exv10w1



 




Exhibit 10.1


STANDARD OFFICE LEASE




BY AND BETWEEN




ARDEN REALTY LIMITED PARTNERSHIP,

a Maryland limited partnership,




AS LANDLORD,




AND




ARUBA NETWORKS, INC.,

a Delaware corporation,




AS TENANT




SUITE 100




1344 Crossman Avenue




 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE 1

	 	BASIC LEASE PROVISIONS
	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE 2

	 	TERM/PREMISES/MUST TAKE SPACE
	 	 	2	 
	(a)

	 	Term
	 	 	2	 
	(b)

	 	Must Take Space
	 	 	2	 
	(c)

	 	Premises
	 	 	3	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	ARTICLE 3

	 	RENTAL
	 	 	3	 
	(a)

	 	Basic Rental
	 	 	3	 
	(b)

	 	Direct Costs
	 	 	3	 
	(c)

	 	Definitions
	 	 	3	 
	(d)

	 	Determination of Payment
	 	 	6	 
	(e)

	 	Audit Right
	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE 4

	 	SECURITY DEPOSIT
	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE 5

	 	HOLDING OVER
	 	 	8	 
	 
	 	 	 	 	 	 
	ARTICLE 6

	 	OTHER TAXES
	 	 	8	 
	 
	 	 	 	 	 	 
	ARTICLE 7

	 	USE
	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE 8

	 	CONDITION OF PREMISES
	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE 9

	 	REPAIRS AND ALTERATIONS
	 	 	10	 
	(a)

	 	Landlord’s Obligations
	 	 	10	 
	(b)

	 	Tenant’s Obligations
	 	 	10	 
	(c)

	 	Alterations
	 	 	11	 
	(d)

	 	Insurance; Liens
	 	 	11	 
	(e)

	 	Costs and Fees; Removal
	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE 10

	 	LIENS
	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE 11

	 	PROJECT SERVICES
	 	 	12	 
	(a)

	 	Basic Services
	 	 	12	 
	(b)

	 	Excess Usage
	 	 	12	 
	(c)

	 	Additional Electrical Service
	 	 	12	 
	(d)

	 	HVAC Balance
	 	 	12	 
	(e)

	 	Telecommunications
	 	 	13	 
	(f)

	 	Sole Electrical Representative
	 	 	13	 
	(g)

	 	Abatement Events
	 	 	13	 
	 
	 	 	 	 	 	 
	ARTICLE 12

	 	RIGHTS OF LANDLORD
	 	 	14	 
	(a)

	 	Right of Entry
	 	 	14	 
	(b)

	 	Maintenance Work
	 	 	14	 
	(c)

	 	Rooftop
	 	 	14	 
	 
	 	 	 	 	 	 
	ARTICLE 13

	 	INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY
	 	 	15	 
	(a)

	 	Indemnity
	 	 	15	 
	(b)

	 	Exemption of Landlord from Liability
	 	 	16	 
	(c)

	 	Security
	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE 14

	 	INSURANCE
	 	 	17	 
	(a)

	 	Tenant’s Insurance
	 	 	17	 
	(b)

	 	Form of Policies
	 	 	17	 
	(c)

	 	Landlord’s Insurance
	 	 	18	 
	(d)

	 	Waiver of Subrogation
	 	 	18	 
	(e)

	 	Compliance with Law
	 	 	18	 
	 
	 	 	 	 	 	 
	ARTICLE 15

	 	ASSIGNMENT AND SUBLETTING
	 	 	18	 
	 
	 	 	 	 	 	 
	ARTICLE 16

	 	DAMAGE OR DESTRUCTION
	 	 	20	 
	 
	 	 	 	 	 	 
	ARTICLE 17

	 	SUBORDINATION
	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE 18

	 	EMINENT DOMAIN
	 	 	22	 
	 
	 	 	 	 	 	 
	ARTICLE 19

	 	DEFAULT
	 	 	22	 
	(a)

	 	Tenant Default
	 	 	22	 
	(b)

	 	Landlord Default
	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE 20

	 	REMEDIES
	 	 	23	 






(i)









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE 21

	 	TRANSFER OF LANDLORD’S INTEREST
	 	 	25	 
	 
	 	 	 	 	 	 
	ARTICLE 22

	 	BROKER
	 	 	25	 
	 
	 	 	 	 	 	 
	ARTICLE 23

	 	PARKING
	 	 	25	 
	 
	 	 	 	 	 	 
	ARTICLE 24

	 	WAIVER
	 	 	26	 
	 
	 	 	 	 	 	 
	ARTICLE 25

	 	ESTOPPEL CERTIFICATE
	 	 	26	 
	 
	 	 	 	 	 	 
	ARTICLE 26

	 	LIABILITY OF LANDLORD
	 	 	26	 
	 
	 	 	 	 	 	 
	ARTICLE 27

	 	INABILITY TO PERFORM
	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE 28

	 	HAZARDOUS WASTE
	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE 29

	 	SURRENDER OF PREMISES; REMOVAL OF PROPERTY
	 	 	28	 
	 
	 	 	 	 	 	 
	ARTICLE 30

	 	MISCELLANEOUS
	 	 	29	 
	(a)

	 	SEVERABILITY; ENTIRE AGREEMENT
	 	 	29	 
	(b)

	 	Attorneys’ Fees; Waiver of Jury Trial
	 	 	29	 
	(c)

	 	Time of Essence
	 	 	30	 
	(d)

	 	Headings; Joint and Several
	 	 	30	 
	(e)

	 	Reserved Area
	 	 	30	 
	(f)

	 	NO OPTION
	 	 	30	 
	(g)

	 	Use of Project Name; Improvements
	 	 	30	 
	(h)

	 	Rules and Regulations
	 	 	30	 
	(i)

	 	Quiet Possession
	 	 	30	 
	(j)

	 	Rent
	 	 	30	 
	(k)

	 	Successors and Assigns
	 	 	31	 
	(l)

	 	Notices
	 	 	31	 
	(m)

	 	Persistent Delinquencies
	 	 	31	 
	(n)

	 	Right of Landlord to Perform
	 	 	31	 
	(o)

	 	Changes in Project, Facilities, Name
	 	 	31	 
	(p)

	 	Signing Authority
	 	 	31	 
	(q)

	 	Identification of Tenant
	 	 	31	 
	(r)

	 	Confidentiality
	 	 	32	 
	(s)

	 	Governing Law
	 	 	32	 
	(t)

	 	Office of Foreign Assets Control
	 	 	32	 
	(u)

	 	Financial Statements
	 	 	33	 
	(v)

	 	Exhibits
	 	 	33	 
	(w)

	 	Independent Covenants
	 	 	33	 
	(x)

	 	Counterparts
	 	 	33	 
	(y)

	 	Furniture
	 	 	33	 
	(z)

	 	Kitchen Facilities
	 	 	33	 
	  (aa)

	 	Landlord’s Representation
	 	 	33	 
	 
	 	 	 	 	 	 
	ARTICLE 31

	 	OPTION TO EXTEND
	 	 	34	 
	(a)

	 	Option Right
	 	 	34	 
	(b)

	 	Option Rent
	 	 	34	 
	(c)

	 	Exercise of Option
	 	 	34	 
	(d)

	 	Determination of Market Rent
	 	 	34	 
	 
	 	 	 	 	 	 
	ARTICLE 32

	 	SIGNAGE
	 	 	35	 
	 
	 	 	 	 	 	 
	ARTICLE 33

	 	TERMINATION OPTION
	 	 	36	 
	 
	 	 	 	 	 	 
	Exhibit “A”

	 	Premises	 	 	 	 
	Exhibit “B”

	 	Rules and Regulations	 	 	 	 
	Exhibit “C”

	 	Notice of Term Dates and Tenant’s Proportionate Share	 	 	 	 
	Exhibit “D”

	 	Tenant Work Letter	 	 	 	 
	Exhibit “E”

	 	Must Take Space Furniture Inventory	 	 	 	 






(ii)









 






INDEX




	 	 	 	 	 
	 	 	Page(s)	 
	Abatement Event
	 	 	13	 
	Abatement Notice
	 	 	13	 
	Additional Rent
	 	 	3	 
	Affiliate
	 	 	20	 
	Affiliated Assignee
	 	 	20	 
	Alterations
	 	 	11	 
	Approved Working Drawings
	 	Exhibit D
	Architect
	 	Exhibit D
	Base, Shell and Core
	 	Exhibit D
	Basic Rental
	 	 	1	 
	Brokers
	 	 	25	 
	Claims
	 	 	16	 
	Code
	 	Exhibit D
	Commencement Date
	 	 	1	 
	Communication Equipment
	 	 	14	 
	Communication Equipment Notice
	 	 	14	 
	Conditional Termination Notice
	 	 	21	 
	Construction Drawings
	 	Exhibit D
	Contractor
	 	Exhibit D
	Control
	 	 	20	 
	Damage Repair Estimate
	 	 	20	 
	Direct Costs
	 	 	4	 
	Dispute Notice
	 	 	7	 
	Eligibility Period
	 	 	13	 
	Engineers
	 	Exhibit D
	Estimate
	 	 	6	 
	Estimate Statement
	 	 	6	 
	Event of Default
	 	 	23	 
	Excess TI Costs
	 	 	20	 
	Expiration Date
	 	 	1	 
	Exterior Signage
	 	 	35	 
	Final Retention
	 	Exhibit D
	Final Space Plan
	 	Exhibit D
	Final Working Drawings
	 	Exhibit D
	Force Majeure
	 	 	27	 
	Force Majeure Delays
	 	Exhibit D
	Hazardous Material
	 	 	28	 
	Improvement Allowance
	 	Exhibit D
	Improvement Allowance Items
	 	Exhibit D
	Improvements
	 	Exhibit D
	Initial Installment of Basic Rental
	 	 	2	 
	Interest Notice
	 	 	34	 
	Landlord
	 	 	1	 
	Landlord Coordination Fee
	 	Exhibit D
	Landlord Parties
	 	 	16	 
	Landlord’s Work
	 	Exhibit D
	Laws
	 	 	28	 
	Lease
	 	 	1	 
	Lease Year
	 	 	2	 
	Lien Notice
	 	 	12	 
	Market Rent
	 	 	34	 
	Monument Signage
	 	 	35	 
	Mortgages
	 	 	22	 
	Must Take Commencement Date
	 	 	2	 
	Must Take Delivery Conditions
	 	 	2	 
	Must Take Space
	 	 	2	 
	Must Take Space Furniture
	 	 	33	 
	Omnivision
	 	 	2	 
	Omnivision Extension Option
	 	 	36	 






(iii)









 






	 	 	 	 	 
	 	 	Page(s)	 
	Omnivision Lease
	 	 	2	 
	Omnivision Notice
	 	 	36	 
	Operating Costs
	 	 	4	 
	Option
	 	 	34	 
	Option Rent
	 	 	34	 
	Option Rent Notice
	 	 	34	 
	Option Term
	 	 	34	 
	Original Tenant
	 	 	34	 
	Outside Agreement Date
	 	 	35	 
	Outside Date
	 	Exhibit D
	Parking Passes
	 	 	2	 
	Partnership Tenant
	 	 	32	 
	Permits
	 	Exhibit D
	Permitted Alterations
	 	 	11	 
	Permitted Use
	 	 	2	 
	Premises
	 	 	1	 
	Project
	 	 	1	 
	Real Property
	 	 	4	 
	Recapture Notice
	 	 	20	 
	Review Notice
	 	 	7	 
	Review Period
	 	 	7	 
	Rules and Regulations
	 	 	30	 
	Security Deposit
	 	 	2	 
	Signage
	 	 	35	 
	Signage Specifications
	 	 	35	 
	SNDA
	 	 	22	 
	Square Footage
	 	 	1	 
	Statement
	 	 	6	 
	Tax Costs
	 	 	4	 
	Tenant
	 	 	1	 
	Tenant’s Acceptance
	 	 	34	 
	Tenant’s Agents
	 	Exhibit D
	Tenant’s Proportionate Share
	 	 	2	 
	Term
	 	 	1	 
	Termination Notice
	 	 	36	 
	Termination Option
	 	 	36	 
	Transfer
	 	 	19	 
	Transfer Premium
	 	 	19	 
	Transferee
	 	 	19	 






(iv)









 






STANDARD OFFICE LEASE




     This Standard Office Lease (“Lease”) is made and entered into as of the 30th day of
November, 2007, by and between ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
(“Landlord”), and ARUBA NETWORKS, INC., a Delaware corporation (“Tenant”).



     Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the premises described
as Suite No. 100, as designated on the plan attached hereto and incorporated herein as Exhibit “A”
(“Premises”), of the project (“Project”) whose address is 1344 Crossman Avenue, Sunnyvale,
California, for the Term and upon the terms and conditions hereinafter set forth, and Landlord and
Tenant hereby agree as follows:



ARTICLE 1




BASIC LEASE PROVISIONS




	 	 	 	 	 
	A.

	 	Term:
	 	Three (3) years, unless extended or earlier
terminated pursuant to this Lease.
	 
	 	 	 	 
	 

	 	Commencement Date:
	 	December 1, 2007.
	 
	 	 	 	 
	 

	 	Expiration Date:
	 	November 30, 2010.
	 
	 	 	 	 
	B.

	 	Square Footage:
	 	50,531 rentable square feet as of the date of
this Lease. Subject to Article 33 below, upon
the Must Take Commencement Date the Premises
shall be expanded to include the entire
Project consisting of a total of 99,427
rentable square feet.
	 
	 	 	 	 
	C.

	 	Basic Rental:	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Annual Basic	 	Monthly Basic	 	Monthly Basic Rental Per
	Period	 	Rental	 	Rental	 	Rentable Square Foot
	Commencement Date — 11/30/2008
	 	$	939,876.60	 	 	$	78,323.05	*	 	$	1.55	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	12/1/2008 — 6/30/2009
	 	 	N/A	 	 	$	80,849.60	*	 	$	1.60	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	7/1/2009 — 11/30/2009
	 	 	N/A	 	 	$	159,083.20	*	 	$	1.60	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	12/1/2009 — Expiration Date
	 	$	1,968,654.60	 	 	$	164,054.55	 	 	$	1.65	 








 




			
	*       Assumes Must Take Commencement Date occurs on July 1, 2009. Subject to adjustment
as provided in Section 2(b) below.





	 	 	 	 	 
	D.

	 	Intentionally Deleted	 	 
	 
	 	 	 	 
	E.

	 	Tenant’s Proportionate Share:
	 	For the period from the Commencement Date
until the day preceding the Must Take
Commencement Date: 50.82%. For the period
from the Must Take Commencement Date to the
Expiration Date: 100%.
	 
	 	 	 	 
	F.

	 	Security Deposit:
	 	A security deposit of $250,000.00 shall be due
and payable by Tenant to Landlord upon
Tenant’s execution of this Lease. Such
Security Deposit shall be subject to increase
as provided in Article 4 below.






 









 






	 	 	 	 	 
	G.

	 	Permitted Use:
	 	General office use, computer lab and research
and development related to Tenant’s
communications business operations, but at all
times consistent with the character of the
Project.
	 
	 	 	 	 
	H.

	 	Brokers:
	 	CPS Corfac International (representing
Landlord) and Wayne Mascia Associates
(representing Tenant)
	 
	 	 	 	 
	I.

	 	Parking Passes:
	 	Tenant shall be entitled to use three point
eight (3.8) unreserved parking passes for each
1,000 rentable square feet contained in the
Premises, which equals one hundred ninety-two
(192) passes as of the Commencement Date and
three hundred seventy-eight (378) as of the
Must Take Commencement Date, upon the terms
and conditions provided in Article 23 hereof.
	 
	 	 	 	 
	J.

	 	Initial Installment of Basic Rental:
	 	The first full month’s Basic Rental of
	 

	 	 	 	$78,323.05 shall be due and payable by Tenant
to Landlord upon Tenant’s execution of this
Lease.






ARTICLE 2




TERM/PREMISES/MUST TAKE SPACE




     (a) Term. The Term of this Lease shall commence on the Commencement Date as set forth
in Article 1.A. of the Basic Lease Provisions and shall end on the Expiration Date set forth in
Article 1.A. of the Basic Lease Provisions. Landlord shall deliver possession of the Premises to
Tenant upon the Commencement Date and Tenant shall have early entry rights under Section 5.4 of the
Tenant Work Letter. For purposes of this Lease, the term “Lease Year” shall mean each consecutive
twelve (12) month period during the Term, with the first (1st) Lease Year commencing on
the Commencement Date.



     (b) Must Take Space. Landlord and Tenant acknowledge that the second (2nd)
floor of the Project (the “Must Take Space”) consisting of approximately 48,896 rentable square
feet is currently subject to a Lease (the “Omnivision Lease”) to Omnivision Technologies
(“Omnivision”). The Omnivision Lease is scheduled to expire on June 30, 2009. Landlord and Tenant
hereby agree that subject to Article 33 below, the Premises shall be expanded to include the Must
Take Space effective as of the date (the “Must Take Commencement Date”) that is the later of (i)
July 1, 2009, and (ii) the date by which all of the following have occurred (the “Must Take
Delivery Conditions”): Landlord has delivered the Must Take Space to Tenant in a broom clean
condition, free of any personal property of any prior tenants other than cubicles and furniture and
in substantially its configuration existing as of the date of this Lease and with the following
work to such space to be substantially completed by Landlord at no charge or cost to Tenant: (a)
cause all Building-standard lighting within the Must Take Space to be in good working condition,
(b) replace damaged and/or stained ceiling tiles throughout the Must Take Space, (c) cause all
bathroom fixtures and door handles for the restrooms to be in proper working order, (d) cause all
life-safety systems within the Must Take Space to be in good working order, and (e) patch and match
finishes within the conference rooms of the Must Take Space where permanent fixtures have been
removed (if any). Commencing on the Must Take Commencement Date, Tenant’s lease of the Must Take
Space shall be on the same terms and conditions as affect the original Premises throughout the
Term, including, without limitation, the same Basic Rental rate (per rentable square foot) as then
applies to the original Premises; provided, however, that (A) as indicated in Section 1(E) above,
Tenant’s Proportionate Share shall be increased to take into account
the additional number of rentable square feet of the Must Take Space, and (B) except for the
Must Take Delivery Conditions, the Must Take Space shall be leased to Tenant in its then “as is”
condition (i.e., Landlord shall not be required to construct any additional improvements in, or
contribute any additional Tenant Improvement Allowance for, the Must Take Space and the Tenant Work
Letter attached hereto as Exhibit “D” shall not apply to the Must Take Space). The Term for the
Must Take Space and Tenant’s obligation to pay rent with respect to the Must Take Space shall
commence upon the Must Take Commencement Date and shall expire co-terminously with the Term for the
original Premises.



-2-









 




Landlord shall not be liable to Tenant or otherwise be in default hereunder in
the event that Landlord is unable to deliver the Must Take Space to Tenant on the projected
delivery date thereof due to the failure of Omnivision to timely vacate and surrender to Landlord
the Must Take Space, or any portion thereof; provided, however, that Landlord agrees to use its
commercially reasonable efforts to enforce its right to possession of such Must Take Space against
such other tenant. Promptly after the Must Take Commencement Date has occurred, Landlord and
Tenant shall execute an amendment to this Lease adding the Must Take Space to the Premises upon the
terms and conditions set forth in this Section 2(b).




     (c) Premises. Landlord and Tenant hereby stipulate that the Premises (including the
Must Take Space) contains the number of square feet specified in Article 1.B. of the Basic Lease
Provisions. Landlord may deliver to Tenant a Commencement Letter in a form substantially similar
to that attached hereto as Exhibit “C”, which Tenant shall execute and return to Landlord within
five (5) days of receipt thereof. Failure of Tenant to timely execute and deliver the Commencement
Letter shall constitute acknowledgment by Tenant that the statements included in such notice are
true and correct, without exception.



ARTICLE 3




RENTAL




     (a) Basic Rental. Tenant agrees to pay to Landlord during the Term hereof, at
Landlord’s office or to such other person or at such other place as directed from time to time by
written notice to Tenant from Landlord, the sums as set forth in Article 1.C. of the Basic Lease
Provisions, payable in advance on the first (1st) day of each calendar month, without
demand, setoff or deduction, and in the event this Lease commences or the date of expiration of
this Lease occurs other than on the first (1st) day or last day of a calendar month, the
rent for such month shall be prorated based on the actual number of days in each month.
Notwithstanding the foregoing, the first full month’s Basic Rental shall be paid to Landlord in
accordance with Article 1.J. of the Basic Lease Provisions. If the Must Take Commencement Date is
not the first day of a month, Basic Rental for the partial month commencing as of the Must Take
Commencement Date shall be prorated based upon the actual number of days in such month and shall be
due and payable upon the Must Take Commencement Date.



