exv10w33



 




Exhibit 10.33


LEASE

BY AND BETWEEN




TRINET MILPITAS ASSOCIATES, LLC,

a Delaware limited liability company




as Landlord


and




LSI LOGIC CORPORATION,

a Delaware corporation




as Tenant




February 20,  2004




1855 Barber Lane

MILPITAS, CALIFORNIA




 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	ARTICLE 1 REFERENCE	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	1.1	 	 	References
	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 2 LEASED PREMISES TERM AND POSSESSION	 	 	3	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	2.1	 	 	Demise Of Leased Premises
	 	 	3	 
	

	 	 	2.2	 	 	Intentionally Deleted
	 	 	3	 
	

	 	 	2.3	 	 	Lease Commencement Date; Lease Term
	 	 	3	 
	

	 	 	2.4	 	 	Delivery Of Possession and Termination of Existing Lease; Tenant’s Right to
Terminate
	 	 	3	 
	

	 	 	2.5	 	 	Acceptance Of Possession
	 	 	4	 
	

	 	 	2.6	 	 	Surrender Of Possession
	 	 	4	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 3 RENT, LATE CHARGES AND SECURITY DEPOSITS	 	 	4	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	3.1	 	 	Base Monthly Rent
	 	 	4	 
	

	 	 	3.2	 	 	Additional Rent
	 	 	5	 
	

	 	 	3.3	 	 	Year-End Adjustments; Audits
	 	 	5	 
	

	 	 	3.4	 	 	Late Charge, And Interest On Rent In Default
	 	 	6	 
	

	 	 	3.5	 	 	Payment Of Rent
	 	 	6	 
	

	 	 	3.6	 	 	Prepaid Rent
	 	 	6	 
	

	 	 	3.7	 	 	Security Deposit
	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 4 USE OF LEASED PREMISES AND OUTSIDE AREA	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	4.1	 	 	Permitted Use
	 	 	7	 
	

	 	 	4.2	 	 	General Limitations On Use
	 	 	7	 
	

	 	 	4.3	 	 	Noise And Emissions
	 	 	8	 
	

	 	 	4.4	 	 	Trash Disposal
	 	 	8	 
	

	 	 	4.5	 	 	Parking
	 	 	8	 
	

	 	 	4.6	 	 	Signs
	 	 	8	 
	

	 	 	4.7	 	 	Compliance With Laws And Private Restrictions
	 	 	8	 
	

	 	 	4.8	 	 	Compliance With Insurance Requirements
	 	 	8	 
	

	 	 	4.9	 	 	Landlord’s Right To Enter
	 	 	9	 
	

	 	 	4.10	 	 	Use Of Outside Areas
	 	 	9	 
	

	 	 	4.11	 	 	Environmental Protection
	 	 	9	 
	

	 	 	4.12	 	 	Rules And Regulations
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 5 REPAIRS, MAINTENANCE, SERVICES AND UTILITIES	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	5.1	 	 	Repair And Maintenance
	 	 	11	 
	

	 	 	5.2	 	 	Utilities
	 	 	12	 
	

	 	 	5.3	 	 	Security
	 	 	12	 
	

	 	 	5.4	 	 	Energy And Resource Consumption
	 	 	12	 
	

	 	 	5.5	 	 	Limitation Of Landlord’s Liability	 	 	12	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 6 ALTERATIONS AND IMPROVEMENTS	 	 	12	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	6.1	 	 	By Tenant
	 	 	12	 
	

	 	 	6.2	 	 	Ownership Of Improvements
	 	 	13	 
	

	 	 	6.3	 	 	Alterations Required By Law
	 	 	13	 
	

	 	 	6.4	 	 	Liens	 	 	14	 






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	 	 	 	 	 	 	 	 	 	Page	 
	

	 	 	 	 	 	 	 	 	14	 
	ARTICLE 7 ASSIGNMENT AND SUBLETTING BY TENANT	 	 	14	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	7.1	 	 	By Tenant
	 	 	14	 
	

	 	 	7.2	 	 	Permitted Transfers
	 	 	15	 
	

	 	 	7.3	 	 	Landlord’s Election
	 	 	15	 
	

	 	 	7.4	 	 	Conditions To Landlord’s Consent
	 	 	15	 
	

	 	 	7.5	 	 	Assignment Consideration And Excess Rentals Defined
	 	 	16	 
	

	 	 	7.6	 	 	Payments
	 	 	17	 
	

	 	 	7.7	 	 	Good Faith
	 	 	17	 
	

	 	 	7.8	 	 	Effect Of Landlord’s Consent
	 	 	17	 
	

	 	 	7.9	 	 	Options Personal
	 	 	17	 
	

	 	 	7.10	 	 	Tenant’s Remedies
	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 8 LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	8.1	 	 	Limitation On Landlord’s Liability And Release
	 	 	17	 
	

	 	 	8.2	 	 	Tenant’s Indemnification Of Landlord
	 	 	18	 
	

	 	 	8.3	 	 	Landlord’s Indemnification of Tenant
	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 9 INSURANCE	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	9.1	 	 	Tenant’s Insurance
	 	 	18	 
	

	 	 	9.2	 	 	Landlord’s Insurance
	 	 	19	 
	

	 	 	9.3	 	 	Mutual Waiver Of Subrogation
	 	 	20	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 10 DAMAGE TO LEASED PREMISES	 	 	20	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	10.1	 	 	Landlord’s Duty To Restore
	 	 	20	 
	

	 	 	10.2	 	 	Insurance Proceeds
	 	 	20	 
	

	 	 	10.3	 	 	Landlord’s Right To Terminate
	 	 	20	 
	

	 	 	10.4	 	 	Tenant’s Right To Terminate
	 	 	21	 
	

	 	 	10.5	 	 	Tenant’s Waiver
	 	 	21	 
	

	 	 	10.6	 	 	Abatement Of Rent
	 	 	21	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 1 1 CONDEMNATION	 	 	21	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	11.1	 	 	Tenant’s Right To Terminate
	 	 	21	 
	

	 	 	11.2	 	 	Landlord’s Right To Terminate
	 	 	21	 
	

	 	 	11.3	 	 	Restoration
	 	 	22	 
	

	 	 	11.4	 	 	Temporary Taking
	 	 	22	 
	

	 	 	11.5	 	 	Division Of Condemnation Award
	 	 	22	 
	

	 	 	11.6	 	 	Abatement Of Rent
	 	 	22	 
	

	 	 	11.7	 	 	Taking Defined
	 	 	22	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 12 DEFAULT AND REMEDIES	 	 	22	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	12.1	 	 	Events Of Tenant’s Default
	 	 	22	 
	

	 	 	12.2	 	 	Landlord’s Remedies
	 	 	23	 
	

	 	 	12.3	 	 	Landlord’s Default And Tenant’s Remedies
	 	 	24	 
	

	 	 	12.4	 	 	Limitation Of Tenant’s Recourse
	 	 	25	 
	

	 	 	12.5	 	 	Tenant’s Waiver
	 	 	25	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 13 GENERAL PROVISIONS	 	 	25	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	13.1	 	 	Taxes On Tenant’s Property
	 	 	25	 
	

	 	 	13.2	 	 	Holding Over
	 	 	26	 
	

	 	 	13.3	 	 	Subordination To Mortgages
	 	 	26	 
	

	 	 	13.4	 	 	Tenant’s Attornment Upon Foreclosure
	 	 	26	 
	

	 	 	13.5	 	 	Mortgagee Protection
	 	 	27	 






- ii -









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	Page	 
	

	 	 	13.6	 	 	Estoppel Certificates
	 	 	27	 
	

	 	 	13.7	 	 	Financial Statements and Information
	 	 	27	 
	

	 	 	13.8	 	 	Transfer By Landlord
	 	 	27	 
	

	 	 	13.9	 	 	Force Majeure
	 	 	28	 
	

	 	 	13.10	 	 	Notices
	 	 	28	 
	

	 	 	13.11	 	 	Attorneys’ Fees
	 	 	28	 
	

	 	 	13.12	 	 	Definitions
	 	 	29	 
	

	 	 	13.13	 	 	General Waivers
	 	 	30	 
	

	 	 	13.14	 	 	Miscellaneous
	 	 	31	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 14 CORPORATE AUTHORITY BROKERS AND ENTIRE AGREEMENT	 	 	31	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	14.1	 	 	Corporate Authority
	 	 	31	 
	

	 	 	14.2	 	 	Brokerage Commissions
	 	 	31	 
	

	 	 	14.3	 	 	Entire Agreement
	 	 	31	 
	

	 	 	14.4	 	 	Landlord’s Representations
	 	 	32	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 15 OPTIONS TO EXTEND	 	 	32	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 16 TELEPHONE SERVICE	 	 	34	 






- iii -









 






LEASE




     This
Lease, dated February 20, 2004 (the “Effective Date of this Lease”), is
made by and between
Trinet
Milpitas Associates,
LLC, a Delaware limited liability company
(“Landlord”), and LSI
Logic CORPORATION, a Delaware corporation (“Tenant”).



ARTICLE 1




REFERENCE




1.1 References. All references in this Lease (subject to any further clarifications
contained in this Lease) to the following terms shall have the following meaning or refer to the
respective address, person, date, time period, amount, percentage, calendar year or fiscal year as
below set forth:




	 	 	 
	Tenant’s Address for Notice:
	 	LSI Logic Corporation
	 
	 	1621 Barber Lane, M/S D-106
	 
	 	Milpitas, California 95035-7458 
	 
	 	Attn: General Counsel
	 
	 	 
	 
	 	 
	 
	 	With a required copy to:
	 
	 	 
	 
	 	LSI Logic Corporation
	 
	 	  1621 Barber Lane, M/S D-129
	 
	 	Milpitas, California 95035-7458
	 
	 	 Attn: Corporate Real Estate
	 
	 	 
	Landlord’s Address for Notices:
	 	c/o iStar Financial Inc.
	 
	 	One Embarcadero Center
	 
	 	Suite 3300
	 
	 	San Francisco, CA 94111
	 
	 	 
	Landlord’s Representative:
	 	Erich Stiger, Asset Management
	 
	 	 
	Phone Number:
	 	(415)391-4300
	 
	 	 
	Intended Commencement Date:
	 	February 20, 2004
	 
	 	 
	Intended Term:
	 	Eight (8) Years
	 
	 	 
	Lease Expiration Date:
	 	Eight (8) Years from the Lease Commencement Date, unless
	 
	 	earlier terminated in accordance with the terms of
	 
	 	this Lease, or extended by Tenant
pursuant to Article 15.
	 
	 	 
	Options to Renew:
	 	Two (2) option(s) to renew, each for a term of thirty (30)
	 
	 	months.
	 
	 	 
	Tenant’s Security Deposit:
	 	$60,851.62
	 
	 	 
	Late Charge Amount:
	 	Five Percent (5%) of the Delinquent Amount
	 
	 	 
	Tenant’s Required Liability Coverage:
	 	$3,000,000 Combined Single Limit
	 
	 	 
	Tenant’s Broker(s):
	 	George Fox and Greg Bendis of Mien J. Studley, Inc.
	 
	 	 
	Property:
	 	That certain real property situated in the City of Milpitas,
	 
	 	County of Santa Clara, State of California, together with
	 
	 	all buildings and improvements thereon, which real
	 
	 	property is






- 1 -









 






	 	 	 
	 
	 	shown on the Site Plan attached hereto as
	 
	 	Exhibit “A” and is commonly known as or otherwise
	 
	 	described as follows: 1855 Barber Lane, Milpitas,
	 
	 	California.
	 
	 	 
	Building:
	 	That certain building located on the Property in which the
	 
	 	Leased Premises are located, which building is shown
	 
	 	outlined on Exhibit“A”hereto (the“Building”). The
	 
	 	Building is commonly known as or otherwise described as
	 
	 	follows: 1855 Barber Lane, Milpitas, California.
	 
	 	 
	Outside Areas:
	 	The“Outside Areas” shall mean all areas within the Property
	 
	 	which are located outside the Building, such as
	 
	 	pedestrian walkways, parking areas, landscaped area, open
	 
	 	areas and enclosed trash disposal areas.
	 
	 	 
	Leased Premises:
	 	The Property, including the Outside Areas, the Building and
	 
	 	all the interior space within the Building, including
	 
	 	stairwells, connecting walkways, and atriums, consisting
	 
	 	of approximately 81,500 square feet and, for purposes of
	 
	 	this Lease, agreed to contain said number of square feet.
	 
	 	 
	Base Monthly Rent:
	 	The term“Base Monthly
Rent” shall mean the following:






	 	 	 	 	 
	Month	 	Base Monthly Rent	 
	01-12
	 	$	52,975.00	 
	13-24
	 	$	54,034.50	 
	25-36
	 	$	55,115.19	 
	37-48
	 	$	56,217.49	 
	49-60
	 	$	57,341.84	 
	61-72
	 	$	58,488.68	 
	73-84
	 	$	59,658.45	 
	85-96
	 	$	60,851.62	 






	 	 	 
	Use:
	 	Office, research and development (including engineering labs)
	 
	 	 
	Tenant’s Proportionate Share:
	 	100%
	 
	 	 
	Exhibits:
	 	The term“Exhibits” shall mean the Exhibits of this Lease
	 
	 	which are described as follows:
	 
	 	 
	 
	 	Exhibit“A” – Site Plan showing the Leased Premises.
	 
	 	 
	 
	 	Exhibit“B” – Floor Plan outlining the portion of the
	 
	 	Leased Premises located within the Building
	 
	 	 
	 
	 	Exhibit“C” – Rules and Regulations
	 
	 	 
	 
	 	Exhibit“D” – Form of Subordination, Nondisturbance and
	 
	 	Attornment Agreement
	 
	 	 
	 
	 	Exhibit“E”– Form of Tenant Estoppel






- 2 -









 






ARTICLE 2




LEASED PREMISES, TERM AND POSSESSION




2.1 Demise Of Leased Premises. Subject to Paragraph 2.4 and Article 7 below, Landlord hereby leases to Tenant
and Tenant hereby leases from Landlord for Tenant’s own use in the conduct of Tenant’s business and not for
purposes of speculating in real estate, for the Lease Term and upon the terms and subject to the conditions of this
Lease, that certain property described in Article 1 as the Leased Premises. Tenant’s lease of the Leased Premises
shall be conditioned upon and be subject to the continuing compliance by Tenant with (i) all the terms and
conditions of this Lease, (ii) all Laws governing the use of the Leased Premises, (iii) all Private Restrictions,
easements and other matters now of public record respecting the use of the Leased Premises, and (iv) all reasonable
rules and regulations from time to time established by Landlord as set forth in Paragraph 4.12 below.




2.2 Intentionally Deleted.




2.3 Lease Commencement Date; Lease Term. Subject to Paragraph 2.4 below, the term of this Lease shall begin,
and the Lease Commencement Date shall be deemed to have occurred, on the Intended Commencement Date, as set
forth in Article 1 (the “Lease Commencement Date”), and the term of this Lease shall end on the Lease Expiration
Date (as set forth in Article 1). The “Lease Term” shall be that period of time commencing on the Lease
Commencement Date and ending on the Lease Expiration Date.




2.4 Delivery Of Possession and Termination of Existing Lease; Tenant’s Right to Terminate.




     (a) Landlord shall deliver to Tenant possession of the Leased Premises under this Lease on the Intended
Commencement Date. Landlord and Tenant acknowledge that prior to and as of the Effective Date of this Lease,
Tenant has been and is in possession of the entire Leased Premises pursuant to that certain Lease dated July 20, 2000
between Landlord and Tenant, as successor-by-merger to C-Cube Microsystems, Inc. (the “Existing Lease”).
Notwithstanding the foregoing or anything to the contrary in this Lease, Landlord’s obligation
to deliver possession
of the Leased Premises to Tenant under this Lease is hereby expressly conditioned on the
execution by Landlord and
Tenant of a termination agreement (a “Termination Agreement”), reasonably satisfactory to
Landlord and Tenant,
terminating the Existing Lease. If the condition precedent set forth in the preceding sentence
has not been met on or
before the Intended Commencement Date, then Landlord shall not be in default under this Lease,
nor shall this
Lease be void, voidable or cancelable by Landlord or Tenant until the lapse of ninety (90)
days after the Intended
Commencement Date (the “Delivery Grace Period”), and the Lease Commencement Date shall not be
deemed to
have occurred until Landlord and Tenant have executed a Termination Agreement, in which event
the Lease
Commencement Date shall be one (1) day after the effective termination date of the Existing
Lease as set forth in the
Termination Agreement. If Landlord or Tenant has not executed a Termination Agreement, or if
Landlord shall not
have delivered possession of the Leased Premises to Tenant as contemplated by this Lease,
within the Delivery
Grace Period, then either Landlord or Tenant shall have the right to terminate this Lease.
Such right to terminate
shall be each party’s sole remedy for such delay, and in no event shall either party be liable
in damages to the other
party for such delay. Notwithstanding the foregoing, both Landlord and Tenant shall use
their best efforts to
negotiate and execute the Termination Agreement prior to the Intended Commencement Date. In
the event that the
Lease Commencement Date does not occur on the Intended Commencement Date, the parties shall
memorialize the
Lease Commencement Date and the Lease Termination Date in a mutually acceptable letter to be
signed by each
party.



     (b) Tenant or any Successor Entity (as hereinafter defined), but not any other transferee,
shall have the
right to terminate this Lease effective at the end of the sixtieth
(60th) month of
the Lease Term (the “Termination
Date”) by providing Landlord with at least two hundred seventy (270) days advance written
notice and paying
Landlord on or before the Termination Date a termination fee in an amount equal to the sum of
(i) that portion of the
brokerage commissions paid by Landlord in connection with the execution of this Lease that has
not been amortized
as of the Lease Termination Date (Landlord shall promptly provide Tenant with such amount
together with such
supporting documentation as Tenant may reasonably request) and (ii) three times the Base
Monthly Rent and
Property Operating Expenses then in effect.



- 3 -









 





2.5 Acceptance Of Possession. TENANT ACKNOWLEDGES THAT TENANT HAS BEEN IN POSSESSION OF THE
LEASED PREMISES PRIOR TO THE EFFECTIVE DATE OF THIS LEASE AND THAT BY CONTINUING TO OCCUPY THE
LEASED PREMISES PURSUANT TO THIS LEASE, TENANT SHALL BE DEEMED TO HAVE ACCEPTED THE LEASED PREMISES
IN “AS-IS” CONDITION AS OF THE DATE OF THIS LEASE. EXCEPT FOR ANY EXPRESS REPRESENTATIONS AND
WARRANTIES OF LANDLORD SET FORTH IN THIS LEASE (THE “EXPRESS REPRESENTATIONS”), LANDLORD DOES NOT,
BY THE EXECUTION AND DELIVERY OF THIS LEASE, AND LANDLORD SHALL NOT, BY THE EXECUTION AND DELIVERY
OF ANY DOCUMENT OR INSTRUMENT EXECUTED AND DELIVERED IN CONNECTION WITH THIS LEASE, MAKE ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND OR NATURE WHATSOEVER, WITH RESPECT TO
THE LEASED PREMISES, AND ALL SUCH REPRESENTATIONS AND WARRANTIES ARE HEREBY DISCLAIMED. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING PROVISION, LANDLORD MAKES, AND SHALL MAKE, NO EXPRESS OR
IMPLIED WARRANTY AS TO MATTERS OF ZONING, TAX CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL CONDITION
(INCLUDING, WITHOUT LIMITATION, LAWS, RULES, REGULATIONS, ORDERS AND REQUIREMENTS PERTAINING TO THE
USE, HANDLING, GENERATION, TREATMENT, STORAGE OR DISPOSAL OF ANY TOXIC OR HAZARDOUS WASTE OR TOXIC,
HAZARDOUS OR REGULATED SUBSTANCE), VALUATION, GOVERNMENTAL APPROVALS, GOVERNMENTAL REGULATIONS OR
ANY OTHER MATTER OR THING RELATING TO OR AFFECTING THE LEASED PREMISES (THE “DISCLAIMED MATTERS”).
TENANT AGREES THAT, WITH RESPECT TO THE LEASED PREMISES, TENANT HAS NOT RELIED UPON AND WILL NOT
RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF LANDLORD OTHER THAN THE
EXPRESS REPRESENTATIONS. TENANT WILL CONDUCT SUCH INSPECTIONS AND INVESTIGATIONS OF THE LEASED
PREMISES (INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITION THEREOF) AND RELY
UPON SAME.




