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EXHIBIT 10.25    
  



	

 	 	

 




 
 

REAL ESTATE SUBLEASE    
  


 
 

PREAMBLE    
  


    THIS SUBLEASE, executed by and between Photon Dynamics (hereinafter called "Sublessor"), and the lessee, Sanmina-SCI Corporation (hereinafter
called "Sublessee"), whereby for and in consideration of the covenants and agreements hereinafter set forth to be kept and performed by the parties hereto, Sublessor, hereby subleases to Sublessee and
Sublessee does hereby take, lease, and hire from Sublessor the Leased Premises hereinafter described for the period, and at the rental, subject to, and upon the terms and conditions hereinafter set
forth, as follows: 


 
 

ARTICLE 1. LEASED PREMISES    
  


    Section 1.01. Leased Premises.  Sublessor leases to Sublessee, and Sublessee leases from
Sublessor a portion of certain premises situated in the City of San Jose, County of Santa Clara, State of California, commonly described as 6325 San Ignacio (hereinafter called the "Leased Premises"),
more fully described on Exhibit 1 hereof. 


    Section 1.02. Definition of leased premises.  Exclusive Tenancy: That portion of the subleased
premises reserved for the exclusive use by the sublessee. Shared Tenancy: That portion of the subleased premises that will be shared by both sublessor and sublessee, but are expected to be converted
for exclusive use. Common area Tenancy: that portion of the premises that are common usage areas such as: Restrooms, Cafeteria, Hallways, etc. 


 
 

ARTICLE 2. SUBLEASE TERM    
  


    Section 2.01. Sublease Term.  The Term of this Sublease shall commence on Feb 1,2002
(hereinafter called the "Commencement Date"), and shall expire on Jan 31, 2005 unless sooner terminated pursuant to the terms of this Agreement (the "Term"). If there are any option terms, such terms
will be reflected on an Addendum to this Sublease. 


    Section 2.02. Acceptance of Leased Premises.  Sublessee's occupancy of the Leased
Premises shall be conclusive evidence of Sublessee's acceptance of all improvements constituting the Leased Premises, in good and satisfactory condition and repair. Sublessee shall accept possession
and use of the Leased Premises "as is" in their condition existing as of the date hereof with all faults. Sublessee, at Sublessee's sole cost and expense, shall promptly comply with all applicable
laws, ordinances, codes, rules, orders, directions and regulations of governmental authority governing and regulating the use or occupancy of the Leased Premises as may now or hereafter be in effect
during the Term hereof and shall if so required make any alterations, additions or changes to the Leased Premises as may be required by said laws, ordinances, codes, rules, directions and regulations. 


    Section 2.03. Holding Over.  Any holding over of the Leased Premises by Sublessee after
the expiration of the Term hereof shall only be with the written consent of Sublessor first had and obtained and shall be construed to be a tenancy from month to month at a rental per month, or
portion thereof, in an amount equal to one hundred fifty percent (150%) of the rent due Sublessor for the month 


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immediately preceding such holding over, and shall otherwise be on the same terms, conditions and covenants herein specified. 


    Section 2.04. Sublease Termination and Condition of Premises.  Upon the termination of
this Sublease for any reason whatsoever, Sublessee shall return possession of the Leased Premises to Sublessor or Sublessor's authorized agent in a good, clean and safe condition, reasonable wear and
tear excepted. On or before, and in any event no later than thirty (30) days following the date Sublessee vacates the Leased Premises and returns possession of same to Sublessor, Sublessee and
Sublessor, or authorized agents thereof, shall conduct a joint inspection of the Leased Premises. Sublessee at its cost shall thereafter promptly repair or correct any defects or deficiencies in the
condition of the Leased Premises, reasonable wear and tear excepted. 


 
 

ARTICLE 3. RENT    
  


    Section 3.01. Payment of Rent.  Sublessee hereby covenants and agrees to pay rent to
Sublessor, without offset or deduction of any kind whatsoever, in the form and at the times as herein specified. All rent shall be paid to Sublessor at the address specified in this Sublease unless
and until Sublessee is otherwise notified in writing. Base Minimum Rent payments in the monthly amount set forth below shall be payable monthly, in advance, due on the first (1st) day of each calendar
month commencing on the Commencement Date hereof and delinquent if not paid on or before the third (3rd) day of the month throughout the Term of this Sublease. Rent for any period which is for less
than one month shall be a pro rata portion of the monthly installment. The required payments under Article 6 and all other charges payable by Sublessee shall be deemed to be additional rent. 



    Section 3.02. Base Minimum Rent.  Base Minimum Rent shall be computed as follows: 


    As
specified in Exhibit 2 for base rent and Exhibit 3 for square footage calculations. 


    Section 3.03. Delinquent Payments.  In the event Sublessee shall fail to pay the rent or
any installment thereof, or any other fees, costs, taxes or expenses payable under this Sublease within five (5) days after the said payment has become due, Sublessee agrees that Sublessor will
incur additional costs and expenses in the form of extra collection efforts, administrative time, handling costs, and potential impairment of credit on loans for which this Sublease may be a security.
Both parties agree that in such event, Sublessor, in addition to its other remedies shall be entitled to recover a late payment charge against Sublessee equal to five percent (5%) of the amount not
paid within said five (5) day period.
Additionally, any past due amounts under this Sublease shall bear interest at the rate of the lesser of one and one-half percent (11/2%) per month or the maximum rate
permitted by applicable law. Sublessee further agrees to pay Sublessor any cost incurred by Sublessor in effecting the collection of such past due amount, including but not limited to attorneys' fees
and/or collection agency fees. Sublessor shall have the right to require Sublessee to pay monies due in the form of a cashier's check or money order. Nothing herein contained shall limit any other
remedy of Sublessor with respect to such payment delinquency. 


    Section 3.04. Security Deposit.  On execution of this Sublease, Sublessee shall deposit
with Sublessor a sum equal to NONE (the "Security Deposit") in order to provide security for the performance by Sublessee of the provisions of this Sublease. If Sublessee is in default, Sublessor may,
but shall not be obligated to use the Security Deposit, or any portion of it, to cure the default or to compensate Sublessor for damage sustained by Sublessor resulting from Sublessee's default.
Sublessee shall immediately on demand pay to Sublessor a sum equal to the portion of the Security Deposit expended or applied by Sublessor as provided in this paragraph so as to maintain the Security
Deposit in the sum initially deposited with Sublessor. At the expiration or termination of this Sublease, Sublessor shall return the Security Deposit to Sublessee or its successor, less such amounts
as are reasonably necessary to remedy Sublessee's defaults, to repair damages the Leased Premises caused by 


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Sublessee or to clean the Leased Premises upon such termination, as soon as practicable thereafter. In the event of the sale or other conveyance of the Leased Premises, the Security Deposit will be
transferred to the purchaser or transferee and the Sublessor will be relieved of any liability with reference to such Security Deposit. Sublessor shall not be required to keep the Security Deposit
separate from its other funds, and (unless otherwise required by law) Sublessee shall not be entitled to interest on the Security Deposit. 


 
 

ARTICLE 4. USE OF PREMISES    
  


    Section 4.01. Permitted Use.  The Leased Premises are to be used by Sublessee for the
sole purpose of manufacturing and for no other purpose whatsoever. Sublessee shall not use or occupy the Leased Premises or permit the same to be used or occupied for any use, purpose or business
other than as provided in this Section 4.01 during the Term of this Sublease or any extension thereof. 


    Section 4.02. Prohibited Activities.  During the Term of Sublease or any extension
thereof, Sublessee shall not: 



    (a) Use
or permit the Leased Premises to be used for any purpose in violation of any statute, ordinance, rule, order, or regulation of any governmental authority
regulating the use or occupancy of the Leased Premises. 


    (b) Use
or permit the use of the Leased Premises in any manner that will tend to create a nuisance or tend to adversely affect or injure the reputation of Sublessor or
its affiliates. 


    (c) Allow
any activity to be conducted on the premises or store any material on the Leased Premises which will increase premiums for or violate the terms of any
insurance policy(s) maintained by or for the benefit of Sublessor. 


    (d) Store
any explosive or radioactive materials in or about the Leased Premises. 


    (e) Use
or allow the Leased Premises to be used for sleeping quarters, dwelling rooms or for any unlawful purpose. 



    (f)  Build
any fences, walls, barricades or other obstructions; or, install any radio, television, phonograph, antennae, loud speakers, sound amplifiers, or similar
devices on the roof, exterior walls or in the windows of the Leased Premises, or make any changes to the interior or exterior of the Leased Premises without Sublessor's prior written consent. 