     (b) Direct Costs. Tenant shall pay an additional sum for each calendar year equal to
the product of the amount set forth in Article 1.E. of the Basic Lease Provisions multiplied by the
amount of “Direct Costs.” In the event either the Premises and/or the Project is expanded or
reduced, then Tenant’s Proportionate Share shall be appropriately adjusted, and as to the calendar
year in which such change occurs, Tenant’s Proportionate Share for such calendar year shall be
determined on the basis of the number of days during that particular calendar year that such
Tenant’s Proportionate Share was in effect. In the event this Lease shall commence on any date
other than the first day of a calendar year or terminate on any date other than the last day of a
calendar year, the additional sum payable hereunder by Tenant during the calendar year in which
this Lease commences or terminates shall be prorated on the basis of a three hundred sixty five
(365) day year; provided, however, that notwithstanding the foregoing or anything to the contrary
contained herein, Tenant shall have no obligation to pay any Direct Costs that are fairly allocable
to any time period before the Commencement Date (or Must Take Commencement Date with respect to the
Must Take Space) or after the expiration or earlier termination of the Term. Any and all amounts
due and payable by Tenant pursuant to this Lease (other than Basic Rental) shall be deemed
“Additional Rent” and Landlord shall be entitled to exercise the same rights and remedies upon
default in these payments as Landlord is entitled to exercise with respect to defaults in monthly
Basic Rental payments.



     (c) Definitions. As used herein the term “Direct Costs” shall mean the sum of the
following:



          (i) “Tax Costs”, which shall mean any and all real estate taxes and other similar charges on
real property or improvements, assessments, water and sewer charges, and all other charges
assessed, reassessed or levied upon the Project and appurtenances thereto and the parking or other
facilities thereof, or the real property thereunder (collectively the “Real Property”) or
attributable thereto or on the rents, issues, profits or income received or derived therefrom which
are assessed, reassessed or levied by the United States, the State of California or any local
government authority or agency or any political subdivision thereof, and shall include Landlord’s
reasonable legal




-3-









 







fees, costs and disbursements incurred in connection with proceedings for
reduction of Tax Costs or any part thereof; provided, however, if at any time after the date of
this Lease the methods of taxation now prevailing shall be altered so that in lieu of or as a
supplement to or a substitute for the whole or any part of any Tax Costs, there shall be assessed,
reassessed or levied (a) a tax, assessment, reassessment, levy, imposition or charge wholly or
partially as a net income, capital or franchise levy or otherwise on the rents, issues, profits or
income derived therefrom, or (b) a tax, assessment, reassessment, levy (including but not limited
to any municipal, state or federal levy), imposition or charge measured by or based in whole or in
part upon the Real Property and imposed upon Landlord, then except to the extent such items are
payable by Tenant under Article 6 below, such taxes, assessments, reassessments or levies or the
part thereof so measured or based, shall be deemed to be included in the term “Direct Costs.”
Notwithstanding the foregoing or anything to the contrary contained in this Lease, Tax Costs shall
not include and Tenant shall have no obligation to pay any of the following tax or assessment
expenses: (A) estate, inheritance, transfer, gift or franchise taxes of Landlord or any federal,
state or local income, sales or transfer tax, (B) penalties and interest, other than those
attributable to Tenant’s failure to comply timely with its obligations pursuant to this Lease, (C)
increases in Tax Costs (whether increases result from increased rate, valuation, or both)
attributable to additional improvements to the Project unless constructed for Tenant’s primary
benefit or for the common benefit of Tenant and other tenants in the Project, and (D) any Tax Costs
in excess of the amount which would be payable if such tax or assessment expense were paid in
installments over the longest allowable term. In the event that Tenant shall desire in good faith
to contest or otherwise review by appropriate legal or administrative proceedings any Tax Costs,
Tenant may do so, provided that Tenant shall not be entitled to withhold any Tax Costs pending such
contest and Tenant shall indemnify, defend and hold Landlord and the Landlord Parties harmless from
any and all claims, actions, costs, expenses and liabilities arising from any such contest by
Tenant. At the request of Tenant, Landlord shall reasonably cooperate with Tenant in any such
contest. Upon written request, Landlord shall supply to Tenant all tax bills and other
correspondence from any governmental agency relating to any Tax Costs that Tenant is obligated to
pay, and Tenant shall have the right to inspect and copy Landlord’s books and records at Tenant’s
expense upon reasonable notice to the extent such books and records relate to a determination of
the amount of Tax Costs due or being contested by Landlord or Tenant. If for any reason, Tax Costs
for any year during the Term are reduced refunded or otherwise changed, Tenant’s Direct Costs shall
be adjusted accordingly. The obligations of Landlord to refund any overpayment of Direct Costs
shall survive the expiration or earlier termination of this Lease.




          (ii) “Operating Costs”, which shall mean all costs and expenses incurred by Landlord in
connection with the maintenance, operation, replacement, ownership and repair of the Project, the
equipment, the intrabuilding cabling and wiring, malls and landscaped and other common areas and
the parking structure, areas and facilities of the Project, determined in accordance with sound,
generally accepted real estate accounting principles consistently applied. Operating Costs shall
include but not be limited to, salaries, wages, medical, surgical and general welfare benefits and
pension payments, payroll taxes, fringe benefits, employment taxes, workers’ compensation, uniforms
and dry cleaning thereof for all persons who perform duties connected with the operation,
maintenance and repair of the Project, its equipment, the intrabuilding cabling and wiring and the
common areas, including janitorial, gardening, security, parking, operating engineer, elevator,
painting, plumbing, electrical, carpentry, heating, ventilation, air conditioning and window
washing; hired services; accountant’s fees incurred in the preparation of rent adjustment
statements; legal fees; real estate tax consulting fees; personal property taxes on property used
in the maintenance and operation of the Project; fees, costs, expenses or dues payable pursuant to
the terms of any covenants, conditions or restrictions or owners’ association pertaining to the
Project; capital expenditures incurred to effect economies of operation of the Project where the
economies reasonably expected to be achieved each year are in excess of the reasonably expected
annual amortized cost of such expenditure and capital expenditures required by government
regulations, laws, or ordinances not in effect as of the Commencement Date including, but not
limited to the Americans with Disabilities Act; provided, however, that any such permitted capital
expenditure shall be amortized (with interest at ten percent (10%) per annum) over its useful life;
the
cost of all charges for electricity, gas, water and other utilities furnished to the Project,
including any taxes thereon; the cost of all charges for fire and extended coverage, liability and
all other insurance in connection with the Project carried by Landlord; the cost of all building
and cleaning supplies and materials; the cost of all charges for cleaning, maintenance and service
contracts and other services with independent contractors and administration fees; a property
management fee not to exceed four percent (4%) of the aggregate gross receipts collected by
Landlord for the Project each year (which fee may be imputed if Landlord has internalized
management or otherwise acts as its own property





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manager) and license, permit and inspection fees
relating to the Project. If the Omnivision Lease has been terminated and all of the Must Take
Space has not been leased to a third party, then for the portion of any Lease Year in which such
vacancy exists, Operating Costs that vary with the level of occupancy shall be adjusted to reflect
the Operating Costs of the Project as though ninety-five percent (95%) were occupied at all times,
and the increase or decrease in the sums owed hereunder shall be based upon such Operating Costs as
so adjusted; provided, however, that in no event shall such gross-up result in Landlord recovering
more than one hundred percent (100%) of Operating Costs for any such item that is so grossed-up.




     Notwithstanding anything above to the contrary, Operating Costs shall not include (1) the cost
of providing any service directly to and paid directly by any tenant (outside of such tenant’s
Direct Cost payments) such as where a Tenant directly contracts for electric power or other
utilities with the local public services company, provided that in each such case, Landlord shall
have the right to “gross up” such item as if such space was vacant; (2) the cost of any items for
which Landlord is reimbursed by insurance proceeds, condemnation awards, a tenant of the Project
(outside of such tenant’s Direct Cost payments), or otherwise to the extent so reimbursed; (3) any
real estate brokerage commissions or other costs incurred in procuring tenants, or any fee in lieu
of commission; (4) amortization of principal and interest on mortgages or ground lease payments (if
any); (5) costs of items considered capital repairs, replacements, improvements and equipment under
generally accepted accounting principles consistently applied except as expressly included in
Operating Costs pursuant to the definition above; (6) costs incurred by Landlord due to the
violation by Landlord or any tenant of the terms and conditions of any lease of space in the
Project or any law, code, regulation, ordinance or the like; (7) any compensation paid to clerks,
attendants or other persons in commercial concessions operated by Landlord (other than in the
parking facility for the Project); (8) costs incurred in connection with upgrading the Project to
comply with disability, life, seismic, fire and safety codes, ordinances, statutes, or other laws
in effect prior to the Commencement Date, including, without limitation, the then applicable
requirements of the Americans with Disabilities Act, including penalties or damages incurred due to
such non-compliance; (9) bad debt expenses and interest, principal, points and fees on debts
(except in connection with the financing of items which may be included in Operating Costs); (10)
marketing costs, including those costs described in (3) above, attorneys’ fees in connection with
the negotiation and preparation of letters, deal memos, letters of intent, leases, subleases and/or
assignments, space planning costs, and other costs and expenses incurred in connection with lease,
sublease and/or assignment negotiations and transactions with present or prospective tenants or
other occupants of the Project, including attorneys’ fees and other costs and expenditures incurred
in connection with disputes with present or prospective tenants or other occupants of the Project;
(11) costs, including permit, license and inspection costs, incurred with respect to the
installation of other tenants’ or occupants’ improvements made for tenants or other occupants in
the Project or incurred in renovating or otherwise improving, decorating, painting or redecorating
vacant space for tenants or other occupants in the Project; (12) any costs expressly excluded from
Operating Costs elsewhere in this Lease; (13) costs of any items (including, but not limited to,
costs incurred by Landlord for the repair of damage to the Project) to the extent Landlord receives
reimbursement from insurance proceeds or from a third party (except that any deductible amount
under any insurance policy shall be included within Operating Costs, but to the extent that any
such deductible exceeds $50,000.00, such excess amount shall be amortized over the useful life of
the applicable repair or replacement determined in accordance with generally accepted real estate
accounting principles); (14) rentals and other related expenses for leasing an HVAC system,
elevators, or other items (except when needed in connection with normal repairs and maintenance of
the Project) which if purchased, rather than rented, would constitute a capital improvement not
included in Operating Costs pursuant to this Lease; (15) depreciation, amortization and interest
payments, except as specifically included in Operating Costs pursuant to the terms of this Lease
and except on materials, tools, supplies and vendor-type equipment purchased by Landlord to enable
Landlord to supply services Landlord might otherwise contract for with a third party, where such
depreciation, amortization and interest payments would otherwise have been included in the charge
for such third party’s services, all as determined in accordance with generally accepted accounting
principles, consistently applied, and when
depreciation or amortization is permitted or required, the item shall be amortized over its
reasonably anticipated useful life; (16) expenses in connection with services or other benefits
which are not offered to Tenant or for which Tenant is charged for directly but which are provided
to another tenant or occupant of the Project, without charge; (17) costs incurred in connection
with the operation of retail stores selling merchandise and restaurants in the Project to the
extent such costs are in excess of the costs Landlord reasonably estimates would have been incurred
had such space been used for general office use; (18) costs (including in connection therewith all
attorneys’ fees and




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costs of settlement, judgments and/or payments in lieu thereof) arising from claims,
disputes or potential disputes in connection with potential or actual claims litigation or
arbitrations pertaining to Landlord and/or the Project, other than such claims or disputes
respecting any services or equipment used in the operation of the Building by Landlord; (19) costs
associated with the operation of the business of the partnership which constitutes Landlord as the
same are distinguished from the costs of operation of the Project; (20) costs incurred in
connection with the original construction of the Project; (21) costs of correcting defects in or
inadequacy of the initial design or construction of the Project; (22) costs incurred to comply with
laws relating to the removal of any “Hazardous Material,” as that term is defined in Article 28 of
this Lease; (23) salaries and benefits of employees above the grade of portfolio manager (provided
that such portfolio manager’s salaries and benefits shall be divided on a prorata basis among the
buildings that he or she is responsible for), or of officers, executives and partners of Landlord;
(24) Landlord’s general corporate overhead and general and administrative expenses and any overhead
and/or profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for services
in the Project to the extent the same exceed the amount which would generally be expected to be the
cost of such services charged by comparably qualified unaffiliated third parties; (25) any amount
payable by Landlord for damages or which constitute a fine or penalty (including interest or
penalties for late payment unless Tenant’s late payment resulted in such interest or penalty); and
(26) any costs, including fines, penalties and legal fees incurred due to violations by Landlord,
its employees, agents or contractors of any Law or the terms and conditions of any contract
pertaining to the Project.




     (d) Determination of Payment.



          (i) Landlord shall give Tenant a yearly expense estimate statement (the “Estimate Statement”)
which shall set forth Landlord’s reasonable estimate (the “Estimate”) of what the total amount of
Direct Costs for the then-current calendar year shall be. The failure of Landlord to timely
furnish the Estimate Statement for any calendar year shall not preclude Landlord from subsequently
enforcing its rights to collect any Direct Costs under this Article 3, once such amount has been
determined by Landlord. Tenant shall pay, with its next installment of Monthly Basic Rental due
(but in no event sooner than thirty (30) days after delivery of the Estimate), a fraction of the
Estimate for the then-current calendar year (reduced by any amounts paid pursuant to the last
sentence of this Section 3(d)(i)). Such fraction shall have as its numerator the number of months
which have elapsed in such current calendar year to the month of such payment, both months
inclusive, and shall have twelve (12) as its denominator. Until a new Estimate Statement is
furnished, Tenant shall pay monthly, with the Monthly Basic Rental installments, an amount equal to
one-twelfth (1/12) of the total estimated Direct Costs set forth in the previous Estimate delivered
by Landlord to Tenant.




          (ii) In addition, Landlord shall endeavor to give to Tenant as soon as reasonably practicable
following the end of each calendar year, a statement (the “Statement”) which shall state the Direct
Costs incurred or accrued for such preceding calendar year. Upon receipt of the Statement for each
calendar year during the Term, if amounts paid by Tenant based on the Estimates are less than the
actual amount of Direct Costs as specified on the Statement, Tenant shall pay, with its next
installment of monthly Basic Rental due (but in no event sooner than thirty (30) days after
delivery of the Statement), the full amount of Direct Costs for such calendar year, less the
amounts paid during such calendar year based on the Estimate. If, however, the Statement indicates
that amounts paid by Tenant based on the Estimate are greater than the actual Direct Costs as
specified on the Statement, such overpayment shall be credited against Tenant’s next installments
of Basic Rental and Direct Costs or promptly refunded to Tenant if the Lease has terminated. The
failure of Landlord to timely furnish the Statement for any calendar year shall not prejudice
Landlord from enforcing its rights under this Article 3, once such Statement has been delivered.
Even though the Term has expired and Tenant has vacated the Premises, when the final determination
is made of Tenant’s Proportionate Share of the Direct Costs for the calendar year in which this
Lease terminates, Tenant shall immediately pay to Landlord (or Landlord shall promptly refund to
Tenant, as applicable) an amount as calculated pursuant to the provisions of this Section 3(d).
The provisions of this Section 3(d)(ii) shall survive the expiration or earlier termination of the
Term.




          (iii) If the Project is a part of a multi-building development, those Direct Costs
attributable to such development as a whole (and not attributable solely to any individual building
therein) shall be allocated by Landlord to the Project and to the other buildings within such
development on an equitable basis.




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     (e) Audit Right. Within one hundred twenty (120) days after receipt of a Statement by
Tenant (“Review Period”), if Tenant disputes the amount set forth in the Statement, Tenant’s
employees or an independent certified public accountant (which accountant is a member of a
nationally or regionally recognized accounting firm and is not retained on a contingency fee
basis), designated by Tenant, may, after reasonable notice to Landlord (“Review Notice”) and at
reasonable times, inspect Landlord’s records at Landlord’s offices, provided that Tenant is not
then in default after expiration of all applicable cure periods and provided further that Tenant
and such accountant or representative shall, and each of them shall use their commercially
reasonable efforts to cause their respective agents and employees to, maintain all information
contained in Landlord’s records in strict confidence. Notwithstanding the foregoing, Tenant shall
only have the right to review Landlord’s records one (1) time during any twelve (12) month period.
If after such inspection, but within thirty (30) days after the Review Period, Tenant notifies
Landlord in writing (“Dispute Notice”) that Tenant still disputes such amounts, a certification as
to the proper amount shall be made in accordance with Landlord’s standard accounting practices, at
Tenant’s expense (except as provided below), by an independent certified public accountant selected
by Landlord and who is a member of a nationally or regionally recognized accounting firm. Tenant’s
failure to deliver the Review Notice within the Review Period or to deliver the Dispute Notice
within thirty (30) days after the Review Period shall be deemed to constitute Tenant’s approval of
such Statement and (except in the event of fraud or intentional misrepresentation by Landlord)
Tenant, thereafter, waives the right or ability to dispute the amounts set forth in such Statement.
If Tenant timely delivers the Review Notice and the Dispute Notice, Landlord shall cooperate in
good faith with Tenant and the accountant to show Tenant and the accountant the information upon
which the certification is to be based. However, if such certification by the accountant proves
that the Direct Costs set forth in the Statement were overstated by more than three percent (3%),
then the cost of Tenant’s accountant and the cost of such certification shall be paid for by
Landlord. Promptly following the parties receipt of such certification, the parties shall make
such appropriate payments or reimbursements, as the case may be, to each other, as are determined
to be owing pursuant to such certification. Tenant agrees that this section shall be the sole
method to be used by Tenant to dispute the amount of any Direct Costs payable by Tenant pursuant to
the terms of this Lease, and Tenant hereby waives any other rights at law or in equity relating
thereto.



ARTICLE 4




SECURITY DEPOSIT




     Tenant has deposited or concurrently herewith is depositing with Landlord the sum set forth in
Article 1.F. of the Basic Lease Provisions as security for the full and faithful performance of
every provision of this Lease to be performed by Tenant. Upon the Must Take Space Commencement
Date, Tenant shall deposit with Landlord an additional Seventy-Eight Thousand One Hundred Nine and
10/100 Dollars ($78,109.10), for a total Security Deposit in the amount of Three Hundred
Twenty-Eight Thousand One Hundred Nine and 10/100 Dollars ($328,109.10). If Tenant breaches any
provision of this Lease, including but not limited to the payment of rent, and such breach is not
cured by Tenant within the applicable notice and cure period, Landlord may use all or any part of
this security deposit for the payment of any rent or any other sums in default, or to compensate
Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s default. If
any portion of said deposit is so used or applied, Tenant shall, within ten (10)  days after
written demand therefor, deposit cash with Landlord in an amount sufficient to restore the security
deposit to its full amount. Tenant agrees that Landlord shall not be required to keep the security
deposit in trust, segregate it or keep it separate from Landlord’s general funds, but Landlord may
commingle the security deposit with its general funds and Tenant shall not be entitled to interest
on such deposit. At the expiration of the Term, the security deposit or any balance thereof shall
be returned to Tenant (or, at Landlord’s option, to Tenant’s “Transferee”, as such term is defined
in Article 15 below), provided that subsequent to the expiration of this Lease, Landlord may retain
from said security deposit (i) an amount reasonably estimated by Landlord to cover potential Direct
Cost reconciliation payments due with respect to the calendar year in which this Lease terminates
or expires (such amount so retained shall not, in any event, exceed ten percent (10%) of estimated
Direct Cost payments due from Tenant for such calendar year through the date of expiration or
earlier termination of this Lease and any amounts so retained and not applied to such
reconciliation shall be returned to Tenant within thirty (30) days after Landlord’s delivery of the
Statement for such calendar year), (ii) any and all amounts reasonably estimated by Landlord to
cover the anticipated costs to be incurred by Landlord to remove any signage provided to Tenant
under this Lease that has not been removed by Tenant, to remove cabling and other items required to be removed by Tenant



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under Section 29(b) below and to repair any damage caused by such removal (in which case any excess
amount so retained by Landlord shall be returned to Tenant within thirty (30) days after such
removal and repair) that has not been performed by Tenant, and (iii) any and all amounts permitted
by law or this Article 4. Notwithstanding anything to the contrary contained in this Article 4, in
the event that Tenant, at the expiration of the thirty-fifth (35th) month of the Lease
Term, is not in default of any of its obligations under this Lease, Landlord shall reduce the
amount of the Security Deposit by the amount of the monthly Basic Rental due and payable to
Landlord for the thirty-sixth (36th) month of the initial Lease Term and Landlord shall
apply such amount against Tenant’s monthly Basic Rental obligation for the thirty-sixty
(36th) month of the initial Lease Term. Tenant hereby waives the provisions of
Section 1950.7 of the California Civil Code and all other provisions of law, now or hereafter in
effect, which provide that Landlord may claim from a security deposit only those sums reasonably
necessary to remedy defaults in the payment of rent, to repair damage caused by Tenant or to clean
the Premises, it being agreed that Landlord may, in addition, claim those sums specified in this
Article 4 above, and all of Landlord’s damages under this Lease and California law including, but
not limited to, any damages accruing upon termination of this Lease under Section 1951.2 of the
California Civil Code and/or those sums reasonably necessary to compensate Landlord for any other
loss or damage, foreseeable or unforeseeable, caused by any Event of Default.



