Exhibit 10.41



Exhibit 10.40
















LEASE
















BETWEEN







BATTON ASSOCIATES, LLC, LESSOR







AND







VARIOUS, INC., LESSEE































220
Humboldt Court

Sunnyvale, California 94089



















May
9, 2008











TABLE
OF CONTENTS

Paragraph

Page

1.

Lease

1

2.

Term

2

3.

Monthly
Base Rent

3

4.

Additional
Rent; Operating Expenses and Taxes

3

5.

Payment
of Rent

7

6.

Security
Deposit

7

7.

Use

8

8.

Environmental
Matters

8

9.

Taxes
on Lessee’s Property

10

10.

Insurance

11

11.

Indemnification

12

12.

Tenant
Improvement Work

13

13.

Maintenance
and Repairs; Alterations; Surrender and Restoration

15

14.

Utilities
and Services

18

15.

Liens

18

16.

Assignment
and Subletting

19

17.

Non-Waiver

22

18.

Holding
Over

23

19.

Damage
or Destruction

23

20.

Eminent
Domain

26

21.

Remedies

26

22.

Lessee’s
Property

28

23.

Notices

28

24.

Estoppel
Certificates

29

25.

Parking

29

26.

Signage

29

27.

Real
Estate Brokers

29

28.

Subordination;
Attornment

30

29.

No
Termination Right

30

30.

Lessor’s
Entry

31

31.

Attorneys’
Fees

31

32.

Compliance
with CC&Rs

31

33.

Quiet
Possession

31

34.

Force
Majeure

31

35.

Right
of First Refusal to Purchase the Property

31

36.

General
Provisions

35

SCHEDULE
OF EXHIBITS

EXHIBIT
“A”

Legal
Description

EXHIBIT
“B”

Lessor’s
FF&E

EXHIBIT
“C”

Commencement
Memorandum









L E A S E

220
Humboldt Court

Sunnyvale, California 94089

THIS LEASE, referred to herein as “this Lease,” dated for
reference purposes as of May 9, 2008, is made and entered into by and
between BATTON ASSOCIATES, LLC, a California limited liability company
(“Lessor”), and VARIOUS, INC., a California corporation (“Lessee”).

RECITALS:

A.

Lessor is the owner of the real property commonly referred to as
220 Humboldt Court, Sunnyvale, California 94089, more particularly described on
Exhibit “A” attached hereto and incorporated by reference herein, consisting of
a parcel of land containing approximately 3.55 acres, together with all
easements and appurtenances thereto (the “Land”), and the existing building
thereon containing approximately 50,112 rentable square feet (the “Building”),
and all other improvements located thereon.  The Building and the other
improvements are hereafter referred to collectively as the “Improvements.”
 The Land and the Improvements are hereafter referred to collectively as
the “Property.”

B.

Lessor and Lessee wish to enter into this Lease upon the terms and
conditions set forth herein.

NOW, THEREFORE, the parties agree as follows:

1.


.

Lease.  

(a)

Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, at the rental and upon the terms and conditions set forth herein, the
Property, during the term of this Lease.  The total number of rentable
square feet in the Building shall be confirmed in writing by Lessor to Lessee,
subject to Lessee’s written approval.  

(b)

Lessor grants to Lessee, at no additional cost to Lessee, the
right to use such items of the existing furniture, data/voice wiring, and
approximately 196 cubicles owned by Lessor and currently located in the Building
as of the date hereof (“Lessor’s FF&E”) that Lessee elects to use.  An
inventory of Lessor’s FF&E is attached hereto as Exhibit “B.”  Except
for the cubicles which shall remain in the Building, Lessee will advise Lessor
in writing of any items on Exhibit “B” which Lessee elects not to use within
thirty (30) days after the date of this Lease and, upon request by Lessee,
Lessor shall remove such items from the Building at no cost to Lessee prior to
Commencement Date.  A new Exhibit “B-1” shall be prepared and initialed by
the parties and attached hereto listing Lessor’s FF&E which Lessee elects to
use after such removal.  Except for Lessor’s FF&E which Lessee elects
not to use and which Lessor removes from the Building, all of Lessor’s FF&E
shall remain the property of Lessor and shall be returned by Lessee to Lessor
upon the expiration or earlier termination of this Lease in its condition at
that time.








2.

Term.

(a)

The term of this Lease (the “term”) shall commence on July 1,
2008 (the “Commencement Date”), subject to the prior satisfaction of the
conditions set forth in Paragraph 2(c).  The Commencement Date shall be
confirmed in writing by Lessor and Lessee by the execution and delivery of the
Commencement Memorandum in the form attached hereto as Exhibit “C” and
incorporated by reference herein.

(b)

The term of this Lease shall expire (the “Expiration Date”) on
October 31, 2015, unless sooner terminated in accordance with the
provisions hereof.  

(c)

The commencement of the term of this Lease on the Commencement
Date specified in Paragraph 2(a) shall be subject to the prior satisfaction of
the following conditions: (1) the prior execution and delivery of this Lease by
the parties, (2) the payment by Lessee to Lessor upon the execution and
delivery of this Lease of the sum of Eighty-three Thousand One Hundred
Eighty-five and Ninety-two Hundredths Dollars ($83,185.92) representing the
Monthly Base Rent for the month of November 2008, and (3) the payment by Lessee
to Lessor concurrently with the execution and delivery of this Lease of the sum
of One Hundred Twenty Thousand Two Hundred Fifty-seven Dollars ($120,257.00) as
the Security Deposit referred to in Paragraph 6(a).  Lessor warrants that
on the Commencement Date the Building and the parking area on the Property will
be in compliance with the Americans With Disabilities Act (ADA), applicable
building codes, and all other applicable ordinances, regulations, laws, and
requirements of all governmental agencies or authorities (collectively, “Laws”),
and with all of the systems of the Building in good operating condition and
repair, including, but not limited to, the HVAC system, mechanical, lighting,
electrical, life safety, and plumbing systems, with the ceiling tiles in good
condition, and with the roof in good condition and the roof membrane water
tight.

The parties acknowledge that Lessee has elected to occupy the
Property prior to the construction of the Tenant Improvement Work in the
Building referred to in Paragraph 12(a).

(d)

If for any reason the Building and other Improvements are not in
the condition referred to in Paragraph 2(c) on the Commencement Date, Lessor
shall not be subject to any liability therefore, nor shall such failure affect
the validity of this Lease, or the obligations of Lessee hereunder, except that
in such case Lessee shall not be obligated to begin paying Operating Expenses
and Taxes pursuant to Paragraph 4(a)or Monthly Base Rent pursuant to paragraph
3(a) until the Building is delivered to Lessee in the condition referred to in
Paragraph 2(c) above.  Lessor shall use its good faith diligent efforts to
see to it that the Property and the Building and the other Improvements on the
Property are in the condition referred to in Paragraph 2(c) by July 1,
2008, subject to the satisfaction of the following conditions:(1) Lessee
shall have executed and delivered to Lessor two (2) copies of this Lease on or
before May 15, 2008; and (2) concurrently with the execution and delivery of
this Lease, Lessee shall have paid to Lessor the Monthly Base Rent for the month
of November 2008, and the Security Deposit referred to in Paragraph 2(c).
 If the Property and the Building are not delivered to Lessee in the
condition referred to in Paragraph 2(c) by December 1, 2008, plus the number of
days of delay by Lessee in satisfying the conditions referred to in the
preceding sentence, (“Lessee Delays”), Lessee may, at its option, by notice in
writing received by Lessor after December 1, 2008, plus the period of Lessee
Delays, if any, and before the date possession is so delivered, cancel this 






2






Lease, in which event Lessor shall promptly refund the Monthly
Base Rent for November 2008 and the Security Deposit to Lessee, and the parties
shall be discharged from all further obligations hereunder.  If such
written notice is not received by Lessor on or before the date possession is so
delivered by Lessor to Lessee, Lessee’s right to cancel this Lease pursuant to
this Paragraph 2(d) shall terminate and be of no further force or effect.

(e)

Subject to the satisfaction of conditions (1) and (2) set forth in
Paragraph 2(c), and the delivery by Lessee to Lessor of written evidence that
Lessee’s commercial general liability insurance coverage required by
Paragraph 10(a) is in effect, Lessee and Lessee’s vendors and contractors
shall have access to the Building on May 30, 2008 for the purpose of the
installation by Lessee at Lessee’s expense of Lessee’s telephone system, network
wiring, and data communications equipment; provided that Lessee shall cooperate
with Lessor to cause such activities to be performed in a manner that does not
interfere with any work by Lessor in or about the Building or the Property
necessary to place the Property in the condition referred to in Paragraph
2(c).

3.

Monthly Base Rent.  

(a)

Subject to Paragraph 2(d), commencing on July 1, 2008 and
continuing on the first day of each calendar month thereafter during the term,
Lessee shall pay to Lessor without prior notice or demand, or deduction or
offset, except as otherwise provided herein in monthly installments in advance
Monthly Base Rent, in lawful money of the United States, as follows:

   Period

Monthly Base Rent/NNN

        (50,112 RSF)

July 1, 2008 – October 31, 2008

$  0.00

November 1, 2008 – June 30, 2009

$  83,185.92

July 1, 2009 – June 30, 2010

$  86,097.43

July 1, 2010 – June 30, 2011

$  89,110.83

July 1, 2011 – June 30, 2012

$  92,229.72

July 1, 2012 – June 30, 2013

$  95,457.76

July 1, 2013 – June 30, 2014

$  98,798.78

July 1, 2014 – October 31, 2015

$102,256.73

(b)

Upon the execution and delivery of this Lease by Lessor and
Lessee, Lessee shall pay to Lessor the sum of Eight-three Thousand One Hundred
Eighty-five and Ninety-two Hundredths Dollars ($83,185.92), representing the
Monthly Base Rent for the month of November, 2008.  Monthly Base Rent for a
partial calendar month at the commencement or expiration of the term shall be
prorated on the basis of the actual number of days in such month.

4.

Additional Rent; Operating Expenses and Taxes.

(a)

In addition to the Monthly Base Rent payable by Lessee pursuant to
Paragraph 4, Lessee shall pay to Lessor commencing on September 1, 2008, and
continuing thereafter during the entire term of this Lease as “Additional Rent”
(1) the total Operating Expenses of the Property, and (2) the total real property taxes
and assessments levied or assessed against the Property in accordance with
Paragraph 4(c) hereof.





3






 

(b)

“Operating Expenses” as used herein shall include all direct costs
 actually  incurred by Lessor in
the management, operation, maintenance, repair, and replacement of the Property,
including the cost of all maintenance, repairs, and restoration of the Property
performed by Lessor pursuant to Paragraphs 13(b) and 13(c) hereof, determined in
accordance with generally accepted accounting principles (unless excluded by
this Lease), including, but not limited to:

Personal property taxes related to the Property; any parking taxes
or levies imposed on the Property in the future by any governmental agency; a
management fee not to exceed three percent (3%) of the Monthly Base Rent payable
by Lessee under this Lease, which management fee shall be payable to Lessor, any
affiliate of Lessor, or an independent property manager selected by Lessor;
water and sewer charges; waste disposal; insurance premiums for insurance
coverages maintained by Lessor pursuant to Paragraph 10(b) hereof; license,
permit, and inspection fees; all charges for electricity, heating, air
conditioning, gas, and any other utilities (including, without limitation, any
temporary or permanent utility surcharge or other exaction) except to the extent
that such utilities are paid directly by Lessee pursuant to Paragraph 14(a);
maintenance, repair, and replacement of the roof membrane; maintenance and
replacement of floor and window coverings; repair, maintenance, and replacement
of the heating, ventilating, air conditioning, mechanical and electrical systems
(including a contract between Lessor and an HVAC service company for the
periodic service, repairs, and replacement of parts to the HVAC system in the
Building pursuant to Paragraph 13(c)), plumbing and sewage systems; landscaping,
gardening, and tree trimming; glazing; repair, maintenance, cleaning, sweeping,
striping, and resurfacing of the parking area; exterior Building lighting and
parking lot lighting; supplies, materials, equipment and tools used in the
maintenance of the Property; costs for accounting services incurred in the
calculation of Operating Expenses and Taxes as defined herein; and the cost of
capital expenditures for any improvements or changes to the Building or any
other part of the Property (1) that are required by laws, ordinances, or other
governmental regulations adopted after the Commencement Date; (2) that are
voluntarily made by Lessor which are intended to have the effect of reducing
Operating Expenses, provided, however, that with respect to capital improvements
made to save Operating Expenses the amortization thereof shall not be at a rate
greater than the actual savings in Operating Expenses; (3) that are required
because of Lessee’s specific use of the Property; or (4) that are reasonably
necessary in Lessor’s judgment to maintain the Property in good operating
condition and repair, provided that Lessor shall amortize the cost of said
improvements referred to in the foregoing clauses (1), (2), (3), or (4) and
expenditures (including insurance deductible amounts if the improvements damaged
are repaired or reconstructed) over the useful life of said improvements
(together with interest on the unamortized balance at the rate equal to the
effective rate of interest actually charged to Lessor for its borrowings for
capital expenditures, but in no event in excess of ten percent (10%) per annum)
as an Operating Expense in accordance with generally accepted accounting
principles.  Operating Expenses shall also include any other expenses or
charges, whether or not described herein, not specifically excluded by other
provisions of this Lease, which in accordance with generally accepted accounting
principles would be considered an expense of managing, operating, maintaining,
and repairing the Property.






4







(c)

Real property taxes and assessments levied or assessed against the
Property, during the term of this Lease are referred to herein as “Taxes.”

As used herein, “Taxes” shall mean:

(1)

all real estate taxes, assessments and any other taxes levied or
assessed against the Property, including the Land, the Building, and all
improvements located thereon, and including any increase in Taxes resulting from
a reassessment following any transfer of ownership of the Property or any
interest therein or following any improvements to the Property; and

(2)

all other taxes which may be levied in lieu of real estate taxes,
assessments, and other fees, charges, and levies, general and special, ordinary
and extraordinary, unforeseen as well as foreseen, of any kind and nature by any
authority having the direct or indirect power to tax, including without
limitation any governmental authority or any improvement or other district or
division thereof, for public improvements, services, or benefits which are
assessed, levied, confirmed, imposed, or become a lien (1) upon the Property,
and/or any legal or equitable interest of Lessor in any part thereof; or (2)
upon this transaction or any document to which Lessee is a party creating or
transferring any interest in the Property; and (3) any tax or excise, however
described, imposed in addition to, or in substitution partially or totally of,
any tax previously included within the definition of “Taxes” or any tax the
nature of which was previously included in the definition “Taxes.”