2.6 Surrender Of Possession. Upon the expiration or upon the sooner termination of this Lease,
Tenant shall remove all of Tenant’s signs from the exterior of the Building and shall remove all
of Tenant’s inventory, equipment, trade fixtures, furniture, supplies, wall decorations and other
personal property (collectively, “Tenant’s FF&E”) from within the Leased Premises, including the
Building and the Outside Areas, and shall vacate and surrender the Leased Premises, and all
portions thereof, to Landlord broom clean and in good condition, reasonable wear and tear
excepted. Tenant shall repair all damage to the Leased Premises, and all portions thereof, caused
by Tenant’s removal of Tenant’s property. Tenant shall patch and refinish, to Landlord’s
reasonable satisfaction, all penetrations made by Tenant or its employees to the floor, walls or
ceiling of the Leased Premises, whether such penetrations were made with Landlord’s approval or
not. Tenant shall repair or replace all stained or damaged ceiling tiles, wall coverings and floor
coverings to the reasonable satisfaction of Landlord. Tenant shall repair all damage caused by
Tenant to the exterior surface of the Building and the paved surfaces of the Outside Areas and,
where necessary, replace or resurface same. Additionally, to the extent that Landlord shall have
notified Tenant in writing at the time Landlord approved any improvements requiring Landlord
approval that it desired to have such improvements removed at the expiration or sooner termination
of the Lease (“Required Removables”), Tenant shall, upon the expiration or sooner termination of
the Lease, remove the Required Removables and repair all damage caused by such removal. If Tenant
fails to comply with the terms of this Paragraph 2.6, Landlord may perform Tenant’s obligations at
Tenant’s expense, and Tenant shall be liable to Landlord for all reasonable costs incurred by
Landlord in performing such obligations for Tenant (including, without limitation, reasonable
costs of Landlord’s oversight of removal, repair and replacement work). Tenant shall pay to
Landlord the amount of all costs so incurred within fifteen (15) days of Landlord’s delivery to
Tenant of an invoice together with reasonable supporting information. Tenant shall indemnify
Landlord against loss or liability resulting from delay by Tenant in surrendering the Leased
Premises, including, without limitation, any claims made by any succeeding tenant or any losses to
Landlord with respect to lost opportunities to lease to succeeding tenants.




ARTICLE 3




RENT, LATE CHARGES AND SECURITY DEPOSITS




3.1 Base Monthly Rent. Commencing on the Lease Commencement Date (as determined pursuant to
Article 2 above) and continuing throughout the Lease Term, Tenant shall pay to Landlord, without
prior demand therefor, in




- 4 -









 








advance on or before the first day of each calendar month, the amount set forth as
Base Monthly Rent in Article 1 (the “Base Monthly Rent”).




3.2 Additional Rent. Commencing on the Lease Commencement Date (as determined pursuant Article 2
above) and continuing throughout the Lease Term, in addition to the Base Monthly Rent and to the
extent not required by Landlord to be contracted for and paid directly by Tenant, Tenant shall pay
to Landlord as additional rent (the “Additional Rent”) the following amounts:




     (a) An amount equal to all Property Operating Expenses (as defined in Paragraph 13.12)
incurred by
Landlord. Payment shall be made by whichever of the following methods (or combination of
methods) are from
time to time designated by Landlord:



          (i) Landlord may forward invoices or bills for such Property Operating Expenses to Tenant,
and Tenant shall, no later than fifteen (15) days following receipt of such invoices or bills from
Landlord, pay such invoices or bills and deliver satisfactory evidence of such payment to
Landlord, and/or



          (ii) Landlord may bill to Tenant, on a periodic basis not more frequently than monthly, the
amount of such Property Operating Expenses (or group of Property Operating Expenses) as paid or
incurred by Landlord, and Tenant shall pay to Landlord the amount of such Property Operating
Expenses within fifteen (15) days after receipt of a written bill therefor from Landlord, and/or



          (iii) Except for any Property Operating Expenses which Tenant does not pay for directly in
accordance with this Lease, Landlord may deliver to Tenant Landlord’s reasonable estimate of any
given Property Operating Expenses (such as Landlord’s Insurance Costs or Real Property Taxes), or
group of Property Operating Expenses, which it reasonably estimates will be paid or incurred for
the ensuing calendar or fiscal year, in an amount as Landlord may reasonably determine, and Tenant
shall pay to Landlord an amount equal to the estimated amount of such expenses for such year in
equal monthly installments during such year with the installments of Base Monthly Rent.



     Landlord reserves the right to change from one of the three options set forth in this Paragraph
3.2(a) to another, from time to time, the methods of billing Tenant for any given expense or group
of expenses or the periodic basis on which such expenses are billed. Landlord shall give Tenant
reasonable prior written notice of any such change.



     (b) Landlord’s share of the consideration received by Tenant upon certain assignments and
sublettings as required by Article 7.



     (c) Any legal fees and costs that Tenant is obligated to pay or reimburse to Landlord pursuant
to Article 13; and



     (d) Any other charges or reimbursements due Landlord from Tenant pursuant to the terms of
this Lease.



Tenant shall pay the Real Property Taxes directly to the applicable taxing authority. Tenant shall
make such payments and deliver satisfactory evidence of payment to Landlord no later than ten (10)
days before such Real Property Taxes become delinquent. Notwithstanding the foregoing, Landlord
shall have the right to contest the amount or validity of any Real Property Taxes, in whole or in
part, by appropriate administrative and legal proceedings, and to instruct Tenant to postpone
payment of any such contested Real Property Taxes pending the prosecution of such proceedings and
any appeals.




3.3 Year-End Adjustments; Audits. If Landlord bills Tenant for the Property Operating Expenses (or
any group of such expenses) on an estimated basis in accordance with the provisions of Paragraph
3.2(a)(iii) above, Landlord shall furnish to Tenant within three months following the end of the
applicable calendar or fiscal year, as the case may be, a statement and reasonably sufficient
back-up information setting forth (i) the amount of such expenses paid or incurred during the just
ended calendar or fiscal year, as appropriate, and (ii) the amount that Tenant has paid to
Landlord for credit against such expenses for such period. If Tenant shall have paid more than its
obligation for such expenses for the stated period, Landlord shall, at its election, either (i)
credit the amount of such overpayment toward the next ensuing payment or payments of Rent that
would otherwise be due or (ii) refund in cash to Tenant




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the amount of such overpayment. If such year-end statement shall show that Tenant did
not pay its obligation for such expenses in full, then Tenant shall pay to Landlord the amount of
such underpayment within thirty (30) days from Landlord’s billing of same to Tenant. The provisions
of this Paragraph shall survive the expiration or sooner termination of this Lease. In the event
Tenant objects in writing to any such year-end statement within ninety (90) days after receipt of
such statement, then Tenant shall have the right, during the six (6) month period following
delivery of such statement, at Tenant’s sole cost (except in the case where Tenant shows Landlord
overcharged by at least 5% in which case Landlord shall reimburse for this cost, to the extent
reasonably an actually incurred by Tenant), to review in Landlord’s offices Landlord’s records
relevant to such statement. Such review shall be subject to Landlord’s reasonable audit procedures
and shall be performed only by Tenant’s internal audit team, an independent firm of certified
public accountants or another party, in any case which firm or party is (a) reasonably acceptable
to Landlord, (b) not compensated on a contingency fee basis or in any other manner which is
dependent upon the results of such audit or inspection (and Tenant shall deliver the fee agreement
or other similar evidence of such fee arrangement to Landlord upon request) and (c) agrees with
Landlord in writing to maintain the results of such audit confidential. If, as of the date ninety
(90) days after Tenant’s receipt of such year-end statement, Tenant shall not have objected thereto
in writing, or if, during the six (6) month period following delivery of such statement, Tenant
shall not have carried out a review of Landlord’s records, then such year-end statement shall be
final and binding upon Landlord and Tenant, and Tenant shall have no further right to object to
such statement. If Tenant timely delivers a written objection to a year-end statement and, within
such six (6) month period, Tenant conducts an audit and delivers to Landlord a written statement
specifying objections to such annual statement, then Tenant and Landlord shall meet to attempt to
resolve such objection within ten (10) business days after delivery of the objection statement. If
such objection is not resolved within such ten (10) business day period, then either party shall
have the right, at any time within sixty (60) days after the expiration of such ten (10) business
day period, to require that the dispute be submitted to binding arbitration under the rules of the
American Arbitration Association. If neither Landlord nor Tenant commences an arbitration
proceeding within such sixty (60) day period, then the year-end statement in question shall be
final and binding on Landlord and Tenant. Notwithstanding that any such dispute remains unresolved,
Tenant shall be obligated to pay Landlord all amounts payable in accordance with this Paragraph 3
(including any disputed amount). The audit and arbitration procedures set forth in this Paragraph
3.3 shall be Tenant’s exclusive remedy with respect to the calculation of the amount of Tenant’s
obligations under Paragraph 3.2.




3.4 Late Charge, And
Interest On Rent In Default. Tenant acknowledges that the late payment by
Tenant of any
monthly installment of Base Monthly Rent or any Additional Rent will cause Landlord to incur
certain costs and
expenses not contemplated under this Lease, the exact amounts of which are extremely difficult or
impractical to fix.
Such costs and expenses will include without limitation, administration and collection costs and processing and
accounting expenses. Therefore, if any installment of Base Monthly Rent or any Additional Rent is not received by
Landlord from Tenant within ten (10) calendar days after the same becomes due, Tenant shall immediately pay to
Landlord a late charge equal to the Late Charge Amount (as defined in Paragraph 1.1). Landlord and Tenant agree
that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to
Landlord for the anticipated loss Landlord would suffer by reason of Tenant’s failure to make timely payment. In no
event shall this provision for a late charge be deemed to grant to Tenant a grace period or extension of time within
which to pay any rental installment or prevent Landlord from exercising any right or remedy available to Landlord
upon Tenant’s failure to pay each rental installment due under this Lease when due, including the right to terminate
this Lease. If any rent remains delinquent for a period in excess often (10) calendar days, then, in addition to such
late charge, Tenant shall pay to Landlord interest on any rent that is not so paid from the date due until paid at the
then maximum rate of interest not prohibited or made usurious by Law.




3.5 Payment Of Rent. Except as specifically provided otherwise in this Lease, Rent shall be paid in lawful money
of the United States, without any abatement, reduction or offset for any reason whatsoever, to Landlord at such
address as Landlord may designate from time to time. Tenant’s obligation to pay Base Monthly Rent and Additional
Rent shall be appropriately prorated at the commencement and expiration of the Lease Term. The failure by Tenant
to pay any Additional Rent as required pursuant to this Lease when due shall be treated the same as a failure by
Tenant to pay Base Monthly, and Landlord shall have the same rights and remedies against Tenant as Landlord
would have had Tenant failed to pay the Base Monthly Rent when due.




3.6 Prepaid Rent. Tenant shall not be required to make any advance payment of rent as a credit against the first
payment of Base Monthly Rent due hereunder. Tenant shall be entitled, at its option, to a refund or
credit of the




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difference between the Base Monthly Rent specified in this Lease and the amounts paid
to Landlord as base monthly rent under the Existing Lease retroactive to February 15, 2004.




3.7 Security Deposit. Upon Tenant’s execution of this Lease, Tenant shall deposit with Landlord the
amount set forth in Article 1 as the “Security Deposit” as security for the performance by Tenant
of the terms of this Lease to be performed by Tenant, and not as prepayment of rent. Landlord may
apply such portion or portions of the Security Deposit as are reasonably necessary for the
following purposes: (i) to remedy any Event of Default by Tenant in the payment of Base Monthly
Rent or Additional Rent or a late charge or interest on defaulted rent, or any other monetary
payment obligation of Tenant under this Lease; (ii) to repair damage to the Leased Premises caused
or permitted to occur by Tenant; (iii) to clean and restore and repair the Leased Premises
following their surrender to Landlord if not surrendered in the condition required pursuant to the
provisions of Article 2, and (iv) to remedy any other Event of Default of Tenant to the extent
permitted by Law including, without limitation, paying in full on Tenant’s behalf any sums claimed
by materialmen or contractors of Tenant to be owing to them by Tenant for work done or improvements
made at Tenant’s request to the Leased Premises. In this regard, Tenant hereby waives any
restriction on the uses to which the Security Deposit may be applied as contained in Section
1950.7(c) of the California Civil Code and/or any successor statute. In the event the Security
Deposit or any portion thereof is so used, Tenant shall pay to Landlord, promptly upon demand, an
amount in cash sufficient to restore the Security Deposit to the full original sum. Landlord shall
not be deemed a trustee of the Security Deposit. Landlord may use the Security Deposit in
Landlord’s ordinary business and shall not be required to segregate it from Landlord’s general
accounts. Tenant shall not be entitled to any interest on the Security Deposit. If Landlord
transfers the Leased Premises or any portion thereof during the Lease Term, Landlord may pay the
Security Deposit to any subsequent owner in conformity with the provisions of Section 1950.7 of the
California Civil Code and/or any successor statute, in which event the transferring landlord shall
be released from all liability for the return of the Security Deposit. Tenant specifically grants
to Landlord (and Tenant hereby waives the provisions of California Civil Code Section 1950.7 to the
contrary) a period of ninety (90) days following a surrender of the Leased Premises by Tenant to
Landlord within which to inspect the Leased Premises, make required restorations and repairs,
receive and verify workmen’s billings therefor, and prepare a final accounting with respect to the
Security Deposit. In no event shall the Security Deposit or any portion thereof, be considered
prepaid rent.




ARTICLE 4 
USE OF LEASED PREMISES AND OUTSIDE AREA




4.1 Permitted Use. Tenant shall be entitled to use the Leased Premises solely for the
“Permitted Use” as set forth
in Article 1 and for no other purpose whatsoever. Notwithstanding anything to the contrary
contained in this Lease,
in no event shall the Leased Premises be used for any pornographic or obscene purposes, any
commercial sex
establishment, any pornographic, obscene, nude or semi-nude performances, modeling, or sexual
conduct. Tenant
shall have the right to use the Outside Areas in conjunction with its Permitted Use of the Leased
Premises solely for
the purposes for which they were designed and intended and for no other purposes whatsoever. In
addition,
notwithstanding Paragraph 4.2, Tenant shall have the exclusive right to use the roof of the
Building for the
placement and operation of Tenant’s own equipment, provided that any such equipment shall be
subject to
Landlord’s prior approval that it will not have a negative impact on the appearance of the
Building, will not damage
or impact the Building’s roof, roof membrane, structure or systems, will not violate any
manufacturer’s warranties
covering the roof and complies with all Laws.




4.2 General Limitations On Use. Except as expressly permitted under this Lease, Tenant shall not (i) do or permit
anything to be done in or about the Leased Premises which does or could jeopardize the structural
integrity of the
Building or cause damage to any part of the Leased Premises, (ii) operate any equipment within the
Leased Premises
which does or could (a) injure, vibrate or shake the Leased Premises or any portion thereof, (b)
damage, overload or
impair the efficient operation of any electrical, plumbing, heating, ventilating or air
conditioning systems within or
servicing the Leased Premises, or (c) damage or impair the efficient operation of the sprinkler
system (if any) within
or servicing the Leased Premises. Except as expressly permitted under this Lease or as existing as
of the Lease
Commencement Date, Tenant shall not, without Landlord’s consent, which shall not be unreasonably
withheld,
conditioned or delayed, (1) install any equipment or antennas on or make any penetrations of the
exterior walls or
roof of the Building, (2) affix any equipment to or make any penetrations or cuts in the floor,
ceiling, walls or roof




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of the Leased Premises, (3) place any loads upon the floors, walls, ceiling or roof
systems which could endanger the structural integrity of the Building or damage its floors,
foundations or supporting structural components, (4) place any explosive, flammable or harmful
fluids or other waste materials in the drainage systems of the Leased Premises, (5) drain or
discharge any fluids in the landscaped areas or across the paved areas of the Property, (6) use
any of the Outside Areas for the storage of its materials, supplies, inventory or equipment and
all such materials, supplies, inventory or equipment shall at all times be stored within the
Building, or (7) commit nor permit to be committed any waste in or about the Leased Premises.




4.3 Noise And Emissions. All noise generated by Tenant in its use of the Leased Premises shall be
confined or
muffled so that it does not interfere with the businesses of or annoy the occupants and/or users of
adjacent
properties. All dust, fumes, odors and other emissions generated by Tenant’s use of the Leased
Premises shall be
sufficiently dissipated in accordance with sound environmental practice and exhausted from the
Leased Premises in
such a manner so as not to interfere with the businesses of or annoy the occupants and/or users of
adjacent
properties, or cause any damage to the Leased Premises or any component part thereof or the
property of adjacent
property owners.




4.4 Trash Disposal. Tenant shall provide trash bins or other adequate garbage disposal facilities
within the trash
enclosure areas provided or permitted by Landlord outside the Leased Premises sufficient for the
interim disposal of
all of its trash, garbage and waste. All such trash, garbage and waste temporarily stored in such
areas shall be stored
in such a manner so that it is not visible from outside of such areas, and Tenant shall cause such
trash, garbage and
waste to be regularly removed from the Leased Premises in a clean, safe and neat condition free and
clear of all
trash, garbage, waste and/or boxes, pallets and containers containing same at all times.




4.5 Parking. Tenant shall have the exclusive right to use all parking areas within the Leased
Premises as depicted
on Exhibit A (including the right to mark the parking spaces located immediately adjacent to the
Building for use by
Tenant’s executives, employees and visitors). Tenant shall not use any other location within the
Leased Premises
for the parking of vehicles. Tenant shall not, at any time, park or permit to be parked any
recreational vehicles,
inoperative vehicles or equipment (except as expressly set forth in this Lease) in the Outside
Areas or on any other
portion of the Leased Premises. Tenant agrees to assume responsibility for compliance by its
employees and invitees
with the parking provisions contained herein. If Tenant or its employees park any vehicle within
the Leased
Premises in violation of these provisions, then Landlord may, upon prior written notice to Tenant
giving Tenant one
(1) day (or any applicable statutory notice period, if longer than one (1) day) to remove such
vehicle(s).




4.6 Signs. Tenant shall have the exclusive right to install signs identifying Tenant on, in or
about the Leased
Premises, subject to Landlord’s prior approval (except signs existing as of the Lease Commencement
Date), which
shall not be unreasonably withheld, conditioned or delayed and to all applicable Laws and Private
Restrictions.
Tenant shall be responsible for maintaining any such signs in first-class condition and shall
remove such signs
(including, without limitation, all signs existing as of the Lease Commencement Date) on or before
the expiration or
sooner termination of this Lease. Tenant shall repair all damage to the Leased Premises caused by
the installation,
maintenance or removal of such signs.




4.7 Compliance With Laws And Private Restrictions. Tenant shall abide by and shall promptly
observe and
comply with, at its sole cost and expense, all Laws and Private Restrictions respecting the use and
occupancy of the
Leased Premises, including, without limitation, all Laws governing the use and/or disposal of
hazardous materials,
and shall defend with competent counsel, indemnify and hold Landlord harmless from any claims,
damages or
liability resulting from Tenant’s failure to so abide, observe, or comply. Tenant’s obligations
hereunder shall survive
the expiration or sooner termination of this Lease.




4.8 Compliance With Insurance Requirements. With respect to any insurance policies required or
permitted to
be carried by Landlord in accordance with the provision of this Lease, copies of which have been or
will, upon
Tenant’s written request therefor, be provided to Tenant, Tenant shall not conduct nor permit any
other person to
conduct any activities nor keep, store or use (or allow any other person to keep, store or use) any
item or thing
within the Leased Premises which (i) is prohibited under the terms of any such policies, (ii) could
result in the
termination of the coverage afforded under any of such policies, (iii) could give to the insurance
carrier the right to
cancel any of such policies, or (iv) could cause an increase in the rates (over standard rates)
charged for the coverage
afforded under any of such policies (unless Tenant paid for such increase. Tenant shall comply with
all reasonable




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requirements of any insurance company, insurance underwriter, or Board of Fire
Underwriters which are necessary to maintain, at standard rates, the insurance coverage carried
by either Landlord or Tenant pursuant to this Lease.




4.9 Landlord’s Right To Enter. Landlord and its agents shall have the right to enter the Leased
Premises during normal business hours after giving Tenant reasonable notice and subject to Tenant’s
reasonable security measures for the purpose of (i) inspecting the same; (ii) showing the Leased
Premises to prospective purchasers, mortgagees or, during the last 270 days of the Lease Term,
tenants; (iii) making alterations, additions or repairs as provided under this Lease; (iv)
performing any of Tenant’s obligations when Tenant has failed to do so; (v) posting notices of
non-responsibility (and for such purposes Tenant shall provide Landlord at least thirty days’ prior
written notice of any work to be performed on the Leased Premises); and (vi) supplying any services
to be provided by Landlord. Any entry into the Leased Premises obtained by Landlord in accordance
with this paragraph shall not under any circumstances be construed or deemed to be a forcible or
unlawful entry into, or a detainer of, the Leased Premises, or an eviction, actual or constructive
of Tenant from the Leased Premises or any portion thereof but shall be made so as not to interrupt
Tenant in an unreasonable manner, not to interfere with Tenant’s business in an unreasonable manner
and not to remain in the Leased Premises any longer than is reasonably necessary.




4.10 Use Of Outside Areas. Tenant, in its use of the Outside Areas, shall at all times keep the
Outside Areas in a safe condition free and clear of all materials, equipment, debris, trash
(except within existing enclosed trash areas), inoperable vehicles, and other items which are not
specifically permitted by Landlord to be stored or located thereon by Tenant. If, in the
reasonable opinion of Landlord, unauthorized persons are using any of the Outside Areas by reason
of, or under claim of, the express or implied authority or consent of Tenant, then Tenant, upon
demand of Landlord, shall use commercially reasonable efforts to restrain such use.




4.11 Environmental Protection. Tenant’s obligations under this Paragraph 4.11 shall survive the
expiration or termination of this Lease.




