgagors or tenants; to post notices of
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nonresponsibility; and to alter, improve or repair the Premises or other parts of thebuilding, all without abatement of rent, and may erect scaffolding and other necessary structuresin or through the Premises where reasonably required by the character of the work to be performed;provided, however that the business of Tenant shall be interfered with to the least extent that isreasonably practical. Any entry to the Premises by Landlord for the purposes provided for hereinshall not under any circumstances be construed or deemed to be a forcible or unlawful entry into ora detainer of the Premises or an eviction, actual or constructive, of Tenant from the Premises orany portion thereof. See Paragraph 59.     19. **BANKRUPTCY AND DEFAULT**. The commencement of a bankruptcy action or liquidation action orreorganization action or insolvency action or an assignment of or by Tenant for the benefit ofcreditors, or any similar action undertaken by Tenant, or the insolvency of Tenant, shall, atLandlord’s option, constitute a breach of this Lease by Tenant. If the trustee or receiverappointed to serve during a bankruptcy, liquidation, reorganization, insolvency or similar actionelects to reject Tenant’s unexpired Lease, the trustee or receiver shall notify Landlord in writingof its election within thirty (30) days after an order for relief in a liquidation action or withinthirty (30) days after the commencement of any action.     Within thirty (30) days after court approval of the assumption of this Lease, the trustee orreceiver shall cure (or provide adequate assurance to the reasonable satisfaction of Landlord thatthe trustee or receiver shall cure) any and all previous defaults under the unexpired Lease andshall compensate Landlord for all actual pecuniary loss and shall provide adequate assurance offuture performance under said Lease to the reasonable satisfaction of Landlord. Adequate assuranceof future performance, as used herein, includes, but shall not be limited to: (i) assurance ofsource and payment of rent and other consideration due under this Lease (ii) assurance that theassumption or assignment of this Lease will not breach substantially any provision, such as radius,location, use, or exclusivity provision, in any agreement relating to the above described Premises.     Nothing contained in this section shall affect the existing right of Landlord to refuse toaccept an assignment upon commencement of or in connection with a bankruptcy, liquidation,reorganization or insolvency action or an assignment of Tenant for the benefit of creditors orother similar act. Nothing contained in this Lease shall be construed as giving or granting orcreating an equity in the demised Premises to Tenant. In no event shall the leasehold estate underthis Lease, or any interest therein, be assigned by voluntary or involuntary bankruptcy proceedingwithout the prior written consent of Landlord. In no event shall this Lease or any rights orprivileges hereunder be an asset of Tenant under any bankruptcy, insolvency or reorganizationproceedings.     The failure to perform or honor any covenant, condition or representation made under thisLease shall constitute a default hereunder by Tenant upon expiration of the appropriate graceperiod hereinafter provided. Tenant shall have a period of ten (10) days from the date of writtennotice from Landlord within which to cure any default in the payment of rental or adjustmentthereto. Tenant shall have a period of thirty (30) days from the date of written notice fromLandlord within which to cure any other default under this Lease. Upon an uncured default of thisLease by Tenant Landlord shall have the following rights and remedies in addition to any otherrights or remedies available to Landlord at law or in equity:
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          (a) The rights and remedies provided for by California Civil Code Section 1951.2, includingbut not limited to, recovery of the worth at the time of award of the amount by which the unpaidrent for the balance of the term after the time of award exceeds the amount of rental loss for thesame period that Tenant proves could be reasonably avoided, as computed pursuant to subsection (b)of said Section 1951.2.          (b) The rights and remedies provided by California Civil Code Section which allows Landlord tocontinue the Lease in affect and to enforce all of its rights and remedies under this Lease,including the right to recover rent as it becomes due, for so long as Landlord does not terminateTenant’s right to possession, acts of maintenance or preservation, efforts to relet the Premises,or the appointment of a receiver upon Landlord’s initiative to protect its interest under thisLease shall not constitute a termination of Tenant’s right to possession.          (c) The right to terminate this Lease by giving notice to Tenant in accordance with applicablelaw.          (d) The right and power after compliance with all statutory requirements and in any event onnot less than three (3) business days prior written notice to enter the Premises and removetherefrom all persons and property, to store such property in a public warehouse or elsewhere atthe cost of and for the account of Tenant, and to sell such property and apply such proceedstherefrom pursuant to applicable California law. Landlord may from time to time sublet thePremises or any part thereof for such term or terms (which may extend beyond the term of thisLease) and at such rent and such other terms as Landlord in its reasonable sole discretion may deemadvisable, with the right to make alterations and repairs to the Premises. Upon each subletting(i) Tenant shall be immediately liable to pay Landlord, in addition to indebtedness other than rentdue hereunder, the reasonable cost of such subletting, including, but not limited to, reasonableattorneys’ fees, and any real estate commissions actually paid, and the cost of such reasonablealterations and repairs incurred by Landlord and the amount, if any, by which the rent hereunderfor the period of such subletting (to the extent such period does not exceed the term hereof)exceeds the amount to be paid as rent for the Premises for such period or (ii) at the option ofLandlord, rents received from such subletting shall be applied first to payment of indebtednessother than rent due hereunder from Tenant to Landlord; second, to the payment of any costs of suchsubletting and of such alterations and repairs; third to payment of rent due and unpaid hereunder;and the residue, if any, shall be held by Landlord and applied in payment of future rent as thesame becomes due hereunder. If Tenant has been credited with any rent to be received by suchsubletting under option (i) and such rent shall not be promptly paid to Landlord by thesubtenant(s), or if such rentals received from such subletting under option (ii) during any monthbe less than that to be paid during that month by Tenant hereunder. Tenant shall pay and suchdeficient to Landlord. Such deficiency shall be calculated and paid monthly. No taking possessionof the Premises by Landlord shall be construed as an election on its part to terminate this Leaseunless a written notice of such intention be given to Tenant. Notwithstanding any such sublettingwithout termination, Landlord may at any time hereafter elect to terminate this Lease for suchprevious breach.          (e) The right to have a receiver appointed for Tenant upon application by Landlord, to takepossession of the Premises and to apply any rental collected from the
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Premises and to exercise all other rights and remedies granted to Landlord pursuant tosubparagraph d. above. See Paragraph 60.     20. **ABANDONMENT**. Tenant shall not vacate or abandon the Premises at any time during the termof this Lease; and if Tenant shall abandon, vacate or surrender said Premises, or be dispossessedby the process of law, or otherwise, any personal property belonging to Tenant and left on thePremises shall be deemed to be abandoned, at the option of Landlord, except such property as may bemortgaged to Landlord. See Paragraph 61.     21. **DESTRUCTION**. In the event the Premises are destroyed in whole or in part from any cause,except for routine maintenance and repairs and incidental damage and destruction caused fromvandalism and accidents for which Tenant is responsible under Paragraph 7. Landlord may, at itsoption:               (a) Rebuild or restore the Premises to their condition prior to the damage or destruction, or               (b) Terminate this Lease.     If Landlord does not give Tenant notice in writing within thirty (30) days from thedestruction of the Premises of its election either rebuild and restore them or to terminate thisLease, Landlord shall be deemed to have elected to rebuild or restore them, in which event Landlordagrees, at its expense, promptly to rebuild or restore the Premises to their condition prior to thedamage or destruction. Tenant shall be entitled to a reduction in rent when such repair is beingmade in the proportion that the area of the Premises rendered untenantable by such damage bears tothe total area of the Premises. If Landlord does not complete the rebuilding or restoration withinone hundred eighty (180) days following the date of destruction (such period of time to be extendedfor delays caused by the fault or neglect of Tenant or because of Acts of God, acts of publicagencies, labor disputes, strikes, fires, freight embargos, rainy or stormy weather, inability toobtain materials, supplies or fuels, acts of contractors or subcontractors, or delay of thecontractors or subcontractors due to such causes or other contingencies beyond the control ofLandlord), then Tenant shall have the right to terminate this Lease by giving fifteen (15) daysprior written notice to Landlord. Notwithstanding anything herein to the contrary. Landlord’sobligation to rebuild or restore shall be limited to the building and interior improvementsconstructed by Landlord as they existed as of the commencement date of the Lease and shall notinclude restoration of Tenant’s trade fixtures, equipment, merchandise, or any improvements,alterations or additions made by Tenant to the Premises, which Tenant shall forthwith replace orfully repair at Tenant’s sole cost and expense provided this Lease is not cancelled according tothe provisions above.     Unless this Lease is terminated pursuant to the foregoing provisions, this Lease shall remainin full force and effect. Tenant hereby expressly waives the provisions of Section 1932,Subdivision 2, in Section 1933, Subdivision 4 of the California Civil Code.     In the event that the building in which the Premises are situated is damaged or destroyed tothe extent of not less than 33% of the replacement cost thereof. Landlord may elect to terminatethis Lease, whether the Premises be injured or not. In the event the destruction of the
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Premises is caused by Tenant, Tenant shall pay the deductible portion of Landlord’s insuranceproceeds. See Paragraph 62.     22. **EMINENT DOMAIN**. If all or any part of the Premises shall be taken by any public orquasi-public authority under the power of eminent domain or conveyance in lieu thereof, the Leaseshall terminate as to any portion of the Premises so taken or conveyed on the date when title vestsin the condemnor and Landlord shall be entitled to any and all payment, income, rent, award, or anyinterest therein whatsoever which may be paid or made in connection with such taking or conveyance,and Tenant shall have no claim against Landlord or otherwise for the value of any unexpired term ofthis Lease. Notwithstanding the foregoing paragraph, any compensation specifically awarded Tenantfor loss of business, Tenant’s personal property, moving cost or loss of goodwill shall be andremain the property of Tenant.     If any action or proceeding is commenced for such taking of the Premises or any part thereof,or if Landlord is advised in writing by any entity or body having the right or power ofcondemnation of its intention to condemn the premises or any portion thereof, then Landlord shallhave the right to terminate this Lease by giving Tenant written notice thereof within sixty (60)days of the date of receipt of said written advice or commencement of said action or proceeding, ortaking conveyance, which termination shall take place as of the first to occur of the last day ofthe calendar month next following the month in which such notice is given or the date on whichtitle to the Premises shall vest in the condemnor.     In the event of such a partial taking or conveyance of the Premises, if the portion of thePremises taken or conveyed is so substantial that the Tenant can no longer reasonably conduct itsbusiness, Tenant shall have the privilege of terminating this Lease within sixty (60) days from thedate of such taking or conveyance, upon written notice to Landlord of its intention so to do, andupon giving of such notice this Lease shall terminate on the last day of the calendar month nextfollowing the month in which such notice is given, upon payment by Tenant of the rent from the dateof such taking or conveyance to the date of termination.     If a portion of the Premises be taken by condemnation or conveyance in lieu thereof andneither Landlord nor Tenant shall terminate the Lease as provided herein, this Lease shall continuein full force and effect as to the part of the Premises not so taken or conveyed, and the rentherein shall be apportioned as of the date of such taking or conveyance so that thereafter the rentto be paid by Tenant shall be in the ratio that the area of the portion of the Premises not sotaken or conveyed bears to the total area of the Premises prior to such taking. See Paragraph 63     23. **SALE OR CONVEYANCE BY LANDLORD**. In the event of a sale or conveyance of the Premises orany interest therein, by any owner of the reversion then constituting Landlord, the transferorshall thereby be released from any further liability upon any of the terms, covenants or conditions(express or implied) herein contained in favor of Tenant, and in such event, insofar as suchtransfer is concerned, Tenant agrees to look solely to the responsibility of the successor ininterest of such transferor in and to the Premises and this Lease. This Lease shall not beaffected by any such sale or conveyance, and Tenant agrees to attorn to the successor in interestof such transferor. See Paragraph 64.