Not included within the definition of “Taxes” are any net income,
profits, franchise, estate, gift, or inheritance taxes imposed by any
governmental authority.  “Taxes” also shall not include penalties or
interest charges assessed on delinquent Taxes, provided that Lessee has not been
in default in the payment of rent. 

With respect to any assessments which may be levied against or
upon the Property, or the Land, which under applicable Laws then in force may be
evidenced by improvement or other bonds, or may be paid in annual installments,
only the amount of such annual installment (with appropriate proration of any
partial year) and statutory interest shall be included within the computation of
the annual Taxes levied against the Property.

(d)

Notwithstanding anything in Paragraphs 4(b) or 4(c) to the
contrary, the following costs (“Costs”) shall be excluded from the definition of
Operating Expenses:

(1)

Costs, fines, penalties, or interest incurred by the acts,
omissions or violations of law by Lessor, or its agents, employees or
contractors;

(2)

Costs for which Lessor is entitled to receive reimbursement from
others, including reimbursement from insurance; 

(3)

Interest, charges, fees, and like carrying costs incurred on debt
or payments on any deed of trust or ground lease on the Property of which Lessor
is debtor, trustor, or lessee;

(4)

Costs incurred in repairing, maintaining or replacing any
structural elements of the Building for which Lessor is responsible pursuant to
Paragraph 13(a) hereof;






5






(5)

Any wages, bonuses or other compensation of employees of Lessor,
including fringe benefits, or any fee, office overhead, general and
administrative expenses, or accounting charges paid to Lessor or its affiliates
for management and administration of the Property in excess of the management
fee referred to in Paragraph 4(b);

(6)

Costs in the nature of depreciation, amortization or other expense
reserves; 

(7)

Leasing expenses and broker commissions payable by Lessor;

(8)

Costs incurred as a result of casualties or by the exercise of the
power of eminent domain; and 

(9)

Costs which are properly capitalized under generally accepted
accounting principles, except to the extent those costs (including interest
thereon) are incurred after the Commencement Date and are amortized on a
straight line basis over the useful life of the capital item in question,
determined in accordance with Paragraph 4(b) above.

Lessor shall at all times use its diligent good faith efforts to
operate the Property in an economically reasonable manner at costs not
disproportionately higher than those experienced by other comparable property in
the market area in which the Property is located.

(e)

Operating Expenses and Taxes shall be payable by Lessee to Lessor
within thirty (30) days after receipt by Lessee of an invoice from Lessor
specifying the nature of the Operating Expenses or Taxes for which payment is
requested and the amount payable by Lessee.

(f)

Lessee or Lessee’s accountants shall have the right to inspect and
audit Lessor’s books and records with respect to this Lease once each calendar
year to verify actual Operating Expenses and/or Taxes.  Lessor’s books and
records shall be kept in accordance with generally accepted accounting
principles.  If Lessee’s audit of the Operating Expenses and/or Taxes for
any year reveals a net overcharge of more than five percent (5%), Lessor shall
promptly reimburse Lessee for the cost of the audit and the amount of any
overcharge shall be credited to Operating Expenses and/or Taxes next due
hereunder; otherwise Lessee shall bear the cost of Lessee’s audit.  

(g)

Notwithstanding the expiration or termination of this Lease,
within thirty (30) days after receipt by Lessee of an invoice from Lessor for
any Operating Expenses or Taxes payable by Lessee for the calendar year in which
this Lease expires or terminates, Lessee shall pay to Lessor any such amount due
as shown on such invoice.  Lessee’s obligations under this subparagraph (g)
shall survive the expiration or termination of this Lease.  If it is
determined that Lessor has collected from Lessee more Operating Expenses or
Taxes than are due for the calendar year in which this Lease expires or
terminates, Lessor shall refund the amount of the overpayment to Lessee as soon
as reasonably possible.  Neither Lessor nor Lessee shall have the right to
make any claim against the other for payment of additional Operating Expenses or
Taxes, or for a refund or adjustment in the amount of Operating Expenses or
Taxes previously paid, for any calendar year of the term after the expiration of
one year following the end of the calendar year in question.






6






5.

Payment of Rent.

(a)

All rent shall be due and payable by Lessee in lawful money of the
United States of America at the address of Lessor set forth in Paragraph 23,
“Notices,” without deduction or offset and without prior demand or notice,
unless otherwise specified herein.  Monthly Base Rent shall be payable
monthly, in advance, commencing November 1, 2008 and continuing on the first
(1st) day of each calendar month thereafter during the term of this Lease,
except that the Monthly Base Rent for the month of November, 2008 shall be paid
by Lessee upon the execution and delivery of this Lease by Lessor and Lessee
pursuant to Paragraph 2(c) hereof.  Lessee’s obligation to pay the
Operating Expenses and Taxes of the Property shall commence on September 1,
2008, and shall continue thereafter during the term of this Lease as billed by
Lessor.  The term “rent” as used in this Lease shall include all sums
payable by Lessee hereunder.

(b)

If any installment of Monthly Base Rent, Additional Rent or any
other sum due from Lessee is not received by Lessor within five (5) days after
the same is due, Lessee shall pay to Lessor an additional sum equal to five
percent (5%) of the amount overdue as a late charge.  The parties agree
that this late charge represents a fair and reasonable estimate of the costs
that Lessor will incur by reason of the late payment by Lessee.  Acceptance
of any late charge shall not constitute a waiver of Lessee’s default with
respect to the overdue amount.  Any amount not paid within ten (10) days
after Lessee’s receipt of written notice that such amount is due shall bear
interest from the date due until paid at the rate of ten percent (10%) per
annum. 

Initials:  Lessor
          HS            

             
Lessee
        MHB         

(c)

Notwithstanding the foregoing, no late charge or interest shall be
due on the first (and only the first) late payment of rent by Lessee during any
calendar year during the term of this Lease if Lessee establishes to Lessor’s
reasonable satisfaction that the failure of Lessor to receive such payment
within five (5) days after the receipt by Lessee of a written notice of
delinquency from Lessor (by U.S. Mail, overnight courier, email, or facsimile)
was caused by a delay in the normal delivery of the United States Mail as a
result of the occurrence of a hurricane, tornado, flood, or similar event that
delayed the delivery of U.S. Mail mailed from the location in the United States
from which Lessee’s rent payment was mailed.

6.

Security Deposit.

(a)

Concurrently with the execution and delivery of this Lease by
Lessor and Lessee, Lessee shall pay to Lessor the sum of One Hundred Twenty
Thousand Two Hundred Fifty-seven Dollars ($120,257.00) (an amount equal to last
month’s Monthly Base Rent ($102,257.00) plus last month’s estimated Operating
Expenses and Taxes ($18,000.00) (the “Security Deposit”), as security for
Lessee’s faithful performance of Lessee’s obligations under this Lease
including, but not limited to, the payment of rent when due, the repair of any
damage to the Property caused by Lessee, and the surrender of the Property and
Lessor’s FF&E to Lessor on the expiration or sooner termination of the term
in a clean condition, and otherwise in the condition required by Paragraph
13(f).  If Lessee fails to pay Monthly Base Rent or Additional Rent or any
other charges due hereunder within applicable notice and cure periods, or if
Lessee fails to surrender possession of the Property and Lessor’s FF&E on
the Expiration Date or earlier termination date of the term in the condition
required by Paragraph 13(f), or if Lessee otherwise is 






7






in breach under this Lease (as defined in Paragraph 21), Lessor
may use, apply or retain all or any portion of said Security Deposit to the
extent reasonably necessary to cure the breach, for the payment of any amount
due Lessor, and to reimburse or compensate Lessor for any liability, cost,
expense, loss or damage (including attorneys’ fees) which Lessor may suffer or
incur by reason thereof.  If Lessor uses or applies all or any portion of
the Security Deposit, Lessee shall within ten (10) days after written request
therefor deposit with Lessor a sufficient amount to restore the Security Deposit
to the original amount required by this Lease.  Lessor shall not be
required to keep all or any part of the Security Deposit separate from its
general accounts.  

(b)

Lessor shall, within thirty (30) days after the expiration or
earlier termination of the term hereof, and provided Lessee has vacated the
Property, return to Lessee (or, at Lessor’s option, to the last assignee, if
any, of Lessee’s interest herein), that portion of the Security Deposit not used
or applied by Lessor.  No part of the Security Deposit shall be considered
to be held in trust, to bear interest or other increment for its use, or to be
prepayment for any sum payable by Lessee under this Lease.  Lessee waives
(1) California Civil Code Section 1950.7 and any and all other laws, rules and
regulations applicable to security deposits in the lease of commercial property
(“Security Deposit Laws”) to the extent they attempt to limit or restrict the
uses for which Lessor may apply the Security Deposit or the period to which
Lessor may apply the Security Deposit to rent due prior to or following the
termination of Lessee’s right to possession, notwithstanding the surrender of
possession of the Property by Lessee; and (2) any and all rights, duties and
obligations either party may now or, in the future, will have relating to or
arising from the Security Deposit Laws. Notwithstanding anything to the contrary
herein, the Security Deposit may be retained and applied by Lessor (A) to offset
rent which is unpaid either before or after termination of this Lease, and (B)
against other damages suffered by Lessor as a result of any breach by Lessee (as
defined in Paragraph 21) before or after termination of this Lease.  

7.

Use.  Lessee may use the Property
for general offices, administration, marketing, internet services, media
services, customer call center, research and development, and light assembly,
and for no other use or purpose without Lessor’s prior written consent, which
consent Lessor shall not unreasonably withhold, delay or condition, provided
that (1) Lessee demonstrates to Lessor’s reasonable satisfaction that such other
use is permitted by applicable laws and ordinances, (2) the manufacture of
integrated circuits on the Property is expressly prohibited, and (3) any
hazardous materials used by Lessee or any assignee or sublessee of Lessee on or
about the Property in connection with such use are approved in writing by
Lessor.  Any use of the Property by any sublessee or assignee pursuant to
Paragraph 16 shall comply with the provisions of this Paragraph 7.

8.

Environmental Matters.

(a)

The term “Hazardous Materials” as used in this Lease shall mean
any product, substance, or waste whose presence, use, manufacture, disposal,
transportation, or release, is regulated or monitored by any governmental
authority pursuant to Environmental Laws as hereafter defined.  Hazardous
Materials shall include, but not be limited to hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or fractions thereof.
 

(b)

Lessee shall not use, store, or transport to or from the Building
or the Property, or dispose of any Hazardous Materials on or about the Property
without Lessor’s prior 






8






written consent and timely compliance (at Lessee’s expense) with
all Environmental laws, except for (1) ordinary and customary office supplies
and cleaning materials which are used in the normal course of Lessee’s agreed
use of the Property, and (2) such other Hazardous Materials the generation,
possession, storage, use, transportation, or disposal of which in the quantities
used by Lessee do not require a permit from any governmental authority.
 All such Hazardous Materials (1) shall be used, stored, transported, and
disposed of in strict compliance with Environmental Laws, and (2) shall be
stored on the Property only in limited quantity required for Lessee’s business
at the Property.  Except as otherwise specifically permitted by this
Paragraph 8(b), Lessee shall not use, store, transport, or dispose of any
Hazardous Materials in or about the Building or the Property.  Lessee shall
not install any above or below ground storage tanks on the Property.
 Without limiting the generality of the foregoing, Lessee shall, at its
sole cost, comply with all Environmental Laws relating to its use of Hazardous
Materials.  If Hazardous Materials are discovered at or about the Building
or the Property in violation of Environmental Laws and such Hazardous Materials
were used, stored, transported, or disposed of by Lessee, then Lessee shall, at
Lessee’s sole expense, promptly take all action necessary to cause the Property
to comply with all Environmental Laws with respect to such Hazardous Materials.
 Upon Lessor’s request, Lessee shall deliver to Lessor (1) a copy of
Lessee’s current Hazardous Materials Management Plan, if any, and any amendments
or supplements thereto, or replacements thereof, from time to time during the
term of this Lease, and (2) a copy of all Hazardous Materials reports or plans
filed by Lessee with the City of Sunnyvale, if any, even though Lessee’s
Hazardous Materials Management Plan and any such reports or plans filed with the
City show that Lessee is not currently using any reportable Hazardous Materials
on the Property.

(c)

“Environmental Laws” shall mean and include any Federal, State, or
local statute, law, ordinance, code, rule, regulation, order, or decree
regulating, relating to, or imposing liability or standards of conduct
concerning, any hazardous, toxic, or dangerous waste, substance, element,
compound, mixture or material, as now or at any time hereafter in effect
including, without limitation, California Health and Safety Code §§25100 et
seq., §§25300 et seq., Sections 25281(f) and 25501 of the California Health and
Safety Code, Section 13050 of the Water Code, the Federal Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
§§9601 et seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act, 42
U.S.C. §§9601 et seq., the Federal Toxic Substances Control Act, 15 U.S.C.
§§2601 et seq., the Federal Resource Conservation and Recovery Act as amended,
42 U.S.C. §§6901 et seq., the Federal Hazardous Material Transportation Act, 49
U.S.C. §§1801 et seq., the Federal Clean Air Act, 42 U.S.C. §7401 et seq., the
Federal Water Pollution Control Act, 33 U.S.C. §1251 et seq., the River and
Harbors Act of 1899, 33 U.S.C. §§401 et seq., and all rules and regulations of
the EPA, the California Environmental Protection Agency, or any other state or
federal department, board or any other agency or governmental board or entity
generally having jurisdiction over the environment, as any of the foregoing have
been, or are hereafter amended.

(d)

If Lessee knows that Hazardous Materials have come to be located
in, on, or under the Building, or if there is objective evidence that Hazardous
Materials have come to be located in, on, under, or about the Property, other
than as permitted under this Lease or previously consented to in writing by
Lessor, Lessee shall immediately give written notice to Lessor of such fact and
provide Lessor with a copy of any report, notice, claim or other documentation
which it has concerning the presence of such Hazardous Materials.






9






(e)

Lessee and Lessee’s agents, employees, and contractors shall not
cause any Hazardous Materials to be discharged into the plumbing or sewage
system of the Building or into or onto the Land underlying or adjacent to the
Building in violation of any Environmental Laws.  Lessee shall promptly, at
Lessee’s expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of any
contamination in violation of Environmental Laws or the terms of this Lease
caused by Lessee or caused by any of Lessee’s employees, agents, or contractors,
and for the maintenance, security and/or monitoring of the Property or
neighboring properties if such contamination is caused by a release or emission
of any Hazardous Materials by Lessee or by any of Lessee’s employees, agents, or
contractors.  

