ex102.htm


    


     

    


    


    


    


    


    


    


    


    


    


    

      THIS
EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A

      CONFIDENTIAL
TREATMENT REQUEST. REDACTED MATERIAL IS MARKED

      WITH
[* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND

      EXCHANGE
COMMISSION.




    


    


    


    


    


    


    LEASE

     

    (Single
Tenant; Stand-Alone; Net)

     

    


     

    BETWEEN

     

    


     

    XILINX,
INC.

     

    AND

     

    SONICWALL,
INC.

     

    


    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    
      
        
          
            	
                    INDEX
      TO LEASE

                  	 
      
	 
      	
                    Page

                  
	
                    ARTICLE
      I.           BASIC
      LEASE PROVISIONS

                  	
                    1

                  
	 
      	 
      
	
                    ARTICLE
      II.          PREMISES

                  	
                    3

                  
	 
      	 
      
	
                    SECTION
      2.1         LEASED
      PREMISES 

                  	
                    3

                  
	
                    SECTION
      2.2         ACCEPTANCE AND
      CONDITION OF PREMISES 

                  	
                    3

                  
	
                    SECTION
      2.3         BUILDING NAME AND
      ADDRESS 

                  	
                    4

                  
	 
      	 
      
	
                    ARTICLE
      III.         TERM

                  	
                    4

                  
	 
      	 
      
	
                    SECTION
      3.1         GENERAL 

                  	
                    4

                  
	
                    SECTION
      3.2         DELAY IN
      POSSESSION 

                  	
                    4

                  
	
                    SECTION
      3.3         RIGHT TO EXTEND
      THIS LEASE 

                  	
                    4

                  
	 
      	 
      
	
                    ARTICLE
      IV.         RENT AND
      OPERATING EXPENSES

                  	
                    5

                  
	 
      	 
      
	
                    SECTION
      4.1         BASIC
      RENT 

                  	
                    5

                  
	
                    SECTION
      4.2         OPERATING
      EXPENSES 

                  	
                    5

                  
	
                    SECTION
      4.3         SECURITY
      DEPOSIT 

                  	
                    8

                  
	 
      	 
      
	
                    ARTICLE
      V.          USES

                  	
                    9

                  
	 
      	 
      
	
                    SECTION
      5.1        USE 

                  	
                    9

                  
	
                    SECTION
      5.2        SIGNS 

                  	
                    9

                  
	
                    SECTION
      5.3        HAZARDOUS
      MATERIALS 

                  	
                    10

                  
	 
      	 
      
	
                    ARTICLE
      VI.        COMMON AREAS;
      SERVICES8

                  	
                    11

                  
	 
      	 
      
	
                    SECTION
      6.1        UTILITIES AND
      SERVICES 

                  	
                    11

                  
	
                    SECTION
      6.2        OPERATION AND
      MAINTENANCE OF COMMON AREAS 

                  	
                    11

                  
	
                    SECTION
      6.3        USE OF COMMON
      AREAS 

                  	
                    12

                  
	
                    SECTION
      6.4        PARKING 

                  	
                    12

                  
	
                    SECTION
      6.5        CHANGES AND ADDITIONS
      BY LANDLORD 

                  	
                    12

                  
	 
      	 
      
	
                    ARTICLE
      VII.       MAINTAINING THE
      PREMISES

                  	
                    13

                  
	 
      	 
      
	
                    SECTION
      7.1        TENANT’S MAINTENANCE
      AND REPAIR 

                  	
                    13

                  
	
                    SECTION
      7.2        LANDLORD’S MAINTENANCE
      AND REPAIR 

                  	
                    13

                  
	
                    SECTION
      7.3        ALTERATIONS 

                  	
                    13

                  
	
                    SECTION
      7.4        MECHANIC’S
      LIENS 

                  	
                    14

                  
	
                    SECTION
      7.5        ENTRY AND
      INSPECTION 

                  	
                    15

                  
	 
      	 
      
	
                    ARTICLE
      VIII.      TAXES AND ASSESSMENTS ON TENANT’S
      PROPERTY

                  	
                    15

                  
	 
      	 
      
	
                    ARTICLE
      IX.        ASSIGNMENT AND
      SUBLETTING

                  	
                    15

                  
	 
      	 
      
	
                    SECTION
      9.1        TRANSFERS 

                  	
                    15

                  
	
                    SECTION
      9.2        APPROVAL 

                  	
                    16

                  
	
                    SECTION
      9.3        TRANSFER
      PREMIUMS 

                  	
                    16

                  
	
                    SECTION
      9.4        RECAPTURE 

                  	
                    16

                  
	
                    SECTION
      9.5        TERMS OF
      CONSENT 

                  	
                    17

                  
	
                    SECTION
      9.6        PERMITTED
      TRANSFERS 

                  	
                    17

                  
	 
      	 
      
	
                    ARTICLE
      X.         INSURANCE AND
      INDEMNITY

                  	
                    17

                  
	 
      	 
      
	
                    SECTION
      10.1      TENANT’S
      INSURANCE 

                  	
                    17

                  
	
                    SECTION
      10.2      LANDLORD’S
      INSURANCE 

                  	
                    18

                  
	
                    SECTION
      10.3      TENANT’S
      INDEMNITY 

                  	
                    18

                  
	
                    SECTION
      10.4      LANDLORD’S
      NONLIABILITY 

                  	
                    18

                  
	
                    SECTION
      10.5      WAIVER OF
      SUBROGATION 

                  	
                    18

                  


          

        

      

    

    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    
      
        
          
            
              
                	
                        INDEX
      TO LEASE

                      	 
      
	
                        (continued)

                      	
                        Page

                      
	 
      ARTICLE
      XI.        DAMAGE OR
      DESTRUCTION	
                        
                          19

                        

                      
	 	 
	
                        SECTION
      11.1      PARTIAL
      DAMAGE-INSURED 

                      	
                        19

                      
	
                        SECTION
      11.2      PARTIAL
      DAMAGE-UNINSURED 

                      	
                        19

                      
	
                        SECTION
      11.3      TOTAL
      DESTRUCTION 

                      	
                        19

                      
	
                        SECTION
      11.4      DAMAGE NEAR END OF
      TERM 

                      	
                        19

                      
	
                        SECTION
      11.5      WAIVER 

                      	
                        19

                      
	
                        SECTION
      11.6      TENANT’S
      PROPERTY 

                      	
                        20

                      
	
                        SECTION
      11.7      NOTICE OF
    DAMAGE 

                      	
                        20

                      
	
                        SECTION
      11.8      REPLACEMENT
    COST 

                      	
                        20

                      
	 
      	 
      
	
                        ARTICLE
      XII.      EMINENT DOMAIN

                      	
                        20

                      
	 
      	 
      
	
                        SECTION
      12.1      PARTIAL
    TAKING 

                      	
                        20

                      
	
                        SECTION
      12.2      TOTAL TAKING 

                      	
                        20

                      
	
                        SECTION
      12.3      DISTRIBUTION OF
      AWARD 

                      	
                        20

                      
	
                        SECTION
      12.4      SALE UNDER THREAT OF
      CONDEMNATION 

                      	
                        20

                      
	 
      	 
      
	
                        ARTICLE
      XIII.    SUBORDINATION; ESTOPPEL CERTIFICATE;
      FINANCIALS

                      	
                        21

                      
	 
      	 
      
	
                        SECTION
      13.1      SUBORDINATION 

                      	
                        21

                      
	
                        SECTION
      13.2      ESTOPPEL
      CERTIFICATE 

                      	
                        21

                      
	
                        SECTION
      13.3      FINANCIALS 

                      	
                        21

                      
	 
      	 
      
	
                        ARTICLE
      XIV.     EVENTS OF DEFAULT AND
      REMEDIES

                      	
                        22

                      
	 
      	 
      
	
                        SECTION
      14.1      TENANT’S
      DEFAULTS 

                      	
                        22

                      
	
                        SECTION
      14.2      LANDLORD’S
      REMEDIES 

                      	
                        23

                      
	
                        SECTION
      14.3      LATE
PAYMENTS 

                      	
                        24

                      
	
                        SECTION
      14.4      RIGHT OF LANDLORD TO
      PERFORM 

                      	
                        24

                      
	
                        SECTION
      14.5      DEFAULT BY
      LANDLORD 

                      	
                        25

                      
	
                        SECTION
      14.6      EXPENSES AND LEGAL
      FEES 

                      	
                        25

                      
	
                        SECTION
      14.7      WAIVER OF JURY TRIAL/JUDICIAL
      REFERENCE 

                      	
                        25

                      
	
                        SECTION
      14.8      SATISFACTION OF
      JUDGMENT 

                      	
                        27

                      
	
                        SECTION
      14.9      LIMITATION OF ACTIONS AGAINST
      LANDLORD 

                      	
                        27

                      
	 
      	 
      
	
                        ARTICLE
      XV.       END OF TERM

                      	
                        27

                      
	 
      	 
      
	
                        SECTION
      15.1      HOLDING OVER 

                      	
                        27

                      
	
                        SECTION
      15.2      MERGER ON
      TERMINATION 

                      	
                        27

                      
	
                        SECTION
      15.3      SURRENDER OF PREMISES; REMOVAL OF
      PROPERTY 

                      	
                        27

                      
	 
      	 
      
	
                        ARTICLE
      XVI.      PAYMENTS AND
    NOTICES

                      	
                        28

                      
	 
      	 
      
	
                        ARTICLE
      XVII.    RULES AND REGULATIONS

                      	
                        29

                      
	 
      	 
      
	
                        ARTICLE
      XVIII.   BROKER’S COMMISSION

                      	
                        29

                      
	 
      	 
      
	
                        ARTICLE
      XIX.     TRANSFER OF LANDLORD’S
      INTEREST

                      	
                        29

                      
	 
      	 
      
	
                        ARTICLE
      XX.      INTERPRETATION

                      	
                        29

                      
	 
      	 
      
	
                        SECTION
      20.1      GENDER AND
      NUMBER 

                      	
                        29

                      
	
                        SECTION
      20.2      HEADINGS 

                      	
                        30

                      
	
                        SECTION
      20.3      JOINT AND SEVERAL
      LIABILITY 

                      	
                        30

                      
	
                        SECTION
      20.4      SUCCESSORS 

                      	
                        30

                      
	
                        SECTION
      20.5      TIME OF
    ESSENCE 

                      	
                        30

                      


              

            

          

        

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      
        
          	
                  INDEX
      TO LEASE

                	 
      
	
                  (continued)

                	
                  Page

                
	
                  SECTION
      20.6      CONTROLLING
      LAW/VENUE 

                	
                  30

                
	
                  SECTION
      20.7      SEVERABILITY 

                	
                  30

                
	
                  SECTION
      20.8      WAIVER AND CUMULATIVE
      REMEDIES 

                	
                  30

                
	
                  SECTION
      20.9      INABILITY TO
      PERFORM 

                	
                  30

                
	
                  SECTION
      20.10    ENTIRE AGREEMENT

                	
                  30

                
	
                  SECTION
      20.11    QUIET ENJOYMENT

                	
                  30

                
	
                  SECTION
      20.12    SURVIVAL

                	
                  31

                
	
                  SECTION
      20.13    INTERPRETATION.

                	
                  31

                
	 
      	 
      
	
                  ARTICLE
      XXI.     EXECUTION AND RECORDING

                	
                  31

                
	 
      	 
      
	
                  SECTION
      21.1      COUNTERPARTS 

                	
                  31

                
	
                  SECTION
      21.2      CORPORATE, LIMITED LIABILITY
      COMPANY AND PARTNERSHIP AUTHORITY 

                	
                  31

                
	
                  SECTION
      21.3      EXECUTION OF LEASE; NO OPTION OR
      OFFER 

                	
                  31

                
	
                  SECTION
      21.4      RECORDING 

                	
                  31

                
	
                  SECTION
      21.5      AMENDMENTS 

                	
                  31

                
	
                  SECTION
      21.6      EXECUTED
COPY 

                	
                  31

                
	
                  SECTION
      21.7      ATTACHMENTS 

                	
                  31

                
	 
      	 
      
	
                  ARTICLE
      XXII.    MISCELLANEOUS

                	
                  31

                
	 
      	 
      
	
                  SECTION
      22.1      CHANGES REQUESTED BY
      LENDER 

                	
                  31

                
	
                  SECTION
      22.2      MORTGAGEE
      PROTECTION 

                	
                  32

                
	
                  SECTION
      22.3      COVENANTS AND
      CONDITIONS 

                	
                  32

                
	
                  SECTION
      22.4      SECURITY
      MEASURES 

                	
                  32

                
	
                  SECTION
      22.5      SDN LIST 

                	
                  32

                
	
                  SECTION
      22.6      FURNITURE, FIXTURES AND EQUIPMENT
      (“FF&E”)24

                	
                  32

                
	
                  SECTION
      22.7      SECURITY
    BADGES 

                	
                  32

                


        

      

       

    

    EXHIBITS

    


      Exhibit
A                                Floor
Plan of Premises

      Exhibit
B                                Diagram
of Site

      Exhibit
C                                Tenant’s
Insurance

      Exhibit
D                                Rules
and Regulations

      Exhibit
X                                Work
Letter

      Exhibit
Y                                Basic
Rent and Security Deposit

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    LEASE

    (Single
Tenant; Net)

     

    THIS
LEASE is made as of the 19th day of June, 2009, by and between XILINX, INC., a
Delaware corporation, hereafter called “Landlord,” and SONICWALL,
INC., a California Corporation, hereinafter called “Tenant.”

     

    ARTICLE I.

     

    BASIC LEASE
PROVISIONS

     

    Each
reference in this Lease to the “Basic Lease Provisions” shall
mean and refer to the following collective terms, the application of which shall
be governed by the provisions in the remaining Articles of this
Lease.

     

    
      	
               
      

            	
              1.

            	
              Premises:  The
      Premises are more particularly described in Section
  2.1.

            


    

     

    
      	
               
      

            	
              2.

            	
              Address
      of Building:  2001 Logic Drive, San Jose,
    California

            


    

     

    
      	
               
      

            	
              3.

            	
              Use
      of Premises:  For general office use and for the research and
      development of computer technology

            


    

     

    
      	
               
      

            	
              4.

            	
              Commencement
      Date:  The Lease term shall commence upon the later occurring of
      the following: (a) fifteen (15) days after the date the City of San Jose
      completes a final inspection and approves the Tenant Improvements (as such
      term is defined in Section 2.2 below) so completed in accordance with the
      building permit; or (b) September 1,
2009

            


    

     

    
      	
               
      

            	
              5.

            	
              Expiration
      Date:  The last day of the month in which the fifth anniversary
      of the Commencement Date occurs (for example, if the Commencement Date is
      September 5, 2009, then the Expiration Date would be September 30,
      2014)

            


    

     

    
      	
               
      

            	
              6.

            	
              Basic
      Rent:   Basic Rent shall be as set forth on Exhibit Y
      attached hereto.

            


    

     

    
      	
               
      

            	
              7.

            	
              Guarantor(s):  None

            


    

     

    
      	
               
      

            	
              8.

            	
              Floor
      Area:  Approximately 72,000 rentable square
  feet

            


    

     

    
      	
               
      

            	
              9.

            	
              Security
      Deposit:  Security Deposit shall be as set forth on Exhibit Y
      attached hereto.

            


    

     

    
      	
               
      

            	
              10.

            	
              Broker(s):

            	
              “Landlord’s
      Broker”:  Colliers
  International

            


    

     

    
      	
               
      

            	
              “Tenant’s
      Broker”: CPS
      CORFAC International

            


    

     

    
      	
               
      

            	
              11.

            	
              Additional
      Insureds:  None

            


    

     

    12.           Address
for Notices:

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

       

    

    
      	
              LANDLORD

            	
              TENANT

            
	
               

              XILINX,
      INC.

              2100
      Logic Drive

              San
      Jose, CA 95124

              Attn:  Director
      of Global Site Services

               

            	
               

              SONICWALL,
      INC.

              2001
      Logic Drive

              San
      Jose, CA  95124

              Attn:  Vice
      President

               

              With
      a  copy to:

               

              SONICWALL,
      INC.

              2001
      Logic Drive

              San
      Jose, CA  95124

              Attn:  General
      Counsel

               

            


    

    
      	
               
      

            	
              13.

            	
              Address
      for Payments: All payments due under this Lease shall be made to the
      address shown on the invoice for the payment due, or if no address is
      shown, to Landlord’s notice address
above.

            


    

     

    
      	
               
      

            	
              14.

            	
              Tenant’s
      Liability Insurance
  Requirement:  $3,000,000.00

            


    

     

    
      	
               
      

            	
              15.

            	
              Vehicle
      Parking Spaces:  A minimum of two hundred eighty-eight (288)
      general parking spaces, including twenty (20) reserved visitor parking
      stalls located adjacent to the Premises’ lobby entrance as indicated on
      the site plan attached as Exhibit B. All
      parking shall be provided to Tenant at no additional cost during the Term
      and any extension thereof.

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    ARTICLE
II.

     

    PREMISES

     

    SECTION
2.1     LEASED
PREMISES.  Landlord leases to Tenant and Tenant leases from
Landlord the premises shown in Exhibit A (the “Premises”), containing
approximately the rentable square footage set forth as the “Floor Area” in Item 8 of the Basic
Lease Provisions.  The Premises consist of all of the rentable square
footage within the building identified in Item 2 of the Basic Lease Provisions
(the Premises together with such building and the underlying real property, are
called the “Building”).   The
Building is located on the site shown on Exhibit B (the “Site”).  All
references to “Floor
Area” in this Lease shall mean the rentable square footage set forth in
Item 8 of the Basic Lease Provisions.  The rentable square footage set
forth in Item 8 may include or have been adjusted by various factors,
including, without limitation, a load factor for any vertical penetrations,
stairwells or similar features or areas of the Building.  Tenant
agrees that the Floor Area set forth in Item 8 shall be binding on Landlord and
Tenant for purposes of this Lease regardless of whether any future or differing
measurements of the Premises or the Building are consistent or inconsistent with
the Floor Area set forth in Item 8.

     

    SECTION
2.2     ACCEPTANCE AND
CONDITION OF PREMISES.  

     

    (a) Tenant
acknowledges that except as expressly set forth below in Section 2.2(d), neither
Landlord nor any representative of Landlord has made any representation or
warranty with respect to the Premises, the Building or the Site or their
respective suitability or fitness for any purpose.

     

    (b) Tenant
further acknowledges that neither Landlord nor any representative of Landlord
has agreed to undertake any alterations or additions or to construct any
improvements to the Premises, except to fund the “Landlord’s Contribution”
towards construction of certain “Tenant Improvements” subject
to the terms and conditions of the Work Letter attached hereto as Exhibit X (the “Work Letter”).

     

    (c) As of the
Commencement Date, Tenant shall be conclusively deemed to have accepted the
Premises and those portions of the Building and Site in which Tenant has any
rights under this Lease, which acceptance shall mean that it is conclusively
established that the Premises and those portions of the Building and Site in
which Tenant has any rights under this Lease were in satisfactory condition and
in conformity with the provisions of this Lease, subject only to those defective
or incomplete portions of the Tenant Improvements itemized on a written
punchlist pursuant to the Work Letter or a breach of Landlord’s representations
and warranties set forth below in Section 2.2(d).

     

    (d) Landlord
hereby represents and warrants that, as of the Commencement Date:

     

    (i) The
Premises, the Building, and the Common Areas, including all fixtures, equipment
and building systems servicing the Premises, including, without limitation,
existing plumbing, mechanical, lighting, HVAC systems, and all items for which
Tenant shall have repair, maintenance and/or replacement obligations under
Section 7.1 or elsewhere in the Lease and the Tenant Improvements (1) have been
constructed and/or installed in a good and workmanlike manner and  in
compliance with all applicable laws and regulations, (2) are not in violation of
any applicable laws and regulations, and (3) are not subject to any enforcement
or correction order by any government authority in connection with the
generation, use, storage, treatment or disposal of Hazardous Materials (as
defined in Section 5.3);

     

    (ii) There are
no Hazardous Materials (as defined in Section 5.3) located on the
Premises.

     

    (iii)           The
roof, bearing walls and foundation of the Building are free of material defects.
..

     

    (e) The
warranty period for the representation and warranty in Section 2.2(d)(i)
shall be for a period of six (6) months from the Commencement
Date.  If Tenant does not give Landlord notice of any non-compliance
with the representations and warranties in Section 2.2(d)(i) within six (6)
months of the Commencement 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

      Date,
Landlord shall have no further liability or obligations under
Section 2.2(d)(i), but Landlord shall still be obligated to perform its
maintenance obligations under Sections 6.2 and 7.2 of this
Lease.

    

     

    SECTION
2.3     BUILDING NAME AND
ADDRESS.  Tenant shall not utilize any name selected by
Landlord from time to time for the Building and/or the Site as any part of
Tenant’s corporate or trade name.  Landlord shall have the right to
change the name, address, number or designation of the Building or Site without
liability to Tenant.

     

     

    ARTICLE
III.

     

    TERM

     

    SECTION
3.1     GENERAL.  Subject
to the provisions of Section 3.2 below, the term of this Lease (“Term”) shall commence on the
date set forth in Item 4 of the Basic Lease Provisions (the “Commencement Date”), and shall
expire on the date set forth in Item 5 of the Basic Lease Provisions (the “Expiration
Date”).  