     (a) As used herein, the term “Hazardous Materials” shall mean any toxic or
hazardous substance, material or waste or any pollutant or infectious or
radioactive material, including but not limited to those substances, materials
or wastes regulated now or in the future under any of the following statutes or
regulations and any and all of those substances included within the definitions
of “hazardous substances,” “hazardous materials,” “hazardous waste,” “hazardous
chemical substance or mixture,” “imminently hazardous chemical substance or
mixture,” “toxic substances,” “hazardous air pollutant,” “toxic pollutant,” or
“solid waste” in the (a) Comprehensive Environmental Response, Compensation and
Liability Act of 1990 (“CERCLA” or “Superfund”), as amended by the Superfund
Amendments and Reauthorization Act of 1986 (“SARA”), 42 U.S.C. § 9601 et seq.,
(b) Resource Conservation and Recovery Act of 1976
(“RCRA”), 42 U.S.C. § 6901 et
seq., (c) Federal Water Pollution Control Act (“FSPCA”), 33 U.S.C. § 1251 et
seq., (d) Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq., (e) Toxic Substances
Control Act (“TSCA”), 14 U.S.C. § 2601 et seq., (f) Hazardous Materials
Transportation Act, 49 U.S.C. § 1801, et seq., (g) Carpenter-Presley-Tanner
Hazardous Substance Account Act (“California Superfund”), Cal. Health & Safety
Code § 25300 et seq., (h) California Hazardous Waste Control Act, Cal. Health &
Safety code § 25100 et seq., (i) Porter- Cologne Water Quality Control Act
(“Porter-Cologne Act”), Cal. Water Code § 13000 et seq., (j) Hazardous Waste
Disposal Land Use Law, Cal. Health & Safety codes §25220
et seq., (k) Safe
Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”), Cal. Health
& Safety code § 25249.5 et seq., (1) Hazardous Substances Underground Storage
Tank Law, Cal. Health & Safety code § 25280 et seq., (m) Air Resources Law, Cal.
Health & Safety Code § 39000 et seq., and (n) regulations promulgated pursuant
to said laws or any replacement thereof, or as similar terms are defined in the
federal, state and local laws, statutes, regulations, orders or rules. Hazardous
Materials shall also mean any and all other biohazardous wastes and substances,
materials and wastes which are, or in the future become, regulated under
applicable Laws for the protection of health or the environment, or which are
classified as hazardous or toxic substances, materials or wastes, pollutants or
contaminants, as defined, listed or regulated by any federal, state or local
law, regulation or order or by common law decision, including, without
limitation, (i) trichloroethylene, tetrachloroethylene, perchloroethylene and
other chlorinated solvents, (ii) any petroleum products or fractions thereof,
(iii) asbestos, (iv) polychlorinated biphenyls, (v) flammable explosives, (vi)
urea formaldehyde, (vii) radioactive materials and waste, and (viii) materials
and wastes that are harmful to or may threaten human health, ecology or the
environment.



     (b) Notwithstanding anything to the contrary in this Lease, Tenant, at its sole
cost, shall comply with all Laws relating to the storage, use and disposal of
Hazardous Materials; provided, however, that Tenant shall not be



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responsible for contamination of the Leased Premises by Hazardous Materials that
existed as of the commencement date of the Existing Lease or that migrated or migrate onto the
Leased Premises from neighboring properties/areas (collectively, “Pre-existing Hazardous
Materials”), unless caused by Tenant or a Tenant Related Party. Tenant shall not store, use or
dispose of any Hazardous Materials except for small quantities of typical office supplies and those
Hazardous Materials listed in a Hazardous Materials management plan (“HMMP”) which Tenant shall
deliver to Landlord within thirty (30) days of the Effective Date of this Lease and update at least
annually with Landlord (“Permitted Materials”) which may be used, stored and disposed of provided
(i) such Permitted Materials are used, stored, transported, and disposed of in strict compliance
with applicable Laws, (ii) such Permitted Materials shall be limited to the materials listed on and
may be used only in the quantities specified in the HMMP, and (iii) Tenant shall provide Landlord
with copies of all material safety data sheets and other documentation required under applicable
Laws in connection with Tenant’s use of Permitted Materials as and when such documentation is
provided to any regulatory authority having jurisdiction. In no event shall Tenant cause or permit
to be discharged into the plumbing or sewage system of the Leased Premises or onto the land
underlying or adjacent to the Leased Premises any Hazardous Materials. Tenant shall be solely
responsible for and shall defend, indemnify, and hold Landlord and its agents harmless from and
against all claims, costs and liabilities, including reasonable attorneys’ fees and costs, arising
out of or in connection with Tenant’s storage, use and/or disposal of Hazardous Materials in, on,
under or near the Leased Premises. If the presence of Hazardous Materials on the Leased Premises
caused or permitted by Tenant results in contamination or deterioration of water or soil, then
Tenant shall promptly take any and all action necessary to clean up such contamination, but the
foregoing shall in no event be deemed to constitute permission by Landlord to allow the presence of
such Hazardous Materials. At any time prior to the expiration of the Lease Term if Tenant has a
reasonable basis to suspect that there has been any release or the presence of Hazardous Materials
in the ground or ground water on the Leased Premises which did not exist upon commencement of the
Lease Term, Tenant shall have the right to conduct appropriate tests of water and soil and to
deliver to Landlord the results of such tests to demonstrate that no contamination in excess of
permitted levels has occurred as a result of Tenant’s use of the Leased Premises. Tenant shall
further be solely responsible for, and shall defend, indemnify, and hold Landlord and its agents
harmless from and against all claims, costs and liabilities, including reasonable attorneys’ fees
and costs, arising out of or in connection with any removal, cleanup and restoration work and
materials required hereunder to return the Leased Premises and any other property of whatever
nature to their condition existing prior to the appearance of the Hazardous Materials.




     (c) Upon termination or expiration of the Lease, Tenant at its sole expense shall cause all
Hazardous
Materials placed in or about the Leased Premises by Tenant, its agents, contractors, or
invitees, and all installations
(whether interior or exterior) made by or on behalf of Tenant relating to the storage, use,
disposal or transportation
of Hazardous Materials to be removed from the property and transported for use, storage or
disposal in accordance

and compliance with all Laws and other requirements respecting Hazardous Materials used or
permitted to be used
by Tenant. Tenant shall apply for and shall obtain from all appropriate regulatory authorities
(including any
applicable fire department or regional water quality control board) all permits, approvals and
clearances necessary
for the closure of the Leased Premises and shall take all other actions as may be required to
complete the closure of
the Leased Premises.



     (d) At any time prior to expiration of the Lease Term, subject to reasonable prior notice (not
less than
forty-eight (48) hours) and Tenant’s reasonable security requirements and provided such
activities do not
unreasonably interfere with the conduct of Tenant’s business at the Leased Premises, Landlord
shall have the right
to enter in and upon the Leased Premises in order to conduct appropriate tests of water and
soil to determine whether
levels of any Hazardous Materials in excess of legally permissible levels has occurred as a
result of Tenant’s use
thereof. Landlord shall furnish copies of all such test results and reports to Tenant and, at
Tenant’s option and cost,
shall permit split sampling for testing and analysis by Tenant. Such testing shall be at
Tenant’s expense if Landlord
has a reasonable basis for suspecting and confirms the presence of Hazardous Materials in the
soil or surface or
ground water in, on, under, or about the Leased Premises, which has been caused by or resulted
from the activities
of Tenant, its agents, contractors, or invitees.



     (e) Notwithstanding any other provision of this Lease, Landlord represents that it is unaware
of any
Hazardous Materials in, on or about the Property in violation of applicable Laws.
Notwithstanding this
representation, Landlord shall (i) cause, at its sole cost and expense, any or all
Pre-existing Hazardous Materials
discovered in, on or about the Property (and not caused by Tenant or a Tenant Related Party)
to be removed if and to
the extent required by applicable Laws and (ii) indemnify and hold Tenant harmless against and
from all liability



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and claims of any kind for loss or damage to Tenant, its employees or agents, and for all
expenses and fees of Tenant (including, but not limited to, reasonable attorneys’ fees) incurred,
directly or indirectly, as a result of (a) the existence of such Pre-existing Hazardous Materials
in, on or about the Property or (b) any acts or omissions of Landlord or any Landlord Related
Party with respect to their use, generation, disposal, storage or transportation of Hazardous
Materials on or about the Property.




          (f) Landlord may voluntarily cooperate in a reasonable manner with the efforts of all
governmental agencies in reducing actual or potential environmental damage. Except as otherwise
provided in this Lease, Tenant shall not be entitled to terminate this Lease or to any reduction
in or abatement of rent by reason of such compliance or cooperation. Tenant agrees at all times to
cooperate fully with the requirements and recommendations of governmental agencies regulating, or
otherwise involved in, the protection of the environment.




4.12 Rules And Regulations. Tenant shall comply with the rules and regulations respecting the use
of the Leased Premises that are attached hereto as Exhibit C. Landlord may, from time to time,
change such rules and regulations for the safety, care, or cleanliness of the Leased Premises,
provided that such changes will not unreasonably interfere with Tenant’s use and occupancy of the
Leased Premises or materially increase Tenant’s cost of occupancy. A violation by Tenant of any of
such rules and regulations shall constitute a default by Tenant under this Lease. If there is a
conflict between the rules and regulations and any of the provisions of this Lease, the provisions
of this Lease shall prevail.




ARTICLE 5




REPAIRS, MAINTENANCE, SERVICES AND UTILITIES




5.1 Repair And Maintenance. Except in the case of damage to or destruction of the Leased
Premises caused by an act of God or other peril, in which case the provisions of Article 10 shall
control, the parties shall have the following obligations and responsibilities with respect to the
repair and maintenance of the Leased Premises.




     (a) Tenant’s
Obligations. Except as expressly provided in Paragraph 5.1 (b), Tenant shall, at
all times during the Lease Term and at its sole cost and expense, regularly clean and continuously
keep and maintain in good order, condition and repair the Leased Premises and every part thereof
including, without limiting the generality of the foregoing, (i) all interior walls, floors and
ceilings, (ii) all windows, doors and skylights, (iii) all electrical wiring, conduits, connectors
and fixtures, (iv) all plumbing, pipes, sinks, toilets, faucets and drains, (v) all lighting
fixtures, bulbs and lamps and all heating, ventilating and air conditioning equipment, (vi) all
entranceways to the Leased Premises, and (vii) all paved areas. Tenant shall, at Tenant’s sole
cost and expense, institute an industry standard preventative maintenance program using a
qualified and licensed heating, ventilating and air conditioning company which regularly inspects
and performs required maintenance on the heating, ventilating and air conditioning equipment and
systems serving the Leased Premises. Notwithstanding the foregoing, Tenant shall have no
obligation or liability for any roof maintenance or repair based on damage or wear and tear that
existed prior to January 1, 2004, except to the extent that any act or omission of Tenant or any
Tenant Related Party resulted or results in a violation of the roof warranty in effect as of the
Lease Commencement Date. Tenant shall, at all times during the Lease Term, keep in a clean and
safe condition the Outside Areas. As needed, Tenant shall sweep and clean the driveways and
parking areas. Tenant shall, at its sole cost and expense, repair all damage to the Leased
Premises caused by the activities of Tenant, its employees, invitees or contractors promptly
following written notice from Landlord to so repair such damages. If Tenant shall fail to perform
the required maintenance or fail to make repairs required of it pursuant to this paragraph within
a reasonable period of time following notice from Landlord to do so, then Landlord may, at its
election and without waiving any other remedy it may otherwise have under this Lease or at Law,
perform such maintenance or make such repairs and charge to Tenant, as Additional Rent, the costs
so incurred by Landlord for same. All glass within or a part of the Leased Premises, both interior
and exterior, is at the sole risk of Tenant and any broken glass shall promptly be replaced by
Tenant at Tenant’s expense with glass of the same kind, size and quality. In the event Tenant’s
obligations under this Paragraph 5.1 (a) require that Tenant make a repair, replacement or
expenditure whose benefit extends beyond the Lease Term and which is deemed a capital improvement
in accordance with generally accepted accounting principles, then Landlord shall pay the cost
thereof; however, such cost shall be amortized by Landlord, on a straight-line basis, over the
useful life of such item,



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utilizing an interest rate of zero percent (0%), and the monthly amortized cost of
such any item so amortized shall be included in the Property Maintenance Costs and charged to
Tenant as Additional Rent.




     (b) Landlord’s Obligation. Landlord shall, at all times during the Lease Term and at
Landlord’s sole cost and expense, maintain in good condition and repair the foundation, footings,
structural exterior walls (excluding painting, sealing and other exterior surface maintenance),
structural roof elements (excluding the roof membrane), poured concrete floors (excluding floor
surfaces) and exterior utility connections up to the Building and under the foundation. In
addition, Landlord shall, at all times during the Lease Term, maintain in good condition and
repair the roof membrane, provided that the costs incurred by Landlord in performing such
maintenance and repair of the roof membrane shall be included in the Property Maintenance Costs
and charged to Tenant as Additional Rent. Landlord represents and warrants that as of the
Effective Date of this Lease, the roof membrane is covered by effective warranties (copies of
which have been provided to Tenant) and agrees that Tenant shall have no obligation to make or pay
for any capital repairs or maintenance and repair to the non-structural elements of the roof, to
the extent such capital repairs or maintenance and repair is covered by such warranty.



5.2 Utilities. Tenant shall arrange at its sole cost and expense and in its own
name, for the supply of water, gas and electricity to the Leased Premises. In
the event that such services are not separately metered, Tenant shall, at its
sole expense, cause such meters to be installed. Tenant shall be responsible for
determining if the local supplier of water, gas and electricity can supply the
needs of Tenant and whether or not the existing water, gas and electrical
distribution systems within the Leased Premises are adequate for Tenant’s needs.
Tenant shall be responsible for determining if the existing sanitary and storm
sewer systems now servicing the Leased Premises are adequate for Tenant’s needs.
Tenant shall pay all charges for water, gas, electricity and storm and sanitary
sewer services supplied to the Leased Premises, irrespective of whether or not
the services are maintained in Landlord’s or Tenant’s name.




5.3 Security. Tenant acknowledges that Landlord has not undertaken any duty
whatsoever to provide security for the Leased Premises and, accordingly,
Landlord is not responsible for the security of same or the protection of
Tenant’s property or Tenant’s employees, invitees or contractors. To the extent
Tenant determines that such security or protection services are advisable or
necessary, Tenant shall arrange for and pay the costs of providing same.




5.4 Energy And Resource Consumption. Landlord may, in its sole discretion,
cooperate in a reasonable manner with the efforts of governmental agencies
and/or utility suppliers in reducing energy or other resource consumption within
the Leased Premises. Tenant agrees at all times to comply with the requirements
of utility suppliers and governmental agencies regulating the consumption of
energy and/or other resources.




5.5 Limitation Of Landlord’s Liability. Landlord shall not be liable to Tenant
for injury to Tenant, its employees, agents, invitees or contractors, for damage
to Tenant’s property or loss of Tenant’s business or profits, nor shall Tenant
be entitled to terminate this Lease or to any reduction in or abatement of rent
by reason of (i) Landlord’s failure to provide security services or systems for
the protection of the Leased Premises, or the protection of Tenant’s property or
Tenant’s employees, invitees, agents or contractors, or (ii) Landlord’s failure
to perform any maintenance or repairs to the Leased Premises until Tenant has
notified Landlord, and the applicable cure period has expired, as provided in
Paragraph 12.3, or (iii) any failure, interruption, rationing or other
curtailment in the supply of water, electric current, gas or other utility
service to the Leased Premises from whatever cause (other than Landlord’s gross
negligence or willful misconduct), or (iv) the unauthorized intrusion or entry
into the Leased Premises by third parties (other than Landlord or Landlord’s
employees, agents or contractors).




ARTICLE 6




ALTERATIONS AND IMPROVEMENTS




6.1 By Tenant. Tenant shall not make any alterations to or modifications of the Leased Premises
or construct any improvements within the Leased Premises until Landlord shall have first
approved, in writing, the plans and specifications therefor, which approval shall not be
unreasonably withheld, conditioned or delayed. Without limiting the generality of the foregoing,
Tenant acknowledges that it shall be reasonable for Landlord to withhold its





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consent to any modification, alteration or improvement if, in Landlord’s reasonable
judgment, such modification, alteration or improvement would adversely affect the structure of the
Building, any of the Building’s systems, the appearance of the Building or the value or utility of
the Leased Premises. All such modifications, alterations or improvements, once so approved, shall
be made, constructed or installed by Tenant at Tenant’s expense (including all permit fees and
governmental charges related thereto), using a licensed contractor first approved by Landlord
(which approval shall not be unreasonably withheld, conditioned or delayed), in substantial
compliance with the aforementioned Landlord-approved plans and specifications therefore. All work
undertaken by Tenant shall be done in accordance with all Laws and in a good and workmanlike manner
using materials of good quality. Tenant shall not commence the making of any such modifications or
alterations or the construction of any such improvements until (i) all required governmental
approvals and permits shall have been obtained, (ii) all requirements regarding insurance imposed
by this Lease have been satisfied, (iii) Tenant shall have given Landlord at lease five (5)
business days prior written notice of its intention to commence such work so that Landlord may post
and file notices of non-responsibility, and (iv) if requested by Landlord, Tenant shall have
obtained contingent liability and broad form builder’s risk insurance in an amount satisfactory to
Landlord in its reasonable discretion to cover any perils relating to the proposed work not covered
by insurance carried by Tenant pursuant to Article 9. In no event shall Tenant make any
modification, alterations or improvements whatsoever to the Outside Areas or the exterior or
structural components of the Building including, without limitation, any cuts or penetrations in
the floor, roof or exterior walls of the Leased Premises unless otherwise provided herein without
Landlord’s prior consent, which shall not be unreasonably withheld, conditioned or delayed. As used
in this Article, the term “modifications, alterations and/or improvements” shall include, without
limitation, the installation of additional electrical outlets, overhead lighting fixtures, drains,
sinks, partitions, doorways, or the like. Notwithstanding the foregoing, Tenant, without Landlord’s
prior written consent (but subject to the other terms and conditions of this Article 6), shall be
permitted to make alterations to the Leased Premises which do not affect the structure of the
Building or the Leased Premises, do not affect the plumbing, electrical, mechanical or other
systems of the Building and do not affect the appearance of the Leased Premises viewed from the
exterior, provided that: (a) such alterations do not exceed $25,000 individually or $100,000 in the
aggregate in each calendar year, (b) Tenant shall timely provide Landlord the notice required
pursuant to Paragraph 4.9 above, (c) Tenant shall provide Landlord, promptly following the
completion of the alteration, with a set of the plans and specifications therefor, either “as
built” or marked to show construction changes made, and (d) if requested by Landlord, Tenant shall,
on or before the expiration or earlier termination of this Lease, remove any such alteration that
is not an improvement that would be typically found in an office space environment and restore the
Leased Premises to their condition prior to such alteration, reasonable wear and tear excepted.




6.2 Ownership Of Improvements. All modifications, alterations and improvements
made or added to the Leased Premises by Tenant (collectively, “Alterations”)
during the Lease Term, other than Tenant’s FF&E, shall be deemed real property
and a part of the Leased Premises, but shall remain the property of Tenant
during the Lease. Any such Alterations (except for Tenant’s FF&E), once
completed, shall not be altered or removed from the Leased Premises during the
Lease Term without Landlord’s written approval if required by Paragraph 6.1
above. At the expiration or sooner termination of this Lease, all Alterations
(other than Tenant’s FF&E) shall automatically become the property of Landlord
and shall be surrendered to Landlord as part of the Leased Premises as required
pursuant to Paragraph 2.6, unless Landlord shall require Tenant to remove any
Alterations in accordance with the provisions of Paragraph 2.6, in which case
Tenant shall remove such Alterations. Landlord shall have no obligation to
reimburse Tenant for all or any portion of the cost or value of any Alterations
so surrendered to Landlord. All modifications, alterations or improvements which
are installed or constructed on or attached to the Leased Premises by Landlord
and/or at Landlord’s expense shall be deemed real property and a part of the
Leased Premises and shall be property of Landlord. All lighting, plumbing,
electrical, heating, ventilation and air conditioning fixtures, partitioning,
window coverings, wall coverings and floor coverings installed by Tenant shall
be deemed improvements to the
Leased Premises and not Tenant’s FF&E.




6.3 Alterations Required By Law. Tenant shall, at its sole cost, make all
modifications, alterations and improvements to the Leased Premises that are
required by any Law because of Tenant’s (i) use or occupancy of the Leased
Premises, (ii) application for any permit or governmental approval, or (iii)
making of any Alterations to or within the Leased Premises. If Landlord shall,
at any time during the Lease Term, be required by any governmental authority to
make any modifications, alterations or improvements to the Leased Premises, the
cost incurred by Landlord in making such modifications, alterations or
improvements, including interest at a rate equal to the sum of that rate quoted
by Wells Fargo Bank, N.T. & S.A. from time to time as its prime rate, plus two
percent (2%), shall




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be amortized by Landlord over the useful life of such modifications, alterations or
improvements (based on generally accepted industry standards), on a straight line basis, and the
monthly amortized cost of such modifications, alterations and improvements as so amortized shall be
considered a Property Maintenance Cost.