(f)

Lessee shall indemnify, defend with counsel reasonably acceptable
to Lessor, and hold Lessor harmless from any and all claims, damages, fines,
judgments, penalties, costs, liabilities or losses (including, without
limitation, any and all sums paid for settlement of claims, attorneys’ fees,
consultant and expert fees) (“Claims”) arising during or after the term (as such
may be extended) from the use, storage, transportation, release, disposal,
discharge, or emission of Hazardous Materials at or about the Building or the
Property by Lessee, or Lessee’s employees, agents, contractors, invitees, or
sublessees (collectively, “Lessee Parties”), in violation of Environmental Laws
or the terms of this Lease.  Without limitation of the foregoing, this
indemnification shall include any and all costs incurred due to any
investigation of the site or any cleanup, removal or restoration mandated by a
federal, state or local agency or political subdivision and any repairs to the
Building or the Property required in connection therewith.  The foregoing
indemnity shall survive the expiration or earlier termination of this
Lease.

(g)

Prior to the expiration of the term and the surrender of
possession of the Property by Lessee to Lessor, in the event that Lessee or any
sublessee during the term of this Lease has used Hazardous Materials on the
Property for which a permit is required, Lessee shall obtain at Lessee’s expense
an environmental closure report certified by the appropriate department of the
City of Sunnyvale (“Certified Closure Report”) and a copy of such Certified
Closure Report shall be delivered to Lessor if such
report is required by the City of Sunnyvale or applicable law .  Such closure shall include the removal and
remediation at Lessee’s expense of any Hazardous Materials in, on, under, or
about the Property released or discharged by Lessee, its Permitted Affiliates,
sublessees, assignees, employees, agents, contractors, or invitees (1) referred to in the environmental closure report prepared
by the City of Sunnyvale, or (2)
as may be required by the City as a condition to the issuance by the City of
a Certified Closure Report that does not recommend or require further clean up
or other similar action.

(h)

Lessee shall not be responsible under this Lease for any Hazardous Materials present on the Property that were not
released by Lessee or its employees, agents, contractors, invitees, or
sublessees.

(i)

The provisions of this Paragraph 8 shall survive the expiration or
earlier termination of the term of this Lease.

9.

Taxes on Lessee’s Property.
 Lessee shall pay before delinquency, or reimburse Lessor upon demand, for
any and all taxes, assessments, license fees, and public charges levied,
assessed, or imposed and which become payable during the term upon (1) Lessee’s
equipment, trade fixtures, furniture, and personal property installed or located
in the Building, and (2) Lessor’s FF&E referred to in Paragraph 1(b).






10






10.

Insurance.

(a)

Lessee shall, at Lessee’s sole cost and expense, provide and keep
in force commencing with the commencement date of Lessee’s early access to the
Property pursuant to Paragraph 2(e) and continuing during the Lease term, a
commercial general liability and umbrella insurance policy with a recognized
casualty insurance company qualified to do business in California, with a Three
Million Dollars ($3,000,000.00) combined limit.  Lessee’s commercial
general liability policy shall contain cross liability endorsements, shall
contain contractual liability coverage, shall include general liability coverage
insuring for bodily injury and property damage to Lessor’s FF&E, and shall
include Lessor and W.F. Batton Management Company, Lessor’s property manager, as
additional insureds.  All such insurance carried by Lessee shall be in a
form reasonably satisfactory to Lessor and its mortgage lender and shall be
carried with companies that have a general policyholder’s rating of not less
than A-VIII in the most current edition of Best’s Insurance Reports; shall
provide that the insurer shall endeavor to give Lessor at least thirty (30)
days’ prior written notice before reduction or cancellation of coverage; and
such coverage shall be primary and not contributory.  Prior to the early
occupancy of the Property by Lessee, and upon renewal of such policies not less
than thirty (30) days prior to the expiration of the term of such coverage,
Lessee shall deliver to Lessor certificates of insurance confirming such
coverage, together with evidence of the payment of the premium therefor.
 If Lessee fails to procure and maintain the insurance required hereunder
within five (5) days after receipt by Lessee of written notice from Lessor,
Lessor may, but shall not be required to, order such insurance at Lessee’s
expense and Lessee shall reimburse Lessor for all costs incurred by Lessor with
respect thereto.  Lessee’s reimbursement to Lessor for such amounts shall
be deemed Additional Rent, and shall include all sums disbursed, incurred or
deposited by Lessor, including Lessor’s costs, expenses and reasonable
attorneys’ fees with interest thereon at the Interest Rate. Lessee shall also
carry at Lessee’s expense property insurance coverage on Lessor’s FF&E
naming Lessor as insured and with loss payable to Lessor.  

(b)

Subject to the provisions of Paragraphs 4(a), 4(b), and 4(d),
Lessor shall obtain and carry in Lessor’s name, as insured, during the term of
this Lease, “all risk” property insurance coverage in an amount equal to the
full replacement cost of the Building and Improvements (with rental loss
insurance coverage for a period of one year) (“Lessor’s property insurance”),
flood insurance (but only if required by Lessor’s lender), commercial general
liability insurance, and insurance against such other risks or casualties as
Lessor shall reasonably determine, including, but not limited to, insurance
coverages required of Lessor by the beneficiary of any deed of trust which
encumbers the Property (including earthquake and terrorism insurance coverage,
but only if required by Lessor’s lender), insuring Lessor’s interest in the
Property, any other improvements to the Property constructed by Lessor, or by
Lessee with Lessor’s prior written approval, in an amount not less than the full
replacement cost of the Building and all other Improvements from time to time.
 The proceeds of any such insurance shall be payable solely to Lessor and
Lessee shall have no right or interest therein.  Lessor shall have no
obligation to insure against loss by Lessee to Lessee’s equipment, furniture,
fixtures, inventory, or other personal property of Lessee in, on, or about the
Building occurring from any cause whatsoever.  Lessor’s commercial general
liability insurance shall provide for contractual liability coverage of Lessor’s
indemnity referred to in Paragraph 11(b).  Lessee, at Lessee’s expense, and
not Lessor, shall insure Lessor’s FF&E in, on, or about the Building that
Lessee has the right to use without charge.






11






(c)

Notwithstanding anything to the contrary contained in this Lease,
the parties release each other, and their respective authorized representatives,
employees, officers, directors, shareholders, managers, members, assignees,
subtenants, and property managers, from any Claims for damage to the Property
and to the fixtures, personal property, leasehold improvements and alterations
of either Lessor or Lessee in or on the Property that are caused by or result
from risks required by this Lease to be insured against or actually insured
against under any property insurance policies carried by the parties and in
force at the time of any such damage, whichever is greater. This waiver applies
whether or not the loss is due to the negligent acts or omissions of Lessor or
Lessee or their respective authorized representatives, shareholders, managers,
members, assignees, subtenants, successors, officers, directors, employees,
agents, contractors, or invitees.  All of Lessor’s and Lessee’s repair and
indemnity obligations under this Lease shall be subject to the waiver contained
in this Paragraph 10(c).

(d)

Each party shall cause each property insurance policy obtained by
it to provide that the insurance company waives all right of recovery by way of
subrogation against either party in connection with the above waiver and any
damage covered by any policy; provided, however, that such provision or
endorsement shall not be required if the applicable policy of insurance permits
the named insured to waive rights of subrogation on a blanket basis, in which
case the blanket waiver shall be acceptable.  Neither party shall be liable
to the other for any property loss or damage caused by fire or any of the risks
insured against (or required to be insured against) under any insurance policy
carried pursuant to this Lease.

11.

Indemnification.

(a)

Subject to Paragraphs 11(c) and 11(d), Lessee shall indemnify,
defend, and hold Lessor harmless from all Claims, suits, actions, or liabilities
for personal injury, death or for loss or damage to property (1) that arise from
any activity, work, or thing done or permitted by Lessee in or about the
Property, (2) for bodily injury or damage to property which arises in or
about the Property to the extent the injury or damage to property results from
the negligent acts or omissions of Lessee, its employees, agents, or
contractors, or (3) that are based on any Event of Default by Lessee in the
performance of any obligation on Lessee’s part to be performed under this Lease,
except to the extent caused by the gross negligent or willful misconduct of
Lessor or its employees, agents, or contractors or a breach by Lessor of its
obligations under this Lease.  Lessee also waives all claims against Lessor
for damages to property, or to goods, wares, and merchandise stored in, upon, or
about the Building or the Property, and for injuries to persons in, upon, or
about the Building or the Property from any cause arising at any time, except as
may be caused by the gross negligence or willful misconduct of Lessor or its
employees, agents or contractors or the breach by Lessor of its obligations
under this Lease.  

(b)

Subject to Paragraphs 10(c) and 10(d), Lessor shall indemnify,
defend, and hold Lessee harmless from all Claims for personal injury, death or
for loss or damage to property (1) that arise from bodily injury or damage to
property in or about the Property to the extent the injury or damage to property
results from the gross negligent or willful misconduct of Lessor, its employees,
agents or contractors, or (2) that are based on any breach or default by Lessor
in the performance of any obligation on Lessor’s part to be performed under this
Lease, except to the extent caused by the negligence or willful misconduct of
Lessee or its employees, agents or contractors or a breach by Lessee of its
obligations under this Lease.






12






(c)

The foregoing indemnities by Lessee and Lessor shall also include
reasonable costs, expenses and attorneys’ fees incurred in connection with any
indemnified claim or incurred by the indemnitee in successfully establishing the
right to indemnity.  The indemnitor shall have the right to assume the
defense of any claim subject to the foregoing indemnities with counsel
reasonably satisfactory to the indemnitee.  The indemnitee agrees to
cooperate fully with the indemnitor and its counsel in any matter where the
indemnitor elects to defend, provided the indemnitor shall promptly reimburse
the indemnitee for reasonable costs and expenses incurred in connection with its
duty to cooperate.

The foregoing indemnities are conditioned upon the indemnitee
providing reasonably prompt notice to the indemnitor of any claim or occurrence
that is likely to give rise to a claim, suit, action or liability that will fall
within the scope of the foregoing indemnities, along with sufficient details
that will enable the indemnitor to make a reasonable investigation of the
claim.

When the claim is caused by the joint negligence or willful
misconduct of Lessee and Lessor or by the indemnitor party and a third party
unrelated to the indemnitor party (except indemnitor’s agents, officers,
employees or invitees), the indemnitor’s duty to indemnify and defend shall be
proportionate to the indemnitor’s allocable share of joint negligence or willful
misconduct.

(d)

Notwithstanding anything to the contrary contained herein, Lessor
shall not be liable to Lessee, or to any of Lessee’s employees, agents,
contractors, or invitees, for any damage because of any act or negligence of any
owner or occupant of adjoining or contiguous property, or other third person, or
for overflow, breakage, or leakage of water, steam, gas, or electricity from
pipes, wires, or otherwise in the Building.

12.

Tenant Improvement Work. 

(a)

Promptly after the execution and delivery of this Lease, Lessee
shall prepare and deliver to Lessor a floor plan (“Preliminary Plans”) showing
the improvements (“Tenant Improvement Work”) to be made by Lessee to the
Building.  As used in this Lease, the term “Tenant Improvement Work” also
includes all architectural, engineering and other design fees, and City permit
and inspection fees.  Lessee intends to install a computer data center,
customer call center, and a food and dining area in the Building as part of the
Tenant Improvement Work.  Lessor shall promptly approve the Preliminary
Plans or, subject to the uses described above, disapprove the same, describing
the matters that are not approved and specifying the reasons therefor, provided
that Lessor’s approval of the Preliminary Plans shall not be unreasonably
withheld, delayed or conditioned.  Following approval by Lessor of the
Preliminary Plans, Lessee shall cause to be prepared, as quickly as possible,
final plans and specifications (“Final Plans”) for the Tenant Improvement Work
and a final estimate of the total cost of the work (“Final Cost Estimate”).
 Lessee shall deliver copies of the Final Plans to Lessor for Lessor’s
written approval, which approval shall promptly be granted by Lessor, provided
that the Final Plans conform to or represent logical evolutions of, or
development from, the work described in the Preliminary Plans previously
approved by Lessor.  Lessee shall also deliver to Lessor a copy of the
Final Cost Estimate for Lessor’s information.  Lessee shall have the right
to make nonmaterial changes to the Final Plans, without Lessor’s prior written
approval, but Lessee shall not make material changes to the Final Plans without
Lessor’s prior written approval, which 






13






approval shall not be unreasonably withheld by Lessor.  If
Lessor disapproves any material change to the Final Plans proposed by Lessee,
the parties shall confer and negotiate in good faith to reach agreement on
modifications to the Final Plans, as a consequence of such change.  As soon
as all such matters are approved by Lessor and Lessee, Lessee shall submit the
Final Plans to all appropriate governmental agencies and thereafter the Lessee
shall use its commercially reasonable efforts to obtain required governmental
approvals to construct the Tenant Improvement Work as soon as practicable.
 Lessor may condition Lessor’s approval of the Final Plans upon Lessee’s
agreement in writing to remove, at Lessee’s expense upon the expiration or
sooner termination of this Lease, any specialized improvements constructed by
Lessee in the Building that in Lessor’s reasonable judgment may need to be
removed in order to facilitate the leasing of the Building to future
tenants.

(b)

The Final Plans shall show all trade fixtures to be installed in
the Building solely at Lessee’s expense (they shall not be purchased with
Lessor’s Tenant Improvement Allowance or Additional Tenant Improvement
Allowance) (“Lessee’s Trade Fixtures”).  Lessee’s Trade Fixtures shall
remain the property of Lessee and may be removed from the Building by Lessee
upon the expiration or sooner termination of this Lease, provided that Lessee
repairs all damage to the Building caused by such removal.  Notwithstanding
the foregoing, Lessor may condition Lessor’s approval of the Final Plans upon
certain trade fixtures specified by Lessor remaining in the Building upon the
expiration or sooner termination of the Lease, in which event Lessee may use the
Tenant Improvement Allowance, and the Additional Tenant Improvement Allowance,
if applicable, to pay the cost thereof.