     

    SECTION
3.2     DELAY IN
POSSESSION.  If Landlord, for any reason whatsoever, cannot
deliver possession of the Premises to Tenant on or before the Commencement Date
as set forth in Item 4 of the Basic Lease Provisions in the condition required
hereunder, this Lease shall not be void or voidable nor shall Landlord be liable
to Tenant
for any resulting loss or damage except that Landlord will reimburse Tenant for
reasonable rent actually paid by Tenant that Tenant would not have had to pay
but for the failure of Landlord to deliver possession of the Premises to Tenant
on or before the Commencement Date (“Alternate
Rent”).  However, Tenant shall not be liable for any rent and
the Commencement Date shall not occur until Landlord tenders possession of the
Premises to Tenant in the condition required hereunder, except that if Landlord
cannot so tender possession of the Premises on or before the Commencement Date
due to causes set forth in Section 3 of the Work Letter , then the Commencement
Date shall be deemed to have occurred and Landlord shall be entitled to full
performance by Tenant (including the payment of rent) as of the date set forth
in Item 4 of the Basic Lease Provisions and shall not owe Tenant any Alternate
Rent. So long as Tenant’s activities during such early access do not interfere
with or delay the construction of the Tenant Improvements and Tenant coordinates
such early access and work with Landlord’s Contractor (as such term is defined
in the Work Letter), Tenant shall have early access to the Premises solely for
the completion of certain other improvements consented to by Landlord in
accordance with Section 7.3 of this Lease and installation of Tenant’s
furniture, fixtures, equipment and cabling no later than July 15, 2009 until the
Commencement Date (“Early Access Period”). Such access during the Early Access
Period shall be free of Rent. Tenant shall provide Landlord with necessary
insurance prior to such Early Access.

     

    SECTION
3.3     RIGHT TO EXTEND THIS
LEASE.  

     

    (a) Provided
that no Event of Default has occurred under any provision of this Lease, either
at the time of exercise of the extension right granted herein or at the time of
the commencement of such extension, and provided further that Tenant is
occupying the entire Premises and has not assigned or sublet any of its interest
in this Lease, then Tenant may extend the Term of this Lease for one (1) period
of twelve (12) months (the “Extension
Term”).  Tenant shall exercise its right to extend the Term by
and only by delivering to Landlord, not less than six (6) months or more than
twelve (12) months prior to the expiration date of the Term, Tenant’s
irrevocable written notice of its commitment to extend (the “Commitment
Notice”).  The Basic Rent payable under the Lease during the
Extension Term shall be as set forth under “Extension Term” in Exhibit Y attached
hereto.

     

    (b) If Tenant
properly exercises its right to extend the Term for the Extension Term and
Tenant desires to further extend the Term of the Lease beyond the Extension Term
for one (1) additional period of twelve (12) months (the “Discretionary Extension
Term”), Tenant shall deliver such request in writing to Landlord no
sooner than twelve (12) months or no later than nine (9) months prior to the
expiration of the Extension Term.  Within thirty (30) days of such
request, Landlord shall in its sole and absolute discretion either (a) deny such
request to extend the Term beyond the Extension Term, or (b) deliver to Tenant
in writing Landlord’s determination of the amount that is ninety-five percent
(95%) of the then fair market rental value for the Premises (“FMV Notice”).  Such
determination shall be derived from a written appraisal of the then fair market
rental value of the Premises based on comparable facilities in comparable
locations prepared by an independent professional appraiser or real estate
broker who is a Member of the Appraisal Institute (M.A.I.), or its successor
institution, and is experienced 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

      with the
prevailing market rents for the area in which the Premises is
located.  If Landlord elects to deliver the FMV Notice, then within
thirty (30) days of receiving such FMV Notice, Tenant shall notify Landlord in
writing of its election to either extend the Term for the Discretionary
Extension Term at the rental rate set forth in the FMV Notice or to vacate the
Premises as of the expiration of the Extension Term (the “Discretionary Extension
Notice”).  Within twenty (20) days after receipt of the
Discretionary Extension Notice, Landlord shall prepare an appropriate amendment
to this Lease for the Discretionary Extension Term period, and Tenant shall
execute and return same to Landlord within ten (10) days after Tenant’s receipt
of same.

    

     

    (c) If Tenant
fails to timely exercise the extension right granted herein within the time
period expressly set forth for exercise by Tenant in Section 3.3(a) above,
Tenant’s right to extend the Term shall be extinguished and the Lease shall
automatically terminate as of the expiration date of the Term, without any
extension and without any liability to Landlord.  Tenant’s rights
under this Section 3.3 shall belong  to SonicWALL, Inc., a California
Corporation, and any Affiliate, as defined in Section 9.6 below, and any other
attempted assignment or transfer of such rights shall be void and of no force
and effect.  Unless agreed to in a writing signed by Landlord and
Tenant, any extension of the Term, whether created by an amendment to this Lease
or by a holdover of the Premises by Tenant, or otherwise, shall be deemed a part
of, and not in addition to, any duly exercised extension period permitted by
this Section 3.3.

     

     

    ARTICLE
IV.

     

    RENT AND
OPERATING EXPENSES

     

    SECTION
4.1     BASIC
RENT.  From and
after the Commencement Date, Tenant shall pay to Landlord without deduction or
offset, the rental amount for the Premises shown in Exhibit Y attached
hereto (the “Basic
Rent”), including subsequent adjustments and free rent periods, if
any.  The rent shall be due and payable in advance commencing on the
Rent Commencement Date (as prorated for any partial month) and continuing
thereafter on the first day of each successive calendar month of the
Term.  No demand, notice or invoice shall be required for the payment
of Basic Rent.  An installment of rent in the amount of one (1) full
month’s Basic Rent at the initial rate following the free rent period [* * *] and one (1) month’s
estimated Tenant’s Share of Operating Expenses (as defined in Section 4.2,
which amount equals Twenty-Three Thousand Forty Dollars ($23,040)) shall be
delivered to Landlord concurrently with Tenant’s execution of this Lease and
shall be applied against the Basic Rent and Operating Expenses first due
hereunder.


    SECTION
4.2     OPERATING
EXPENSES.

     

    (a) From and
after the Rent Commencement Date, Tenant shall pay to Landlord, as additional
rent, Tenant’s Share of all Operating Expenses, as defined in Section 4.2(f),
incurred by Landlord in the operation
of the Building and Site.  The term “Tenant’s Share” means one
hundred percent (100%) of any Operating Expenses determined by Landlord and
Tenant to solely benefit or relate to  the Building, plus twelve and
46/100 percent (12.46%) of any Operating Expenses determined by Landlord to
benefit or relate substantially to the Common Area of the Site.

     

    (b) Prior to
the start of each full Expense Recovery Period (as defined in this Section 4.2),
Landlord shall give Tenant a written estimate of the amount of Tenant’s Share of
Operating Expenses for the applicable Expense Recovery Period.  Any
delay or failure by Landlord in providing such estimate shall not relieve Tenant
from its obligation to pay Tenant’s Share of Operating Expenses or estimated
amounts thereof, if and when Landlord provides such estimate or final payment
amount.  Tenant shall pay the estimated amounts to Landlord in equal
monthly installments, in advance concurrently with payments of Basic
Rent.  If Landlord has not furnished its written estimate for any
Expense Recovery Period by the time set forth above, Tenant shall continue to
pay monthly the estimated Tenant’s Share of Operating Expenses in effect during
the prior Expense Recovery Period; provided that when the new estimate is
delivered to Tenant, Tenant shall, at the next monthly payment date, pay any
accrued estimated Tenant’s Share of Operating Expenses based upon the new
estimate. Any overpayment of Tenant’s Share of Operating Expenses shall be
applied to the next Rent coming due, until Tenant is fully reimbursed. For
purposes hereof, “Expense
Recovery Period” shall mean every twelve month period during the Term (or
portion thereof for the first and last lease years) commencing March 1st
and ending on the last day of February, provided that Landlord shall have the
right to change the date on which an Expense Recovery Period commences in which
event appropriate 

     

    
      
        
        

      

      
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      reasonable
adjustments shall be made to Tenant’s Share of Operating Expenses so that the
amount payable by Tenant shall not materially vary as a result of such
change.

    

     

    (c) Within
one hundred twenty (120) days after the end of each Expense Recovery Period,
Landlord shall furnish to Tenant a statement (a “Reconciliation Statement”)
showing in reasonable detail the actual or prorated Tenant’s Share of Operating
Expenses incurred by Landlord during such Expense Recovery Period, and the
parties shall within thirty (30) days thereafter make any payment or allowance
necessary to adjust Tenant’s estimated payments of Tenant’s Share of Operating
Expenses, if any, to the actual Tenant’s Share of Operating Expenses as shown by
the Reconciliation Statement.  Any delay or failure by Landlord in
delivering any Reconciliation Statement shall not constitute a waiver of
Landlord’s right to require Tenant to pay Tenant’s Share of Operating Expenses
pursuant hereto except that if any Reconciliation Statement is provided more
than one (1) year after the expiration of the applicable Expense Recovery
Period, such Reconciliation Statement, at Tenant’s option, shall be null and
void. .  Any amount due Tenant shall be credited against installments
next coming due for Basic Rent and under this Section 4.2, and any deficiency
shall be paid by Tenant together with the next installment.  Should
Tenant fail to object in writing to Landlord’s determination of Tenant’s Share
of Operating Expenses within sixty (60) days following delivery of Landlord’s
Reconciliation Statement, Landlord’s determination of Tenant’s Share of
Operating Expenses for the applicable Expense Recovery Period shall be
conclusive and binding on the parties for all purposes and any future claims to
the contrary shall be barred.

     

    (d) Even
though this Lease has terminated and the Tenant has vacated the Premises, when
the final determination is made of Tenant’s Share of Operating Expenses for the
Expense Recovery Period in which this Lease terminates, Tenant shall within
thirty (30) days of written notice pay the entire increase over the estimated
Tenant’s Share of Operating Expenses already paid.  Conversely, any
overpayment by Tenant shall be rebated by Landlord to Tenant not later than
thirty (30) days after such final determination.

     

    (e) Not more
often than once each calendar year, Tenant, upon thirty (30) days advance
written notice to Landlord, at Tenant’s sole cost and expense, may retain an
independent certified public accountant engaged on a non-contingency fee basis
and reasonably acceptable to Landlord, to review and audit Landlord’s books and
records with regard to the Operating Expenses for the Building, Premises and
Common Areas and the calculations of Tenant’s proportionate share thereof. If it
is determined by such auditors that Tenant overpaid its share of any Operating
Expenses, Landlord shall refund to Tenant the amount of such overpayment within
thirty (30) days. If it is reasonably determined by such auditors that Tenant
underpaid its share of any Operating Expenses, Tenant shall pay to Landlord the
amount of such deficiency within thirty (30) days. If it is reasonably
determined by such auditors that Tenant overpaid its share of any Operating
Expenses by more than ten percent (10%), Landlord shall reimburse Tenant for the
reasonable costs of Tenant’s audit.

     

    (f) The term
“Operating Expenses”
shall mean and include all Building Costs, as defined in subsection (g), and
Property Taxes, as defined in subsection (h), but shall not be duplicative of
any costs for which Tenant is otherwise responsible under the
Lease.

     

    (g) The term
“Building Costs” shall
mean all expenses of operation, repair, replacement and maintenance of the
Building and Site, including without limitation all appurtenant Common Areas (as
defined in Section 6.2), and shall include the following charges by way of
illustration but not limitation:  Building exterior maintenance
(excluding any maintenance of the foundations, exterior walls, roof and roofing
which shall be at Landlord’s sole cost and expense and not an Operating Expense,
but including any costs associated with the roof membrane amortized over its
useful life); maintenance, repair and replacement of all mechanical systems
servicing the Building, including, but not limited to the HVAC system, provided
that the replacement of any HVAC component or HVAC unit that has a cost in
excess of Ten Thousand Dollars ($10,000) shall be treated as a capital
replacement and the cost shall be amortized over the useful life of such
component or unit calculated at a market cost of funds; outside area maintenance
of the Site (including landscaping and exterior lights serving the Building);
insurance premiums and deductibles and/or reasonable premium and deductible
equivalents should Landlord elect to self-insure all or any portion of any risk
that Landlord is authorized to insure hereunder (including flood insurance
premiums); license, permit, and inspection fees; supplies; materials; equipment;
tools; costs incurred in connection with compliance with any laws or changes in
laws applicable to the Building or Site; the cost of any capital improvements,
repairs or replacements (other than as expressly excluded elsewhere in this
Lease) provided that such costs are
amortized as set forth below; labor; and any expense incurred pursuant to
Sections 6.1, 6.2, 7.2, and 10.2 

     

    
      
        
        

      

      
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      (unless
the Lease expressly provides that a specific cost shall be solely at Landlord’s
expense). Notwithstanding the above, the cost of any particular capital
expenditure shall be amortized over its useful life and the amount includable in
Building Costs shall be limited to the monthly amortized cost thereof. The
determination of what constitutes a capital expenditure and useful life
applicable thereto shall be made in accordance with GAAP. Capital expenditures
shall (a) be reasonably intended to reduce or limit operating costs or energy
consumption of the Premises; (b) required after the Commencement Date under any
governmental law or regulation that was not applicable to the Premises,
Building, Site or Common Areas at the time originally constructed; or (c) be for
repair or replacement of any equipment or improvements needed to operate and/or
maintain the Premises, Building, Site and/or Common Areas at the same quality
levels as prior to the repair or replacement.

    

     

    (h) Notwithstanding
anything contrary in this Section 4.2 or elsewhere in this Lease, the following
costs and expenses shall not be included in “Building Costs”:

     

    (i) Repair
and replacement of the paved surface of the parking lots associated with the
Site, unless such repair or replacement is necessitated by damage caused by
Tenant or Tenant’s employee, agent, or visitor;

     

    (ii) Repair
and replacement of the following structural elements of the Building: the
foundations, structural walls, and structural roof systems (but Building Costs
shall include any costs associated with the roof membrane amortized over its
useful life);

     

    (iii) Repairs,
alterations, additions, improvements or replacements needed to rectify or
correct  any construction defects related to the original design,
materials or construction or workmanship of the Building which exist within
Premises as of the Commencement Date;

     

    (iv) Repairs
made  in order for Landlord to be in compliance with its
representations and warranties set forth above in Section 2.2(d)(i) and and
2.2(d)(ii) or to comply with Landlord’s representations and warranties set forth
above in Section 2.2(d)(iii);

     

    (v) Property
management fees;

     

    (vi) Depreciation;

     

    (vii) Rent paid
or payable under any ground lease or underlying lease to which this Lease is
subject, including rent paid to any ground landlord under a ground
lease;

     

    (viii) Principal
payments of mortgage or other non-operating debts of Landlord;

     

    (ix) Costs of
selling, financing or refinancing the Building;

     

    (x) Fines or
penalties resulting from any violations of law, negligence or willful misconduct
of Landlord or its employees, agents or contractors;

     

    (xi) Any
expense for which Landlord has received actual reimbursement;

     

    (xii) Costs
that Landlord is entitled to recover under a warranty, ;

     

    (xiii) Legal
fees, space planner’s fees, broker’s leasing commissions or other compensation
payable to brokers incurred with respect to leasing tenant space in the
Site;

     

    (xiv) Legal
fees, space planner’s fees, broker’s leasing commissions or other compensation
payable to brokers incurred with respect to leasing space in the Building or
Site;

     

    (xv) The cost
of constructing tenant improvements for any other tenant of the
Site;

     

    
      
        
        

      

      
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    (xvi) Legal
fees, accountant fees, and other expenses incurred in connection with disputes
of tenants or other occupants of the Site or associated with the enforcement of
the terms of any leases with tenants;

     

    (xvii) Costs
incurred due to a violation by Landlord or any other tenant of the terms and
conditions of a lease;

     

    (xviii) Costs of
any service provided to Tenant or other occupants of the Site for which Landlord
is reimbursed;

     

    (xix) Deductibles
for earthquake and flood insurance;

     

    (xx) Landlord’s
general overhead expenses not related to the Premises;

     

    (xxi) Salaries
of any personnel who perform services not in connection with the management,
operation, repair or maintenance of the Premises.; and

     

    (xxii) Repairs
covered by the proceeds of insurance or from funds provided by Tenant or any
other tenant of the Site(including where any other tenant of the Site is
obligated to make such repairs or pay the cost of such repairs)

     

    (i) The term
“Property Taxes” as used
herein shall include any form of federal, state, county or local government or
municipal taxes, fees, charges or other impositions of every kind (whether
general, special, ordinary or extraordinary) related to the ownership, leasing
or operation of the Building and the tax parcel on which the Building is located
(such parcel being Assessor’s Parcel No. 421-07-031) (the “Tax Parcel”), including
without limitation, the following: (i) all real estate taxes or personal
property taxes levied against the Building and Tax Parcel, as such property
taxes may be reassessed from time to time; and (ii) other taxes, charges and
assessments which are levied with respect to this Lease or to the Building, and
any improvements, fixtures and equipment and other property of Landlord located
in the Building, (iii) all assessments and fees for public improvements,
services, and facilities and impacts thereon, including without limitation
arising out of any Community Facilities Districts, “Mello Roos” districts,
similar assessment districts, and any traffic impact mitigation assessments or
fees; (iv) any tax, surcharge or assessment which shall be levied in
addition to or in lieu of real estate or personal property taxes, other than
taxes covered by Article VIII; and (v) taxes based on the receipt of rent
(including gross receipts or sales taxes applicable to the receipt of rent), and
(vi) costs and expenses incurred in contesting the amount or validity of any
Property Tax by appropriate proceedings.  Notwithstanding the
foregoing, general net income or franchise taxes or transfer taxes imposed
against Landlord shall be excluded.

     

    SECTION
4.3     SECURITY
DEPOSIT.  Concurrently with Tenant’s delivery of this Lease,
Tenant shall deposit with Landlord the sum stated in Exhibit Y attached
hereto, to be held by Landlord as security for the full and faithful performance
of all of Tenant’s obligations under this Lease (the “Security Deposit”). Landlord
shall not be required to keep this Security Deposit separate from its general
funds, and Tenant shall not be entitled to interest on the Security
Deposit.   The Security Deposit may be utilized by Landlord
towards the payment of all expenses by Landlord for which Tenant would be
required to reimburse Landlord under this Lease.  Upon any Event of
Default by Tenant (as defined in Section 14.1), Landlord may, in its sole and
absolute discretion and notwithstanding any contrary provision of Civil Code
Section 1950.7, except Civil Code Section 1950.7(b), retain, use or apply the
whole or any part of the Security Deposit to pay any sum which Tenant is
obligated to pay under this Lease including, without limitation, amounts
estimated by Landlord as the amounts due it for prospective rent and for damages
pursuant to Section 14.2(a)(i) of this Lease and/or Civil Code Section 1951.2,
sums that Landlord may expend or be required to expend by reason of the Event of
Default by Tenant or any loss or damage that Landlord may suffer by reason of
the Event of Default or costs incurred by Landlord in connection with the repair
or restoration of the Premises pursuant to Section 15.3 of this Lease upon
expiration or earlier termination of this Lease.  In no event shall
Landlord be obligated to apply the Security Deposit upon an Event of Default and
Landlord’s rights and remedies resulting from an Event of Default, including
without limitation, Tenant’s failure to pay Basic Rent, Tenant’s Share of
Operating Expenses or any other amount due to Landlord pursuant to this Lease,
shall not be diminished or altered in any respect due to the fact that Landlord
is holding the Security Deposit.  If any portion of the Security
Deposit is applied by Landlord as permitted by this Section, Tenant shall within
five (5) days after 

     

    
      
        
        

      

      
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      written
demand by Landlord deposit cash with Landlord in an amount sufficient to restore
the Security Deposit to its original amount. Tenant agrees that Landlord may
retain all or a portion of the Security Deposit only in an amount as
necessary  and until such time as all amounts due from Tenant in
accordance with this Lease, including the Lab Restoration Work as defined in
Section 15.3, have been determined and paid in full and Tenant agrees that
Tenant shall have no claim against Landlord for Landlord’s retaining such
Security Deposit to the extent provided in this Section.  Except as
set forth above or in Section 15.3 of this Lease, the Security Deposit shall be
returned to Tenant (or, at Landlord’s option, to the last assignee of Tenant’s
interest in this Lease) within thirty (30) days after the expiration of the
Term.  

    

     

     

    ARTICLE V.