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     24. **ATTORNMENT TO LENDER OR THIRD PARTY**. In the event the interest of Landlord in the landand buildings in which the leased Premises are located (whether such interest of Landlord is a feetitle interest or a leasehold interest is encumbered by deed of trust, and such interest isacquired by the lender or any third party through judicial foreclosure or by exercise of a power ofsale at private trustee’s foreclosure sale. Tenant hereby agrees to attorn to the purchaser at anysuch foreclosure sale and to recognize such purchaser as the Landlord under this Lease. In theevent the lien of the deed of trust securing the loan from a Lender to Landlord is prior andparamount to the Lease, this Lease shall nonetheless continue in full force and effect for theremainder of the unexpired term thereof at the same rental herein reserved and upon all the otherterms, conditions and conveyance herein contained.     25. **HOLDING OVER**. Any holding over by Tenant after expiration or other termination of theterm of this Lease with the written consent of Landlord delivered to Tenant shall not constitute arenewal or extension of the Lease or give Tenant any rights in or to the leased Premises except asexpressly provided in this Lease. Any holding over after the expiration or other termination ofthe term of this Lease, with the consent of Landlord, shall be construed to be a tenancy from monthto month, on the same terms and conditions herein specified insofar as applicable except that themonthly Basic Rent shall be increased to an amount equal to One Hundred Twenty-Five Percent (125%)percent of the monthly Basic Rent required during the last month of the Lease term.     26. **CERTIFICATE OF ESTOPPEL**. Either party shall at any time upon not less than ten (10) daysprior written notice from the other party, execute, acknowledge and deliver to the requestingparty, a statement in writing (i) certifying that this Lease is unmodified and in full force andeffect (or, if modified, stating the nature of such modification and certifying that this Lease, asso modified, is in full force and effect) and the date to which the rent and other charges are paidin advance, if any, and (ii) acknowledging that there are not, to the best of such party’sknowledge, any uncured defaults on the part of the other party hereunder, or specifying suchdefaults, if any, are claimed. Any such statement may be conclusively relied upon by anyprospective purchaser or encumbrancer of the Premises. Tenant’s failure to deliver such statementwithin such time shall be conclusive upon the party receiving such request that this Lease is infull force and effect, without modification except as may be represented by Landlord; that thereare no uncured defaults in the requesting party’s performance, and that not more than one month’srent has been paid in advance.     27. **CONSTRUCTION CHANGES**. It is understood that the description of the Premises and thelocation of ductwork, plumbing and other facilities therein are subject to such minor changes asLandlord or Landlord’s architect determines to be desirable in the course of construction of thePremises, and no such changes shall affect this Lease or entitle Tenant to any reduction of renthereunder or result in any liability of Landlord to Tenant. Landlord does not guarantee theaccuracy of any drawings supplied to Tenant and verification of the accuracy of such drawing restswith Tenant.     28. **RIGHT OF LANDLORD TO PERFORM**. All terms, covenants and conditions of this Lease to beperformed or observed by Tenant shall be performed or observed by Tenant at Tenant’s sole cost andexpense and without any reduction in rent. If Tenant shall fail to pay any sum of money, or otherrent, required to be paid by it hereunder or shall fail to
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perform any other term or covenant hereunder on its part to be performed, and such failureshall continue for five (5) days after written notice thereof of Landlord. Landlord, withoutwaiving or releasing Tenant from any obligation of Tenant hereunder, may, but shall not be obligedto, make any such payment or perform any such other term or covenant on Tenant’s part to beperformed. All sums so paid by Landlord and all necessary costs of such performance by Landlordtogether with interest thereon at the rate of the prime rate of interest per annum as quoted by theBank of America from the date of such payment on performance by Landlord, shall be paid (and Tenantcovenants to make such payment) to Landlord on demand by Landlord, and Landlord shall have (inaddition to any other right or remedy of Landlord) the same rights and remedies in the event ofnonpayment by Tenant as in the case of failure by Tenant in the payment of rent hereunder.     29. **ATTORNEYS’ FEES**.          A. In the event that either Landlord or Tenant should bring suit for the possession of thePremises, for the recovery of any sum due under this Lease, or because of the breach of anyprovision of this Lease, or for any other relief against the other party hereunder, then all costsand expenses, including reasonable attorneys’ fees incurred by the prevailing party therein shallbe paid by the other party, which obligation on the part of the other party shall be deemed to haveaccrued on the date of the commencement of such action an shall be enforceable whether or not theaction is prosecuted to judgment.          B. Should Landlord be named as a defendant in any suit brought against Tenant in connectionwith or arising out of Tenant’s occupancy hereunder, Tenant shall pay to Landlord its costs andexpenses incurred in such suit, including a reasonable attorney’s fee.     30. **WAIVER**. The waiver by either party of the other party’s failure to perform or observe anyterm, covenant or condition herein contained to be performed or observed by such waiving partyshall not be deemed to be a waiver of such term, covenant or condition or of any subsequent failureof the party failing to perform or observe the same or any other such term, covenant or conditiontherein contained, and no custom or practice which may develop between the parties hereto duringthe term hereof shall be deemed a waiver of, or in any way, affect the right of either party toinsist upon performance and observance by the other party in strict accordance with the termshereof.     31. **NOTICES**. All notices, demands, requests, advices or designations which may be or arerequired to be given by either party to the other hereunder shall be in writing. All notices,demands, requests, advices or designations by Landlord to Tenant shall be sufficiently given, madeor delivered if personally served on Tenant by leaving the same at the Premises or if sent byUnited States certified or registered mail, postage prepaid, addressed to Tenant at the Premises.All notices, demands, requests, advices or designations by Tenant to Landlord shall be sent byUnited States certified or registered mail, postage prepaid, addressed to Landlord at its officesat Peery/Arrillaga 2560 Mission College Boulevard, Suite 101, Santa Clara, CA 95054. Each notice,request, demand advice or designation referred to in this paragraph shall be deemed received on thedate of the personal service or mailing thereof in the manner herein provided, as the case may be.
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     32. **EXAMINATION OF LEASE**. Submission of this instrument for examination or signature byTenant does not constitute a reservation of or option for a lease, and this instrument is noteffective as a lease or otherwise until its execution and delivery by both Landlord and Tenant.     33. **DEFAULT BY LANDLORD**. Landlord shall not be in default unless Landlord fails to performobligations required of Landlord within a reasonable time, but in no event earlier than (30) daysafter written notice by Tenant to Landlord and to the holder of any first mortgage or deed of trustcovering the Premises whose name and address shall have heretofore been furnished to Tenant inwriting, specifying wherein Landlord has failed to perform such obligations; provided, however,that if the nature of Landlord’s obligations is such that more than thirty (30) days are requiredfor performance, then Landlord shall not be in default if Landlord commences performance withinsuch thirty (30) day period and thereafter diligently prosecutes the same to completion.     34. **CORPORATE AUTHORITY**. If Tenant is a corporation (or a partnership), each individualexecuting this Lease on behalf of said corporation (or partnership) represents and warrants that heis duly authorized to execute and deliver this Lease on behalf of said corporation (or partnership)in accordance with the by-laws of said corporation (or partnership in accordance with thepartnership agreement) and that this Lease is binding upon said corporation (or partnership) inaccordance with its terms. If Tenant is a corporation, Tenant shall, within thirty (30) days afterexecution of this Lease, deliver to Landlord a certified copy of the resolution of the Board ofDirectors of said corporation authorizing or ratifying the execution of this Lease.     35. **INTENTIONALLY LEFT BLANK**     36. **LIMITATION OF LIABILITY**. In consideration of the benefits accruing hereunder, Tenant andall successors and assigns covenant and agree that in the event of any actual or alleged failure,breach or default hereunder by Landlord:               (a) the sole and exclusive remedy shall be against Landlord and Landlord’s assets;               (b) no partner of Landlord shall be sued or named as a party in any suit or action (except asmay be necessary to secure jurisdiction of the partnership);               (c) no service of process shall be made against any partner of Landlord (except as may benecessary to secure jurisdiction of the partnership);               (d) no partner of Landlord shall be required to answer or otherwise plead to any service ofprocess;               (e) no judgment will be taken against any partner of Landlord;               (f) any judgment taken against any partner of Landlord may be vacated and set aside at anytime without hearing;