(c)

Lessor shall contribute the sum of Two Hundred Fifty Thousand Five
Hundred Sixty Dollars ($250,560.00) ($5.00 per rentable square foot of the
Building) (“Tenant Improvement Allowance”) to defray the cost of the Tenant
Improvement Work.   Upon receipt by Lessor of a written request from
Lessee delivered to Lessor concurrently with the delivery to Lessor of copies of
the Final Plans and Final Cost Estimate, Lessor shall also agree to contribute
an additional sum of up to Two Hundred Fifty Thousand Five Hundred Sixty Dollars
($250,560.00) ($5.00 per rentable square foot of the Building) (the “Additional
Tenant Improvement Allowance”) to the cost of the Tenant Improvement Work,
provided that (1) Lessor and Lessee approve in writing the written scope of the
additional Tenant Improvement Work, which approval shall not be unreasonably
withheld, conditioned or delayed, and (2) the amount of the Additional Tenant
Improvement Allowance, plus ten percent (10%) interest per year on the unpaid
balance thereof from time to time, shall be amortized on a straight line basis
over the term of this Lease and added to and paid by Lessee to Lessor with the
Monthly Base Rent, commencing as of the first day of the calendar month after
the month in which the Tenant Improvement Work is completed, and continuing in
monthly installments during the remaining term of this Lease.  Lessee shall
pay the entire cost of the Tenant Improvement Work in excess of Lessor’s Tenant
Improvement Allowance (and the Additional Tenant Improvement Allowance if
applicable) (“Lessee’s Contribution”).  Lessor’s Tenant Improvement
Allowance and Additional Tenant Improvement Allowance, if applicable, shall be
paid by Lessor to Lessee in monthly installments promptly following receipt by
Lessor of copies of the general contractor’s progress billings to Lessee.
 The amount of such monthly installments paid by Lessor to Lessee shall be
in the proportion that the sum of Lessor’s Tenant Improvement Allowance and
Additional Tenant Improvement Allowance (if applicable) bears to the Final Cost
Estimate of the Tenant Improvement Work.  There shall be deducted from
Lessor’s monthly payments Lessor’s proportionate share of the ten percent (10%)
retention, which proportionate share shall be paid 






14






by Lessor to Lessee concurrently with the payment by Lessee to the
contractor of the total retention upon satisfaction of the conditions in the
construction contract for the payment thereof.  Notwithstanding the
foregoing, Lessor shall be released from the obligation to disburse any
undisbursed portion of the Tenant Improvement Allowance or Additional Tenant
Improvement Allowance for any Tenant Improvement Work not completed prior to the
first anniversary of the Commencement Date of the term.

(d)

Lessee shall enter into a Construction Contract with a general
contractor approved by Lessor for the construction of the Tenant Improvement
Work.  At least ten (10) days prior to the performance of any Tenant
Improvement Work by Lessee’s contractor, Lessee shall notify Lessor in writing
of the planned commencement date of the Tenant Improvement Work so that Lessor
can timely file a Notice of Nonresponsibility.  The Tenant Improvement
Work, including the additional Tenant Improvement Work requested by Lessee which
is approved by Lessor, shall be constructed by a general contractor selected by
Lessee under the supervision of Lessee.  The Tenant Improvement Work shall
be constructed in accordance with the approved Final Plans (and any written
change orders approved in writing by Lessor), in compliance with all building
codes and all applicable laws, and in a good and workmanlike manner, free of
defects in workmanship and materials, using only new materials and equipment of
good quality, and free of liens.  Upon completion of the Tenant Improvement
Work, Lessee shall deliver to Lessor a complete set of “as built” drawings of
the Building showing the Tenant Improvement Work constructed therein. 

(e)

Subject to completion of the Tenant Improvement Work, and except
as otherwise expressly provided herein, Lessee waives all right to make repairs
at the expense of Lessor, or to deduct the costs thereof from the rent, and
Lessee waives all rights under Section 1941 and 1942 of the Civil Code of the
State of California.

13.

Maintenance and Repairs; Alterations; Surrender and
Restoration.

(a)

Lessor shall, at Lessor’s sole expense, keep in good order,
condition, and repair and replace when necessary, the structural elements of the
roof, excluding the roof membrane, but subject to Lessor’s obligation pursuant
to Paragraph 2(c) to perform any repairs to the roof membrane necessary to put
the roof membrane in a good and water tight condition prior to the Commencement
Date at Lessor’s expense (and not as a deduction from the Tenant Improvement
Allowance), the foundation and exterior walls (except the interior faces
thereof) of the Building, excluding any alterations, structural or otherwise,
made by Lessee to the Building which are not approved in writing by Lessor prior
to the construction or installation thereof by Lessee.  Subject to the
applicable conditions of Paragraphs 19 and 20 hereof, Lessor shall perform and
construct, and Lessee shall not be responsible for performing or constructing,
any repairs, maintenance, or improvements (1) required as a result of any
casualty damage or as a result of any taking pursuant to the exercise of the
power of eminent domain, or (2) for which Lessor receives reimbursement from
third parties based on construction or other warranties, contractor guarantees,
or insurance claims.  Lessor shall use its good faith diligent efforts to
collect any such sums.

(b)

In addition to the items referred to in Paragraph 4(b), Lessor
shall, repair, maintain, and replace as needed, as an Operating Expense pursuant
to Paragraph 4 hereof, the roof membrane (subject to Lessor’s obligation with
respect to the roof membrane referred to in 






15






Paragraph 2(c) and Paragraph 13(a) above), ceiling glass, exterior
glass and glazing, the Building’s electrical, plumbing and life safety systems,
the exterior areas of the Property outside the Building and the parking
facilities serving the Building, including without limitation, the landscaping,
tree trimming, resurfacing and restriping of the parking lot and walkways,
exterior building lighting, and parking lot lighting, and, subject to Paragraphs
4(b) and (d), Lessor shall perform or cause to be performed, any repair,
maintenance, or improvements which are properly treated as capital improvements
or capital expenditures, and shall amortize the cost thereof over their useful
life, together with interest thereon (as provided in Paragraphs 4(b) and (d)),
as an Operating Expense  (to the extent properly
includable as an Operating Expense pursuant to Paragraphs 4(b) and (d))  in accordance with generally accepted accounting
principles.  In the event Lessee provides Lessor with written notice of the
need for any repairs to the Property, Lessor shall commence any such repairs
promptly following receipt by Lessor of such notice and Lessor shall diligently
prosecute such repairs to completion.  

(c)

Subject to the foregoing, except as otherwise provided in this
Lease, Lessee shall at all times keep the Property and the Building, including
the interior common areas of the Building, in good and safe order, condition,
and repair.  Lessee shall contract for and pay directly for the janitorial
service to the Building, including the interior common areas of the Building.
 Notwithstanding the foregoing, Lessor shall execute and maintain in full
force and effect throughout the term a service contract with an authorized air
conditioning service company for periodic service, repairs, and replacement of
parts to the HVAC system in the Building as an Operating Expense of the Property
pursuant to Paragraph 4(b).  If Lessor is required to make any repairs
to the Building required as a result of Lessee’s negligent acts or omission to
act, Lessor may add the cost of such repairs to the next installment of rent
which shall thereafter become due, and Lessee shall promptly pay the same upon
receipt of an invoice therefor.

(d)

Lessee may, from time to time, at its own cost and expense and
without the consent of Lessor make nonstructural alterations to the interior of
the Property, the cost of which in any one instance is Fifty Thousand Dollars
($50,000.00) or less, and the aggregate cost of all such work during the term of
this Lease does not exceed Two Hundred Fifty Thousand Dollars ($250,000.00),
provided that Lessee first notifies Lessor in writing of any such nonstructural
alterations.  Otherwise, Lessee shall not make any alterations,
improvements, or additions to the Building or the Property without delivering to
Lessor a complete set of plans and specifications for such work and obtaining
Lessor’s prior written consent thereto, which consent shall not be unreasonably
withheld, conditioned or delayed.  If any nonstructural alterations to the
interior of the Building or the Property exceed Fifty Thousand Dollars
($50,000.000) in cost in any one instance, or exceed the aggregate cost of Two
Hundred Fifty Thousand Dollars ($250,000.00) during the term of this Lease,
Lessee shall employ, at Lessee’s expense, a qualified licensed general
contractor to perform such alterations pursuant to a construction contract
entered into between Lessee and such contractor.  The contractor and the
construction contract shall be subject to Lessor’s written approval prior to
commencement of construction, which approval shall not be unreasonably withheld.
 Lessee shall deliver to Lessor at Lessee’s expense a complete set of “as
built” drawings of the Building, including such alterations, upon the completion
thereof.  Lessor may condition its consent to Lessee agreeing in writing to
remove any such alterations at the expiration or earlier termination of the term
of this Lease and Lessee agreeing to restore the Building and the Property to
its condition prior to such alterations at Lessee’s expense.  Lessor shall
advise Lessee in writing at the time Lessor’s consent is granted whether Lessor reserves the right to require Lessee to remove any
alterations from the Building or the Property prior to the expiration or earlier
termination of this Lease.






16






 

Except as otherwise provided in Paragraph 12(b), Lessee may remove
any of Lessee’s Trade Fixtures installed by Lessee at Lessee’s expense in the
computer data center, including, but not limited to, racks, servers, and other
electronic or data equipment or instrumentation, provided that Lessee shall
repair any damage to the Building caused by such removal.  All alterations,
trade fixtures and personal property installed in the Building or the Property
solely at Lessee’s expense shall during the term of this Lease remain the
property of Lessee, and Lessee shall be entitled to all depreciation,
amortization and other tax benefits with respect thereto.  Lessee may also
remove any of Lessee’s personal property, furniture, or equipment  not permanently affixed to the
Building (“Lessee’s Personal Property”) at any time and from time to time,
provided that Lessee shall repair at Lessee’s expense any damage to the Building
caused by such removal.  Lessor shall have no lien or other interest
whatsoever in any item of Lessee’s Personal Property.  Except as otherwise
provided in Paragraph 12(b) and except for Lessee’s Trade Fixtures installed in
the computer data center, all trade fixtures, alterations, and improvements to
the Building or the Property, whether made by Lessor or installed by Lessee at
Lessee’s expense, shall be surrendered by Lessee with the Property and shall
become the property of Lessor (except for those items Lessor
required Lessee to remove pursuant to the previous paragraph) ; provided,
however that Lessee may remove any or all of Lessee’s Personal Property prior to or promptly following the expiration of the term, on
the condition that Lessee shall repair any damage to the Building caused by such
removal .

(e)

Lessee, at Lessee’s sole cost and expense, shall during the term
of this Lease promptly and properly observe and comply with all existing and
future Laws, and the rules and regulations of the Board of Fire Underwriters.
 Except for the cost of the repair of the structural elements of the
Building referred to in Paragraph 13(a) which shall remain Lessor’s
responsibility, any structural changes or repairs, or other repairs or changes
of any nature to the Building which would be considered a capital expenditure
under generally accepted accounting principles, shall be treated as an Operating
Expense and shall be amortized in accordance with the provisions of Paragraph
4(b).

(f)

Lessee shall surrender the Property (including the Tenant
Improvement Work) and Lessor’s FF&E listed on Exhibit “B” attached hereto,
by the last day of the Lease term or any earlier termination date, in accordance
with this Paragraph (f) with all of the improvements to the Property, parts, and
surfaces thereof, clean and free of debris, and with the Property in good
operating order, condition, and state of repair, ordinary wear and tear
excepted, except that Lessor’s FF&E may be surrendered by Lessee in its then
as is condition, which may not be good operating condition as a result of wear
and use by Lessee, and except for damage caused by casualty, the elements, acts
of God or other force majeure events, a taking by eminent domain, maintenance
that is Lessor’s responsibility hereunder, Hazardous Materials not released or
emitted by Lessee or its agents, employees or contractors, and alterations or
other improvements made by Lessee with Lessor’s prior written consent which
Lessee is not required to remove as a condition to Lessor’s consent to such
alterations or improvements.
 “Ordinary wear and tear” shall not include any damage or
deterioration that would have been prevented by commercially reasonable
maintenance practice or by Lessee performing all of its obligations under this
Lease.  The obligations of Lessee shall include the repair of any damage
occasioned by the installation, maintenance, or removal of Lessee’s trade
fixtures, furnishings, equipment, and alterations, and 






17






the restoration by Lessee of the Building and the Property to its
condition prior to any alterations, additions, or improvements made by Lessee
(subject to the exceptions set forth in the first sentence of this subparagraph
(f)), (1) if Lessor’s consent thereto was conditioned upon such removal and
restoration upon expiration or sooner termination of the Lease term pursuant to
Paragraph 13(d), or (2) if Lessee made any such alterations, additions, or
improvements without obtaining Lessor’s prior written consent in breach of
Paragraph 13(d), and within a reasonable time after the expiration or sooner
termination of the Lease term Lessor gives written notice to Lessee requiring
Lessee to perform such removal and restoration.  Lessee’s obligations under
this Paragraph 13 shall survive the expiration or earlier termination of this
Lease.

Notwithstanding anything to the contrary herein, Lessee shall,
within twenty-four hours after the expiration of this Lease, at Lessee’s expense
and in compliance with the National Electric Code and other applicable laws,
remove all electronic, fiber, phone and data cabling and related equipment that
has been installed by or for the exclusive benefit of Lessee in or around the
Building (collectively, the “Cabling”); provided, however, Lessee shall not
remove such Cabling if Lessee receives a written notice from Lessor at least
fifteen (15) days prior to the expiration or termination of the Lease advising
Lessee that such Cabling shall remain in place, in which event the Cabling shall
be surrendered with the Property and shall become the property of Lessor upon
the expiration or termination of the Lease.

14.

Utilities and Services.

(a)

Lessee shall contract for and pay directly the cost of all
electricity, telephone, gas, water, heat and air conditioning service,
janitorial service, refuse pick-up, sewer charges, and all other utilities or
services supplied to or consumed by Lessee, its agents, employees, contractors,
and invitees, on or about the Building.

(b)

Except for Lessor’s gross negligence or willful misconduct, Lessor
shall not be liable to Lessee for any interruption or failure of any utility
services to the Building or the Property and Lessee shall not be relieved from
the performance of any covenant or agreement in this Lease because of any such
interruption or failure; provided, that if the Building becomes not reasonably
suitable for Lessee’s use due to the cessation of utilities or other services,
and such interference with Lessee’s use of the Building continues for ten (10)
consecutive days or more, Lessee shall be entitled to an equitable abatement of
rent thereafter to the extent of the interference with Lessee’s use of the
Building occasioned thereby, and until the interference ceases.  