     

    USES

    
    

    SECTION
5.1     USE.  Tenant
shall use the Premises only for the purposes stated in Item 3 of the Basic Lease
Provisions, all in accordance with applicable laws and restrictions and pursuant
to approvals to be obtained by Tenant from all relevant and required
governmental agencies and authorities.  The parties agree that any
contrary use shall be deemed to cause material and irreparable harm to Landlord
and shall entitle Landlord to injunctive relief in addition to any other
available remedy.  Tenant, at its expense, shall procure, maintain and
make available for Landlord’s inspection throughout the Term, all governmental
approvals, licenses and permits required for the proper and lawful conduct of
Tenant’s permitted use of the Premises.  Tenant shall not use or allow
the Premises to be used for any unlawful purpose, nor shall Tenant permit any
nuisance or commit any waste in the Premises or the Site.  Tenant
shall not perform any work or conduct any business whatsoever in the Site other
than inside the Premises.  Tenant shall not do or permit to be done
anything which will invalidate or increase the cost of any insurance policy(ies)
covering the Building, the Site and/or their contents, and shall comply with all
applicable insurance underwriters rules.  Tenant shall comply at its
expense with all present and future laws, ordinances, restrictions, regulations,
orders, rules and requirements of all governmental authorities that pertain to
Tenant or its use of the Premises, including without limitation all federal and
state occupational health and safety requirements, whether or not Tenant’s
compliance will necessitate expenditures or interfere with its use and enjoyment
of the Premises and provided, at all times, that the Landlord shall be
responsible for any ADA compliance on and to the exterior of the Building and/or
Common Areas unless such expenditures are necessitated by Tenant’s actions or
any Alterations made to the Premises by Tenant..  Tenant shall comply
at its expense with all present and future covenants, conditions, easements or
restrictions now or hereafter affecting or encumbering the Building and/or Site,
and any amendments or modifications thereto, including without limitation the
payment by Tenant of any periodic or special dues or assessments charged against
the Premises or Tenant which may be allocated to the Premises or Tenant in
accordance with the provisions thereof.

     

    SECTION
5.2     SIGNS.  Provided
Tenant continues to occupy the entire Premises, Tenant shall have the exclusive
right to one (1) exterior sign on the Building, and one (1) signage position on
the monument sign at the front of the Building, for Tenant’s name and graphics
and subject to Landlord’s right of prior approval that such exterior signage is
in compliance with the Signage Criteria (defined below).  Except as
provided in the foregoing, Tenant shall have no right to maintain signs in any
location in, on or about the Premises, the Building or the Site and shall not
place or erect any signs that are visible from the exterior of the
Building.  The size, location, design, graphics, material, style,
color and other physical aspects of any permitted sign shall be subject to
Landlord’s written determination, as reasonably determined by Landlord, prior to
installation, that signage is in compliance with any covenants, conditions or
restrictions encumbering the Premises and approved by the City in which the
Premises are located (“Signage
Criteria”).  Prior to placing or erecting any such signs,
Tenant shall obtain and deliver to Landlord a copy of any applicable municipal
or other governmental permits and approvals and comply with any applicable
insurance requirements for such signage.  Landlord agrees to
reasonably cooperate with Tenant, but at no additional cost or expense to
Landlord, in obtaining any required permits and approvals for the approved
signage.  Tenant shall be responsible for all costs of any permitted
sign, including, without limitation, the fabrication, installation, maintenance
and removal thereof and the cost of any permits therefor. If Tenant fails to
maintain its sign in good condition, or if Tenant fails to remove same upon
termination of this Lease and repair and restore any damage caused by the sign
or its removal, Landlord may do so at Tenant’s expense.  Landlord
shall have the right to temporarily remove any signs in connection with any
repairs or maintenance in or upon the Building.  The term “sign” as
used in this Section shall include all signs, designs, monuments, displays,
advertising materials, logos, banners, projected images, pennants, decals,
pictures, notices, lettering, numerals or graphics.

     

    
      
        
        

      

      
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    SECTION
5.3     HAZARDOUS
MATERIALS.

     

    (a) For
purposes of this Lease, the term “Hazardous Materials” means
(i) any “hazardous material” as defined in Section 25501(o) of the
California Health and Safety Code, (ii) hydrocarbons, polychlorinated biphenyls
or asbestos, (iii) any toxic or hazardous materials, substances, wastes or
materials as defined pursuant to any other applicable state, federal or local
law or regulation, and (iv) any other substance or matter which may result
in liability to any person or entity as a result of such person’s possession,
use, storage, release or distribution of such substance or matter under any
statutory or common law theory.

     

    (b) Tenant
shall not cause or permit any Hazardous Materials to be brought upon, stored,
used, generated, released or disposed of on, under, from or about the Premises
(including without limitation the soil and groundwater thereunder) without the
prior written consent of Landlord, which consent may be given or withheld in
Landlord’s sole and absolute discretion.  Notwithstanding the
foregoing, Tenant shall have the right, without obtaining prior written consent
of Landlord, to utilize within the Premises a reasonable quantity of standard
office products that may contain Hazardous Materials, provided however, that
(i) Tenant shall  follow all instructions on such packaging with
respect to the storage, use and disposal of such products, and shall otherwise
comply with all applicable laws with respect to such products, and (ii) all
of the other terms and provisions of this Section 5.3 shall apply with
respect to Tenant’s storage, use and disposal of all such products.

     

    (c) If the
presence of any Hazardous Materials on, under, from or about the Building or the
Site caused or permitted by Tenant or its agents, employees, contractors,
licensees or invitees results in (i) injury to any person, (ii) injury to or any
contamination of the Building or the Site, or (iii) injury to or contamination
of any real or personal property wherever situated, Tenant, at its expense,
shall promptly take all actions necessary to return the Building and the Site
and any other affected real or personal property owned by Landlord to the
condition existing prior to the introduction of such Hazardous Materials and to
remedy or repair any such injury or contamination, including without limitation,
any cleanup, remediation, removal, disposal, neutralization or other treatment
of any such Hazardous Materials.  Notwithstanding the foregoing,
Tenant shall not, without Landlord’s prior written consent, which consent may be
given or withheld in Landlord’s sole and absolute discretion, take any remedial
action in response to the presence of any Hazardous Materials on, under, from or
about the Premises or the Site or any other affected real or personal property
owned by Landlord or enter into any similar agreement, consent, decree or other
compromise with any governmental agency with respect to any Hazardous Materials
claims; provided however, Landlord’s prior written consent shall not be
necessary in the event that the presence of Hazardous Materials on, under, from
or about the Premises or the Site or any other affected real or personal
property owned by Landlord (i) imposes an immediate threat to the health, safety
or welfare of any individual and (ii) is of such a nature that an immediate
remedial response is necessary and it is not reasonably
practicable  to obtain Landlord’s consent before taking such
action.  To the fullest extent permitted by law and except to the
extent caused by the fault or negligence of Landlord, Tenant shall indemnify,
hold harmless, protect and defend (with attorneys reasonably acceptable to
Landlord) Landlord and any successors to all or any portion of Landlord’s
interest in the Building and the Site and any other real or personal property
owned by Landlord from and against any and all liabilities, losses, damages,
diminution in value, judgments, fines, demands, claims, recoveries,
deficiencies, costs and expenses (including without limitation attorneys’ fees,
court costs and other professional expenses), whether foreseeable or
unforeseeable, arising directly or indirectly out of the use, generation,
storage, treatment, release, on- or off-site disposal or transportation of
Hazardous Materials (A) on, into, from, under or about the Building during the
Term regardless of the source of such Hazardous Materials unless caused solely
by Landlord or (B) on, into, from, under or about the Premises, the Building or
the Site caused or permitted by Tenant, its agents, employees, contractors,
licensees or invitees.  Such indemnity obligation shall specifically
include, without limitation, Tenant’s proportion of the cost of any required or
necessary repair, restoration, cleanup or detoxification of the Premises, the
Building and the Site and any other real or personal property owned by Landlord,
the preparation of any closure or other required plans, whether such action is
required or necessary during the Term or after the expiration of this Lease and
any loss of rental due to the inability to lease the Premises or any portion of
the Building or Site as a result of such Hazardous Materials, the remediation
thereof or any repair, restoration or cleanup related thereto.  If it
is at any time discovered that Hazardous Materials have been released on, into,
from, under or about the Premises during the Term by  Tenant or its
agents, employees, contractors, licensees or invitees, Tenant shall, at
Landlord’s request, immediately prepare and submit to Landlord a comprehensive
plan, subject to Landlord’s approval, specifying the actions to be taken by
Tenant to return the Premises, the Building or the Site  to the
condition existing prior to the introduction of such Hazardous
Materials.  Upon Landlord’s approval of such plan, Tenant shall, at
its 

     

    
      
        
        

      

      
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      expense,
and without limitation of any rights and remedies of Landlord under this Lease
or at law or in equity, immediately implement such plan and proceed to cleanup,
remediate and/or remove all such Hazardous Materials in accordance with all
applicable laws and as required by such plan and this Lease.  The
provisions of this Section 5.3(c) shall expressly survive the expiration or
sooner termination of this Lease.

    

     

    (d) To the
fullest extent permitted by law, Landlord shall indemnify, hold harmless,
protect and defend (with attorneys reasonably acceptable to Tenant) Tenant from
and against any and all liabilities, losses, damages, judgments, fines, demands,
claims, recoveries, deficiencies, costs and expenses (including without
limitation attorneys’ fees, court costs and other professional expenses),
whether foreseeable or unforeseeable, arising directly or indirectly out of
Landlord’s breach of any of its obligations under this Section 5.3 of the Lease,
including, without limitation, its representation and warranty set forth above
in Section 2.2(d)(ii). For the purpose of the indemnity provisions hereof, any
acts or omissions of Landlord or its officers, directors, employees, agents, or
contractors of Landlord shall be strictly attributable to Landlord. The
provisions of this Section 5.3(d) shall expressly survive the expiration or
sooner termination of this Lease.

     

     

    ARTICLE VI.

     

    COMMON AREAS;
SERVICES

    
    

    SECTION
6.1     UTILITIES AND
SERVICES.  

     

    (a) Tenant
shall be responsible for and shall pay promptly, directly to the appropriate
supplier, all charges for water, gas, electricity, sewer, heat, light, power,
telephone, telecommunications service, refuse pickup, janitorial service,
interior landscape maintenance and all other utilities, materials and services
furnished directly to Tenant or the Premises or used by Tenant in, on or about
the Premises during the Term, together with any taxes thereon.

     

    (b) Landlord
shall not be liable for damages or otherwise for any failure or interruption of
any utility or other service furnished to the Premises, and no such failure or
interruption shall be deemed an eviction or entitle Tenant to terminate this
Lease or withhold or abate any rent due hereunder. Notwithstanding the
foregoing, in the event services are interrupted for more than five (5) business
days or if the interruption or failure of any utilities or services is caused by
the negligence or willful misconduct of Landlord, or Landlord’s officers,
agents, employees or contractors, Tenant shall be entitled to an abatement of
rent to the extent of the interference with Tenant’s use and occupancy of the
Premises, with such abatement to commence on the day that Tenant notifies
Landlord of the interruption of utilities or services.  Landlord shall
at all reasonable times have free access to the Building and Premises to
install, maintain, repair, replace or remove all electrical and mechanical
installations of Landlord.  Tenant acknowledges that the costs
incurred by Landlord related to providing above-standard utilities and services
to Tenant, including, without limitation, telephone lines, shall be charged to
Tenant.

     

    SECTION
6.2     OPERATION AND
MAINTENANCE OF COMMON AREAS.  

     

    (a) During
the Term, Landlord shall operate and maintain all Common Areas within the Site
in the manner Landlord may deem to be appropriate.  The term “Common Areas” shall mean all
areas of the Site which are not held for exclusive use by persons entitled to
occupy space including Tenant, and their respective employees and invitees,
including without limitation the cafeteria located on the Site (the “Cafeteria”) as more
particularly shown on the site plan attached hereto as Exhibit B, the
conference facility located on the Site  (the “Conference Facility”) as more
particularly shown as “LC1” and “LC2” on the site plan attached hereto as Exhibit B, parking
areas and structures, driveways, sidewalks, landscaped and planted areas, and
electrical and utility rooms and roof access entries, if any, in the
Building.

     

    (b) An
equitable pro-rata portion of costs incurred by Landlord for the maintenance and
operation of the Cafeteria (the “Cafeteria Fee”) shall be
included in Building Costs on an “open book” basis, such Cafeteria Fee to be Two
Thousand Five Hundred Dollars ($2,500.00) per month subject to adjustment should
Landlord’s actual costs to operate the Cafeteria increase.  Any items
purchased at the Cafeteria shall be paid for by Tenant or Tenant’s employees on
a point-of-purchase basis.

     

    
      
        
        

      

      
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    (c) The
Conference Facility shall be available for Tenant’s use at no cost to Tenant one
(1) time per annual quarter for a one (1) day period of use, subject to
Landlord’s reasonable rules and regulations related to scheduling, access,
security, and cleaning requirements (including payment by Tenant of a reasonable
cleaning fee) (the “Conference
Facility Regulations”).  Any additional use of the Conference
Facility shall be at Tenant’s cost and subject to the Conference Facility
Regulations.  Tenant’s quarterly use rights are not cumulative and
each quarterly use right expires if not used in such annual
quarter.

     

    SECTION
6.3     USE OF COMMON
AREAS.  The occupancy by Tenant of the Premises and Building
shall include the use of the Common Areas as provided in this Article VI,
subject, however, to compliance with all  non-discriminatory rules and
regulations as are prescribed from time to time by Landlord for use of the
Common Areas.  Landlord shall at all times during the Term have
exclusive control of the Common Areas, and may restrain or permit any use or
occupancy, except as authorized by Landlord’s rules and regulations for use of
the Common Areas.  Tenant shall keep the Common Areas clear of any
obstruction or unauthorized use related to Tenant’s operations or use of
Premises, including without limitation, planters and furniture. Provided
Landlord uses reasonable efforts not to interfere with the conduct of Tenant’s
business at the Premises, nothing in this Lease shall be deemed to impose
liability upon Landlord for any damage to or loss of the property of, or for any
injury to, Tenant, its invitees or employees except to the extent caused by the
fault of negligence of Landlord.  Landlord may temporarily close any
portion of the Common Areas for repairs, remodeling and/or alterations, to
prevent a public dedication or the accrual of prescriptive rights, or for any
other reason deemed sufficient by Landlord, without liability to
Tenant.  Landlord’s temporary closure of any portion of the Common
Areas for such purposes shall not deprive Tenant of reasonable access to the
Premises.

     

    SECTION
6.4     PARKING.  Tenant
shall be entitled to use its allocated share of the vehicle parking spaces set
forth in Item 15 of the Basic Lease Provisions on those portions of the Common
Areas designated by Landlord for parking at no additional cost or expense during
the Term, including any extension thereof.  Tenant shall not use more
than its allocated share of vehicle parking spaces.  All parking
spaces shall be used only for parking of vehicles no larger than full size
passenger automobiles, sport utility vehicles or pickup trucks, with the
exception that no more than two (2) recreational vehicles owned by employees of
Tenant, who have requirements to be on site from time to time for twenty-four
hour per day, may use certain parking spaces reasonably designated by Landlord
for such use for no more than a seventy-two (72) hour period.  Tenant
shall not permit or allow any vehicles that belong to or are controlled by
Tenant or Tenant’s employees, suppliers, shippers, customers or invitees to be
loaded, unloaded or parked in areas other than those designated by Landlord for
such activities.  If Tenant permits or allows any of the prohibited
activities described above, then Landlord shall have the right, without notice,
in addition to such other rights and remedies that Landlord may have, to remove
or tow away the vehicle involved and charge the costs to
Tenant.  Parking within the Building and Common Areas shall be limited
to striped parking stalls, and no parking shall be permitted in any driveways,
access ways or in any area which would prohibit or impede the free flow of
traffic within the Common Areas.  There shall be no parking of any
vehicles for longer than a seventy-two (72)  hour period unless
otherwise authorized by Landlord, and vehicles which have been abandoned or
parked in violation of the terms hereof may be towed away at the owner’s
expense.  Nothing contained in this Lease shall be deemed to create
liability upon Landlord for any damage to motor vehicles of visitors or
employees, for any loss of property from within those motor vehicles, or for any
injury to Tenant, its visitors or employees, unless ultimately determined to be
caused by the  active negligence or willful misconduct of
Landlord.  Tenant shall be liable for any damage to the parking areas
caused by Tenant or Tenant’s employees, suppliers, shippers, customers or
invitees, including without limitation damage from excess oil
leakage.  Tenant shall have no right to install any fixtures,
equipment or personal property in the parking areas.

     

    SECTION
6.5     CHANGES AND ADDITIONS BY
LANDLORD.  Landlord reserves the right to make alterations or
additions to the Site, or to the attendant fixtures, equipment and Common
Areas.  Landlord may at any time relocate or remove any of the
driveways, sidewalks, landscaped and planted areas and parking areas of the
Common Areas, from time to time.  No change shall entitle Tenant to
any abatement of rent or other claim against Landlord.  No such change
shall deprive Tenant of reasonable access to or use of the
Premises.

     

    
      
        
        

      

      
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    ARTICLE VII.

     

    MAINTAINING THE
PREMISES

     

    SECTION
7.1     TENANT’S MAINTENANCE AND
REPAIR.  Subject to Section 2.2, Section 7.2 and Article XI,
Tenant at its sole expense shall maintain and make all repairs and replacements
necessary to keep the interior of the Premises and Building in the condition as
existed on the Commencement Date (or on any later date that any approved
improvements may have been installed), excepting ordinary wear and tear,
including without limitation all interior glass, doors, door closures, hardware,
fixtures, electrical, plumbing, fire extinguisher equipment and other equipment
installed in the Premises and all Alterations constructed by or for Tenant
pursuant to Section 7.3 below.  Any damage or deterioration of the
Premises shall not be deemed ordinary wear and tear if the same could have been
prevented by good maintenance practices by Tenant.    All
repairs and replacements shall be at least equal in quality to the original
work, shall be made only by a licensed contractor reasonably approved by
Landlord. Landlord may impose reasonable restrictions and requirements with
respect to repairs and replacements, as provided in Section 7.3, and the
provisions of Section 7.4 shall apply to all repairs and
replacements.  If Tenant fails to properly maintain and/or repair the
Premises or the Building as herein provided following Landlord’s notice and the
expiration of the applicable cure period (or earlier if Landlord determines that
such work must be performed prior to such time in order to avoid damage to the
Premises or Building or other detriment), then Landlord may elect, but shall
have no obligation, to perform any repair or maintenance required hereunder on
behalf of Tenant and at Tenant’s expense, and Tenant shall reimburse Landlord
upon demand for all costs incurred. Notwithstanding the foregoing, if the nature
of any Tenant repair, maintenance or replacement obligation is of a capital
nature, the same shall be treated as a capital expense as set forth in Section
4.2(g) above with the Landlord paying for the repair, maintenance or replacement
and Tenant paying to Landlord in a lump sum the amortized amount of the cost of
repair covering the remaining term of the Lease. 

     

    SECTION
7.2     LANDLORD’S MAINTENANCE AND
REPAIR.  Subject to Section 4.2, Section 7.1 and
Article XI, Landlord shall at Landlord’s cost provide service, maintenance
and repair with respect to any air conditioning, ventilating or heating
equipment (“HVAC”) which
serves the Premises (exclusive, however, of supplemental HVAC equipment
installed by Tenant and serving only the Premises) and shall maintain in good
repair the roof, foundations, footings, the exterior surfaces of the exterior
walls of the Building (including exterior glass), the structural elements of the
Building, except to the extent caused by the fault or negligence of
Tenant  its agents, employees, invitees, subtenants or
contractors.  Landlord shall have the right to employ or designate any
reputable person or firm, including any employee or agent of Landlord or any of
Landlord’s affiliates or divisions, to perform any service, repair or
maintenance function.  Landlord need not make any other improvements
or repairs except as specifically required under this Lease, and nothing
contained in this Section shall limit Landlord’s right to reimbursement from
Tenant for maintenance, repair costs and replacement costs as provided elsewhere
in this Lease. Tenant understands that it shall not perform any maintenance or
make any repairs or replacements at Landlord’s expense and shall have no right
to any rental offset for any maintenance, repairs or replacements performed by
Tenant.  Tenant further understands that Landlord shall not be
required to make any repairs to the roof, foundations, footings, the exterior
surfaces of the exterior walls of the Building (excluding exterior glass),
structural elements of the Building, or HVAC, unless and until either Landlord
becomes aware of the need for such repair or Tenant has notified Landlord in
writing of the need for such repair and Landlord shall have a reasonable period
of time thereafter to commence and complete said repair, if
warranted.

     

    SECTION
7.3     ALTERATIONS.  

     

    (a) Except as
otherwise provided in this Section, Tenant shall make no alterations, additions,
fixtures or improvements (“Alterations”) to the Premises or the
Building, including the front lobby area,  without the prior written
consent of Landlord, which consent may be granted or withheld in Landlord’s sole
and absolute discretion.    In the event that any requested
Alteration would result in a change from Landlord’s building standard materials
and specifications (“Standard
Improvements”), Landlord may withhold consent to such Alteration in its
sole and absolute discretion.  In the event Landlord so consents to a
change from the Standard Improvements (such change being referred to as a “Non-Standard Improvement”),
Tenant shall be responsible for the cost of replacing such Non-Standard
Improvement with the applicable Standard Improvement (“Replacements”) which
Replacements shall be completed prior to the Expiration Date or earlier
termination of this Lease.  Landlord shall not unreasonably withhold
or delay its consent to any Alterations which cost less than Fifty Thousand
Dollars 

     

    
      
        
        

      

      
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      ($50,000.00)
and do not (i) affect the exterior of the Building or outside areas (or be
visible from adjoining sites), or (ii) affect or penetrate any of the
structural portions of the Building, including but not limited to the roof, or
(iii) require any change to the basic floor plan of the Premise (including,
without limitation, the adding of any additional “office” square footage) or any
change to any structural or mechanical systems of the Premises, or (iv) fail to
comply with any applicable governmental requirements or require any governmental
permit as a prerequisite to the construction thereof, or (v) interfere in
any manner with the proper functioning of, or Landlord’s access to, any
mechanical, electrical, plumbing, elevator or HVAC systems, facilities or
equipment located in or serving the Building, or (vi) diminish the value of
the Premises including, without limitation, using lesser quality materials than
those existing in the Premises.