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               (g) no writ of execution will ever be levied against the assets of any partner of Landlord;               (h) these covenants and agreements are enforceable both by Landlord and also by any partner ofLandlord.     Tenant agrees that each of the foregoing covenants and agreements shall be applicable to anycovenant or agreements either expressly contained in this Lease or imposed by statute or at commonlaw.     37. **SIGNS**. No sign, placard, picture advertisement, name or notice shall be inscribed,displayed or printed or affixed on or to any part of the outside of the Premises or any exteriorwindows of the Premises without the written consent of Landlord, first had and obtained andLandlord shall have the right to remove any such sign, placard, picture, advertisement, name ornotice without notice to and at the expense of Tenant. If Tenant is allowed to print or affix orin any way place a sign in, on or about the Premises, upon expiration or other sooner terminationof this Lease, Tenant, at Tenant’s sole cost and expense shall both remove such sign and repair alldamage in such a manner as to restore all aspects of the appearance of the Premises to thecondition prior to the placement of said sign. All approved signs or lettering on outside doorsshall be printed, painted, affixed or inscribed at the expense of Tenant by a person reasonablyapproved of by Landlord.     Tenant shall not place anything or allow anything to be placed near the glass of any window,door partition or wall which may appear unsightly from outside the Premises.     38. **MISCELLANEOUS AND GENERAL PROVISIONS**.          A. *Use of Building Name*. Tenant shall not, without the written consent of Landlord, use thename of the building for any purpose other than as the address of the business conducted by Tenantin the Premises.          B. *Choice of Law*: *Severability*. This Lease shall in all respects be governed by andconstrued in accordance with the laws of the State of California any provision of this Lease shallbe invalid, unenforceable or ineffective for any reason whatsoever, all other provisions hereofshall be and remain in full force and effect.          C. *Definition of Terms*. The term “Premises” includes the space leased hereby and anyimprovements now or hereafter installed therein or attached thereto. The term “Landlord” or anypronoun used in place thereof includes the plural as well as the singular and the successors andassigns of Landlord. The term “Tenant” or any pronoun used in place thereof includes the plural aswell as the singular and individuals, firms, associations, partnerships and corporations, and theirand each of their respective heirs, executors, administrators, successors and permitted assigns,according to the context hereof, and the provisions of this Lease shall inure to the benefit of andbind such heirs, executors, administrators, successors and permitted assigns.     The term “person” includes the plural as well as the singular and individuals, firms,associations, partnerships and corporations. Words used in any gender include other genders. If
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there be more than one Tenant the obligations of Tenant hereunder are joint and several. Theparagraph headings of this Lease are for convenience of reference only and shall have no effectupon the construction or interpretation of any provision hereof.          D. *Time of Essence*. Time is of the essence of this Lease and of each and all of itsprovisions.          E. *Quitclaim*. At the expiration or earlier termination of this Lease. Tenant shall execute,acknowledge and deliver to Landlord, within ten (10) days after written demand from Landlord toTenant, any quitclaim deed or other document required by any reputable title company, licensed tooperate in the State of California, to remove the cloud or encumbrance created by this Lease fromthe real property of which Tenant’s Premises are a part.          F. *Incorporation of Prior Agreements, Amendments*. This agreement and the exhibits andattachments may be altered, amended or revoked only by an instrument in writing signed by bothLandlord and Tenant. Landlord and Tenant agree hereby that all prior or contemporaneous oralagreements between and among themselves and their agents or representatives relative to the leasingof the Premises are merged in or revoked by this agreement.          G. *Recording*. Landlord and Tenant shall record a short form memorandum hereof in the formattached hereto as Exhibit D.          H. *Amendments for Financing*. Tenant further agrees to execute any amendments reasonablyrequired by a lender to enable Landlord to obtain financing, so long as Tenant’s rights hereunderare not materially and adversely affected and there is no change in the Basic Rent, Options toRenew, Lease Term or Construction obligations of Landlord.          I. *Additional Paragraphs*. Paragraphs 39 through 65 are added hereto and are included as apart of this Lease.          J. *Clauses, Plats and Riders*. Clauses, plats and riders, if any, signed by Landlord andTenant and endorsed on or affixed to this Lease are a part hereof.          K. *Diminution of Light. Air or View*. Tenant covenants and agrees that no diminution orshutting off of light, air or view by any structure which may be hereafter erected (whether or notby Landlord) shall in any way affect his Lease, entitle Tenant to any reduction of rent hereunderor result in any liability of Landlord to Tenant.
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     IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this Lease as of the dayand year first above written.         LANDLORD:   TENANT:         JOHN ARRILLAGA   QUANTUM CORPORATION,SEPARATE PROPERTY TRUST   a Delaware corporation         By   /s/ John Arrillaga   By   /s/ Joseph C. Shepela           John Arrillaga, Trustee                     Title    VP Human Resources                  RICHARD T. PEERY      SEPARATE PROPERTY TRUST               By   /s/ Richard Peery                Richard T. Peery, Trustee   
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Paragraphs 39 through 65 to Lease Agreement Dated October 31, 1989, By and Between JOHN ARRILLAGAAND RICHARD T. PEERY SEPARATE PROPERTY TRUSTS, as Landlord, and QUANTUM CORPORATION, a Delawarecorporation, as Tenant for 155,734 ± Square Feet of Space Located at the corner of Bellew andMagnolia Drive, Milpitas, California.     39. BASIC RENT: In accordance with Paragraph 4A, subject to the provisions ofParagraph 40 and 41, Basic Rent shall be payable as follows during the indicated months of the termof the Lease based upon the gross leasable area within the building that is part of the Premises:     Period Monthly Basic RentMonths 1-17 $1.00/sf(plus the partial calendarmonth, if any, followingthe Commencement Date) $1.00/sf     Months 18-29 $1.05/sf     Months 30-41 $1.10/sf     Months 42-53 $1.15/sf     Months 54-65 $1.20/sf     Months 66-77 $1.25/sf     Months 78-89 $1.30/sf     Months 90-101 $1.35/sf     Months 102-113 $1.40/sf     Months 114-125 $1.45/sf     Months 126-137 $1.50/sf     Months 138-149 $1.55/sf     Months 150- 161 $1.60/sf     Months 162-173 $1.65/sf     Months 174-185 $1.70/sf     Example of calculation for Basic Rent per month for the period commencing with thefirst through the seventeenth month of said Lease:
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     Square footage of Building  155,734 Per square foot Basic Monthly Rent:  x$1.00     Basic Rent per Month: $155,734          40. BASIC RENT REDUCTION DURING PHASE IN PERIOD: For the period commencing on*[Illegible]*basis. In the event Tenant does not occupy the entire building from the CommencementDate of this Lease, it is agreed that Tenant’s monthly Basic Rent will be reduced by $1.00 persquare foot on the square footage not occupied. This reduction in Basic Rent is only allowed fromthe Commencement Date through May 31, 1991 (but not under any circumstances after May 31, 1991).In no event whatsoever shall Tenant be entitled to such reduction in rent and this Paragraph 40shall not be considered in effect and binding on Landlord after May 31, 1991 regardless of theCommencement Date of this Lease and regardless of the reason for any delays in the Commencementdate of this Lease. In the event Tenant occupies the Premises on a phased in basis in accordancewith the foregoing, Landlord and Tenant agree to execute an amendment to this Lease reflecting thenumber of square feet so occupied and adjusting the Basic Rent accordingly. It is further agreedthat during the phase-in period Tenant will be responsible for paying all Additional Rent expenseas outlined in Paragraph 4D on the entire building from the Commencement Date.     41. LEASE TERM AND COMMENCEMENT DATE: The following provisions relate to thecommencement and duration of the term of this Lease:          A. Lease Term: The term of this Lease shall commence on the “Commencement Date” (asdefined herein) and shall continue for a period of fifteen (15) years and five (5) months, plus thepartial calendar month, if any, in which the Commencement Date occurs, subject to (i) earliertermination in accordance with the provisions of this Lease, and (ii) extension pursuant to theoptions to renew granted by Paragraphs 42 and 43. By way of example only, if the Commencement Dateoccurs on December 15, 1990, the term of the Lease shall continue until May 30, 2006 (i.e., aperiod of 15 years and 5 calendar months, along with the partial calendar month following December15, 1990 until December 31, 1990).          B. Commencement Date Defined: As used herein, the term “Commencement Date” shall meanthe later to occur of the following: (i) the date upon which the “Improvements” are “SubstantiallyCompleted”; or (ii) December 15, 1990; provided, however, that if prior to the later of such datesTenant’s operating personnel enter into occupancy of the Premises and commence the operation ofTenant’s business within the Premises, the Commencement Date shall be the date such personnel ofTenant so enter into occupancy of the Premises. The term “Substantially Completed” and/or“Substantial Completion” shall mean the date when all of the following have occurred with respectto the Improvements in question: (i) the construction of the Improvements in question has beensubstantially completed in accordance with the approved plans therefor except for punch list itemswhich do not prevent Tenant from reasonably using the Premises to conduct Tenant’s business; (ii)Landlord. has executed a certificate or statement representing that the Improvements in questionhave been substantially completed in accordance with the plans and specifications therefor exceptfor punch list items which do- net prevent Tenant from reasonably using the Premises to conductTenant’s business; and (iii) the Building Department of the City of Milpitas has completed itsfinal inspection of such Improvements and has “signed off” the building inspection card approvingsuch work as complete except for punch list items which do not prevent Tenant from reasonably usingthe