15.

Liens.  Lessee agrees to keep the
Property free from all liens arising out of any improvement work performed by
Lessee or arising out of any other work performed, materials furnished, or
obligations incurred by Lessee.  Lessee shall give Lessor at least ten (10)
days prior written notice before commencing any work of improvement on the
Property approved in writing by Lessor pursuant to Paragraph 13(d), the contract
price for which exceeds Twenty Thousand Dollars ($20,000.00).  Lessor shall
have the right to post notices of non-responsibility with respect to any such
work.  If Lessee shall, in good faith, contest the validity of any such
lien, claim or demand, then Lessee shall, at its sole expense, defend and
protect itself, Lessor and the Property against the same, and shall pay and
satisfy any such adverse judgment that may be rendered thereon or provide a lien
release bond in accordance with applicable law before the enforcement thereof
against Lessor or the Property.






18






16.

Assignment and Subletting.

(a)

Except as otherwise provided in this Paragraph 16, Lessee shall
not assign this Lease, or any interest therein, voluntarily or involuntarily,
and shall not sublet the Property or any part thereof, or any right or privilege
appurtenant thereto, without the prior written consent of Lessor in each
instance pursuant to the terms and conditions set forth below, which consent
shall not be unreasonably withheld, subject to the following provisions.

(b)

Prior to any assignment or sublease which Lessee desires to make,
Lessee shall provide to Lessor in writing the name and address of the proposed
assignee or sublessee, true and complete copies of all documents relating to
Lessee’s proposed agreement to assign or sublease, a copy of a current financial
statement for the proposed assignee or sublessee, and Lessee shall specify in
writing all consideration to be received by Lessee for such assignment or
sublease in the form of lump sum payments, installments of rent, or otherwise.
 For purposes of this Paragraph 16, the term “consideration” shall include
all money or other consideration to be received by Lessee for such assignment or
sublease.  Within fifteen (15) days after the receipt of such documentation
and other information, Lessor shall (1) notify Lessee in writing that Lessor
elects to consent to the proposed assignment or sublease subject to the terms
and conditions hereinafter set forth; or (2) notify Lessee in writing that
Lessor refuses such consent, specifying reasonable grounds for such refusal.


Notwithstanding the foregoing, if Lessee proposes to sublease all
or substantially all of the rentable square feet of the Building for
substantially the remainder of the term, except to one or more “Permitted
Affiliates” (as defined in Paragraph 16(g)), Lessee shall so notify Lessor
in writing, specifying the proposed commencement date of the proposed sublease
and the other information referred to above in this Paragraph 16(b).  After
receipt by Lessor of such notice from Lessee, Lessor may elect to terminate this
Lease effective as of the proposed sublease commencement date specified in
Lessee’s notice by giving written notice of termination to Lessee.  If
Lessor elects to terminate this Lease pursuant to the foregoing provision, upon
the effective date of termination, Lessor and Lessee shall each be released and
discharged from any liability or obligation to the other under this Lease
accruing thereafter with respect to the Property, except for obligations then
outstanding and except for the indemnity obligations or other obligations which
survive the expiration or termination of this Lease by the express terms hereof,
and Lessee agrees that Lessor may enter into a direct lease with the proposed
assignee or sublessee, if any,  without any obligation or liability to
Lessee.

(c)

In deciding whether to consent to any proposed assignment or
sublease, Lessor may take into account whether or not reasonable conditions have
been satisfied, including, but not limited to, the following:

(1)

In Lessor’s reasonable judgment, the proposed assignee or
subtenant is engaged in such a business, that the Property, or the relevant part
thereof, will be used in such a manner which complies with Paragraph 8 hereof
entitled “Use” and Lessee or the proposed assignee or sublessee submits to
Lessor documentary evidence reasonably satisfactory to Lessor that such proposed
use constitutes a permitted use of the Property pursuant to the ordinances and
regulations of the City of Sunnyvale;






19






(2)

The proposed assignee or sublessee shall be a person or entity
with sufficient financial net worth so as to reasonably indicate that it will be
able to meet its obligations under this Lease or the sublease in a timely
manner, and the proposed assignee or sublessee shall not be a person who is on
the most current list of “Specifically Designated National and Blocked Persons”
published by the United States Treasury Department’s Office of Foreign Assets
Control, or on any comparable list maintained by any agency of the U.S.
Government;

(3)

The proposed assignment or sublease shall be subject to approval
by Lessor’s mortgage lender, but only if Lessor’s mortgage lender so requires
under the express terms of its written agreement with Lessor; and Lessor shall
use its good faith efforts to obtain such approval promptly following  Lessee’s request; 

 (4) 

 The assignment or sublease shall prohibit further assignment or
subletting without Lessor’s prior written consent, which consent shall not be
unreasonably withheld, delayed or conditioned; and 
 
 (5)

Lessor’s consent to the assignment
or sublease shall be in a separate instrument containing the relevant provisions
of this Paragraph 16 and otherwise in form reasonably acceptable to Lessor and
its counsel.

(d)

As a condition to Lessor’s granting
its consent to any assignment or sublease, except with respect to permitted
transferees, (1) Lessor may require that Lessee pay to Lessor, as and when
received by Lessee, fifty percent (50%) of the amount of any excess of the
consideration to be received by Lessee in connection with said assignment or
sublease over and above the Monthly Base Rent and Additional Rent fixed by this
Lease and payable by Lessee to Lessor, after deducting only (A) a standard
leasing commission payable by Lessee in consummating such assignment or
sublease, (B) customary out-of-pocket costs paid by Lessee in connection with
such assignment or subletting, including the cost of a demising wall separating
the subleased or assigned space, minor repairs, interior painting, etc., and
(C) reasonable attorneys’ fees incurred by Lessee and Lessor in negotiating
and reviewing the assignment or sublease documentation; provided, that the
leasing commission referred to in clause (A) shall be amortized on a straight
line basis over the balance of the term of this Lease and deducted monthly from
the excess consideration paid by the assignee or sublessee; (2) Lessee and the
proposed assignee or sublessee shall demonstrate to Lessor’s reasonable
satisfaction that each of the criteria referred to in subparagraph (c) above is
satisfied; and (3) Lessee shall reimburse Lessor for the reasonable attorneys’
fees incurred by Lessor in negotiating and reviewing the assignment or sublease
documentation not to exceed Three Thousand Dollars ($3,000.00).

(e)

Each assignment or sublease
agreement to which Lessor has consented shall be an instrument in writing which
complies with the provisions of this Paragraph 16 and in form reasonably
satisfactory to Lessor, and shall be executed by both Lessee and the assignee or
sublessee, as the case may be.  Each such assignment or sublease agreement
shall recite that it is and shall be subject and subordinate to the provisions
of this Lease, that the assignee or sublessee accepts such assignment or
sublease, that Lessor’s consent thereto shall not constitute a consent to any
subsequent assignment or subletting by Lessee or the assignee or sublessee, and,
except as otherwise set forth in a sublease approved by Lessor, the assignee or
sublessee agrees to perform all of the obligations of Lessee hereunder (to the
extent such obligations relate to the portion of the Property assigned or subleased
or as appropriate), and that the termination of this Lease shall, at Lessor’s
sole election, constitute a termination of every such assignment or
sublease.






20






 

(f)

In the event Lessor shall consent to
a sublease, except as otherwise provided in Paragraphs 16(g) or 16(h), Lessee
shall remain primarily liable for all obligations and liabilities of Lessee
under this Lease, including, but not limited to, the payment of rent.  In
the event of an assignment of this Lease by Lessee which Lessor has approved in
writing, provided that there is no uncured default by Lessee hereunder, Lessee
shall be released from all liability or obligations under this Lease accruing
from and after the effective date of the assignment if (1) the financial
condition of the assignee is as good or better than that of Lessee as of the
effective date of the assignment, (2) the assignee expressly assumes in writing
all of the obligations of Lessee under this Lease, and (3) all of the other
conditions in Paragraph 16(c) have been satisfied.

(g)

Notwithstanding the foregoing,
Lessee may, without Lessor’s prior written consent, and without any
participation by Lessor in assignment and subletting proceeds, assign this Lease
or sublet all or any portion of the Property to a subsidiary, affiliate,
division or corporation controlled by or under common control with  Lessee  , or to a successor corporation to Lessee by merger,
consolidation or reorganization, or to a purchaser of substantially all of
Lessee’s business operations conducted at the Property (each, a “Permitted
Affiliate”); provided, that except as specified hereafter (and except in cases
where Lessee does not survive the transaction),  Lessee  shall remain primarily liable for all obligations and
liabilities of Lessee under this Lease, including, but not limited to, the
payment of rent.  Lessee’s foregoing rights to assign this Lease or to
sublet the Property shall be subject to the following conditions:  (1)
there shall be no uncured Event of Default (as defined in Paragraph 22) by
Lessee under this Lease; (2) in the case of an assignment or subletting to a
Permitted Affiliate,  Lessee  shall remain
liable to Lessor hereunder provided that Lessee survives the transaction, (3) if
as a result of a merger, consolidation, or reorganization  Lessee  is not a surviving entity, the transferee or successor
entity to  Lessee  shall have on
the effective date of such transaction a net worth as shown on its current
balance sheet certified by an officer of the assignee or sublessee (hereinafter
“transferee”) or successor entity at least equal to that of Lessee immediately
prior to the effective date of the assignment or sublease, or, if less,
financial resources sufficient, in Lessor’s reasonable good faith judgment, to
perform the obligations under the assignment or sublease, as applicable; and (4)
the transferee or successor entity shall expressly assume in writing Lessee’s
obligations hereunder accruing from and after the effective date of such
assignment or subletting.  Subject to satisfaction of the conditions (1)
through (4) referred to in this subparagraph (g) above, Marc Bell Capital
Partners, and any other entity owned and/or controlled by Marc Bell Capital
Partners, shall be a Permitted Affiliate for purposes of this subparagraph
(g).

(h)

The sale or transfer of Lessee’s
capital stock in a public offering pursuant to an effective registration
statement filed by Lessee with the Securities and Exchange Commission or
otherwise in connection with any other bona fide financing transaction shall not
be deemed an assignment, subletting, or other transfer of this Lease or the
Property, provided, that in the event of the sale, transfer or issuance of
Lessee’s securities in connection with a merger, consolidation, or
reorganization in which Lessee is not a surviving entity, the conditions set
forth in Paragraph 16(g)(1), (3), and (4) shall apply.






21






(i)

Subject to the provisions of this
Paragraph 16 any assignment or sublease without Lessor’s prior written consent
(where such consent is required hereunder) shall at Lessor’s election be void.
 The consent by Lessor to any assignment or sublease shall not constitute a
waiver of the provisions of this Paragraph 16, including the requirement of
Lessor’s prior written consent, with respect to any subsequent assignment or
sublease.  If Lessee shall purport to assign this Lease, or sublease all or
any portion of the Property, without Lessor’s prior written consent (if such
consent is required hereunder), Lessor may collect rent from the person or
persons then or thereafter occupying the Property and apply the net amount
collected to the rent payable by Lessee hereunder, but no such collection shall
be deemed a waiver of Lessor’s rights and remedies under this Paragraph 16, or
the acceptance of any such purported assignee, sublessee, or occupant, or a
release of Lessee from the further performance by Lessee of covenants on the
part of Lessee herein contained.

(j)

Lessee shall not hypothecate or
encumber its interest under this Lease or any rights of Lessee hereunder, or
enter into any license or concession agreement respecting all or any portion of
the Property, without Lessor’s prior written consent which shall not be
unreasonably withheld, subject to all of the provisions of this Paragraph 16.
 Notwithstanding the foregoing, Lessor agrees that Lessee may grant a
license or a concession for space in the Building to a food service operation
for the convenience of Lessee’s employees and business invitees (but not serving
the general public), provided that the food service licensee or concessionaire
complies with all applicable laws and ordinances in connection with its
operation, no alcoholic beverages are served on the premises, and Lessor
approves the number of rentable square feet in the Building devoted to the food
service activity, which approval shall not be unreasonably withheld, delayed, or
conditioned (except for the foregoing conditions).

(k)

In the event of any sale or exchange
of the Property by Lessor and assignment of this Lease by Lessor, upon Lessor
providing Lessee with written confirmation that Lessor has transferred any
security deposit held by Lessor to Lessor’s successor in interest and subject to
the assumption by the transferee of Lessor’s obligations hereunder accruing from
and after the effective date of such assignment, Lessor shall be entirely
relieved of all liability under any and all of Lessor’s covenants and
obligations contained in or derived from this Lease with respect to the period
commencing with the consummation of the sale or exchange and
assignment.

(l)

The parties acknowledge that Lessor
has the remedy described in California Civil Code Section 1951.4 (Lessor may
continue the Lease in effect after Lessee’s breach and abandonment and recover
rent as it becomes due, if Lessee has right to sublet or assign, subject only to
reasonable limitations).

17.

Non-Waiver.

(a)

No waiver of any provision of this
Lease shall be implied by any failure of Lessor to enforce any remedy for the
violation of that provision, even if that violation continues or is repeated.
 Any waiver by Lessor or Lessee of any provision of this Lease must be in
writing.  

(b)

No receipt of Lessor of a lesser
payment than the rent required under this Lease shall be considered to be other
than on account of the earliest rent due, and no 






22






endorsement or statement on any
check or letter accompanying a payment or check shall be considered an accord
and satisfaction.  Lessor may accept checks or payments without prejudice
to Lessor’s right to recover all amounts due and pursue all other remedies
provided for in this Lease.

Lessor’s receipt of money from
Lessee after giving notice to Lessee terminating this Lease shall not reinstate,
continue, or extend the Lease term or affect the termination notice given by
Lessor before the receipt of the money.  After serving notice terminating
this Lease, filing an action, or obtaining final judgment for possession of the
Property, Lessor may receive and collect any rent, and the payment of that rent
shall not waive or affect such prior notice, action, or judgment.

18.