6.4 Liens. Tenant shall keep the Leased Premises and every part thereof free from any lien, and
shall pay when due all bills arising out of any work performed, materials furnished, or obligations
incurred by Tenant, its agents, employees or contractors relating to the Leased Premises. If any
such claim of lien is recorded against Tenant’s interest in this Lease, the Leased Premises or any
part thereof, Tenant shall bond against, discharge or otherwise cause such lien to be entirely
released within thirty (30) days after the same has been recorded. Tenant’s failure to do so shall
be conclusively deemed a material default under the terms of this Lease.




ARTICLE 7




ASSIGNMENT AND SUBLETTING BY TENANT




7.1 By Tenant. Except as expressly permitted in Paragraph 7.2 below, Tenant shall not sublet the
Leased Premises or any portion thereof or assign its interest in this Lease, whether voluntarily
or by operation of Law, without Landlord’s prior written consent, which shall not be unreasonably
withheld, conditioned or delayed. Any attempted subletting or assignment without Landlord’s prior
written consent, at Landlord’s election, shall constitute a default by Tenant under the terms of
this Lease. The acceptance of rent by Landlord from any person or entity other than Tenant, or the
acceptance of rent by Landlord from Tenant with knowledge of a violation of the provisions of this
paragraph, shall not be deemed to be a waiver by Landlord of any provision of this Article or this
Lease or to be a consent to any subletting by Tenant or any assignment of Tenant’s interest in
this Lease. Without limiting the circumstances in which it may be reasonable for Landlord to
withhold its consent to an assignment or subletting, Landlord and Tenant acknowledge that it shall
be reasonable for Landlord to withhold its consent in the following instances:




     (a) the proposed assignee or sublessee is a governmental agency;



     (b) the proposed use is not a Permitted Use;



     (c) in Landlord’s reasonable judgment, the financial worth of a proposed
assignee is less than that of Tenant or does not meet the credit standards
applied by Landlord;



     (d) the proposed assignee or sublessee has, in the five years prior to the
assignment or sublease, filed for bankruptcy protection, has been the subject of
an involuntary bankruptcy that was not discharged within ninety (90) days of its
filing, or has been adjudged insolvent;



     (e) Landlord has experienced a previous uncured material default by or is in
litigation with the proposed assignee or sublessee;



     (f) the use of the Leased Premises by the proposed assignee or sublessee will
violate any applicable Law, ordinance or regulation;



     (g) the proposed assignee or sublessee is, as of the date of this Lease, in
negotiations with Landlord or any of its affiliates for a lease in a property
owned by Landlord or any of its affiliates and located in the City of Milpitas,
California;



     (h) the proposed assignment or sublease fails to include all of the terms and
provisions required to be included therein pursuant to this Article 7;



     (i) there is an Event of Default under this Lease, or there have been three or
more Events of Default during the 12 months preceding the date that Tenant shall
request consent; or



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     (j) in the case of a subletting of less than the entire Leased Premises, if the
subletting would result in the division of the Leased Premises into more than three subparcels or
would require improvements to be made outside of the Leased Premises.



7.2 Permitted Transfers. Notwithstanding anything contained herein to the
contrary regarding Landlord consent requirements, but otherwise subject to the
provisions of this Article 7:




     (a) Tenant may sublet or assign to any Successor Entity (as hereinafter defined)
without obtaining Landlord’s consent; provided that: (i) such Successor Entity’s
tangible net worth (determined in accordance with generally accepted accounting
principles) immediately after such transaction is at least equal to Tenant’s
tangible net worth immediately prior to such transaction; (ii) in the event of a
merger, if required by Landlord, the surviving Successor Entity assumes all
obligations of Tenant under this Lease; and (iii) in the event of a sale of
assets or stock of Tenant, if required by Landlord, the Successor Entity assumes
in writing all obligations of Tenant under this Lease. “Successor Entity” means
an entity controlling, controlled by or under common control with Tenant, as
well as any entity into or with which Tenant is merged or otherwise consolidated
or which purchases all or substantially all of Tenant’s assets or stock, and
which entity succeeds to Tenant’s interest in this Lease by assignment or
sublease.



     (b) Tenant
may sublet or assign to LSI Logic Storage Systems, Inc.,or its
successor, without obtaining Landlord’s consent, provided that such sublessee or
assignee assumes all obligations of Tenant under this Lease (in the case of a
sublease, to the extent applicable to the subleased portion of the Leased
Premises).



     (c) Landlord’s consent shall not be required for a short-term license, not
exceeding one (1) year, of any portion of the Leased Premises that are then not
separately demised.



7.3 Landlord’s Election. If Tenant desires to assign its interest under the
Lease or to sublet all or part of the Leased Premises (a “Proposed Transfer”),
Tenant must first notify Landlord, in writing, of such Proposed Transfer, at
least fifteen (15) business days in advance of the date it intends to close the
Proposed Transfer, specifying (a) the size of the space to be so transferred,
(b) the duration of the term of such Proposed Transfer and (c) the terms of the
Proposed Transfer, including the name of the proposed assignee or sublessee, the
proposed assignee’s or sublessee’s intended use of the Leased Premises, current
financial statements (including a balance sheet, income statement and statement
of cash flow, all prepared in accordance with generally accepted accounting
principles) of such proposed assignee or sublessee, the form of documents to be
used in effectuating such assignment or subletting and such other information as
Landlord may reasonably request. Landlord shall have a period of fifteen (15)
business days following receipt of such notice and the required information to
consent or decline to consent to the Proposed Transfer. If Landlord does not
respond within such fifteen (15) business day period, Landlord shall be deemed
to have approved the Proposed Transfer. If Landlord declines to consent to the
Proposed Transfer, Landlord shall notify Tenant in writing, specifying the
reasons under this Lease that such refusal is justified. During such fifteen
(15) business day period, Tenant covenants and agrees to supply to Landlord, promptly upon request,
all necessary
or relevant information which Landlord may reasonably request respecting such proposed assignment
or subletting
and/or the proposed assignee or sublessee.




7.4 Conditions To Landlord’s Consent. If Landlord elects to consent, or is
deemed to have consented pursuant to Paragraph 7.3 above, or shall have been
ordered to so consent by a court of competent jurisdiction, to such requested
assignment or subletting, such consent shall be expressly conditioned upon the
occurrence of each of the conditions below set forth, and any purported
assignment or subletting made or ordered prior to the full and complete
satisfaction of each of the following conditions shall be void and, at the
election of Landlord, which election may be exercised at any time following such
a purported assignment or subletting but prior to the satisfaction of each of
the stated conditions, shall constitute a material default by Tenant under this
Lease until cured by satisfying in full each such condition by the assignee or
sublessee. The conditions are as follows:




     (a) The execution by Landlord, Tenant and the proposed assignee or sublessee of a
commercially reasonable consent form.



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     (b) Each such sublessee or assignee having agreed, in writing reasonably
satisfactory to Landlord, to assume, to be bound by, and to perform the
obligations of this Lease not otherwise to be performed by Tenant which relate
to space being subleased.



     (c) There being no then-existing Event of Default under this Lease, and there
having been no more than two Events of Default during the preceding 12 months.



     (d) Tenant having reimbursed to Landlord all reasonable costs and reasonable
attorneys’ fees incurred by Landlord in conjunction with the processing and
documentation of any such requested subletting or assignment (not to exceed One
Thousand Dollars ($1,000.00) in each case).



     (e) Tenant having delivered to Landlord a complete and fully-executed duplicate
original of such sublease agreement or assignment agreement (as applicable) and
all related agreements.



     (f) With respect to an assignment, Tenant having paid, or having agreed in
writing to pay as to future payments, to Landlord fifty percent (50%) of all
Assignment Consideration to be paid to Tenant or to any other on Tenant’s behalf
or for Tenant’s benefit for such assignment as follows:



               (i) If
Tenant assigns its interest under this Lease and if all or a portion of
the consideration for such assignment is to be paid by the assignee at the time
of the assignment, that Tenant shall have paid to Landlord and Landlord shall
have received an amount equal to fifty percent (50%) of the Assignment
Consideration so paid or to be paid (whichever is the greater) at the time of
the assignment by the assignee; or



               (ii) If Tenant assigns its interest under this Lease and if Tenant is to receive
all or a portion of the consideration for such assignment in future
installments, that Tenant and Tenant’s assignee shall have entered into a
written agreement with and for the benefit of Landlord satisfactory to Landlord
and its counsel whereby Tenant and Tenant’s assignee jointly agree to pay to
Landlord an amount equal to fifty percent (50%) of all such future Assignment
Consideration installments to be paid by such assignee as and when such
Assignment Consideration is so paid.



               (g) With respect to a sublease of all or a portion of the Leased Premises,
Tenant and Tenant’s sublessee shall have entered into a written agreement with
and for the benefit of Landlord satisfactory to Landlord and its counsel whereby
Tenant and Tenant’s sublessee jointly agree to pay to Landlord the applicable
percentage set forth below of all Excess Rentals to be paid by such sublessee as
and when such Excess Rentals are so paid:



	 	 	 	 	 
	Portion of Leased Premises Subleased	 	Percentage of Excess Rentals to Landlord
	Up to and including 25%

	 	 	0	%
	Between 25% and 50%

	 	 	25	%
	From 50% up to and including 100%

	 	 	50	%






Landlord and Tenant agree that the percentages set forth above apply to the aggregate of all
subleased portions of the Leased Premises during the Lease Term. For example, if Tenant initially
subleases 20% of the Leased Premises, Landlord shall not be entitled to any portion of any Excess
Rentals from such sublease; provided that, if Tenant subsequently subleases an additional 10% of
the Leased Premises, then Landlord shall be entitled to 25% of the aggregate Excess Rentals
payable with respect to the entire 30% portion of the Leased Premises that is then subleased.




7.5 Assignment Consideration And Excess Rentals Defined. For purposes of this Article, including
any amendment to this Article by way of addendum or other writing, the term “Assignment
Consideration” shall mean all consideration to be paid by the assignee to Tenant or to any other
party on Tenant’s behalf or for Tenant’s benefit as consideration for such assignment, after
deduction for the following costs actually paid or actually incurred by Tenant directly in
connection with such assignment: market-rate leasing commissions; rent concessions; reasonable
costs of tenant improvements, capital improvements, building upgrades and permit fees; and
reasonable attorneys’ fees not to exceed five thousand dollars ($5,000.00). The term “Excess
Rentals” shall mean all consideration to be




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paid by the sublessee to Tenant or to any other party on Tenant’s behalf or for
Tenant’s benefit for the sublease of the Leased Premises in excess of the rent due to
Landlord under the terms of this Lease for the same period, after deduction for the
following costs actually paid or actually incurred by Tenant directly in connection with
such sublease: market-rate leasing commissions; rent concessions; reasonable costs of
tenant improvements, capital improvements, building upgrades and permit fees; and
reasonable attorneys’ fees not to exceed five thousand dollars ($5,000.00). Tenant agrees
that the portion of any Assignment Consideration and/or Excess Rentals arising from any
assignment or subletting by Tenant which is to be paid to Landlord pursuant to this Article
now is and shall then be the property of Landlord and not the property of Tenant.




7.6 Payments. All payments required by this Article to be made to Landlord shall be made in
cash in full as and
when they become due. At the time Tenant, Tenant’s assignee or sublessee makes each such
payment to Landlord,
Tenant or Tenant’s assignee or sublessee, as the case may be, shall deliver to Landlord an
itemized statement in
reasonable detail showing the method by which the amount due Landlord was calculated and
certified by the party
making such payment as true and correct.




7.7 Good Faith. The rights granted to Tenant by this Article are granted in
consideration of Tenant’s express
covenant that all pertinent allocations which are made by Tenant between the rental value of
the Leased Premises
and the value of any of Tenant’s personal property which may be conveyed or leased generally
concurrently with
and which may reasonably be considered a part of the same transaction as the permitted assignment
or subletting
shall be made fairly, honestly and in good faith. If Tenant shall breach this covenant,
Landlord may immediately declare Tenant to be in default under the terms of this Lease and
terminate this Lease and/or exercise any other rights and remedies Landlord would have
under the terms of this Lease in the case of a material default by Tenant under this Lease.




7.8 Effect Of Landlord’s Consent. No subletting or assignment, even with the consent of
Landlord, shall relieve
Tenant of its personal and primary obligation to pay rent and to perform all of the other
obligations to be performed
by Tenant hereunder. Consent by Landlord to one or more assignments of Tenant’s interest in
this Lease or to one or
more sublettings of the Leased Premises shall not be deemed to be a consent to any subsequent
assignment or
subletting. If Landlord shall have been ordered by a court of competent jurisdiction to
consent to a requested
assignment or subletting, or such an assignment or subletting shall have been ordered by a
court of competent
jurisdiction over the objection of Landlord, such assignment or subletting shall not be
binding between the assignee
(or sublessee) and Landlord until such time as all conditions set forth in Paragraph 7.4 above
have been fully
satisfied (to the extent not then satisfied) by the assignee or sublessee, including, without
limitation, the payment to
Landlord of all agreed assignment considerations and/or excess rentals then due Landlord.




7.9 Options Personal. If Landlord consents to an assignment or subletting hereunder and this
Lease contains any
renewal options, expansion options, rights of first refusal, rights of first negotiation or
any other rights or options
pertaining to additional space in property owned by Landlord or any affiliate of Landlord,
such rights and/or options
shall not run to any assignee or subtenant other than a Successor Entity, it being agreed by
the parties hereto that any
such rights and options are personal to the original Tenant and any Successor Entity named
herein and may not be
otherwise transferred.




7.10 Tenant’s Remedies. Notwithstanding any contrary provision of law, including California
Civil Code section 1995.310, Tenant shall have no right, and Tenant hereby waives and
relinquishes any right, to cancel or terminate this Lease in the event Landlord is
determined to have unreasonably withheld or delayed its consent to a proposed Transfer.




ARTICLE 8




LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY




8.1 Limitation On
Landlord’s Liability And Release. Landlord shall not be liable to
Tenant for, and Tenant hereby releases Landlord and its partners, principals, members,
officers, agents, employees, lenders, attorneys, and consultants (collectively, the
“Landlord Related Parties”) from, any and all liability, whether in contract, tort or on
any other basis, for any injury to or any damage sustained by Tenant, Tenant’s agents,
employees, contractors or




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invitees (collectively, the “Tenant Related Parties”), any damage to Tenant’s
property, or any loss to Tenant’s business, loss of Tenant’s profits or other financial loss of
Tenant resulting from or attributable to the condition of, the management of, the repair or
maintenance of, the protection of, the supply of services or utilities to, the damage in or
destruction of the Leased Premises, or any portion thereof, including without limitation (i) the
failure, interruption, rationing or other curtailment or cessation in the supply of electricity,
water, gas or other utility service to the Leased Premises; (ii) the vandalism or forcible entry
into the Building or the Leased Premises; (iii) the penetration of water into or onto any portion
of the Leased Premises; (iv) the failure to provide security and/or adequate lighting in or about
the Leased Premises, (v) the existence of any design or construction defects within the Leased
Premises; (vi) the failure of any mechanical systems to function properly (such as the HVAC
systems); (vii) the blockage of access to any portion of the Leased Premises, except that Tenant
does not so release Landlord from such liability to the extent such damage was proximately caused
by Landlord’s or any Landlord Related Parties’ gross negligence, willful misconduct, or Landlord’s
or any Landlord Related Parties’ failure to perform an obligation expressly undertaken pursuant to
this Lease after a reasonable period of time shall have lapsed following receipt of written notice
from Tenant to so perform such obligation.




8.2 Tenant’s Indemnification Of Landlord. Tenant shall defend with competent
counsel reasonably satisfactory to Landlord any claims made or legal actions
filed or threatened against Landlord or any of the Landlord Related Parties with
respect to the violation of any Law, or the death, bodily injury, personal
injury, property damage, or interference with contractual or property rights
suffered by any third party occurring within the Leased Premises or resulting
from Tenant’s use or occupancy of the Leased Premises, or resulting from
Tenant’s activities in or about the Leased Premises, and Tenant shall indemnify
and hold Landlord and the Landlord Related Parties harmless from any loss
liability, penalties, or expense whatsoever (including reasonable attorneys’
fees and any loss attributable to vacant space which otherwise would have been
leased, but for such activities) resulting therefrom, except to the extent
proximately caused by the gross negligence or willful misconduct of Landlord or
the Landlord Related Parties. This Paragraph 8.2 shall survive the expiration or
earlier termination of this Lease.




8.3 Landlord’s Indemnification of Tenant. Landlord shall defend with competent
counsel reasonably satisfactory to Tenant, and shall indemnify and hold harmless
Tenant and the Tenant Related Parties, from and against any and all claims,
demands, liabilities, causes of action, suits, judgments, damages and expenses
(including reasonable attorneys’ fees) arising out of or in connection with
Landlord’s failure to perform its obligations under this Lease or the violation
of any Law by Landlord, except to the extent proximately caused by the gross
negligence or willful misconduct of Tenant or the Tenant Related Parties. This
Paragraph 8.3 shall survive the expiration or earlier termination of this Lease.




ARTICLE 9




INSURANCE




9.1 Tenant’s Insurance. Tenant shall maintain insurance complying with all of the following:




     (a) Tenant shall procure, pay for and keep in full force and effect, at all times during the
Lease Term, the following:



               (i) Commercial general liability insurance insuring Tenant against liability for personal
injury, bodily injury, death and damage to property occurring within the Leased Premises, or
resulting from Tenant’s use or occupancy of the Leased Premises, or any portion thereof, or
resulting from Tenant’s activities in or about the Leased Premises, with coverage in an amount
equal to Tenant’s Required Liability Coverage (as set forth in Article 1), which insurance shall
contain a “broad form liability” endorsement insuring Tenant’s performance of Tenant’s obligations
to indemnify Landlord as contained in this Lease.



               (ii) Fire and property damage insurance in so-called “fire and extended coverage” form
insuring Tenant against loss from physical damage to Tenant’s personal property, inventory, trade
fixtures and improvements within the Leased Premises with coverage for the full actual replacement
cost thereof;



               (iii) Plate glass insurance, at actual replacement cost;



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               (iv) Pressure vessel insurance, if applicable;



               (v) Workers’ compensation insurance and any other employee benefit insurance
sufficient to comply with all Laws; and



               (vi) With respect to Alterations, contingent liability and builder’s risk insurance, in
an amount and with coverage reasonably satisfactory to Landlord.



     (b) Each policy of liability insurance required to be carried by Tenant pursuant
to this paragraph or actually carried by Tenant with respect to the Leased
Premises: (i) shall, except with respect to insurance required by subparagraph
(a)(vi) above, name Landlord, and such others as are reasonably designated by
Landlord, as additional insureds; (ii) shall be primary insurance providing that
the insurer shall be liable for the full amount of the loss, up to and including
the total amount of liability set forth in the declaration of coverage, without
the right of contribution from or prior payment by any other insurance coverage
of Landlord; (iii) shall be in a form reasonably satisfactory to Landlord; (iv)
shall be carried with companies reasonably acceptable to Landlord with Best’s
ratings of at least A and XI; (v) shall provide that such policy shall not be
subject to cancellation, lapse or change except after at least thirty days prior
written notice to Landlord, and (vi) shall contain a so-called “severability” or
“cross liability” endorsement. Each policy of property insurance maintained by
Tenant with respect to the Leased Premises or any property therein (i) shall
provide that such policy shall not be subject to cancellation, lapse or change
except after at least thirty days prior written notice to Landlord and (ii)
shall contain, to the extent commercially reasonable to obtain, a waiver and/or
a permission to waive by the insurer of any right of subrogation against
Landlord, its partners, principals, members, officers, employees, agents and
contractors, which might arise by reason of any payment under such policy or by
reason of any act or omission of Landlord, its partners, principals, members,
officers, employees, agents and contractors.



     (c) Prior to the time Tenant or any of its contractors enters the Leased
Premises, Tenant shall deliver to Landlord, with respect to each policy of
insurance required to be carried by Tenant pursuant to this Article, a
certificate of the insurer certifying in form reasonably satisfactory to
Landlord that a policy has been issued, premium paid, providing the coverage
required by this Paragraph and containing the provisions specified herein. With
respect to each renewal or replacement of any such insurance, the requirements
of this Paragraph must be complied with not less than fifteen days prior to the
expiration or cancellation of the policies being renewed or replaced. Landlord
may, at any time and from time to time, inspect any and all insurance policies
required to be carried by Tenant pursuant to this Article. If Landlord’s Lender,
insurance broker, advisor or counsel reasonably determines at any time that the
amount of coverage set forth in Paragraph 9.1(a) for any policy of insurance
Tenant is required to carry pursuant to this Article is not adequate, then
Tenant shall increase the amount of coverage for such insurance to such greater
amount as Landlord’s Lender, insurance broker, advisor or counsel reasonably
deems adequate.



     (d) Tenant shall have the right to self-insure for the insurance required by
this Paragraph 9.1 so long as the long-term, unsecured debt of Tenant is rated
“A” or better by a major credit rating agency. Tenant shall also have the right
to provide the insurance required hereunder with a so-called umbrella policy.
Tenant shall have the right to self-insure for the insurance required by
Paragraph 9.1(a)(v) so long as Tenant has obtained qualified self-insurer status
for such insurance from the California Department of Industrial Relations.