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Premises to conduct Tenant’s business. Notwithstanding the foregoing, Substantial Completionof the Interior Improvements shall not be deemed to have occurred until Landlord has obtained finalor conditional approval from the Fire Department of the City of Milpitas that the Improvements havebeen completed in accordance with such department’s requirements (subject only to conditions thatdo not prevent Tenant from occupying the Improvements).          C. Lease Terms Co-Extensive: It is acknowledged that *[Illegible]*adjacent propertyupon which is to be constructed a building for Tenant’s use consisting of approximately 176,516square feet (the “Companion Lease”), and (ii) it is the intention of the parties that the term ofthis Lease be co-extensive with the term of the Companion Lease, such that the terms of both leasesexpire on the same date. To that end, in the event that following the date upon which theCommencement Date of this Lease and the comparable “Commencement Date” of the Companion Leasebecome established as a date certain following completion of improvements and satisfaction of anyother conditions related to determining such dates, and if such dates are not the same, thenwhichever date occurs later shall be the expiration date of the lease term for both leases (subjectto the right of Tenant to extend either lease pursuant to the options to extend granted in the twoleases). It is acknowledged that the implementation of this paragraph may result in an extensionof the term of this Lease, in which event Tenant shall continue to pay rent at the rate applicablefor the period immediately prior to the adjusted lease term expiration date. As soon as theparties are able to implement the provisions of this paragraph because the Commencement Date ofthis Lease and “Commencement Date” of the Companion Lease have been determined following completionof improvements and satisfaction of other appropriate conditions, the parties shall executeamendments to this Lease and the Companion Lease establishing the applicable Commencement Date, theexpiration date of the term of the leases in accordance with the foregoing provisions of thisParagraph 41C, the actual rent based upon the measurements of the completed building covered bysuch lease as certified prior to the Commencement Date by an architect or general contractorreasonably approved by the parties, and the actual date for each rent adjustment provided for ineach lease, based upon the actual Commencement Date.     42. FIRST FIVE-YEAR OPTION TO EXTEND: Landlord hereby grants to Tenant an option toextend the term of this Lease for an additional five (5) year period upon the following terms andconditions:          A. If Tenant elects to exercise the option to extend, Tenant shall give Landlord writtennotice of Tenant’s exercise of this option to extend at least one hundred eighty (180) days priorto the expiration of the Basic Term hereof, in which event the Lease shall be considered extendedfor an additional five (5) year period upon the same terms and conditions as this Lease, absentthis Paragraph 42 and subject to the rental as set forth below. In the event that Tenant fails totimely exercise Tenant’s option asset forth herein in writing, Tenant shall have no further optionto extend this Lease, and this Lease shall continue in full force and effect for the full remainingterm hereof, absent this Paragraph 42.          B. The monthly Basic Rent for the option period shall be as follows in the event the option isexercised:
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               MonthlyPeriod Basic RentMonths  1-12  $1.75/sfMonths  13-24  $1.80/sfMonths  25-36  $1.85/sfMonths  37-48  $1.90/sfMonths  49-60  $1.95/sf          C. Notwithstanding anything contained herein, Tenant may not exercise the option to renewgranted by this Paragraph 42 at any time that Tenant is in material default of its obligationsunder this Lease, if *[Illegible]*cured within the time period provided for in this Lease; provided,however, that if such default of Tenant is not for money due under this Lease and cannot be cured,and if Landlord does not elect to terminate this Lease as a result of such non-curable default byTenant, Tenant may exercise the option to extend granted by this Paragraph 42 notwithstanding suchnon-curable default.     43. SECOND FIVE-YEAR OPTION TO EXTEND: Provided Tenant has extended the Lease for anadditional five (5) year period as set forth in Paragraph 42, Landlord hereby grants to Tenant anoption to extend the term of this Lease for an additional five (5) year period upon the followingterms and conditions:          A. Tenant shall give Landlord written notice of Tenant’s exercise of this option to extend atleast one hundred eighty (180) days prior to the expiration of the Lease term as extended pursuantto Paragraph 42, in which event the Lease shall be considered extended for an additional five (5)year period upon the same terms and conditions as this Lease, absent this Paragraph 43A and subjectto the rental as set forth below. In the event that Tenant fails to timely exercise Tenant’soption as set forth herein in writing, Tenant shall have no further option to extend this Lease,and this Lease shall continue in full force and effect for the full remaining term hereof, absentthis Paragraph 43.          B. The monthly rental for the option period shall be as follows in the event the option isexercised:               MonthlyPeriod Basic RentMonths  1-12  $2.00/sfMonths  13-24  $2.05/sfMonths  25-36  $2.10/sfMonths  37-48  $2.15/sfMonths  49-60  $2.20/sf          C. Notwithstanding anything contained herein, Tenant may not exercise the option to extendgranted by this Paragraph 43 at any time that Tenant is in material default of its obligationsunder this Lease, if Tenant has received written notice from Landlord that Tenant is in default,and such default has not been timely cured within the time period provided for in this
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Lease; provided, however, that if such default of Tenant is not for money due under this Leaseand cannot be cured, and if Landlord does not elect to terminate this Lease as a result of suchnon-curable default by Tenant, Tenant may exercise the option to extend granted by this Paragraph43 notwithstanding such non-curable default.     44. ASSESSMENT CREDITS: The demised property herein is subject to a specialassessment levied by the City of Milpitas in Improvement District No. 12. As a part of saidspecial assessment proceedings, additional bonds were sold and assessments levied to provide forconstruction contingencies and reserve funds. Interest will be earned on such funds created forcontingencies and on reserve funds which will be credited for the benefit of said assessmentdistrict. To the extent surpluses are created in said district through unused contingency funds,interest earnings or reserve funds, such surpluses shall be deemed the property of Landlord.Notwithstanding that such surpluses may be credited on assessments otherwise due against thedemised premises, Tenant shall pay to Landlord, as additional *[ Illegible]*.     45. HAZARDOUS MATERIALS: The parties agree as follows with respect to the existenceor use of hazardous material on the Premises:          A. Tenant shall have no obligation to “clean up”, to comply with any law regarding, or toreimburse, release, indemnify, or defend Landlord with respect to any hazardous materials or wasteswhich Tenant or other parties on the Premises did not store, dispose, or transport in, use, orcause to be on the Premises in violation of applicable law during the term of this Lease. Anyhandling, transportation, storage, treatment, disposal or use of hazardous materials by Tenant orother parties in or about the Premises during the term of this Lease shall strictly comply with allapplicable laws and regulations. Tenant will be 100 percent liable and responsible for any and all“clean up” of said toxic waste and/or hazardous materials contamination which Tenant, its agents,or future subtenants, if any, does store, dispose, or transport in, use or-cause to be on thePremises in violation of applicable law or governing agency(s) (or which originate on the Premisesduring the term of this Lease from any manner whatsoever, including but not limited to, dumping byothers), and will indemnify Landlord and hold Landlord harmless from any liabilities, demands,costs, expenses and damages, including attorney fees incurred as a result of any claims resultingfrom such contamination, or from any claims for personal injury or property damage or diminution inthe value of the Premises caused by the use, storage, disposal or transportation of hazardousmaterials on the Premises by Tenant or other parties during the term of this Lease. It is agreedthat the Tenant’s responsibilities related to toxic waste and hazardous materials will survive thetermination date of the Lease. Tenant agrees to complete compliance with governmental regulationsregarding use or removal or remediation of Hazardous Materials used, stored, disposed, transportedor caused to be on the Premises by Tenant or its agents or subtenants, or which originate on thePremises during the term of this Lease, and prior to the termination of said Lease Tenant agrees tofollow the proper closure procedures and will obtain a clearance from the local fire departmentand/or the appropriate city agency. Tenant also agrees to install such toxic waste and/orhazardous materials monitoring devices as Landlord reasonably deems necessary to monitor any use ofhazardous materials by Tenant, its agents or subtenants, originating from the Premises during theLease term, if recommended by a qualified environmental consulting firm.
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          B. Landlord hereby makes the following representations to Tenant, each of which is made onlyto the best of Landlord’s knowledge as of the date Landlord executes this Lease, without anyinquiry or investigation having been made or required by Landlord regarding this subject, nor doesLandlord have any obligation to investigate or make inquiry regarding the subject:               (1) The soil and ground water on or under the Premises does not contain hazardous materials inamounts which violate any laws to the extent that any governmental entity could require eitherLandlord or Tenant to take any remedial action with respect to such hazardous materials.               (2) During the time that Landlord has owned the Premises, Landlord has received no notice of(i) any violation, or alleged violation, of any law that has not been corrected to the satisfactionof the appropriate authority, (ii) any pending claims relating to the presence of hazardousmaterial on the Premises, or (iii) any pending investigation by any governmental agency concerningthe Premises relating to hazardous materials.          C. Landlord *[Illegible]*received from any governmental authority concerning hazardousmaterials which relates to the Premises, and (ii) any contamination of the Premises by hazardousmaterials which constitutes a violation of any law. Attached as Exhibit “C”, hereto is alist of hazardous materials that Tenant intends to use at the Premises. If during the Lease termTenant proposes to use other hazardous materials at the Premises, Tenant shall inform Landlord ofsuch use, identifying the hazardous materials and the manner of their use, storage and disposal,and shall agree (i) to use, store and dispose of such materials strictly in compliance with alllaws and (ii) that the indemnity set forth in paragraph 45A shall be applicable to Tenant’s use ofsuch material.          D. Landlord or Tenant may, at any time, cause testing wells to be installed on the Premises,and may cause the ground water to be tested to detect the presence of hazardous material by the useof such tests as are then customarily used for such purposes. Testing wells installed by Tenantshall be paid for by Tenant. If tests conducted by Landlord disclose that Tenant has violated anyhazardous materials laws, or Tenant or parties on the Premises during the term of this Lease havecontaminated the Premises as determined by regulatory agencies pursuant to hazardous materialslaws, or that Tenant has liability to Landlord pursuant to paragraph 45A, then Tenant shall pay for100% of the cost of the test and all related expense. Prior to the expiration of the Lease term,Tenant shall remove any testing wells it has installed at the Premises, and return the Premises tothe condition existing prior to the installation of such wells, unless Landlord requests in writingthat Tenant leave all or some of the testing wells in which instance the wells requested to be leftshall not be removed.          E. If any tests performed by Tenant or Landlord prior to the Commencement Date disclosehazardous materials at the Premises, Landlord at its expense will promptly take all reasonableaction required by law with respect to the existence of such materials at the Premises. TheCommencement Date shall not be delayed because of such action by Landlord unless occupation of thePremises is prohibited by law.