Holding Over.  Lessee shall vacate
the Property and deliver the same to Lessor in the condition required by this
Lease upon the expiration or sooner termination of this Lease.  In the
event of holding over by Lessee after the expiration or termination of this
Lease without Lessor’s written consent, such holding over shall be on a
month-to-month tenancy and all of the terms and provisions of this Lease shall
be applicable during such period, including, but not limited to, the payment by
Lessee of the Additional Rent, except that Lessee shall pay Lessor as Monthly
Base Rent during such holdover an amount equal to one hundred twenty-five
percent (125%) of the Monthly Base Rent in effect at the expiration of the term
for the first three (3) months of the holdover period and one hundred fifty
percent (150%) of the Monthly Base Rent in effect at the expiration of the term
for any holdover period thereafter.  If such holdover is without Lessor’s
written consent, Lessee shall also be liable to Lessor for all reasonable costs,
expenses, and consequential damages incurred by Lessor as a result of such
holdover.  The rental payable during such holdover period shall be payable
to Lessor on demand.  Acceptance of rent during holdover shall be without
prejudice to Lessor’s right to evict Lessee after termination of this
Lease.

19.

Damage or Destruction.  

(a)

In the event of a total destruction
of the Building and Improvements during the lease term from any cause, either
party may elect to terminate this Lease effective as of the date of the casualty
by giving written notice of termination to the other party within thirty (30)
days after the casualty occurs.  A total destruction shall be deemed to
have occurred for this purpose if the Building and Improvements are destroyed to
the extent of sixty-five percent (65%) or more of the replacement cost thereof.  If this
Lease is not terminated, Lessor shall repair and restore the Building and
Improvements in a diligent manner and this Lease shall continue in full force
and effect, except that Monthly Base Rent and Additional Rent shall be abated in
accordance with Paragraph 19(g) below.

(b)

Subject to Paragraph 19(d), in the
event of a partial destruction of the Building and Improvements to an extent
less than sixty-five
percent (65%) of the replacement cost thereof and if the damage
thereto can be repaired, reconstructed, or restored within a period of two
hundred forty (240) days from the date of such casualty, and if the casualty is
from a cause which is insured (or required to be insured) under Lessor’s “all
risk” property insurance, or is insured under any other coverage then carried by
Lessor, Lessor receives such insurance proceeds, and such proceeds are
sufficient to repair, reconstruct and restore the Buildings and Improvements,
Lessor shall forthwith repair the same, and this Lease shall continue in full
force 






23






and effect, except that Monthly Base
Rent and Additional Rent shall be abated in accordance with Paragraph 19(f)
below.  If any of the foregoing conditions is not met, Lessor shall have
the option of either repairing and restoring the Building and Improvements, or
terminating this Lease effective as of the date of the casualty by giving
written notice of termination to Lessee within thirty (30) days after the
casualty, subject to the provisions of Paragraph 19(c).  Notwithstanding
anything to the contrary contained in this Paragraph 19, except as set forth in
Paragraph 19(d), Lessor shall not have the right to terminate this Lease if the
cost to repair the damage to the Building and Improvements would cost less than
five percent (5%) of the replacement cost of the Building and Improvements,
regardless of whether or not the casualty is insured.  Notwithstanding
anything to the contrary contained in this Paragraph 19, if the cost to repair
the damage to the Building and Improvements exceeds five percent (5%) of the
replacement cost of the Building and Improvements, and Lessor elects to
terminate this Lease, Lessee may nullify the effect of such termination by
giving Lessor written notice within ten (10) days after receipt by Lessee of
Lessor’s notice of termination that Lessee elects to repair the damage to the
Building and Improvements at Lessee’s sole cost (to the extent the costs exceed
the proceeds received by Lessor from Lessor’s property insurance), in which
event this Lease shall remain in effect, provided that Rent abatement shall not
extend beyond the date that the restoration is substantially
completed.

(c)

In the event of a partial
destruction of the Building and Improvements to an extent equal to or exceeding
twenty-five percent (25%), but less than sixty-five percent (65%) of the replacement cost thereof,
or in the event the damage thereto cannot be repaired, reconstructed, or
restored within a period of two
hundred forty (240) days from the date
of such casualty, Lessee may terminate this Lease by giving written notice of
termination to Lessor within thirty (30) days after the casualty.  The
foregoing shall not affect Lessor’s termination rights under subparagraph (b)
above.

Furthermore, if such casualty is
from a cause which is not insured under Lessor’s “all risk” property insurance,
or is not required by this Lease to be insured under any other insurance carried
by Lessor or required hereunder to be carried by Lessor, Lessor may elect to
repair and restore the Building and Improvements (provided that Lessee has not
elected to terminate this Lease pursuant to the first sentence of this Paragraph
19(c)), or Lessor may terminate this Lease effective as of the date of the
casualty by giving written notice of termination to Lessee, subject to the
limitations of Paragraph 19(b).  Lessor’s election to repair and restore
the Building and Improvements or to terminate this Lease, shall be made and
written notice thereof shall be given to Lessee within thirty (30) days after
the casualty.  Notwithstanding the foregoing, (1) if Lessor has not
obtained all necessary governmental permits for the restoration and commenced
construction of the restoration within one hundred twenty (120) days after the casualty, Lessee may terminate this
Lease by written notice to Lessor given at any time prior to the actual
commencement of construction of the restoration; or (2) if Lessor elects to
repair and restore the Building and Improvements under subparagraph (b) or (c)
above, but the repairs and restoration are not substantially completed
within two hundred seventy (270) days after the casualty,
Lessee may terminate this Lease by written notice to Lessor given within thirty
(30) days after the expiration of said period of two
hundred seventy (270) days after the casualty provided that the repairs and
restoration have not been substantially completed prior to the receipt of such
notice by Lessor.






24






(d)

In the event of a partial
destruction of the Building and Improvements to the extent of less than
twenty-five percent (25%), but Lessee’s computer data center in the Building
sustains material damage to the extent that the computer data center is not able
to conduct normal business operations, and such damage cannot be repaired and
normal operations of the computer data center cannot be restored, in spite of
the diligent efforts of Lessor and Lessee to do so, within ninety (90) days
following the date of the casualty, then either Lessor or Lessee may terminate
this Lease by giving written notice of termination to the other within thirty
(30) days after the expiration of said period of ninety (90) days following the
casualty and prior to the restoration of normal operations of the computer data
center.

(e)

Notwithstanding anything to the
contrary contained in this Paragraph 19, if at any time during the last
twelve (12) months of the term of this Lease there is
damage to the Building and Improvements for which the cost to repair exceeds
five percent (5%) of the  replacement cost of the  Building and Improvements,
whether or not an insured loss, Lessor may, at Lessor’s option, terminate this
Lease effective sixty (60) days following the date of occurrence of such damage
by giving written notice to Lessee of Lessor’s election to do so within thirty
(30) days after the date of such damage.  

(f)

If this Lease is not terminated by
Lessor or Lessee pursuant to the foregoing provisions, Lessor shall complete the
repairs in a diligent manner and this Lease shall continue in full force and
effect, except that Monthly Base Rent and Additional Rent shall be abated in
accordance with Paragraph 19(g) below.

(g)

Subject to the limitation in the
last sentence of Paragraph 19(b) above in the event of repair, reconstruction,
or restoration as provided herein, the Monthly Base Rent and Additional Rent
shall be abated proportionally in the ratio which the Lessee’s use of the
Property is impaired during the period of such repair, reconstruction, or
restoration, from the date of the casualty until such repair, reconstruction or
restoration is completed.

(h)

With respect to any destruction of
the Building and Improvements which Lessor is obligated to repair, or may elect
to repair, under the terms of this Paragraph 19, the provisions of Section 1932,
Subdivision 2, and of Section 1933, Subdivision 4, of the Civil Code of the
State of California are waived by the parties.  Lessor’s obligation to
repair and restore the Building and Improvements shall include the Tenant
Improvement Work referred to in Paragraph 13(a).  Lessor shall also repair
and restore any other leasehold improvements constructed thereafter by Lessor,
or by Lessee with Lessor’s prior written consent.  Lessor’s time for
completion of the repairs and restoration of the Building and Improvements
referred to above shall be extended by a period equal to any delays caused by
strikes, labor disputes, unavailability of materials, inclement weather, or acts
of God, but not by more than forty-five (45) days.

(i)

In the event of termination of this
Lease pursuant to any of the provisions of this Paragraph 19, the Monthly Base
Rent and Additional Rent shall be apportioned on a per diem basis and shall be
paid to the date of the casualty.  In no event shall Lessor be liable to
Lessee for any damages resulting to Lessee from the occurrence of such casualty,
or from the repairing or restoration of the Building and Improvements, or from
the termination of this Lease as provided herein, nor shall Lessee be relieved
thereby from any of Lessee’s obligations hereunder, except to the extent and
upon the conditions expressly set forth in this Paragraph 19, and except in the
event of termination of this Lease by either party in which case Lessee shall be relieved of its obligations under
this Lease that accrue from and after the date of such termination, except for
obligations which survive the expiration or termination of this Lease by the
express provisions hereof.







25






 

20.

Eminent Domain.

(a)

If the whole or any substantial part
of the Property is taken or condemned by any competent public authority for any
public use or purpose, the term of this Lease shall end upon the earlier to
occur of  the date when the possession of the part so taken shall be
required for such use or purpose or the vesting of title in such public
authority.  Rent shall be apportioned as of the date of such termination.
 Lessee shall be entitled to receive any damages separately awarded by the
court for (1) leasehold improvements installed at Lessee’s expense or other
property owned by Lessee, and (2) reasonable costs of moving by Lessee to
another location in Santa Clara County, California.  The entire balance of
the award shall be the property of Lessor.

(b)

If there is a partial taking of the
Property by eminent domain which is not a substantial part of the Property and
the balance of the Property remains reasonably suitable for continued use and
occupancy by Lessee for the purposes referred to in Paragraph 7, Lessor shall
complete any necessary repairs in a diligent manner and this Lease shall remain
in full force and effect with a just and proportionate abatement of the Monthly
Base Rent and Additional Rent, based on the extent to which Lessee’s use of the
Property is impaired thereafter.  If after a partial taking, the Property
is not reasonably suitable for Lessee’s continued use and occupancy for the uses
permitted herein, Lessee may terminate this Lease effective on the earlier of
the date title vests in the public authority or the date possession is taken.
 Subject to the provisions of Paragraph 20(a), the entire award for such
taking shall be the property of Lessor.

21.

Remedies.  A “default” is
defined as a failure by Lessee to comply with or perform any of the terms,
covenants, and conditions contained in this Lease.  A “breach” is defined
as the occurrence of one or more of the following defaults, and the failure of
Lessee to cure such default within any applicable grace period.  Default by
Lessee shall include the following:  

Failure by Lessee to make any
payment of rent or any other sum when due under this Lease and such failure
continues for ten (10) days after notice from Lessor to Lessee; or failure by
Lessee to perform any other term of this Lease and such failure continues for
thirty (30) days after receipt by Lessee of written notice from Lessor setting
forth in reasonable detail the nature and extent of the default referencing
pertinent Lease provisions, or if more than thirty (30) days are required to
cure the default, failure by Lessee to begin curing such default within the
period of thirty (30) days after receiving such written notice from Lessor and
diligently prosecuting the cure to completion within a reasonable time; or if
Lessee’s interest herein, or any part thereof, is assigned or transferred,
either voluntarily or by operation of law in violation of the provisions of this
Lease; or if Lessee makes a general assignment for the benefit of its creditors;
or if this Lease is rejected by a bankruptcy trustee for Lessee, or by Lessee as
debtor in possession, or if Lessee as a bankrupt debtor fails to act in a timely
manner in assuming or rejecting this Lease; then any of such events shall
constitute an event of default by Lessee hereunder, and if Lessee fails to cure
such default within any applicable cure period, Lessor may, at its option, elect
the remedies specified in either subparagraph (a) or (b) below.  Any such
rejection of this Lease referred to above shall not cause an automatic
termination of this Lease.  Whenever in this Lease reference is made to a
default by Lessee, such reference shall refer to an event of default as defined
in this Paragraph 21.






26






(a)

Lessor may repossess the Property
and remove all persons and property therefrom in accordance with applicable law.
 If Lessor repossesses the Property because of a breach of this Lease, this
Lease shall terminate and Lessor may recover from Lessee:

(1)

the worth at the time of award of
the unpaid rent which had been earned at the time of termination including
interest thereon at a rate equal to the discount rate established by the Federal
Reserve Bank of San Francisco for member banks, plus one percent (1%), or the
maximum legal rate of interest, whichever is less, from the time of termination
until paid;

(2)

the worth at the time of award of
the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Lessee proves could have been reasonably avoided, including interest thereon at
a rate equal to the Federal discount rate plus one percent (1%) per annum, or
the maximum legal rate of interest, whichever is less, from the time of
termination until paid;

(3)

the worth at the time of award of
the amount by which the unpaid rent for the balance of the term after the time
of award exceeds the amount of such rental loss for the same period that Lessee
proves could be reasonably avoided discounted at the discount rate established
by the Federal Reserve Bank of San Francisco for member banks at the time of the
award plus one percent (1%); and

(4)

any other amount necessary to
compensate Lessor for all the detriment proximately caused by Lessee’s breach or
by Lessee’s failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom.

(b)

If Lessor does not repossess the
Property, then this Lease shall continue in effect for so long as Lessor does
not terminate Lessee’s right to possession and Lessor may enforce all of its
rights and remedies under this Lease, including the right to recover the rent
and other sums due from Lessee hereunder.  For the purposes of this
Paragraph 21, the following do not constitute a repossession of the Property by
Lessor or a termination of the Lease by Lessor:

(1)

Acts of maintenance or preservation
by Lessor or efforts by Lessor to relet the Property; or

(2)

The appointment of a receiver by
Lessor to protect Lessor’s interests under this Lease.

(c)

Lessor’s failure to perform or
observe any of its obligations under this Lease, or Lessor’s failure promptly to
commence to cure any such failure or default by Lessor hereunder, after receipt
of written notice from Lessee setting forth in reasonable detail the nature and
extent of the failure or default, referencing pertinent Lease provisions, and
Lessor’s failure diligently to prosecute such cure to completion within thirty
(30) days thereafter, or if more than thirty (30) days are required to cure the
default, Lessor’s failure to commence such cure promptly and diligently
prosecute the cure to completion within a reasonable time, shall constitute a
default by Lessor.  If Lessor commits a default, Lessee’s sole remedy shall
be to institute an action against Lessor for damages or for equitable or
injunctive relief, but Lessee shall not have the right to rent abatement, offset
against rent, or to terminate this Lease in the event of any default by
Lessor.