    

     

    (b) Landlord
may impose any condition to its consent, including but not limited to a
requirement that the installation and/or removal of all Alterations and
Replacements be covered by a lien and completion bond satisfactory to Landlord
in its sole and absolute discretion and requirements as to the manner and time
of performance of such work.  Landlord shall in all events have the
right to approve prior to the commencement of any work the contractor performing
the installation and removal of Alterations and Replacements and Tenant shall
not permit any contractor not approved by Landlord to perform any work on the
Premises or on the Building.  Tenant shall obtain all required permits
for the installation and removal of Alterations and Replacements and shall
perform the installation and removal of Alterations and Replacements in
compliance with all applicable laws, regulations and ordinances, including
without limitation the Americans with Disabilities Act, all covenants,
conditions and restrictions affecting the Site, and the Rules and Regulations as
described in Article XVII.  If any governmental entity requires, as a
condition to any proposed Alterations or Replacements by Tenant, that
improvements be made to the Common Areas (for example, a change to the number of
required disabled parking spaces needed in the Common Areas as a result of
changes made by Tenant within the Premises), and if Landlord consents to such
improvements to the Common Areas (which consent may be withheld in the sole and
absolute discretion of Landlord), then Tenant shall, at Tenant’s sole expense,
make such required improvements to the Common Areas in such manner, utilizing
such materials, and with such contractors, architects and engineers as Landlord
may require in its sole and absolute discretion.  Landlord shall have
the right, but not the obligation, to elect to make any such improvements to be
made to the Common Areas at Tenant’s expense, in which case Tenant shall
reimburse Landlord upon demand for all costs incurred in making such
improvements.

     

    (c) Any
request for Landlord’s consent to any proposed Alterations shall be made in
writing and shall contain architectural plans describing the work in detail
reasonably satisfactory to Landlord.  Landlord may elect to cause its
architect to review Tenant’s architectural plans.  Should the work
proposed by Tenant and consented to by Landlord modify the basic floor plan of
the Premises, then Tenant shall, at its expense, furnish Landlord with as-built
drawings and CAD disks compatible with Landlord’s systems and
standards.

     

    (d) Unless
Landlord otherwise agrees in writing, all Alterations made or affixed to the
Premises, the Building or to the Common Area (excluding moveable trade fixtures
and furniture), including without limitation all Tenant Improvements constructed
pursuant to the Work Letter (except as otherwise provided in the Work Letter)
and all telephone and data cabling, shall become the property of Landlord and
shall be surrendered with the Premises at the end of the Term; except that:
Landlord may, by notice to Tenant given either prior to or within ten (10) days
following the expiration or termination of this Lease, require Tenant
to:

     

    (i) Remove by
the Expiration Date, or sooner termination date of this Lease, or within ten
(10) days following notice to Tenant that such removal is required if notice is
given following the Expiration Date or sooner termination, all or any of the
Alterations installed either by Tenant or by Landlord at Tenant’s request,
including performing the restoration work required under Section 15.3(b), but
excluding all other Tenant Improvements constructed pursuant to the Work Letter
and all telephone and data cabling; and

     

    (ii) To repair
any damage to the Premises, the Building or the Common Area arising from that
removal and restore the Premises to its condition prior to making such
Alterations.

     

    SECTION
7.4     MECHANIC’S
LIENS.  Tenant shall keep the Premises and the Site free from
any liens arising out of any services or work performed, materials furnished, or
obligations incurred by or for Tenant.  Upon request by Landlord,
Tenant shall promptly (but in no event later than fifteen (15) calendar days
following such request) cause any such lien to be released by posting a bond in
accordance with California Civil Code Section 3143 

     

    
      
        
        

      

      
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      or any
successor statute.  In the event that Tenant shall not, within thirty
(30) calendar days following the imposition of any lien, cause the lien to be
released of record by payment or posting of a proper bond, Landlord shall have,
in addition to all other available remedies, the right to cause the lien to be
released by any means it deems proper, including payment of or defense against
the claim giving rise to the lien.  All expenses so incurred by
Landlord, including Landlord’s attorneys’ fees shall be reimbursed by Tenant
upon demand, together with interest from the date of payment by Landlord at the
maximum rate permitted by law until paid.  Tenant shall give Landlord
no less than twenty (20) days’ prior notice in writing before commencing
construction of any kind on the Premises or Common Area and shall again notify
Landlord that construction has commenced, such notice to be given on the actual
date on which construction commences, so that Landlord may post and maintain
notices of nonresponsibility on the Premises, Building, or Common Area, as
applicable, which notices Landlord shall have the right to post and which Tenant
agrees it shall not disturb.  Tenant shall also provide Landlord
notice in writing within ten (10) days following the date on which such work is
substantially completed.  The provisions of this Section shall
expressly survive the expiration or sooner termination of this Lease.


    

     

    SECTION
7.5     ENTRY AND
INSPECTION.  Landlord shall at all reasonable times, upon
written or oral notice (except in emergencies, when no notice shall be required)
have the right to enter the Building and Premises to inspect them, to supply
services in accordance with this Lease, to perform any work required or
permitted to be performed by Landlord within the Premises, to have access to
install, repair, maintain, replace or remove all electrical and mechanical
installations of Landlord and to protect the interests of Landlord in the
Premises, and to show the Premises to prospective or actual purchasers or
encumbrance holders (or, during the last one hundred and eighty (180) days of
the Term or when an Event of Default exists, to place upon the Premises any
usual or ordinary “for lease” signs and exhibit the Premises to prospective
tenants at reasonable hours), all without being deemed to have caused an
eviction of Tenant and without abatement of rent except as provided elsewhere in
this Lease.  Landlord shall have the right, if desired, to retain a
key which unlocks all of the doors in the Premises, excluding Tenant’s vaults
and safes, and Landlord shall have the right to use any and all means which
Landlord may deem proper to open the doors in an emergency in order to obtain
entry to the Premises, and any entry to the Premises obtained by Landlord as
provided in this Section 7.5 shall not be deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or any eviction of Tenant from the
Premises. Landlord shall at all times use reasonable efforts not to interfere
with the conduct of Tenant’s business at the Premises. 

     

     

    ARTICLE VIII.

     

    TAXES AND ASSESSMENTS ON TENANT’S
PROPERTY

     

    Tenant
shall be liable for and shall pay, prior to delinquency, all taxes and
assessments levied against all personal property of Tenant located in the
Premises.

     

     

    
      ARTICLE IX.

       

      ASSIGNMENT AND
SUBLETTING

    

     

    SECTION
9.1     TRANSFERS.  Tenant shall not,
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed as further described below: (i) directly or
indirectly assign, mortgage, pledge, hypothecate, encumber, or permit any lien
to attach to, or otherwise transfer, this Lease or any interest hereunder, by
operation of law or otherwise, (ii) sublet the Premises or any part thereof,
(iii) permit the use of the Premises by any entity or person other than Tenant
and its employees (all of the foregoing are hereinafter sometimes referred to
collectively as “Transfers” and any Person to
whom any Transfer is made or sought to be made is hereinafter sometimes referred
to as a “Transferee”),
or (iv) advertise the Premises or Lease for Transfers.  If Tenant
shall desire Landlord’s consent to any Transfer, Tenant shall notify Landlord in
writing, which notice shall include: (a) the proposed effective date (which
shall not be less than thirty (30) nor more than one hundred eighty (180) days
after Tenant’s notice), (b) the portion of the Premises to be Transferred
(herein called the “Subject
Space”), (c) the terms of the proposed Transfer and the consideration
therefor, the name, address and background information concerning the proposed
Transferee, and a true and complete copy of all proposed Transfer documentation,
and (d) financial statements (balance sheets and income/expense statements for
the current and prior three (3) years) of the proposed Transferee, in form and
detail reasonably satisfactory to Landlord, certified by an officer, partner or
owner of the Transferee, and any other information to enable Landlord to
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      responsibility,
character, and reputation of the proposed Transferee, nature of such
Transferee’s business and proposed use of the Subject Space, and such other
information as Landlord may reasonably require.  Any Transfer made
without complying with this Article, and not cured within thirty (30) days after
written notice from Landlord,  shall at Landlord’s option be null,
void and of no effect.

    

     

    SECTION
9.2     APPROVAL.  Landlord shall
approve or disapprove the proposed Transfer within ten (10) business days of
receipt of Tenant’s notice.  Landlord shall not unreasonably withhold
its consent to any proposed Transfer of the Subject Space to the Transferee on
the terms specified in Tenant’s notice.  The parties hereby agree that
it shall be reasonable under this Lease and under any applicable law for
Landlord to withhold consent to any proposed Transfer where one or more of the
following applies (without limitation as to other reasonable grounds for
withholding consent): (i) the Transferee is of a character or reputation or
engaged in a business which is not consistent with the quality or nature of the
Site or other tenants of the Site, (ii) the Transferee intends to use the
Subject Space for purposes which are not permitted under this Lease, (iii) the
Subject Space is not regular in shape with appropriate means of ingress and
egress suitable for normal renting purposes, would result in more than a
reasonable number of occupants, or would require increased services by Landlord,
(iv) the Transferee is either a government (or agency or instrumentality
thereof), (v)  the proposed Transferee does not have, in Landlord’s
sole good faith determination, satisfactory references or a reasonable financial
condition in relation to the obligations to be assumed in connection with the
Transfer, (vi)  the Transfer involves a partial or collateral
assignment, or a mortgage, pledge, hypothecation, or other encumbrance or lien
on this Lease, or a Transfer by operation of law, (vii) the proposed Transfer
involves conversion, merger or consolidation of Tenant into a limited liability
company or limited liability partnership which would have the legal effect of
releasing Tenant from any obligations under this Lease, (viii) the proposed
Transfer would cause Landlord to be in violation of any laws or any other lease,
mortgage or agreement to which Landlord is a party, would give a tenant of the
Site a right to cancel its lease, or would create adverse tax consequences for
Landlord, or (ix)  Tenant has committed and failed to cure an Event of
Default.  If Tenant disagrees with Landlord’s decision to deny
approval, Tenant’s sole remedy shall be to seek injunctive relief.

     

    SECTION
9.3     TRANSFER
PREMIUMS.  If Landlord
consents to a Transfer, and as a condition thereto which the parties hereby
agree is reasonable, Tenant shall pay Landlord fifty percent (50%) of any
Transfer Premium derived by Tenant from such Transfer. “Transfer Premium” shall mean,
for a lease assignment, all consideration paid or payable
therefor.  “Transfer
Premium” shall mean, for a sublease, all rent, additional rent or other
consideration paid by such Transferee (less reasonable and market leasing
commissions relating to the Transfer and the unamortized portion of Tenant’s
Contribution to the Tenant Improvements) in excess of the total rent payable by
Tenant under this Lease (on a monthly basis during the Term, and on a per
rentable square foot basis, if less than all of the Premises is
transferred).  “Transfer Premium” shall also
include so-called “key money,” or other bonus amount paid by Transferee to
Tenant, and any payment in excess of fair market value for services rendered by
Tenant to Transferee or in excess of Tenant’s depreciated tax basis for assets,
fixtures, inventory, equipment or furniture transferred by Tenant to
Transferee.  If part of the consideration for such Transfer shall be
payable other than in cash, Landlord’s share of such non-cash consideration
shall be in such form as is reasonably satisfactory to Landlord.  The
percentage of the Transfer Premium due Landlord hereunder shall be paid within
ten (10) days after Tenant receives any Transfer Premium from the
Transferee.

     

    SECTION
9.4     RECAPTURE.  Notwithstanding
anything to the contrary contained in this Article, in the event that the
Subject Space comprises fifty percent (50%) or more of the total Premises,
Landlord shall have the option, by giving notice to Tenant within thirty (30)
days after receipt of Tenant’s notice of such proposed Transfer, to
recapture  the Subject Space.  Such recapture notice shall
cancel and terminate this Lease with respect to theSubject Space  as
of the date stated in Tenant’s notice as the effective date of the proposed
Transfer (or at Landlord’s option, shall cause the Transfer to be made to
Landlord or its agent or nominee, in which case the parties shall execute
reasonable Transfer documentation promptly thereafter).  If this Lease
shall be canceled with respect to less than the entire Premises, the Basic Rent
and additional rent due under this Lease shall be prorated on the basis of the
number of rentable square feet retained by Tenant in proportion to the number of
rentable square feet contained in the Premises, this Lease as so amended shall
continue thereafter in full force and effect, and upon request of either party
the parties shall execute written confirmation of the same. In the event
Landlord elects to recapture the Subject Space, Landlord shall be responsible,
at its sole cost and expense, for the demising thereof and  Tenant
shall surrender and vacate the Subject Space when required hereunder in
accordance with the surrender 

     

    
      
        
        

      

      
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      provisions
of this Lease on an “as is” and “where is” condition, subject to Tenant’s rights
to remove trade fixtures and other personal
property..   

    

     

    SECTION
9.5     TERMS
OF CONSENT.  If Landlord
consents to a Transfer: (i) the terms and conditions of this Lease, including
Tenant’s liability for the Subject Space, shall in no way be deemed to have been
waived or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) no Transferee shall succeed to
any rights provided in this Lease or any amendment hereto to extend the Term of
this Lease, expand the Premises, or lease other space, any such rights being
deemed personal to the initial Tenant, (d) Tenant shall deliver to Landlord
promptly after execution, an original executed copy of all documentation
pertaining to the Transfer in form reasonably acceptable to Landlord, and (v)
Tenant shall furnish a complete statement, certified by an independent certified
public accountant, or Tenant’s chief financial officer, setting forth in detail
the computation of any Transfer Premium that Tenant has derived and shall derive
from such Transfer.  Landlord or its authorized representatives shall
have the right at all reasonable times upon no less than forty eight (48) hours
prior written notice to cause its independent certified public accountant to
audit the books, records and papers of Tenant and any Transferee relating to any
Transfer, and shall have the right to make copies thereof except to the extent
prohibited by applicable securities laws.  If the Transfer Premium
respecting any Transfer shall be found understated, Tenant shall within thirty
(30) days after demand pay the deficiency, and if understated by more than ten
percent (10%)  Tenant shall pay Landlord’s costs of such
audit.  Any sublease hereunder shall be subordinate and subject to the
provisions of this Lease, and if this Lease shall be terminated during the term
of any sublease, Landlord shall have the right to: (a) deem such sublease as
merged and canceled and repossess the Subject Space by any lawful means, or (b)
deem such termination as an assignment of such sublease to Landlord and not as a
merger, and require that such subtenant attorn to and recognize Landlord as its
landlord under any such sublease.  If Tenant shall commit an Event of
Default under this Lease and such Event of Default is not cured during the time
period specified herein, Landlord is hereby irrevocably authorized, as Tenant’s
agent and attorney­-in-fact, to direct any Transferee to make all payments
under or in connection with the Transfer directly to Landlord (which Landlord
shall apply towards Tenant’s obligations under this Lease).

     

    SECTION
9.6     PERMITTED
TRANSFERS.  Notwithstanding
anything to the contrary in this Article IX, Tenant may assign this Lease,
without Landlord’s consent, and without any obligation to pay any Transfer
Premiums, and without Landlord’s right to recapture to any corporation or other
entity which controls, is controlled by, or is under common control with Tenant,
or to any corporation or other entity resulting from a merger, sale,
reorganization or consolidation with Tenant, or to any person or entity which
acquires a controlling interest in Tenant’s stock, either by private sale or as
the result of a public stock offering, or substantially all of the assets of
Tenant as a going concern (collectively, an “Affiliate”), provided
that:

     

    (a) The
Affiliate’s net worth is equal to or greater than Tenant’s net worth at the time
of the Transfer;

     

    (b) The
Affiliate assumes in writing all of Tenant’s obligations under this
Lease;

     

    (c) Tenant
notifies Landlord of such assignment to an Affiliate at least thirty
(30)  days prior to the effective date of the assignment;
and

     

    (d) Tenant
gives Landlord such reasonable information as Landlord shall reasonably request
regarding the Affiliate.

     

     

    
      ARTICLE X.

       

      INSURANCE AND
INDEMNITY

    

    
    

    SECTION
10.1     TENANT’S
INSURANCE.  Tenant, at its sole cost and expense, shall provide
and maintain in effect the insurance described in Exhibit
C.  Evidence of that insurance must be delivered to Landlord
prior to the Commencement Date or any earlier date on which Tenant may enter
upon or take possession of the Premises for any reason whatsoever.

     

    
      
        
        

      

      
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    SECTION
10.2     LANDLORD’S
INSURANCE.  Landlord may, at its election, provide any or all
of the following types of insurance, with or without deductible and in amounts
and coverages as may be determined by Landlord in its sole and absolute
discretion:  property insurance, subject to standard exclusions,
covering the Building and/or Site, and such other risks as Landlord or its
mortgagees may from time to time deem appropriate, including coverage for the
Tenant Improvements constructed by Landlord pursuant to the Work Letter (if any)
attached hereto, and commercial general liability coverage.  Landlord
shall not be required to carry insurance of any kind on Tenant’s Alterations or
on Tenant’s other property, including, without limitation, trade fixtures,
furnishings, equipment, signs and all other items of personal property, and
shall not be obligated to repair or replace that property should damage
occur.  All proceeds of insurance maintained by Landlord upon the
Building and/or Site shall be the property of Landlord, whether or not Landlord
is obligated to or elects to make any repairs.

     

    SECTION
10.3     TENANT’S
INDEMNITY.  To the fullest extent permitted by law, Tenant
shall defend, indemnify, protect, save and hold harmless Landlord, its agents,
and any and all affiliates of Landlord, including, without limitation, any
corporations or other entities controlling, controlled by or under common
control with Landlord, from and against any and all claims, demands, actions,
losses, liabilities, costs or expenses arising either before or after the
Commencement Date from Tenant’s use or occupancy of the Premises, the Building
or the Common Areas, including, without limitation, the use by Tenant, its
agents, employees, invitees or licensees of any facilities within the Common
Areas, including without limitation the Cafeteria; the conduct of Tenant’s
business; any activity, work, or thing done, permitted or suffered by Tenant or
its agents, employees, invitees or licensees in or about the Premises, the
Building or the Common Areas; any Event of Default in the performance of any
obligation on Tenant’s part to be performed under this Lease; or any act or
negligence of Tenant or its agents, employees, visitors, patrons, guests,
invitees or licensees.  Landlord may, at its option, require Tenant to
assume Landlord’s defense in any claim, action or proceeding covered by this
Section through counsel satisfactory to Landlord.  The provisions of
this Section shall expressly survive the expiration or sooner termination of
this Lease.  Tenant’s obligations under this Section shall not apply
to the extent that the claim, demand, action, loss, liability, cost or expense
is caused by the active negligence or willful misconduct of
Landlord.

     

    SECTION
10.4     LANDLORD’S
NONLIABILITY.  Landlord, its agents, and any and all affiliates
of Landlord, shall not be liable to Tenant, its employees, agents and/or
invitees, and Tenant hereby waives all claims against Landlord, its agents, and
any and all affiliates of Landlord, for and knowingly assumes the risk of loss
of or damage to any property, or loss or interruption of business or income, or
any other loss, cost, damage, injury or liability whatsoever (including without
limitation any consequential damages and lost profit or opportunity costs),
resulting from, but not limited to, Acts of God, acts of civil disobedience or
insurrection, acts or omissions of third parties, fire, explosion, falling
plaster, steam, gas, electricity, water or rain which may leak or flow from or
into any part of the Building, mold, or from the breakage, leakage, obstruction
or other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, electrical works, roof, windows or other fixtures in the Building
(whether the damage or injury results from conditions arising in the Premises or
in other portions of the Building), except to the extent caused
by  the negligence of Landlord, its agents or any and all affiliates
of Landlord in connection with any of the foregoing.  It is understood
that any such condition may require the temporary evacuation or closure of all
or a portion of the Building.  Except to the extent set forth in this
Section 10.4, Landlord shall have no liability whatsoever (including without
limitation consequential damages and lost profit or opportunity costs) and,
except as provided in Sections 11.1 and 12.1 below, there shall be no abatement
of rent, by reason of any injury to or interference with Tenant’s business
arising from the making of any repairs, alterations or improvements to any
portion of the Building, including repairs to the Premises, nor shall any
related activity by Landlord constitute an actual or constructive
eviction.  In making repairs, alterations or improvements, however,
Landlord shall interfere as little as reasonably practicable with the conduct of
Tenant’s business in the Premises.  Should Tenant elect to receive any
service or products from a concessionaire, licensee or third party tenant of
Landlord, Landlord shall have no liability for any services or products so
provided or for any breach of contract by such third party
provider.  Neither Landlord nor its agents shall be liable for
interference with light or other similar intangible interests.  Tenant
shall immediately notify Landlord in case of fire or accident in the Premises,
the Building or the Site and of defects in any improvements or
equipment.