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          F. The obligations of Landlord and Tenant under this Paragraph 45 shall survive the expirationor earlier termination of the term of this Lease. The rights and obligations of Landlord andTenant with respect to issues relating to hazardous materials are exclusively established by thisParagraph 45.     46. APPROVALS: Whenever this Lease requires the approval or consent of eitherLandlord or Tenant before an action may be taken, such approval or consent shall not beunreasonably withheld or delayed.     47. LANDLORD’S RIGHT TO TERMINATE: It is understood that the Premises to be leased byTenant are to be constructed by Landlord, and that Landlord is required to obtain the necessarybuilding permits for the building shell before construction of said Premises can commence.Therefore, it is agreed that in the event Landlord cannot obtain all the necessary building permitsfor the building shell by June 1, 1990, then either Landlord or Tenant can terminate this Lease bywritten notice to the other party given within thirty (30) days thereafter, without any liabilityto the other party of any type whatsoever, and that this Lease Agreement will be null and void asof the date of receipt of such notice. Landlord agrees to use its best efforts to obtain therequired permits by June 1, 1990.     48. CROSS DEFAULT: As set forth in Paragraph 41C, Landlord and Tenant have enteredinto another lease dated October 31, 1989 referred to herein as the “Companion Lease” affectingproperty contiguous to the Premises leased hereunder. As a material part of the consideration forthe execution of this Lease by Landlord, it is agreed between Landlord and Tenant that a defaultunder this Lease, or a default under said Companion Lease dated October 31, 1989 may, at the optionof Landlord, be considered a default under both leases, in which event Landlord shall be entitled(but in no event required) to apply all rights and remedies of Landlord under the terms of oneLease to both Leases including, but not limited to, the right to terminate one or both of saidleases by reason of a default under said Companion Lease dated October 31, 1989 or hereunder.     49. SUBDIVISION: With respect to the development of the Premises:          A. The parties acknowledge that as of the date this Lease is signed by the last party (the“Effective Date”) the Premises is not constituted as a separate legal parcel, but is part of alarger parcel consisting of approximately 37.096 acres (“Larger Parcel”), all of which is shown bythe site plan attached to the lease as Exhibit “A”. Landlord agrees to use reasonableefforts to cause the Premises to be constituted as a separate legal parcel containing approximately10.531 acres in the approximate area and configuration shown and outlined within the area marked inred on Exhibit “A”, and to use reasonable efforts to cause lot 2, as shown on Exhibit“A” to the companion Lease and lots 3 through 5 as shown on Exhibit “A” to the OptionAgreement (the “Option”) between Landlord and Tenant of even date herewith to be subdivided bymeans of the recordation of a subdivision map by July 1, 1990. In causing such property to besubdivided, Landlord and Tenant agree to consent to reasonable lot line modifications as requiredby the City of Milpitas; provided, however, that the configuration of the Premises shall beestablished in such manner that does not result in a material reduction in the Improvements or inparking, access, or landscape amenities which are shown on the site plan attached to this Lease asExhibit “A”. Tenant agrees to reimburse Landlord for actual expenses paid by Landlord inthe
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preparation, processing and recordation of such subdivision map and to meet other requirementsnecessary to make said lots 1-5 separate lots; provided, however, Tenant’s total reimbursementobligation pursuant hereto, the Companion Lease and the Option shall not exceed Twenty FiveThousand Dollars ($25,000). At such time is Landlord causes any such subdivision to be completed,Landlord and Tenant shall execute an amendment to this Lease which shall set forth the descriptionof the Premises resulting from the subdivision.          B. Landlord and Tenant agree that the Premises and the Larger Parcel during (and limited to)the term of this Lease shall be developed and used only in accordance with a master plan, developedby Landlord. The parties have mutually agreed to a Master Plan for the general development of theentire 37.096 ± acre site which is attached hereto as Exhibit “A” and entitled “Master SitePlan”. Said Master Site Plan sets forth the buildings and land to be leased under this Lease andthe Companion Lease (Building 1 and 2 on Lots 1 and 2), and the buildings and land proposed to bedeveloped on the remainder of the property (Building 3, 4, and 5 to be constructed on Lots 3, 4,and 5 respectively) as well as the general location of the parking and landscaping pertainingthereto. The parties agree that the Master Site Plan may be modified provided that (i) a perimeterdriveway is developed in front of each building which generally runs near and parallel with thestreet surrounding the 37 ± acre site, (ii) a landscape and recreation area at the rear of Lot 4 (asshown on the Site Plan) is developed when a building is constructed on Lot 4 *[Illegible]*streetsbetween the street and parking area closest to the street. The parties agree that (i) Landlord maychange the master plan, shape and sizes of the buildings, parking and landscaping as long as thegeneral development concept set forth above is generally followed by Landlord, and (ii) anysuccessor or assign of Landlord or Tenant shall be required to consent and agree to develop thePremises and the Larger Parcel in accordance with the foregoing, and shall be deemed to haveassumed the obligation to so develop such property by acceptance of a deed, assignment or othermeans of transfer of Landlord’s or Tenant’s interest in such property or any portion thereof, asthe case may be. Further, the memorandum of lease to be recorded by Landlord and Tenant pursuantto paragraph 38G shall contain the following statement:“The Lease provides that from and after the commencement date of the Lease andcontinuing for a period of fifteen years, whichever first occurs, the Premises andthe larger 37.096 acre parcel in which the Premises were originally included, shallbe developed by the parties to the Lease or their successors or assigns, as moreparticularly set forth in the Lease, so that (i) a perimeter, driveway is developedin front of each building which generally runs near and parallel with the streetsurrounding the 37 ± acre site, (ii) a landscape area is developed along the frontageof all streets between the street and parking area closest to the street, (iii) alandscape and recreation area at the rear of Lot 4 (as shown on the Site Planidentified in the Lease) is developed when a building is constructed on Lot 4, and(iv) all buildings will be similar and generally architecturally compatible, itbeing agreed that Landlord may change the shape and sizes of the buildings, parkingand landscaping as long as the general development concept set forth above and inthe Lease is generally followed by Landlord. Tenant understands that the lots shownon the Master Site Plan described in the Lease are for lease purposes only and thatthe lots have not been legally subdivided and do not constitute separate legal lots,but Landlord agrees to use reasonable efforts to cause Lots 1-5 to be
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subdivided in accordance with the approved Master Plan by July 1, 1990. If a PublicAgency requires modifications to the lot lines as shown on the Master Plan, theparties agree to reasonable lot line modifications. Tenant agrees to reimburseLandlord for actual expenses paid by Landlord in the processing and recordation ofsuch subdivision map and to meet all other requirements necessary to make said Lots1-5 separate lots; provided, however, Tenant’s total reimbursement obligation(pursuant to all agreements between Landlord and Tenant) shall in no event exceedTwenty-Five Thousand Dollars ($25,000.00).”     50. LIMITATION ON IMPOSITION OF LATE CHARGE: Notwithstanding anything contained inParagraph 4C, if Tenant is delinquent in the payment of Basic Rent or Additional Rent and issubject to a late charge, Landlord agrees to waive the late charge if the Basic Rent or AdditionalRent due is paid within five days of Landlord’s written notice to Tenant of the delinquent amountowed and provided Tenant has not been delinquent in its payment of Basic Rent or Additional Rentowed under said Lease during the twelve (12) month period preceding the rent delinquency inquestion.     51. SECURITY DEPOSIT: The following provisions shall modify Paragraph 4F:          A. Within thirty (30) days after the expiration or earlier *[Illegible]*Deposit except foramounts that Landlord has deducted therefrom that are needed by Landlord to cure defaults of Tenantunder the Lease or compensate Landlord for damages for which Tenant is liable pursuant to thisLease. The use or disposition of the Security Deposit shall be subject to the provisions ofCalifornia Civil Code Section 1950.7.          B. Tenant shall have the option of satisfying its obligation with respect to an amount equalto one-half (1/2) of the Security Deposit by providing to Landlord, at Tenant’s sole cost, a letterof credit which (i) is drawn upon an institutional lender reasonably acceptable to Landlord, (ii)is in the amount of one-half (1/2) of the Security Deposit, (iii) is for a term of at least twelve(12) months, (iv) with respect to any letter of credit in effect within the six month periodimmediately prior to the expiration of the Lease term, shall provide that the term of such letterof credit shall extend at least thirty (30) days past the Lease expiration date, (v) may be drawnupon by Landlord upon submission of a declaration of Landlord that Tenant is in default (as definedin Paragraph 19 and as modified by Paragraph 60). Landlord shall not be obligated to furnish proofof default to such institutional lender, and Landlord shall only be required to give theinstitutional lender written notification that Tenant is in default and upon receiving such writtennotification from Landlord the institutional lender shall be obligated to immediately deliver cashto Landlord equal to the amount Landlord may spend or become obligated to spend by reason ofTenant’s default or to compensate Landlord for any loss or damage which Landlord may suffer byreason of Tenant’s default up to 1/2 of the total Security Deposit, (vi) shall provide that if theletter of credit is not renewed, replaced or extended within twenty (20) days of its expirationdate the issuer of the credit shall automatically make payment of the amount of the letter ofcredit directly to Landlord after the date which is twenty (20) days before the expiration date,and no later than the expiration date, without Landlord being required to make demand upon theletter of credit, and (vii) is otherwise in form and content reasonably satisfactory to Landlord.If Tenant provides Landlord with a letter of credit meeting the foregoing requirements, one-half(1/2) of the cash Security Deposit (i.e., $210,240.90 of the $420,481.80
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Deposit) shall be returned to Tenant by Landlord inasmuch as the cash deposit remaining andthe Letter of Credit equal the total Security Deposit required in Paragraph 4F. If Tenant defaultswith respect to any provisions of this Lease, including but not limited to provisions relating tothe payment of rent, Landlord may (but shall not be required to) draw down on the letter of creditfor payment of any sum which Landlord may spend or become obligated to spend by reason of Tenant’sdefault, or to compensate Landlord for any loss or damage which Landlord may suffer by reason ofTenant’s default. Landlord and Tenant acknowledge that such letter of credit will be treated as ifit were a cash security deposit, and such letter of credit may be drawn down upon by Landlord upondemand and presentation of evidence of the identity of Landlord to the issuer, in the event thatTenant defaults with respect to any provision of this Lease and such default is not cured withinany applicable cure period. Notwithstanding anything to the contrary in this Lease, Landlord shallnot be obligated to furnish proof of default to such institutional lender and Landlord is onlyrequired to give the institutional lender written notification that Tenant is in default and uponreceiving such written notification from Landlord the institutional lender shall be obligated toimmediately deliver cash to Landlord equal to the amount Landlord may spend or become obligated tospend by reason of Tenant’s default, or to compensate Landlord for any loss or damage whichLandlord may suffer by reason of Tenant’s default up to 1/2 of the total Security Deposit.Landlord acknowledges that it is not entitled to draw down such letter of credit unless Landlordwould have been entitled to draw upon the cash security deposit pursuant to the terms of Paragraph4.F of the Lease. Concurrent with the delivery of the *[Illegible]*the default upon which the drawdown was based, together with evidence that Landlord has provided to Tenant the written notice ofsuch default which was required under the applicable provision of the Lease, and evidence of thefailure of Tenant to cure such default within the applicable grace period following receipt of suchnotice of default. Any proceeds received by Landlord by drawing upon the letter of credit shall beapplied in accordance with the provisions governing the Security Deposit imposed by Paragraph 4Fand this Paragraph 51. If Landlord draws upon the letter of credit, thereafter Tenant shall onceagain shall have the right to post a letter of credit in place of one-half (1/2) of a cash SecurityDeposit so long as Tenant is not then in default. In any event Tenant will be obligated toreplenish the amount drawn to restore the Security Deposit to its original amount as provided forin paragraph 4F. If any portion of the letter of credit is used or applied pursuant hereto, Tenantshall, within ten (10) days after receipt of a written demand therefor from Landlord, restore andreplace the value of such security by either (i) depositing cash with Landlord in the amount equalto the sum drawn down under the letter of credit, or (ii) increasing the letter of credit to itsvalue immediately prior to such application. Tenant’s failure to replace the value of the securityas provided in the preceding sentence shall be a material breach of its obligation under thisLease.     52. ALTERATIONS MADE BY TENANT: The provisions of this Paragraph 52 shall modifyParagraphs 5 and 6:          A. As used herein, the term “Alteration” shall mean any alteration, addition or improvementmade by Tenant to the Premises during the term of the Lease, but shall not include Tenant’s tradefixtures so long as such trade fixtures are not installed in such a manner that they have become anintegral part of the building.          B. Tenant shall not construct any Alterations or otherwise alter the Premises withoutLandlord’s prior written approval if the total cost of such Alterations exceeds $20,000
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per the scope of any single remodeling job to the Premises, or if such Alteration isstructural in nature. Any other non-structural Alteration of less than $20,000 for the total costof the remodeling job may be undertaken by Tenant without Landlord’s prior written approval butwith the understanding that Tenant shall be obligated to restore the Premises as set forth inParagraph 5 at the termination of this Lease, except as otherwise provided in Paragraph 52.D.Notwithstanding the foregoing, Tenant shall have the right to reconfigure modular freestandingwalls and partitions without Landlord’s prior consent, which have been installed by Tenant and paidfor by Tenant.          C. At all times during the Lease Term (i) Tenant shall maintain and keep up dated “as-built”plans for all Alterations constructed by Tenant, and (ii) Tenant shall provide to Landlord copiesof such “as-built” plans as such Alterations are made.          D. Tenant shall have the right to remove at any time during the Lease term or prior to theexpiration thereof any (i) process equipment such as clean hoods, thermal cycling chambers, freonpiping, high temperature furnaces, air handlers and special air-conditioning, (ii) process systemssuch as compressed air or processed exhaust systems and (iii) the clean room modules and allrelated process equipment which are paid for 100% by Tenant (excluding building standard HVAC,electrical, plumbing and other building standard systems which are an integral part of the buildingnot related to Tenant’s clean room modules or other *[Illegible]*Lease shall be deemed to be tradefixtures, so long as Tenant repairs all damage caused by the installation and/or removal thereof,returns the Premises prior to the termination of the Lease to the condition existing prior to theinstallation of such item, and repairs and restores any so-called “doughnuts” or gaps in the roofand/or floor tiles and/or ceiling and lighting resulting from such removal. At the time Tenantrequests the consent of Landlord to approve the installation of an Alteration requiring the consentof Landlord, Tenant shall seek from Landlord a written statement of whether or not Landlord willrequire Tenant to remove such Alteration and restore all or part of the Premises as required byLandlord in accordance with this paragraph and Paragraph 5 at the expiration or earlier terminationof the term of the Lease. If Tenant does not obtain from Landlord a statement in writing thatLandlord will not require such Alteration to be removed, then at the expiration or soonertermination of the term of the Lease, it is agreed that Tenant may be required to remove all orpart of such Alterations, and return the Premises to the condition existing prior to theinstallation of such Alterations as provided for in Paragraph 5 above. In addition, if Tenant hasinstalled Alterations without Landlord’s consent, if Landlord so requires, Tenant shall also removeall or part of such Alterations so installed without Landlord’s consent as Landlord may designateand return the Premises to the condition existing prior to the installation of such Alteration.Alterations for which Landlord has given its written consent to Tenant that such Alteration neednot be removed, shall not be removed by Tenant at the expiration or earlier termination of the termof the Lease.          E. At all times during the term of the Lease, Tenant shall have the right to install andremove trade fixtures as defined in the Lease and installed and paid for by Tenant, so long asTenant repairs all damage caused by the installation thereof and returns the Premises to thecondition existing prior to the installation of such fixtures and repairs and restores any socalled “doughnuts” or gaps in the roof and/or floor (including floor structure, sub-floor andappropriate floor covering for said area) and/or floor tiles and/or ceiling tiles and lightingresulting from such removal.