    Section 4.03. Operational Permits.  Sublessee, prior to the Commencement Date, shall
obtain and thereafter continuously maintain in full force and effect for the Term of this Sublease or any extension thereof, at no cost or expense to Sublessor, any and all approvals, licenses, or
permits required by any lawful authority as of the Commencement Date or imposed thereafter, for the use of Leased Premises, including but not limited to business licenses. 


    Section 4.04. Compliance With Laws.  Sublessee shall comply with all federal, state,
county, municipal, or other statutes, laws, ordinances, regulations, rules, or orders of any governmental or quasi-governmental entity, body, agency, commission, board, or official applicable to the
Leased Premises and Sublessee's business. 


    Section 4.05. Employee badge and security policy.  Sublessee agrees to comply with all
Sublessor's current and future employee security policies. 


 
 

ARTICLE 5. UTILITIES AND TAXES    
  


    Section 5.01. Utility Charges.  Sublessee shall be responsible for and shall pay to the
Sublessor for a portion of the CAC (common area charges) that represent Sublessee's portion of utility charges and 


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other such CAC charges that represent water, and other such charges during the Term of this Sublease or any extension thereof. Sublessor shall not be liable in damages or otherwise for any failure or
interruption of any utility service being furnished to the Leased Premises and no such failure or interruption shall entitle Sublessee to terminate this Sublease. 


    Section 5.02. Personal Property Taxes.  Sublessee shall be responsible for and shall pay
before they become delinquent all taxes, assessments, or other charges levied or imposed by any governmental entity on the equipment, trade fixtures, appliances, merchandise and other personal
property situated in, on, or about the Leased Premises including, without limiting the generality of the other terms of this Section, any shelves, counters, vault doors, wall safes, partitions,
fixtures, machinery, or office equipment on the Leased Premises, whether put there prior to or after the Commencement Date of this Sublease. 


    Section 5.03. Real Property Taxes and Assessments.  Sublessee shall pay directly to the
charging authority all taxes (as hereinafter defined) respecting the Leased Premises. Sublessee shall pay all taxes on or before ten (10) days prior to delinquency thereof. Sublessee shall
promptly after payment of any taxes deliver to Sublessor written receipts or other satisfactory evidence of the payment thereof. As used herein, "taxes" shall mean all taxes, assessments, fees,
charges, levies, and penalties (if such penalties result from Sublessee's delinquency in paying all or any taxes), of any kind and nature, general and special, ordinary and extraordinary, unforeseen
as well as foreseen (including, without limitation, all installments of principal and interest required to pay any general or special assessments for public improvements) now or hereafter imposed by
any authority having the direct or indirect power to tax, including, without limitation the federal government, and any state, county, city, or other governmental or quasi-governmental authority, and
any improvement or assessment district or other agency or division thereof, whether such tax is: 



    (a) levied
or assessed against or with respect to the value, occupancy, or use of all or any portion of the Leased Premises (as now constructed or as may at any time
hereafter be constructed, altered, or otherwise changed), or any legal or equitable interest of Sublessor in the Leased Premises or any part thereof; or 


    (b) levied
or assessed against or with respect to Sublessor's business of leasing the Leased Premises, or with respect to the operation of the Leased Premises; or 


    (c) determined
by the area of the Leased Premises or any part thereof, or by the gross receipts, income, or rent and other sums payable hereunder by Sublessee
(including, without limitation, any gross income or excise tax levied with respect to receipt of such rent and/or other sums due under this Sublease); or 


    (d) imposed
upon this transaction or any document to which Sublessee is a party creating or transferring any interest in the Leased Premises; or 


    (e) imposed
during the term of this Sublease or any extension thereof because of a change in ownership of the Leased Premises which results in an increase of real
property taxes; or 


    (f)  any
tax or excise, however described, 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) in addition to, in substitution partially or totally of, or as an alternate to, any tax previously included within the definition of taxes, or any tax the nature of which was previously
included in the definition of taxes, whether or not now customary or within the contemplation of the parties. 



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Taxes
shall also include all charges, levies or fees imposed by reason of environmental regulation or other governmental control of the Leased Premises, and all costs and expenses and reasonable
attorneys' fees paid or incurred by Sublessor in connection with: 


	(1)
	any
proceeding to contest in whole or in part the imposition or collection of any taxes; and (2) negotiation with public authorities as to any taxes. 



    Section 5.04. Proration of Taxes.  Sublessee's liability to pay taxes shall be prorated
on the basis of a 365-day year to account for any fractional portion of a fiscal tax year included in the lease Term and its commencement and expiration. 



    Section 5.05. Tax Delinquency.  Failure of Sublessee to pay promptly when due any of the
charges required to be paid under this Article shall constitute a default under the terms hereof in like manner as a failure to pay rental when due, and if Sublessor shall elect to pursue an unlawful
detainer action upon
said default, then Sublessor shall be entitled to claim as an amount of additional rent owed for purposes of said unlawful detainer the amount of such taxes due and payable by Sublessee. 


    Section 5.06. All Other Charges.  Sublessee shall pay to Sublessor any and all charges,
fees, taxes, and other amounts due from Sublessor to the master lessor of the Leased Premises prior to its due date, for sums due or owing on or after the date of this Sublease. 


    Section 5.07. Common Area Maintenance Charges.  Sublessee shall be responsible for, and
shall pay to Sublessor on demand, any and all costs, fees, charges, assessments, expenses or payments for which Sublessor is obligated or liable under the Master Lease (as that term is defined in
Section 12.29) with respect to the operation, maintenance and repair of common area of the Leased Premises. "Common area" shall include, without limitation, those areas in or about the property
of which the Leased Premises are a part, which have been set aside for the general use, convenience and benefit of the occupants of the property and their customers and employees, including, without
limitation, the automobile parking areas, sidewalks, landscaped areas and other areas for pedestrian and vehicular use. 


    To
the extent Sublessor pays estimated amounts for such common area expenses, Sublessee shall pay such amounts to Sublessor on demand from Sublessor and shall be entitled to
reimbursements and/or offsets against future common area expenses as such reimbursements or offsets are received by Sublessor. 


 
 

ARTICLE 6. MAINTENANCE AND ALTERATIONS    
  


    Section 6.01. Maintenance by Sublessee.  Sublessee shall, at its sole cost and expense,
keep in good and safe condition, order and repair all portions of the Leased Premises and all facilities appurtenant thereto and every part thereof which Sublessor is responsible to maintain or repair
as lessee under the Master Lease (as defined in Section 12.29), including without limitation, all plumbing, heating, air conditioning, ventilating, sprinkler, electrical and lighting
facilities, interior walls, interior surfaces of exterior walls, floors, ceilings, windows, doors, entrances, all glass (including plate glass), and skylights located within the Leased Premises,
walkways, parking and service areas within or adjacent to the Leased Premises. If the Leased Premises are not so maintained, and such condition continues seventy-two (72) hours
after notice or exists upon expiration or termination hereof, Sublessor may cause such maintenance to be performed at Sublessee's expense and/or may obtain maintenance contracts for the Store and
charge the Sublessee for same. Sublessor shall, when and if it deems necessary, make any and all repairs on the Leased Premises, and Sublessee hereby consents to such actions by Sublessor. Sublessor
may charge the Sublessee for any of the foregoing repairs, if, in Sublessor's opinion, such repairs are occasioned by Sublessee's abuse or neglect. Sublessee shall not modify, alter, or add to the
Leased Premises without the prior written consent of Sublessor. 


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    Section 6.02. Damage; Abatement of Rent.  Notwithstanding anything in this Sublease to
the contrary, Sublessee at its own cost and expense shall repair and replace as necessary all portions of the Leased Premises damaged by Sublessee, its employees, agents, invitees, customers or
visitors. There shall be no abatement of rent or other sums payable by Sublessee prior to or during any repairs by Sublessee or Sublessor hereunder or under Section 6.01. 


    Section 6.03. Alterations and Liens.  Sublessee shall not make or permit any other person
to make any structural changes, alterations, or additions to the Leased Premises or to any improvement thereon or facility appurtenant thereto without the prior written consent of Sublessor first had
and obtained. Sublessee shall keep the Leased Premises free and clear from any and all liens, claims, and demands for work performed, materials furnished, or operations conducted on the Leased
Premises at the instance or request of Sublessee. As a condition to giving its consent to any proposed alterations, Sublessor may require that Sublessee remove any or all of said alterations at the
expiration or sooner termination of the Sublease term and restore the Leased Premises to its condition as of the date of Sublessee's occupation of the Leased Premises. Prior to construction or
installation of any alterations, Sublessor may require Sublessee to provide Sublessor, at Sublessee's sole cost and expense, a lien and completion bond in an amount equal to one and
one-half times the estimated cost of such alterations, to insure Sublessor against any Liability for mechanic's and materialmen's liens and to insure completion of the work. Should
Sublessee make any alterations without the prior written consent of Sublessor, Sublessee shall remove the same at Sublessee's expense upon demand by Sublessor. 