ARTICLE 5




HOLDING OVER




     Should Tenant, without Landlord’s written consent, hold over after termination of this Lease,
Tenant shall, at Landlord’s option, become either a tenant at sufferance or a month-to-month tenant
upon each and all of the terms herein provided as may be applicable to such a tenancy and any such
holding over shall not constitute an extension of this Lease. During such holding over, Tenant
shall pay in advance, monthly, Basic Rental at a rate equal to one hundred fifty percent (150%) of
the rate in effect for the last month of the Term of this Lease or Landlord’s then asking rate for
comparable space in the Project, whichever is greater, in addition to, and not in lieu of, all
other payments required to be made by Tenant hereunder including but not limited to Tenant’s
Proportionate Share of any increase in Direct Costs. Nothing contained in this Article 5 shall be
construed as consent by Landlord to any holding over of the Premises by Tenant, and Landlord
expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord
as provided in this Lease upon the expiration or earlier termination of the Term. If Tenant fails
to surrender the Premises upon the expiration or termination of this Lease, Tenant agrees to
indemnify, defend and hold Landlord harmless from all costs, loss, expense or liability, including
without limitation, claims made by any succeeding tenant and real estate brokers claims and
attorney’s fees and costs.



ARTICLE 6




OTHER TAXES




     Tenant shall pay, prior to delinquency, all taxes assessed against or levied upon Tenant’s
trade fixtures, furnishings, equipment and all other personal property of Tenant located in the
Premises. In the event any or all of Tenant’s trade fixtures, furnishings, equipment and other
personal property shall be assessed and taxed with property of Landlord, Tenant shall pay to
Landlord, within thirty (30) days after delivery to Tenant by Landlord of a written statement
setting forth such amount, the amount of such taxes applicable to Tenant’s property. Tenant shall
assume and pay to Landlord at the time Basic Rental next becomes due (or if assessed after the
expiration of the Term, then within thirty (30) days), any personal property, excise, sales, use,
rent, occupancy, garage, parking, gross receipts or other taxes (other than net income taxes) which
may be assessed against Tenant’s personal property or business operations in the Premises . In
addition to Tenant’s obligation pursuant to the immediately preceding sentence, Tenant shall pay
directly to the party or entity entitled thereto all business license fees, gross receipts taxes
and similar taxes and impositions which may from time to time be assessed against or levied upon
Tenant, as and when the same become due and before delinquency. Notwithstanding anything to the
contrary contained herein, any sums payable by Tenant under this Article 6 shall not be included in
the computation of “Tax Costs.”



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ARTICLE 7




USE




     Tenant shall use and occupy the Premises only for the use set forth in Article 1.G. of the
Basic Lease Provisions and shall not use or occupy the Premises or permit the same to be used or
occupied for any other purpose without the prior written consent of Landlord, which consent may be
given or withheld in Landlord’s sole and absolute discretion, and Tenant agrees that it will use
the Premises in such a manner so as not to interfere with or infringe upon the rights of other
tenants or occupants in the Project. Tenant shall, at its sole cost and expense, promptly comply
with all laws, statutes, ordinances, governmental regulations or requirements now in force or which
may hereafter be in force relating to or affecting (i) the condition, use or occupancy of the
Premises or the Project (excluding alterations or improvements that are required to be constructed
that are not related to Tenant’s particular use of the Premises), and (ii) improvements installed
or constructed in the Premises by or for the benefit of Tenant (excluding the Landlord’s Work, the
compliance for which Landlord shall be responsible at Landlord’s sole cost). Tenant shall not
permit more than six (6) people per one thousand (1,000) rentable square feet of the Premises to
occupy the Premises at any time. Tenant shall not do or permit to be done anything which would
invalidate or increase (unless Tenant agrees to pay for such increase and Landlord reasonably
consents to such actions by Tenant giving rise to such increase) the cost of any fire and extended
coverage insurance policy covering the Project and/or the property located therein and Tenant shall
comply with all rules, orders, regulations and requirements of any organization which sets out
standards, requirements or recommendations commonly referred to by major fire insurance
underwriters, and Tenant shall promptly upon demand reimburse Landlord for any additional premium
charges for any such insurance policy assessed or increased by reason of Tenant’s failure to comply
with the provisions of this Article.



ARTICLE 8




CONDITION OF PREMISES




     Landlord shall cause the base building heating, ventilation and air conditioning, electrical,
lighting, plumbing, sewer and life-safety systems and the roof of the Project to be in good working
order and condition as of the Commencement Date (and with respect to the Must Take Space, as of the
Must Take Commencement Date). In furtherance of the foregoing, Tenant may notify Landlord in
writing if any such systems or such roof is not in good working order or condition at any time on
or before the date which is sixty (60) days after the Commencement Date (or with respect to the
Must Take Space, at any time on or before the date which is sixty (60) days after the Must Take
Commencement Date), in which case Landlord shall promptly make any necessary repairs to such
systems or roof at no cost or charge to Tenant (as a Direct Cost or otherwise). Without in any way
limiting Landlord’s other repair, maintenance, or other obligations under this Lease, Tenant’s
failure to so notify Landlord within such sixty (60) day periods shall be deemed to constitute
Landlord’s satisfaction of its obligation to cause such items to be in good working order and
condition. As indicated in Section 1 of the Tenant Work Letter, prior to the Commencement Date,
Landlord shall remove the batteries from the non-functional UPS system in the Premises. The
remaining UPS system for the Premises shall be provided in its “as is” condition and
notwithstanding anything to the contrary contained in this Lease, Landlord shall have no obligation
for maintenance and repair of such system. Subject to and without in any way limiting Landlord’s
other repair, maintenance , or other obligations under this Lease, Tenant hereby agrees that except
as provided in this Article 8 above or in the Tenant Work Letter attached hereto as Exhibit “D” and
made a part hereof, the Premises shall be taken “as is”, “with all faults”, without any
representations or warranties that are not specifically stated in this Lease, and Tenant hereby
agrees and warrants that it has investigated and inspected the condition of the Premises and the
suitability of same for Tenant’s purposes (or has voluntarily elected not to do so), and Tenant
does hereby waive and disclaim any objection to, cause of action based upon, or claim that its
obligations hereunder should be reduced or limited because of the suitability of the Premises or
Project for Tenant’s purposes. Tenant acknowledges that neither Landlord nor any agent nor any
employee of Landlord has made any representations or warranty with respect to the Premises or the
Project or with respect to the suitability of either for the conduct of Tenant’s business that is
not expressly stated in this Lease and Tenant expressly warrants and represents that Tenant has
relied solely on its own investigation and inspection of the Premises and the Project (and
Landlord’s obligations under this Lease) in its decision to enter into this Lease and let the
Premises in the above-described condition. The Premises shall be initially improved as provided
in, and subject to, the Tenant Work Letter attached hereto as Exhibit “D” and made a part



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hereof. The existing leasehold improvements in the Premises as of the date of this Lease,
together with the Improvements (as defined in the Tenant Work Letter) may be collectively referred
to herein as the “Tenant Improvements”. Subject to and without in any way limiting Landlord’s
repair, maintenance, warranty and other obligations under this Lease, the taking of possession of
the Premises by Tenant shall conclusively establish that the Premises and the Project were at such
time in satisfactory condition. Tenant hereby waives subsection 1 of Section 1932 and
Sections 1941 and 1942 of the Civil Code of California or any successor provision of law.



ARTICLE 9




REPAIRS AND ALTERATIONS




     (a) Landlord’s Obligations.



          (i) Landlord shall maintain in good condition and repair all of the following: (A) the
windows and frames, gutters, and downspouts of the Project; (B) sidewalks, curbs, parking lots, and
other common areas; (C) lamp and light bulb replacement (for Project standard lights), (D) the
structural portions of the Project, including the foundation, floor/ceiling slabs, roof, curtain
wall, exterior glass, columns, beams, shafts, stairs, stairwells, elevator and elevator cab and
common areas, and (E) the mechanical, electrical, life safety, plumbing, sprinkler (if any),
heating, ventilating and air-conditioning, and sewage systems servicing the Premises and the
Project.




          (ii) Notwithstanding any provision set forth in this Lease to the contrary, if Tenant then
leases the entire Project and if Tenant provides written notice to Landlord of an event or
circumstance which requires the action of Landlord pursuant to Section 9(a)(i) above (where
Tenant’s ability to use the Premises or any material portion thereof for the operation of its
business pursuant to the terms of this Lease is materially and adversely impaired or where there is
a material and imminent risk to the health or safety of persons) and Landlord fails to provide such
action within a reasonable period of time, given the circumstances, after the receipt of such
notice, but in no event greater than thirty (30) days after Landlord’s receipt of such notice
(unless the nature of Landlord’s failure to perform reasonably requires more than thirty (30) days
to cure, in which event Landlord shall have such longer time as may reasonably be necessary to
effect the cure), then Tenant may proceed to take the required action upon delivery of an
additional ten (10) business days notice to Landlord specifying that Tenant is taking such required
action, and if such action was required under the terms of this Lease to be taken by Landlord and
was not taken by Landlord within such ten (10) day period, then Tenant shall be entitled to prompt
reimbursement by Landlord of Tenant’s actual and reasonable costs in taking such action. In the
event Tenant takes such action, and such work will affect the Project systems or the structural
integrity of the Project, Tenant shall use only those contractors used by Landlord in the Project
for work on such Project systems or structure unless such contractors are unwilling or unable to
perform, or timely perform, such work, in which event Tenant may utilize the services of any other
qualified, licensed and experienced contractor which normally and regularly performs similar work
in comparable buildings. Tenant shall cause any such work to be performed so as to minimize
interference with the rights of other occupants of the Project (if applicable). Landlord shall
reimburse Tenant for the reasonable costs of Tenant’s performance incurred in accordance with the
terms and conditions of this Section 9(a)(ii) within thirty (30) days after Tenant’s submission to
Landlord of receipts and invoices therefor (accompanied by reasonably supporting documentation),
provided that such costs may be included in Operating Costs to the extent that such repair costs
otherwise qualify as Operating Costs pursuant to Section 3(c)(ii) above.




     (b) Tenant’s Obligations. Except as expressly provided as Landlord’s obligation in
this Article 9, and Articles 8, 16 and 18, Tenant shall keep the interior of the Premises in good
condition and repair. Subject to Section 14(d) concerning waiver of subrogation rights, all damage
or injury to the Premises or the Project resulting from the act or negligence of Tenant, its
employees, agents or visitors, guests, invitees or licensees or by the use of the Premises, shall
be promptly repaired by Tenant at its sole cost and expense, to the reasonable satisfaction of
Landlord; provided, however, that for damage to the Project as a result of casualty or for any
repairs that may impact the mechanical, electrical, plumbing, heating, ventilation or
air-conditioning systems of the Project, Landlord shall have the right (but not the obligation) to
select the contractor (provided that such contractor is available to perform the work at a
commercially reasonable cost) and oversee all such repairs. If an Event of Default by Tenant under
this Section 9(b) shall occur, Landlord may make the applicable repairs and charge Tenant for the
cost thereof, which cost shall be paid by Tenant within thirty (30) days from invoice from
Landlord. Tenant shall be responsible for the design and function of all non-standard improvements
installed by Tenant in the Premises. Except as expressly



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provided in Section 9(a)(ii) above, Tenant waives all rights to make repairs at the expense of
Landlord, or to deduct the cost thereof from the rent.



     (c) Alterations. Tenant shall make no alterations, installations, changes or
additions in or to the Premises or the Project (collectively, “Alterations”) without Landlord’s
prior written consent, which consent shall not be unreasonably withheld or delayed.
Notwithstanding anything to the contrary contained herein, Tenant may make Alterations (the
“Permitted Alterations”), without Landlord’s consent, provided that the aggregate cost of any such
alterations does not exceed $50,000.00 in any twelve (12) month period, and further provided that
such alterations do not (i) require any structural or other substantial modifications to the
Premises, (ii) require any changes to, nor adversely affect, the systems and equipment of the
Project, or (iii) affect the exterior appearance of the Project. Tenant shall give Landlord at
least thirty (30) days prior notice of such Permitted Alterations, which notice shall be
accompanied by reasonably adequate evidence that such changes meet the criteria contained in this
Article 9. Any Alterations must be performed in accordance with the terms hereof, using only
contractors or mechanics reasonably approved by Landlord in writing and upon the reasonable
approval by Landlord in writing of fully detailed and dimensioned plans and specifications
pertaining to the Alterations in question, if applicable, to be prepared and submitted by Tenant at
its sole cost and expense. Tenant shall at its sole cost and expense obtain all necessary
approvals and permits pertaining to any Alterations approved by Landlord. Tenant shall cause all
Alterations to be performed in a good and workmanlike manner, in conformance with all applicable
federal, state, county and municipal laws, rules and regulations, pursuant to a valid building
permit, if required, and in conformance with Landlord’s reasonable construction rules and
regulations. Tenant hereby agrees to indemnify, defend, and hold Landlord free and harmless from
all liens and claims of lien, and all other liability, claims and demands arising out of any work
done or material supplied to the Premises by or at the request of Tenant in connection with any
Alterations to the extent such claims and demands are not caused by Landlord’s or any of Landlord’s
agents’, employees’, or contractors’ negligence or willful misconduct.



     (d) Insurance; Liens. Prior to the commencement of any Alterations, Tenant shall
provide Landlord with evidence that Tenant carries “Builder’s All Risk” insurance in an amount
covering the cost of construction of such Alterations, and such other insurance as Landlord may
reasonably require, it being understood that all such Alterations shall be insured by Tenant
pursuant to Article 14 of this Lease immediately upon completion thereof. In addition, Landlord
may, in its discretion, for Alterations (other than the Improvements) reasonably expected to costs
in excess of One Hundred Thousand Dollars ($100,000.00), require Tenant to obtain a lien and
completion bond or some alternate form of security satisfactory to Landlord in an amount sufficient
to ensure the lien free completion of such Alterations and naming Landlord as a co-obligee.



     (e) Costs and Fees; Removal. If permitted Alterations are made, they shall be made at
Tenant’s sole cost and expense and shall be and become the property of Landlord, except that
Landlord may, by written notice to Tenant given at the time of Landlord’s consent to such
Alteration (provided Tenant requests that Landlord make such determination at the time of Tenant’s
request for consent) or in the case of Permitted Alterations, by written notice to Tenant within
fifteen (15) days after Landlord’s receipt of Tenant’s notice of such Permitted Alterations
(provided Tenant requests that Landlord make such determination at the time of Tenant’s notice),
require Tenant at Tenant’s expense to remove such Alterations from the Premises, and to repair any
damage to the Premises and the Project caused by such removal. Any and all costs attributable to
or related to the applicable building codes of the city in which the Project is located (or any
other authority having jurisdiction over the Project) arising from Tenant’s plans, specifications,
improvements, Alterations or otherwise shall be paid by Tenant at its sole cost and expense. With
regard to Alterations arising from or related to this Article 9 that require a building permit,
Landlord shall be entitled to receive an administrative/coordination fee (not to exceed 3% of the
cost of construction of the Alteration at issue) to compensate Landlord for all overhead, general
conditions, fees and other costs and expenses arising from Landlord’s involvement with such work.
The construction of initial improvements to the Premises shall be governed by the terms of the
Tenant Work Letter and not the terms of this Article 9.



ARTICLE 10




LIENS




     Tenant shall keep the Premises and the Project free from any mechanics’ liens, vendors liens
or any other liens arising out of any work performed, materials furnished or obligations incurred
by



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Tenant, and Tenant agrees to defend, indemnify and hold Landlord harmless from and against any
such lien or claim or action thereon, together with costs of suit and reasonable attorneys’ fees
and costs incurred by Landlord in connection with any such claim or action. Before commencing any
work of Alteration to the Premises, Tenant shall give Landlord at least ten (10) business days’
written notice of the proposed commencement of such work (to afford Landlord an opportunity to post
appropriate notices of non-responsibility). In the event that there shall be recorded against the
Premises or the Project or the property of which the Premises is a part any claim or lien arising
out of any such work performed, materials furnished or obligations incurred by Tenant and such
claim or lien shall not be removed or discharged (by bond or otherwise) within ten (10) days of
Tenant’s receipt of notice (“Lien Notice”) of the filing, Landlord shall have the right but not the
obligation to pay and discharge said lien without regard to whether such lien shall be lawful or
correct, or to require that Tenant promptly deposit with Landlord in cash, lawful money of the
United States, one hundred fifty percent (150%) of the amount of such claim, which sum may be
retained by Landlord until such claim shall have been removed of record or until judgment shall
have been rendered on such claim and such judgment shall have become final, at which time Landlord
shall have the right to apply such deposit in discharge of the judgment on said claim and any
costs, including attorneys’ fees and costs incurred by Landlord, and shall remit the balance
thereof to Tenant.



ARTICLE 11




PROJECT SERVICES




     (a) Basic Services. Landlord agrees to furnish to the Premises, at a cost to be
included in Operating Costs, air conditioning and heat all in such reasonable quantities as in the
judgment of Landlord is reasonably necessary for the comfortable occupancy of the Premises. In
addition, Landlord shall provide electric current for normal lighting and normal office machines,
elevator service and water on the same floor as the Premises for lavatory and drinking purposes in
such reasonable quantities as in the judgment of Landlord is reasonably necessary for general
office use and in compliance with applicable codes. To the extent reasonably determined by
Landlord to be practicable, all such electricity (including, without limitation, electricity in
order to power the heating, ventilation and air conditioning system serving the Premises), shall be
separately metered or submetered at Tenant’s expense and Tenant shall make payment directly to the
entity providing such electricity to the Premises if such separate meters are installed. If,
however, separate meters are not installed and the Premises are submetered or are jointly metered,
then Landlord shall determine and Tenant shall pay the amount reasonably determined by Landlord to
be Tenant’s equitable share of the monthly charge for such electricity, as Additional Rent.
Janitorial and maintenance services shall be furnished by Tenant a regular basis throughout the
Term and Landlord shall have no obligation to provide janitorial service to the Premises. Tenant
shall comply with all reasonable rules and regulations which Landlord may establish for the proper
functioning and protection of the common area air conditioning, heating, elevator, electrical,
intrabuilding cabling and wiring and plumbing systems. Landlord shall not be liable for, and
except as provided in Section 11(g) below, there shall be no rent abatement as a result of, any
stoppage, reduction or interruption of any such services caused by governmental rules, regulations
or ordinances, riot, strike, labor disputes, breakdowns, accidents, necessary repairs or other
cause. Except as specifically provided in this Article 11, Tenant agrees to pay for all utilities
and other services utilized by Tenant and any additional building services furnished to Tenant
which are not uniformly furnished to all tenants of the Project, at the rate generally charged by
Landlord to tenants of the Project for such utilities or services.



     (b) Excess Usage. Tenant will not, without the prior written consent of Landlord, use
any apparatus or device in the Premises which will in any way exceed the capacity of such apparatus
or device; nor connect any apparatus, machine or device with water pipes or electric current
(except through existing electrical outlets in the Premises), for the purpose of using electric
current or water.