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     53. STRUCTURAL CAPITAL COSTS REGULATED BY GOVERNMENTAL AGENCIES AFTER THE COMMENCEMENT OF THISLEASE NOT CAUSED BY TENANT OR TENANT’S USES OR REMODELING OF THE PREMISES: The provisions of thisParagraph 53 shall modify Paragraphs 7 and 14:          A. If during the last five (5) years of the term of the Lease if Tenant has not extended theLease as provided for in Paragraphs 42 and 43, or during either of the five (5) year extensionperiods permitted by Paragraphs 42 and 43, it becomes necessary (due to any governmentalrequirement for continued occupancy of the Premises) to make structural improvements required bylaws enacted or legal requirements imposed by governmental agency(s) after the Commencement Date,and the cost for each required work or improvement exceeds $100,000, then if such legal requirementis not imposed because of Tenant’s specific use of the Premises and is not “triggered” by Tenant’sAlterations or Tenant’s application for a building permit or any other governmental approval (inwhich instance Tenant shall be responsible for 100% of the cost of such improvements), Landlordshall be responsible for paying the cost of such improvement and constructing such improvement,subject to a cash contribution from Tenant of a portion of the cost thereof as provided for andcalculated in Paragraph 53B.          B. When Landlord makes an improvement pursuant to Paragraph 53A, and as a condition toLandlord’s obligation to construct such improvement, Tenant shall make the following contributionin cash to Landlord for the cost therefore prior to the *[Illegible]*100% of the cost or the first$100,000.00 worth of each improvement. After the first $100,000.00, all costs above $100,000.00shall be divided by 15 and multiplied by the time period remaining in the last five years of theLease term from the date work on such improvement commences.     For example, if the cost of such improvement was $400,000 and there was one year and sixmonths remaining in the Lease term when the work commenced, then Tenant would be responsible forreimbursing Landlord in cash $130,000 computed as follows:         Total Cost of Work     $400,000.00 Tenant Responsible for1st $100,000      -100.000.00         Total Amount To Be Amortized      300,000.00          $300,000.00/15— $20,000/yr. x 1.5 yrs  =  $30,000.00          Tenant responsible for $100,000 + 30,000  =  $130,000.00           C. If Landlord has made improvements, for which Tenant has reimbursed Landlord for the costthereof pursuant to Paragraph 53B, and the term of this Lease is subsequently extended pursuant tothe exercise by Tenant of an option to renew pursuant to Paragraph 42 or 43, upon the exercise ofany such option by Tenant, Tenant shall pay to Landlord an additional sum equal to the total amountof said improvement less the amount previously paid for by Tenant. Using the example in Paragraph53B above, Tenant would owe Landlord the additional amount of $270,000.00 ($400,000.00 -$130,000.00 = $270,000.00).
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     54. REAL PROPERTY TAXES: Paragraph 9 is modified by the following:          A. The term “Real Property Taxes” shall not include charges, levies or fees directly relatedto the use, storage, disposal or release of hazardous materials on the Premises unless directlyrelated to Tenant’s activities, which subject is exclusively governed by Paragraph 45.          B. If any assessments for public improvements are levied against the Premises, Landlord mayelect either to pay the assessment in full or to allow the assessment to go to bond. If Landlordpays the assessment in full, Tenant shall pay to Landlord or any assignee or purchaser of thePremises each time payment of Real Property Taxes is made a sum equal to that which would have beenpayable (as both principal and interest) had Landlord allowed the assessment to go to bond.          C. Tenant at its cost shall have the right, at any time, to seek a reduction in the assessedvaluation of the Premises or to contest any Real Property Taxes that are to be paid by Tenant. IfTenant seeks a reduction or contests such Real Property Taxes, the failure on Tenant’s part to paysuch Real Property Taxes being so contested shall not constitute a default so long as Tenantcomplies with the provisions of this Paragraph. Landlord shall not be required to join in anyproceeding or contest brought by Tenant unless the provisions of any law require that theproceeding or contest be brought by or in the name of Landlord. In that case Landlord shall joinin the proceedings or contest or permit it to be brought in Landlord’s name as long as Landlord isnot required to bear any cost. Tenant, on final determination of the proceeding or contest, shallimmediately pay or discharge its share of any Real Property Taxes determined by any decision orjudgment rendered, together with all costs, charges, interest, and penalties incidental to the*[Illegible]*contests them as provided in this paragraph, before the commencement of the proceedingor contest Tenant shall furnish to Landlord a surety bond in form reasonably satisfactory toLandlord issued by an insurance company qualified to do business in California. The amount of thebond shall equal 125% of the total amount of Real Property Taxes in dispute and any such bond shallbe assignable to any lender or purchaser of the Premises. The bond shall hold Landlord and thePremises harmless from any damage arising out of the proceeding or contest and shall insure thepayment of any judgment that may be rendered.     55. PROPERTY INSURANCE: Paragraph 12 is modified by the following:          A. If Tenant so elects, Tenant may obtain from a third party insurance company the insurancerequired to be carried by Landlord pursuant to Paragraph 12 so long as each of the followingconditions is satisfied: (i) the Landlord is not the John Arrillaga and Richard T. Peery SeparateProperty Trusts or an affiliated entity; (ii) the insurance to be carried by Tenant to satisfy thisrequirement strictly complies with all of the provisions of Paragraph 12; (iii) such insuranceshall name Landlord as the insured and provide that it is to be payable to Landlord in the samemanner as if such insurance had been carried by Landlord pursuant to Paragraph 12 (subject to therights of any lender holding a mortgage or deed of trust encumbering the Premises); (iv) eachlender holding a mortgage or deed or trust encumbering the Premises shall have given its writtenconsent to Tenant carrying such insurance and such insurance shall comply with the requirements ofany such lender; (v) Tenant must notify Landlord, by certified mail, no later than one hundredeighty (180) days prior to the expiration
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date of Landlord’s insurance policy (which expiration date is currently 3/13/xx of a givenyear and is subject to change), that Tenant will directly obtain the required insurance coveragefor the insurance year commencing 3/14/XX through 3/13/XX and each insurance year through thetermination data of this Lease, or until Tenant is no longer able to comply with all of theprovisions of this paragraph 55; (vi) the annual premium must be paid in full at the commencementof the policy; (vii) the insurance policy must be issued for a one-year period following theexpiration date of Landlord’s insurance policy (i.e., from 3/14/XX to 3/13/XX); (viii) anyand all deductibles required under the policy will be paid entirely by Tenant; (ix) the terms ofthe coverage must be broad form and cover all items to be covered as set forth in Paragraph 12 ofthis Lease; (x) the Building and Premises must be insured for their full replacement cost; (xi) theinsurance policy containing the required coverage in accordance with the provisions of thisparagraph must be sent to Landlord for retention within thirty (30) days prior to the expirationdate of Landlord’s insurance policy, and may not be terminated or altered without thirty (30) dayswritten notice to Landlord by the company providing such insurance (it is agreed that if theinsurance policy is cancelled or altered, Landlord will have the right to obtain the propertyinsurance coverage on said building, and Landlord will bill the Tenant for the related insurancepremium); and (xii) at all times while Tenant is so carrying such insurance, Tenant is QuantumCorporation or a successor entity and the then net worth of such corporation is substantially thesame as the net worth of Quantum Corporation as of the date of this Lease is executed by Landlordand Tenant. Tenant shall provide such evidence as is required by Landlord and any lender toestablish that the insurance that Tenant carries pursuant to this Paragraph 55 has been obtainedand meets the requirement of this Paragraph 55. Such insurance carried by Tenant shall be in formand provided by an insurance company that is reasonably acceptable to Landlord, which must be rated“A plus” or better by Best’s Insurance Service (or an equivalent rating from anther rating agencyshould Best’s no longer provide *[Illegible]*insurance provided by Tenant does not satisfy therequirements of paragraph 12, in the event of a subsequent casualty, Tenant shall be responsiblefor and shall pay for that portion of the restoration cost, in excess of the insurance proceedsactually available, that would have been covered by insurance satisfying the requirements ofparagraph 12.          B. Tenant shall not obligated to contribute to the cost of earthquake insurance more than anamount equal to six (6) times the then annual cost of fire and “all risk” insurance per year. Forexample, if the 1993 annual premium for fire and “all risk” insurance is $9,000, then Tenant’sshare of the cost of any premium for earthquake insurance for the following year (1994) shall belimited to $54,000 ($9,000 x 6). Tenant shall have the right to require earthquake insuranceproviding it is available if Tenant agrees to pay full cost thereof.     56. ASSIGNMENT AND SUBLETTING: The following modifications are made to Paragraph 16:          A. In the event that Tenant seeks to make any assignment or sublease, then Landlord, by givingTenant written notice of its election within fifteen (15) days after Tenant’s notice of intent toassign or sublease has been given to Landlord, shall have the right to elect (i) to withhold itsconsent to such assignment or sublease, as permitted pursuant to Paragraph 16, or (ii) to permitTenant to so assign the Lease or sublease such part of the Premises, in which event Tenant may doso, but without being released of its liability for the performance of all of its