    Section 6.04. Inspection by Sublessor.  Sublessee shall permit Sublessor or Sublessor's
agents, representatives, designees, or employees to enter the Leased Premises at all reasonable times for the purpose of inspecting the Leased Premises to determine whether Sublessee is complying with
the terms of this Sublease and for the purpose of doing other lawful acts that may be necessary to protect Sublessor's interest in the Leased Premises under this Sublease, or to perform Sublessor's
duties under this Sublease, or to show the Leased Premises to insurance agents, lenders, and other third parties, or as otherwise allowed by law. 


    Section 6.05. Plans and Permits.  Any alteration that Sublessee shall desire to make in
or about the Leased Premises and which requires the consent of Sublessor shall be presented to Sublessor in written form, with proposed detailed plans and specifications therefore prepared at
Sublessee's sole expense. Any consent by Sublessor thereto shall be deemed conditioned upon Sublessee's acquisition of all permits required to make such alteration from all appropriate governmental
agencies, the furnishing of copies thereof to Sublessor prior to commencement of the work, and the compliance by Sublessee with all conditions of said permits in a prompt and expeditious manner, all
at Sublessee's sole cost and expense. 


    Section 6.06. Construction Work Done by Sublessee.  All construction work required or
permitted to be done by Sublessee shall be performed by a licensed contractor in a good and workmanlike manner and shall conform in quality and design with the Leased Premises existing as of the
Commencement Date,
and shall not diminish the value of the Leased Premises in any way whatsoever. In addition, all such construction work shall be performed in compliance with all applicable statutes, ordinances,
regulations, codes and orders of governmental authorities and insurers of the Leased Premises. Sublessee or its agents shall secure all licenses and permits necessary therefor. 


    Section 6.07. Title to Alterations.  Unless Sublessor requires the removal thereof, any
alterations which may be made on the Leased Premises, shall upon installation or construction thereof on the Leased Premises become the property of Sublessor and shall remain upon and be surrendered
with the Leased Premises at the expiration or sooner termination of the term of this Sublease. Without limiting the generality of the foregoing, all heating, lighting, electrical (including all
wiring, conduits, main and subpanels), air conditioning, partitioning, drapery, and carpet installations made by Sublessee, regardless of how affixed to the Leased Premises, together with all other
alterations that have become 


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a part of the Leased Premises, shall be and become the property of Sublessor upon installation, and shall not be deemed trade fixtures, and shall remain upon and be surrendered with the Leased
Premises at the expiration or sooner termination of this Sublease. 


    Section 6.08. Removal of Alterations.  In addition to Sublessor's right to require
Sublessee at the time of installation or construction of any alteration to remove the same upon expiration or sooner termination of this Sublease, Sublessor may elect, by notice to Sublessee at least
thirty (30) days before expiration of the Term hereof, or within five (5) days after sooner termination hereof, to acquire Sublessee to remove any alterations that Sublessee has made to
the Leased Premises. If Sublessor so elects, Sublessee shall, at its sole expense, upon expiration of the Term hereof, or within twenty (20) days after any sooner termination hereof, remove
such alterations, repair any damage occasioned thereby, and restore the Leased Premises to the condition existing as of the Commencement Date or such other condition as may reasonably be designated by
Sublessor in its election. 


    Section 6.09. Additional Maintenance charges.  Sublessee agrees to pay, on a monthly
basis, a portion of those expenses made by the sublessor, to provide facilities services as set forth on Exhibit four (4). These charges may be negotiated by mutual consent between sublessor and
sublessee. 


 
 

ARTICLE 7. INDEMNITY AND INSURANCE    
  


    Section 7.01. Hold-Harmless Clause.  Sublessee agrees to indemnify, defend
and hold Sublessor, the property of Sublessor, and the Leased Premises, free and harmless from any and all claims, liability, loss, damage, or expenses incurred by reason of this Sublease or resulting
from Sublessee's occupancy
and use of the Leased Premises (other than as a result of the direct gross negligence of Sublessor), specifically including, without limitation, any claim, liability, loss, or damage arising by reason
of: 



    (a) The
death or injury of any person or persons, including Sublessee, any person who is an employee or agent of Sublessee, or by reason of the damage to or destruction
of any property, including property owned by Sublessee or any person who is an employee or agent of Sublessee, and caused or allegedly caused by either the condition of the Leased Premises, or some
act or omission of Sublessee or of some agent, contractor, employee, or invitee of Sublessee on the Leased Premises; 



    (b) Any
work performed on the Leased Premises or materials furnished to the Leased Premises at the instance or request of Sublessee or any agent or employee of
Sublessee; and 


    (c) Sublessee's
failure to perform any provision of this Sublease or to comply with any requirement of law or any requirement imposed on the use by Sublessee of the
Leased Premises by any governmental agency or political subdivision. 




Maintenance
of the insurance required under this Article shall not relieve Sublessee of the obligations of indemnification contained in this Section. 


    Section 7.02. Liability Insurance.  Sublessee shall, at its own cost and expense, secure
and maintain during the term of this Sublease, a comprehensive broad form policy of Combined Single Limit Bodily Injury and Property Damage Insurance issued by a reputable company authorized to
conduct insurance business in the State of California insuring Sublessee against loss or liability caused by or connected with Sublessee's use and occupancy of the Leased Premises in an amount not
less than One Million Dollars ($1,000,000) per occurrence. 


    Section 7.03. Casualty and Fire Insurance.  At all times during the Term hereof,
Sublessee shall keep the Leased Premises and personal property thereon insured against loss or damage by fire, windstorm, hail, explosion, damage from vehicles, smoke damage, vandalism, casualty and
malicious mischief and such other risks as are customarily included in "all risk" extended insurance coverage, including coverage for business interruption, in an amount equal to not less than one
hundred percent 


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(100%) of the actual replacement value of the Leased Premises and the personal property, fixtures, and other property on the Leased Premises. 


    Section 7.04. Workers' Compensation Insurance.  During the term of this Sublease,
Sublessee shall comply with all Workers' Compensation laws applicable on the date hereof or enacted thereafter and shall maintain in full force and effect a Workers' Compensation Insurance policy
covering all employees in any way connected with the business conducted by Sublessee pursuant to this Sublease and shall pay all premiums, contributions, taxes and such other costs and expenses as are
required to be paid incident to such insurance coverage, all at no cost to Sublessor. 


    Section 7.05. Policy Form.  The policies of insurance required to be secured and
maintained under this Sublease shall be issued by good, responsible companies, qualified to do business in the State of California, with a general policy holders' rating of at least "A" and a
financial rating of at least Class XIII as rated in the most currently available "Best's Key Rating Guide". Executed copies of such policies of insurance or certificates thereof shall be
delivered to Sublessor and to the Master Lessor under the Master Lease not later than two (2) days prior to the commencement of business operations of Sublessee at the Leased Premises and
thereafter, executed copies of renewal policies of insurance or certificates thereof shall be delivered to Sublessor within thirty (30) days prior to the expiration of the term of each such
policy. All such policies of insurance shall contain a provision that the insurance company writing such policy(s) shall give Sublessor at least thirty (30) days' written notice in advance of
any cancellation or lapse, or the effective date of any reduction in the amounts or other material changes in the provisions of such insurance. All policies of insurance required under this Sublease
shall be written as primary coverage and shall list the Master Lessor under the Master Lease and the Sublessor as loss payees and as additional insureds. If Sublessee fails to procure or maintain in
force any insurance as required by this Section or to furnish the certified copies or certificates thereof required hereunder, Sublessor may, in addition to all other remedies it may have, procure
such insurance and/or certified copies or certificates, and Sublessee shall promptly reimburse Sublessor for all premiums and other costs incurred in connection therewith. 


    Section 7.06. Waiver of Subrogation.  Sublessee agrees that in the event of loss or
damage due to any of the perils for which it has agreed to provide insurance, Sublessee hereby waives any and all claims that it might otherwise have against Sublessor with respect to any risk insured
against to the extent of any proceeds realized from the insurance coverage to compensate for a loss. To the extent permitted by applicable insurance policies without voiding coverage, Sublessee hereby
releases and relieves Sublessor, and waives its entire right of recovery against Sublessor for loss or damage arising out of or incident to the perils insured against to the extent of insurance
proceeds realized for such loss or damage, which perils occur in, on or about the Leased Premises and regardless of the cause or origin, specifically including the negligence of Sublessor or its
agents, employees, contractors and/or invitees. Sublessee shall to the extent such insurance endorsement is available, obtain for the benefit of Sublessor a waiver of any right of subrogation which
the insurer of such party might otherwise acquire against Sublessor by virtue of the payment of any loss covered by such insurance and shall give notice to the insurance carrier or carriers that the
foregoing waiver of subrogation is contained in this Sublease. 