27






(d)

Lessor shall have no security
interest or lien on any item of Lessee’s Property.  Within ten (10) days
following Lessee’s request, Lessor shall execute documents reasonably acceptable
to Lessee to evidence Lessor’s waiver of any right, title, lien or interest in
Lessee’s Property and giving any lender holding a security interest or lien on
Lessee’s Property reasonable rights of access to the Property to remove such
Lessee’s  Property, provided that all tangible personal property
constituting Lessee’s Property is separately itemized in such document or an
exhibit thereto and such lender expressly agrees in such document for the
benefit of Lessor (1) to give Lessor reasonable prior notice of its entry in the
Property for the purpose of removing Lessee’s Property, and (2) to repair at
such lender’s expense any damage to the Property or the Building caused by such
removal.  No lien shall be placed on any of Lessor’s FF&E or any other
personal property owned by Lessor.  All such property shall remain free of
liens.  

22.

Lessee’s Personal
Property.  If
any personal property of Lessee remains on the Property after (1) Lessor
terminates this Lease pursuant to Paragraph 21 above following an Event of
Default by Lessee, or (2) after the expiration of the Lease term or after the
termination of this Lease pursuant to any other provisions hereof, Lessor shall
give written notice thereof to Lessee prior to Lessor taking action with respect
thereto pursuant to applicable law.  Lessor shall thereafter release,
store, and dispose of any such personal property of Lessee in accordance with
the provisions of applicable law.

23.

Notices.  

(a)

All notices, statements, demands,
requests, or consents given hereunder by either party to the other shall be in
writing and shall be personally delivered, or shall be sent by a recognized
overnight delivery service, or shall be sent by United States mail, first class,
or registered or certified, return receipt requested, postage prepaid, and
addressed to the parties as follows:

Lessor:

Batton Associates, LLC

c/o W.F. Batton Management
Company

1000 C Commercial
Street

San Carlos, California
94070

Attention:  Harold
Balzer




Lessee:                                   Various, Inc.

 

c/o Penthouse Media Group,
Inc.

6800 Broken Sound Parkway NW, Suite
100

Boca Raton, FL 33487

Attention:  General Counsel,
Joshua Bressler




and




Various, Inc.

c/o Penthouse Media Group,
Inc.

6800 Broken Sound Parkway NW, Suite
100

Boca Raton, FL 33487

Attention:  CFO, Ezra
Shashoua






28






and




Various, Inc.

c/o Penthouse Media Group,
Inc.

6800 Broken Sound Parkway NW, Suite
100

Boca Raton, FL 33487

Attention:  COO, Anthony L
Previte

Either party may change its address
for notice by giving written notice to the other party of the new address for
notice in accordance with subparagraph (b) below.

(b)

When personally delivered to the
recipient, notice shall be effective on delivery; when mailed first class to the
last address known to the party giving notice, notice shall be effective on
delivery; when mailed by certified mail with return receipt requested, notice
shall be effective on receipt if delivery is confirmed by a return receipt; when
delivered by recognized overnight delivery service with charges prepaid or
charged to sender’s account, notice is effective on delivery if delivery is
confirmed by the delivery service.

24.

Estoppel Certificates.  Lessee and Lessor
shall within fifteen (15) days following written request by the other party (the
“Requesting Party”), execute and deliver to the Requesting Party an Estoppel
Certificate (1) certifying that this Lease has not been modified and certifying
that this Lease is in full force and effect, or, if modified, stating the nature
of such modification and certifying that this Lease, as so modified, is in full
force and effect; (2) stating the date to which the rent and other charges are
paid in advance, if at all; (3) stating the amount of any security deposit held
by Lessor; (4) acknowledging that there are not, to the responding party’s
knowledge, any uncured material defaults on the part of the Requesting Party
hereunder, or if there are uncured material defaults on the part of the
Requesting Party following the expiration of all applicable notice and cure
periods, stating the nature of such uncured material defaults; and (5) any other
provisions reasonably requested by either party.

25.

Parking.  Lessee shall have
the right to use, at no additional cost to Lessee, all of the parking spaces on
the Property for the term of the Lease.

26.

Signage.  Lessee shall have
the right to have its sign on the monument sign for the Property and on the
Building, subject to (1) Lessor’s approval of the size, design and locations of
such signage, which approval shall not be unreasonably withheld, (2) compliance
with the Moffett Park CC&Rs, and (3) Lessee obtaining necessary City of
Sunnyvale approvals and complying with applicable City of Sunnyvale ordinances
and regulations with respect to such signage.  Lessee shall not place any
other signs on or about the exterior of the Building or the areas of Property
outside of the Building without Lessor’s prior written consent, which consent
shall not be unreasonably withheld, subject to compliance of such signs with
applicable laws, ordinances, and regulations.  All of Lessee’s signage
shall be erected and installed at Lessee’s expense.  Lessee shall promptly
remove all such signage at Lessee’s expense upon the expiration or sooner
termination of this Lease.

27.

Real Estate Brokers.  Lessor and Lessee
each represents to the other that it has not had any dealings with any real
estate broker, agent, finder, or similar person with respect to this 






29






Lease other than Newmark Knight
Frank, Lessee’s Broker, who is acting solely as the agent for Lessee only in
this transaction, and CPS CORFAC International, Lessor’s Broker, who is acting
solely as the agent for Lessor only in this transaction.  Each party (the
indemnitor party) shall indemnify, defend, and hold harmless the other party
(the indemnitee party) from all damages, expenses, and liabilities resulting
from any claims that may be asserted against the indemnitee party by any broker,
agent, finder, or other person with whom the indemnitor party has or purportedly
has dealt other than the aforementioned Brokers.  Any real estate
commissions payable with respect to this transaction shall be payable pursuant
to the terms of separate commission agreements entered into by the party or
parties responsible for the payment of such commissions and the Brokers who are
entitled to receive such commissions.

28.

Subordination;
Attornment.

(a)

This Lease, without any further
instrument, shall at all times be subject and subordinate to any and all
mortgages and deeds of trust which may now or hereafter affect the Property, and
to all advances made or hereafter to be made upon the security thereof, and to
all renewals, modifications, consolidations, replacements and extensions
thereof, provided, however, that such subordination is made on the express
condition that so long as Lessee is not in default beyond any applicable notice
and cure period, Lessee’s possession and rights under this Lease shall not be
disturbed.  Lessor shall use reasonable efforts to cause the beneficiary of
any deed of trust existing as of the date hereof to execute and deliver to
Lessor and Lessee within two (2) months after the execution and delivery of this
Lease by Lessor and Lessee a recognition and non-disturbance agreement in
commercially reasonable form which provide that so long as Lessee is not in
default hereunder beyond any applicable cure period (1) this Lease shall
not be terminated, and (2) that upon acquiring title to the Property by
foreclosure or otherwise such holder shall recognize all of Lessee’s rights
hereunder which accrue thereafter; provided that such person or persons
purchasing or acquiring the Property shall not be obligated to cure any defaults
by Lessor existing at the time of such purchase or acquisition (but the
foregoing provision shall not excuse the performance of obligations of Lessor to
the extent such obligations arise after such purchase or acquisition); provided
further, however, that Lessor’s failure to procure such recognition and
non-disturbance agreement shall not permit Lessee to terminate this Lease.
 

(b)

In confirmation of such
subordination, Lessee shall promptly execute, acknowledge, and deliver to Lessor
upon request any subordination, non-disturbance, and attornment agreement or
other instrument with respect to any existing deed of trust, or any deed of
trust executed by Lessor hereafter, which is in commercially reasonable form and
contains non-disturbance provisions consistent with Paragraph 28(a) above,
without expense to Lessee, provided, however, that if any person or persons who
purchase or otherwise acquire the Property by any sale, sales and/or other
proceedings under such mortgages and/or deeds of trust, then this Lease shall
continue in full force and effect in the same manner and with like effect as if
such person or persons had been named as Lessor herein, and Lessee hereby
attorns and agrees to attorn to such person or persons.

29.

No Termination Right.
 Lessee shall not have the right to terminate this Lease as a result of any
default by Lessor and Lessee’s remedies in the event of a default by Lessor
shall be limited to the remedy set forth in Paragraph 21(c).  Lessee
expressly waives the defense of constructive eviction.






30






30.

Lessor’s Entry.  Except in the case
of an emergency and except for permitted entry during Lessee’s normal working
hours for any purpose reasonably related to Lessor’s ownership of the Property
which entry may occur without prior notice, Lessor and Lessor’s agents shall provide Lessee with at
least twenty-four (24) hours’ notice prior to entry of the Building by Lessor
and Lessor’s agents.  Such entry by Lessor and Lessor’s agents shall not
interfere with Lessee’s operations more than reasonably necessary.  If
required by Lessee, Lessor and Lessor’s agents shall at all times be accompanied
by a representative of Lessee during any such entry except in case of emergency.
 Lessor may enter the Building without prior notice to Lessee if the
Building is vacant.

31.

Attorneys’ Fees.  If any action at law
or in equity shall be brought to recover any rent under this Lease, or for or on
account of any default by Lessor or Lessee, or to enforce or interpret any of
the provisions of this Lease or for recovery of the possession of the Property,
the prevailing party shall be entitled to recover from the other party costs of
suit and reasonable attorneys’ fees, the amount of which shall be fixed by the
court and shall be made a part of any judgment rendered.

32.

Compliance with
CC&Rs.
 During the term of this Lease, Lessee shall comply, at Lessee’s expense,
with all of the covenants, conditions, and restrictions affecting the Property
which are recorded in the Official Records of Santa Clara County, California,
and which are in effect as of the date of this Lease.  

33.

Quiet Possession.  So long as no Event
of Default by Lessee under this Lease remains uncured, Lessee shall have quiet
enjoyment and possession of the Property for the entire term hereof subject to
all of the provisions of this Lease.

34.

Force Majeure.  Neither Lessor nor
Lessee shall be in default in the performance of any obligation under this Lease
(other than any monetary obligation) to the extent such party is unable to
perform any of its obligations on account of any prevention, delay, stoppage due
to strikes, lockouts, inclement weather, labor disputes, inability to obtain
labor materials, fuels, energy or reasonable substitutes therefor, governmental
restrictions, regulations: controls, actions or inaction (including, but not
limited to, any action or inaction with respect to the issuance of any permit or
approval, or the conduct of any inspection, for Lessor’s Tenant Improvement Work
or the build out of the Property), civil commotion, fire or other acts of God,
acts of war, terrorism, bioterrorism, national emergency, or any other cause of
any kind beyond the reasonable control of such party (except financial
inability) (collectively “Force Majeure”).

35.

Right of First Refusal to
Purchase the Property.  Lessor hereby grants to Various, Inc., on the
terms and conditions set forth herein, the right of first refusal (“Right of
First Refusal”) to purchase the Property, if Lessor elects to offer the Property
for sale and Lessor receives an offer to purchase the Property which Lessor
wishes to accept.  The Right of First Refusal is personal to Various, Inc.
and shall not be assignable to, or exercisable by, any other person or entity
(except a Permitted Affiliate as defined in Paragraph 16(g)).  The exercise
of the Right of First Refusal by Various, Inc. is conditional upon Various, Inc.
(or a Permitted Affiliate) being in possession of the Property under this Lease
with no uncured Event of Default hereunder, provided that Lessor shall have
previously given written notice of the default to Various, Inc. (or the
Permitted Affiliate) and a reasonable opportunity to cure the default in
accordance with the provisions of this Lease.  When
used hereafter in this Paragraph 35, “Various, Inc.” or “Lessee” shall include a
Permitted Affiliate.






31






 

(a)

Lessor’s right to sell the Property
at any time during the period commencing on the Commencement Date and ending on
the first to occur of (1) the termination by Lessor of this Lease on
account of a breach by Various, Inc., or (2) the expiration of the term of this
Lease (the “Right of First Refusal Period”), shall be subject to the provisions
of this Paragraph 35.

(b)

Subject to the provisions of
subparagraphs (c), (d) and (e) hereof, in the event that Lessor desires to sell
the Property during the Right of First Refusal Period and Lessor receives a
written offer to purchase the Property which Lessor wishes to accept, Lessor
shall deliver a copy of such offer (the “First Offer”) to Various, Inc. promptly
after receiving the First Offer.  The First Offer shall contain the
purchase price of the Property acceptable to Lessor, the terms of sale which
Lessor is willing to accept for the Property, and information concerning all
liens, encumbrances, and exceptions to title affecting the Property.
 Various, Inc. shall have fifteen business (15) days after receipt of the
First Offer within which to give written notice to Lessor of Various, Inc.’s
acceptance of the First Offer to purchase the Property.  Failure of
Various, Inc. to respond to and accept the First Offer in writing within said
period of fifteen (15) business days shall be deemed a rejection of the First
Offer.  If Various, Inc. timely accepts in writing the First Offer to
purchase the Property, Lessor shall sell the Property to Various, Inc., and
Various, Inc. shall purchase the Property from Lessor, in accordance with the
terms and conditions of the First Offer.

(c)

If Various, Inc. does not accept the
First Offer to purchase the Property, Lessor may thereafter sell the Property to
the third party who submitted the First Offer to Lessor.  Lessor may sell
the Property to a third party for a purchase price that is not less than the
purchase price set forth in the First Offer.  In the event that Lessor
proposes to accept a price which is less than one hundred percent (100%) of the
purchase price set forth in the First Offer, or in the event Lessor proposes to
accept an offer to purchase the Property that does not include any of the other
material terms of the First Offer (including title covenants, representations,
or economic matters), or in the event Lessor proposes to accept an offer to
purchase the Property that includes material terms more favorable to the third
party than the terms of the First Offer, or if Lessor proposes to accept an
offer that includes new material terms favorable to the third party not included
in the First Offer, Lessor shall not sell the Property to such third party
without first re-offering to sell the Property to Various, Inc. in accordance
with subparagraph (b) above pursuant to a re-offer that does not include any of
the other material terms of the First Offer, if applicable, or that includes all
of such material terms more favorable to the third party, and Various, Inc.
shall have fifteen (15) business days after receipt of any re-offer within which
to accept the re-offer in writing.  Failure of Various, Inc. to do so
within such period of fifteen (15) business days shall be deemed a rejection of
the re-offer, time being of the essence.

(d)

A tax deferred exchange transaction
in which Lessor disposes of the Property for like kind property shall be a
transaction which is subject to the Right of First Refusal, provided that
Various, Inc. shall be required to cooperate with Lessor in effecting the
exchange, including acquiring the Property from a party to the exchange other
than Lessor, but such cooperation shall not increase Various, Inc.’s liability
or expense.  A transfer of the Property to the members of the limited
liability company constituting Lessor, a transfer to 






32






another entity in which Lessor or
the members of Lessor hold greater than a majority interest, or a transfer to
trusts for the benefit of the member or members of Lessor, or to the heirs of
the persons who are members or partners of Lessor, shall not be a transaction
which is subject to the Right of First Refusal, provided that the transferees in
such a transaction shall acquire the Property subject to the Right of First
Refusal.