9.2 Landlord’s Insurance. With respect to insurance maintained by Landlord:




     (a) Landlord shall maintain, as the minimum coverage required of it by this Lease, fire and
property damage insurance in so-called “fire and extended coverage” form insuring Landlord (and
such others as Landlord may designate) against loss from physical damage to the Leased Premises or
any part thereof with coverage of not less than one hundred percent (100%) of the full actual
replacement cost thereof and against loss of rents for a period of not less than six months. Such
fire and property damage insurance, at Landlord’s election but without any requirements on
Landlord’s behalf to do so, (i) may be written in so-called “all risk” form; (ii) may provide
coverage for physical damage to the improvements so insured for up to the entire full actual
replacement cost thereof; (iii) may be endorsed to cover loss or damage caused by any additional
perils against which Landlord may elect to insure, including earthquake and/or flood; and/or (iv)
may provide coverage for loss of rents for a period of up to twelve months. Landlord shall not be
required to cause such insurance to cover any of Tenant’s personal



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property, inventory, and trade fixtures, or any modifications, alterations or
improvements made or constructed by Tenant to or within the Leased Premises. Landlord shall use
commercially reasonable efforts to obtain such insurance at competitive rates.




     (b) Landlord shall maintain commercial general liability insurance insuring
Landlord (and such others as are designated by Landlord) against liability for
personal injury, bodily injury, death, and damage to property occurring in, on
or about, or resulting from the use or occupancy of the Leased Premises, or any
portion thereof, with combined single limit coverage of at least Three Million
Dollars ($3,000,000). Landlord may carry such greater coverage as Landlord or
Landlord’s Lender, insurance broker, advisor or counsel may from time to time
determine is reasonably necessary, under the circumstances, for the adequate
protection of Landlord and the Leased Premises.



     (c) Landlord may maintain any other insurance which in Landlord’s reasonable
opinion is prudent to carry under the given circumstances, provided such
insurance is commonly carried by owners of property similarly situated and
operating under similar circumstances.



9.3 Mutual Waiver Of Subrogation. Landlord hereby releases Tenant, and Tenant hereby releases
Landlord and its respective partners, principals, members, officers, agents, employees and
servants, from any and all liability for loss, damage or injury to the property of the other in or
about the Leased Premises which is caused by or results from a peril or event or happening which
is covered by insurance actually carried and in force at the time of the loss by the party
sustaining such loss; provided, however, that such waiver shall be effective only to the extent
permitted by the insurance covering such loss and to the extent such insurance is not prejudiced
thereby.




ARTICLE 10




DAMAGE TO LEASED PREMISES




10.1 Landlord’s Duty To Restore. If the Leased Premises or any portion thereof are damaged
by any peril after the Effective Date of this Lease, Landlord shall restore the same, as and when
required by this paragraph, unless this Lease is terminated by Landlord pursuant to Paragraph 10.3
or by Tenant pursuant to Paragraph 10.4. If this Lease is not so terminated, then upon the
issuance of all necessary governmental permits, Landlord shall commence and diligently prosecute
to completion the restoration of the Leased Premises to the extent then allowed by Law, to
substantially the same condition in which it existed as of the Lease Commencement Date. Landlord’s
obligation to restore shall be limited to actual receipt of insurance proceeds and to the
improvements constructed by Landlord. Landlord shall have no obligation to restore any
improvements made by Tenant to the Leased Premises after the Effective Date of this Lease or any
of Tenant’s personal property, inventory or trade fixtures.




10.2 Insurance Proceeds. All insurance proceeds available from the fire and property damage
insurance carried by Landlord shall be paid to and become the property of Landlord. If this Lease
is terminated pursuant to either Paragraph 10.3 or 10.4, all insurance proceeds available from
insurance carried by Tenant which cover loss of property that is Landlord’s property or would
become Landlord’s property on termination of this Lease shall be paid to and become the property
of Landlord, and the remainder of such proceeds shall be paid to and become the property of
Tenant. If this Lease is not terminated pursuant to either Paragraph 10.3 or 10.4, all insurance
proceeds available from insurance carried by Tenant which cover loss to property that is
Landlord’s property shall be paid to and become the property of Landlord, and all proceeds
available from such insurance which cover loss to property which would only become the property of
Landlord upon the termination of this Lease shall be paid to and remain the property of Tenant.
The determination of Landlord’s property and Tenant’s property shall be made pursuant to Paragraph
6.2.




10.3 Landlord’s Right To Terminate. Landlord shall have the option to terminate this Lease in the
event any of the following occurs, which option may be exercised only by delivery to Tenant of a
written notice of election to terminate within thirty days after the date of such damage or
destruction:




     (a) The Leased Premises are damaged by any peril covered by valid and collectible insurance
actually carried by Landlord and in force at the time of such damage or destruction (an “insured
peril”) to such an extent that



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the estimated cost to restore the Leased Premises exceeds the insurance proceeds
available from insurance actually carried by Landlord, plus the deductible amount specified in
such insurance policy;




     (b) The Leased Premises are damaged by an uninsured peril, which peril Landlord
was not required to insure against pursuant to the provisions of Article 9 of
this Lease.



     (c) The Leased Premises are damaged by any peril and, because of Laws then in
force, the Leased Premises (i) cannot be restored at reasonable cost or (ii) if
restored, cannot be used for the same use being made thereof before such damage.



10.4 Tenant’s Right To Terminate. If the Leased Premises or any portion thereof are damaged by any
peril and Landlord does not elect to terminate this Lease or is not entitled to terminate this
Lease pursuant to this Article, then as soon as reasonably practicable, but in any event within
ninety (90) days after the date of such damage or destruction, Landlord shall furnish Tenant with
the written opinion of Landlord’s architect or construction consultant as to when the restoration
work required of Landlord may be complete. Tenant shall have the option to terminate this Lease in
the event any of the following occurs, which option may be exercised only by delivery to Landlord
of a written notice of election to terminate within fifteen (15) days after Tenant receives from
Landlord the estimate of the time needed to complete such restoration:




     (a) If the time estimated to substantially complete the restoration exceeds nine
(9) months from and after the date the architect’s or construction consultant’s
written opinion is delivered; or



     (b) If the damage occurred within eighteen (18) months of the last day of the
Lease Term and the time estimated to substantially complete the restoration
exceeds one-half (1/2) of the number of full months then remaining in the Lease
Term from and after the date the architect’s or construction consultant’s
written opinion is delivered.



10.5 Tenant’s Waiver. Landlord and Tenant agree that the provisions of Paragraph 10.4 above,
captioned “Tenant’s Right To Terminate,” are intended to supersede and replace the provisions
contained in California Civil Code, Section 1932, Subdivision 2, and California Civil Code,
Section 1934, and accordingly, Tenant hereby waives the provisions of such Civil Code Sections and
the provisions of any successor Civil Code Sections or similar laws hereinafter enacted.




10.6 Abatement Of Rent. In the event of damage to the Leased Premises which does not result in the
termination of this Lease, the Base Monthly Rent (and any Additional Rent) shall be temporarily
abated during the period of restoration in proportion to the degree to which Tenant’s use of the
Leased Premises is impaired by such damage.




ARTICLE 11




CONDEMNATION




11.1 Tenant’s Right To Terminate. Except as otherwise provided in Paragraph 11.4 below
regarding temporary takings, Tenant shall have the option to terminate this Lease if, as a result
of any taking, all or a material portion of the Leased Premises is taken and the part of the
Leased Premises that remains cannot, within a reasonable period of time, be made reasonably
suitable for the continued operation of Tenant’s business as conducted in the Leased Premises
immediately prior to the taking. Tenant must exercise such option within a reasonable period of
time, to be effective on the later to occur of (i) the date that possession of that portion of the
Leased Premises that is condemned is taken by the condemnor or (ii) the date Tenant vacated the
Leased Premises.




11.2 Landlord’s Right To Terminate. Except as otherwise provided in Paragraph 11.4 below regarding
temporary takings, Landlord shall have the option to terminate this Lease if, as a result of any
taking, (i) all or a material portion of the Leased Premises is taken and the part of the Leased
Premises that remains cannot, within a reasonable period of time, be made reasonably suitable for
the continued operation of Tenant’s business as conducted in the Leased Premises immediately prior
to the taking, or (iii) because of the Laws then in force, the Leased Premises may




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not be used for the same use being made before such taking, whether or not restored
as required by Paragraph 11.3 below. Any such option to terminate by Landlord must be exercised
within a reasonable period of time, to be effective as of the date possession is taken by the
condemnor.




11.3 Restoration. If any part of the Leased Premises is taken and this Lease is not terminated,
then Landlord shall, to the extent not prohibited by Laws then in force, repair any damage
occasioned thereby to the remainder thereof to a condition reasonably suitable for Tenant’s
continued operations and otherwise, to the extent practicable, in the manner and to the extent
provided in Paragraph 10.1.




11.4 Temporary Taking. If a portion of the Leased Premises is temporarily taken for a period of nine
(9) months or less and such period does not extend beyond the Lease Expiration Date, this Lease
shall remain in effect. If any portion of the Leased Premises is temporarily taken for a period
which exceeds nine (9) months or which extends beyond the Lease Expiration Date, then the rights of
Landlord and Tenant shall be determined in accordance with Paragraphs 11.1 and 11.2 above.




11.5 Division Of Condemnation Award. Any award made for any taking of the Leased Premises, or any
portion thereof, shall belong to and be paid to Landlord, and Tenant hereby assigns to Landlord
all of its right, title and interest in any such award; provided,
however, that Tenant shall be
entitled to receive any portion of the award that is made specifically (i) for the taking of
personal property, inventory or trade fixtures belonging to Tenant, (ii) for the interruption of
Tenant’s business or its moving costs, or (iii) for the value of any leasehold improvements
installed and paid for by Tenant. The rights of Landlord and Tenant regarding any condemnation
shall be determined as provided in this Article, and each party hereby waives the provisions of
Section 1265.130 of the California Code of Civil Procedure, and the provisions of any similar law
hereinafter enacted, allowing either party to petition the Supreme Court to terminate this Lease
and/or otherwise allocate condemnation awards between Landlord and Tenant in the event of a taking
of the Leased Premises.




11.6 Abatement Of Rent. In the event of a taking of the Leased Premises which does not result in a
termination of this Lease, then, as of the date possession is taken by the condemning authority,
the Base Monthly Rent (and any Additional Rent) shall be abated in proportion to the degree to
which, and during the period of time for which, Tenant’s use of the Leased Premises is impaired.




11.7 Taking Defined. The term “taking” or “taken” as used in this Article 11 shall mean any
transfer or conveyance of all or any portion of the Leased Premises to a public or quasi-public
agency or other entity having the power of eminent domain pursuant to or as a result of the
exercise of such power by such an agency, including any inverse condemnation and/or any sale or
transfer by Landlord of all or any portion of the Leased Premises to such an agency under threat
of condemnation or the exercise of such power.




ARTICLE 12




DEFAULT AND REMEDIES




12.1 Events Of Tenant’s Default. Tenant shall be in default of its obligations under this Lease if
any of the following events (each an “Event of Default”) occur:




     (a) Tenant shall have failed to pay Base Monthly Rent or any regularly scheduled
Additional Rent when due and such failure continues for more than five (5) days
after Landlord gives written notice thereof to Tenant; provided, however, that
after the second such failure in a calendar year, only the passage of time, but
no further notice, shall be required to establish an Event of Default in the
same calendar year; or



     (b) Tenant shall have failed to pay any other Additional Rent or other amount of
money or charge payable by Tenant hereunder as and when such additional rent or
amount or charge becomes due and payable and such failure continues for more
than ten (10) days after Landlord gives written notice to Tenant of Tenant’s
failure to



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make payment when it was due; provided, however, that after the second such failure
in a calendar year, only the passage of time, but no further notice, shall be required to
establish an Event of Default in the same calendar year; or




     (c) Tenant shall have failed to perform any term, covenant or condition of this
Lease (except those requiring the payment of Base Monthly Rent or Additional
Rent, which failures shall be governed by subparagraphs (a) and (b) above)
within thirty (30) days after written notice from Landlord to Tenant specifying
the nature of such failure and requesting Tenant to perform same; provided,
however, that Tenant shall use diligence to cure such failure as soon as
reasonably practicable; and provide, further, that if, by the nature of such
term, covenant or condition, such failure cannot reasonably be cured within such
period of thirty (30) days, an Event of Default shall not exist as long as
Tenant commences with due diligence and dispatch the curing of such failure
within such period of thirty (30) days and, having so commenced, thereafter
prosecutes with diligence and dispatch and completes the curing of such failure
within a reasonable time; or




     (d) Tenant shall have sublet the Leased Premises or assigned or encumbered its
interest in this Lease in violation of the provisions contained in Article 7,
whether voluntarily or by operation of Law; or




     (e) Tenant shall have abandoned the Leased Premises (Tenant’s vacating the
Leased Premises shall not be deemed an abandonment, so long as Tenant continues
to pay Rent and to perform all of Tenant’s other obligations as required under
this Lease); or




     (f) Tenant shall have permitted or suffered the sequestration or attachment of,
or execution on, or the appointment of a custodian or receiver with respect to,
all or any substantial part of the property or assets of Tenant or any property
or asset essential to the conduct of Tenant’s business, and Tenant shall have
failed to obtain a return or release of the same within thirty days thereafter,
or prior to sale pursuant to such sequestration, attachment or
levy, whichever is earlier; or




     (g) Tenant shall have made a general assignment of all or a substantial part of
its assets for the benefit of its creditors; or




     (h) Tenant shall have allowed (or sought) to have entered against it a decree or order which:
(i) grants or constitutes an order for relief, appointment of a trustee, or condemnation or a
reorganization plan under the bankruptcy laws of the United States; (ii) approves as properly
filed a petition seeking liquidation or reorganization under said bankruptcy laws or any other
debtor’s relief law or similar statute of the United States or any state thereof; or (iii)
otherwise directs the winding up or liquidation of Tenant; provided, however, if any decree or
order was entered without Tenant’s consent or over Tenant’s objection, Landlord may not terminate
this Lease pursuant to this Subparagraph if such decree or order is rescinded or reversed within
thirty days after its original entry; or




     (i) Tenant shall have availed itself of the protection of any debtor’s relief law, moratorium
law or other similar law which does not require the prior entry of a decree or order.




12.2 Landlord’s Remedies. In the event of an Event of Default by Tenant, and without limiting
Landlord’s right to indemnification as provided in Article 8.2, Landlord shall have the following
remedies, in addition to all other rights and remedies provided by law or otherwise provided in
this Lease, to which Landlord may resort cumulatively, or in the alternative:




     (a) Landlord may, at Landlord’s election, keep this Lease in effect and enforce,
by an action at law or in equity, all of its rights and remedies under this
Lease including, without limitation, (i) the right to recover the rent and other
sums as they become due by appropriate legal action, (ii) the right to make
payments required by Tenant, or perform Tenant’s obligations and be reimbursed
by Tenant for the cost thereof with interest at the then maximum rate of
interest not prohibited by law from the date the sum is paid by Landlord until
Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive relief
and specific performance to prevent Tenant from violating the terms of this
Lease and/or to compel Tenant to perform its obligations under this Lease, as
the case may be.



     (b) Landlord may, at Landlord’s election, if such election is made prior to a
complete cure of the applicable Event of Default by Tenant, terminate this Lease
by giving Tenant written notice of termination, in which





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event this Lease shall terminate on the date set forth for termination in such notice. Any
termination under this subparagraph shall not relieve Tenant from its obligation to pay to
Landlord all Base Monthly Rent and Additional Rent then or thereafter due, or any other sums due
or thereafter accruing to Landlord, or from any claim against Tenant for damages previously
accrued or then or thereafter accruing, In no event shall any one or more of the following actions
by Landlord, in the absence of a written election by Landlord to terminate this Lease constitute a
termination of this Lease:




          (i) Appointment of a receiver or keeper in order to protect Landlord’s
interest hereunder;




          (ii) Consent to any subletting of the Leased Premises or assignment of this Lease by Tenant,
whether pursuant to the provisions hereof or otherwise; or




          (iii) Any action taken by Landlord or its partners, principals, members, officers, agents,
employees, or servants, which is intended to mitigate the adverse effects of any breach of this
Lease by Tenant, including, without limitation, any action taken to maintain and preserve the
Leased Premises on any action taken to relet the Leased Premises or any portion thereof for the
account at Tenant and in the name of Tenant.




     (c) In the event Tenant breaches this Lease and abandons the Leased Premises, Landlord may
terminate
this Lease, but this Lease shall not terminate unless Landlord gives Tenant written notice of
termination. If Landlord
does not terminate this Lease by giving written notice of termination, Landlord may enforce
all its rights and
remedies under this Lease, including the right and remedies provided by California Civil Code
Section 1951.4
(“lessor may continue lease in effect after lessee’s breach and abandonment and recover rent
as it becomes due, if
lessee has right to sublet or assign, subject only to reasonable limitations”), as in effect
on the Effective Date of this
Lease.



     (d) In the event Landlord terminates this Lease, Landlord shall be entitled, at Landlord’s
election, to the
rights and remedies provided in California Civil Code Section 1951.2, as in effect on the
Effective Date of this Lease. For purposes of computing damages pursuant to Section 1951.2, an interest rate equal to
the maximum rate of
interest then not prohibited by law shall be used where permitted. Such damages shall include,
without limitation:



          (i) The worth at the time of award of the amount by which the unpaid rent for the balance of
the term after the time of award exceeds the amount of such rental loss that Tenant proves could
be reasonably avoided, computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco, at the time of award plus one percent; and




          (ii) Any other amount reasonably necessary to compensate Landlord for all detriment
proximately caused by Tenant’s failure to perform Tenant’s obligations under this Lease, or which
in the ordinary course of things would be likely to result therefrom, including without
limitation, the following: (i) expenses for cleaning, repairing or restoring the Leased Premises,
(ii) expenses for altering, remodeling or otherwise improving the Leased Premises for the purpose
of reletting, including removal of existing leasehold improvements and/or installation of
additional leasehold improvements (regardless of how the same is funded, including reduction of
rent, a direct payment or allowance to a new tenant, or otherwise), (iii) broker’s fees allocable
to the remainder of the term of this Lease, advertising costs and other expenses of reletting the
Leased Premises; (iv) costs of carrying and maintaining the Leased Premises, such as taxes,
insurance premiums, utility charges and security precautions, (v) expenses incurred in removing,
disposing of and/or storing any of Tenant’s personal property, inventory or trade fixtures
remaining therein; (vi) reasonable attorney’s fees, expert witness fees, court costs and other
reasonable expenses incurred by Landlord (but not limited to taxable costs) in retaking possession
of the Leased Premises, establishing damages hereunder, and releasing the Leased Premises; and
(vii) any other reasonable expenses, costs or damages otherwise incurred or suffered as a result
of Tenant’s default.




12.3 Landlord’s Default And Tenant’s Remedies. In the event Landlord fails to perform its
obligations under this Lease, Landlord shall nevertheless not be in default under the terms of
this Lease until such time as Tenant shall have first given Landlord written notice specifying the
nature of such failure to perform its obligations, and then only after Landlord shall have had
thirty (30) days following its receipt of such notice within which to perform such obligations;
provided that, Landlord shall use diligence to cure such failure as soon as reasonably
practicable; and provided, further, that if longer than thirty (30) days is reasonably required in
order to perform such obligations,





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Landlord shall have such longer period. In the event of Landlord’s default as above set
forth, then, and only then, Tenant may then proceed in equity or at law to compel Landlord to
perform its obligations and/or to recover damages proximately caused by such failure to perform
(except as and to the extent Tenant has waived its right to damages as provided in this Lease). In
addition, in the event that any entity not controlling, controlled by or under common control with
iStar Financial Inc. succeeds to Landlord’s rights and obligations under this Lease, and such
successor Landlord defaults beyond the notice and cure period as above set forth, then, and only
then, Tenant may perform such obligations at such successor Landlord’s cost, in which event such
successor Landlord shall promptly reimburse Tenant for the amount of such costs reasonably and
actually incurred by Tenant (unless Tenant would have been responsible to pay such costs as
Additional Rent had Landlord performed such obligations).




12.4 Limitation Of Tenant’s Recourse. Tenant’s recourse shall be limited to Landlord’s interest in
the Leased Premises, which interest shall include undistributed net proceeds from a sale, other
transfer or refinancing of the Leased Premises. In addition, if Landlord is a corporation, trust,
partnership, joint venture, limited liability company, unincorporated association, or other form
of business entity, Tenant agrees that (i) the obligations of Landlord under this Lease shall not
constitute personal obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals of such business entity, and (ii) Tenant shall
have no recourse to the assets of such officers, directors, trustees, partners, joint venturers,
members, owners, stockholders or principals, except as otherwise provided by Law. Additionally, if
Landlord is a partnership or limited liability company, then Tenant covenants and agrees:




     (a) No partner or member of Landlord shall be sued or named as a party in any suit or action
brought by
Tenant with respect to any alleged breach of this Lease (except to the extent necessary to
secure jurisdiction over the
partnership and then only for that sole purpose);



     (b) No service of process shall be made against any partner or member of Landlord except for
the sole
purpose of securing jurisdiction over the partnership; and



     (c) No writ of execution will ever be levied against the assets of any partner or member of
Landlord other
than to the extent of his or her interest in the assets of the partnership or limited
liability company constituting
Landlord.