 
 

ARTICLE 8. SIGNS AND TRADE FIXTURES    
  


    Section 8.01. Installation of Trade Fixtures.  For so long as Sublessee is not in default
of any of the terms, conditions and covenants of this Sublease, Sublessee shall have the right at any time and from time to time during the Term of this Sublease and any renewal or extension of such
term, at Sublessee's sole cost and expense, to install and affix in, to, or on the Leased Premises such items (hereinafter called "trade fixtures"), for use in Sublessee's trade or business as
Sublessee may, in its reasonable discretion, deem advisable. 


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    Section 8.02. Signs.  Subject to any and all requirements now or hereinafter enacted by
any municipal, county, or state regulatory agency having jurisdiction thereover and subject to Sublessor's written consent, Sublessee may erect at Sublessee's cost, a sign on the Leased Premises
identifying the Leased Premises. Sublessee shall maintain, at Sublessee's sole cost and expense, said sign. 


    Section 8.03. Removal of Signs and Trade Fixtures.  In addition to Sublessor's right to
require Sublessee at the time of installation of any sign or trade fixtures to remove the same upon expiration or sooner termination of this Sublease, Sublessor may elect, by notice to Sublessee at
least thirty (30) days before expiration of the Term hereof, or within five (5) days after sooner termination hereof, to require Sublessee to remove any sign or trade fixture owned by
Sublessee. If Sublessor so elects, Sublessee shall at its sole cost ant expense, upon expiration of the Term hereof, or within twenty (20) days after any sooner termination hereof, remove such
sign or trade fixture owned by Sublessee. If Sublessor so elects, Sublessee shall, at its sole cost and expense, upon expiration of the Term hereof, or within twenty (20) days after any sooner
termination hereof, remove such sign or trade fixture, repair any damage occasioned thereby, and restore the Leased Premises to the condition existing as of the Commencement Date or such other
condition as may reasonably be designated by Sublessor in its election. 


 
 

ARTICLE 9. CONDEMNATION AND DESTRUCTION    
  


    Section 9.01. Total Condemnation.  Should, during the Term of this Sublease or any
renewal or extension thereof, title and possession of all of the Leased Premises be taken under the power of eminent domain by any public or quasi-public agency or entity, this Sublease shall
terminate as of the date actual physical possession of the Leased Premises is taken by the agency or entity exercising the power of eminent domain and both Sublessor and Sublessee shall thereafter be
released from all obligations under this Sublease 



    Section 9.02. Termination Option for Partial Condemnation.  Should, during the Term of
this Sublease or any renewal or extension thereof, title and possession of more than ten percent (10%) of the floor area
of the Leased Premises, and/or more than ten percent (10%) of the parking area of the Leased Premises be taken under the power of eminent domain by any public or quasi-public agency or entity,
Sublessor may terminate this Sublease. The option herein reserved shall be exercised by giving written notice on or before thirty (30) days after actual physical possession of the portion
subject to the eminent domain power is taken by the agency or entity exercising that power and this Sublease shall terminate as of the date the notice is deemed given. 



    Section 9.03. Partial Condemnation Without Termination.  Should Sublessee or Sublessor
fail to exercise the termination option described in this Article, or should the portion of the Leased Premises taken under the power of eminent domain be insufficient to give rise to the option
therein described, then, in that event: 



    (a) This
Sublease shall terminate as to the portion of the Leased Premises taken by eminent domain as of the day (hereinafter called the "date of taking"), actual
physical possession of that portion of the Leased Premises is taken by the agency or entity exercising the power of eminent domain; 



    (b) Base
Minimum Rent to be paid by Sublessee to Sublessor pursuant to the terms of this Sublease shall, after the date of taking, be reduced by an amount that bears
the same ratio to the Base Minimum Rent specified in this Sublease as the square footage of the actual floor area of the Leased Premises taken under the power of eminent domain bears to the total
square footage of floor area of the Leased Premises as of the date of this Sublease; and 


    (c) Except
to the extent the Master Lessor under the Master Lease is so obligated, Sublessee, at Sublessee's own cost and expense shall remodel and reconstruct the
building remaining on the 



9





 


portion of the Leased Premises not taken by eminent domain into a single efficient architectural unit in accordance with plans mutually approved by the parties hereto as soon after the date of taking,
or before, as can be reasonably done. 




    Section 9.04. Condemnation Award.  Should, during the Term of this Sublease or any
renewal or extension thereof, title and possession of all or any portion of the Leased Premises be taken under the power of eminent domain by any public or quasi-public agency or entity, the
compensation or damages for the taking awarded shall belong to and be the sole property of the Sublessor. 


    Section 9.05. Destruction.  (a) In the event the Leased Premises are damaged or destroyed
and the total costs and expenses for repairing or reconstructing the Leased Premises exceeds the sum of $50,000, Sublessor, at Sublessor's option, may: 




    (i)  Continue
this Sublease in full force and effect by restoring, repairing or rebuilding the Leased Premises at Sublessor's own cost and expense or through insurance
coverage; or 


    (ii) Terminate
this Sublease by serving written notice of such termination on Sublessee no later than sixty (60) days following such casualty, in which event
this Sublease shall be deemed to have been terminated on the date of such casualty. 




    (b) In
the event the Leased Premises are damaged or destroyed and Sublessee will not be able to operate any business thereon for one hundred and twenty
(120) consecutive days, Sublessee, at Sublessee's option, may terminate this Sublease by serving written notice of such termination on Sublessor no later than thirty (30) days following
such casualty, in which event this Sublease shall be deemed terminated on the date of such casualty; provided, however, that such termination right shall not be applicable unless Sublessor has a
similar termination right under the Master Lease. 


    (c) Should
Sublessor or the Master Lessor under the Master Lease elect to repair and restore the Leased Premises to their former condition following partial or full
destruction of the Leased Premises: 



    (i)  Sublessee
shall not be entitled to any damages for any loss or inconvenience sustained by Sublessee by reason of the making of such repairs and restoration. 



    (ii) Sublessor
and such Master Lessor shall have full right to enter upon and have access to the Leased Premises, or any portion thereof, as may be reasonably necessary
to enable such parties promptly and efficiently to carry out the work of repair and restoration. 





    Section 9.06. Damage by Sublessee.  Sublessee shall be responsible for and shall pay to
Sublessor any and all losses, damages, costs, and expenses, including but not limited to attorney's fees, resulting from any casualty loss caused by the negligence or willful misconduct of Sublessee
or its employees, agents, contractors, or invitees. 


 
 

ARTICLE 10. SUBLEASING, ASSIGNMENT, DEFAULT AND TERMINATION    
  


    Section 10.01. Subleasing and Assignment.  (a) Sublessee (including without limitation
any permitted subsequent assignee or sublessee) shall not sell, assign, hypothecate, pledge or otherwise transfer this Sublease, or any interest therein, either voluntarily, involuntarily, or by
operation of law, and shall not sublet the Leased Premises, or any part thereof, or any right or privilege appurtenant thereto, for any reason whatsoever, or permit the occupancy thereof by any
person, persons, or entity through or under it, or grant a security interest in Sublessee's interest in the Leased Premises or this Sublease or any fixtures located on the Leased Premises, without the
prior written consent of Sublessor first had and obtained, which may be given or withheld in the Sublessor's sole and absolute discretion. For the purpose of this Section, any dissolution, merger,
consolidation or other reorganization of 


10





 


Sublessee, or any change or changes in the stock ownership of Sublessee, if Sublessee is a corporation, which aggregates forty percent (40%) or more of the capital stock of Sublessee shall be deemed
to be an assignment of this Sublease. Sublessee shall not mortgage, hypothecate or encumber this Sublease. Sublessor's consent to one assignment, subletting, occupancy, or use by any other person,
entity or entities shall not relieve Sublessee from any obligation under this Sublease and shall not be deemed to be a consent to any subsequent assignment, subletting, occupancy or use. Any
assignment, hypothecation, pledge, subletting, occupancy or use without Sublessor's written consent shall be void and shall, at the option of the Sublessor, terminate this Sublease. 



    (b) Should
this Sublease be assigned, or should the Leased Premises or any part thereof be sublet or occupied by any person or persons other than the original Sublessee
hereunder, Sublessor may collect rent from the assignee, sublessee or occupant and apply the net amount collected to the rent herein reserved, but no such assignment, subletting, occupancy or
collection of rent shall be deemed a consent to such assignment, subletting or occupancy or a waiver of any term of this Sublease, nor shall it be deemed acceptance of the assignee, sublessee or
occupant as a tenant, or a release of Sublessee from the full performance by Sublessee of all the terms, provisions, conditions and covenants of this Sublease. 