     

    SECTION
10.5     WAIVER OF
SUBROGATION.  Landlord and Tenant each hereby waives all rights
of recovery against the other and the other’s agents on account of loss and
damage occasioned to the property of such waiving party to the extent that the
waiving party is entitled to proceeds for such loss or damage under any property
insurance policies carried or required to be carried by the provisions of this
Lease; provided however, that the 

     

    
      
        
        

      

      
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      foregoing
waiver shall not apply to the extent of Tenant’s obligations to pay deductibles
under any such policies and this Lease.  By this waiver it is the
intent of the parties that neither Landlord nor Tenant shall be liable to any
insurance company (by way of subrogation or otherwise) insuring the other party
for any loss or damage insured against under any property insurance policies
contemplated by this Lease, even though such loss or damage might be occasioned
by the negligence of such party, its agents, employees, contractors, guests or
invitees.    

    

     

     

    
      ARTICLE XI.

       

      DAMAGE OR DESTRUCTION

       

    

    SECTION
11.1     PARTIAL
DAMAGE-INSURED.  Subject to the provisions of Sections 11.3 and
11.4, if the Premises or the Building, as the case may be, are damaged to the
extent of less than seventy-five percent (75%) of the then replacement value
thereof (excluding excavations and foundations with respect to the Building),
and such damage results in substantial interference for a period exceeding one
hundred eighty (180) calendar days with the conduct by Tenant of its business at
the Premises, Tenant may terminate this Lease effective thirty (30) days after
delivery of written notice to Landlord.  Tenant’s right of termination
shall be exercised by delivery of such notice to Landlord no later than thirty
(30) days after the date that Landlord notifies Tenant of the estimated
percentage damaged and the amount of time necessary to repair the
damage.  In the event Tenant elects not to exercise its right of
termination of the Lease, Landlord shall at Landlord’s expense repair such
damage as soon as reasonably possible and this Lease shall continue in full
force and effect except that Rent shall be abated in proportion to the degree of
interference during the period that there is such substantial interference with
the conduct of Tenant’s business at the Premises.

     

    SECTION
11.2     PARTIAL
DAMAGE-UNINSURED. Subject to the provisions of Sections 11.3 and 11.4, if
at any time during the Term hereof the Premises or the Building, as the case may
be, are damaged and the proceeds received by Landlord are not sufficient to
repair such damage, or such damage was caused by an act or casualty not covered
under an insurance policy required to be maintained by Landlord pursuant to
Section 10.2, or such damage results in substantial interference for a period
exceeding one hundred eighty (180) calendar days with the conduct by Tenant of
its business at the Premises, Tenant may terminate this Lease effective thirty
(30) days after delivery of written notice to Landlord.  Tenant’s
right of termination shall be exercised by delivery of such notice to Landlord
no later than thirty (30) days after the date that Landlord notifies Tenant of
the estimated percentage damaged and the amount of time necessary to repair the
damage. In the event Tenant elects not to exercise its right of termination of
the Lease, Rent shall be abated in proportion to the degree of interference
during the period that there is substantial interference with the conduct of
Tenant’s business at the Premises. Abatement of Rent and Tenant’s right of
termination pursuant to this provision shall be Tenant’s sole remedy under this
Section 11.2. 

     

    SECTION
11.3     TOTAL
DESTRUCTION. If at any time during the term hereof either the Premises or
the Building is destroyed to the extent of seventy-five percent (75%) or more of
the then replacement value thereof (excluding excavations and foundations with
respect to the Building), from any cause whether or not covered by the insurance
maintained pursuant to Section 10.2, this Lease shall at the option of either
party terminate as of the date of such destruction.  The right of
termination shall be exercised by delivery of notice of termination to the other
party within thirty (30) days after the date that Tenant notifies Landlord of
the occurrence of such damage. 

     

    SECTION
11.4     DAMAGE NEAR END OF
TERM. If the Premises are destroyed or damaged in whole or in part to the
extent of at least fifty percent (50%) of the then replacement value thereof
(excluding excavations and foundations with respect to the Building) whether
from an insured or uninsured casualty, during the last six (6) months of the
term of this Lease, either party may cancel and terminate this Lease as of the
date of occurrence of such damage by giving written notice to the other party of
its election to do so within thirty (30) days after the date of occurrence of
such damage.

     

    SECTION
11.5     WAIVER.  Tenant
waives the provisions of California Civil Code Sections 1932(2) and 1933(4), and
any similar or successor statutes relating to termination of leases when the
thing leased is substantially or entirely destroyed, and agrees that any such
occurrence shall instead be governed by the terms of this Lease.

     

    
      
        
        

      

      
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    SECTION
11.6     TENANT’S
PROPERTY. Landlord’s obligation to rebuild or restore shall not include
restoration of Tenant’s trade fixtures, equipment, merchandise, or any
improvements, alterations or additions made by Tenant to the
Premises.

     

    SECTION
11.7     NOTICE
OF DAMAGE.  Tenant shall notify Landlord within five (5) days
after the occurrence thereof of any damage to all or any portion of the
Premises.  In no event shall Landlord have any obligation to repair or
restore the Premises pursuant to this Article XI until a reasonable period of
time after Landlord’s receipt of notice from Tenant of the nature and scope of
any damage to the Premises, and a reasonable period of time to collect insurance
proceeds arising from such damage (unless such damage is clearly not covered by
insurance then in effect covering the Premises).

     

    SECTION
11.8     REPLACEMENT
COST.  Landlord shall reasonably determine in good faith the
time necessary to complete repairs and the estimated cost of repair of any
damage, or of the replacement cost, for purposes of this Article XI, by
averaging the costs set forth in two competitive bids for the repair and
replacement work, with such average being conclusive.

     

     

    
      ARTICLE XII.

       

      EMINENT DOMAIN

    

    
    

    SECTION
12.1     PARTIAL
TAKING.  If at least thirty-three percent (33%) of the floor
area of the Premises is taken for any public or quasi-public use, under any
statute or right of eminent domain (collectively a “taking”), this Lease shall,
as to the part so taken, terminate as of the date the condemnor or purchaser
takes possession of the property being taken, and the rent payable hereunder
shall be reduced in the same proportion that the floor area of the portion of
the Premises so taken bears to the original floor area of the Premises except if
the taking renders the Premises unusable for Tenant’s purposes, Tenant at its
sole option may terminate this Lease.  Landlord shall, at its own cost
and expense, make all necessary alterations to the Premises in order to make the
portion of the Premises not taken a complete architectural unit.  Such
work shall not, however, exceed the scope of the work done by Landlord in
originally constructing the Premises.  Each party hereto waives the
provisions of California Code of Civil Procedure Section 1265.130 allowing
either party to petition the superior court to terminate this Lease in the event
of a partial taking of the Premises.

     

    SECTION
12.2     TOTAL
TAKING.  If more than thirty-three percent (33%) of the floor
area of the Premises is taken, then any such taking shall be treated as a total
taking, and this Lease shall terminate upon the date possession shall be taken
by the condemning authority.

     

    SECTION
12.3     DISTRIBUTION
OF AWARD. If a part or all of the Premises is taken, all compensation
awarded upon such taking shall belong to and be paid to Landlord, except that
nothing in this Lease shall be deeded to assign to Landlord or Landlord’s lender
any award relating to the value of the leasehold interest created by this Lease
or any award of payment on account of alterations or improvements paid for by
Tenant, Tenant’s trade fixtures and personal property.  Tenant shall
receive from the award a sum attributable to Tenant’s movable property or trade
fixtures on the Premises which Tenant has the right to remove from the Premises
pursuant to the provisions of this Lease, but elects not to remove; or, if
Tenant elects to remove any such property or trade fixtures, Tenant shall
receive a sum for reasonable removal and relocation costs not to exceed the
market value thereof on the date possession of the Premises is
taken.

     

    SECTION
12.4     SALE UNDER
THREAT OF CONDEMNATION.  A sale by Landlord to any authority
having the power of eminent domain, either under threat of condemnation or while
condemnation proceedings are pending, shall be deemed a taking under the power
of eminent domain for purposes of this Article XII.

     

    
      
        
        

      

      
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      ARTICLE XIII.

       

      SUBORDINATION; ESTOPPEL
CERTIFICATE; FINANCIALS

    

     

    SECTION
13.1     SUBORDINATION.  As a
condition precedent to the effectiveness of this Lease, Landlord shall provide
to Tenant a non-disturbance certificate acceptable to Tenant from any ground
lessor, mortgage holders or lien holders of Landlord or any lender that
currently holds a deed of trust or other security interest against the Premises,
Building, Site and/or Common Areas. At the option of Landlord or any lender of
Landlord’s that obtains a security interest in the Building, this Lease shall be
either superior or subordinate to all ground or underlying leases, mortgages and
deeds of trust, if any, which may hereafter affect the Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, that so long as no Event of Default exists under this Lease, Tenant’s
possession and quiet enjoyment of the Premises shall not be disturbed and such
lender shall recognize the Lease and Tenant’s rights hereunder, and this Lease
shall not terminate in the event of termination of any such ground or underlying
lease, or the foreclosure of any such mortgage or deed of trust, to which this
Lease has been subordinated pursuant to this Section.  Tenant shall
execute and deliver any documents or agreements requested by Landlord or such
lessor or lender which provide Tenant with the non-disturbance protections set
forth in this Section.  In the event of a termination or foreclosure,
Tenant shall become a tenant of and attorn to the successor-in-interest to
Landlord upon the same terms and conditions as are contained in this Lease and
such successor-in-interest shall be required to request the Attornment of
Tenant, , and shall execute any instrument reasonably required by Landlord’s
successor for that purpose.  Tenant shall also, upon written request
of Landlord, execute and deliver all instruments as may be required from time to
time to subordinate the rights of Tenant under this Lease to any ground or
underlying lease or to the lien of any mortgage or deed of trust (provided that
such instruments include the nondisturbance and attornment provisions set forth
above), or, if requested by Landlord, to subordinate, in whole or in part, any
ground or underlying lease or the lien of any mortgage or deed of trust to this
Lease.  Tenant agrees that any purchaser at a foreclosure sale or
lender taking title under a deed-in-lieu of foreclosure shall not be responsible
for any act or omission of a prior landlord except for continuing defaults
and  shall not be subject to any offsets or defenses Tenant may have
against a prior landlord, except as specifically set forth herein as an offset
or defense that is due Tenant, and shall not be liable for the return of the
security deposit to the extent it is not actually received by such purchaser or
bound by any rent paid for more than the current month in which the foreclosure
occurred.

     

    SECTION
13.2     ESTOPPEL
CERTIFICATE.

     

    (a) Tenant
shall within ten (10)  business days following written request from
Landlord, execute, acknowledge and deliver to Landlord, in any form that
Landlord may reasonably require, a statement in writing (i) certifying that this
Lease is unmodified and in full force and effect (or, if modified, stating the
nature of the modification and certifying that this Lease, as modified, is in
full force and effect) and the dates to which the rental, additional rent and
other charges have been paid in advance, if any, and (ii) acknowledging that, to
Tenant’s knowledge, there are no uncured defaults on the part of Landlord, or
specifying each default if any are claimed, and (iii) setting forth all further
information that Landlord or any prospective purchaser or encumbrancer may
reasonably require.  Tenant’s statement may be relied upon by any
prospective purchaser or encumbrancer of all or any portion of the Building or
Site.

     

    (b) Notwithstanding
any other rights and remedies of Landlord, Tenant’s failure to deliver any
estoppel statement within the provided time shall be conclusive upon Tenant that
(i) this Lease is in full force and effect, without modification except as may
be represented by Landlord, (ii) there are no uncured Events of Default in
Landlord’s performance, and (iii) not more than one month’s rental has been paid
in advance.

     

    SECTION
13.3     FINANCIALS.

     

    (a) Tenant
shall deliver to Landlord, prior to the execution of this Lease and thereafter
at any time and from time to time within ten (10) days following Landlord’s
written request, Tenant’s current tax returns and financial statements,
certified to be true, accurate and complete by the chief financial officer of
Tenant, including a balance sheet and profit and loss statement for the most
recent prior year, (collectively, the “Statements”), which Statements
shall accurately and completely reflect the financial condition of Tenant.
Landlord acknowledges that Tenant is a publicly traded corporation on a
nationally recognized stock exchange and, so long as 

     

    
      
        
        

      

      
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      Tenant
remains a publicly traded corporation on a nationally recognized stock
exchanges, the foregoing obligation to deliver the Statements shall be satisfied
by the filing by the Tenant of financial statements with the Securities and
Exchange Commission on a quarterly basis on Form 10-Q and on an annual basis on
Form 10-K. In the event Tenant ceases to remain a publicly traded corporation on
a nationally recognized stock exchange, Tenant shall deliver the Statements as
set forth above and  Landlord agrees that it will keep the Statements
confidential, except that Landlord shall have the right to deliver the same to
any proposed purchaser of the Building or Site, and to any encumbrancer or
proposed encumbrancer of all or any portion of the Building or
Site.

    

     

    (b) Tenant
acknowledges that Landlord is relying on the Statements in its determination to
enter into this Lease, and Tenant represents to Landlord, which representation
shall be deemed made on the date of this Lease and again on the Commencement
Date, that no material change in the financial condition of Tenant, as reflected
in the Statements, has occurred since the date of Tenant’s most recent periodic
report filed with the Securities and Exchange Commission.

     

     

    
      
        ARTICLE XIV.

         

        EVENTS OF DEFAULT AND
REMEDIES

      

    

    
    

    SECTION
14.1     TENANT’S
DEFAULTS.  The occurrence of any one or more of the following
events (continuing beyond the expiration of any cure period set forth below, if
any is provided) shall constitute an “Event of Default” by
Tenant.  A breach of this Lease that is cured within the applicable
cure period set forth below shall not constitute an Event of
Default.

     

    (a) The
failure by Tenant to make any payment of Basic Rent or additional rent required
to be made by Tenant, as and when due, where the failure continues for a period
of five (5) days after written notice from Landlord to Tenant; provided,
however, that any such notice shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure Section 1161 and
1161(a) as amended.  For purposes of these Events of Default and
remedies provisions, the term “additional rent” shall be
deemed to include all amounts of any type whatsoever other than Basic Rent to be
paid by Tenant pursuant to the terms of this Lease and the Work
Letter.

     

    (b) The
assignment, sublease, encumbrance or other transfer of this Lease by Tenant,
either voluntarily or by operation of law, whether by judgment, execution,
transfer by intestacy or testacy, or other means, without the prior written
consent of Landlord when consent is required by this Lease.

     

    (c) The
discovery by Landlord that the Statements or any financial statement provided
by  any Affiliate, successor or guarantor of Tenant, was knowingly
materially false when made.

     

    (d) The
failure of Tenant to timely and fully provide any subordination agreement,
estoppel certificate or the Statements  in accordance with the
requirements of Article XIII.

     

    (e) The
abandonment of the Premises by Tenant.

     

    (f) The
failure or inability by Tenant to observe or perform any of the express or
implied covenants or provisions of this Lease to be observed or performed by
Tenant, other than as specified in this Section 14.1, where the failure
continues for a period of thirty (30) days after written notice from Landlord to
Tenant or such shorter period as is specified in any other provision of this
Lease; provided, however, that any such notice shall be in lieu of, and not in
addition to, any notice required under California Code of Civil Procedure
Section 1161 and 1161(a) as amended. However, if the nature of the failure is
such that more than thirty (30) days are reasonably required for its cure, then
an Event of Default shall not be deemed to have occurred if Tenant commences the
cure within thirty (30) days, and thereafter diligently pursues the cure to
completion.

     

    (g) (i) The
making by Tenant of any general assignment for the benefit of creditors; (ii)
the filing by or against Tenant of a petition to have Tenant adjudged a Chapter
7 debtor under 11 U.S.C. Section 101 et seq. (the “Bankruptcy Code”) or to have
debts discharged or for reorganization or arrangement under any law

     

    
      
        
        

      

      
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      relating
to bankruptcy (unless, in the case of a petition filed against Tenant, the same
is dismissed within sixty (60)  days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant’s assets
located at the Premises or of Tenant’s interest in this Lease, if possession is
not restored to Tenant within sixty (60)  days; (iv) the attachment,
execution or other judicial seizure of substantially all of Tenant’s assets
located at the Premises or of Tenant’s interest in this Lease, where the seizure
is not discharged within sixty (60)  days; (v) Tenant’s convening of a
meeting of its creditors for the purpose of effecting a moratorium upon or
composition of its debts or (vi) the failure of Tenant to pay its material
obligations to creditors as and when they become due and payable, other than as
a result of a good faith dispute by Tenant as to the amount due to such
creditors.  Landlord shall not be deemed to have knowledge of any
event described in this Section 14.1(g) unless notification in writing is
received by Landlord, nor shall there be any presumption attributable to
Landlord of Tenant’s insolvency.  In the event that any provision of
this Section 14.1(g) is contrary to applicable law, the provision shall be of no
force or effect.

    

     

    (h) Any other
breach of this Lease which this Lease provides is an Event of
Default.

     

    SECTION
14.2     LANDLORD’S
REMEDIES.

     

    (a) If an
Event of Default by Tenant occurs, then in addition to any other remedies
available to Landlord, Landlord may exercise the following
remedies:

     

    (i) Landlord
may terminate Tenant’s right to possession of the Premises by any lawful means,
in which case this Lease shall terminate and Tenant shall immediately surrender
possession of the Premises to Landlord.  Such termination shall not
affect any accrued obligations of Tenant under this Lease.  Upon
termination, Landlord shall have the right to reenter the Premises and remove
all persons and property.  Landlord shall also be entitled to recover
from Tenant (and to retain, use or apply any Security Deposit held by Landlord
towards amounts estimated by Landlord as:

     

    (1) The worth
at the time of award of the unpaid Basic Rent and additional rent which had been
earned at the time of termination;

     

    (2) The worth
at the time of award of the amount by which the unpaid Basic Rent and additional
rent which would have been earned after termination until the time of award
exceeds the amount of such loss that Tenant proves could have been reasonably
avoided;

     

    (3) The worth
at the time of award of the amount by which the unpaid Basic Rent and additional
rent for the balance of the Term after the time of award exceeds the amount of
such loss that Tenant proves could be reasonably avoided;

     

    (4) Any other
amount necessary to compensate Landlord for all damage  proximately
caused by Tenant’s failure to perform its obligations under this
Lease  including, but not limited to, the cost of recovering
possession of the Premises, refurbishment of the Premises, marketing costs,
commissions and other expenses of reletting, including necessary repair, the
unamortized portion of any tenant improvements and brokerage commissions funded
by Landlord in connection with this Lease, reasonable attorneys’ fees, and any
other reasonable costs; and

     

    (5) At
Landlord’s election, all other amounts in addition to or in lieu of the
foregoing as may be permitted by law.  The term “rent” as used in the Lease
shall be deemed to mean the Basic Rent, Tenant’s Share of Operating Expenses and
any other sums required to be paid by Tenant to Landlord pursuant to the terms
of this Lease whether or not designated as additional rent hereunder, including,
without limitation, any sums that may be owing from Tenant pursuant to Section
4.3 of this Lease.  Any sum, other than Basic Rent, shall be computed
on the basis of the average monthly amount accruing during the twenty-four (24)
month period immediately prior to the Event of Default, except that if it
becomes necessary to compute such rental before the twenty-four (24) month
period has occurred, then the computation shall be on the basis of the average
monthly amount during the shorter period.  As used in Sections
14.2(a)(i) (1) and (2) above, the “worth at the time of award” shall be computed
by allowing interest at the rate of ten percent (10%) per annum.  As
used in Section 14.2(a)(i)(3)

     

    
      
        
        

      

      
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      above,
the “worth at the time of award” shall be computed by discounting the amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).

    

     

    (ii) Landlord
may elect not to terminate Tenant’s right to possession of the Premises and to
continue to enforce all of its rights and remedies under this Lease, including
the right to collect all rent as it becomes due as provided in Civil Code
Section 1951.4.  Efforts by the Landlord to maintain, preserve or
relet the Premises, or the appointment of a receiver to protect the Landlord’s
interests under this Lease, shall not constitute a termination of the Tenant’s
right to possession of the Premises.  In the event that Landlord
elects to avail itself of the remedy provided by this Section 14.2(a)(ii),
Landlord shall not unreasonably withhold its consent to an assignment or
subletting of the Premises subject to the reasonable standards for Landlord’s
consent as are contained in this Lease.

     

    (b) Landlord
shall be under no obligation to observe or perform any covenant of this Lease on
its part to be observed or performed which accrues after the date of any Event
of Default by Tenant unless and until the Event of Default is cured by
Tenant.  The various rights and remedies reserved to Landlord in this
Lease or otherwise shall be cumulative and, except as otherwise provided by
California law, Landlord may pursue any or all of its rights and remedies at the
same time.