     (c) Additional Electrical Service. If Tenant shall require electric current in excess
of that which Landlord is obligated to furnish under Section 11(a) above, Tenant shall first obtain
the written consent of Landlord, which Landlord may refuse in its reasonable discretion.



     (d) HVAC Balance. If any lights, machines or equipment (including but not limited to
computers and computer systems and appurtenances) are used by Tenant in the Premises which
materially affect the temperature otherwise maintained by the air conditioning system, or generate
substantially more heat in the Premises than would be generated by the building standard lights and
usual office equipment, after receiving the consent of Tenant Landlord shall have the right to
install any machinery and equipment which Landlord reasonably deems necessary to restore
temperature



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balance, including but not limited to modifications to the standard air conditioning
equipment, and the cost thereof, including the cost of installation and any additional cost of
operation and maintenance occasioned thereby, shall be paid by Tenant to Landlord within thirty
(30) days after demand by Landlord. If Tenant fails to provide consent to installation of such
additional machinery and equipment, Tenant agrees to accept the temperature imbalance
(notwithstanding Section 11(a) above) and to hold Landlord harmless from any loss, cost, expense or
liability arising therefrom.



     (e) Telecommunications. Upon request from Tenant from time to time, Landlord will
provide Tenant with a listing of telecommunications and media service providers serving the
Project, and Tenant shall have the right to contract directly with the providers of its choice. If
Tenant wishes to contract with or obtain service from any provider which does not currently serve
the Project or wishes to obtain from an existing carrier services which will require the
installation of additional equipment, such provider must, prior to providing service, enter into a
written agreement with Landlord setting forth the terms and conditions of the access to be granted
to such provider. In considering the installation of any new or additional telecommunications
cabling or equipment at the Project, Landlord will consider all relevant factors in a reasonable
and non-discriminatory manner, including, without limitation, the existing availability of services
at the Project, the impact of the proposed installations upon the Project and its operations and
the available space and capacity for the proposed installations. Landlord may also consider
whether the proposed service may result in interference with or interruption of other services at
the Project or the business operations of other tenants or occupants of the Project. In no event
shall Landlord be obligated to incur any costs or liabilities in connection with the installation
or delivery of telecommunication services or facilities at the Project. All such installations
shall be subject to Landlord’s prior approval and shall be performed in accordance with the terms
of Article 9. If Landlord approves the proposed installations in accordance with the foregoing,
Landlord will deliver its standard form agreement upon request and will use commercially reasonable
efforts to promptly enter into an agreement on reasonable and non-discriminatory terms with a
qualified, licensed and reputable carrier confirming the terms of installation and operation of
telecommunications equipment consistent with the foregoing.



     (f) Sole Electrical Representative. Tenant agrees that until and unless Tenant leases
the entire Project, Landlord shall be the sole and exclusive representative with respect to the
selection of the electrical provider for the Project. If and when Tenant leases the entire
Project, Tenant shall be entitled to select an alternative electrical provider, subject to
Landlord’s reasonable approval.



     (g) Abatement Events. An “Abatement Event” shall be defined as an event that prevents
Tenant from using the Premises or any portion thereof, as a result of any failure to provide
services or access to the Premises, where (i) Tenant does not actually use the Premises or such
portion thereof, and (ii) such event is not caused by the negligence or willful misconduct of
Tenant, its agents, employees or contractors. Tenant shall give Landlord notice (“Abatement
Notice”) of any such Abatement Event, and if such Abatement Event continues beyond the “Eligibility
Period” (as that term is defined below), then the Basic Rental and Tenant’s Proportionate Share of
Direct Costs shall be abated entirely or reduced, as the case may be, after expiration of the
Eligibility Period for such time that Tenant continues to be so prevented from using, and does not
use, the Premises or a portion thereof, in the proportion that the rentable area of the portion of
the Premises that Tenant is prevented from using, and does not use, bears to the total rentable
area of the Premises; provided, however, in the event that Tenant is prevented from using, and does
not use, a portion of the Premises for a period of time in excess of the Eligibility Period and the
remaining portion of the Premises is not sufficient to allow Tenant to effectively conduct its
business therein, and if Tenant does not conduct its business from such remaining portion, then for
such time after expiration of the Eligibility Period during which Tenant is so prevented from
effectively conducting its business therein, the Basic Rental and Tenant’s Proportionate Share of
Direct Costs for the entire Premises shall be abated entirely for such time as Tenant continues to
be so prevented from using, and does not use, the Premises. If, however, Tenant reoccupies any
portion of the Premises during such period, the Basic Rental and Tenant’s Proportionate Share of
Direct Costs allocable to such reoccupied portion, based on the proportion that the rentable area
of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall
be payable by Tenant from the date Tenant reoccupies such portion of the
Premises. The term “Eligibility Period” shall mean a period of five (5) consecutive business
days after Landlord’s receipt of any Abatement Notice(s). Except as provided in Articles 16 and 18
below, such right to abate Basic Rental and Tenant’s Proportionate Share of Direct Costs shall be
Tenant’s sole and exclusive remedy at law or in equity for an Abatement Event.



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ARTICLE 12




RIGHTS OF LANDLORD




     (a) Right of Entry. Landlord and its agents shall have the right to enter the
Premises upon twenty-four (24) hours prior notice (except that no notice shall be required in the
case of an emergency or regularly scheduled service) for the purpose of cleaning the Premises,
examining or inspecting the same, serving or posting and keeping posted thereon notices as provided
by law, or which Landlord deems necessary for the protection of Landlord or the Project, showing
the same to prospective tenants (during the last nine (9) months of the Term or Option Term or any
period in which an Event of Default exists only), lenders or purchasers of the Project, in the case
of an emergency, and for making such alterations, repairs, improvements or additions to the
Premises or to the Project as Landlord may reasonably deem necessary. Landlord agrees that, except
in an emergency, Landlord shall cooperate with Tenant’s reasonable security requirements in
connection with any such entry including, without limitation, permitting Tenant to provide an
escort with respect to any such entry. If Tenant shall not be personally present to open and
permit an entry into the Premises at any time when such an entry by Landlord is necessary or
permitted hereunder (and after the required notice, if any, has been given to Tenant), Landlord may
enter by means of a master key, or may forcibly enter in the case of an emergency, in each event
without liability to Tenant and without affecting this Lease. During any entry by Landlord under
this Section 12(a), Landlord and Landlord’s employees, agents and contractors shall use
commercially reasonable efforts to minimize any disruption to Tenant’s access to and use of the
Premises.



     (b) Maintenance Work. Landlord reserves the right from time to time, but subject to
payment by and/or reimbursement from Tenant if and to the extent allowable under this Lease:
(i) to install, use, maintain, repair, replace, relocate and control for service to the Premises
and/or other parts of the Project pipes, ducts, conduits, wires, cabling, appurtenant fixtures,
equipment spaces and mechanical systems, wherever located in the Premises or the Project, (ii) to
temporarily alter, close or relocate any facility in the Premises or the common areas or otherwise
conduct any of the above activities for the purpose of complying with a general plan for fire/life
safety for the Project or otherwise provided that, except in an emergency, Landlord shall first
obtain Tenant’s consent (which shall not be unreasonably withheld) to any such action which may
materially and adversely affect Tenant’s business operations at the Premises, and (iii) to comply
with any federal, state or local law, rule or order. Landlord shall use reasonable efforts to
perform any such work with the least inconvenience to Tenant as is reasonably practicable, but in
no event shall Tenant be permitted to withhold or reduce Basic Rental or other charges due
hereunder as a result of same, make any claim for constructive eviction or otherwise make any claim
against Landlord for interruption or interference with Tenant’s business and/or operations.



     (c) Rooftop. If Tenant desires to use the roof of the Project to install
communication equipment to be used from the Premises, Tenant may so notify Landlord in writing
(“Communication Equipment Notice”), which Communication Equipment Notice shall generally describe
the specifications for the equipment desired by Tenant. If at the time of Landlord’s receipt of
the Communication Equipment Notice, Landlord reasonably determines that space is available on the
roof of the Project for such equipment, then subject to all governmental laws, rules and
regulations, Tenant and Tenant’s contractors (which shall first be reasonably approved by Landlord)
shall have the right and access to install, repair, replace, remove, operate and maintain a
reasonable number of so-called “satellite dishes” or other similar devices, such as antennae
(collectively, “Communication Equipment”) no greater than one (1) meter in diameter for each such
piece of equipment, together with aesthetic screening designated by Landlord and all cable, wiring,
conduits and related equipment, for the purpose of receiving and sending radio, television,
computer, telephone or other communication signals, at a location on the roof of the Project
designated by Landlord. Landlord shall have the right to require Tenant to relocate the
Communication Equipment at any time to another location on the roof of the Project reasonably
approved by Tenant. Tenant shall retain Landlord’s designated roofing contractor to make any
necessary penetrations and associated repairs to the roof in order to preserve Landlord’s roof
warranty. Tenant’s installation and operation of the Communication Equipment shall be governed by
the following terms and conditions:



          (i) Tenant’s right to install, replace, repair, remove, operate and maintain the Communication
Equipment shall be subject to all governmental laws, rules and regulations and Landlord makes no
representation that such laws, rules and regulations permit such installation and operation.



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          (ii) All plans and specifications for the Communication Equipment shall be subject to
Landlord’s reasonable approval. However, after initial installation of the Communication
Equipment, Tenant may modify the Communication Equipment without Landlord’s approval of plans and
specifications for such modifications provided that the weight load from such modification is not
increased, Tenant’s makes no penetrations to the roof in connection with such modifications, such
modifications do not interfere with any other then existing equipment of the roof of the Project
and the location of equipment on the roof of the Project is not modified.




          (iii) All costs of installation, operation and maintenance of the Communication Equipment and
any necessary related equipment (including, without limitation, costs of obtaining any necessary
permits and connections to the Project’s electrical system) shall be borne by Tenant.




          (iv) It is expressly understood that Landlord retains the right to use the roof of the Project
for any purpose whatsoever provided that Landlord shall not unduly interfere with Tenant’s use of
the Communication Equipment.




          (v) Tenant shall use the Communication Equipment so as not to cause any interference to other
tenants in the Project or with any other tenant’s Communication Equipment, and not to damage the
Project or interfere with the normal operation of the Project.




          (vi) Landlord shall not have any obligations with respect to the Communication Equipment.
Landlord makes no representation that the Communication Equipment will be able to receive or
transmit communication signals without interference or disturbance (whether or not by reason of the
installation or use of similar equipment by others on the roof of the Project) and Tenant agrees
that Landlord shall not be liable to Tenant therefor. Tenant shall not lease or otherwise make the
Communication Equipment available to any third party and the Communication Equipment shall be only
for Tenant’s use in connection with the conduct of Tenant’s business in the Premises.




          (vii) Tenant shall (A) be solely responsible for any damage caused as a result of the
Communication Equipment, (B) promptly pay any tax, license or permit fees charged pursuant to any
laws or regulations in connection with the installation, maintenance or use of the Communication
Equipment and comply with all precautions and safeguards recommended by all governmental
authorities, and (C) pay for all necessary repairs, replacements to or maintenance of the
Communication Equipment.




          (viii) The Communication Equipment shall remain the sole property of Tenant. Tenant shall
remove the Communication Equipment and related equipment at Tenant’s sole cost and expense upon the
expiration or sooner termination of this Lease or upon the imposition of any governmental law or
regulation which may require removal, and shall repair the Project upon such removal to the extent
required by such work of removal. If Tenant fails to remove the Communication Equipment and repair
the Project within fifteen (15) days after the expiration or earlier termination of this Lease,
Landlord may do so at Tenant’s expense. The provisions of this Section 12(c)(viii) shall survive
the expiration or earlier termination of this Lease.




          (ix) The Communication Equipment shall be deemed to constitute a portion of the Premises for
purposes of Article 13 of this Lease.




          (x) Upon request from Landlord, Tenant agrees to execute a license agreement with Landlord or
Landlord’s rooftop management company regarding Tenant’s installation, use and operation of the
Communication Equipment, which license agreement shall be in commercially reasonable form and shall
incorporate the terms and conditions of this Section 12(c). Tenant acknowledges that such license
agreement will require Tenant to pay a one-time initial oversight fee to Landlord or the rooftop
management company in connection with the installation of the Communication Equipment, not to
exceed One Thousand Five Hundred Dollars ($1,500.00).




ARTICLE 13




INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY




     (a) Indemnity. Tenant shall indemnify, defend and hold Landlord, Arden Realty, Inc.,
their subsidiaries, partners, parental or other affiliates and their respective members,
shareholders, officers, directors, employees and contractors (collectively, “Landlord Parties”)
harmless from any and all claims to the extent arising from Tenant’s use of the Premises or the
Project or from the



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conduct of its business or from any activity, work or thing which may be
permitted or suffered by Tenant in or about the Premises or the Project and shall further
indemnify, defend and hold Landlord and the Landlord Parties harmless from and against any and all
claims to the extent arising from any breach or default in the performance of any obligation on
Tenant’s part to be performed under this Lease or arising from any negligence or willful misconduct
of Tenant or any of its agents, contractors, employees or invitees on the Project and from any and
all costs, attorneys’ fees and costs, expenses and liabilities incurred in the defense of any claim
or any action or proceeding brought thereon, including negotiations in connection therewith.
However, notwithstanding the foregoing, Tenant shall not be required to indemnify and/or hold the
Landlord Parties harmless from any loss, cost, liability, damage or expense, including, but not
limited to, penalties, fines, attorneys’ fees or costs (collectively, “Claims”), to any person,
property or entity to the extent resulting from the negligence or willful misconduct of the
Landlord Parties or any of their agents, contractors, or employees (except for damage to the Tenant
Improvements and Tenant’s personal property, fixtures, furniture and equipment in the Premises in
which case Tenant shall be responsible to the extent Tenant is required to obtain the requisite
insurance coverage pursuant to this Lease). Landlord shall indemnify, defend and hold Tenant
harmless from and against any Claims to the extent resulting from the negligence or willful
misconduct of Landlord or its agents, contractors or employees and not covered by insurance
required to be carried under this Lease by Tenant or actually carried by Tenant; provided, however,
that (i) because Landlord maintains insurance on the Project and Tenant compensates Landlord for
such insurance as part of Tenant’s Proportionate Share of Direct Costs and because of the existence
of waivers of subrogation set forth in Article 14 of this Lease, Landlord shall indemnify and hold
Tenant harmless from and against any Claims related to damage to the Project to the extent covered
by the property insurance that Landlord actually carries or that Landlord is required to carry
under this Lease, even if resulting from the negligent acts, omissions, or willful misconduct of
Tenant or those of its agents, contractors, or employees, and (ii) because Tenant must carry
insurance pursuant to Article 14 to cover its personal property within the Premises and the Tenant
Improvements, Tenant shall indemnify, defend and hold Landlord harmless from and against any Claim
related to damage to any of Tenant’s personal property within the Premises, to the extent covered
by the property insurance that Tenant actually carries or that Tenant is required to carry under
this Lease, even if resulting from the negligent acts, omissions or willful misconduct of Landlord
or those of its agents, contractors, or employees. Further, Tenant’s agreement to indemnify
Landlord and Landlord’s agreement to indemnify Tenant pursuant to this Section 13(a) is not
intended to and shall not relieve any insurance carrier of its obligations under policies required
to be carried by Landlord or Tenant pursuant to this Lease, to the extent such policies cover the
matters subject to such indemnification obligations. Tenant hereby assumes all risk of damage to
property or injury to persons in or about the Premises from any cause, and Tenant hereby waives all
claims in respect thereof against Landlord and the Landlord Parties, excepting to the extent the
damage is caused by the negligence or willful misconduct of Landlord or the Landlord Parties
(provided that in such case Landlord’s liability shall be limited to amounts not covered by
insurance carried by Tenant or required to be carried by Tenant pursuant to this Lease).



     (b) Exemption of Landlord from Liability. Landlord and the Landlord Parties shall not
be liable for injury to Tenant’s business, or loss of income therefrom, however occurring
(including, without limitation, from any failure or interruption of services or utilities or as a
result of Landlord’s negligence), or, except in connection with damage or injury to the extent
resulting from the negligence or willful misconduct of Landlord or the Landlord Parties (provided
that in such case Landlord’s liability shall be limited to amounts not covered by insurance carried
by Tenant or required to be carried by Tenant pursuant to this Lease), for damage that may be
sustained by the person, goods, wares, merchandise or property of Tenant, its employees, invitees,
customers, agents, or contractors, or any other person in, on or about the Premises directly or
indirectly caused by or resulting from any cause whatsoever, including, but not limited to, fire,
steam, electricity, gas, water, or rain which may leak or flow from or into any part of the
Premises, or from the breakage, leakage, obstruction or other defects of the pipes, sprinklers,
wires, appliances, plumbing, air conditioning, light fixtures, or mechanical or electrical systems, or from intrabuilding cabling or wiring,
whether such damage or injury results from conditions arising upon the Premises or upon other
portions of the Project or from other sources or places and regardless of whether the cause of such
damage or injury or the means of repairing the same is inaccessible to Tenant. Landlord and the
Landlord Parties shall not be liable to Tenant for any damages arising from any willful or
negligent action or inaction of any other tenant of the Project.



     (c) Security. Tenant acknowledges that Landlord’s election whether or not to provide
any type of mechanical surveillance or security personnel whatsoever in the Project is solely
within



-16-









 







Landlord’s discretion; Landlord and the Landlord Parties shall have no liability to Tenant
in connection with the provision, or lack, of such services, and Tenant hereby agrees to release
Landlord and the Landlord Parties from any liability with regard to any such potential claim
incurred by Tenant. Landlord and the Landlord Parties shall not be liable to Tenant for losses due
to theft, vandalism, or like causes.



ARTICLE 14




INSURANCE




     (a) Tenant’s Insurance. Tenant, shall at all times during the Term of this Lease, and
at its own cost and expense, procure and continue in force the following insurance coverage:
(i) Commercial General Liability Insurance, written on an occurrence basis, with a combined single
limit for bodily injury and property damages of not less than Two Million Dollars ($2,000,000) per
occurrence and Three Million Dollars ($3,000,000) in the annual aggregate, including products
liability coverage if applicable, owners and contractors protective coverage, blanket contractual
coverage, and personal injury coverage, covering the insuring provisions of this Lease and the
performance of Tenant of the indemnity and exemption of Landlord from liability agreements set
forth in Article 13 hereof; (ii) a policy of standard fire, extended coverage and special extended
coverage insurance (all risks), including a vandalism and malicious mischief endorsement, sprinkler
leakage coverage where sprinklers are provided in an amount equal to the full replacement value new
without deduction for depreciation of all (A) Tenant Improvements and Alterations in the Premises,
including but not limited to all mechanical, plumbing, heating, ventilating, air conditioning,
electrical, telecommunication and other equipment, systems and facilities installed by Tenant, and
(B) trade fixtures, furniture, equipment and other personal property installed by or at the expense
of Tenant; (iii) Worker’s Compensation coverage as required by law; and (iv) business interruption,
loss of income and extra expense insurance covering any failure or interruption of Tenant’s
business equipment (including, without limitation, telecommunications equipment) and covering all
other perils, failures or interruptions sufficient to cover a period of interruption of not less
than twelve (12) months. Tenant shall carry and maintain during the entire Term (including any
option periods, if applicable), at Tenant’s sole cost and expense, increased amounts of the
insurance required to be carried by Tenant pursuant to this Article 14 and such other reasonable
types of insurance coverage and in such reasonable amounts covering the Premises and Tenant’s
operations therein, as may be reasonably required by Landlord; provided that (A) Landlord may not
require Tenant to provide any new or increased insurance coverages more than once during the
initial Term nor more than once during any Option Term, and (B) Landlord may not require Tenant to
carry any type or amount of insurance coverages in excess of that generally required to be carried
by comparable tenants in comparable building projects owned by comparable owners in the Sunnyvale
market.