    (c) In
the event Sublessee wishes to assign this Sublease or sublet or allow the use of the Leased Premises or any part thereof, Sublessee shall give Sublessor not less
than ninety (90) days written notice thereof and shall, in such notice, provide the name of the proposed assignee or sublessee, its proposed use of the Leased Premises, its background, such
financial and credit information as Sublessor may require to determine the business experience, financial stability and creditworthiness of the proposed assignee or sublessee, and such additional
information as Sublessor may request. Sublessee shall also pay Sublessor a one-time administrative fee of $1,000 to reimburse Sublessor for its costs of reviewing, analyzing and processing
the request for consent to assignment or subletting. 


    (d) In
addition to its right to consent or refuse to consent to a proposed assignment Sublessor shall have the option, exercisable by written notice to Sublessee within
the sixty (60) days after Sublessee gives Sublessor written notice of its desire to assign the Sublease, to terminate this Sublease with respect to the entire Leased Premises upon a date
specified in said notice to Sublessee not less than ninety (90) days nor more than three hundred sixty (360) days after the date of said notice and retake the Leased Premises for its own
use and/or for leasing for its own account. If Sublessor exercises such
option, Sublessee shall nonetheless have the right, exercisable by notice given to Sublessor within twenty (20) days after Sublessor's notice of exercise is given, to withdraw the proposed
assignment from consideration, in which event the exercise of Sublessor's option shall be of no force or effect and, except for the payment of the fee provided for in Subsection (c) above, the
assignment shall be deemed not to have been proposed. If Sublessor does not elect to exercise its option to terminate this Lease and consents to the assignment or sublease, said assignee or sublessee
shall pay directly to Sublessor all rent or other consideration payable by the assignee or sublessee in excess of the amount of rent or other consideration payable by Sublessee to Sublessor hereunder
(whether denominated as rent or otherwise) and shall expressly assume Sublessee's obligations hereunder. 


    (e) As
a condition to Sublessor's consent to an assignment or subletting, Sublessor shall be entitled to receive (i) in the case of a subletting, one hundred
percent (100%) of all rent (however denominated and paid) payable by the subtenant to Sublessee in excess of that payable by Sublessee to Sublessor pursuant to the other provisions of this Sublease,
and (ii) in the case of an assignment, one hundred percent (100%) of all consideration given, directly or indirectly, by the assignee to Sublessee in connection with such assignment. For
purposes of this paragraph, the term "rent" shall mean and include all consideration paid or given, directly or indirectly, for the use of the Leased Premises or any portion thereof, and the term
"consideration" shall mean and include 



11





 


money, services, property or any other thing of value such as payment of costs, cancellation of indebtedness, discounts, rebates and the like. Any rent or other consideration which is to be passed
through to Sublessor pursuant to this paragraph shall be paid to Sublessor promptly upon receipt by Sublessee and shall be paid in cash, regardless of the form in which received by Sublessee. In the
event any rent or other consideration received by Sublessee is in a form other than cash, Sublessee shall pay to Sublessor in cash the fair value of Sublessor's portion of such consideration. 




    Section 10.02. Events of Default.  Sublessee's failure to timely pay any rent, taxes or
other charges required to be paid pursuant to the terms of this Sublease shall constitute a material breach of this Sublease and an event of default if not paid by Sublessee within five
(5) days of the date such rent, taxes or charges are payable. Events of default under this Sublease shall also include, without limitation, the events hereinafter set forth, each of which shall
be deemed a material default of the terms of the Sublease if not fully cured within ten (10) days of occurrence. Such events shall include: 



    (a) Sublessee's
failure to perform or observe any term, provisions, convenant, agreement or condition of this Sublease; 


    (b) Sublessee
breaches this Sublease and abandons the Leased Premises before expiration of the Term of this Sublease; 


    (c) Any
representation or warranty made by Sublessee in connection with this Sublease between Sublessee and Sublessor proving to have been incorrect in any respect; 


    (d) Sublessee's
institution of any proceedings under the Bankruptcy Act, as such Act now exists or under any similar act relating to the subject of insolvency or
bankruptcy, whether in such proceeding Sublessee seeks to be adjudicated a bankrupt, or to be discharged of its debts or effect a plan of liquidation, composition or reorganization; 


    (e) The
filing against Sublessee of any involuntary proceeding under any such bankruptcy laws; 


    (f)  Sublessee's
becoming insolvent or being adjudicated a bankrupt in any court of competent jurisdiction, or the appointment of a receiver or trustee of Sublessee's
property, or Sublessee's making an assignment for the benefit of creditors; 


    (g) The
issuance of a writ of attachment by any court of competent jurisdiction to be levied on this Lease; or 


    (h) Any
event which is an event of default under the Master Lease or which would become so with the passage of time or the giving of notice or both. 




    Section 10.03. Sublessor's Remedies for Sublessee's Default.  Upon the occurrence of any
event of default described in Section 10.02 hereof, Sublessor may, at its option and without any further demand or notice, in addition to any other remedy or right given hereunder or by law, do
any of the following: 



    (a) Sublessor
may terminate Sublessee's right to possession of the Leased Premises by giving written notice to Sublessee. If Sublessor gives such written notice, then
on the date specified in such notice, this Sublease and Sublessee's right of possession shall terminate. No act by Sublessor other than giving such written notice to Sublessee shall terminate this
Sublease. Acts of maintenance, efforts to relet the Leased Premises, or the appointment of a receiver on Sublessor's initiative to protect Sublessor's interest under this Sublease shall not constitute
a termination of Sublessee's right to possession. On termination, Sublessor has the right to recover from Sublessee: 



    (i)  The
worth at the time of the award of the unpaid rent and other charges that had been earned or owed to Sublessor at the time of termination of this Sublease; 




12





 



    (ii) The worth at the time of the award of the amount by which (a) the unpaid rent and other charges that would have been earned or owed to Sublessor after the
date of termination of this Sublease until the time of award exceeds (b) the amount of such rental loss that Sublessee proves could have been reasonably avoided; 



    (iii) The
worth at the time of the award of the amount by which (a) the unpaid rent and other charges for the balance of the term after the time of award exceeds
(b) the amount of such rental loss that Sublessee proves could have been reasonably avoided; and 


    (iv) Any
other amount necessary to compensate Sublessor for all the detriment caused by Sublessee's failure to perform its obligations under this Sublease or which in
the ordinary course of things would be likely to result therefrom, including without limitation any costs or expenses incurred by Sublessor in recovering possession of the Leased Premises, maintaining
or preserving the Leased Premises after such default, preparing the Leased Premises for reletting to a new tenant, or any repairs or alterations to the Leased Premises for such reletting, and all
leasing commissions, reasonable attorney's fees, architect's fees and any other costs incurred by Sublessor to relet the Leased Premises or to adapt them to another beneficial use. Sublessee shall
also indemnify, defend and hold Sublessor harmless from all claims, demands, actions, liabilities and expenses (including but not limited to reasonable attorney's fees and costs) arising prior to the
termination of this Sublease or arising out of Sublessee's use or occupancy of the Leased Premises. 




As
used in subparagraphs (i) and (ii) above, the "worth at the time of the award" is computed by allowing interest at the rate of eighteen percent (18%) per annum or the maximum rate
allowed by law, whichever is less. As used in subparagraph (iii) above, "the worth at the time of the award" is 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 (1%) per annum. 


    (b) Sublessor
may, in any lawful manner, re-enter and take possession of the Leased Premises without terminating this Sublease or otherwise relieving
Sublessee of any obligation hereunder. Sublessor is hereby authorized, but not obligated (except to the extent required by law), to relet the Leased Premises or any part thereof on behalf of the
Sublessee, to use the premises for its or its affiliates' account, to incur such expenses as may be reasonably necessary to relet the Leased Premises, and relet the Leased Premises for such term, upon
such conditions and at such rental as Sublessor in its sole discretion may determine. Until the Leased Premises are relet by Sublessor, if at all, Sublessee shall pay to Sublessor all amounts required
to be paid by Sublessee hereunder. If Sublessor relets the Leased Premises or any portion thereof, such reletting shall not relieve Sublessee of any obligation hereunder, except that Sublessor shall
apply the rent or other proceeds actually collected by it as a result of such reletting against any amounts due from Sublessee hereunder to the extent that such rent or other proceeds compensate
Sublessor for the non-performance of any obligation of Sublessee hereunder. Such payments by Sublessee shall be due at such times as are provided elsewhere in this Sublease, and Sublessor
need not wait until the termination of this Sublease, by expiration of the term hereof or
otherwise, to recover them by legal action or in any other manner. Sublessor may execute any lease made pursuant hereto in its own name, and the tenant thereunder shall be under no obligation to see
to the application by Sublessor of any rent or other proceeds by Sublessor, nor shall Sublessee have any right to collect any such rent or other proceeds. Sublessor shall not by any
re-entry or other act be deemed to have accepted any surrender by Sublessee of the Leased Premises or Sublessee's interest therein, or be deemed to have otherwise terminated this Sublease,
or to have relieved Sublessee of any obligation hereunder, unless Sublessor shall have given Sublessee express written notice of Sublessor's election to do so as set forth herein. 