     

    (c) No delay
or omission of Landlord to exercise any right or remedy shall be construed as a
waiver of the right or remedy or of any breach or Event of Default by
Tenant.  The acceptance by Landlord of rent shall not be a (i) waiver
of any preceding breach or Event of Default by Tenant of any provision of this
Lease, other than the failure of Tenant to pay the particular rent accepted,
regardless of Landlord’s knowledge of the preceding breach or Event of Default
at the time of acceptance of rent, or (ii) a waiver of Landlord’s right to
exercise any remedy available to Landlord by virtue of the breach or Event of
Default.  The acceptance of any payment from a debtor in possession, a
trustee, a receiver or any other person acting on behalf of Tenant or Tenant’s
estate shall not waive or cure a breach or Event of Default under Section
14.1.  No payment by Tenant or receipt by Landlord of a lesser amount
than the rent required by this Lease shall be deemed to be other than a partial
payment on account of the earliest due stipulated rent, nor shall any
endorsement or statement on any check or letter be deemed an accord and
satisfaction and Landlord shall accept the check or payment without prejudice to
Landlord’s right to recover the balance of the rent or pursue any other remedy
available to it.  No act or thing done by Landlord or Landlord’s
agents during the Term shall be deemed an acceptance of a surrender of the
Premises, and no agreement to accept a surrender shall be valid unless in
writing and signed by Landlord.  No employee of Landlord or of
Landlord’s agents shall have any power to accept the keys to the Premises prior
to the termination of this Lease, and the delivery of the keys to any employee
shall not operate as a termination of this Lease or a surrender of the
Premises.

     

    SECTION
14.3     LATE
PAYMENTS.  Any payment due to Landlord under this Lease,
including without limitation Basic Rent, Tenant’s Share of Operating Expenses or
any other payment due to Landlord under this Lease whether or not designated as
additional rent hereunder, that is not received by Landlord within five (5) days
following the date due shall bear interest at the maximum rate permitted by law
from the date due until fully paid.  The payment of interest shall not
cure any breach or Event of Default by Tenant under this Lease.  In
addition, Tenant acknowledges that the late payment by Tenant to Landlord of
Basic Rent and Tenant’s Share of Operating Expenses will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult and impracticable to ascertain.  Those costs may
include, but are not limited to, administrative, processing and accounting
charges, and late charges which may be imposed on Landlord by the terms of any
ground lease, mortgage or trust deed covering the
Premises.  Accordingly, if any Basic Rent or Tenant’s Share of
Operating Expenses due from Tenant shall not be received by Landlord or
Landlord’s designee within five (5) days following the date due, then Tenant
shall pay to Landlord, in addition to the interest provided above, a late
charge, which the Tenant agrees is reasonable, in a sum equal to five percent
(5%) of the amount overdue.  Acceptance of a late charge by Landlord
shall not constitute a waiver of Tenant’s breach or Event of Default with
respect to the overdue amount, nor shall it prevent Landlord from exercising any
of its other rights and remedies.  The late charge shall be waived for
the first (1st) instance in any calendar year where such late charge is
incurred, not to exceed three (3) times during the Term, provided that the
payment is made within five (5) days of delivery of Landlord’s written notice to
Tenant notifying Tenant that such payment is overdue.

     

    SECTION
14.4     RIGHT OF LANDLORD TO
PERFORM.  All covenants and agreements to be performed by
Tenant under this Lease shall be performed at Tenant’s sole cost and expense and
without any 

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

       

      abatement
of rent or right of set-off.  If Tenant fails to pay any sum of money,
other than rent payable to Landlord, or fails to perform any other act on its
part to be performed under this Lease, and the failure continues beyond any
applicable grace period set forth in Section 14.1, then in addition to any other
available remedies, Landlord may, at its election make the payment or perform
the other act on Tenant’s part and Tenant hereby grants Landlord the right to
enter onto the Premises in order to carry out such
performance.  Landlord’s election to make the payment or perform the
act on Tenant’s part shall not give rise to any responsibility of Landlord to
continue making the same or similar payments or performing the same or similar
acts.  Tenant shall, promptly upon demand by Landlord, reimburse
Landlord for all sums paid by Landlord and all necessary incidental costs,
together with interest at the maximum rate permitted by law from the date of the
payment by Landlord.  

    

     

    SECTION
14.5     DEFAULT BY
LANDLORD.  Landlord shall not be deemed to be in default in the
performance of any obligation under this Lease, and Tenant shall have no rights
to take any action against Landlord, unless and until Landlord has failed to
perform the obligation within thirty (30) days after written notice by Tenant to
Landlord specifying in reasonable detail the nature and extent of the failure,
except in the case of imminent danger to person or property in which case
Landlord shall perform as soon as reasonably practicable under the
circumstances; provided, however, that if the nature of Landlord’s obligation is
such that more than thirty (30) days are required for its performance, then
Landlord shall not be deemed to be in default if it commences performance within
the thirty (30) day period and thereafter diligently pursues the cure to
completion. Notwithstanding the foregoing, in the event Landlord fails to
properly fulfill (or commence to perform and thereafter diligently pursue to
completion) its obligations for maintenance, repair, replacement and/or
providing services under the Lease, or for performing the Tenant Improvements,
following thirty (30) days written notice from Tenant, then Tenant may elect,
but shall have no obligation to perform any repair or maintenance required by
Landlord hereunder on behalf of Landlord, at Landlord’s
expense.  Landlord shall promptly reimburse Tenant upon demand for all
reasonable costs actually incurred, but Tenant shall not deduct such costs from
any rent or other sum due Landlord and shall seek reimbursement from Landlord
directly.  In the event of Landlord’s default under this Lease,
Tenant’s sole remedies shall be to seek damages or specific performance from
Landlord, provided that any damages shall be limited to Tenant’s actual
out-of-pocket expenses and shall in no event include any consequential damages,
lost profits or opportunity costs.

     

    SECTION
14.6     EXPENSES AND LEGAL
FEES.   All sums reasonably incurred by Landlord in
connection with any Event of Default by Tenant under this Lease or holding over
of possession by Tenant after the expiration or earlier termination of this
Lease, or any action related to a filing for bankruptcy or reorganization by
Tenant, including without limitation all costs, expenses and actual accountants,
appraisers, attorneys and other professional fees, and any collection agency or
other collection charges, shall be recoverable by Landlord, and shall bear
interest at the rate of ten percent (10%) per annum.   Should
either Landlord or Tenant bring any action in connection with this Lease, the
prevailing party shall be entitled to recover as a part of the action its
reasonable attorneys’ fees, and all other costs.  The prevailing party
for the purpose of this Section shall be determined by the trier of the
facts.  

     

    SECTION
14.7     WAIVER
OF JURY TRIAL/JUDICIAL REFERENCE.  

     

    (a) LANDLORD
AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF
COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY, AND TO THE
EXTENT ENFORCEABLE UNDER CALIFORNIA LAW, EACH PARTY DOES HEREBY EXPRESSLY AND
KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER
(AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR
AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES AND/OR ANY
CLAIM OF INJURY OR DAMAGE.  FURTHERMORE, THIS WAIVER AND RELEASE OF
ALL RIGHTS TO A JURY TRIAL IS DEEMED TO BE INDEPENDENT OF EACH AND EVERY OTHER
PROVISION, COVENANT, AND/OR CONDITION SET FORTH IN THIS LEASE.

     

    (b) IN
THE EVENT THAT THE JURY WAIVER PROVISIONS OF SECTION 14.7(a) ARE NOT ENFORCEABLE
UNDER CALIFORNIA LAW, THEN THE PROVISIONS OF THIS SECTION 

     

    
      
        
        

      

      
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      14.7(b)
SHALL APPLY.  IT IS THE DESIRE AND INTENTION OF THE PARTIES TO AGREE
UPON A MECHANISM AND PROCEDURE UNDER WHICH CONTROVERSIES AND DISPUTES ARISING
OUT OF THIS LEASE OR RELATED TO THE PREMISES WILL BE RESOLVED IN A PROMPT AND
EXPEDITIOUS MANNER.  ACCORDINGLY, EXCEPT WITH RESPECT TO ACTIONS FOR
UNLAWFUL OR FORCIBLE DETAINER OR WITH RESPECT TO THE PREJUDGMENT REMEDY OF
ATTACHMENT, ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY
HERETO AGAINST THE OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE
PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE, SHALL BE HEARD AND RESOLVED BY A
REFEREE UNDER THE PROVISIONS OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, SECTIONS
638 – 645.1, INCLUSIVE (AS SAME MAY BE AMENDED, OR ANY SUCCESSOR STATUTE(S)
THERETO) (THE “REFEREE SECTIONS”).  ANY FEE TO INITIATE THE JUDICIAL
REFERENCE PROCEEDINGS SHALL BE PAID BY THE PARTY INITIATING SUCH PROCEDURE;
PROVIDED HOWEVER, THAT THE COSTS AND FEES, INCLUDING ANY INITIATION FEE, OF SUCH
PROCEEDING SHALL ULTIMATELY BE BORNE IN ACCORDANCE WITH SECTION 14.6
ABOVE.  THE VENUE OF THE PROCEEDINGS SHALL BE IN THE COUNTY IN WHICH
THE PREMISES ARE LOCATED.  WITHIN TEN (10) DAYS OF DELIVERY BY ANY
PARTY TO THE OTHER PARTY OF A WRITTEN REQUEST TO RESOLVE ANY DISPUTE OR
CONTROVERSY PURSUANT TO THIS SECTION 14.7(b), THE PARTIES SHALL AGREE UPON A
SINGLE REFEREE WHO SHALL TRY ALL ISSUES, WHETHER OF FACT OR LAW, AND REPORT A
FINDING AND JUDGMENT ON SUCH ISSUES AS REQUIRED BY THE REFEREE
SECTIONS.  IF THE PARTIES ARE UNABLE TO AGREE UPON A REFEREE WITHIN
SUCH TEN (10) DAY PERIOD, THEN ANY PARTY MAY THEREAFTER FILE A LAWSUIT IN THE
COUNTY IN WHICH THE PREMISES ARE LOCATED FOR THE PURPOSE OF APPOINTMENT OF A
REFEREE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 AND 640, AS SAME
MAY BE AMENDED OF ANY SUCCESSOR STATUTE(S) THERETO.  IF THE REFEREE IS
APPOINTED BY THE COURT, THE REFEREE SHALL BE A NEUTRAL AND IMPARTIAL RETIRED
JUDGE WITH SUBSTANTIAL EXPERIENCE IN THE RELEVANT MATTERS TO BE DETERMINED, FROM
JAMS/ENDISPUTE, INC., THE AMERICAN ARBITRATION ASSOCIATION OR SIMILAR
MEDIATION/ARBITRATION ENTITY.  THE PROPOSED REFEREE MAY BE CHALLENGED
BY ANY PARTY FOR ANY OF THE GROUNDS LISTED IN SECTION 641 OF THE CALIFORNIA CODE
OF CIVIL PROCEDURE, AS SAME MAY BE AMENDED OR ANY SUCCESSOR STATUTE(S)
THERETO.  THE REFEREE SHALL HAVE THE POWER TO DECIDE ALL ISSUES OF
FACT AND LAW AND REPORT HIS OR HER DECISION ON SUCH ISSUES, AND TO ISSUE ALL
RECOGNIZED REMEDIES AVAILABLE AT LAW OR IN EQUITY FOR ANY CAUSE OF ACTION THAT
IS BEFORE THE REFEREE, INCLUDING AN AWARD OF ATTORNEYS’ FEES AND COSTS IN
ACCORDANCE WITH CALIFORNIA LAW.  THE REFEREE SHALL NOT, HOWEVER, HAVE
THE POWER TO AWARD PUNITIVE DAMAGES, NOR ANY OTHER DAMAGES WHICH ARE NOT
PERMITTED BY THE EXPRESS PROVISIONS OF THIS LEASE, AND THE PARTIES HEREBY WAIVE
ANY RIGHT TO RECOVER ANY SUCH DAMAGES.  THE PARTIES SHALL BE ENTITLED
TO CONDUCT ALL DISCOVERY AS PROVIDED IN THE CALIFORNIA CODE OF CIVIL PROCEDURE,
AND THE REFEREE SHALL OVERSEE DISCOVERY AND MAY ENFORCE ALL DISCOVERY ORDERS IN
THE SAME MANNER AS ANY TRIAL COURT JUDGE, WITH RIGHTS TO REGULATE DISCOVERY AND
TO ISSUE AND ENFORCE SUBPOENAS, PROTECTIVE ORDERS AND OTHER LIMITATIONS ON
DISCOVERY AVAILABLE UNDER CALIFORNIA LAW.  THE REFERENCE PROCEEDING
SHALL BE CONDUCTED IN ACCORDANCE WITH CALIFORNIA LAW (INCLUDING THE RULES OF
EVIDENCE), AND IN ALL REGARDS, THE REFEREE SHALL FOLLOW CALIFORNIA LAW
APPLICABLE AT THE TIME OF THE REFERENCE PROCEEDING.  IN ACCORDANCE
WITH SECTION 644 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, THE DECISION OF THE
REFEREE UPON THE WHOLE ISSUE MUST STAND AS THE DECISION OF THE COURT, AND UPON
THE FILING OF THE STATEMENT OF DECISION WITH THE CLERK OF THE COURT, OR WITH THE
JUDGE IF THERE IS NO CLERK, JUDGMENT MAY BE ENTERED THEREON IN THE SAME MANNER
AS IF THE ACTION HAD BEEN TRIED BY THE COURT.  THE PARTIES SHALL
PROMPTLY AND DILIGENTLY COOPERATE WITH ONE ANOTHER AND THE REFEREE, AND SHALL
PERFORM SUCH ACTS AS MAY BE NECESSARY TO OBTAIN A PROMPT AND EXPEDITIOUS
RESOLUTION OF THE DISPUTE OR CONTROVERSY IN

       

      
        
          
          

        

        
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      ACCORDANCE
WITH THE TERMS OF THIS SECTION 14.7(b).  TO THE EXTENT THAT NO PENDING
LAWSUIT HAS BEEN FILED TO OBTAIN THE APPOINTMENT OF A REFEREE, ANY PARTY, AFTER
THE ISSUANCE OF THE DECISION OF THE REFEREE, MAY APPLY TO THE COURT OF THE
COUNTY IN WHICH THE PREMISES ARE LOCATED FOR CONFIRMATION BY THE COURT OF THE
DECISION OF THE REFEREE IN THE SAME MANNER AS A PETITION FOR CONFIRMATION OF AN
ARBITRATION AWARD PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 1285 ET SEQ. (AS
SAME MAY BE AMENDED OR ANY SUCCESSOR STATUTE(S) THERETO).

    

     

    SECTION
14.8     SATISFACTION OF
JUDGMENT.  The obligations of Landlord do not constitute the
personal obligations of the individual partners, trustees, directors, officers,
members or shareholders of Landlord or its constituent partners or
members.  Should Tenant recover a money judgment against Landlord,
such judgment shall be satisfied only from the interest of Landlord in the
Building and out of the rent or other income from such property receivable by
Landlord or out of consideration received by Landlord from the sale or other
disposition of all or any part of Landlord’s right, title or interest in the
Building, insurance policy proceeds and/or award in eminent domain attributable
to Landlord’s interest in the property and no action for any deficiency may be
sought or obtained by Tenant.

     

    SECTION
14.9     LIMITATION OF ACTIONS
AGAINST LANDLORD.  Any claim, demand or right of any kind by
Tenant which is based upon or arises in connection with this Lease, including
without limitation any arising under a tort or contract cause of action, shall
be barred unless Tenant commences an action thereon within the earlier of the
time period prescribed by law or twenty-four (24) months after the date that the
act, omission, event or default upon which the claim, demand or right arises,
has been discovered (or reasonably should have been discovered) by
Tenant.

     

     

    
      
        ARTICLE XV.

         

        END OF TERM

         

      

    

    SECTION
15.1     HOLDING OVER.  This
Lease shall terminate without further notice upon the expiration of the Term,
including any extension terms thereof, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties.  Any period of time following the Expiration Date or earlier
termination of this Lease required for Tenant to remove its property or to place
the Premises in the condition required pursuant to Section 15.3 (or for
Landlord to do so if Tenant fails to do so) shall be deemed a holding over by
Tenant.  If Tenant holds over for any period after the Expiration Date
(or earlier termination) of the Term with or  without the prior
written consent of Landlord, such possession shall constitute a tenancy at
sufferance only and an Event of Default under this Lease;   In
either of such events, possession shall be subject to all of the terms of this
Lease, except that the monthly Basic Rent shall be at a daily rate of two
hundred percent (200%) of the Basic Rent for the month immediately preceding the
date of termination divided by thirty (30).  If Tenant fails to
surrender the Premises upon the expiration of this Lease despite demand to do so
by Landlord, Tenant shall indemnify and hold Landlord harmless from all loss or
liability, including without limitation, any claims made by any succeeding
tenant relating to such failure to surrender.  Acceptance by Landlord
of rent after the termination shall not constitute a consent to a holdover or
result in a renewal of this Lease.  The foregoing provisions of this
Section are in addition to and do not affect Landlord’s right of re-entry or any
other rights of Landlord under this Lease or at law.

     

    SECTION
15.2     MERGER ON
TERMINATION.  The voluntary or other surrender of this Lease by
Tenant, or a mutual termination of this Lease, shall terminate any or all
existing subleases unless Landlord, at its option, elects in writing to treat
the surrender or termination as an assignment to it of any or all subleases
affecting the Premises.

     

    SECTION
15.3     SURRENDER OF
PREMISES; REMOVAL OF PROPERTY.  

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

       

    

    (a) Subject
to the provisions of Section 7.3 of this Lease and of the Work Letter, if any,
attached hereto, upon the Expiration Date or upon any earlier termination of
this Lease, Tenant shall quit and surrender possession of the Premises to
Landlord in as good order, condition and repair as when received or as hereafter
may be improved by Landlord or Tenant, reasonable wear and tear and repairs
which are Landlord’s obligation excepted, and shall, without expense to
Landlord, remove or cause to be removed from the Premises all personal property,
removable trade fixtures, and equipment and debris and perform all work required
under Section 7.3 of this Lease and/or the Work Letter, if any, attached hereto,
as to Replacements of Non-Standard Improvements and removal of Alterations,
except for any items that Landlord may by written authorization allow to
remain.  Tenant shall repair all damage to the Premises resulting from
the removal, which repair shall include the patching and filling of holes and
repair of structural damage, provided that Landlord may instead elect to repair
any structural damage at Tenant’s expense.  If Tenant shall fail to
comply with the provisions of this Section, Landlord may effect the removal
and/or make any repairs, and the cost to Landlord shall be additional rent
payable by Tenant upon demand.  If Tenant fails to remove Tenant’s
personal property from the Premises upon the expiration of the Term, Landlord
may remove, store, dispose of and/or retain such personal property, at
Landlord’s option, in accordance with then applicable laws, all at the expense
of Tenant.  If requested by Landlord, Tenant shall execute,
acknowledge and deliver to Landlord an instrument in writing releasing and
quitclaiming to Landlord all right, title and interest of Tenant in the
Premises.

     

    (b) As part
of the Tenant Improvements defined in the Work Letter, Tenant will be converting
an existing conference area within the Building (as shown on Exhibit B attached
hereto) into a laboratory space.  Upon the Expiration Date or upon any
earlier termination of this Lease, Tenant shall restore such laboratory space to
a bare walls and bare floor condition, including the removal of any raised
flooring and restoration of the electrical system to that which existed on the
Commencement Date (the “Lab
Restoration Work”).  Landlord may retain One Hundred Thousand
Dollars ($100,000) of the Security Deposit to be used by Landlord to restore the
Premises after Tenant has vacated the Premises, and, in the event that the
Security Deposit balance is less than One Hundred Thousand Dollars ($100,000)
after Landlord’s deductions for other repairs or damage attributable to Tenant
under this Lease, Tenant shall deposit sufficient funds with Landlord such that
the balance retained by Landlord shall be at least One Hundred Thousand Dollars
($100,000).  Any amounts not used by Landlord for the Lab Restoration
Work shall be returned to Tenant within thirty (30) days after completion of the
Lab Restoration Work by Landlord.

     

     

    
      ARTICLE XVI.

       

      PAYMENTS AND NOTICES

       

    

    All sums
payable by Tenant to Landlord shall be deemed to be rent under this Lease and
shall be paid, without deduction or offset, in lawful money of the United States
to Landlord at the address specified in Item 13 of the Basic Lease Provisions,
or at any other place as Landlord may designate in writing.  Unless
this Lease expressly provides otherwise, as for example in the payment of Basic
Rent and the Tenant’s Share of Operating Expenses pursuant to Sections 4.1
and 4.2, all payments shall be due and payable within five (5) days after
demand.  All payments requiring proration shall be prorated on the
basis of the number of days in the pertinent calendar month or year, as
applicable.  Any notice, election, demand, consent, approval or other
communication to be given or other document to be delivered by either party to
the other may be delivered in person or by courier or overnight delivery service
to the other party, or may be deposited in the United States mail, duly
registered or certified, postage prepaid, return receipt requested, and
addressed to the other party at the address set forth in Item 12 of the Basic
Lease Provisions, or if to Tenant, at that address or, from and after the
Commencement Date, at the Premises (whether or not Tenant has departed from,
abandoned or vacated the Premises).  Either party may, by written
notice to the other, served in the manner provided in this Article, designate a
different address.  If any notice or other document is sent by mail,
duly registered or certified, it shall be deemed served or delivered seventy-two
(72) hours after mailing.  If more than one person or entity is named
as Tenant under this Lease, service of any notice upon any one of them shall be
deemed as service upon all of them.