Tenant further agrees that each of the foregoing covenants and agreements shall be enforceable by
Landlord and by any partner or member of Landlord and shall be applicable to any actual or alleged
misrepresentation or nondisclosure made regarding this Lease or the Leased Premises or any actual
or alleged failure, default or breach of any covenant or agreement either expressly or implicitly
contained in this Lease or imposed by statute or at common law.




12.5 Tenant’s Waiver. Landlord and Tenant agree that the provisions of Paragraph 12.3 above are
intended to supersede and replace the provisions of California Civil Code Sections 1932(1), 1941
and 1942, and accordingly, Tenant hereby waives the provisions of California Civil Code Sections
1932(1), 1941 and 1942 and/or any similar or successor law regarding Tenant’s right to terminate
this Lease or to make repairs and deduct the expenses of such repairs from the rent due under this
Lease.




ARTICLE 13




GENERAL PROVISIONS




13.1 Taxes On Tenant’s Property. Tenant shall pay before delinquency any and all taxes,
assessments, license fees, use fees, permit fees and public charges of whatever nature or
description levied, assessed or imposed against Tenant or Landlord by a governmental agency
arising out of, caused by reason of or based upon Tenant’s estate in this Lease, Tenant’s
ownership of property, improvements made by Tenant to the Leased Premises, improvements made by
Landlord for Tenant’s use within the Leased Premises, Tenant’s use (or estimated use) of public
facilities or services or Tenant’s consumption (or estimated consumption) of public utilities,
energy, water or other resources (collectively, “Tenant’s Interest”). Upon demand by Landlord if
Landlord suspects that such payments have not been made by Tenant, Tenant shall furnish Landlord
with satisfactory evidence of these payments. If any such taxes,






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assessments, fees or public charges are levied against Landlord, Landlord’s property, the Leased
Premises or any portion thereof, or if the assessed value of the Leased Premises or any portion
thereof is increased by the inclusion therein of a value placed upon Tenant’s Interest, regardless
of the validity thereof, Landlord shall have the right to require Tenant to pay such taxes, and if
not paid and satisfactory evidence of payment delivered to Landlord prior to delinquency, then
Landlord shall have the right to pay such taxes on Tenant’s behalf and to invoice Tenant for the
same. If Tenant shall not have paid such taxes then Tenant shall, within thirty (30) days of the
date it receives an invoice from Landlord setting forth the amount of such taxes, assessments,
fees, or public charge so levied, pay to Landlord, as Additional Rent, the amount set forth in such
invoice. Failure by Tenant to pay the amount so invoiced within such time period shall be
conclusively deemed a default by Tenant under this Lease. Tenant shall have the right to bring suit
in any court of competent jurisdiction to recover from the taxing authority the amount of any such
taxes, assessments, fees or public charges so paid.




13.2 Holding Over. This Lease shall terminate without further notice on the Lease Expiration Date
(as set forth in Article 1). Any holding over by Tenant after expiration of the Lease Term shall
neither constitute a renewal nor extension of this Lease nor give Tenant any rights in or to the
Leased Premises except as expressly provided in this Paragraph. Any such holding over shall be
construed to be a tenancy from month to month, on the same terms and conditions herein specified
insofar as applicable, except that the Base Monthly Rent shall be increased to an amount equal to
one hundred fifty percent (150%) of the Base Monthly Rent payable during the last full month
immediately preceding such holding over.




13.3 Subordination To Mortgages. This Lease is subject to and subordinate to all ground leases,
mortgages and deeds of trust which affect the Leased Premises or any portion thereof and which are
of public record as of the Effective Date of this Lease, and to all renewals, modifications,
consolidations, replacements and extensions thereof. However, if the lessor under any such ground
lease or any lender holding any such mortgage or deed of trust shall advise Landlord that it
desires or requires this Lease to be made prior and superior thereto, then, upon written request
of Landlord to Tenant, Tenant shall promptly execute, acknowledge and deliver any and all
customary or reasonable documents or instruments which Landlord and such lessor or lender deems
necessary or desirable to make this Lease prior thereto. Tenant hereby consents to Landlord’s
ground leasing the land underlying the Leased Premises and/or encumbering the Leased Premises or
any portion thereof as security for future loans on such terms as Landlord shall desire, all of
which future ground leases, mortgages or deeds of trust shall be subject to and subordinate to
this Lease. However, if any lessor under any such future ground lease or any lender holding such
future mortgage or deed of trust shall desire or require that this Lease be made subject to and
subordinate to such future ground lease, mortgage or deed of trust, then Tenant agrees, within ten
days after Landlord’s written request therefor, to execute, acknowledge and deliver to Landlord
any and all commercially reasonable documents or instruments requested by Landlord or by such
lessor or lender as may be necessary or proper to assure the subordination of this Lease to such
future ground lease, mortgage or deed of trust, but only if such lessor or lender agrees to
recognize Tenant’s rights under this Lease and agrees not to disturb Tenant’s quiet possession of
the Leased Premises so long as there has been no Event of Default by Tenant. If Landlord assigns
the Lease as security for a loan, Tenant agrees to execute such commercially reasonable documents
as are reasonably requested by the lender and to provide reasonable provisions in the Lease
protecting such lender’s security interest which are customarily required by institutional lenders
making loans secured by a deed of trust. Landlord shall use reasonable efforts to provide Tenant,
within ten (10) days after the Lease Commencement Date, with a Subordination, Nondisturbance and
Attornment Agreement substantially in the form attached as Exhibit D hereto from any ground
lessor(s), mortgage holder(s) or lien holder(s) (or in such other form such other party may
reasonably require). In addition, during the Lease Term and any extensions thereof, Landlord shall
use commercially reasonable efforts to provide Tenant with such a Subordination, Nondisturbance
and Attornment Agreement from any future ground lessor, mortgage holder or lien holder that may
require that this Lease be subordinated to its interest in the Leased Premises.




13.4 Tenant’s Attornment Upon Foreclosure. Tenant shall, upon request, attorn (i) to any purchaser
of the Leased Premises or any portion thereof at any foreclosure sale or private sale conducted
pursuant to any security instruments encumbering the Leased Premises or any portion thereof, (ii)
to any grantee or transferee designated in any deed given in lieu of foreclosure of any security
interest encumbering the Leased Premises or any portion thereof, or (iii) to the lessor under an
underlying ground lease of the land underlying the Leased Premises or any portion thereof, should
such ground lease be terminated; provided that such purchaser, grantee or lessor recognizes
Tenant’s rights under this Lease, except that such purchaser, grantee or lessor shall not: (a) be
liable for any act or





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omission of any prior landlord under this Lease; (b) be subject to any offsets or defenses
which Tenant might have against any prior landlord (prior to such purchaser, grantee or lessor
becoming landlord under this Lease); (c) be bound by any Rent or Additional Rent which Tenant
might have paid to any prior landlord greater than the current month or more than one (1) month
prior to the due date for the then current installment; or (d) be liable for any deposits made or
prepaid Rent paid by Tenant hereunder unless such deposits or payments have been transferred to
such purchaser, grantee or lessor.




13.5 Mortgagee Protection. In the event of any default on the part of Landlord, Tenant will give
notice by registered mail to any Lender or lessor under any underlying ground lease who shall
have requested, in writing, to Tenant that it be provided with such notice, and Tenant shall
offer such Lender or lessor a reasonable opportunity to cure the default, including time to
obtain possession of the Leased Premises by power of sale or judicial foreclosure or other
appropriate legal proceedings if reasonably necessary to effect a cure.




13.6 Estoppel Certificates.




     (a) Tenant will, following any request by Landlord, promptly execute and deliver to Landlord
an estoppel
certificate in the form attached as Exhibit E (i) certifying that this Lease is unmodified and
in full force and effect,
or, if modified, stating the nature of such modification and certifying that this Lease, as so
modified, is in full force
and effect, (ii) stating the date to which the rent and other charges are paid in advance, if
any, (iii) acknowledging
that there are not, to Tenant’s knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying
such defaults if any are claimed, and (iv) certifying such other information about this Lease
as may be reasonably
requested by Landlord, its Lender or prospective lenders, investors or purchasers of the
Leased Premises or any
portion thereof. Tenant’s failure to execute and deliver such estoppel certificate within ten
(10) business days after
receipt of Landlord’s request therefor shall constitute an acknowledgment by Tenant that the
statements included
therein are true and correct without exception. Landlord and Tenant intend that any statement
delivered pursuant to
this paragraph may be relied upon by any Lender or purchaser or prospective Lender or
purchaser of the Leased
Premises, or any interest in any portion thereof.



     (b) Landlord will, following any request by Tenant, promptly execute and deliver to Tenant an
estoppel
certificate in reasonable form (i) certifying that this Lease is unmodified and in full force
and effect, or, if modified,
stating the nature of such modification and certifying that this Lease, as so modified, is in
full force and effect,
(ii) stating the date to which the rent and other charges are paid in advance, if any, (iii)
acknowledging that there are
not, to Landlord’s knowledge, any uncured defaults on the part of Tenant hereunder, or
specifying such defaults if
any are claimed, and (iv) certifying such other information about this Lease as may be
reasonably requested by
Tenant. Landlord’s failure to execute and deliver such estoppel certificate within ten (10)
business days after receipt
of Tenant’s request therefor shall constitute an acknowledgment by Landlord that the
statements included therein are
true and correct without exception.



13.7 Financial Statements and Information. If Tenant is not a reporting company under the
Securities and Exchange Act of 1934, as amended, Tenant shall deliver to Landlord and to any
lender or purchaser designated by Landlord the following information certified to be true,
complete and correct by an officer of Tenant: within 90 days after the end of each fiscal year of
Tenant, a balance sheet of Tenant and its consolidated subsidiaries as of the end of such year, a
statements of profits and losses of Tenant and its subsidiaries for such year, and an audited
statement of cash flows of Tenant and its consolidated subsidiaries for such year, setting forth
in each case, in comparative form, the corresponding figures for the preceding fiscal year in
reasonable detail and scope and certified by independent certified public accountants of
recognized national standing selected by Tenant; and within 45 days after the end of each fiscal
quarter of Tenant a balance sheet of Tenant and its consolidated subsidiaries as at the end of
such quarter, statements of profits and losses of Tenant and its consolidated subsidiaries for
such quarter and a statement of cash flows of Tenant and its consolidated subsidiaries for such
quarter, setting forth in each case, in comparative form, the corresponding figures for the
similar quarter of the preceding year, in reasonable detail and scope, and certified to be true
and complete by a financial officer of Tenant having knowledge thereof; the foregoing financial
statements all being prepared in accordance with generally accepted accounting principles,
consistently applied.




13.8 Transfer By Landlord. Landlord and its successors in interest shall have the right to transfer
their interest in the Leased Premises or any portion thereof at any time and to any person or
entity. In the event of any such transfer,




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the Landlord originally named herein (and in the case of any subsequent transfer, the
transferor), from the date of such transfer, (i) shall be automatically relieved, without any
further act by any person or entity, of all liability for the performance of the obligations of
the Landlord hereunder which may accrue after the date of such transfer and (ii) shall be relieved
of all liability for the performance of the obligations of the Landlord hereunder which have
accrued before the date of transfer if its transferee agrees to assume and perform all such prior
obligations of the Landlord hereunder (provided such transfer is not a fraudulent conveyance).
Tenant shall attorn to any such transferee. After the date of any such transfer, the term
“Landlord” as used herein shall mean the transferee of such interest in the Leased Premises.




13.9 Force Majeure. The obligations of each of the parties under this Lease (other than the
obligations to pay money) shall be temporarily excused if such party is prevented or delayed in
performing such obligations by reason of any strikes, lockouts or labor disputes; government
restrictions, regulations, controls, action or inaction; civil commotion; or extraordinary
weather, fire or other acts of God.




13.10 Notices. Any notice required or desired to be given by a party regarding this Lease shall be
in writing and shall be personally served, or in lieu of personal service may be given by
reputable overnight courier service, postage prepaid, addressed to the other party as follows (any
“copy to” notices may be given by regular U.S. mail):




	 	 	 	 	 
	

	 	If to Landlord:
	 	TriNet Milpitas Associates, LLC
	

	 	 	 	c/o iStar Financial Inc.
	

	 	 	 	1114 Avenue of the Americas, 27th Floor
	

	 	 	 	New York, NY 10036
	

	 	 	 	Attention: Asset Manager
	 
	 	 	 	 
	

	 	with a copy to:
	 	TriNet Milpitas Associates, LLC
	

	 	 	 	c/o iStar Financial Inc.
	

	 	 	 	One Embarcadero Center, Suite 3300
	

	 	 	 	San Francisco, CA 94111
	

	 	 	 	Attention: Chief Operating Officer
	 
	 	 	 	 
	

	 	and with a copy to:
	 	TriNet Milpitas Associates, LLC
	

	 	 	 	c/o iStar Financial Inc.
	

	 	 	 	3480 Preston Ridge Road, Suite 575
	

	 	 	 	Alpharetta, GA 30005
	

	 	 	 	Attention: Director of Lease Administration
	 
	 	 	 	 
	

	 	If to Tenant:
	 	LSI Logic Corporation
	

	 	 	 	1621 Barber Lane, M/S D-106
	

	 	 	 	Milpitas, California 95035-7458
	

	 	 	 	Attn: General Counsel
	 
	 	 	 	 
	

	 	with a copy to:
	 	LSI Logic Corporation
	

	 	 	 	1621 Barber Lane, M/S D-129
	

	 	 	 	Milpitas, California 95035-7458
	

	 	 	 	Attn: Corporate Real Estate






Any notice given in accordance with the foregoing shall be deemed received upon actual receipt or
refusal to accept delivery.




13.11 Attorneys’ Fees. In the event any party shall bring any action, arbitration proceeding or
legal proceeding alleging a breach of any provision of this Lease, to recover Rent, to terminate
this Lease, or to enforce, protect, determine or establish any term or covenant of this Lease or
rights or duties hereunder of either party, the prevailing party shall be entitled to recover from
the non-prevailing party as a part of such action or proceeding, or in a separate action for that
purpose brought within one year from the determination of such proceeding, reasonable attorneys’
fees, expert witness fees, court costs and other reasonable expenses incurred by the prevailing
party.






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13.12 Definitions. Any term that is given a special meaning by any provision in this Lease
shall, unless otherwise specifically stated, have such meaning wherever used in this Lease or in
any Addenda or amendment hereto. In addition to the terms defined in Article 1, the following
terms shall have the following meanings:




     (a) Real Property Taxes. The term “Real Property Tax” or “Real Property Taxes” shall each mean
Tenant’s Proportionate Share of (i) all taxes, assessments, levies and other charges of any kind or
nature whatsoever, general and special, foreseen and unforeseen (including all instruments of
principal and interest required to pay any general or special assessments for public improvements
and any increases resulting from reassessments caused by any change in ownership or new
construction), now or hereafter imposed by any governmental or quasi-governmental authority or
special district having the direct or indirect power to tax or levy assessments, which are levied
or assessed for whatever reason against the Leased Premises or any portion thereof, or Landlord’s
interest herein, or the fixtures, equipment and other property of Landlord that is an integral part
of the Leased Premises and located thereon, (ii) all charges, levies or fees imposed by any
governmental authority against Landlord by reason of or based upon the use of or number of parking
spaces within the Leased Premises, the amount of public services or public utilities used or
consumed (e.g. water, gas, electricity, sewage or waste water disposal) at the Leased Premises, the
number of people employed by tenants of the Leased Premises, the size (whether measured in area,
volume, number of tenants or whatever) or the value of the Leased Premises, or the type of use or
uses conducted within the Leased Premises, and all costs and fees (including reasonable attorneys’
fees) reasonably incurred by Landlord in contesting any Real Property Tax and in negotiating with
public authorities as to any Real Property Tax, and (iii) all tax increases due to improvements
made to the Leased Premises by Tenant or by Landlord on behalf of Tenant. If, at any time during
the Lease Term, the taxation or assessment of the Leased Premises prevailing as of the Effective
Date of this Lease shall be altered so that in lieu of or in addition to any the Real Property Tax
described above there shall be levied, awarded or imposed (whether by reason of a change in the
method of taxation or assessment, creation of a new tax or charge, or any other cause) an
alternate, substitute, or additional use or charge (i) on the value, size, use or occupancy of the
Leased Premises or Landlord’s interest therein or (ii) on or measured by the gross receipts, income
or rentals from the Leased Premises, or on Landlord’s business of owning, leasing or managing the
Leased Premises or (iii) computed in any manner with respect to the operation of the Leased
Premises, then any such tax or charge, however designated, shall be included within the meaning of
the terms “Real Property Tax” or “Real Property Taxes” for purposes of this Lease. If any Real
Property Tax is partly based upon property or rents unrelated to the Leased Premises, then only
that part of such Real Property Tax that is fairly allocable to the Leased Premises shall be
included within the meaning of the terms “Real Property Tax” or “Real Property Taxes.”
Notwithstanding the foregoing, the terms “Real Property Tax” or “Real Property Taxes” shall not
include any (a) estate, inheritance, transfer, gift, capital levy, capital stock, franchise or
income tax, (b) items included as a Property Maintenance Cost, (c) reserves for future Real
Property Taxes, (d) environmental assessments, charges or liens arising in connection with the
remediation of Pre-existing Hazardous Materials (unless caused by Tenant or a Tenant or any Tenant
Related Party) or of other Hazardous Materials caused by Landlord or any Landlord Related Party, or
(e) any personal property taxes attributable to items not owned by Tenant or utilized by Tenant in
connection with Tenant’s operations at the Leased Premises.



     (b) Landlord’s Insurance Costs. The term “Landlord’s Insurance Costs” shall mean
Tenant’s
Proportionate Share of the actual costs to Landlord to carry and maintain the policies of fire
and property damage
insurance for the Leased Premises or any portion thereof and general liability and any other
insurance required or
permitted to be carried by Landlord pursuant to Article 9, together with the amortized portion
of any deductible
amounts paid by Landlord upon the occurrence of any insured casualty or loss for which such
amortization falls
within the Lease Term (provided such amounts are amortized only if they are deemed a capital
expense in
accordance with generally accepted accounting principles, in which event they shall be
amortized over the useful life
of the applicable item, based on generally accepted industry standards).



     (c) Property Maintenance Costs. The term “Property Maintenance Costs” shall mean Tenant’s
Proportionate Share of all costs and expenses (except Landlord’s Insurance Costs and Real
Property Taxes) paid or
incurred by Landlord in protecting, operating, maintaining, repairing and preserving the
Leased Premises and all
parts thereof, including without limitation, (i) a market rate professional management fee not
to exceed four percent
(4%) of Base Monthly Rent if Tenant is not self-managing the Leased Premises, (ii) the
amortizing portion of any
costs incurred by Landlord in the making of any modifications, alterations or improvements
required by any
governmental authority as set forth in Article 6, which are so amortized during the Lease
Term, (iii) the amortizing
portion of any costs incurred by Landlord pursuant to the last sentence of Paragraph 5.1(a),
and (iv)such other




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reasonable costs as may be paid or incurred with respect to operating, maintaining, and
preserving the Leased Premises, except those items specifically set forth in Paragraph 5.1(b) to
be performed at Landlord’s sole cost and expense. To the extent that any Property Maintenance
Costs are incurred for items deemed to be capital improvements in accordance with generally
accepted accounting principles, then such costs shall be amortized by Landlord over the useful
life of such items, and the monthly amortized cost of items as so amortized shall be considered a
Property Maintenance Cost.




     (d) Intentionally Deleted.



     (e) Property Operating Expenses. The term “Property Operating Expenses” shall mean and include
all
Real Property Taxes, plus all Landlord’s Insurance Costs, plus all Property Maintenance Costs.
Notwithstanding the
foregoing, Property Operating Expenses shall not include: (a) the cost of capital improvements
(except as set forth in
this Lease); (b) depreciation; (c) all fees, costs, principal payments of mortgage and
interest related to any
mortgage(s) or deed(s) of trust, all payments made under any ground or underlying lease and
all other non-operating
debts of Landlord; (d) the cost of repairs or other work to the extent Landlord is reimbursed
by insurance or
condemnation proceeds; (e) costs in connection with leasing space in the Building, (including,
without limitation,
brokerage commissions, marketing costs, attorneys’ fees, lease concessions, rental abatements
and construction
allowances granted to specific tenants); (f) costs incurred in connection with the sale,
financing or refinancing of the
Leased Premises (other than any increase in Real Property Taxes that may result therefrom);
(g) fines, interest and
penalties incurred due to the late payment by Landlord of Property Operating Expenses (unless
caused by the act or
omission of Tenant); (h) organizational expenses associated with the creation, maintenance and
operation of the
entity which constitutes Landlord; (i) any penalties or damages that Landlord pays to Tenant
under this Lease; (j)
costs associated with damage or repairs to any part of the Project or necessitated by the
gross negligence or willful
misconduct of Landlord or any Landlord Related Party; (k) reserves for Landlord’s repair,
replacement or
improvement of the Leased Premises or any portion thereof; (1) executive salaries and
benefits; (m) legal fees,
accountant fees and other expenses incurred in connection with the defense of Landlord’s title
to or interest in the
Leased Premises or any part thereof; or (n) any costs, fines, or penalties incurred due to
violations by Landlord or
any Landlord Related Party of any governmental rule or authority, this Lease, or due to
Landlord’s gross negligence
or willful misconduct.