13





 


    (c) Even though Sublessee has breached this Sublease and may have abandoned or vacated the Leased Premises, this Sublease shall continue in effect for so long as
Sublessor does not terminate Sublessee's right to possession, and Sublessor may enforce all its rights and remedies under this Sublease, including the right to recover the rent and other charges as
they become due under this Lease. 


    (d) In
the event any personal property of Sublessee remains at the Leased Premises after Sublessee has vacated, it shall be dealt with in accordance with the statutory
procedures provided by applicable law dealing with the disposition of personal property of Sublessee remaining on the Leased Premises after Sublessee has vacated. 


    (e) Sublessor
may exercise any right or remedy reserved to the Master Lessor under the Master Lease (each of which rights and remedies are hereby incorporated herein),
and any other remedy or right now or hereafter available to a landlord against a defaulting tenant under applicable law or the equitable powers of its courts, whether or not otherwise specifically
reserved herein. 


    (f)  Sublessor
shall be under no obligation to observe or perform any provision, term, covenant, agreement or condition of this Sublease on its part to be observed or
performed which accrues after the date of any default by Sublessee hereunder. 


    (g) Any
legal action by Sublessor to enforce any obligation of Sublessee or in the pursuance of any remedy hereunder shall be deemed timely filed if commenced at any
time prior to one (1) year after the expiration of the term hereof or prior to four (4) years after the cause of action accrues, whichever period expires later. 


    (h) In
any action of unlawful detainer commenced by Sublessor against Sublessee by reason of any default hereunder, the reasonable rental value of the Leased Premises
for the period of the unlawful detainer shall be deemed to be the amount of rent and additional charges reserved in this Sublease for such period. 


    (i)  Sublessee
hereby waives any right of redemption or relief from forfeiture under any present or future law, if Sublessee is evicted or Sublessor takes possession of
the Leased Premises by reason of any default by Sublessee hereunder. 


    (j)  No
delay or omission of Sublessor to exercise any right or remedy shall be construed as a waiver of any such right or remedy or of any default by Sublessee
hereunder. 




    Section 10.04. Receiver.  Upon the occurrence of any event of default as defined in
Section 10.02 hereof or in any action instituted by Sublessor against Sublessee to take possession of the Leased Premises and/or to collect Base Minimum Rent, or any other charge due hereunder,
a receiver may be appointed at the request of Sublessor to collect such rents and profits, to conduct the business of Sublessee then being carried on in the Leased Premises and to take possession of
any property belonging to Sublessee and used in the conduct of such business and use the same in conducting such business on the Leased Premises without compensation to Sublessee for such use. Neither
the application nor the appointment of such receiver shall be construed as an election on the Sublessor's part to terminate this Sublease unless written notice of such intention is given by Sublessor
to Sublessee. 


    Section 10.05. Attorneys' Fees.  If as a result of any breach or default in the
performance of any of the provisions of this Sublease, Sublessor uses the services of an attorney in order to secure compliance with such provisions or recover damages therefor, or to terminate this
Sublease or evict Sublessee, Sublessee shall reimburse Sublessor upon demand for any and all attorneys' fees and expenses so incurred by Sublessor, including without the limitation appraisers' and
expert witness fees; provided that if Sublessee shall be the prevailing party in any legal action brought by Sublessor against 


14





 


Sublessee, Sublessee shall be entitled to recover the fees of its attorneys in such amount as the court may adjudge reasonable. Sublessee shall advance to Sublessor any and all attorneys' fees and
expenses to be incurred or incurred by Sublessor in connection with any modifications to this Sublease proposed by Sublessee, any proposed assignment of this Sublease by Sublessee or any proposed
subletting of the Leased Premises by Sublessee. 


    Section 10.06. Cumulative Remedies; No Waiver.  The specified remedies to which Sublessor
may resort under the terms hereof are cumulative and are not intended to be exclusive of any other remedy or means of redress to which Sublessor may be lawfully entitled in case of any breach or
threatened breach by Sublessee of any provision hereof. If for any reason Sublessor fails or neglects to take advantage of any of the terms of this Sublease providing for termination or other remedy,
any such failure of Sublessor shall not be deemed to be a waiver of any default of any of the provisions, terms, covenants, agreements or conditions of this Sublease. The waiver by Sublessor of any
breach of any term, condition or covenant herein contained shall not be deemed to be a waiver of any subsequent breach of the same or any other term, condition or covenant herein contained. None of
the provisions,
terms, covenants, agreements or conditions hereof can be waived except by the express written consent of Sublessor. Subsequent acceptance of rent hereunder by Sublessor shall not be deemed to be a
waiver of any preceding breach by Sublessee of any provision, term, covenant, agreement or condition of this Sublease other than the failure of Sublessee to pay the particular rental accepted,
regardless of Sublessor's knowledge of such preceding breach at the time of acceptance of such rent. 


 
 

ARTICLE 11. ESTOPPEL    
  


    Section 11.01. Estoppel.  At any time and from time to time, upon request in writing from
Sublessor, Sublessee agrees to execute, acknowledge, and deliver to Sublessor a statement in writing within three (3) days of request, certifying that this Sublease is unmodified and in full
force and effect (or, if there have been modifications, stating the modifications), the commencement and termination dates, the Base Minimum Rent, the other charges payable hereunder the dates to
which the same have been paid, and such other items as Sublessor may reasonably request. It is understood and agreed that any such statement may be relied upon by any mortgagee, beneficiary, or
grantee of any security or other interest, or any assignee of any thereof, under any mortgage or deed of trust now or hereafter made covering any leasehold interest in the Leased Premises, and any
prospective purchaser of the Leased Premises. 


 
 

ARTICLE 12. MISCELLANEOUS PROVISIONS    
  


    Section 12.01. Force Majeure—Unavoidable Delays.  Should the performance of
any act required by this Sublease to be performed by either Sublessor or Sublessee be prevented or delayed by reason of an act of God, war, civil commotion, fire, flood, or other like casualty,
strike, lockout, labor troubles, inability to secure materials, restrictive governmental laws or regulations, unusually severe weather, or any other cause, except financial inability, not the fault of
the party required to perform the act, the time for performance of the act will be extended for a period equivalent to the period of delay and performance of the act during the period of delay will be
excused; provided, however, that nothing contained in this section shall excuse the prompt payment of rent or other monies due by Sublessee as required by this Sublease or the performance of any act
rendered difficult solely because of the financial condition of the party, Sublessor or Sublessee, required to perform the act. 



    Section 12.02. Notices.  Except as otherwise expressly provided by law, any and all
notices or other communications required or permitted by this Sublease or by law to be served on or given to either party hereto by the other party hereto shall be in writing and shall be deemed duly
served and given when personally delivered to the party, Sublessor or Sublessee, to whom it is directed or any managing employee of such party, or, in lieu of such personal service, forty-eight
(48) hours after deposit in the United States mail, certified or registered mail, with postage prepaid, or when transmitted by telecopy 


15





 


or facsimile addressed to the parties as set forth on the signature page hereof. Either party, Sublessor or Sublessee, may change the addresses herein contained for purposes of this Section by giving
written notice of the change to the other party in the manner provided in this Section. 


    Section 12.03. Amendments.  No amendment, change or modification of this Sublease shall
be valid and binding unless such is contained in a written instrument executed by the parties hereto and which instrument expresses the specific intention of the parties to amend, change or modify
this Sublease. 


    Section 12.04. Accord and Satisfaction.  No payment by Sublessee or receipt by Sublessor
of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on account of the stipulated rent earliest in time, nor shall any endorsement or statement on any check or
any letter accompanying any check or payment as rent be deemed an accord and satisfaction and Sublessor may accept such check or payment without prejudice to Sublessor's right to recover the balance
of such rent or pursue any other remedy provided in this Sublease or by law. 


    Section 12.05. No Agency Created.  Nothing contained in this Sublease shall be deemed or
construed by the parties hereto or by any third party to create the relationship of principal and agent, or of partnership, or of joint venture, or of any association whatsoever between Sublessor and
Sublessee other than sublessor and sublessee. 


    Section 12.06. Brokerage Commission.  Sublessee represents that neither it nor any of its
affiliates has engaged the services of any real estate broker, finder, or any other person or entity in connection with this lease transaction and therefore should Sublessee be found to be in
violation of such representation, Sublessee shall indemnify Sublessor against any and all claims for brokerage commissions or finders fees in connection with this transaction, and to indemnify, defend
and hold Sublessor free and harmless from all liabilities arising from any such claim, including without limitation, attorneys' fees in connection therewith. 