     

    
      
        
        

      

      
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      ARTICLE XVII.

       

      RULES AND
REGULATIONS

    

     

    Tenant
agrees to observe faithfully  the Rules and Regulations, attached as
Exhibit D, and any reasonable and
nondiscriminatory amendments, modifications and/or additions as may be adopted
and published by written notice to tenants by Landlord for the safety, care,
security, good order, or cleanliness of the Premises, Building, Site and Common
Areas.  Landlord shall not be liable to Tenant for any violation of
the Rules and Regulations or the breach of any covenant or condition in any
lease by any other tenant or such tenant’s agents, employees, contractors,
guests or invitees.  One or more waivers by Landlord of any breach of
the Rules and Regulations by Tenant or by any other tenant(s) shall not be a
waiver of any subsequent breach of that rule or any other.  Tenant’s
failure to act in good faith compliance with the Rules and Regulations shall
constitute a breach of this Lease provided Tenant shall have five (5) business
days to cure any such non-compliance after written notice thereof; provided
however, that if the nature of the non-compliance is such that more than five
(5) business days are reasonably required for its cure, then a breach of this
Lease shall not be deemed to have occurred if Tenant commences the cure within
five (5) business days, and thereafter diligently pursues the cure to
completion. In the case of any conflict between the Rules and Regulations and
this Lease, this Lease shall be controlling.

     

     

    
      ARTICLE XVIII.

       

      BROKER’S
COMMISSION

    

     

    The
parties recognize as the broker(s) who negotiated this Lease the firm(s), whose
name(s) is (are) stated in Item 10 of the Basic Lease Provisions, and agree that
Landlord shall be responsible for the payment of brokerage commissions to those
broker(s) pursuant to a separate written agreement between Landlord and the
broker(s) unless otherwise provided in this Lease.  It is understood
and agreed that Landlord’s Broker represents only Landlord in this transaction
and that Tenant’s Broker (if any) represents only Tenant.  Each party
warrants that it has had no dealings with any other real estate broker or agent
in connection with the negotiation of this Lease, and agrees to indemnify and
hold the other party harmless from any cost, expense or liability (including
reasonable attorneys’ fees) for any compensation, commissions or charges claimed
by any other real estate broker or agent employed by the indemnifying party in
connection with the negotiation of this Lease.  The foregoing
agreement shall survive the termination of this Lease.

     

     

    
      
        ARTICLE XIX.

         

        TRANSFER OF LANDLORD’S
INTEREST

      

    

     

    In the
event of any transfer of Landlord’s interest in the Premises, the transferor
shall be automatically relieved of all further obligations on the part of
Landlord, and the transferor shall be relieved of any obligation to pay any
funds in which Tenant has an interest to the extent that such funds have been
turned over, subject to that interest, to the transferee and Tenant is notified
of the transfer as required by law.  No beneficiary of a deed of trust
to which this Lease is or may be subordinate, and no landlord under a so-called
sale-leaseback, shall be responsible in connection with the Security Deposit,
unless the mortgagee or beneficiary under the deed of trust or the landlord
actually receives the Security Deposit.  It is intended that the
covenants and obligations contained in this Lease on the part of Landlord shall,
subject to the foregoing, be binding on Landlord, its successors and assigns,
only during and with respect to obligations arising during their respective
successive periods of ownership.

     

     

    
      
        
          ARTICLE XX.

           

          INTERPRETATION

        

      

    

     

    SECTION
20.1     GENDER AND
NUMBER.  Whenever the context of this Lease requires, the words
“Landlord” and “Tenant” shall include the
plural as well as the singular, and words used in neuter, masculine or feminine
genders shall include the others.

     

    
      
        
        

      

      
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    SECTION
20.2     HEADINGS.  The
captions and headings of the articles and sections of this Lease are for
convenience only, are not a part of this Lease and shall have no effect upon its
construction or interpretation.

     

    SECTION
20.3     JOINT AND SEVERAL
LIABILITY.  If more than one person or entity is named as
Tenant, the obligations imposed upon each shall be joint and several and the act
of or notice from, or notice or refund to, or the signature of, any one or more
of them shall be binding on all of them with respect to the tenancy of this
Lease, including, but not limited to, any renewal, extension, termination or
modification of this Lease. 

     

    SECTION
20.4     SUCCESSORS.  Subject
to Articles IX and XIX, all rights and liabilities given to or imposed upon
Landlord and Tenant shall extend to and bind their respective heirs, executors,
administrators, successors and assigns.  Nothing contained in this
Section is intended, or shall be construed, to grant to any person other than
Landlord and Tenant and their successors and assigns any rights or remedies
under this Lease.

     

    SECTION
20.5     TIME OF
ESSENCE.  Time is of the essence with respect to the
performance of every provision of this Lease.

     

    SECTION
20.6     CONTROLLING
LAW/VENUE.  This Lease shall be governed by and interpreted in
accordance with the laws of the State of California.  Any litigation
commenced concerning any matters whatsoever arising out of or in any way
connected to this Lease shall be initiated in the Superior Court of the county
in which the Site is located.

     

    SECTION
20.7     SEVERABILITY.  If
any term or provision of this Lease, the deletion of which would not adversely
affect the receipt of any material benefit by either party or the deletion of
which is consented to by the party adversely affected, shall be held invalid or
unenforceable to any extent, the remainder of this Lease shall not be affected
and each term and provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law.

     

    SECTION
20.8     WAIVER AND CUMULATIVE
REMEDIES.  One or more waivers by Landlord or Tenant of any
breach of any term, covenant or condition contained in this Lease shall not be a
waiver of any subsequent breach of the same or any other term, covenant or
condition.  Consent to any act by one of the parties shall not be
deemed to render unnecessary the obtaining of that party’s consent to any
subsequent act.  No breach by Tenant of this Lease shall be deemed to
have been waived by Landlord unless the waiver is in a writing signed by
Landlord.  The rights and remedies of Landlord under this Lease shall
be cumulative and in addition to any and all other rights and remedies which
Landlord may have.

     

    SECTION
20.9     INABILITY TO
PERFORM.  In the event that either party shall be delayed or
hindered in or prevented from the performance of any work or in performing any
act required under this Lease by reason of any cause beyond the reasonable
control of that party, other than financial inability, then the performance of
the work or the doing of the act shall be excused for the period of the delay
and the time for performance shall be extended for a period equivalent to the
period of the delay.  The provisions of this Section shall not operate
to excuse Tenant from the prompt payment of rent or excuse either party from the
timely performance of any other obligation under this Lease within that party’s
reasonable control.

     

    SECTION
20.10     ENTIRE
AGREEMENT.  This Lease and its exhibits and other attachments
cover in full each and every agreement of every kind between the parties
concerning the Premises, the Building and the Site, and all preliminary
negotiations, oral agreements, understandings and/or practices, except those
contained in this Lease, are superseded and of no further
effect.  Tenant waives its rights to rely on any representations or
promises made by Landlord or others which are not contained in this
Lease.  No verbal agreement or implied covenant shall be held to
modify the provisions of this Lease, any statute, law, or custom to the contrary
notwithstanding.

     

    SECTION
20.11     QUIET
ENJOYMENT.  Upon the observance and performance of all the
covenants, terms and conditions on Tenant’s part to be observed and performed,
and subject to the other provisions of this Lease, Tenant shall have the right
of quiet enjoyment and use of the Premises for the Term without hindrance or
interruption by Landlord or any other person claiming by or through
Landlord.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

       

    

    SECTION
20.12     SURVIVAL.  All
covenants of Landlord or Tenant which reasonably would be intended to survive
the expiration or sooner termination of this Lease, including without limitation
any warranty or indemnity hereunder, shall so survive and continue to be binding
upon and inure to the benefit of the respective parties and their successors and
assigns.

     

    SECTION
20.13     INTERPRETATION.  This
Lease shall not be construed in favor of or against either party, but shall be
construed as if both parties prepared this Lease.

     

     

    
      
        ARTICLE XXI.

         

        EXECUTION AND
RECORDING

      

    

     

    SECTION
21.1     COUNTERPARTS.  This
Lease may be executed in one or more counterparts, each of which shall
constitute an original and all of which shall be one and the same
agreement.

     

    SECTION
21.2     CORPORATE, LIMITED LIABILITY COMPANY
AND PARTNERSHIP AUTHORITY.  If Tenant is a corporation, limited
liability company or partnership, each individual executing this Lease on behalf
of the corporation, limited liability company or partnership represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
behalf of the corporation, limited liability company or partnership, and that
this Lease is binding upon the corporation, limited liability company or
partnership in accordance with its terms.  Tenant shall, at Landlord’s
request, deliver a certified copy of its board of directors’ resolution,
operating agreement or partnership agreement or certificate authorizing or
evidencing the execution of this Lease.

     

    SECTION
21.3     EXECUTION OF LEASE; NO OPTION OR
OFFER.  The submission of this Lease to Tenant shall be for
examination purposes only, and shall not constitute an offer to or option for
Tenant to lease the Premises.  Execution of this Lease by Tenant and
its return to Landlord shall not be binding upon Landlord, notwithstanding any
time interval, until Landlord has in fact executed and delivered this Lease to
Tenant, it being intended that this Lease shall only become effective upon
execution by Landlord and Tenant and delivery of a fully executed counterpart to
Tenant.

     

    SECTION
21.4     RECORDING.  Tenant
shall not record this Lease without the prior written consent of
Landlord.  Tenant, upon the request of Landlord, shall execute and
acknowledge a “short form” memorandum of this Lease for recording purposes.
Landlord acknowledges that Tenant is a publicly traded company and that,
provided that Tenant first removes all exhibits attached to this Lease
(including but not limited to removal of Exhibit X and Exhibit Y) prior to
any such filing, a copy of this Lease minus the attached exhibits may need to be
filed with the Securities and Exchange Commission as an exhibit to a current,
interim or annual report. 

     

    SECTION
21.5     AMENDMENTS.  No
amendment or termination of this Lease shall be effective unless in writing
signed by authorized signatories of Tenant and Landlord, or by their respective
successors in interest.  No actions, policies, oral or informal
arrangements, business dealings or other course of conduct by or between the
parties shall be deemed to modify this Lease in any respect.

     

    SECTION
21.6     EXECUTED COPY.  Any
fully executed photocopy or similar reproduction of this Lease shall be deemed
an original for all purposes.

     

    SECTION
21.7     ATTACHMENTS.  All
exhibits, amendments, riders and addenda attached to this Lease are hereby
incorporated into and made a part of this Lease.

     

     

    
      
        ARTICLE XXII.

         

        MISCELLANEOUS

      

    

    
    

    SECTION
22.1     CHANGES REQUESTED BY
LENDER.  If, in connection with obtaining financing for the
Building or Site, the lender shall request reasonable modifications in this
Lease as a condition to the 

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

       

      financing,
Tenant will not unreasonably withhold or delay its consent, provided that the
modifications do not materially increase the obligations of Tenant or materially
and adversely affect the leasehold interest created by this
Lease.

    

     

    SECTION
22.2     MORTGAGEE
PROTECTION.  No act or failure to act on the part of Landlord
which would otherwise entitle Tenant to be relieved of its obligations hereunder
shall result in such a release or termination unless (a) Tenant has given notice
by registered or certified mail to any beneficiary of a deed of trust or
mortgage encumbering the Premises whose address has been furnished to Tenant in
writing and (b) such beneficiary is afforded a reasonable opportunity to cure
the default by Landlord (which in no event shall be less than sixty (60) days),
including, if necessary to effect the cure, time to obtain possession of the
Premises by power of sale or judicial foreclosure provided that such foreclosure
remedy is diligently pursued.  Tenant agrees that each beneficiary of
a deed of trust or mortgage encumbering the Premises is an express third party
beneficiary hereof, Tenant shall have no right or claim for the collection of
any deposit from such beneficiary or from any purchaser at a foreclosure sale
unless such beneficiary or purchaser shall have actually received and not
refunded the deposit, and Tenant shall comply with any written directions by any
beneficiary to pay rent due hereunder directly to such beneficiary without
determining whether a default exists under such beneficiary’s deed of
trust.

     

    SECTION
22.3     COVENANTS AND
CONDITIONS.  All of the provisions of this Lease shall be
construed to be conditions as well as covenants as though the words specifically
expressing or imparting covenants and conditions were used in each separate
provision.

     

    SECTION
22.4     SECURITY
MEASURES.  Tenant hereby acknowledges that Landlord shall have
no obligation whatsoever to provide guard service or other security measures for
the benefit of the Premises or the Site.  Tenant assumes all
responsibility for the protection of Tenant, its employees, agents, invitees and
property from acts of third parties.  Nothing herein contained shall
prevent Landlord, at its sole option, from providing security protection for the
Site or any part thereof, at Landlord’s cost. 

     

    SECTION
22.5     SDN
LIST.  Tenant hereby represents and warrants that neither
Tenant nor any officer, director, employee, partner, member or other principal
of Tenant (collectively, “Tenant Parties”) is listed as
a Specially Designated National and Blocked Person (“SDN”) on the list of such
persons and entities issued by the U.S. Treasury Office of Foreign Assets
Control (OFAC).  In the event Tenant or any Tenant Party is or becomes
listed as an SDN, Tenant shall be deemed in breach of this Lease and Landlord
shall have the right to terminate this Lease immediately upon written notice to
Tenant.

     

    SECTION
22.6     FURNITURE, FIXTURES
AND EQUIPMENT (“FF&E”).  Tenant shall have use of all
FF&E located in the Premises as of the Commencement Date, including but not
limited to, furniture systems, security systems, filing systems and the UPS, for
the lease term, and any extension terms, at no additional cost to
Tenant.  Landlord shall provide an inventory of such FF&E to
Tenant prior to Tenant’s possession of the Premises.  Landlord to also
provide an inventory of additional furniture available to Tenant during the term
of the Lease should Tenant desire to reconfigure the Premises for an increased
headcount.  Tenant shall not remove any FF&E from the Premises
without Landlord’s prior written consent.  Tenant shall maintain the
FF&E in the same condition as existed on the Commencement Date, reasonable
wear and tear excepted, and shall be liable for any cost to restore the FF&E
to such condition.

     

    SECTION
22.7     SECURITY
BADGES.  There shall be a Ten Dollar ($10.00) per security
badge charge to cover Landlord’s costs of providing such security
badges.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

       

    

    
      	
              LANDLORD:

            	 
      	
              TENANT:

            
	
              XILINX,
      INC.,

              a  Delaware
      corporation

              By:_________________________________

              Name:  Jon
      Olson

              Its:
      Sr. Vice President & CFO

            	 
      	
              SONICWALL,
      INC.,

              a
      California corporation

              By:_________________________________

              Name:
      Frederick M. Gonzalez

              Its:
      Vice President, General Counsel & Corporate
  Secretary

            


    

    


    


    


    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    EXHIBIT
A

    


    Floor
Plan of Premises

    


    

     

    
 

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

       

    

    EXHIBIT A
(Continued)

    


    Floor
Plan of Premises

    


     

    

    


     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B

    


    Diagram
of Site (Building and Premises shown as Building 5)

    


    

    


    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
C

    


    TENANT’S
INSURANCE

    


    The
following requirements for Tenant’s insurance shall be in effect at the
Building, and Tenant shall also cause any subtenant to comply with these
requirements.  Landlord reserves the right to adopt reasonable
nondiscriminatory modifications and additions to these insurance
requirements.  Tenant agrees to obtain and present evidence to
Landlord that it has fully complied with the insurance
requirements.

    


    1.           Tenant
shall, at its sole cost and expense, commencing on the date Tenant is given
access to the Premises for any purpose and during the entire Term, procure, pay
for and keep in full force and effect:  (i) commercial general
liability insurance with respect to the Premises and the operations of or on
behalf of Tenant in, on or about the Premises, including but not limited to
coverage for personal injury, contractual liability, independent contractors,
broad form property damage, fire legal liability, products liability (if a
product is sold from the Premises), and liquor law liability (if alcoholic
beverages are sold, served or consumed within the Premises), which policy(ies)
shall be written on an “occurrence” basis and for not less than the amount set
forth in Item 14 of the Basic Lease Provisions, with a combined single
limit (with a $50,000 minimum limit on fire legal liability) per occurrence for
bodily injury, death, and property damage liability, or the current limit of
liability carried by Tenant, whichever is greater, and subject to such increases
in amounts as Landlord may determine from time to time; (ii) workers’
compensation insurance coverage as required by law, together with employers’
liability insurance of at least One Million Dollars ($1,000,000.00); (iii) with
respect to Alterations and the like required or permitted to be made by Tenant
under this Lease, builder’s risk insurance in an amount equal to the replacement
cost of the work; (iv) insurance against fire, vandalism, malicious mischief and
such other additional perils as may be included in a standard “special form”
policy, insuring Tenant’s Alterations, trade fixtures, furnishings, equipment
and items of personal property of Tenant located in the Premises, in an amount
equal to not less than ninety percent (90%) of their actual replacement cost
(with replacement cost endorsement); and (v) business interruption coverage in
amounts satisfactory to cover one (1) year of loss.  In no event shall
the limits of any policy be considered as limiting the liability of Tenant under
this Lease.

    


    2.           All
policies of insurance required to be carried by Tenant pursuant to this Exhibit C shall be
written by responsible insurance companies authorized to do business in the
State of California and with a general policyholder rating of not less than “A-”
and financial rating of not less than “VIII” in the most current Best’s
Insurance Report.  The deductible or other retained limit under any
policy carried by Tenant shall be commercially reasonable, and Tenant shall be
responsible for payment of such retained limit with full waiver of subrogation
in favor of Landlord.  Any insurance required of Tenant may be
furnished by Tenant under any blanket policy carried by it or under a separate
policy.  A true and exact copy of each paid up policy evidencing the
insurance (appropriately authenticated by the insurer) or a certificate of
insurance, certifying that the policy has been issued, provides the coverage
required by this Exhibit C and
contains the required provisions, together with endorsements acceptable to
Landlord evidencing the waiver of subrogation and additional insured provisions
required below, shall be delivered to Landlord prior to the date Tenant is given
the right of possession of the Premises.  Proper evidence of the
renewal of any insurance coverage shall also be delivered to Landlord not less
than thirty (30) days prior to the expiration of the coverage.  In the
event of a loss covered by any policy under which Landlord is an additional
insured, Landlord shall be entitled to review a copy of such
policy.

    


    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

    

    3.           Each
policy evidencing insurance required to be carried by Tenant pursuant to this
Exhibit C
shall contain the following provisions and/or clauses satisfactory to
Landlord:  (i) with respect to Tenant’s commercial general liability
insurance, a provision that the policy and the coverage provided shall be
primary and that any coverage carried by Landlord shall be in excess of and
noncontributory with respect to any policies carried by Tenant, together with a
provision including Landlord, the Additional Insureds identified in Item 11 of
the Basic Lease Provisions and any other parties in interest designated by
Landlord, as additional insureds; (ii) except with respect to Tenant’s
commercial general liability insurance, a waiver by the insurer of any right to
subrogation against Landlord, its agents, employees, contractors and
representatives which arises or might arise by reason of any payment under the
policy or by reason of any act or omission of Landlord, its agents, employees,
contractors or representatives; and (iii) a provision that the insurer will not
cancel or change the coverage provided by the policy without first giving
Landlord thirty (30) days prior written notice.  Tenant shall also
name Landlord, the Additional Insureds identified in Item 11 of the Basic Lease
Provisions and any other parties in interest designated by Landlord, as
additional insureds on any excess or umbrella liability insurance policy carried
by Tenant.

    


    4.           In
the event that Tenant fails to procure, maintain and/or pay for, at the times
and for the durations specified in this Exhibit C, any
insurance required by this Exhibit C, or fails
to carry insurance required by any governmental authority, Landlord may at its
election procure that insurance and pay the premiums, in which event Tenant
shall repay Landlord all sums paid by Landlord, together with interest at the
maximum rate permitted by law and any related costs or expenses incurred by
Landlord, within ten (10) days following Landlord’s written demand to
Tenant.

    


    NOTICE TO TENANT:  IN
ACCORDANCE WITH THE TERMS OF THIS LEASE, TENANT MUST PROVIDE EVIDENCE OF THE
REQUIRED INSURANCE TO LANDLORD PRIOR TO BEING AFFORDED ACCESS TO THE
PREMISES.

    


    


    
      
        
        

      

      
        C-2

        
          

        

      

      
        
        

      

    

    
       

    

    EXHIBIT D

     

    RULES AND REGULATIONS

    
 

    This
Exhibit sets forth the rules and regulations governing Tenant’s use of the
Premises leased to Tenant pursuant to the terms, covenants and conditions of the
Lease to which this Exhibit is attached and therein made part
thereof.  In the event of any conflict or inconsistency between this
Exhibit and the Lease, the Lease shall control.

    


    1.           Tenant
shall not place anything or allow anything to be placed near the glass of any
window, door, partition or wall, which may appear unsightly from outside the
Premises.