     (b) Form of Policies. The aforementioned minimum limits of policies and Tenant’s
procurement and maintenance thereof shall in no event limit the liability of Tenant hereunder. The
Commercial General Liability Insurance policy shall name Landlord, the Landlord Parties, Landlord’s
property manager, Landlord’s lender(s) and such other persons or firms as Landlord specifies in
writing from time to time, as additional insureds with an appropriate endorsement to the policy(s).
All such insurance policies carried by Tenant shall be with companies having a rating of not less
than A-VIII in Best’s Insurance Guide. Tenant shall furnish to Landlord, from the insurance
companies, or cause the insurance companies to furnish, certificates of coverage. The deductible
under each such policy shall be reasonably acceptable to Landlord. No such policy shall be
cancelable or subject to material reduction of coverage or cancellation except after thirty
(30) days prior written notice to Landlord by the insurer. All such policies shall be endorsed to
agree that Tenant’s policy is primary and that any insurance carried by Landlord is excess and not
contributing with any Tenant insurance requirement hereunder. Tenant shall, at least twenty
(20) days prior to the expiration of such policies, furnish Landlord with renewals or binders.
Tenant agrees that if Tenant does not take out and maintain such insurance or furnish Landlord with renewals or
binders in a timely manner, and such failure shall continue for three (3) days after Tenant’s
receipt of notice thereof from Landlord, then Landlord may (but shall not be required to) procure
said insurance on Tenant’s behalf and charge Tenant the cost thereof, which amount shall be payable
by Tenant promptly upon demand with interest (at the rate set forth in Section 20(e) below) from
the date such sums are expended. Tenant shall have the right to provide such insurance coverage
pursuant to blanket policies obtained by Tenant, provided such blanket policies expressly afford
coverage to the Premises and to Tenant as required by this Lease.



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     (c) Landlord’s Insurance. Landlord shall, as a cost to be included in Direct Costs,
procure and maintain at all times during the Term of this Lease, a policy or policies of insurance
covering loss or damage to the Project in the amount of the full replacement costs without
deduction for depreciation thereof, providing protection against all perils included within the
classification of fire and extended coverage, vandalism coverage and malicious mischief, sprinkler
leakage, water damage, and special extended coverage on the building. Additionally, Landlord may
carry: (i) Bodily Injury and Property Damage Liability Insurance and/or Excess Liability Coverage
Insurance; and (ii) Earthquake and/or Flood Damage Insurance; and (iii) Rental Income Insurance;
and (iv) any other forms of insurance Landlord may deem appropriate or any lender may require. The
costs of all insurance carried by Landlord shall be included in Direct Costs.



     (d) Waiver of Subrogation. Landlord and Tenant each agree to require their respective
insurers issuing the insurance described in Sections 14(a)(ii), 14(a)(iv) and the first sentence of
Section 14(c), waive any rights of subrogation that such companies may have against the other
party. Notwithstanding anything to the contrary contained in this Lease, Tenant hereby waives any
right that Tenant may have against Landlord and Landlord hereby waives any right that Landlord may
have against Tenant as a result of any loss or damage to their respective property (including the
Project) to the extent covered by the property insurance that is actually insured against or that
is required to be insured against under this Lease, without regard to the negligence or willful
misconduct of the party so released or any other cause.



     (e) Compliance with Law. Tenant agrees that it will not, at any time, during the Term
of this Lease, carry any stock of goods or do anything in or about the Premises that will in any
way tend to increase the insurance rates upon the Project. Except as expressly provided in
Article 7 above, Tenant agrees to pay Landlord forthwith upon demand the amount of any increase in
premiums for insurance that may be carried during the Term of this Lease, or the amount of
insurance to be carried by Landlord on the Project resulting from the foregoing, or from Tenant
doing any act in or about the Premises that does so increase the insurance rates, whether or not
Landlord shall have consented to such act on the part of Tenant. If Tenant installs upon the
Premises any electrical equipment which causes an overload of electrical lines of the Premises,
Tenant shall at its own cost and expense, in accordance with all other Lease provisions
(specifically including, but not limited to, the provisions of Article 9, 10 and 11 hereof), make
whatever changes are necessary to comply with requirements of the insurance underwriters and any
governmental authority having jurisdiction thereover, but nothing herein contained shall be deemed
to constitute Landlord’s consent to such overloading. Landlord shall, as a Direct Cost, comply
with all insurance requirements applicable to the Premises including, without limitation, the
installation of fire extinguishers or an automatic dry chemical extinguishing system; provided,
however, that if such requirement is imposed due to Tenant’s unique use of the Premises (as opposed
to general office use), then Tenant shall be responsible, at Tenant’s expense, for compliance with
such requirement.



ARTICLE 15




ASSIGNMENT AND SUBLETTING




     Tenant shall have no power to, either voluntarily, involuntarily, by operation of law or
otherwise, sell, assign, transfer or hypothecate this Lease, or sublet the Premises or any part
thereof, or permit the Premises or any part thereof to be used or occupied by anyone other than
Tenant or Tenant’s employees without the prior written consent of Landlord, which consent shall not
be unreasonably withheld. If Tenant is a corporation whose capital stock is not traded over a
public exchange or over-the-counter market, unincorporated association, partnership or limited
liability company, the sale, assignment, transfer or hypothecation of any class of stock or other
ownership interest in such corporation, association, partnership or limited liability company in
excess of fifty percent (50%) in the aggregate shall be deemed a “Transfer” within the meaning and
provisions of this Article 15. Tenant may transfer its interest pursuant to this Lease only upon the
following express conditions, which conditions are agreed by Landlord and Tenant to be reasonable:



     (a) That the proposed Transferee (as hereafter defined) shall be subject to the prior written
consent of Landlord, which consent will not be unreasonably withheld but, without limiting the
generality of the foregoing, it shall be reasonable for Landlord to deny such consent if:



          (i) The use to be made of the Premises by the proposed Transferee is a use which would be
prohibited by any other portion of this Lease (including but not limited to any Rules and
Regulations then in effect);



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          (ii) The financial responsibility of the proposed Transferee is not reasonably satisfactory to
Landlord in light of the Tenant’s obligations under this Lease; or




          (iii) The proposed Transferee is either a governmental agency or instrumentality thereof.




     (b) Upon Tenant’s submission of a request for Landlord’s consent to any such Transfer, Tenant
shall pay to Landlord Landlord’s then standard processing fee and reasonable out-of-pocket
attorneys’ fees and costs incurred in connection with the proposed Transfer, which shall in no
event exceed an aggregate of $3,000.00 per proposed Transfer;



     (c) That the proposed Transferee shall execute an agreement pursuant to which it shall agree
to perform faithfully and be bound by all of the terms, covenants, conditions, provisions and
agreements of this Lease applicable to that portion of the Premises so transferred; and



     (d) That an executed duplicate original of said assignment and assumption agreement or other
Transfer on a form reasonably approved by Landlord, shall be delivered to Landlord within five
(5) days after the execution thereof, and that such Transfer shall not be binding upon Landlord
until the delivery thereof to Landlord and the execution and delivery of Landlord’s consent
thereto. It shall be a condition to Landlord’s consent to any subleasing, assignment or other
transfer of part or all of Tenant’s interest in the Premises (“Transfer”) that (i) upon Landlord’s
consent to any Transfer, Tenant shall pay and continue to pay fifty percent (50%) of any “Transfer
Premium” (defined below), received by Tenant from the transferee; (ii) any sublessee of part or all
of Tenant’s interest in the Premises shall agree that in the event Landlord gives such sublessee
notice that Tenant is in default (beyond applicable notice and cure periods) under this Lease, such
sublessee shall thereafter make all sublease or other payments directly to Landlord, which will be
received by Landlord without any liability whether to honor the sublease or otherwise (except to
credit such payments against sums due under this Lease), and any sublessee shall agree to attorn to
Landlord or its successors and assigns at their request should this Lease be terminated for any
reason, except that in no event shall Landlord or its successors or assigns be obligated to accept
such attornment; (iii) any such consent shall be effected on forms supplied by Landlord and/or its
legal counsel; and (iv) Landlord may require that Tenant not then be in default hereunder in any
respect; and (v) Tenant or the proposed subtenant or assignee (collectively, “Transferee”) shall
agree to pay Landlord, upon demand, as Additional Rent, a sum equal to the additional costs, if
any, incurred by Landlord for maintenance and repair as a result of any change in the nature of
occupancy caused by such subletting or assignment. “Transfer Premium” shall mean all rent,
Additional Rent or other consideration payable by a Transferee in connection with a Transfer in
excess of the Basic Rental and Direct Costs payable by Tenant under this Lease during the term of
the Transfer and if such Transfer is for less than all of the Premises, the Transfer Premium shall
be calculated on a rentable square foot basis. In any event, the Transfer Premium shall be
calculated after deducting the reasonable expenses incurred by Tenant for (1) any changes,
alterations and improvements to the Premises paid for by Tenant in connection with the Transfer,
and (2) any brokerage commissions and reasonable attorneys’ fees paid for by Tenant in connection
with the Transfer. The calculation of “Transfer Premium” shall also include, but not be limited
to, key money, bonus money or other cash consideration paid by a Transferee to Tenant in connection
with such Transfer, and any payment in excess of fair market value for services rendered by Tenant
to the Transferee and any payment in excess of fair market value for assets, fixtures, inventory,
equipment, or furniture transferred by Tenant to the Transferee in connection with such Transfer.
Any Transfer of this Lease which is not in compliance with the provisions of this Article 15 shall
be voidable by written notice from Landlord and shall, at the option of Landlord, terminate this
Lease. In no event shall the consent by Landlord to any Transfer be construed as relieving Tenant
or any Transferee from obtaining the express written consent of Landlord to any further Transfer,
or as releasing Tenant from any liability or obligation hereunder whether or not then accrued and Tenant shall
continue to be fully liable therefor. No collection or acceptance of rent by Landlord from any
person other than Tenant shall be deemed a waiver of any provision of this Article 15 or the
acceptance of any Transferee hereunder, or a release of Tenant (or of any Transferee of Tenant).
Notwithstanding anything to the contrary in this Lease, if Tenant or any proposed Transferee claims
that Landlord has unreasonably withheld or delayed its consent under this Article 15 or otherwise
has breached or acted unreasonably under this Article 15, their sole remedies shall be a
declaratory judgment and an injunction for the relief sought, as well as an action for compensatory
damages, without any consequential or punitive damages, and Tenant hereby waives all other
remedies, including, without limitation, any right at law or equity to terminate this Lease, on its
own behalf and, to the extent permitted under all applicable laws, on behalf of the proposed
Transferee.



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     Notwithstanding anything to the contrary contained in this Article 15, except as provided in
the next grammatical paragraph below, Landlord shall have the option, by giving written notice
(“Recapture Notice”) to Tenant within fifteen (15) days after Landlord’s receipt of a request for
consent to a proposed Transfer for all or substantially all of the remainder of the Term (provided
that the space subject to such request, together with any space which is then subject to a previous
sublease, constitutes at least sixty-six percent (66%) of the rentable square footage of the
Premises) , to terminate this Lease as to the portion of the Premises that is the subject of the
proposed Transfer. However, if Landlord delivers a Recapture Notice to Tenant, Tenant may, within
ten (10) days after Tenant’s receipt of the Recapture Notice, deliver written notice to Landlord
indicating that Tenant is rescinding its request for consent to the proposed Transfer, in which
case such Transfer shall not be consummated and this Lease shall remain in full force and effect as
to the portion of the Premises that was the subject of the Transfer. Tenant’s failure to so notify
Landlord in writing within said ten (10) day period shall be deemed to constitute Tenant’s election
to allow the Recapture Notice to be effective. If this Lease is so terminated with respect to less
than the entire Premises, the Basic Rental and Tenant’s Proportionate Share shall be prorated based
on the number of rentable square feet retained by Tenant as compared to the total number of
rentable square feet previously contained in the Premises, and this Lease as so amended shall
continue thereafter in full force and effect, and upon the request of either party, the parties
shall execute written confirmation of the same.



     Notwithstanding anything to the contrary contained in this Article 15, an assignment or
subletting of all or a portion of the Premises to (i) an affiliate (“Affiliate”) of Tenant (an
entity which is controlled by, controls, or is under common control with, Tenant), (ii) any
successor corporation to Tenant by way of merger, consolidation or other corporate reorganization,
(iii) any entity acquiring all or substantially all of Tenant’s assets or stock, shall not be
deemed a Transfer under this Article 15, provided that Tenant notifies Landlord of any such
assignment or sublease and promptly supplies Landlord with any non-privileged, non-proprietary
documents or information reasonably requested by Landlord regarding such assignment or sublease or
such affiliate, and further provided that such assignment or sublease is not a subterfuge by Tenant
to avoid its obligations under this Lease. An assignee of Tenant’s entire interest in this Lease
pursuant to the immediately preceding sentence may be referred to herein as an “Affiliated
Assignee.” “Control,” as used in this Article 15, shall mean the ownership, directly or
indirectly, of greater than fifty percent (50%) of the voting securities of, or possession of the
right to vote, in the ordinary direction of its affairs, of greater than fifty percent (50%) of the
voting interest in, an entity.



ARTICLE 16




DAMAGE OR DESTRUCTION




     Within sixty (60) days after the date Landlord learns of the necessity for repairs as a result
of damage, Landlord shall notify Tenant (“Damage Repair Estimate”) of Landlord’s estimated
assessment of the period of time in which the repairs will be completed. If the Project is damaged
by fire or other casualty which Landlord is required to insure pursuant to Section 14(c) above, the
damage shall be repaired by Landlord provided the Damage Repair Estimate indicates that repairs can
be completed within one hundred eighty (180) days after the date of the Damage Repair Estimate,
without the payment of overtime or other premiums, and until such repairs are completed rent shall
be abated in proportion to the part of the Premises which is unusable by Tenant in the conduct of
its business (but there shall be no abatement of rent by reason of any portion of the Premises
being unusable for a period equal to one (1) day or less). Upon the occurrence of any damage to
the Premises, Tenant shall assign to Landlord (or to any party designated by Landlord) all insurance proceeds payable to Tenant under Section 14(a)(ii)(A)
above; provided, however, that if the cost of repair of improvements within the Premises by
Landlord exceeds the amount of insurance proceeds received by Landlord from Tenant’s insurance
carrier, as so assigned by Tenant, such excess costs (the “Excess TI Costs”) shall be paid by
Tenant to Landlord prior to Landlord’s repair of such damage, except that if Excess TI Costs exceed
one (1) month of Tenant’s Basic Rental, notwithstanding anything to the contrary contained herein,
Tenant may terminate this Lease by written notice to Landlord within ten (10) days after Tenant
learns of the amount of the Excess TI Costs, in which case this Lease shall so terminate unless
Landlord notifies Tenant, within ten (10) days after Landlord receives such written notice of
termination from Tenant, that Landlord agrees to fund the Excess TI Costs over and above one (1)
month of Tenant’s Basic Rental. If, however, the Damage Repair Estimate indicates that repairs
cannot be completed within one hundred eighty (180) days after the date of the Damage Repair
Estimate without the payment of overtime or other premiums, Landlord may, at its option, either
(i) make such repairs in a reasonable time and in such event this Lease shall continue in effect
and the rent shall be abated, if at all, in the manner provided




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in this Article 16, or (ii) elect
not to effect such repairs and instead terminate this Lease, by notifying Tenant in writing of such
termination within sixty (60) days after Landlord learns of the necessity for repairs as a result
of damage, such notice to include a termination date giving Tenant sixty (60) days to vacate the
Premises. In addition, Landlord may elect to terminate this Lease if the Project shall be damaged
by any casualty or cause, whether or not the Premises or any improvements within the Premises are
affected, if the damage is not fully covered, except for deductible amounts, by Landlord’s and
Tenant’s insurance policies and if the amount that Landlord will be required to expend in
connection with such repairs (not covered by insurance) exceeds two (2) months of Tenant’s Basic
Rental, unless Tenant agrees, within ten (10) days after its receipt of written request from
Landlord, to fund such deficiency to the extent in excess of two (2) months of Tenant’s Basic
Rental and to provide adequate security, as reasonably determined by Landlord, to ensure that
Tenant has the ability to fund such deficiency. However, if Landlord does not elect to terminate
this Lease pursuant to Landlord’s termination right as provided above, and the Damage Repair
Estimate indicates that repairs cannot be completed within one hundred eighty (180) days after the
date of the Damage Repair Estimate, Tenant may elect, not later than thirty (30) days after
Tenant’s receipt of the Damage Repair Estimate, to terminate this Lease by written notice to
Landlord effective as of the date specified in Tenant’s notice. Furthermore, if neither Landlord
nor Tenant have terminated this Lease and if such repairs are not substantially complete (i.e.,
complete other than minor punch list items) within the period specified in the Damage Repair
Estimate for such repairs (but not fewer than one hundred eighty (180) days after the date of the
Damage Repair Estimate), Tenant may, at any time thereafter, deliver notice to Landlord
(“Conditional Termination Notice”) of Tenant’s election to terminate this Lease, in which case if
such repairs are not substantially complete within forty-five (45) days after the date of
Landlord’s receipt of the Conditional Termination Notice, this Lease shall terminate as of the date
of expiration of such forty-five (45) day period. However, if such repairs are substantially
complete within such forty-five (45) day period, then Tenant’s Conditional Termination Notice shall
be of no force or effect. Finally, if the Premises or the Project is damaged to any substantial
extent during the last twelve (12) months of the Term, then notwithstanding anything contained in
this Article 16 to the contrary, Landlord shall have the option to terminate this Lease by giving
written notice to Tenant of the exercise of such option within sixty (60) days after Landlord
learns of the necessity for repairs as the result of such damage. In the event that the Premises
or the Project is destroyed or damaged to any substantial extent during the last twelve (12) months
of the Term and if such damage shall take longer than sixty (60) days to repair, then
notwithstanding anything in this Article 16 to the contrary, Tenant shall have the option to
terminate this Lease by written notice to Landlord of the exercise of such option within sixty (60)
days after Tenant learns of the necessity for repairs as the result of such damage. A total
destruction of the Project shall automatically terminate this Lease. Except as provided in this
Article 16, there shall be no abatement of rent and no liability of Landlord by reason of any
injury to or interference with Tenant’s business or property arising from such damage or
destruction or the making of any repairs, alterations or improvements in or to any portion of the
Project or
the Premises or in or to fixtures, appurtenances and equipment therein. Tenant
understands that Landlord will not carry insurance of any kind on Tenant’s furniture, furnishings,
trade fixtures or equipment, and that Landlord shall not be obligated to repair any damage thereto
or replace the same. Tenant acknowledges that Tenant shall have no right to any proceeds of
insurance carried by Landlord relating to property damage. With respect to any damage which
Landlord is obligated to repair or elects to repair, Tenant, as a material inducement to Landlord
entering into this Lease, irrevocably waives and releases its rights under the provisions of
Sections 1932 and 1933 of the California Civil Code.




ARTICLE 17




SUBORDINATION




     This Lease is subject and subordinate to all ground or underlying leases, mortgages and deeds
of trust which affect the property or the Project, including all renewals, modifications,
consolidations, replacements and extensions thereof (collectively, “Mortgages”); provided, however,
if the lessor under any such lease or the holder or holders of any such mortgage or deed of trust
shall advise Landlord that they desire or require this Lease to be prior and superior thereto, upon
written request of Landlord to Tenant, Tenant agrees to promptly execute, acknowledge and deliver
any and all documents or instruments which Landlord or such lessor, holder or holders deem
necessary or desirable for purposes thereof. Landlord shall have the right to cause this Lease to
be and become and remain subject and subordinate to any and all ground or underlying leases,
mortgages or deeds of trust which may hereafter be executed covering the Premises, the Project or



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the property or any renewals, modifications, consolidations, replacements or extensions thereof,
for the full amount of all advances made or to be made thereunder and without regard to the time or
character of such advances, together with interest thereon and subject to all the terms and
provisions thereof; provided, however, that Landlord obtains from the lender or other holder of the
Mortgage in question a written undertaking in favor of Tenant to the effect that such lender or
other holder will not disturb Tenant’s right of possession and will recognize all of Tenant’s
rights under this Lease if Tenant is not then or thereafter in default (beyond applicable notice
and cure periods) of any covenant or provision of this Lease. Tenant agrees, within ten
(10) business days after Landlord’s written request therefor, to execute, acknowledge and deliver
upon request a subordination, non-disturbance and attornment agreement in a commercially reasonable
form to assure the non-disturbance protection and subordination of this Lease to any such
mortgages, deed of trust, or leasehold estates (hereinafter, an “SNDA”). Tenant agrees that in the
event any proceedings are brought for the foreclosure of any mortgage or deed of trust or any deed
in lieu thereof, to attorn to the purchaser or any successors thereto upon any such foreclosure
sale or deed in lieu thereof as so requested to do so by such purchaser and to recognize such
purchaser as the lessor under this Lease; Tenant shall, within ten (10)  days after request execute
such further instruments or assurances as such purchaser may reasonably deem necessary to evidence
or confirm such attornment. Tenant agrees to provide copies of any notices of Landlord’s default
under this Lease to any mortgagee or deed of trust beneficiary whose address has been provided to
Tenant and Tenant shall provide such mortgagee or deed of trust beneficiary a commercially
reasonable time after receipt of such notice within which to cure any such default. Tenant waives
the provisions of any current or future statute, rule or law which may give or purport to give
Tenant any right or election to terminate or otherwise adversely affect this Lease and the
obligations of the Tenant hereunder in the event of any foreclosure proceeding or sale. Landlord
represents and warrants to Tenant that, as of the date of this Lease, there are no Mortgages
encumbering the Premises or the Project.