    Section 12.07. Sole and Only Agreement.  This instrument constitutes the sole and only
agreement between Sublessor and Sublessee respecting the Leased Premises or the leasing of the Leased Premises to Sublessee. Sublessor shall have no obligations to Sublessee, whether express or
implied, other than those specifically set forth in this Sublease. 


    Section 12.08. Severability and Governing Law.  This Sublease shall be governed by the
laws of the State of California. Whenever possible each provision of this Sublease shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this
Sublease shall be prohibited,
void, invalid, or unenforceable under applicable law, such provision shall be ineffective to the extent of such prohibition, invalidity, voidability, or enforceability without invalidating the
remainder of such, or the remaining provisions of this Sublease. 


    Section 12.09. Construction and Headings.  All references herein in the singular shall be
construed to include the plural, and the masculine, and the masculine to include the feminine or neuter gender, where applicable, and where the context shall require. Section headings are for
convenience of reference only and shall not be construed as part of this Sublease nor shall they limit or define the meaning of any provision herein. The provisions of this Sublease shall be construed
as to their fair meaning, and not strictly for or against Sublessor or Sublessee. 


    Section 12.10. Effect of Execution.  The submission of this Sublease for examination
shall not effect any obligation on the part of the submitting or examining party and this Sublease shall become effective only upon the complete execution thereof by both Sublessor and Sublessee. 


    Section 12.11. Inurement.  Sublessor shall have the full and unencumbered right to assign
this Sublease. The covenants, agreements, restrictions, and limitations contained herein shall also be binding on Sublessee's permitted successors and assigns. 


16





 

    Section 12.12. Time of Essence.  Time is expressly declared to be of the essence. 


    Section 12.13. No Light, Air or View Easement.  Any diminution or shutting off of light,
air or view by any structure which may be erected on lands adjacent to the Leased Premises shall in no way affect this Sublease or impose any liability on Sublessor. 


    Section 12.14. Triple Net Lease.  It is the purpose and intent of Sublessor and Sublessee
that this Sublease be deemed and construed to be a "triple net lease" so that Sublessor shall receive all rentals and other sums specified hereunder during the term of this Sublease, free from any and
all charges, costs, assessments, expenses, deductions and/or set-offs of any kind or nature whatsoever, and Sublessor shall not be expected or required to pay any such charge, assessment
or expense, or be under any obligation or liability hereunder, except as herein expressly set forth. All charges, costs, expenses and obligations of any nature relating to the repair, restoration,
alteration, maintenance and operation of the Leased Premises shall be paid by Sublessee, except as otherwise herein expressly set forth, and Sublessor shall be indemnified and held harmless by
Sublessee from and against such charges, costs, expenses and obligations. 


    Section 12.15. Authority.  Each individual executing this Sublease on behalf of Sublessee
and the Sublessee (if Sublessee is a corporation or other entity) does hereby covenant and warrant that (i) Sublessee is a duly authorized and validly existing entity, (ii) Sublessee has
and is qualified to do business in California, (iii) the entity has full right and authority to enter into this Sublease, and (iv) each person executing this Sublease on behalf of the
entity was authorized to do so. 



    Section 12.16. Survival.  All obligations of Sublessee under this Sublease, including
without limitation the obligations to pay Base Minimum Rent, shall survive the expiration or termination of this Sublease. 


    Section 12.17. Waiver.  Sublessee hereby waives any rights it may have under the
provisions of the California Civil Code Sections 1932(2), 1933(4), 1941 and 1942, if applicable, and any similar statutes regarding repair of the Leased Premises or termination of this Sublease after
destruction of all or any part of the Leased Premises. 


    Section 12.18. Recordation.  Sublessee shall not record this Sublease or a short form
memorandum hereof without the prior written consent of the Sublessor. 


    Section 12.19. Transfer of Master Lease.  In the event of any assignment or transfer of
the Master Lease by Sublessor to any other party or entity, Sublessor shall be and is hereby entirely freed and relieved of all liability under any and all of its covenants and obligations contained
in or derived from this Sublease arising out of any act, occurrence or omission occurring after the consummation of such assignment or transfer; and the assignee or such transferee shall be deemed,
without any further agreement between parties or their successors in interest or between the parties and any such assignee or transferee, to have assumed and agreed to carry out any and all of the
covenants and obligations of the Sublessor under this Sublease. Sublessee hereby agrees to attorn to any such assignee or trustee. Sublessee agrees to execute any and all documents deemed necessary or
appropriate by Sublessor to evidence the foregoing. 


    Section 12.20. Subordination, Attornment.  Without the necessity of any additional
document being executed by Sublessee for the purpose of effecting a subordination, this Sublease shall in all respects be subject and subordinate at all times to the lien of any mortgage or deed of
trust which may now exist or hereafter be executed in any amount for which the Leased Premises or Sublessor's interest or estate is specified as security. Notwithstanding the foregoing, Sublessor
shall have the right to subordinate or cause to be subordinated any lien or encumbrance to this Sublease. In the event that any mortgage or deed of trust is foreclosed or a conveyance in lieu of
foreclosure is made for any reason, Sublessee shall, notwithstanding any subordination, attorn to and become the sublessee of the successor in 


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interest to Sublessor, at the option of such successor in interest. Sublessee covenants and agrees to execute and deliver, upon demand by Sublessor and in the form requested by Sublessor, any
additional documents evidencing the priority or subordination of this Sublease. 


    Section 12.21. No Merger.  The voluntary or other surrender of this Sublease by
Sublessee, or a mutual cancellation hereof, shall not work a merger, and shall, at the option of Sublessor, terminate all or any existing subleases or sub tenancies or may, at the option of Sublessor,
operate as an assignment to Sublessor of any or all such subleases or sub tenancies. 


    Section 12.22. Right of Sublessor to Perform.  All terms, covenants and conditions of
this Sublease to be performed or observed by Sublessee shall be performed or observed by Sublessee at its sole cost and expense and without any reduction of rent of any nature payable hereunder. If
Sublessee shall fail to pay any sum of money, other than rent required to be paid by it hereunder or shall fail to perform any other term or covenant hereunder on its part to be performed, Sublessor,
without waiving or releasing Sublessee from any obligation of Sublessee hereunder, may, but shall not be obligated to, make any such payment or perform any such other term or covenant on Sublessee's
part to be performed. All sums so paid by Sublessor and all necessary costs of such performance by Sublessor, together with interest thereon from the date of payment at the rate eighteen percent (18%)
or the highest rate permissible by law, whichever is less, shall be paid, and Sublessee covenants to make such payment, to Sublessor on demand, and Sublessor shall have, in addition to any over right
or remedy of Sublessor, the same rights and remedies in the event of nonpayment thereof by Sublessee as in the case of failure in the payment of rent hereunder. 


    Section 12.23. Modification for Lender.  If, in connection with obtaining any type of
financing, Sublessor's lender shall request reasonable modifications to this Sublease as a condition to such financing, Sublessee shall not unreasonably withhold, delay or defer its consent thereto,
provided such modifications do not materially adversely affect Sublessee's rights hereunder. 


    Section 12.24. Sublessor's Personal Liability.  The liability of Sublessor to Sublessee
for any default by Sublessor under the terms of this Sublease shall be limited to the interest of Sublessor in the Leased Premises and Sublessee agrees to look solely to Sublessor's interest in the
Leased Premises for the recovery of any judgment from Sublessor, it being intended that Sublessor shall not be personally liable for any judgment or deficiency. 



    Section 12.25. Breach by Landlord.  Sublessor shall not be deemed to be in breach in the
performance of any obligation required to be performed by it hereunder unless and until it has failed to perform such obligation within thirty (30) days after written notice by Sublessee to
Sublessor specifying wherein Sublessor has failed to perform such obligation; provided, however, that if the nature of Sublessor's obligation is such that more than thirty (30) days are
required for its performance then Sublessor shall not be deemed to be in breech if it shall commence such performance within such thirty (30) day period and thereafter diligently prosecute the
same to completion. In any event, Sublessee must bring an action for breach of this Sublease within one (1) year of Sublessor's breach or be deemed to have waived the breach and not harmed
thereby. 


    Section 12.26. Hazardous Substances.  Without limiting the generality of other sections
of this Sublease, Sublessee covenants and agrees that Sublessee, its employees and agents shall not bring into, maintain upon or release or discharge upon the Leased Premises any hazardous or toxic
substances or hazardous waste (collectively, "hazardous materials"). 