     (f) Law. The term “Law” or “Laws” shall mean any judicial decisions and any statute,
constitution,
ordinance, resolution, regulation, rule, administrative order, or other requirements of any
municipal, county, state,
federal, or other governmental agency or authority having jurisdiction over the parties to
this Lease, the Leased
Premises or any portion thereof, or either of them, in effect either at the Effective Date of
this Lease or at any time
during the Lease Term, including, without limitation, any regulation, order, or policy of any
quasi-official entity or
body (e.g. a board of fire examiners or a public utility or special district).



     (g) Lender. The term “Lender” shall mean the holder of any promissory note or other evidence
of
indebtedness secured by the Leased Premises or any portion thereof.



     (h) Private Restrictions. The term “Private Restrictions” shall mean (as they may exist from
time to time) any and all covenants, conditions and restrictions, private agreements, easements,
and any other recorded documents or instruments affecting the use of the Leased Premises or any
portion thereof.



     (i) Rent. The term “Rent” shall mean collectively Base Monthly Rent and all Additional
Rent.



13.13 General Waivers. One party’s consent to or approval of any act by the other party requiring
the first party’s consent or approval shall not be deemed to waive or render unnecessary the first
party’s consent to or approval of any subsequent similar act by the other party. No waiver of any
provision hereof, or any waiver of any breach of any provision hereof, shall be effective unless
in writing and signed by the waiving party. The receipt by Landlord of any Rent or payment with or
without knowledge of the breach of any other provision hereof shall not be deemed a waiver of any
such breach. No waiver of any provision of this Lease shall be deemed a continuing waiver unless
such waiver specifically states so in writing and is signed by both Landlord and Tenant. No delay
or omission in the exercise of any right or remedy accruing to either party upon any breach by the
other party under this Lease shall impair such right or remedy or be construed as a waiver of any
such breach theretofore or thereafter occurring.





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The waiver by either party of any breach of any provision of this Lease shall not be deemed
to be a waiver of any subsequent breach of the same or any other provisions herein contained.




13.14 Miscellaneous. Should any provisions of this Lease prove to be invalid or illegal, such
invalidity or illegality shall in no way affect, impair or invalidate any other provisions hereof,
and such remaining provisions shall remain in full force and effect. Time is of the essence with
respect to the performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed an original for all
purposes. This Lease shall, subject to the provisions regarding assignment, apply to and bind the
respective heirs, successors, executors, administrators and assigns of Landlord and Tenant. The
term “party” shall mean Landlord or Tenant as the context implies. If Tenant consists of more than
one person or entity, then all members of Tenant shall be jointly and severally liable hereunder.
This Lease shall be construed and enforced in accordance with the Laws of the State in which the
Leased Premises are located. The captions in this Lease are for convenience only and shall not be
construed in the construction or interpretation of any provision hereof. When the context of this
Lease requires, the neuter gender includes the masculine, the feminine, a partnership, corporation,
limited liability company, joint venture, or other form of business entity, and the singular
includes the plural. The terms “must,” “shall,” “will,” and “agree” are mandatory. The term “may”
is permissive. When a party is required to do something by this Lease, it shall do so at its sole
cost and expense without right of reimbursement from the other party unless specific provision is
made therefor. Where Landlord’s consent is required hereunder, the consent of any Lender shall also
be required to the extent such Lender consent is required under the applicable loan documents.
Landlord and Tenant shall both be deemed to have drafted this Lease, and the rule of construction
that a document is to be construed against the drafting party shall not be employed in the
construction or interpretation of this Lease. Where Tenant is obligated not to perform any act or
is not permitted to perform any act, Tenant is also obligated to restrain any others reasonably
within its control, including agents, invitees, contractors, subcontractors and employees, from
performing such act. Landlord shall not become or be deemed a partner or a joint venturer with
Tenant by reason of any of the provisions of this Lease.




ARTICLE 14




CORPORATE AUTHORITY




BROKERS AND ENTIRE AGREEMENT




14.1 Corporate Authority. If Tenant is a corporation, each individual executing this Lease on
behalf of such corporation represents and warrants that Tenant is validly formed and duly
authorized and existing, that Tenant is qualified to do business in the State in which the Leased
Premises are located, that Tenant has the full right and legal authority to enter into this Lease,
and that he or she is duly authorized to execute and deliver this Lease on behalf of Tenant in
accordance with its terms. Landlord represents and warrants that Landlord has the full right and
legal authority to enter into this Lease, and that the person(s) executing this Lease is duly
authorized to execute and deliver this Lease on behalf of Landlord in accordance with its terms.




14.2 Brokerage Commissions. Within five (5) business days after the Effective Date of this Lease,
Landlord shall pay to the Brokers (as named in Article 1) a one-time fee of $358,600.00. Tenant
represents, warrants and agrees that it has not had any dealings with any real estate broker(s),
leasing agent(s), finder(s) or salesmen, other than the Brokers with respect to the lease by it of
the Leased Premises pursuant to this Lease, and that, except for the onetime fee described in the
immediately foregoing sentence, it will assume all obligations and responsibility with respect to
the payment of such Brokers, and that it will indemnify, defend with competent counsel, and hold
Landlord harmless from any liability for the payment of any real estate brokerage commissions,
leasing commissions or finder’s fees claimed by any other real estate broker(s), leasing agent(s),
finder(s), or salesmen to be earned or due and payable by reason of Tenant’s agreement or promise
(implied or otherwise) to pay (or to have Landlord pay) such a commission or finder’s fee by
reason of its leasing the Leased Premises pursuant to this Lease.




14.3 Entire Agreement. This Lease and the Exhibits (as described in Article 1), which Exhibits are
by this reference incorporated herein, constitute the entire agreement between the parties, and
there are no other agreements, understandings or representations between the parties relating to
the lease by Landlord of the Leased





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Premises to Tenant, except as expressed herein. No subsequent changes, modifications or
additions to this Lease shall be binding upon the parties unless in writing and signed by both
Landlord and Tenant.




14.4 Landlord’s Representations. Tenant acknowledges that neither Landlord nor any of its agents
made any representations or warranties respecting the Leased Premises or any portion thereof, upon
which Tenant relied in entering into the Lease, which are not expressly set forth in this Lease.
Tenant further acknowledges that neither Landlord nor any of its agents made any representations as
to (i) whether the Leased Premises may be used for Tenant’s intended use under existing Law, or
(ii) the suitability of the Leased Premises for the conduct of Tenant’s business, or (iii) the
exact square footage of the Leased Premises, and that Tenant relies solely upon its own
investigations with respect to such matters. Tenant expressly waives any and all claims for damage
by reason of any statement, representation, warranty, promise or other agreement of Landlord or
Landlord’s agent(s), if any, not contained in this Lease or in any Exhibit attached hereto.




ARTICLE 15




OPTIONS TO EXTEND




15.1 So long as LSI Logic Corporation or any Successor Entity (but not any other transferee) is
the Tenant hereunder and occupies at least fifty percent (50%) of the Leased Premises, and subject
to the condition set forth in clause (b) below, Tenant shall have two options to extend the term
of this Lease with respect to the entirety of the Leased Premises, the first for a period of
thirty (30) months from the expiration of the eighth (8th) year of the Lease Term (the
“First Extension Period”), and the second (the “Second Extension Period”) for a period of thirty
(30) months from the expiration of the First Extension Period, subject to the following
conditions:




     (a) Each option to extend shall be exercised, if at all, by notice of exercise given to
Landlord by Tenant
not less than two hundred seventy (270) days prior to the expiration of the eighth
(8th) year of the Lease Term or the
expiration of the First Extension Period, as applicable;



     (b) Anything herein to the contrary notwithstanding, if there is an Event of Default, either
at the time
Tenant exercises either extension option or on the commencement date of the First Extension
Period or the Second
Extension Period, as applicable, Landlord shall have, in addition to all of Landlord’s other
rights and remedies
provided in this Lease, the right to terminate such option(s) to extend upon notice to Tenant.



15.2 In the event the applicable option is exercised within the time periods set forth herein, the
Lease shall be extended for the term of the applicable extension period upon all of the terms and
conditions of this Lease, provided that the Base Monthly Rent for each extension period shall be
ninety-five percent (95%) of the “Fair Market Rent” for the Leased Premises. For purposes hereof,
“Fair Market Rent” shall mean the base rent for the Leased Premises, based upon the rental rate
per square foot that an unaffiliated landlord and tenant would agree to for a lease on similar
terms of this Lease for the relevant Extension Period for comparable premises (in quality and
size) in the vicinity of the Leased Premises, with such comparable base rent including
consideration for the presence or absence of tenant improvements or allowances existing or to be
provided under the lease for such premises, rental abatements, lease takeovers/assumptions, moving
expenses and other forms of rental concessions, real estate brokerage commissions, proposed term
of lease, extent of service provided or to be provided under the lease for such premises, the date
of the particular rate under consideration became or is to become effective and any other relevant
terms or conditions, all determined pursuant to the process described below.




15.3 Within 30 days after receipt of Tenant’s notice of exercise, Landlord shall notify Tenant in
writing of Landlord’s estimate of the Base Monthly Rent for the applicable extension period, based
on the provisions of Paragraph 15.2 above. Within 30 days after receipt of such notice from
Landlord, Tenant shall have the right, exercisable by delivering written notice to Landlord,
either to (i) accept Landlord’s statement of Base Monthly Rent as the Base Monthly Rent for the
applicable extension period; or (ii) reject Landlord’s statement of Base Monthly Rent as the Base
Monthly Rent for the applicable extension period, in which case Landlord and Tenant, acting
reasonably and in good faith, shall attempt to reach an agreement as to an acceptable Base Monthly
Rent within ten (10) business days after delivery of Tenant’s rejection notice (the “Negotiation
Period”). If the parties cannot agree upon an acceptable Base Monthly Rent by the end of the
Negotiation Period, then Landlord’s estimate of Fair





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Market Rent shall be submitted to arbitration, which shall be conducted pursuant to the
provisions hereof. Failure on the part of Tenant to accept or reject Landlord’s statement of Fair
Market Rent within such 30-day period shall constitute acceptance of the Base Monthly Rent for the
applicable extension period as calculated by Landlord. To the extent that arbitration has not been
completed prior to the expiration of any preceding period for which Base Monthly Rent has been
determined, Tenant shall pay Base Monthly Rent at the rate calculated by Landlord, with the
potential for an adjustment to be made once Fair Market Rent is ultimately determined by
arbitration.




15.4 In the event of arbitration, the judgment or the award rendered in any such arbitration may be
entered in any court having jurisdiction and shall be final and binding between the parties. The
arbitration shall be conducted and determined in the County of Santa Clara in accordance with the
then prevailing rules of the American Arbitration Association or its successor for arbitration of
commercial disputes except to the extent that the procedures mandated by such rules shall be
modified as follows:




     (a) Tenant shall make demand for arbitration in writing no later than the last day of the
Negotiation
Period, specifying therein the name and address of the person to act as the arbitrator on its
behalf. The arbitrator
shall be qualified as a real estate appraiser familiar with the Fair Market Rent of similar
industrial, research and
development, or office space in the Silicon Valley area who would qualify as an expert witness
over objection to
give opinion testimony addressed to the issue in a court of competent jurisdiction. Failure on
the part of Tenant to
make a proper demand in a timely manner for such arbitration shall constitute a waiver of the
right thereto. Within
15 days after the service of the demand for arbitration, Landlord shall give notice to Tenant,
specifying the name and
address of the person designated by Landlord to act as arbitrator on its behalf who shall be
similarly qualified. If
Landlord fails to notify Tenant of the appointment of its arbitrator, within or by the time
above specified, then the
arbitrator appointed by Tenant shall be the sole arbitrator to determine the issue.



     (b) In the event that two arbitrators are chosen pursuant to Paragraph 15.4(a) above, the
arbitrators so
chosen shall, within 15 days after the second arbitrator is appointed, select a third
arbitrator, who shall be similarly
qualified. If the arbitrators do not select a third arbitrator within said 15-day period, then
either party, on behalf of
both, may request appointment of such a qualified person by the then Chief Judge of the United
States District Court
having jurisdiction over the County of Santa Clara, acting in his private and not in his
official capacity, and the other
party shall not raise any question as to such Judge’s full power and jurisdiction to entertain
the application for and
make the appointment. The three arbitrators shall decide the dispute by following the
procedure set forth below.



     (c) The arbitrator selected by each of the parties shall state in writing his or her
determination of the Fair
Market Rent supported by the reasons therefor with counterpart copies to each party. The
arbitrators shall arrange
for a simultaneous exchange of such proposed resolutions. The role of the third arbitrator
shall be to select which of
the two proposed resolutions most closely approximates his or her determination of Fair Market
Rent. The third
arbitrator shall have no right to propose a middle ground or any modification of either of the
two proposed
resolutions. The resolution he or she chooses as most closely approximating his determination
shall constitute the
decision of the arbitrators and be final and binding upon the parties.



     (d) In the event of a failure, refusal or inability of any arbitrator to act, his or her
successor shall be
appointed by him or her, but in the case of the third arbitrator, his or her successor shall
be appointed in the same
manner as provided for appointment of the third arbitrator. The arbitrators shall decide the
issue within 15 days after
the appointment of the third arbitrator. Any decision in which the arbitrator appointed by
Landlord and the arbitrator
appointed by Tenant concur shall be binding and conclusive upon the parties. Each party shall
pay the fee and
expenses of its respective arbitrator and both shall share the fee and expenses of the third
arbitrator, and the
attorneys’ fees and expenses of counsel for the respective parties and of witnesses shall be
paid by the respective
party engaging such counsel or calling such witnesses.



     (e) The arbitrators shall have the right to consult experts and competent authorities to
obtain factual
information or evidence pertaining to a determination of Fair Market Rent, but any such
consultation shall be made
in the presence of both parties with full right on their part to cross-examine. The
arbitrators shall render their
decision and award in writing with counterpart copies to each party. The arbitrators shall
have no power to modify
the provisions of this Lease.




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ARTICLE 16




TELEPHONE SERVICE




     Notwithstanding any other provision of this Lease to the contrary:



     (a) So long as the entirety of the Leased Premises is leased to Tenant:



          (i) Landlord shall have no responsibility for providing to Tenant any telephone equipment,
including wiring, within the Leased Premises or for providing telephone service or connections from
the utility to the Leased Premises; and




          (ii) Landlord makes no warranty as to the quality, continuity or availability of the
telecommunications services in the Leased Premises or any portion thereof, and Tenant hereby waives
any claim against Landlord for any actual or consequential damages (including damages for loss of
business) in the event Tenant’s telecommunications services in any way are interrupted, damaged or
rendered less effective, except to the extent caused by the gross negligence or willful misconduct
of Landlord or any Landlord Related Party. Tenant accepts the telephone equipment (including,
without limitation, the INC, as defined below) in its “AS-IS” condition, and Tenant shall be solely
responsible for contracting with a reliable third party vendor to assume responsibility for the
maintenance and repair thereof (which contract shall contain provisions requiring such vendor to
inspect the INC periodically (the frequency of such inspections to be determined by such vendor
based on its experience and professional judgment), and requiring such vendor to meet local and
federal requirements for telecommunications material and workmanship). Unless caused by the gross
negligence or willful misconduct of Landlord or any Landlord Related Party, Landlord shall not be
liable to Tenant and Tenant waives all claims against Landlord whatsoever, whether for personal
injury, property damage, loss of use of the Leased Premises, or otherwise, due to the interruption
or failure of telephone services to the Leased Premises. Tenant hereby holds Landlord harmless and
agrees to indemnify, protect and defend Landlord from and against any liability for any damage,
loss or expense due to any failure or interruption of telephone service to the Leased Premises for
any reason other than the gross negligence or willful misconduct of Landlord or any Landlord
Related Party.




     (b) At such time as the entirety of the Leased Premises is no longer leased to Tenant,
Landlord shall in its
sole discretion have the right, by written notice to Tenant, to elect to assume limited
responsibility for INC, as
provided below, and upon such assumption of responsibility by Landlord, this subparagraph (b)
shall apply
prospectively.



          (i) Landlord shall provide Tenant access to all quantity of pairs in the Building
intra-building network cable (“INC”). Tenant’s access to the INC shall be solely by arrangements
made by Tenant, as Tenant may elect, directly with Pacific Bell or Landlord (or such vendor as
Landlord may designate), and Tenant shall pay all reasonable charges as may be imposed in
connection therewith. Pacific Bell’s charges shall be deemed to be reasonable. Subject to the
foregoing, Landlord shall have no responsibility for providing to Tenant any telephone equipment,
including wiring, within the Leased Premises or for providing telephone service or connections
from the utility to the Leased Premises, except as required by law.




          (ii) Except as permitted in this Lease, Tenant shall not alter, modify, add to or disturb any
telephone wiring in the Leased Premises without the Landlord’s prior written consent, which shall
not be unreasonably withheld, conditioned or delayed. Tenant shall be liable to Landlord for any
damage to the telephone wiring in the Leased Premises due to the act, negligent or otherwise, of
Tenant or any employee, contractor or other agent of Tenant. Tenant shall have access to the
telephone closets within the Building in the manner and under such reasonable procedures
established by Landlord. Tenant shall promptly notify Landlord of any actual or suspected failure
of telephone service to the Leased Premises.




          (iii) All costs incurred by Landlord for the installation, maintenance, repair and
replacement of telephone wiring in the Leased Premises shall be a Property Maintenance Cost,
provided that, if any such cost is deemed a capital expenditure in accordance with generally
accepted accounting principles, it shall be amortized over the useful life of the improvement as
described elsewhere in this Lease.






-34-









 








          (iv) Landlord makes no warranty as to the quality, continuity or availability of the
telecommunications services in the Leased Premises, and Tenant hereby waives any claim against
Landlord for any actual or consequential damages (including damages for loss of business) in the
event Tenant’s telecommunications services in any way are interrupted, damaged or rendered less
effective, except to the extent caused by the grossly negligent or willful act or omission by
Landlord or any Landlord Related Party. Tenant acknowledges that Landlord meets its duty of care to
Tenant with respect to the INC by contracting with a reliable third party vendor to assume
responsibility for the maintenance and repair thereof (which contract shall contain provisions
requiring such vendor to inspect the INC periodically (the frequency of such inspections to be
determined by such vendor based on its experience and professional judgment), and requiring such
vendor to meet local and federal requirements for telecommunications material and workmanship).
Subject to the foregoing, unless caused by the gross negligence or willful misconduct of Landlord
or any Landlord Related Party, Landlord shall not be liable to Tenant and Tenant waives all claims
against Landlord whatsoever, whether for personal injury, property damage, loss of use of the
Leased Premises, or otherwise, due to the interruption or failure of telephone services to the
Leased Premises. Tenant hereby holds Landlord harmless and agrees to indemnify, protect and defend
Landlord from and against any liability for any damage, loss or expense due to any failure or
interruption of telephone service to the Leased Premises for any reason other than the gross
negligence or willful misconduct of Landlord or any Landlord Related Party.




-35-









 





     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the Effective
Date of this Lease first above set forth.



	 	 	 	 	 
	 	 	LANDLORD:
	 
	 	 	 	 
	 	 	TRINET MILPITAS ASSOCIATES, LLC, a Delaware
	 	 	limited liability company
	 
	 	 	 	 
	

	 	By:
	TriNet Realty Investors II,
Inc., a Maryland corporation, its
Managing Member
	 
	 	 	 	 
	

	 	 	By:	 /s/ Erich Stiger
	

	 	 	Name: 	
Erich Stiger
	

	 	 	Title:	 Vice President
	 
	 	 	 	 
	 	 	TENANT:
	 
	 	 	 	 
	 	 	LSI LOGIC CORPORATION,
	 	 	a Delaware corporation
	 
	 	 	 	 
	 	 	By:	 /s/ Bryon Look
	 	 	Name: Bryon Look
	 	 	Title: EVP, Chief Financial Officer
	 
	 	 	 	 
	 	 	By:	/s/ John J. D’Errico
	 	 	Name: John J. D’Errico
	 	 	Title: EVP, Storage & Communications Components
	 
	 	 	 	 
	LSI Logic Legal Department

	 	 	 	LSI Logic Corp. Real Estate
	 
	 	 	 	 
	Date
02/20/04

	 	 	 	Date 02-20-04
	 
	 	 	 	 
	Approved as to form

	 	 	 	Approved as to form
	 
	 	 	 	 
	By 
/s/ AndrewS. Hughes
                   
  	 	 	By 	
/s/ Donald
A. Costello  







-36-










 






Exhibit A




SITE PLAN




-1-









 













 









 








Exhibit B




FLOOR PLAN




-1-









 













 









 








Exhibit C




RULES AND REGULATIONS




     The following rules and regulations shall apply to the Leased Premises, the
Building, the parking areas associated therewith, and the appurtenances thereto:



     1. Sidewalks, doorways, vestibules, halls, stairways, loading dock areas
and associated overhead doors, and other similar areas shall not be obstructed
by Tenant or any Tenant Related Party or used by Tenant or any Tenant Related
Party for purposes other than ingress and egress to and from the Leased Premises
and for going from one to another part of the Building.