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obligations under the Lease, and the following shall apply (except the following shall notapply to a “Permitted Transfer” described in Paragraph 57):               (1) If Tenant assigns its interest in this Lease, then in addition to the rental provided forin this Lease, Tenant shall pay to Landlord fifty percent (50%) of all consideration received byTenant over and above (i) the assignee’s agreement to assume the obligations of Tenant under thisLease and (ii) all “Permitted Transfer Costs” (as defined herein) related to such assignment. Asused herein, the term “Permitted Transfer Costs” shall mean all reasonable leasing commissions paidto third parties not affiliated with Tenant in order to obtain the assignment or sublease inquestion.               (2) (If Tenant sublets all or part of the Premises, then Tenant shall pay to Landlord inaddition to the rental provided for in this Lease fifty percent (50%) of the positive difference,if any, between (i) all rent and other consideration paid by the subtenant to Tenant, less (ii) allrent paid by Tenant to Landlord pursuant to this Lease which is allocable to the area so sublet andall Permitted Transfer Costs related to such sublease. After Tenant has recovered all PermittedTransfer Costs Tenant shall pay to Landlord the amount specified in the preceding sentence on thesame basis, whether periodic or in lump sum that such rent and other consideration is paid toTenant by its subtenant, within seven (7) days after it is received by Tenant.               (3) Tenant’s obligations under this subparagraph shall survive any assignment or sublease. Atthe time Tenant makes any payment to Landlord required by this subparagraph, Tenant shall deliveran itemized statement of the method by which the amount to which Landlord is entitled wascalculated, certified by Tenant as true and correct. Landlord shall have the right to inspectTenant’s books and records relating to the payments due pursuant to this subparagraph. Uponrequest therefor, Tenant shall deliver to *[Illegible]*               (4) As used herein, the term “consideration” shall mean any consideration of any kindreceived, or to be received, by Tenant as a result of the assignment or sublease, if such sums arepaid for Tenant’s interest in this Lease or in the Premises.     57. PERMITTED ASSIGNMENTS AND SUBLEASES: Notwithstanding anything contained inParagraph 16, so long as Tenant otherwise complies with the provisions of Paragraph 16 and thePermitted Transfer does not release Tenant from its obligations hereunder, Tenant may enter intoany of the following transfers (a “Permitted Transfer”) without Landlord’s prior written consent,and the provisions of Paragraph 56A shall not apply to any such Permitted Transfer:          A. Tenant may sublease all or part of the Premises or assign its interest in this Lease to anycorporation which controls, is controlled by, or is under common control with Tenant by means of anownership interest of more than fifty percent (50%) providing Tenant remains liable for the paymentof rent and full performance of the lease;          B. Tenant may assign its interest in the Lease to a corporation which results from a merger,consolidation or other reorganization in which Tenant is not the surviving corporation so long as95% of all assets of Tenant are permanently transferred to such assignee.
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In the event there is not a permanent transfer of 95% or more of the assets and liabilitiesfrom Tenant to a third party, and Tenant continues to exist as a separate entity, both companiesshall be jointly and severally liable for the full terms and conditions of the Lease;          C. Tenant may assign this Lease to a corporation which purchases or otherwise acquires 95% ormore of the assets of Tenant so long as 95% of all assets of Tenant are permanently transferred tosuch assignee (in the event there is not a permanent transfer of 95% or more of the assets andliabilities from Tenant to a third party and Tenant continues to exist as a separate entity, bothcompanies shall be jointly and severally liable for the full terms and conditions of the Lease).     58. SUBORDINATION AND MORTGAGES: Paragraph 17 is modified to provide that this Leaseshall not be subordinate to a mortgage or deed of trust unless the Lender holding such mortgage ordeed of trust enters into a written subordination, non-disturbance and attornment agreement inwhich the Lender agrees that notwithstanding any subordination of this Lease to such Lender’smortgage or deed of trust, (i) such Lender shall recognize all of Tenant’s rights under this Lease,and (ii) in the event of a foreclosure this Lease shall not be terminated so long as Tenant is notin material default of its obligations under this Lease, but shall continue in effect and Tenantand such Lender (or any party acquiring the Premises through such foreclosure) shall each be boundto perform the respective obligations of Tenant and Landlord with respect to the Premises arisingafter such foreclosure.     59. LANDLORD’S RIGHT TO ENTER: Notwithstanding the provisions of Paragraph 18, (i)except in the event of an emergency, Landlord shall give Tenant twenty-four (24) hours notice priorto entering the Premises, agrees to comply with any reasonably safety and/or security regulationsimposed by Tenant with respect to such entry, and shall only enter the Premises when accompanied byTenant or its agent (so long as Tenant makes itself reasonably available for this purpose), and(ii) Landlord may install “for lease” signs relating to the Premises only during the last 150 daysof the Lease term. Landlord agrees to use *[Illegible]*.and invitees shall be performed in a mannerwith as minimal interference as possible with Tenant’s business at the Premises. Subject to theforegoing, Tenant agrees to cooperate with Landlord and Landlord’s agents, employees andcontractors so that responsibilities of Landlord under the Lease can be fulfilled in a reasonablemanner during normal business hours so that no extraordinary costs are incurred by Landlord.     60. BANKRUPTCY AND DEFAULT: Paragraph 19 is modified to provide that with respect tonon-monetary defaults not involving Tenant’s failure to pay Basic Rent or Additional Rent, Tenantshall not be in default of any non-monetary obligation if (i) more than thirty (30) days isrequired to cure such non-monetary default, and (ii) Tenant commences cure of such default as soonas reasonably practicable after receiving written notice of such default from Landlord andthereafter continuously and with due diligence prosecutes such cure to completion.     61. ABANDONMENT: Paragraph 20 is modified to provide that Tenant shall not be indefault under the Lease if it leaves all or any part of Premises vacant so long as (i) Tenant isperforming all of its other obligations under the Lease including the obligation to pay Basic Rentand Additional Rent, (ii) Tenant provides on-site security during normal business hours for thoseparts of the Premises left vacant, (iii) such vacancy does not materially and adversely affect the
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validity or coverage of any policy of insurance carried by Landlord with respect to thePremises, and (iv) the utilities and heating and ventilation system are operated to the extentnecessary to prevent damage to the Premises or its systems.     62. DESTRUCTION: Paragraph 21 is modified by the following:          A. Except as provided in Paragraph 62B, Landlord may not terminate the Lease if the Premisesare damaged by a peril that is covered by the insurance carried by Landlord pursuant to Paragraph12, but instead shall restore the Premises in the manner described by Paragraph 21.          B. If the Premises are damaged by a peril covered by the insurance carried by Landlordpursuant to Paragraph 12, Landlord shall have the option to terminate the Lease if each of thefollowing conditions is satisfied: (i) the cost to repair or the damage exceeds thirty-threepercent (33%) of the then replacement cost of the Premises; and (ii) the damage occurs at a timewhen there is less than five (5) years remaining in the term of the Lease. Notwithstanding theforegoing, if such damage occurs at a time when there is less than five (5) years remaining in theterm of the Lease and Landlord notifies Tenant of Landlord’s election to terminate the Leasepursuant to the provisions of this Paragraph 62B, if Tenant has the right to extend the term ofthis Lease pursuant to either Paragraph 42 or 43 such that the remaining term of the Lease(including the option period) will be more than five (5) years following the date of such damage,this Lease shall not terminate if Tenant notifies Landlord in writing of Tenant’s exercise of anoption to extend granted to Tenant by either Paragraph 42 or 43. In such event, this Lease shallnot terminate, the term shall be so extended, and Landlord shall restore the Premises in the mannerprovided in Paragraph 21.          C. If the Premises are damaged by any peril, then as soon as reasonably practicable, Landlordshall furnish Tenant with the *[Illegible]*completed. Tenant shall have the option to terminatethis Lease in the event any of the following occurs, which option may be exercised only by deliveryto Landlord of a written notice of election to terminate within seven (7) days after Tenantreceives from Landlord the estimate of the time needed to complete such restoration:               (1) The Premises are damaged by any peril and, in the reasonable opinion of Landlord’sarchitect or construction consultant, the restoration of the Leased Premises cannot besubstantially completed within 180 days after the date of such damage; or               (2) The Premises are damaged by any peril within twelve (12) months of the last day of theLease term and provided Tenant has not exercised an option to renew pursuant to the provisions ofParagraph 42 or 43, and, in the reasonable opinion of Landlord’s architect or constructionconsultant, the restoration of the Leased Premises cannot be substantially completed within sixty(60) days after the date of such damage.     63. EMINENT DOMAIN: Paragraph 22 is modified by the following:     Landlord may not terminate the Lease if less than 1/3 of the building is taken by condemnationor if a taking by condemnation is only threatened.