    Upon
any violation of the foregoing covenant, Sublessee shall be obligated, at Sublessee's sole cost and expense, to clean up and remove from the Leased Premises all hazardous
materials introduced into the Leased Premises by Sublessee or any third party for whom Sublessee is responsible. Such clean-up and removal shall include all testing and investigation
required by any governmental authorities having 


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jurisdiction and preparation and implementation of any remedial action plan required by any governmental authorities having jurisdiction. All such clean-up and removal activities of
Sublessee shall, in each instance, be conducted to the satisfaction of Sublessor and all governmental authorities having jurisdiction. Sublessor's right of entry under this Sublease shall include the
right to enter and inspect the Leased Premises for violations of Sublessee's covenant herein. 


    Sublessee
shall indemnify, defend and hold harmless Sublessor, its affiliates, directors, shareholders, officers, employees, agents, lenders and attorneys from and against any and all
claims, liabilities, losses, actions, costs and expenses (including attorneys' fees and costs of defense) incurred by such indemnified persons, or any of them, as the result of (i) the
introduction into or about the Leased Premises by Sublessee or anyone for whom Sublessee is responsible of any hazardous materials, (ii) the usage by Sublessee or anyone for whom Sublessee is
responsible of hazardous materials in or about the Leased Premises, (iii) the discharge or release in or about the Leased Premises by Sublessee or anyone for whom Sublessee is responsible of
any hazardous materials, (iv) any injury to or death of persons or damage to or destruction of property resulting from the use by Sublessee or anyone for whom Sublessee is responsible of
hazardous materials in or about the Leased Premises, and (v) any failure of Sublessee or anyone for whom Sublessee is responsible to observe the foregoing covenants of this Section. Payment
shall not be a condition precedent to enforcement of the foregoing indemnification provision. 


    Upon
any violation of the foregoing covenants Sublessor shall be entitled to exercise all remedies available to a lessor against a defaulting lessee, including but not limited to
these set forth in Article 10. Without limiting the generality of the foregoing, Sublessee expressly agrees that upon any such violation Sublessor may, at its option, (A) immediately
terminate this Sublease or (B) continue this Sublease in effect until compliance by Sublessee with its clean-up and removal covenant notwithstanding any earlier expiration date of
the term of this Sublease. No action by Sublessor hereunder shall impair the obligations of Sublessee pursuant to this Section. By its signature to this Sublease, Sublessee confirms that it has
conducted its own examination of the Leased Premises with respect to hazardous materials and accepts the same "AS IS" and with no hazardous materials present thereon. 


    Section 12.27. Survival of Indemnities.  The obligations of the indemnifying party under
each and every indemnification and hold harmless provision contained in this Sublease shall survive the expiration or earlier termination of this Sublease to and until the last to occur of
(a) the last date permitted by law for bringing of any claim or action with respect to which indemnification may be claimed by the indemnified party against the indemnifying party under such
provision or (b) the date on which any claim or action for which indemnification may be claimed under such provision is fully and finally resolved and, if applicable, any compromise thereof or
judgment or award thereon is paid in full by the indemnifying party and the indemnified party is reimbursed by the indemnifying party for any amounts paid by the indemnified party in compromise
thereof or upon a judgment or award thereon and in defense of such action or claim, including attorneys' fees incurred. 


    Section 12.28. Meaning of Consent.  Whenever an act or provision contained in this
Sublease is conditioned upon the consent or approval of Sublessor, this shall be interpreted to mean, unless otherwise specified to the contrary, that the Sublessor has the full unconditional right
and sole discretion as to whether or not to give its consent, which may only be given in writing. 


    Section 12.29. Master Lease.  Notwithstanding anything in this Sublease to the contrary,
the rights of Sublessee shall be subject to the terms and conditions contained in the lease ("Master Lease") between Sublessor and the owner of the Leased Premises (the "Master Lessor"), as it may be
amended from time to time. Sublessee shall assume and perform and comply with the obligations of the lessee under the Master Lease to the same extent as if references to the Sublessor therein were
references to Sublessee (all of which obligations are hereby incorporated herein), including, without limitation, the 


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payment of any and all costs, expenses, charges, fees, taxes, payments or other monetary obligations (except for minimum rent and percentage rent) for which Sublessor is liable or responsible under
the Master Lease, as such costs, expenses, charges, fees, taxes, payment or other monetary obligations come due. Sublessee shall not commit or permit to be committed on the Leased Premises any act or
omission which shall violate any term or condition of the Master Lease. Notwithstanding anything in this Sublease to the contrary, the effectiveness of this Sublease shall be conditioned upon
Sublessor obtaining the written consent of the Master Lessor (if such consent is required under the Master Lease), in form and substance satisfactory to Sublessor, within ten (10) days of the
date hereof. If the Master Lease terminates for any reason, this Sublease shall terminate coincidentally therewith without any liability of Sublessor to Sublessee. 


    Section 12.30. Environmental survey.  Sublessor shall, at it's expense, perform a
class 1 environmental survey. Such survey is scheduled to commence Dec. 13, 2001. 


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IN WITNESS WHEREOF, the parties hereto have executed this Sublease on this 10th day of December, 2001. 



	Signed	 	  
	 	Signed	 	  

	

Name: Randy Furr	
 	

Name: Vincent S. Sollitto
	

Title: President and COO	
 	

Title: President and CEO
	

SANMINA-SCI CORPORATION	
 	

PHOTON DYNAMICS, INC.






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EXHIBIT 1    
    DESCRIPTION OF LEASED PREMISES    
  


     

  







 
 

EXHIBIT 2    
  


RENT SCHEDULE:  


BASED ON INITIAL SQUARE FOOTAGE CALCULATION AS SHOWN IN EXHIBIT 3


INCLUDES MASTER LESSOR'S ANNUAL 4% INCREASE


DOES NOT INCLUDE ADDITIONAL AMOUNTS FOR INCREASE IN EXCLUSIVE OCCUPANCY (See Exhibit 3 for square footage calculations)



	 
	 	BASE RENT RATE
	 	RENT PER MONTH
	 	RENT PER YEAR

	1ST YEAR	 	$2.25	 	$33,986.00	 	$407,832.00
	2ND YEAR	 	$2.34	 	$35,346.00	 	$424,152.00
	3RD YEAR	 	$2.43	 	$36,705.00	 	$440,460.00
	4TH YEAR	 	$2.53	 	$38,216.00	 	$458,592.00
	5TH YEAR	 	$2.63	 	$39,726.00	 	$476,712.00









 
 

EXHIBIT 3    
    
    SQUARE FOOTAGE CALCULATIONS FOR BASE RENT    
  


    Square footage is calculated by adding (base rent rate × 100% of sq. ft. in exclusive use) PLUS (base rent
rate × 50% of sq ft. in shared tenancy) PLUS (base rent rate × 50% of common area tenancy).



	DESCRIPTION
	 	AREA (in Ft. Sq.)

	EXCLUSIVE TENNANCY	 	 
	Main stockroom	 	2620
	QC	 	400
	Mfg Floor	 	4,870
	IHI Cleanroom	 	620
	Shipping dock area	 	1285
	Doc Control	 	80
	Conference room	 	200
	6 Offices	 	750
	 	 	

	 	 	10825
	 	 	

	SHARED TENNANCY*	 	 
	Class 10,000 Cleanroom (3200ft × 50%)	 	1600
	Changeroom (770ft.x 50%)	 	385
	Cleanroom storage (190ft. X 50%)	 	95
	 	 	

	 	 	2080
	 	 	

	COMMON AREA TENNANCY	 	 
	Elect.room (100ft X 50%)	 	50
	Cafeteria (1470ft × 50%)	 	735
	Telecom (100ft.x 50%)	 	50
	Bathrooms, showers,halls (2730ft. × 50%)	 	1365
	 	 	

	 	 	2200
	 	 	

	Total Calculated square footage	 	15105
	 	 	












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EXHIBIT 10.25


REAL ESTATE SUBLEASE

PREAMBLE

ARTICLE 1. LEASED PREMISES

ARTICLE 2. SUBLEASE TERM

ARTICLE 3. RENT

ARTICLE 4. USE OF PREMISES

ARTICLE 5. UTILITIES AND TAXES

ARTICLE 6. MAINTENANCE AND ALTERATIONS

ARTICLE 7. INDEMNITY AND INSURANCE

ARTICLE 8. SIGNS AND TRADE FIXTURES

ARTICLE 9. CONDEMNATION AND DESTRUCTION

ARTICLE 10. SUBLEASING, ASSIGNMENT, DEFAULT AND TERMINATION

ARTICLE 11. ESTOPPEL

ARTICLE 12. MISCELLANEOUS PROVISIONS


EXHIBIT 1 DESCRIPTION OF LEASED PREMISES


EXHIBIT 2


EXHIBIT 3 SQUARE FOOTAGE CALCULATIONS FOR BASE RENT