     2. Plumbing (including outside drains and sump pumps), fixtures and
appliances shall be used only for the purposes for which designed, and no
sweepings, rubbish, rags or other unsuitable material shall be thrown or
deposited therein. Damage resulting to any such fixtures or appliances from
misuse by Tenant or any Tenant Related Party shall be paid by Tenant.



     3. No signs (other than those existing as of the Lease Commencement Date),
advertisements or notices shall be painted or affixed on or to any windows or
doors or other part of the Building visible from the exterior of the Leased
Premises without the prior written consent of Landlord. Except as consented to
in writing by Landlord or in accordance with Tenant’s building standard
improvements, other than those existing as of the Lease Commencement Date, no
draperies, curtains, blinds, shades, screens or other devices shall be hung at
or used in connection with any window or exterior door or doors of the Leased
Premises. No awning shall be permitted on any part of the Leased Premises.
Tenant shall not place anything against or near glass partitions or doors, or
windows which might appear unsightly from outside the Leased Premises.



     4. Tenant, at its expense, shall be responsible for providing all door
locks in the Leased Premises and shall provide to Landlord, at Tenant’s expense,
contemporaneously with the installation of such devices, a master key, card
keys, access codes or other means to allow Landlord immediate access to all
areas within the Leased Premises, subject to the terms and conditions of the
Lease.



     5. Landlord may prescribe weight limitations and determine the locations
for safes and other heavy equipment or items, which shall in all cases be placed
in the Building so as to distribute weight in a manner reasonably acceptable to
Landlord which may include the use of such supporting devices as Landlord may
reasonably require. All damages to the Building caused by the installation or
removal of any property of Tenant, or done by Tenant’s property while in the
Building, shall be repaired at the expense of Tenant.



     6. Corridor doors, when not in use, shall be kept closed. Nothing shall be
swept or thrown into the corridors, halls, elevator shafts or stairways. No
birds or animals (other than seeing-eye dogs) shall be brought into or kept in,
on or about the Leased Premises. No portion of the Leased Premises shall at any
time be used or occupied as sleeping or lodging quarters.



     7. Tenant shall not make or permit any vibration or improper, objectionable
or unpleasant noises-or odors in the Building. Tenant shall not introduce,
disturb or release asbestos or PCBs into or from the Leased Premises.



     8. Tenant shall not keep in the Leased Premises any flammable or explosive
fluid or substance. Tenant shall not install or operate any steam or gas engine
or boiler, or other mechanical apparatus in the Leased Premises without the
prior written consent of Landlord. The use of oil, gas or inflammable liquids
for heating, lighting or any other purpose is expressly prohibited. Explosives
or other articles deemed extra hazardous shall not be brought into the Leased
Premises.



     9. Landlord will not be responsible for lost or stolen personal property,
money or jewelry from the Leased Premises or any part thereof regardless of
whether such loss occurs when the area is locked against entry or not.



-1-









 





     10. All vehicles are to be currently licensed, in good operating condition,
parked for business purposes having to do with Tenant’s business operated in the
Leased Premises, parked within designated parking spaces, one vehicle to each
space. No vehicle shall be parked as a “billboard” vehicle in the parking lot.
Any vehicle parked improperly may be towed away. Tenant, Tenant’s agents,
employees, vendors and customers who do not operate or park their vehicles as
required shall subject the vehicle to being towed at the expense of the owner or
driver.



     11. Tenant shall not permit storage outside the Building, including outside
storage of trucks and other vehicles, or dumping of waste or refuse or permit
any harmful materials to be placed in any drainage system or sanitary system in
or about the Leased Premises.



     12. Tenant shall not park or operate any semi-trucks or semi-trailers in
the parking areas associated with the Leased Premises.



     13. Tenant will not permit any person to bring onto the Leased Premises any
handgun, firearm or other weapons of any kind, or illegal drugs.



     14. Landlord may, but shall not be required to, designate an area for
smoking outside the Building.



-2-









 





Exhibit D




FORM OF SUBORDINATION, NONDISTURBANCE & ATTORNMENT AGREEMENT







	 	 	 
	Deed of Trust: A Deed of Trust, Security Agreement and Fixture Filing dated as of executed by
Landlord, to
                    as Trustee, for the benefit of Beneficiary securing repayment of the Note to be recorded in
the records of the County in which the Property is located.
	 
	 	 
	 
	 
	 	 
	Lease and Lease Date: The lease entered into by Landlord and Tenant dated as of covering the
Premises. [Add amendments]
	 
	 	 
	 
	 
	 	 
	Property:

	 	[Property Name]
	

	 	[Street Address]
	

	 	[City, State, Zip]
	 
	 	 
	

	 	The Property is more particularly described on Exhibit A.








     THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (the “Agreement”) is made by and
among Tenant, Landlord, and Beneficiary and affects the Property described in Exhibit A. Certain
terms used in this Agreement are defined in the Defined Terms. This Agreement is entered into as
of the Execution Date with reference to the following facts:



          A. Landlord and Tenant have entered into the Lease covering [certain space in the
improvements located in and upon] the Property (the “Premises”).




          B. Beneficiary has made or is making the Loan to Landlord evidenced by the Note. The
Note is secured, among other documents, by the Deed of Trust.




          C. Landlord, Tenant and Beneficiary all wish to subordinate the Lease to the lien of the
Deed of Trust.




          D. Tenant has requested that Beneficiary agree not to disturb Tenant’s rights in the Premises
pursuant to the Lease in the event Beneficiary forecloses the Deed of Trust, or acquires the
Property pursuant to the
trustee’s power of sale contained in the Deed of Trust or receives a transfer of the Property
by a conveyance in lieu
of foreclosure of the Property (collectively, a “Foreclosure Sale”) but only if Tenant is not
then in default under the
Lease and Tenant attorns to Beneficiary or a third party purchaser at the Foreclosure Sale (a
“Foreclosure
Purchaser”).




-1-









 





     NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein,
the parties agree as follows:



        
  1.
Subordination. The Lease and the leasehold estate created by the
Lease and all of Tenant’s rights under the Lease are and shall
remain subordinate to the Deed of Trust and the lien of the Deed of Trust, to
all rights of Beneficiary under the Deed of Trust and to all renewals,
amendments, modifications and extensions of the Deed of Trust.



        
  2. Acknowledgments
by Tenant. Tenant agrees that: (a) Tenant
has notice that the Lease and the rent and all other sums due under the Lease
have been or are to be assigned to Beneficiary as security for the Loan. In the
event that Beneficiary notifies Tenant of a default under the Deed of Trust and
requests Tenant to pay its rent and all other sums due under the Lease to
Beneficiary, Tenant shall pay such sums directly to Beneficiary or as
Beneficiary may otherwise request, (b) Tenant shall, provided Landlord has given
Tenant written notice of Beneficiary’s notice address, send a copy of any notice
or statement under the Lease to Beneficiary at the same time Tenant sends such
notice or statement to Landlord, and (c) this Agreement satisfies any condition
or requirement in the Lease relating to the granting of a nondisturbance
agreement.



      
    3.  Foreclosure
and Sale. In the event of a Foreclosure Sale,




          (a) So long as Tenant complies with this Agreement and there is no
Event of Default (as defined in the Lease), the Lease shall continue in
full force and effect as a direct lease between Beneficiary and Tenant,
and Beneficiary will not disturb the possession of Tenant, subject to this
Agreement. To the extent that the Lease is extinguished as a result of a
Foreclosure Sale, a new lease shall automatically go into effect upon the
same provisions as contained in the Lease between Landlord and Tenant,
except as set forth in this Agreement, for the unexpired term of the Lease
(including any extensions). Tenant agrees to attorn to and accept
Beneficiary as landlord under the Lease and to be bound by and perform all
of the obligations imposed by the Lease, or, as the case may be, under the
new lease, in the event that the Lease is extinguished by a Foreclosure
Sale. Upon Beneficiary’s acquisition of title to the Property, Beneficiary
will perform all of the obligations imposed on the Landlord by the Lease
except as set forth in this Agreement; provided, however, that Beneficiary
shall not be: (i) liable for any act or omission of a prior landlord
(including Landlord); or (ii) subject to any offsets or defenses that
Tenant might have against any prior landlord (including Landlord) unless
such pre-paid rent or security deposit were transferred to Beneficiary; or
(iii) bound by any rent or additional rent which Tenant might have paid in
advance to any prior landlord (including Landlord) for a period in excess
of one month or by any security deposit, cleaning deposit or other sum
that Tenant may have paid in advance to any prior landlord (including
Landlord); or (iv) bound by any amendment, modification, assignment or
termination of the Lease made without the written consent of Beneficiary;
or (v) liable to Tenant or any other party for any conflict between the
provisions of the Lease and the provisions of any other lease affecting
the Property which is not entered into by Beneficiary.




          (b) Upon the written request of Beneficiary after a Foreclosure
Sale, the parties shall execute a lease of the Premises upon the same
provisions as contained in the Lease between Landlord and Tenant, except
as set forth in this Agreement, for the unexpired term of the Lease
(including any extensions).



     
     4. Subordination and Release of
Purchase Options. Tenant
represents that it has no right or option of any nature to purchase the Property
or any portion of the Property or any interest in the Borrower. To the extent
Tenant has or acquires any such right or option, these rights or options are
acknowledged to be subject and subordinate to the Mortgage and are waived and
released as to Beneficiary and any Foreclosure Purchaser.



     
     5. Acknowledgment by
Landlord. In the event of a default
under the Deed of Trust, at the election of Beneficiary, Tenant shall and is
directed to pay all rent and all other sums due under the Lease to Beneficiary.




-2-









 








        
  6. Construction of Improvements. Beneficiary shall not have
any obligation or incur any liability with respect to the completion of the
tenant improvements located in the Premises at the commencement of the term of
the Lease.



         
 7. Notice. All notices under this Agreement shall be deemed
to have been properly given if delivered by overnight courier service or mailed
by United States certified mail, with return receipt requested, postage prepaid
to the party receiving the notice at its address set forth in the Defined Terms
(or at such other address as shall be given in writing by such party to the
other parties) and shall be deemed complete upon receipt or refusal of delivery.



       
   8. Miscellaneous. Beneficiary shall not be subject to any
provision of the Lease that is inconsistent with this Agreement. Nothing
contained in this Agreement shall be construed to derogate from or in any way
impair or affect the lien or the provisions of the Deed of Trust. This Agreement
shall be governed by and construed in accordance with the laws of the State of
in which the Property is located.



       
   9. Liability and Successors and Assigns. This Agreement shall
run with the land and shall inure to the benefit of the parties and, their
respective successors and permitted assigns including a Foreclosure Purchaser.
If a Foreclosure Purchaser acquires the Property or if Beneficiary assigns or
transfers its interest in the Note and Deed of Trust or the Property, all
obligations and liabilities of Beneficiary under this Agreement shall terminate
and be the responsibility of the Foreclosure Purchaser or other party to whom
Beneficiary’s interest is assigned or transferred. The interest of Tenant under
this Agreement may not be assigned or transferred except in connection with an
assignment of its interest in the Lease which has been consented to by
Beneficiary.



-3-









 





     IN WITNESS WHEREOF, the parties have executed this Subordination, Nondisturbance and
Attainment Agreement as of the Execution Date.



     IT IS RECOMMENDED THAT THE PARTIES CONSULT WITH THEIR ATTORNEYS PRIOR TO THE EXECUTION OF THIS
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT.



	 	 	 
	BENEFICIARY:

	 	                                                            ,          a
	

	 	                                                            
	 
	 	 
	

	 	By                                                             
	 
	 	 
	

	 	Its                                                             
	 
	 	 
	TENANT:
	 	 
	 
	 	 
	

	 	a                                                                       
	 
	 	 
	

	 	By                                                             
	 
	 	 
	

	 	Its                                                             
	 
	 	 
	LANDLORD:
	 	 
	 
	 	 
	

	 	a                                                                       
	 
	 	 
	

	 	By                                                             
	 
	 	 
	

	 	Its                                                             






-4-









 





EXHIBIT A




PROPERTY DESCRIPTION





-5-









 








State of                                                             




County of                                                             




On                                         200_ before me,                                                             personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he/she executed the
same in his/her authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.




WITNESS my hand and official seal.




Signature                                                                                  (Seal)





-6-









 








Exhibit E




FORM OF TENANT ESTOPPEL
CERTIFICATE



TENANT ESTOPPEL CERTIFICATE




	 	 	 	 	 
	To:	 	TriNet Milpitas Associates, LLC
	 	 	c/o iStar Financial, Inc.
	 	 	One Embarcadero Center, Suite 3300
	 	 	San Francisco, CA 94111
	 	 	ATTN: Asset Management
	 
	 	 	 	 
	 	 	                                                            
	 	 	                                                            
	 	 	                                                            
	 	 	ATTN:                                               
	 
	 	 	 	 
	

	 	 	 	Re:     Lease,     dated     as     of                                         , 200___     between
                                        , a                                         , as tenant (the original named
tenant under the Lease, together with such tenant’s successors and
assigns, being hereinafter referred to collectively as the
“Tenant”), and TriNet Milpitas Associates, LLC, a Delaware limited
liability company (“Landlord”), covering
certain premises known by the street address                                                             in the
City of Milpitas, County of Santa Clara, State of California (the
“Leased Premises”), as amended as noted on attached Schedule A
(collectively, the “Lease”)






Gentlemen:




     The undersigned Tenant hereby represents, warrants and certifies to
(“                    ”) and Landlord, that:




     1. The Lease has not been modified, changed, altered or amended in any respect, either orally
or in
writing, except as may be indicated on Schedule A attached hereto, and constitutes the entire
agreement between
Tenant and Landlord affecting Tenant’s leasing of the Leased Premises. A true and correct copy
of the Lease is
attached as Schedule B. The Lease is in full force and effect and is not subject to any
contingencies or conditions
not set forth in the Lease.



     2. The term of the Lease commenced on , and will expire on                                                              ,                      and will expire on
                                                             ,                     ; the Tenant has no option to renew the Lease Term except as follows:                    .



     3. The monthly base rent payable under the Lease as of the current month is $                     . Tenant
has paid all fixed and additional rent and other sums which are due and payable under the Lease
through the date hereof, and Tenant has not made and will not make any prepayments of fixed rent
(except first month’s rent) for more than one month in advance. To Tenant’s best knowledge, there
are no presently unexpired rental concessions or abatements due under the Lease except as set forth
on Schedule A attached hereto. To Tenant’s best knowledge, Tenant has no credits, offsets,
abatements, defenses, counterclaims or deductions against any rental or other payments due under
the Lease or with respect to its performance of the other terms and conditions of the Lease, and
has asserted no claims against Landlord except as set forth on Schedule A attached hereto.



     4.Tenant has paid to Landlord a security deposit in the amount of $                    . Landlord is the
beneficiary under a letter of credit in the amount of $                     required by the Lease as additional security.
Tenant has not made any other payments to Landlord as a security deposit, advance or prepaid rent
(except first month’s rent).



-1-









 





     5. Landlord has completed, and, if required under the Lease, paid for, any
and all tenant work required under the Lease and Tenant has accepted the Leased
Premises. Tenant is not entitled to any further payment or credit for tenant
work.



     6. To Tenant’s current actual knowledge, Landlord is not in default in the
performance of any of the terms of the Lease, nor is there now any fact or
condition which, with notice or lapse of time or both, will become such a
default except as set forth on Schedule A attached hereto. Tenant has not
delivered to Landlord any notice of default with respect to the Landlord’s
obligations under the Lease except as set forth on Schedule A attached hereto.



     7. Tenant is in actual possession of the entire Leased Premises and, to
Tenant’s current actual knowledge, is not in any respect in default under any of
the terms and conditions of the Lease, nor is there now any fact or condition
which, with notice or lapse of time or both, will become such a default except
as set forth on Schedule A attached hereto. Tenant has not received from
Landlord any notice of default with respect to the Tenant’s obligations under
the Lease except as set forth on Schedule A attached hereto.



     8. Tenant has not assigned, transferred, mortgaged or otherwise encumbered
its interest under the Lease, nor subleased any of the Leased Premises, nor
permitted any person or entity to use the Leased Premises, except as otherwise
indicated on Schedule A annexed hereto.



     9. Except as expressly provided in the Lease, Tenant:




	 	(i)  	does not have any right to renew or extend the term of the
lease,
	 
	 	(ii)  	does not have any right to cancel or surrender the Lease prior
to the expiration of the term of the Lease,
	 
	 	(iii)  	does not have any option or rights of first refusal or first
offer to purchase or lease all or any part of the Leased
Premises or the real property of which the Leased Premises are
a part,
	 
	 	(iv)  	does not have any right, title or interest with respect to the
Leased Premises other than as lessee under the lease, and
	 
	 	(v)  	does not have any right to relocate into other property owned
by Landlord or any of landlord’s affiliates.





     10. There has not been filed by or, to Tenant’s current actual knowledge,
against Tenant a petition in bankruptcy, voluntary or otherwise, any assignment
for the benefit of creditors, any petition seeking reorganization or arrangement
under the bankruptcy laws of the United States, or any state thereof, or any
other action brought under said bankruptcy laws with respect to Tenant except as
set forth on Schedule A attached hereto.



     11. If Tenant is required to provide insurance coverage under the Lease,
Tenant has not given or received written notice that Tenant’s insurance coverage
will be canceled or will not be renewed except as set forth on Schedule A
attached hereto.



     12. Tenant is not aware of any material defects or deficiencies in the
systems, elements or components of the Leased Premises. Tenant has not received
any written notice, citation or other claim alleging any material violation of
any applicable building, zoning, land use, environmental, anti-pollution,
health, fire, safety, access accommodations for the physically handicapped,
subdivision, energy and resource conservation or similar laws, statutes, rules,
regulations or ordinances, or any covenants, conditions and restrictions
applicable to the Leased Premises except as set forth on Schedule A attached
hereto.



     13. To the current actual knowledge of Tenant, any and all brokerage and
leasing commissions relating to and/or resulting from Tenant’s execution and
delivery of the Lease and occupancy of the Leased Premises have been paid in
full except as set forth on Schedule A attached hereto.




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     14. The individual executing this Tenant Estoppel Certificate on behalf of Tenant
represents and
warrants that he has the power and the authority to execute this Tenant Estoppel Certificate
on behalf of Tenant.



     15. This Tenant
Estoppel Certificate shall inure to the benefit of           
           and Landlord and their
respective nominees, successors, assigns, participants and designees and shall be binding upon
Tenant and its successors and assigns.



Dated this ____ day of                     , __________.




Tenant:                                         , a                                        




By:                                                            




Its:                                                            




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     in February 2005 the Company determined that two purchase accounting entries recorded in
connection with the 2001 acquisition of the Quantum HDD business required correction. The first
correction related to the fact that at the time of the acquisition, sufficient deferred tax assets
were available to offset the $196.5 million deferred tax liability recorded as part of the
acquisition and accordingly a reduction in the Company’s deferred tax asset valuation allowance
should have been recorded rather than recognition of additional goodwill. The second correction
related to the reversal of $13.8 million of a restructuring reserve associated with the acquisition
to reflect discounting to present value of liabilities associated with such accrual. These errors
were first discovered and brought to the attention of management by PricewaterhouseCoopers LLP in
connection with their work on the audit for fiscal 2004. The Company restated its consolidated
financial statements for each of the three years in the period ended December 27, 2003 by filing a
Form 10-K/A for the year ended December 27, 2003 to correct these errors.



     The Company also recorded two adjustments identified by PricewaterhouseCoopers LLP in
connection with their interim review of the Company’s third fiscal quarter of 2004 results and the
preparation of the Form 10-Q for such quarter. These adjustments addressed the fact that the
Company’s severance accrual computations omitted future severance payments for certain personnel
who had been notified of termination under the Company’s announced restructuring plan and also the
fact that the Company had failed to apply the appropriate discount rate to the facility accrual
associated with the Company’s restructuring activities. The impact of these two adjustments did
not require the restatement of any of the Company’s financial statements.



     The ineffective control over the application of generally accepted accounting principles in
relation to complex, non-routine transactions in the financial reporting process could result in a
material misstatement to the annual or interim financial statements that would not be prevented or
detected. As a result, management has determined that this control deficiency constituted a
material weakness as of December 25, 2004. Because of the material weakness described above,
management has concluded that the Company did not maintain effective internal control over
financial reporting as of December 25, 2004, based on criteria in Internal Control — Integrated
Framework issued by the COSO. The Company’s management has identified the steps necessary to
address the material weakness described above, and has begun to execute remediation plans, as
discussed in “Section 9 A. Controls and Procedures” of this Report. The Company believes that
these corrective actions, taken as a whole, have mitigated the control deficiencies with respect
to our preparation of this Report and that these measures have been effective to ensure that
information required to be disclosed in this Report has been recorded, processed, summarized and
reported correctly. The Company is in the process of developing procedures for the testing of
these controls to determine if the material weakness has been remediated and expects that testing
of these controls will be substantially completed by the end of our fiscal first quarter.