ARTICLE 18




EMINENT DOMAIN




     If the whole of the Premises or the Project or so much thereof as to render the balance
unsuitable for the continued use and operation of the Premises by Tenant (for substantially the
same purposes as immediately prior to the taking) shall be taken under power of eminent domain, or
is sold, transferred or conveyed in lieu thereof, this Lease shall automatically terminate as of
the date possession is taken by the condemning authority. No award for any partial or entire
taking shall be apportioned, and Tenant hereby assigns to Landlord any award which may be made in
such taking or condemnation, together with any and all rights of Tenant now or hereafter arising in
or to the same or any part thereof; provided, however, that nothing contained herein shall be
deemed to give Landlord any interest in or to require Tenant to assign to Landlord any award made
to Tenant for the taking of personal property and trade fixtures belonging to Tenant and removable
by Tenant at the expiration of the Term hereof as provided hereunder or for the interruption of, or
damage to, Tenant’s business, or Tenant’s moving and relocation costs. In the event of a partial
taking described in this Article 18, or a sale, transfer or conveyance in lieu thereof, which does
not result in a termination of this Lease, (i) the rent shall be apportioned according to the ratio
that the part of the Premises remaining useable by Tenant bears to the total area of the Premises,
and (ii) Landlord shall proceed with reasonable diligence to restore the remaining portion(s) of
the Premises and Project substantially to their former condition to the extent feasible to
constitute a complete and tenantable Premises. Tenant hereby waives any and all rights it might
otherwise have pursuant to Section 1265.130 of the California Code of Civil Procedure.



ARTICLE 19




DEFAULT




     (a) Tenant Default. Each of the following acts or omissions of Tenant or of any
guarantor of Tenant’s performance hereunder, or occurrences, shall constitute an “Event of
Default”:



          (i) Failure or refusal to pay Basic Rental, Additional Rent or any other amount to be paid by
Tenant to Landlord hereunder within five (5)  calendar days after notice that the same is due or
payable hereunder; said five (5) day period shall be in lieu of, and not in addition to, the notice
requirements of Section 1161 of the California Code of Civil Procedure or any similar or successor
law, provided that any such notice is prepared and served upon Tenant in accordance with




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the
requirements of Section 1161 of the California Code of Civil Procedure or any similar or successor
law;




          (ii) Except as set forth in items (i) above and (iii) through and including (vi) below,
failure to perform or observe any other covenant or condition of this Lease to be performed or
observed within thirty (30) days following written notice to Tenant of such failure, provided,
however, that if the nature of Tenant’s failure to perform reasonably requires more than thirty
(30) days to cure, then Tenant shall not be deemed in default if Tenant commences to cure such
failure within said thirty (30) day period and thereafter diligently and in good faith prosecutes
such cure to completion. Such thirty (30) day notice shall be in lieu of, and not in addition to,
any required under Section 1161 of the California Code of Civil Procedure or any similar or
successor law, provided that any such notice is prepared and served upon Tenant in accordance with
the requirements of Section 1161 of the California Code of Civil Procedure or any similar or
successor law;




          (iii) Abandonment of the Premises or any significant portion thereof while Tenant is in
default in the payment of any of its monetary obligations or material non-monetary obligations
hereunder;




          (iv) The filing by Tenant or any guarantor hereunder in any court pursuant to any statute of a
petition in bankruptcy or insolvency or for reorganization or arrangement for the appointment of a
receiver of all or a portion of Tenant’s property; the filing against Tenant or any guarantor
hereunder of any such petition, or the commencement of a proceeding for the appointment of a
trustee, receiver or liquidator for Tenant, or for any guarantor hereunder, or of any of the
property of either, or a proceeding by any governmental authority for the dissolution or
liquidation of Tenant or any guarantor hereunder, if such proceeding shall not be dismissed or
trusteeship discontinued within sixty (60) days after commencement of such proceeding or the
appointment of such trustee or receiver; or the making by Tenant or any guarantor hereunder of an
assignment for the benefit of creditors;




          (v) Tenant’s failure to cause to be released any mechanics liens filed against the Premises or
the Project within twenty (20) days after the date by which Tenant has received a second written
notice from Landlord (after a Lien Notice and the expiration of the ten (10) day period specified
in Article 10 above) that the same shall have been filed or recorded; or




          (vi) Tenant’s failure to observe or perform according to the provisions of Articles 7, 14, 17
or 25 within five (5) business days after notice from Landlord (which notice from Landlord may be
delivered only after any notice and cure periods specified in such Article).




     (b) Landlord Default. Notwithstanding anything to the contrary set forth in this
Lease, Landlord shall be in default in the performance of any obligation required to be performed
by Landlord pursuant to this Lease if Landlord fails to perform such obligation within thirty (30)
days after the receipt of notice from Tenant specifying in detail Landlord’s failure to perform;
provided, however, if the nature of Landlord’s obligation is such that more than thirty (30) days
are required for its performance, then Landlord shall not be in default under this Lease if it
shall commence such performance within such thirty (30) day period and thereafter diligently pursue
the same to completion. Upon any such default by Landlord under this Lease, Tenant may, except as
otherwise specifically provided in this Lease to the contrary, exercise any of its rights provided
at law or in equity.



ARTICLE 20




REMEDIES




     (a) Upon the occurrence of an Event of Default under this Lease as provided in Article 19
hereof, Landlord may exercise all of its remedies as may be permitted by law, including but not
limited to the remedy provided by Section 1951.4 of the California Civil Code, and including
without limitation, terminating this Lease, reentering the Premises and removing all persons and
property therefrom, which property may be stored by Landlord at a warehouse or elsewhere at the
risk, expense and for the account of Tenant, subject to California law. If Landlord elects to
terminate this Lease, Landlord shall be entitled to recover from Tenant the aggregate of all
amounts permitted by law, including but not limited to (i) the worth at the time of award of the
amount of any unpaid rent which had been earned at the time of such termination; plus (ii) the
worth at the time of award of the amount by which the unpaid rent which would have been earned
after termination until



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the time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the Term after the time of award exceeds the amount of
such rental loss that Tenant proves could have been reasonably avoided; plus (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to
perform its obligations under this Lease or which in the ordinary course of things would be likely
to result therefrom, specifically including but not limited to, tenant improvement expenses,
brokerage commissions and advertising expenses incurred, expenses of remodeling the Premises or any
portion thereof for a new tenant, whether for the same or a different use, and any special
concessions made to obtain a new tenant; and (v) at Landlord’s election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time by applicable law.
The term “rent” as used in this Section 20(a) shall be deemed to be and to mean all sums of every
nature required to be paid by Tenant pursuant to the terms of this Lease, whether to Landlord or to
others. As used in items (i) and (ii), above, the “worth at the time of award” shall be computed
by allowing interest at the rate set forth in item (e), below, but in no case greater than the
maximum amount of such interest permitted by law. As used in item (iii), above, the “worth at the
time of award” shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).




     (b) Nothing in this Article 20 shall be deemed to affect Landlord’s right to indemnification
for liability or liabilities arising prior to the termination of this Lease for personal injuries
or property damage under the indemnification clause or clauses contained in this Lease.



     (c) Notwithstanding anything to the contrary set forth herein, Landlord’s re-entry to perform
acts of maintenance or preservation of or in connection with efforts to relet the Premises or any
portion thereof, or the appointment of a receiver upon Landlord’s initiative to protect Landlord’s
interest under this Lease shall not terminate Tenant’s right to possession of the Premises or any
portion thereof and, until Landlord does elect to terminate this Lease, this Lease shall continue
in full force and effect and Landlord may enforce all of Landlord’s rights and remedies hereunder
including, without limitation, the remedy described in California Civil Code Section 1951.4 (lessor
may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes
due, if lessee has the right to sublet or assign, subject only to reasonable limitations).
Accordingly, if Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights
and remedies under this Lease, including the right to recover all rent as it becomes due.



     (d) All rights, powers and remedies of Landlord hereunder and under any other agreement now or
hereafter in force between Landlord and Tenant shall be cumulative and not alternative and shall be
in addition to all rights, powers and remedies given to Landlord by law, and the exercise of one or
more rights or remedies shall not impair Landlord’s right to exercise any other right or remedy.



     (e) Any amount due from Tenant to Landlord hereunder which is not paid when due shall bear
interest at the lower of ten percent (10%) per annum or the maximum lawful rate of interest from
the due date until paid, unless otherwise specifically provided herein, but the payment of such
interest shall not excuse or cure any default by Tenant under this Lease. In addition to such
interest: (i) if Basic Rental is not paid on or before the fifth (5th) day of the
calendar month for which the same is due, a late charge equal to five percent (5%) of the amount
overdue or $100, whichever is greater, shall be immediately due and owing and shall accrue for each
calendar month or part thereof
until such rental, including the late charge, is paid in full, which late charge Tenant hereby
agrees is a reasonable estimate of the damages Landlord shall suffer as a result of Tenant’s late
payment and (ii) an additional charge of $25 shall be assessed for any check given to Landlord by
or on behalf of Tenant which is not honored by the drawee thereof; which damages include Landlord’s
additional administrative and other costs associated with such late payment and unsatisfied checks
and the parties agree that it would be impracticable or extremely difficult to fix Landlord’s
actual damage in such event. Such charges for interest and late payments and unsatisfied checks
are separate and cumulative and are in addition to and shall not diminish or represent a substitute
for any or all of Landlord’s rights or remedies under any other provision of this Lease.
Notwithstanding the foregoing or anything to the contrary contained in this Lease, no late charge
or interest shall be due on the first (and only the first) late payment of any rent or other amount
payable hereunder by Tenant to Landlord in any calendar year during the Term unless Tenant fails to
make such payment within five (5) days after its has received written notice of the delinquency
from Landlord.



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     (f) In the event of any default, breach or violation of Tenant’s rights under this Lease by
Landlord, Tenant’s exclusive remedies shall be an action for specific performance or action for
actual damages. Without limiting any other waiver by Tenant which may be contained in this Lease,
except as expressly provided in Section 9(a)(ii) above, Tenant hereby waives the benefit of any law
granting it the right to perform Landlord’s obligation, or the right to terminate this Lease on
account of any Landlord default.



ARTICLE 21




TRANSFER OF LANDLORD’S INTEREST




     In the event of any transfer of Landlord’s interest in the Premises or the Project by sale,
assignment, transfer, foreclosure, deed-in-lieu of foreclosure or otherwise whether voluntary or
involuntary, Landlord shall be automatically relieved of any and all obligations and liabilities on
the part of Landlord first accruing from and after the date of such transfer or termination,
including furthermore without limitation, the obligation of Landlord under Article 4 and California
Civil Code 1950.7 above to return the security deposit, provided said security deposit is
transferred to said transferee. Tenant agrees to attorn to the transferee upon any such transfer
and to recognize such transferee as the lessor under this Lease and Tenant shall, within five
(5) days after request, execute such further instruments or assurances as such transferee may
reasonably deem necessary to evidence or confirm such attornment.



ARTICLE 22




BROKER




     In connection with this Lease, Landlord and Tenant warrant and represent to each other that
they have had dealings only with firm(s) set forth in Article 1.H. of the Basic Lease Provisions
(collectively, the “Brokers”) and that they know of no other person or entity who is or might be
entitled to a commission, finder’s fee or other like payment in connection herewith and does hereby
indemnify and agree to hold the other party, and their agents, members, partners, representatives,
officers, affiliates, shareholders, employees, successors and assigns harmless from and against any
and all loss, liability and expenses that the other party may incur should such warranty and
representation prove incorrect, inaccurate or false. Landlord shall pay all brokerage commissions
due to such Brokers arising out the execution of this Lease pursuant to Landlord’s separate
agreement with such Brokers.



ARTICLE 23




PARKING




     Tenant shall be entitled to use, commencing on the Commencement Date, the number of unreserved
parking passes set forth in Article 1.I. of the Basic Lease Provisions, which parking passes shall
pertain to the Project parking facility. Tenant shall not be required to pay Landlord any fee for
such parking passes; however, Tenant shall be responsible for the full amount of any taxes imposed
by any governmental authority in connection with the renting of such parking passes by Tenant or
the use of the parking facility by Tenant. Tenant shall abide by all reasonable and
non-discriminatory rules and regulations which are prescribed from time to time for the orderly
operation and use of the parking facility where the parking passes are located, including any
sticker or other identification system established by Landlord. Tenant shall cooperate in seeing that Tenant’s
employees and visitors also comply with such rules and regulations. Landlord specifically reserves
the right to change the size, configuration, design, layout and all other aspects of the Project
parking facility at any time and Tenant acknowledges and agrees that Landlord may, without
incurring any liability to Tenant and without any abatement of rent under this Lease, from time to
time, close-off or restrict access to the Project parking facility for purposes of permitting or
facilitating any such construction, alteration or improvements, so long as Tenant’s access to and
use of the Premises, and Tenant’s parking rights, are not materially impaired. Landlord may, from
time to time, relocate any reserved parking spaces (if any) rented by Tenant to another location in
the Project parking facility. Landlord may delegate its responsibilities hereunder to a parking
operator or a lessee of the parking facility in which case such parking operator or lessee shall
have all the rights of control attributed hereby to the Landlord. The parking passes rented by
Tenant pursuant to this Article 23 are provided to Tenant solely for use by Tenant’s own personnel
and visitors and except on a prorata basis (based on relative square footage) in connection with a
permitted Transfer under Article 15



 -25- 









 




above, such passes may not be transferred, assigned, subleased
or otherwise alienated by Tenant without Landlord’s prior approval.




ARTICLE 24




WAIVER




     No waiver by either party hereto of any provision of this Lease shall be deemed to be a waiver
of any other provision hereof or of any subsequent breach by the other party of the same or any
other provision. No provision of this Lease may be waived by Landlord or Tenant, except by an
instrument in writing executed by Landlord. Landlord’s consent to or approval of any act by Tenant
requiring Landlord’s consent or approval shall not be deemed to render unnecessary the obtaining of
Landlord’s consent to or approval of any subsequent act of Tenant, whether or not similar to the
act so consented to or approved. No act or thing done by Landlord or Landlord’s agents during the
Term of this Lease shall be deemed an acceptance of a surrender of the Premises, and no agreement
to accept such surrender shall be valid unless in writing and signed by Landlord. The subsequent
acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay
the particular rent so accepted, regardless of Landlord’s knowledge of such preceding breach at the
time of acceptance of such rent. Any payment by Tenant or receipt by Landlord of an amount less
than the total amount then due hereunder shall be deemed to be in partial payment only thereof and
not a waiver of the balance due or an accord and satisfaction, notwithstanding any statement or
endorsement to the contrary on any check or any other instrument delivered concurrently therewith
or in reference thereto. Accordingly, Landlord may accept any such amount and negotiate any such
check without prejudice to Landlord’s right to recover all balances due and owing and to pursue its
other rights against Tenant under this Lease, regardless of whether Landlord makes any notation on
such instrument of payment or otherwise notifies Tenant that such acceptance or negotiation is
without prejudice to Landlord’s rights.



ARTICLE 25




ESTOPPEL CERTIFICATE




     Tenant shall, at any time and from time to time, upon not less than ten (10) days’ prior
written notice from Landlord, execute, acknowledge and deliver to Landlord a statement in writing
certifying the following information, (but not limited to the following information in the event
further information is reasonably requested by Landlord): (i) that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such modification and certifying that
this Lease, as modified, is in full force and effect); (ii) the dates to which the rental and other
charges are paid in advance, if any; (iii) the amount of Tenant’s security deposit, if any; and
(iv) acknowledging that there are not, to Tenant’s knowledge, any uncured defaults on the part of
Landlord hereunder, and no events or conditions then in existence which, with the passage of time
or notice or both, would constitute a default on the part of Landlord hereunder, or specifying such
defaults, events or conditions, if any are claimed. It is expressly understood and agreed that any
such statement may be relied upon by any prospective purchaser or encumbrancer of all or any
portion of the Real Property. Tenant’s failure to deliver such statement within such time shall
constitute an admission by Tenant that all statements contained therein are true and correct.



ARTICLE 26




LIABILITY OF LANDLORD




     Notwithstanding anything in this Lease to the contrary, any remedy of Tenant for the
collection of a judgment (or other judicial process) requiring the payment of money by Landlord in
the event of any default by Landlord hereunder or any claim, cause of action or obligation,
contractual, statutory or otherwise by Tenant against Landlord or the Landlord Parties concerning,
arising out of or relating to any matter relating to this Lease and all of the covenants and
conditions or any obligations, contractual, statutory, or otherwise set forth herein, shall be
limited solely and exclusively to an amount which is equal to the sum of any sales, insurance and
condemnation proceeds received therefrom by Landlord plus the lesser of (i) the interest of
Landlord in and to the Project, and (ii) the interest Landlord would have in the Project if the
Project were encumbered by third party debt in an amount equal to eighty percent (80%) of the then
current value of the Project. No other property or assets of Landlord or any Landlord Party shall
be subject to levy, execution or



 -26- 









 




other enforcement procedure for the satisfaction of Tenant’s
remedies under or with respect to this Lease, Landlord’s obligations to Tenant, whether
contractual, statutory or otherwise, the relationship of Landlord and Tenant hereunder, or Tenant’s
use or occupancy of the Premises.




ARTICLE 27




INABILITY TO PERFORM




     This Lease and the obligations of Landlord and Tenant hereunder shall not be affected or
impaired because a party obligated to perform is unable to fulfill any of its obligations hereunder
or is delayed in doing so, if such inability or delay is caused by reason of any prevention, delay,
stoppage due to strikes, lockouts, acts of God, or any other cause previously, or at such time,
beyond the reasonable control or anticipation of such party (collectively, a “Force Majeure”) and
such party’s obligations under this Lease shall be forgiven and suspended by any such Force
Majeure; provided, however, that this Article 27 is not intended to, and shall not, extend (i) the
time period for the payment of any monetary amounts due (including, without limitation, rent
payments from Tenant) from either party to the other under this Lease nor relieve either party from
their monetary obligations to the other under this Lease, or (ii) the time periods set forth in
Article 16 above.



ARTICLE 28




HAZARDOUS WASTE




     (a) Tenant shall not cause or permit any Hazardous Material (as defined in Section 28(d)
below) to be brought, kept or used in or about the Project by Tenant, its agents, employees,
contractors, or invitees except for general office supplies typically used in the ordinary course
of business (e.g., copier toner, liquid paper, glue, ink, and cleaning solvents) in commercially
reasonable amounts. Tenant indemnifies Landlord and the Landlord Parties from and against any
breach by Tenant of the obligations stated in the preceding sentence, and agrees to defend and hold
Landlord and the Landlord Parties harmless from and against any and all claims, judgments, damages,
penalties, fines, costs, liabilities, or losses (including, without limitation, diminution in value
of the Project, damages for the loss or restriction or use of rentable or usable space or of any
amenity of the Project, damages arising from any adverse impact or marketing of space in the
Project, and sums paid in settlement of claims, attorneys’ fees and costs, consultant fees, and
expert fees) which arise during or after the Term of this Lease as a result of such breach. This
indemnification of Landlord and the Landlord Parties by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any cleanup, remedial, removal,
or restoration work required by any federal, state, or local governmental agency or political
subdivision because of Hazardous Material present in the soil or ground water on or under the
Project. Without limiting the foregoing, if the presence of any Hazardous Material on the Project
caused or permitted by Tenant results in any contamination of the Project in violation of
applicable Law, then subject to the provisions of Articles 9, 10 and 11 hereof, Tenant shall
promptly take all actions at its sole expense as are necessary to return the Project to the
condition existing prior to the introduction of any such Hazardous Material and the contractors to
be used by Tenant for such work must be approved by Landlord, which approval shall not be
unreasonably withheld so long as such actions would not potentially have any material adverse
long-term or short-term effect on the Project and so long as such actions do not materially
interfere with the use and enjoyment of the Project by the
other tenants thereof; provided however, Landlord shall also have the right, by written notice
to Tenant, to directly undertake any such mitigation efforts with regard to Hazardous Materials in
or about the Project due to Tenant’s breach of its obligations pursuant to this Section 28(a), and
to charge Tenant, as Additional Rent, for the costs thereof.