    


    2.           The
walls, walkways, sidewalks, entrance passages, elevators, stairwells, courts and
vestibules shall not be obstructed or used for any purpose other than ingress
and egress of pedestrian travel to and from the Premises, and shall not be used
for smoking, loitering or gathering, or to display, store or place any
merchandise, equipment or devices, or for any other purpose.  The
walkways, sidewalks, entrance passageways, courts, vestibules and roof are not
for the use of the general public and Landlord shall in all cases retain the
right to control and prevent access thereto by all persons whose presence in the
judgment of the Landlord shall be prejudicial to the safety, character,
reputation and interests of the Building and its tenants, provided that nothing
herein contained shall be construed to prevent such access to persons with whom
Tenant normally deals in the ordinary course of Tenant’s business unless such
persons are engaged in illegal activities.  Smoking is permitted
outside the building and within the Site only in areas designated by
Landlord.  Neither Tenant nor its employees, agents, contractors,
invitees or licensees shall bring any firearm, whether loaded or unloaded, into
the Site at any time.  No tenant or employee or invitee or agent of
any tenant shall be permitted upon the roof of the Building without prior
written approval from Landlord.

    


    3.           No
awnings or other projection shall be attached to the outside walls of the
Building.  No security bars or gates, curtains, blinds, shades or
screens shall be attached to or hung in, or used in connection with, any window
or door of the Premises without the prior written consent of
Landlord.  Neither the interior nor exterior of any windows shall be
coated or otherwise sunscreened without the express written consent of
Landlord.

    


    4.           Tenant
shall not mark, nail, paint, drill into, or in any way deface any part of the
Premises or the Building except to affix standard pictures or other wall
hangings on the interior walls of the premises so long as they are not visible
from the exterior of the building.  Tenant shall not lay linoleum,
tile, carpet or other similar floor covering so that the same shall be affixed
to the floor of the Premises in any manner except as approved by Landlord in
writing.  The expense of repairing any damage resulting from a
violation of this rule or removal of any floor covering shall be borne by
Tenant.

    


    5.           The
toilet rooms, urinals, wash bowls and other plumbing apparatus shall not be used
for any purpose other than that for which they were constructed and no foreign
substance of any kind whatsoever shall be thrown therein.  Any pipes
or tubing used by Tenant to transmit water to an appliance or device in the
Premises must be made of copper or stainless steel, and in no event shall
plastic tubing be used for that purpose.  The expense of any breakage,
stoppage or damage resulting from the violation of this rule shall be borne by
the tenant who, or whose employees or invitees, caused it.

    


    6.           Landlord
shall direct electricians as to the manner and location of any future telephone
wiring.  No boring or cutting for wires will be allowed without the
prior consent of Landlord.  The locations of the telephones, call
boxes and other office equipment affixed to the Premises shall be subject to the
prior written approval of Landlord.

    


    7.           The
Premises shall not be used for manufacturing or for the storage of merchandise
except as such storage may be incidental to the permitted use of the
Premises.  No exterior storage shall be allowed at any time without
the prior written approval of Landlord.  The Premises shall not be
used for cooking or washing clothes without the prior written consent of
Landlord, or for lodging or sleeping or for any immoral or illegal
purposes.

    


    
      
        
        

      

      
        D-1

        
          

        

      

      
        
        

      

       

    

    8.           Tenant
shall not make, or permit to be made, any unseemly or disturbing noises or
disturb or interfere with occupants of this or neighboring buildings or premises
or those having business with them, whether by the use of any musical
instrument, radio, phonograph, noise, or otherwise.  Tenant shall not
use, keep or permit to be used, or kept, any foul or obnoxious gas or substance
in the Premises or permit or suffer the Premises to be used or occupied in any
manner offensive or objectionable to Landlord or other occupants of this or
neighboring buildings or premises by reason of any odors, fumes or
gases.

    


    9.           No
animals, except for seeing eye dogs, shall be permitted at any time within the
Premises.

    


    10.           Tenant
shall not use the name of the Building or the Site in connection with or in
promoting or advertising the business of Tenant, except as Tenant’s address,
without the written consent of Landlord.  Landlord shall have the
right to prohibit any advertising by any Tenant which, in Landlord’s reasonable
opinion, tends to impair the reputation of the Site or its desirability for its
intended uses, and upon written notice from Landlord any Tenant shall refrain
from or discontinue such advertising.

    


    11.           Canvassing,
soliciting, peddling, parading, picketing, demonstrating or otherwise engaging
in any conduct that unreasonably impairs the value or use of the Premises or the
Site are prohibited and each Tenant shall cooperate to prevent the
same.  Landlord shall have full and absolute authority to regulate or
prohibit the entrance to the Premises of any vendor, supplier, purveyor,
petitioner, proselytizer or other similar person if, in the good faith judgment
of Landlord, such person will be involved in general solicitation activities, or
the proselytizing, petitioning, or disturbance of other tenants or their
customers or invitees, or engaged or likely to engage in conduct which may in
Landlord’s opinion distract from the use of the Premises for its intended
purpose.  Notwithstanding the foregoing, Landlord reserves the
absolute right and discretion to limit access to the Buildings by any food or
beverage vendor,  invited by Tenant, and Landlord may condition such
access upon the vendor’s execution of an entry permit agreement which may
contain provisions for insurance coverage and/or the payment of a fee to
Landlord.

    


    12.           No
equipment of any type shall be placed on the Premises which in Landlord’s
opinion exceeds the load limits of the floor or otherwise threatens the
soundness of the structure or improvements of the Building.

    


    13.           Regular
building hours of operation are from 6:00 AM to 6:00 PM Monday through Friday
and 9:00 AM to 1:00 PM on Saturday.  No air conditioning unit or other
similar apparatus shall be installed or used by any Tenant without the prior
written consent of Landlord.

    


    14.           The
entire Premises, including vestibules, entrances, parking areas, doors,
fixtures, windows and plate glass, shall at all times be maintained in a safe,
neat and clean condition by Tenant.  All trash, refuse and waste
materials shall be regularly removed from the Premises by Tenant and placed in
the containers at the locations designated by Landlord for refuse
collection.  All cardboard boxes must be “broken down” prior to being
placed in the trash container.  All styrofoam chips must be bagged or
otherwise contained prior to placement in the trash container, so as not to
constitute a nuisance.  Pallets must be immediately disposed of by
tenant and may not be disposed of in the Landlord provided trash container or
enclosures.  Pallets may be neatly stacked in an exterior location on
a temporary basis (no longer than 5 days) so long as Landlord has provided prior
written approval.  The burning of trash, refuse or waste materials is
prohibited.

    


    15.           Tenant
shall use at Tenant’s cost such pest extermination contractor as Landlord may
direct and at such intervals as Landlord may require.

    


    
      
        
        

      

      
        D-2

        
          

        

      

      
        
        

      

    

    16.           All
keys for the Premises shall be provided to Tenant by Landlord and Tenant shall
return to Landlord any of such keys so provided upon the termination of the
Lease.  Tenant shall not change locks or install other locks on doors
of the Premises, without the prior written consent of Landlord.  In
the event of loss of any keys furnished by Landlord for Tenant, Tenant shall pay
to Landlord the costs thereof.  Upon the termination of its tenancy,
Tenant shall deliver to Landlord all the keys to lobby(s), suite(s) and
telephone & electrical room(s) which have been furnished to Tenant or which
Tenant shall have had made.

    


    17.           No
person shall enter or remain within the Site while intoxicated or under the
influence of liquor or drugs.  Landlord shall have the right to
exclude or expel from the Site any person who, in the absolute discretion of
Landlord, is under the influence of liquor or drugs.

    


    18.           The
moving of large or heavy objects shall occur only between those hours as may be
designated by, and only upon previous written notice to, Landlord, and the
persons employed to move those objects in or out of the Building must be
reasonably acceptable to Landlord.  Without limiting the generality of
the foregoing, no freight, furniture or bulky matter of any description shall be
received into or moved out of the lobby of the Building or carried in the
elevator.

    


    19.           Tenant
shall not install equipment, such as but not limited to electronic tabulating or
computer equipment, requiring electrical or air conditioning service in excess
of that to be provided by Landlord under the Lease without prior written consent
of Landlord.

    


    20.           Landlord
reserves the right to reasonably amend or supplement the foregoing Rules and
Regulations on a non-discriminatory basis and to adopt and promulgate additional
rules and regulations applicable to the Premises.  At least fifteen
(15) prior to their effective date, written notice of such rules and regulations
and amendments and supplements thereto, if any, shall be given to the
Tenant.

    


    


    


    
      
        
        

      

      
        D-3

        
          

        

      

      
        
        

      

    

    


    
      
         

      

      EXHIBIT X

       

      WORK LETTER

       

    

    Construction of Tenant
Improvements with Landlord’s Contribution

    


    1.           Definitions.

     

    (a)           The
term “Tenant
Improvements” shall mean those improvements that Landlord is obligated to
construct in the Premises pursuant to plans and specifications developed
therefor in accordance with Paragraph 2(a) below.

     

    (b)           The
term “Tenant Improvement
Costs” shall include but not be limited to all sums (1) paid to
contractors for labor and materials furnished in connection with construction of
the Tenant Improvements pursuant to Paragraph 2 below; (2) all costs, expenses,
payments, fees, and charges whatsoever paid or incurred by Landlord to or at the
direction of any city, county, or other governmental authority or agency which
are required to be paid by Landlord in order to obtain all necessary
governmental permits, licenses, inspections and approvals relating to the
construction of the Tenant Improvements and the use and occupancy of the
Premises, including without limitation all in lieu fees and utility fees; (3)
engineering and architectural fees for services required in connection with the
design and construction of the Tenant Improvements; and (4) premiums, if any,
for course of construction insurance and for payment and completion bonds
relating only to construction of the Tenant Improvements.

     

    (c)           Landlord
shall provide a “Tenant
Improvement Allowance” of Five Hundred Seventy-Six Thousand Dollars
($576,000.00) (the “Landlord’s
Contribution”), based on Eight Dollars ($8.00) per rentable square foot
of the Premises. If the actual cost of completion of the Tenant Improvements and
costs of furniture, fixtures, and equipment for the Premises is less than the
maximum amount provided for the Landlord’s Contribution, such savings shall
inure to the benefit of Landlord and Tenant shall not be entitled to any credit
or payment.

     

    2.           Procedure and Time
Schedules.

     

    (a)           Approval of
Plans.  Within twenty (20) days after execution of this Lease
by both parties hereto, Tenant shall prepare and submit to Landlord preliminary
plans, specifications and working drawings for the Tenant Improvements which
Tenant desires Landlord to construct on the Premises.  As soon as the
final plans, specifications and working drawings are completed, Landlord shall
deliver the same to Tenant for its approval, which shall not be unreasonably
withheld, and which shall be based solely upon whether such final plans are
consistent with the preliminary plans.  In all events, the parties
shall use their best efforts to reach agreement so that such plans may be
submitted for governmental approval within seven (7) days from submission of
such plans to Tenant for its approval.  If Landlord and Tenant agree
on such plans, they shall indicate their approval thereof by initialing and
dating the same.  Landlord or its agent shall submit such final plans,
specifications and working drawings to all appropriate governmental agencies for
approval.  Landlord shall notify Tenant of any changes required by any
governmental agencies, and Tenant shall have seven (7) days thereafter to
indicate its approval thereof.   The final plans, specifications
and working drawings as approved, and all change orders specifically permitted
pursuant to subparagraph (c) below, shall be referred to herein as the “Approved Plans.”

     

    (b)           Contractors.  The
Tenant Improvements shall be constructed by a general contractor (the “Contractor”) selected by
Landlord and approved by Tenant, in its reasonable discretion. Contractor shall
competitively bid all Tenant Improvement Work that is to be
subcontracted.  All parties shall use their best efforts to complete
the preparation and approval of the Approved Plans so that construction
contracts may be executed to ensure completion on or before September 1, 2009
(the “Target Completion
Date”).

     

    
      
        
        

      

      
        X-1

        
          

        

      

      
        
        

      

       

    

    (c)           Changes To Approved Plans
for Tenant Improvements.  Once the Approved Plans have been
finally approved by Landlord and Tenant as provided above, then thereafter
neither party shall have the right to order extra work or change orders with
respect to the construction of the Tenant Improvements without the prior written
consent of the other, which consent shall not be unreasonably withheld or
delayed.  All extra work or change orders requested by either Landlord
or Tenant shall be made in writing, shall specify the amount of delay or the
time saved resulting therefrom, shall specify any added or reduced cost
resulting therefrom, shall specify which party shall pay such costs and the
manner of payment and shall become effective and a part of the Approved Plans
once approved in writing by both parties.

     

    (d)           Commencement and Completion
of the Tenant Improvements.  As soon as (1) the Approved Plans
have been developed as provided above, and (2) all necessary governmental
approvals have been obtained, then Landlord shall thereafter commence
construction of such improvements and shall diligently prosecute such
construction to completion, taking commercially reasonable efforts so that the
Tenant Improvements are  substantially completed by the Target
Completion Date.  Such improvements shall be constructed by Landlord
substantially in accordance with the Approved Plans, and in compliance with all
applicable regulations, ordinances, building codes, and statutes of lawful
governmental authority.

     

    (e)           Payment of Cost of Tenant
Improvements.

     

    (i)           Landlord
shall pay all Tenant Improvement Costs up to an amount equal to the Tenant
Improvement Allowance. Tenant shall pay any excess Tenant Improvement Costs over
and above the Tenant Improvement Allowance (the “Tenant
Contribution”).

     

    (ii)           After
approval of the original Approved Plans by Landlord and Tenant, Landlord shall
obtain from the Contractor a budget (the “TI Budget”) setting forth the
estimated cost of the Tenant Improvements prior to any subsequent change
orders.  An estimate of the Tenant Contribution shall be determined
based on the TI Budget (the “Estimated Tenant
Contribution”).

     

    (iii)           Prior
to commencement of construction of the Tenant Improvements, Tenant shall deposit
the Estimated Tenant Contribution into an interest-bearing account (the “Construction Cost Account”) at
a banking institution reasonably acceptable to both parties.  The
Construction Cost Account shall be established as a dual-signature account,
requiring the authorization of both Landlord and Tenant for any and all
withdrawals.  If any change orders are made to the Approved Plans that
increase the estimated cost for the Tenant Improvements above the amount
estimated in the TI Budget, then Tenant shall promptly deposit cash in the
amount of the increased cost into the Construction Cost Account.  The
Estimated Tenant Contribution plus any additional amounts deposited in the
Construction Cost Account by Tenant, less any withdrawals made to pay for the
Tenant Improvements, shall remain in the Construction Cost Account until
completion of the Tenant Improvements.

     

    (iv)           Landlord
shall submit invoices to Tenant promptly after Contractor submits such invoices
to Landlord for the costs of completed Tenant Improvements.  Upon
delivery by Landlord to Tenant of invoices from Contractor for completed Tenant
Improvements, Tenant and Landlord shall authorize payment of such invoices from
the Construction Cost Account until all funds held in the Construction Cost
Account have been depleted.

     

    (v)           Upon
exhaustion of all funds held in the Construction Cost Account, Landlord shall
deduct the costs for the Tenant Improvement Costs from the Tenant Improvement
Allowance.  The Tenant Improvement Allowance shall be paid out of
Landlord’s general funds, with any remaining balance commingled with Landlord’s
other general funds.

     

    
      
        
        

      

      
        X-2

        
          

        

      

      
        
        

      

       

    

    (vi)           In
the event the amount of the Tenant Contribution is higher than the amount of the
Estimated Tenant Contribution made by Tenant plus any additional amount
deposited by Tenant in the Construction Cost Account, the difference shall be
paid to Landlord by Tenant promptly after presentation by Landlord of final
invoices from Contractor and/or lien releases evidencing such increase. In the
event the amount of the Tenant Contribution is less than the amount of the
Estimated Tenant Contribution made by Tenant plus any additional amount
deposited by Tenant in the Construction Cost Account, the difference shall be
paid in cash by Landlord to Tenant within thirty (30) days of completion of the
Tenant Improvements.

     

    3.           Delay In Completion Caused
By Tenant.  The parties hereto acknowledge that the date on
which Tenant’s obligation to pay the monthly Basic Rent would otherwise commence
may possibly be delayed because of, among other things:  (a) Tenant’s
failure to promptly review and approve plans for the Tenant Improvements
submitted by Landlord within the time period required; (b) Tenant’s request for
special materials, finishes, or installations which are not readily available
and cause a delay; (c) change orders requested by Tenant and approved by
Landlord that cause a delay; (d) Tenant’s failure to complete any of its own
improvement work to the extent Tenant delays completion by appropriate
governmental authorities of their final inspection and approval of Tenant
Improvements to be constructed by Landlord; or (e) interference with
construction of the Tenant Improvements caused by Tenant or by Tenant’s
contractors or subcontractors that causes a delay.

     

    It is the intent of the parties hereto
that Tenant’s obligation to pay the monthly Basic Rent not be delayed by any of
such causes,  and in the event it is so delayed, then Tenant’s
obligation to pay the monthly Basic Rent shall commence as of the date it would
otherwise have commenced absent said delay caused by Tenant.

     

    4.           Delivery of
Possession.  When the Tenant Improvements are substantially
completed, Landlord and Tenant shall together walk through and inspect the
Premises and Tenant Improvements so completed (which inspection shall include
the testing of all utility facilities, lighting, HVAC equipment, and other
service equipment affecting the Premises, and an inspection of all ceilings,
walls, and floors) using their best efforts to discover all uncompleted or
defective construction.  After such inspection has been completed, a
list of “punchlist”
items shall be prepared by Landlord which the parties agree are to be corrected
by Landlord.  Landlord shall use its best efforts to complete and/or
repair such punchlist items within thirty (30) days.  Tenant’s taking
possession of the Premises shall be deemed to be an acceptance by Tenant of the
Premises as complete and in accordance with the terms of this Lease, subject to
completion of the punchlist items within said period and subject only to the
warranty contained in Section 2.2(d)(i), 2.2(d)(ii) and 2.2(d)(iii) of the
Lease. For any item or items of Tenant Improvements, if any, for which Tenant
shall have any maintenance, repair or replacement obligation under the Lease,
Landlord shall assign on a non-exclusive basis any construction warranties or
enforce such warranties on Tenant’s behalf.

     

     

    


    
      
        
        

      

      
        X-3

        
          

        

      

      
        
        

      

       

    

    EXHIBIT
Y

    


    BASIC RENT AND SECURITY
DEPOSIT

    


    

      
        	
                 
      

              	
                Basic
      Rent:

              


      

       

      
        	
                 
      

              	
                Commencing
      on the Commencement Date, the Basic Rent shall be Zero Dollars ($0.00) per
      month, based on $0.00 per rentable square foot.  Tenant shall
      not pay Operating Expenses (as hereinafter defined) during the three-month
      period in which Basic Rent is $0.00 per rentable square
    foot.

              


      

       

      Basic
Rent is subject to adjustment as follows:

       

      Commencing
in the third (3rd) calendar month following the month in which the Commencement
Date occurs and on the same day of the month as the Commencement Date (the
“Rent Commencement
Date”) (for example, if the Commencement Date is September 15, 2009, then
commencing on December 15, 2009), the Basic Rent shall be [* * *].

       

      Commencing
on the first (1st) anniversary of the Commencement Date, the Basic Rent shall be
[* * *].

       

      Commencing
on the second (2nd) anniversary of the Commencement Date, the Basic Rent shall
be [* * *].

       

      Commencing
on the third (3rd) anniversary of the Commencement Date, the Basic Rent shall be
[* * *].

       

      Commencing
on the fourth (4th) anniversary of the Commencement Date, the Basic Rent shall
be [* * *].

       

      Commencing
on the first (1st) day of the Extension Term (as defined in Section 3.3(a)), the
Basic Rent shall be [* *
*].

      
 

    

    
      Security
Deposit:  [* *
*]

      
 

    

    
      
        
           


        

        
          Y-1 


          
            

          

        

        
           


        

      

    

     

    AMENDMENT
TO

    LEASE
AGREEMENT

    


    Xilinx,
Inc., (“Landlord”) and Sonicwall, Inc., (“Tenant”) hereby agree to amend the
Lease Agreement previously executed on the 19th day if
June, 2009 by the parties (the “Agreement”) to expressly include the following
(this “Amendment”).  This Amendment shall be effective as of the last
date signed hereto.

     

    The
parties hereby agree to delete Section 21.4 entitled Recordings in its entirety
and replace it with the following:

     

    SECTION 21.4     RECORDING. 
Tenant shall not record this Lease without the prior written consent of
Landlord.  Tenant, upon the request of Landlord, shall execute and
acknowledge a “short form” memorandum of this Lease for recording purposes.
Landlord acknowledges that Tenant is a publicly traded company and that, a copy
of this Lease may need to be filed with the Securities and Exchange Commission
as an exhibit to a current, interim or annual report.  In the event
Exhibits X and Y are required to be included in such filing, Tenant agrees to
consult with Landlord to ensure confidential treatment for any information
contained in such exhibits, to the degree Landlord deems necessary.

     

    Except as
otherwise expressly amended, the original Agreement remains in full force and
effect according to its terms.

     

    


     

    TENANT                                LANDLORD

    


    SONICWALL,
INC.                                                                           XILINX,
INC.

    


    
      	
              By:______________________________

            	
              By:______________________________

            


    

    


    
______________________________        ____________________________

    (Print
Name)                                                                           (Print
Name)

    
      	
              Title:
      ____________________________

            	
              Title:
      ____________________________

            


    

    


    
      	
              Date:
      ____________________________

            	
              Date:
      ____________________________