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     64. TRANSFER BY LANDLORD: The provisions of Paragraph 23 of the Lease to the contrarynotwithstanding, Landlord shall not be relieved of its obligations under the Lease which may accrueafter the date of a sale or other transfer unless and until (i) the transferee agrees to assume andbe bound by the terms of this Lease and to perform all obligations of the landlord under the Leasewhich may accrue after the date of such transfer, and (ii) Landlord transfers the Security Depositto its successor in interest (transferee) in accordance with the provisions of California CivilCode Section 1950.7, as amended or recodified.     65. LANDLORD’S LIEN WAIVER: Landlord, within thirty (30) days after demand fromTenant, shall execute and deliver such lien waiver documents that are reasonably required by anysupplier, lessor, or lender in connection with the installation in the Premises of the Tenant’spersonal property or trade fixtures providing Landlord approves the form of any such waiver andLandlord’s rights under this Lease are not materially and adversely affected.         QUANTUM CORPORATION   JOHN ARRILLAGA SEPARATE PROPERTYa Delaware corporation   TRUST         By   /s/ Joseph C. Shepela   By   /s/ John Arrillaga                 John Arrillaga, Trustee         By   VP Human Resources   RICHARD T. PEERY SEPARATE PROPERTY               TRUST               By   /s/ Richard Peery                 Richard T. Peery, Trustee
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AMENDMENT NO. 1     THIS AMENDMENT NO. 1 is made and entered into this 24th day of April, 1990, by and betweenJOHN ARRILLAGA, Trustee, or his Successor Trustee UTA dated 7/20/77 (JOHN ARRILLAGA SEPARATEPROPERTY TRUST) as amended, and RICHARD T. PEERY, Trustee, or his Successor Trustee UTA dated7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY TRUST) as amended, as LANDLORD, and QUANTUMCORPORATION, a Delaware corporation, as TENANT.RECITALS     A. WHEREAS, by Lease Agreement dated October 31, 1989, Landlord leased to Tenant all of thatcertain 155,734 ± square foot building located at Bellew Drive and Magnolia Drive, Milpitas,California, the details of which are more particularly set forth in said October 31, 1989 LeaseAgreement, and     B. WHEREAS, it is now the desire of the parties hereto to amend said Lease to reflect thedelay of the Commencement Date of the Lease from December 15, 1990 to April 1, 1991 and to amendthe Basic Rent schedule accordingly; deletion of the Phase In Right of said Lease; and commencementof payment of Additional Rent as of December 15, 1990; as hereinafter set forth.AGREEMENT     NOW THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, and inconsideration of the hereinafter mutual promises, the parties hereto do agree as follows:     1. LEASE TERM AND COMMENCEMENT DATE: Paragraph 41.B. of the Lease is amended bychanging the reference to the December 15, 1990 Commencement Date to April 1, 1991. Subjectparagraph will be amended to read as follows:     “B. Commencement Date Defined: As used herein, the term “Commencement Date” shallmean the later to occur of the following: (i) the date upon which the “Improvements” are“Substantially Completed”; or (ii) April 1, 1991; provided, however, that if prior to the later ofsuch dates Tenant’s operating personnel enter into occupancy of the Premises and commence theoperation of Tenant’s business within the Premises, the Commencement Date shall be the date suchpersonnel of Tenant so enter into occupancy of the Premises. The term “Substantially Completed”and/or “Substantial Completion” shall mean the date when all of the following have occurred withrespect to the Improvements in question: (i) the construction of the Improvements in question hasbeen substantially completed in accordance with the approved plans therefore except for punch listitems which do not prevent Tenant from reasonably using the Premises to conduct Tenant’s business;(ii) Landlord has executed a certificate or statement representing that the Improvements inquestion have been substantially completed in accordance with the plans and specificationstherefore except for punch list items which do not prevent Tenant from reasonably using thePremises to conduct Tenant’s business; and (iii) the Building Department of the City of Milpitashas completed its final inspection of such Improvements and has “signed off” the buildinginspection card approving such work as complete except for punch list items
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which do not prevent Tenant from reasonably using the Premises to Conduct-Tenant’s business.Notwithstanding the foregoing, Substantial Completion of the Interior Improvements shall not bedeemed to have occurred until Landlord has obtained final or conditional approval from the FireDepartment of the City of Milpitas that the Improvements have been completed in accordance withsuch department’s requirements (subject only to conditions that do not prevent Tenant fromoccupying the Improvements).”     2. DELETION OF “BASIC RENT REDUCTION DURING PHASE IN PERIOD”: As a materialinducement to Landlord to postpone the commencement of the Lease Agreement, Paragraph 40 shall bedeleted in its entirety, and Tenant will be responsible for paying Basic Rent to Landlord, from theCommencement Date of said Lease, on the entire 155,734 ± square foot building.     3. COMMENCEMENT OF PAYMENT OF ADDITIONAL RENT: Notwithstanding the commencement dateof this Lease as stated above, Tenant shall be responsible for paying one hundred percent (100%) ofthe Additional Rent Expenses as outlined in Paragraph 4.D. of said Lease Agreement for the entire155,734+ square foot Lease Premises commencing December 15, 1990.     4. BASIC RENT SCHEDULE: Furthermore, as Landlord is accommodating Tenant in deferringthe Commencement Date of said Lease from December 15, 1990 to April 1, 1991, the parties haveagreed that the Basic Rent increases will be calculated from December 15, 1990 and that Paragraph39 “Basic Rent” of said Lease Agreement shall be amended as follows:     Period Monthly Basic RentMonths 1-13 $1.00/sfMonths 14-25 $1.05/sfMonths 26-37 $1.10/sfMonths 38-49 $1.15/sfMonths 50-61 $1.20/sfMonths 62-73 $1.25/sfMonths 74-85 $1.30/sfMonths 86-97 $1.35/sfMonths 98-109 $1.40/sfMonths 110-121 $1.45/sfMonths 122-133 $1.50/sf
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     Period Monthly Basic RentMonths 134-145 $1.55/sfMonths 146-157 $1.60/sfMonths 158-169 $1.65/sfMonths 170-185 $1.70/sf     5. LANDLORD’S RIGHT TO TERMINATE: Paragraph 47 of the Lease is amended by deletingthe references to June 1, 1990 and adding in lieu thereof references to August 1, 1990. Subjectparagraph will be amended to read as follows:     “It is understood that the Premises to be leased by Tenant are to be constructed by Landlord,and that Landlord is required to obtain the necessary building permits for the building shellbefore construction of said Premises can commence. Therefore, it is agreed that in the eventLandlord cannot obtain all the necessary building permits for the building shell by August 1, 1990,then either Landlord or Tenant can terminate this Lease by written notice to the other party givenwithin thirty (30) days thereafter, without any liability to the other party of any the whatsoever,and that this Lease Agreement will be null and void as of the date of receipt of such notice.Landlord agrees to use its best efforts to obtain the required permits by August 1, 1990.”     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of said October 31, 1989Lease Agreement shall remain in full force and effect.     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 1 to Lease as of theday and year first hereinabove set forth.           LANDLORD:   TENANT:             JOHN ARRILLAGA SEPARATE   QUANTUM CORPORATION  PROPERTY TRUST   a Delaware corporation             By /s/ John Arrillaga   By /s/ Joseph C. Shepala     John Arrillaga, Trustee                   RICHARD T. PEERY SEPARATE PROPERTY TRUST   Title:  VP Human Resources            By /s/ Richard Peery   Dated:  6/12/90             Richard T. Peery, Trustee        
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AMENDMENT No. 2     THIS AMENDMENT NO. 2 is made and entered into this 26th day of June, 1991, by and between JOHNARRILLAGA, Trustee, or his Successor Trustee UTA dated 7/20/77 (JOHN ARRILLAGA SEPARATE PROPERTYTRUST) as amended, and RICHARD T. PEERY, Trustee, or his Successor Trustee UTA dated 7/20/77(RICHARD T. PEERY SEPARATE PROPERTY TRUST) as amended, as LANDLORD, and QUANTUM CORPORATION, aDelaware corporation, as TENANT.RECITALS     A. WHEREAS, by Lease Agreement dated October 31, 1989 Landlord leased to Tenant all of thatcertain 155,734 ± square foot building located at 1130 Bellew Drive Milpitas, California, thedetails of which are more particularly set forth in said October 31, 1989 Lease Agreement, and     B. WHEREAS, the Lease was amended by Amendment No. 1 dated April 24, 1990 to delay theCommencement Date of the Lease from December 15, 1990 to April 1, 1991, and     C. WHEREAS, the Lease was amended by Commencement Letter dated March 4, 1991 to commence theLease March 1, 1991, and     D. WHEREAS, it is now the desire of the parties hereto to: (1) extend the Term for two (2)months so the termination date of said Lease will coincide with the termination date of the“Companion Lease” (additional premises leased from Landlord at 490 McCarthy Blvd., Milpitas,California); and (2) amend the Basic Rent schedule and aggregate Rent of said Lease Agreement ashereinafter set forth.AGREEMENT     NOW THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, and inconsideration of the hereinafter mutual promises, the parties hereto do agree as follows:     1. TERM OF LEASE: Pursuant to Lease Paragraph 41.C. “Lease Terms Co-extensive”, it isagreed between the parties that the term of said Lease Agreement shall be extended for anadditional two (2) months and the Lease termination date is hereby extended from July 31, 2006 toSeptember 30, 2006.     2. BASIC RENTAL FOR EXTENDED TERM OF LEASE: The monthly Basic Rental for the ExtendedTerm of the Lease shall be as follows:     On August 1, 2006 the sum of TWO HUNDRED SIXTY FOUR THOUSAND SEVEN HUNDRED FORTY SEVEN AND80/100 DOLLARS ($264,747.80) shall be due, and a like sum due on the first day of each monththereafter, through and including September 1, 2006.     The aggregate rental for the lease shall be increased by $529,495.60 or from $39,058,087.20 to$39,587,582.80.
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     3. OPTION TO EXTEND PURSUANT TO PARAGRAPHS 42 AND 43 OF THE LEASE: Pursuant toParagraph 42 “First Five-Year Option to Extend” and Paragraph 43 “Second Five-Year Option toExtend”, the latest dates Tenant may exercise its first and second five-year options to extend, asspecified in the aforementioned Paragraphs, are April 3, 2006 and April 3, 2011, respectively.     EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and conditions of said October 31, 1989Lease Agreement shall remain in full force and effect.     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment No. 2 to Lease as of theday and year first hereinabove set forth.         LANDLORD:   TENANT:         JOHN ARRILLAGA SEPARATE   QUANTUM CORPORATIONPROPERTY TRUST   a Delaware corporation         By /s/ John Arrillaga   By /s/ Joseph C. Shepala           John Arrillaga, Trustee               RICHARD T. PEERY SEPARATE PROPERTY TRUST   Title:  VP Human Resources         By /s/ Richard Peery   Dated: 7/19/91           Richard T. Peery, Trustee      
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Quantum 2AMENDMENT NO. 3