     (b) It shall not be unreasonable for Landlord to withhold its consent to any proposed Transfer
if (i) the proposed transferee’s anticipated use of the Premises involves the generation, storage,
use, treatment, or disposal of Hazardous Materials that are not typically used in connection with
an office use; (ii) the proposed Transferee is subject to an enforcement order issued by any
governmental authority in connection with the use, disposal, or storage of a Hazardous Material.



     (c) As used herein, the term “Hazardous Material” means any hazardous or toxic substance,
material, or waste which is or becomes regulated by any local governmental authority, the State of
California or the United States Government. The term “Hazardous Material” includes, without
limitation, any material or substance which is (i) defined as “Hazardous Waste,” “Extremely
Hazardous Waste,” or “Restricted Hazardous Waste” under Sections 25115, 25117 or 25122.7, or



 -27- 









 




listed
pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5
(Hazardous Waste Control Law), (ii) defined as a “Hazardous Substance” under Section 25316 of the
California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous
Substance Account Act), (iii) defined as a “Hazardous Material,” “Hazardous Substance,” or
“Hazardous Waste” under Section 25501 of the California Health and Safety Code, Division 20,
Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a
“Hazardous Substance” under Section 25281 of the California Health and Safety Code, Division 20,
Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) asbestos,
(vii) listed under Article 9 or defined as Hazardous or extremely hazardous pursuant to Article 11
of Title 22 of the California Administrative Code, Division 4, Chapter 20, (viii) designated as a
“Hazardous Substance” pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C.
§ 1317), (ix) defined as a “Hazardous Waste” pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903), or (x) defined as a
“Hazardous Substance” pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (42 U.S.C. § 9601).




     (d) As used herein, the term “Laws” means any applicable federal, state or local law,
ordinance, or regulation relating to any Hazardous Material affecting the Project, including,
without limitation, the laws, ordinances, and regulations referred to in Section 28(c) above.



     (e) Landlord represents to Tenant that, to Landlord’s actual knowledge as of the date hereof,
the Project does not currently contain any Hazardous Materials in violation of any existing
applicable Laws. As used herein, the phrase “actual knowledge” shall mean the actual knowledge of
Landlord’s property manager for the Project, without investigation or inquiry or duty of
investigation or inquiry. Landlord’s property manager for the Project is making such
representation and warranty on behalf of Landlord and not in such person’s individual capacity and,
as a result, Landlord (and not such individual) shall be liable in the event of a breach of this
representation. Landlord shall, at no cost to Tenant (and not as an Operating Cost), remove or
remediate any Hazardous Material in the Project to the extent required under applicable Laws,
except where such removal or remediation is Tenant’s responsibility pursuant to Section 28(a)
above. Tenant shall not be liable for any Hazardous Materials which exist in the Project prior to
the Commencement Date under this Lease.



ARTICLE 29




SURRENDER OF PREMISES; REMOVAL OF PROPERTY




     (a) The voluntary or other surrender of this Lease by Tenant to Landlord, or a mutual
termination hereof, shall not work a merger, and shall at the option of Landlord, operate as an
assignment to it of any or all subleases or subtenancies affecting the Premises.



     (b) Upon the expiration of the Term of this Lease, or upon any earlier termination of this
Lease, Tenant shall quit and surrender possession of the Premises to Landlord in good order and
condition, reasonable wear and tear, Alterations that Tenant is not required to remove from the
Premises, damage caused by casualty or condemnation that Tenant is not required to repair pursuant
to this Lease and repairs which are Landlord’s obligation excepted, and shall, without expense to
Landlord, remove or cause to be removed from the Premises the UPS systems serving the Premises
and all debris and rubbish, all furniture, equipment, business and trade fixtures, free-standing
cabinet work, moveable partitioning, telephone and data cabling installed by Tenant and other
articles of personal property in the Premises except to the extent (i) Landlord elects by notice to
Tenant to exercise its option to have any subleases or subtenancies assigned to it, and/or
(ii) Landlord elects by notice to Tenant to remove the data cabling installed by Tenant (in which
event Tenant shall pay to Landlord the estimated cost [as reasonably determined by Landlord] to be
incurred by Landlord in connection with removing said data cabling within twenty (20) days
following written demand therefor from Landlord). Tenant shall be responsible for the cost to
repair all damage to the Premises resulting from the removal of any of such items from the
Premises.



     (c) Whenever Landlord shall lawfully enter the Premises upon expiration or termination of
this Lease, any property of Tenant not removed by Tenant upon the expiration or termination of the
Term of this Lease, shall be considered abandoned and Landlord may remove any or all of such items
and dispose of the same in any manner or store the same in a public warehouse or elsewhere for the
account and at the expense and risk of Tenant, and if Tenant shall fail to pay the cost of storing
any such property after it has been stored for a period of thirty (30) days or more, Landlord may
sell any or all of such property at public or private sale, in such manner and at such times and



 -28- 









 




places as Landlord, in its sole discretion, may deem proper, without notice to or demand upon
Tenant, for the payment of all or any part of such charges or the removal of any such property, and
shall apply the proceeds of such sale as follows: first, to the cost and expense of such sale,
including reasonable attorneys’ fees and costs for services rendered; second, to the payment of the
cost of or charges for storing any such property; third, to the payment of any other sums of money
which may then or thereafter be due to Landlord from Tenant under any of the terms hereof; and
fourth, the balance, if any, to Tenant.




     (d) All fixtures, Tenant Improvements, Alterations and/or appurtenances attached to or built
into the Premises during the Term, whether at the expense of Landlord or Tenant, or of both, shall
be and remain part of the Premises and shall not be removed by Tenant at the end of the Term unless
otherwise expressly provided for in this Lease ( it being understood that Tenant shall have no
obligation to remove any of the initial Improvements, so long as such Improvements constitute
customary office improvements). Such fixtures, Tenant Improvements, Alterations and/or
appurtenances shall include but not be limited to: all floor coverings, drapes, paneling, built-in
cabinetry, molding, doors, vaults (including vault doors), plumbing systems, security systems,
electrical systems, lighting systems, all fixtures and outlets for the systems mentioned above and
for all telephone, radio and television purposes, and any special flooring or ceiling
installations.



ARTICLE 30




MISCELLANEOUS




     (a) SEVERABILITY; ENTIRE AGREEMENT. ANY PROVISION OF THIS LEASE WHICH SHALL PROVE TO
BE INVALID, VOID, OR ILLEGAL SHALL IN NO WAY AFFECT, IMPAIR OR INVALIDATE ANY OTHER PROVISION
HEREOF AND SUCH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT. THIS LEASE AND THE
EXHIBITS AND ANY ADDENDUM ATTACHED HERETO CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES
HERETO WITH REGARD TO TENANT’S OCCUPANCY OR USE OF ALL OR ANY PORTION OF THE PROJECT, AND NO PRIOR
AGREEMENT OR UNDERSTANDING PERTAINING TO ANY SUCH MATTER SHALL BE EFFECTIVE FOR ANY PURPOSE. NO
PROVISION OF THIS LEASE MAY BE AMENDED OR SUPPLEMENTED EXCEPT BY AN AGREEMENT IN WRITING SIGNED BY
THE PARTIES HERETO OR THEIR SUCCESSOR IN INTEREST. THE PARTIES AGREE THAT ANY DELETION OF LANGUAGE
FROM THIS LEASE PRIOR TO ITS MUTUAL EXECUTION BY LANDLORD AND TENANT SHALL NOT BE CONSTRUED TO HAVE
ANY PARTICULAR MEANING OR TO RAISE ANY PRESUMPTION, CANON OF CONSTRUCTION OR IMPLICATION INCLUDING,
WITHOUT LIMITATION, ANY IMPLICATION THAT THE PARTIES INTENDED THEREBY TO STATE THE CONVERSE,
OBVERSE OR OPPOSITE OF THE DELETED LANGUAGE.



     (b) Attorneys’ Fees; Waiver of Jury Trial.



          (i) In any action to enforce the terms of this Lease, including any suit by Landlord for the
recovery of rent or possession of the Premises, the losing party shall pay the
successful party a reasonable sum for attorneys’ fees and costs in such suit and such
attorneys’ fees and costs shall be deemed to have accrued prior to the commencement of such action
and shall be paid whether or not such action is prosecuted to judgment. Tenant shall also
reimburse Landlord for all costs incurred by Landlord in connection with enforcing its rights under
this Lease against Tenant following a bankruptcy by Tenant or otherwise, including, without
limitation, legal fees, experts’ fees and expenses, court costs and consulting fees.




          (ii) Should Landlord, without fault on Landlord’s part, be made a party to any litigation
instituted by Tenant or by any third party against Tenant, or by or against any person holding
under or using the Premises by license of Tenant, or for the foreclosure of any lien for labor or
material furnished to or for Tenant or any such other person or otherwise arising out of or
resulting from any act or transaction of Tenant or of any such other person, Tenant covenants to
save and hold Landlord harmless from any judgment rendered against Landlord or the Premises or any
part thereof and from all costs and expenses, including reasonable attorneys’ fees and costs
incurred by Landlord in connection with such litigation.



          (iii) TO THE EXTENT PERMITTED BY LAW, EACH PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION SEEKING SPECIFIC



 -29- 









 




PERFORMANCE OF ANY PROVISION OF THIS LEASE, FOR DAMAGES FOR ANY BREACH
UNDER THIS LEASE, OR OTHERWISE FOR ENFORCEMENT OF ANY RIGHT OR REMEDY HEREUNDER.




     (c) Time of Essence. Time is of the essence with respect to the performance of every
provision of this Lease.



     (d) Headings; Joint and Several. The article headings contained in this Lease are for
convenience only and do not in any way limit or amplify any term or provision hereof. The terms
“Landlord” and “Tenant” as used herein shall include the plural as well as the singular, the neuter
shall include the masculine and feminine genders and the obligations herein imposed upon Tenant
shall be joint and several as to each of the persons, firms or corporations of which Tenant may be
composed.



     (e) Reserved Area. Tenant hereby acknowledges and agrees that the exterior walls of
the Premises and the area between the finished ceiling of the Premises and the slab of the floor of
the Project thereabove have not been demised hereby and the use thereof together with the right to
install, maintain, use, repair and replace pipes, ducts, conduits, wiring and cabling leading
through, under or above the Premises or throughout the Project in locations which will not
materially interfere with Tenant’s use of the Premises and serving other parts of the Project are
hereby excepted and reserved unto Landlord, but Tenant shall have the right to use such areas in
common with Landlord and other tenants in the Project as necessary for the installation of Tenant’s
wiring, cabling and other customary installations in the Premises.



     (f) NO OPTION. THE SUBMISSION OF THIS LEASE BY LANDLORD, ITS AGENT OR REPRESENTATIVE
FOR EXAMINATION OR EXECUTION BY TENANT DOES NOT CONSTITUTE AN OPTION OR OFFER TO LEASE THE PREMISES
UPON THE TERMS AND CONDITIONS CONTAINED HEREIN OR A RESERVATION OF THE PREMISES IN FAVOR OF TENANT,
IT BEING INTENDED HEREBY THAT THIS LEASE SHALL ONLY BECOME EFFECTIVE UPON THE EXECUTION HEREOF BY
LANDLORD AND TENANT AND DELIVERY OF A FULLY EXECUTED LEASE TO TENANT.



     (g) Use of Project Name; Improvements. Tenant shall not be allowed to use the name,
picture or representation of the Project, or words to that effect, in connection with any business
carried on in the Premises or otherwise (except as Tenant’s address) without the prior written
consent of Landlord. In the event that Landlord undertakes any additional improvements on the Real
Property including but not limited to new construction or renovation or additions to the existing
improvements, Landlord shall not be liable to Tenant for any noise, dust, vibration or interference
with access to the Premises or disruption in Tenant’s business caused thereby, so long as the same
does not materially interfere with Tenant’s access to or use of the Premises or Tenant’s parking
rights.



     (h) Rules and Regulations. Tenant shall observe faithfully and comply strictly with
the rules and regulations (“Rules and Regulations”) attached to this
Lease as Exhibit “B” and made a part hereof, and such other non-discriminatory Rules and
Regulations as Landlord may from time to time reasonably adopt for the safety, care and cleanliness
of the Project, the facilities thereof, or the preservation of good order therein. Landlord shall
not be liable to Tenant for violation of any such Rules and Regulations, or for the breach of any
covenant or condition in any lease by any other tenant in the Project. A waiver by Landlord of any
Rule or Regulation for any other tenant shall not constitute nor be deemed a waiver of the Rule or
Regulation for this Tenant. If there is any conflict between any such Rules and Regulations and
the other provisions of this Lease, the other provisions of this Lease shall govern.



     (i) Quiet Possession. Upon Tenant’s paying the Basic Rental, Additional Rent and
other sums provided hereunder and observing and performing all of the covenants, conditions and
provisions on Tenant’s part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire Term hereof, subject to all of the provisions of this
Lease.



     (j) Rent. All payments required to be made hereunder to Landlord shall be deemed to
be rent, whether or not described as such.




 -30- 












 






     (k) Successors and Assigns. Subject to the provisions of Article 15 hereof, all of
the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, personal representatives, successors and
assigns.



     (l) Notices. Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal service evidenced by a signed receipt or sent by registered or
certified mail, return receipt requested, or via overnight courier, and shall be effective upon
proof of delivery, addressed to Tenant at 1322 Crossman Avenue, Sunnyvale, California 94089-1113,
Attn: Chief Financial Officer, with a copy to Tenant at the same address , Attn: General Counsel,
or to Landlord at the management office for the Project, with a copy
to Landlord,
c/o Arden Realty,
Inc., 11601 Wilshire Boulevard, Fourth Floor, Los Angeles, California 90025, Attn: Legal
Department. Either party may by notice to the other specify a different address for notice
purposes.



     (m) Persistent Delinquencies. In the event that Tenant shall be delinquent by more
than fifteen (15) days in the payment of rent on three (3) separate occasions in any twelve
(12) month period, Landlord shall have the right to terminate this Lease by thirty (30) days
written notice given by Landlord to Tenant within thirty (30) days of the last such delinquency.



     (n) Right of Landlord to Perform. All covenants and agreements to be performed by
Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s sole cost and
expense and without any abatement of rent, except as otherwise specifically provided herein. If
Tenant shall fail to pay any sum of money, other than rent, required to be paid by it hereunder or
shall fail to perform any other act on its part to be performed hereunder, and such failure shall
continue beyond any applicable cure period set forth in this Lease, Landlord may, but shall not be
obligated to, without waiving or releasing Tenant from any obligations of Tenant, make any such
payment or perform any such other act on Tenant’s part to be made or performed as is in this Lease
provided. All sums so paid by Landlord and all reasonable incidental costs, together with interest
thereon at the rate specified in Section 20(e) above from the date of such payment by Landlord,
shall be payable to Landlord on demand and Tenant covenants to pay any such sums, and Landlord
shall have (in addition to any other right or remedy of Landlord) the same rights and remedies in
the event of the nonpayment thereof by Tenant as in the case of default by Tenant in the payment of
the rent.



     (o) Changes in Project, Facilities, Name.



          (i) Landlord reserves the right, without incurring any liability to Tenant therefor, to make
such changes in or to the Project and the fixtures and equipment thereof, as well as in or to the
street entrances, halls, passages, elevators, stairways and other improvements thereof, as it may
reasonably deem necessary or desirable, so long as such changes (unless required by law) will not
materially interfere with Tenant’s access to or use of the Premises or Tenant’s parking rights.




          (ii) Landlord may adopt any reasonable name for the Project and Landlord reserves the right,
from time to time, to change the name and/or address of the Project at any time.




     (p) Signing Authority. Concurrently with Tenant’s execution of this Lease, Tenant
shall provide to Landlord reasonable evidence of the authority of the individuals executing this
Lease on behalf of Tenant.




     (q) Identification of Tenant.



          (i) If Tenant constitutes more than one person or entity, (A) each of them shall be jointly
and severally liable for the keeping, observing and performing of all of the terms, covenants,
conditions and provisions of this Lease to be kept, observed and performed by Tenant, (B) the term
“Tenant” as used in this Lease shall mean and include each of them jointly and severally, and
(C) the act of or notice from, or notice or refund to, or the signature of, any one or more of
them, with respect to the tenancy of this Lease, including, but not limited to, any renewal,
extension, expiration, termination or modification of this Lease, shall be binding upon each and
all of the persons or entities executing this Lease as Tenant with the same force and effect as if
each and all of them had so acted or so given or received such notice or refund or so signed.




          (ii) If Tenant is a partnership (or is comprised of two or more persons, individually and as
co-partners of a partnership) or if Tenant’s interest in this Lease shall be assigned to a
partnership (or to two or more persons, individually and as co-partners of a partnership) pursuant
to Article 15 hereof (any such partnership and such persons hereinafter referred to in this





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Section 30(q)(ii) as “Partnership Tenant”), the following provisions of this Lease shall apply to
such Partnership Tenant:




               (A) The liability of each of the parties comprising Partnership Tenant shall be joint and
several.



               (B) Each of the parties comprising Partnership Tenant hereby consents in advance to, and
agrees to be bound by, any written instrument which may hereafter be executed, changing, modifying
or discharging this Lease, in whole or in part, or surrendering all or any part of the Premises to
the Landlord, and by notices, demands, requests or other communication which may hereafter be
given, by the individual or individuals authorized to execute this Lease on behalf of Partnership
Tenant under Subparagraph (p) above.



               (C) Any bills, statements, notices, demands, requests or other communications given or
rendered to Partnership Tenant or to any of the parties comprising Partnership Tenant shall be
deemed given or rendered to Partnership Tenant and to all such parties and shall be binding upon
Partnership Tenant and all such parties.



               (D) If Partnership Tenant admits new partners, all of such new partners shall, by their
admission to Partnership Tenant, be deemed to have assumed performance of all of the terms,
covenants and conditions of this Lease on Tenant’s part to be observed and performed.



               (E) Partnership Tenant shall give prompt notice to Landlord of the admission of any such new
partners, and, upon demand of Landlord, shall cause each such new partner to execute and deliver to
Landlord an agreement in form satisfactory to Landlord, wherein each such new partner shall assume
performance of all of the terms, covenants and conditions of this Lease on Partnership Tenant’s
part to be observed and performed (but neither Landlord’s failure to request any such agreement nor
the failure of any such new partner to execute or deliver any such agreement to Landlord shall
terminate the provisions of clause (D) of this Section 30(q)(ii) or relieve any such new partner of
its obligations thereunder).



     (r) Confidentiality. Tenant acknowledges that the content of this Lease and any
related documents are confidential information. Tenant shall keep such confidential information
strictly confidential and shall not disclose such confidential information to any person or entity
other than Tenant’s employees, lenders, investors, financial, legal and space planning consultants
and any proposed Transferees and to the extent required by applicable law or court order.
Notwithstanding the foregoing, Landlord acknowledges that Tenant is a publicly regulated entity
and, as such, may be required to attach a copy of this Lease and otherwise disclose the terms and
conditions of this Lease in government-mandated public filings.



     (s) Governing Law. This Lease shall be governed by and construed in accordance with
the laws of the State of California. No conflicts of law rules of any state or country (including,
without limitation, California conflicts of law rules) shall be applied to result in the
application of any substantive or procedural laws of any state or country other than California.
All controversies, claims, actions or causes of action arising between the parties hereto and/or
their respective successors and assigns, shall be brought, heard and adjudicated by the courts of
the State of California, with venue in the County of Santa Clara. Each of the parties hereto
hereby consents to personal jurisdiction by the courts of the State of California in connection with any such
controversy, claim, action or cause of action, and each of the parties hereto consents to service
of process by any means authorized by California law and consent to the enforcement of any judgment
so obtained in the courts of the State of California on the same terms and conditions as if such
controversy, claim, action or cause of action had been originally heard and adjudicated to a final
judgment in such courts. Each of the parties hereto further acknowledges that the laws and courts
of California were freely and voluntarily chosen to govern this Lease and to adjudicate any claims
or disputes hereunder.