(e)

The Right of First Refusal shall not
apply to, and Various, Inc. shall have no Right of First Refusal with respect
to, any sale or transfer of the Property under a trustee’s power of sale upon
foreclosure of a deed of trust in favor of an unaffiliated third party
institutional lender which encumbers the Property, or by a deed in lieu of
foreclosure.  Various, Inc. agrees upon request by Lessor at any time
during the Right of First Refusal Period to execute, acknowledge, and deliver to
Lessor and to any prospective mortgage lender an instrument in writing agreeing
to the foregoing, and, if requested by such prospective mortgage lender, an
instrument in writing in form for recording subordinating  the rights of
Various, Inc. under this Paragraph 35 to the lien of any such mortgage or deed
of trust, provided that the mortgagee or beneficiary of the deed of trust shall
agree in such instrument that in the event the mortgagee/beneficiary acquires
the Property by foreclosure or by deed in lieu of foreclosure the mortgage
lender shall recognize Lessee’s rights under the Lease, including Lessee’s Right
of First Refusal to purchase the Property, in the event that the
mortgagee/beneficiary elects to offer the Property for sale to a third
party.

(f)

If Various, Inc. accepts the First
Offer, at the closing of the purchase, and upon the payment by Various, Inc. to
Lessor of the purchase price as provided in this Paragraph 35, Lessor shall
transfer and convey fee title to the Property to Various, Inc. by grant deed,
subject only to (1) non-delinquent property taxes and assessments (if any)
(which shall be prorated between Lessor and Various, Inc. as of the date of
closing), (2) existing subleases to sublessees other than Various, Inc., and (3)
such other exceptions to title that are then existing and set forth in the First
Offer.  If the First Offer submitted by Lessor to Various, Inc. provides
for an all cash transaction, Lessor shall pay in full at close of escrow any
existing mortgage indebtedness encumbering the Property, including any
prepayment penalty, or cause the existing mortgage to be defeased, at Lessor’s
expense.

(g)       Upon the
purchase by Various, Inc. of the Property pursuant to this Paragraph 35,
Lessor shall, within ten (10) days after delivery by Various, Inc. to Lessor of
the written acceptance of the First Offer, cause to be delivered to Various,
Inc. a commitment for title insurance in an amount equal to the purchase price
issued by First American Title Insurance Company, covering the Property and
naming Various, Inc. as the proposed insured in the amount of the purchase
price.  Except for the exceptions to title set forth in the First Offer, or
in the commitment for title insurance delivered by Lessor to Lessee, Lessor
shall cure any other meritorious title objections of Various, Inc. prior to the
date of the closing of the purchase in order that a title insurance policy
insuring Various, Inc.’s purchase of the Property consistent with the provisions
of this Paragraph 35 can be issued upon the closing of the purchase.

 

(h)       The closing of  purchase by Various, Inc. of the Property shall be thirty
(30) days after delivery to Lessor by Various, Inc. of the acceptance of the
First Offer, or, if said thirtieth (30th) day is not a regular
business day, then on the next regular business day thereafter.  At the
closing, Lessor shall execute and deliver into escrow a Grant Deed transferring
fee title to the Property to Various, Inc.  Various, Inc. shall wire
transfer to the escrow holder for delivery to 






33






Lessor at the closing the purchase
price to be paid by Various, Inc. to Lessor in immediately available funds.
 The “closing” or the “closing date” of the sale and transfer shall be the
date of recordation of the Grant Deed from Lessor to Various, Inc.

 

(i)       At the closing
of the sale, all real property taxes and assessments levied and assessed against
the Property for the year in which the closing of the sale occurs shall be
prorated between Lessor and Various, Inc. as of the closing.  If at the
closing of the purchase the actual amount of said taxes and assessments for the
year in which the closing occurs have not yet been established, they shall be
prorated based on the prior year’s taxes levied and assessed, and when the
actual amount of the taxes and assessments for the year in which the closing
occurs are established, an adjustment shall be made between Lessor and Various,
Inc. as to the proportionate share payable by Lessor and Various, Inc. based on
the closing date, and Various, Inc. shall reimburse Lessor or be reimbursed by
Lessor, as the case may be, for any overage resulting from the proration made at
the closing.

 

(j)       At close of
escrow Various, Inc. shall assume the lien of all non-delinquent assessments
against the Property, prorated as of the closing, if the First Offer so
provides.

 

(k)       The closing of
the sale of the Property shall take place at First American Title Insurance
Company, 555 Marshall Street, Redwood City, California 94063, or at such other
title company specified by Lessor in the First Offer.  Lessor and Various,
Inc. shall pay the premium for the policy of title insurance, escrow fees,
recording costs, and other closing costs in accordance with Santa Clara County
custom.  No real estate commission shall be payable by Lessor on said
sale.

 

(l)       Rent payable by
Various, Inc. pursuant to this Lease and all other costs and expenses
attributable to the ownership, management, and operation of the Property shall
be prorated between the parties as of the closing date.

 

(m)      Various, Inc.
shall be entitled possession of the Property from and after the date of the
recordation of the Grant Deed.

 

(n)       Each of the
parties agrees to execute such other and further instruments and documents as
may be necessary or convenient to consummate the sale and transfer of the
Property in accordance with the First Offer.  Upon termination of the Right
of First Refusal Period pursuant to subparagraph 35(a) above, Various, Inc.
shall upon request by Lessor execute, acknowledge, and deliver to Lessor a quit
claim deed or other appropriate instrument in form for recording acknowledging
the termination and release of Various, Inc.’s rights under this
Paragraph 35.

(o)

It is understood and agreed that at
the closing of the sale and transfer of the Property, if the First Offer so
provides, Various, Inc. shall assume all obligations of Lessor with respect to
any existing indebtedness secured by a deed of trust to which the Property is
subject that is expressly assumed by Lessee and not paid off by Lessor at
closing, including all obligations of Lessor included in any instrument or
document securing the repayment of any such loan.  Notwithstanding that
Lessor may not be released and discharged by the lender, Various, Inc. shall
agree in writing by an instrument delivered through escrow at closing in form







34






reasonably acceptable to Lessor and
its counsel to indemnify, save and hold Lessor harmless from and against any
claim, liability, obligation, or damage, of whatever kind or nature, including
attorneys’ fees, resulting from the failure of Various, Inc. fully and timely to
perform the obligations accruing after the closing in connection with any such
loan assumed by Various, Inc..  Such indemnity by Various, Inc. shall
survive the closing of the sale and transfer of the Property.

36.

General Provisions.

(a)

Nothing contained in this Lease
shall be deemed or construed by the parties hereto or by any third person to
create the relationship of principal and agent or of partnership or of joint
venture of any association between Lessor and Lessee, and neither the method of
computation of rent nor any other provisions contained in this Lease nor any
acts of the parties hereto shall be deemed to create any relationship between
Lessor and Lessee other than the relationship of landlord and
tenant.

(b)

Each and all of the provisions of
this Lease shall be binding upon and inure to the benefit of the parties hereto,
and except as otherwise specifically provided elsewhere in this Lease, their
respective heirs, executors, administrators, successors, and assigns, subject at
all times, nevertheless, to all agreements and restrictions contained elsewhere
in this Lease with respect to the assignment, transfer, encumbering, or
subletting of all or any part of Lessee’s interest in this Lease.

(c)

The captions of the paragraphs of
this Lease are for convenience only and shall not be considered or referred to
in resolving questions of interpretation or construction.

(d)

This Lease is and shall be
considered to be the only agreement between the parties hereto and their
representatives and agents.  All prior letters of interest, negotiations,
and oral agreements between the parties have been merged into and are included
herein.  There are no other representations or warranties between the
parties and all reliance with respect to representations is solely upon the
representations and agreements contained in this instrument.

(e)

The laws of the State of California
shall govern the validity, performance, and enforcement of this Lease.  The
parties agree that any action for enforcement of this Lease or any other dispute
arising hereunder shall be filed exclusively in courts sitting in Santa Clara
County, California, and each party to this Lease hereby consents and waives any
objection to the jurisdiction and venue of such courts.  Notwithstanding
which of the parties may be deemed to have prepared this Lease, this Lease shall
not be interpreted either for or against Lessor or Lessee, but this Lease shall
be interpreted in accordance with the general tenor of the language in an effort
to reach an equitable result.

(f)

Time is of the essence with respect
to the performance of each of the covenants and agreements contained in this
Lease.

(g)

Recourse by Lessee for breach of
this Lease by Lessor shall be expressly limited to the amount of Lessor’s
interest in the Property and the rents, issues, insurance and condemnation
proceeds, sales proceeds, and profits therefrom, and in the event of any such
breach or default by Lessor Lessee hereby waives the right to proceed against
any other assets of Lessor or against any other assets of any manager or member
of Lessor.






35






(h)

Any provision or provisions of this
Lease which shall be found to be invalid, void or illegal by a court of
competent jurisdiction, shall in no way affect, impair, or invalidate any other
provisions hereof, and the remaining provisions hereof shall nevertheless remain
in full force and effect.

(i)

This Lease may be modified in
writing only, signed by the parties in interest at the time of such
modification.

(j)

Each party represents to the other
that the persons signing this Lease on its behalf are properly authorized to do
so.  Upon the request of either party, evidence of the written authority of
such persons to sign on behalf of the other party shall be provided to the
requesting party hereto either prior to or simultaneously with the return to the
requesting party of a fully executed copy of this Lease.

(k)

No binding agreement between the
parties with respect to the Property shall arise or become effective until this
Lease has been duly executed by both Lessee and Lessor and a fully executed copy
of this Lease has been delivered to both Lessee and Lessor.

(l)

Lessor and Lessee acknowledge that
the terms and conditions of this Lease constitute confidential information of
Lessor and Lessee.  Neither party shall disseminate orally or in written
form a copy of this Lease, lease proposals, lease drafts, or other documentation
containing the terms, details or conditions contained herein to any third party
without obtaining the prior written consent of the other party, except to the
attorneys, accountants, lenders, investors, potential investors, potential
business or merger partners, potential subtenants and assignees or other
authorized business representatives or agents of the parties, or to the extent
required to comply with applicable Laws.  A violation of this Paragraph
36(l) shall not permit either party to terminate this Lease.

(m)

Except as provided in Paragraph18,
Lessor and Lessee waive any claim for consequential damages which one may have
against the other for breach of or failure to perform or observe the
requirements and obligations created by this Lease.

(n)

Lessor and Lessee each agree to and
they hereby do waive trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto against the other on any matters
whatsoever arising out of or in any way connected with this Lease, the
relationship of Lessor and Lessee, Lessee’s use or occupancy of the Property
and/or any claim of injury or damage, and any statutory remedy.

(o)

This Lease shall not be recorded by
either party without the prior written consent of the other party, which consent
the other party may withhold in its sole discretion.






36






IN WITNESS WHEREOF, the Lessor and
Lessee have duly executed this Lease as of the date first set forth
herein.

“Lessor”

 

 

BATTON ASSOCIATES, LLC,

 

 

 


 

a California limited liability company

By:

W.F. BATTON MANAGEMENT COMPANY,

a California corporation
Its Managing Member

 

By: /s/ Harold Balzer

Harold Balzer, President




“Lessee”

VARIOUS, INC.

a California corporation

By:  /s/ Anthony
Previte

Its Chief Operating Officer




By:  /s/
 Robert Brackett

 

Its President

 






37












LEGAL DESCRIPTION

PARCEL 4. AS SHOWN ON THAT CERTAIN
MAP FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA,
STATE OF CALIFORNIA ON NOVEMBER 9, 1976 IN BOOK 383 OF MAPS, PAGE(S)
19.




APN:
110-34-009











EXHIBIT
“A”















LESSOR’S FF&E







		
	
Cubicles
	
196

	
Chairs
	
328

	
Conference Tables
	
7

	
Circle Tables
	
3

	
Credenzas
	
3

	
Desks
	
10

	
Storage Racks
	
8

	
Computer Server Cabinets
	
32

	
UPS Systems
	
3

	
Flat Computer Racks
	
17

	
Projectors
	
6

	
Meeting Room Desks
	
3












EXHIBIT
“B”












COMMENCEMENT
MEMORANDUM




Date:
                                        ,
2008

This Commencement Memorandum is
entered into with respect to the Lease dated May 9, 2008 (the “Lease”) between
Batton Associates, LLC, a California limited liability company (Lessor”), and
Various, Inc., a California corporation (“Lessee”), of the property located at
220 Humboldt Court, Sunnyvale, California 94089 (the “Property”).

In accordance with the Lease, Lessor and Lessee confirm
and agree as follows:

1.

Lessee has taken possession of the
Property on the date hereof pursuant to Paragraph 1 of the Lease, and Lessee
acknowledges that the Property is in the condition required by the
Lease.

2.

Lessee hereby acknowledges that
under the provisions of the Lease the Commencement Date of the term of the Lease
is         , 2008, and the
Expiration Date of the term of the Lease is
        , 2015.

3.

That in accordance with the
provisions of the Lease, Monthly Base Rent and Operating Expenses and Taxes
commence to accrue on the
             ,
2008 (the Commencement Date referred to in Paragraph 2 above), and Operating
Expenses and Taxes commence to accrue on
        , 2008.

4.

Rent is due and payable by Lessee in
advance on the first (1st) day of the month commencing on
        , 2008, and continuing
monthly on the first day of each month during the term of the Lease (except that
Lessee has paid the Monthly Base Rent for the month of
        , 2008 concurrently with
the execution and delivery of the Lease by Lessor and Lessee).  Lessee’s
rent checks should be made payable to Batton Associates, LLC and mailed to
Lessor c/o W.F. Batton Management Company, 1000 C Commercial Street, San
Carlos, California 94070.

AGREED AND
ACCEPTED

LESSEE:

LESSOR:

VARIOUS, INC., 

BATTON ASSOCIATES, LLC,

a California corporation

a California limited liability company




By: W.F. BATTON MANAGEMENT COMPANY,
By: 
 ________________________

   a California corporation

Name:  ______________________

   Its Managing Member

Its:  _________________________

  By:
 _______________________________ 

  Name:
_____________________________

  Its:
________________________________ 







EXHIBIT
“C”