     (t) Office of Foreign Assets Control. Tenant certifies to Landlord that Tenant is not
entering into this Lease, nor acting, for or on behalf of any person or entity named as a terrorist
or other banned or blocked person or entity pursuant to any law, order, rule or regulation of the
United States Treasury Department or the Office of Foreign Assets Control. Tenant hereby agrees to
indemnify, defend and hold Landlord and the Landlord Parties harmless from any and all claims
arising from or related to any breach of the foregoing certification.



-32-









 





     (u) Financial Statements. If Landlord desire to finance, refinance, or sell the
Project, then within ten (10) days after Tenant’s receipt of Landlord’s written request, Tenant
shall provide Landlord with current financial statements of Tenant and financial statements for the
two (2) calendar or fiscal years (if Tenant’s fiscal year is other than a calendar year) prior to
the current financial statement year, if such financial statements are not otherwise publicly
available. Any such statements shall be prepared in accordance with generally accepted accounting
principles and, if the normal practice of Tenant, shall be audited by an independent certified
public accountant.



     (v) Exhibits. The Exhibits attached hereto are incorporated herein by this reference
as if fully set forth herein.



     (w) Independent Covenants. This Lease shall be construed as though the covenants
herein between Landlord and Tenant are independent (and not dependent) and Tenant hereby expressly
waives the benefit of any statute to the contrary and agrees that if Landlord fails to perform its
obligations set forth herein, except as expressly provided in Section 9(a)(ii) above, Tenant shall
not be entitled to make any repairs or perform any acts hereunder at Landlord’s expense or to set
off of any of the rent or other amounts owing hereunder against Landlord.



     (x) Counterparts. This Lease may be executed in counterparts, each of which shall be
deemed an original, but such counterparts, when taken together, shall constitute one agreement.



     (y) Furniture. Throughout the Term of this Lease, Tenant shall be entitled to utilize
the existing cubicles and furniture (or any cubicles and furniture in the Must Take Space upon the
Must Take Commencement Date) currently located on the ground floor of the Project. Alternatively,
Tenant may, at Tenant’s sole cost and expense, replace any or all of the existing cubicles on the
ground floor of the Project with substitute cubicles. If Tenant elects to utilize all or any of
the existing cubicles and furniture (or any cubicles and furniture in the Must Take Space upon the
Must Take Commencement Date) , Tenant acknowledges that such cubicles and furniture (or any
cubicles and furniture in the Must Take Space upon the Must Take Commencement Date) are provided in
their “as-is” condition and Landlord makes no warranty or representation as to the condition
thereof, except as provided in this Section 30(y) below. Landlord and Tenant acknowledge and agree
that, as of the date of this Lease, the cubicles and furniture which exist in the Must Take Space
(collectively, the “Must Take Space Furniture”) is listed on the inventory attached hereto as
Exhibit “E” and made a part hereof, and that, pursuant to the Omnivision Lease, Omnivision has an
obligation to return the Must Take Space Furniture to Landlord at the end of the term of the
Omnivision Lease. If Omnivision fails to fulfill its obligation to leave the Must Take Space
Furniture in the Must Take Space upon expiration of the term of the Omnivision Lease, Landlord
agrees with Tenant that Landlord shall use commercially reasonable efforts to pursue Omnivision to
return or replace any missing items of the Must Take Space Furniture and, to the extent that
despite Landlord’s exercise of its commercially reasonable efforts, Landlord is unable to obtain
such items from Omnivision, Landlord agrees to expend up to the amount of the security deposit held
by Landlord under the Omnivision Lease to replace any such missing items of the Must Take Space
Furniture. However, except as provided in the immediately preceding sentence above, Landlord shall
have no further obligation to replace any missing items of the Must Take Space Furniture. Tenant
shall be entitled, at Tenant’s option exercisable by written notice to Landlord (i) at any time
after the date of this Lease and continuing until the Expiration Date, to purchase from Landlord
for the total sum of One Dollar ($1.00) all or any of such existing cubicles and furniture on the ground floor of the Project, and (ii) at any time after the Must Take Commencement Date
and continuing until the Expiration Date, to purchase any or all of the Must Take Space Furniture
which exists in the Must Take Space from Landlord for the total sum of One Dollar ($1.00).



     (z) Kitchen Facilities. Tenant shall have the right to operate and otherwise utilize
all kitchen and cafeteria facilities currently located in the Premises throughout the Term of this
Lease (as may be extended), subject to all of the terms and conditions of this Lease (including,
without limitation, the Rules and Regulations).



     (aa) Landlord’s Representation. In addition to Landlord’s other representations and
warranties set forth in this Lease, Landlord represents and warrants that, as of the date of this
Lease, Landlord has lawful title to the Project and the right to enter into this Lease.



-33-









 





ARTICLE 31




OPTION TO EXTEND




     (a) Option Right. Landlord hereby grants the Tenant named in this Lease (the
“Original Tenant”) one (1) option (“Option”) to extend the Term for the entire Premises (including,
subject to Article 33 below, the Must Take Space) for a period of three (3) years (“Option Term”),
which Option shall be exercisable only by written notice delivered by Tenant to Landlord as set
forth below. The rights contained in this Article 31 shall be personal to the Original Tenant and
an Affiliated Assignee and may only be exercised by the Original Tenant or an Affiliated Assignee
(and not any other transferee) if the Original Tenant or such Affiliated Assignee occupies at least
sixty-six percent (66%) of the rentable square footage of the Premises as of the date of Tenant’s
Acceptance (as defined in Section 31(c) below).



     (b) Option Rent. The rent payable by Tenant during the Option Term (“Option Rent”)
shall be equal to the “Market Rent” (defined below), but in no event shall the Option Rent be less
than Tenant is paying under the Lease on the month immediately preceding the Option Term for
Monthly Basic Rental, including all escalations, Direct Costs, additional rent and other charges.
“Market Rent” shall mean the applicable Monthly Basic Rental, including all escalations, Direct
Costs, additional rent and other charges at which tenants, as of the commencement of the Option
Term, are entering into leases for non-sublease space which is not encumbered by expansion rights
and which is comparable in size, location and quality to the Premises in renewal transactions for a
term comparable to the Option Term, which comparable space is located in office buildings
comparable to the Project in Sunnyvale, California, taking into consideration (i) concessions then
generally granted in such comparable transactions including, without limitation, rental abatement
concessions, tenant improvement allowances and other concessions, and (ii) the value of the
existing improvements in the Premises to Tenant, as compared to the value of the existing
improvements in such comparable space, with such value to be based upon the age, quality and layout
of the improvements.



     (c) Exercise of Option. The Option shall be exercised by Tenant only in the following
manner: (i) Tenant shall not be in default (beyond applicable notice or cure periods), and shall
not have been in default under this Lease (beyond applicable notice or cure periods) more than once
during the preceding twelve-month period, on the delivery date of the Interest Notice and Tenant’s
Acceptance; (ii) Tenant shall deliver written notice (“Interest Notice”) to Landlord not more than
twelve (12) months nor less than nine (9) months prior to the expiration of the Term, stating that
Tenant is interested in exercising the Option, (iii) within fifteen (15) business days of
Landlord’s receipt of Tenant’s written notice, Landlord shall deliver notice (“Option Rent Notice”)
to Tenant setting forth the Option Rent; and (iv) if Tenant desires to exercise such Option, Tenant
shall provide Landlord written notice within five (5) business days after receipt of the Option
Rent Notice (“Tenant’s Acceptance”) and upon, and concurrent with such exercise, Tenant may, at its
option, object to the Option Rent contained in the Option Rent Notice. Tenant’s failure to deliver
the Interest Notice or Tenant’s Acceptance on or before the dates specified above shall be deemed
to constitute Tenant’s election not to exercise the Option. If Tenant timely and properly
exercises its Option, the Term shall be extended for the Option Term upon all of the terms and
conditions set forth in this Lease, except that the rent for the Option Term shall be as indicated
in the Option Rent Notice unless Tenant, concurrently with Tenant’s Acceptance, objects to the
Option Rent contained in the Option Rent Notice, in which case the parties shall follow the procedure and the Option Rent shall be
determined, as set forth in Section 31(d) below.



     (d) Determination of Market Rent. If Tenant timely and appropriately objects to the
Market Rent in Tenant’s Acceptance, Landlord and Tenant shall attempt to agree upon the Market Rent
using their best good-faith efforts. If Landlord and Tenant fail to reach agreement within thirty
(30) days following Tenant’s Acceptance (“Outside Agreement Date”), then each party shall make a
separate determination of the Market Rent which shall be submitted to each other and to arbitration
in accordance with the following items (i) through (vii):



          (i) Landlord and Tenant shall each appoint, within ten (10) days of the Outside Agreement
Date, one arbitrator who shall by profession be a current real estate broker or appraiser of
comparable commercial properties in the immediate vicinity of the Project, and who has been active
in such field over the last five (5) years. The determination of the arbitrators shall be limited
solely to the issue of whether Landlord’s or Tenant’s submitted Market Rent is the closest to the
actual Market Rent as determined by the arbitrators, taking into account the requirements of item
(b), above




-34-









 




(i.e., the arbitrators may only select Landlord’s or Tenant’s determination of Market
Rent and shall not be entitled to make a compromise determination).




          (ii) The two (2) arbitrators so appointed shall within five (5) business days of the date of
the appointment of the last appointed arbitrator agree upon and appoint a third arbitrator who
shall be qualified under the same criteria set forth hereinabove for qualification of the initial
two arbitrators.




          (iii) The three arbitrators shall within fifteen (15) days of the appointment of the third
arbitrator reach a decision as to whether the parties shall use Landlord’s or Tenant’s submitted
Market Rent, and shall notify Landlord and Tenant thereof.




          (iv) The decision of the majority of the three (3) arbitrators shall be binding upon Landlord
and Tenant.




          (v) If either Landlord or Tenant fails to appoint an arbitrator within ten (10) days after the
applicable Outside Agreement Date, the arbitrator appointed by one of them shall reach a decision,
notify Landlord and Tenant thereof, and such arbitrator’s decision shall be binding upon Landlord
and Tenant.




          (vi) If the two (2) arbitrators fail to agree upon and appoint a third (3rd)
arbitrator, or both parties fail to appoint an arbitrator, then the appointment of the third
arbitrator or any arbitrator shall be dismissed and the matter to be decided shall be forthwith
submitted to arbitration under the provisions of the American Arbitration Association, but subject
to the instruction set forth in this item (d).




          (vii) The cost of arbitration shall be paid by Landlord and Tenant equally.




ARTICLE 32




SIGNAGE




     Subject to this Article 32, Tenant shall be entitled to install, at its sole cost and expense,
the following signage on the exterior of the Project (“Signage”): one (1) sign on the exterior of
the Project (“Exterior Signage”) and one (1) sign on any monument signs for the Project (“Monument
Signage”). The graphics, materials, size, color, design, lettering, lighting (if any),
specifications and exact location of the Signage (collectively, the “Signage Specifications”) shall
be subject to the prior written approval of Landlord, which approval shall not be unreasonably
withheld. In addition, the Signage and all Signage Specifications therefore shall be subject to
Tenant’s receipt of all required governmental permits and approvals, shall be subject to all
applicable governmental laws and ordinances, and all covenants, conditions and restrictions
affecting the Project. Tenant hereby acknowledges that, notwithstanding Landlord’s approval of the
Signage and/or the Signage Specifications therefor, Landlord has made no representations or
warranty to Tenant with respect to the probability of obtaining such approvals and permits. In the
event Tenant does not receive the necessary permits and approvals for the Signage, Tenant’s and
Landlord’s rights and obligations under the remaining provisions of this Lease shall not be
affected. The cost of installation of the Signage, as well as all costs of design and construction of such Signage and all other costs
associated with such Signage, including, without limitation, permits, maintenance and repair, shall
be the sole responsibility of Tenant. Notwithstanding anything to the contrary contained herein,
in the event that at any time during the Term of this Lease (or any Option Term, if applicable),
Tenant fails to occupy at least fifty percent (50%) of the rentable square footage of the
Premises, Tenant’s right to the Signage shall thereupon terminate and Tenant shall remove such
Signage as provided in this Article 32 below. The rights to the Signage shall be personal to the
Original Tenant and any Affiliated Assignee and may not otherwise be transferred. Should the
Signage require maintenance or repairs as determined in Landlord’s reasonable judgment, Landlord
shall have the right to provide written notice thereof to Tenant and Tenant shall cause such
repairs and/or maintenance to be performed within thirty (30) days after receipt of such notice
from Landlord at Tenant’s sole cost and expense. Should Tenant fail to perform such maintenance
and repairs within the period described in the immediately preceding sentence, Landlord shall have
the right to cause such work to be performed and to charge Tenant, as Additional Rent, for the cost
of such work. Upon the expiration or earlier termination of this Lease (or the termination of
Tenant’s Signage right as described above), Tenant shall, at Tenant’s sole cost and expense, cause
the Signage to be removed and shall cause the exterior of the Project or the monument (as
applicable) to be restored to the condition existing prior



-35-









 







to the placement of such Signage, reasonable wear and tear and damage caused by casualty excepted. If Tenant fails to remove such
Signage and to restore the exterior of the Project or the monument as provided in the immediately
preceding sentence within thirty (30) days following the expiration or earlier termination of this
Lease, then Landlord may perform such work, and all costs and expenses incurred by Landlord in so
performing such work shall be reimbursed by Tenant to Landlord within ten (10) days after Tenant’s
receipt of invoice therefor. The immediately preceding sentence shall survive the expiration or
earlier termination of this Lease. Any signs, notices, logos, pictures, names or advertisements
which are installed and that have not been individually approved by Landlord may be removed without
notice by Landlord at the sole expense of Tenant. Except as provided in this Article 32 above,
Tenant may not install any signs on the exterior or roof of the Project or the common areas of the
Project or the Real Property.



ARTICLE 33




TERMINATION OPTION




     Landlord and Tenant acknowledge that pursuant to the Omnivision Lease, Omnivision has an
option (“Omnivision Extension Option”), exercisable by written notice to Landlord on or before
September 30, 2008, to extend the Omnivision Lease for a period of three (3) years. If Omnivision
exercises the Omnivision Extension Option, Landlord shall promptly so notify Tenant in writing (the
“Omnivision Notice”) and Tenant shall have the option (“Termination Option”) to terminate this
Lease effective as of June 30, 2009. In order to exercise the Termination Option, Tenant must
provide Landlord with written notice (“Termination Notice”) of its exercise of the Termination
Option on or before the later of (i) seventy-five (75) days after Landlord’s delivery of the
Omnivision Notice, and (ii) December 31, 2008, and, at the time of Termination Notice, Tenant shall
not be in default under this Lease after expiration of applicable notice and cure periods. If
Omnivision exercises the Omnivision Extension Option and if Tenant does not exercise the
Termination Option in a timely fashion, then notwithstanding anything to the contrary contained in
this Lease, the Must Take Space shall not become a part of the Premises and Tenant shall have no
right to use or purchase the Must Take Space Furniture and, upon request from Landlord, Landlord
and Tenant shall execute an amendment to this Lease documenting that the Must Take Space shall not
become a part of the Premises and modifying Tenant’s Proportionate Share, the Basic Rental and
Tenant’s parking rights as a result.



-36-









 





     IN WITNESS WHEREOF, the parties have executed this Lease, consisting of the foregoing
provisions and Articles, including all exhibits and other attachments referenced therein, as of the
date first above written.



	 	 	 	 	 	 	 	 	 	 	 
	“LANDLORD”	 	ARDEN REALTY LIMITED PARTNERSHIP,

a Maryland limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	ARDEN REALTY, INC.,

a Maryland corporation

Its: Sole General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Robert C. Peddicord 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Its:	 	Chief Operating Officer 	 	 
	 

	 	 	 	 	 	 	 	 	 	 






	 	 	 	 	 	 	 	 	 
	“TENANT”	 	ARUBA NETWORKS, INC.,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Alexa King 	 
	 	 	 	 	 	 	 
	 	 	Print Name:	 	Alexa King 
	 

	 	 	 	 	 	 

	 	 
	 

	 	Title:	 	General Counsel 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Print Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 	 	 	 	 	 	 






-37-









 





EXHIBIT “A”




PREMISES AND MUST TAKE SPACE








 EXHIBIT “A”

-1-




 









 













This Exhibit “A” is provided for informational purposes only and is intended to be only an
approximation of the layout of the Premises and the must Take Space and shall not be deemed to
constitute any representation by Landlord as to the exact layout or configuration of the Premises
or the Must Take Space.



EXHIBIT “A”

-2-




 









 








EXHIBIT “B”




RULES AND REGULATIONS




     1. No sign, advertisement or notice shall be displayed, printed or affixed on or to the
Premises or to the outside or inside of the Project or so as to be visible from outside the
Premises or Project without Landlord’s prior written consent. Landlord shall have the right to
remove any non-approved sign, advertisement or notice, without notice to and at the expense of
Tenant, and Landlord shall not be liable in damages for such removal. All approved signs or
lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of
Tenant by Landlord or by a person selected by Landlord and in a manner and style reasonably
acceptable to Landlord.



     2. The sidewalks, halls, passages, exits, entrances, elevators and stairways shall not be
obstructed by Tenant or used for any purpose other than for ingress and egress from Tenant’s
Premises. Under no circumstances is trash to be stored in the corridors. Furniture, freight and
other large or heavy articles, and all other deliveries may be brought into the Project at
Tenant’s sole responsibility and risk. All damage done to the Project by moving or maintaining
such furniture, freight or articles shall be repaired by Tenant. Tenant shall not take or permit
to be taken in or out of entrances or passenger elevators of the Project, any item normally
taken, or which Landlord otherwise reasonably requires to be taken, in or out through service
doors or on freight elevators. Tenant shall move all supplies, furniture and equipment as soon
as received directly to the Premises, and shall move all waste that is at any time being taken
from the Premises directly to the areas designated for disposal.



     3. Toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any
purpose other than for which they were constructed and no foreign substance of any kind
whatsoever shall be thrown therein.



     4. Tenant shall not overload the floor of the Premises or mark, drive nails, screw or drill
into the partitions (other than to hang ordinary artwork), ceilings or floor or in any
unreasonable way deface the Premises. Except as expressly provided in the Lease, Tenant shall
not place signs in the common areas.



     5. In no event shall Tenant place a load upon any floor of the Premises or portion of any
such flooring exceeding the floor load per square foot of area for which such floor is designed
to carry and which is allowed by law, or any machinery or equipment which shall cause excessive
vibration to the Premises or noticeable vibration to any other part of the Project. Prior to
bringing any heavy safes, vaults, large computers or similarly heavy equipment into the Project,
Tenant shall inform Landlord in writing of the dimensions and weights thereof and shall obtain
Landlord’s consent thereto. Such consent shall not constitute a representation or warranty by
Landlord that the safe, vault or other equipment complies, with regard to distribution of weight
and/or vibration, with the provisions of this Rule 6 nor relieve Tenant from responsibility for
the consequences of such noncompliance, and any such safe, vault or other equipment which
Landlord determines to constitute a danger of damage to the Project or a nuisance to other
tenants, either alone or in combination with other heavy and/or vibrating objects and equipment,
shall be promptly removed by Tenant, at Tenant’s cost, upon Landlord’s written notice of such
determination and demand for removal thereof.



     6. Tenant shall not use or keep in the Premises or Project any kerosene, gasoline or
inflammable, explosive or combustible fluid or material except in connection with the kitchen
equipment currently existing in the Premises or equipment otherwise permitted under the Lease and
except as permitted in Section 28(a) of the Lease, or use any method of heating or
air-conditioning other than that supplied by Landlord.



     7. Tenant shall not lay linoleum, tile, carpet or other similar floor covering so that the
same shall be affixed to the floor of the Premises in any manner except as approved by Landlord.



     8. Tenant shall not install or use any blinds, shades, awnings or screens in connection with
any window or door of the Premises and shall not use any drape or window covering facing any
exterior glass surface other than the standard drapes, blinds or other window covering
established by Landlord.



EXHIBIT “B”

-1-




 









 





     9. Tenant shall cooperate with Landlord in obtaining maximum effectiveness of the cooling
system by closing window coverings when the sun’s rays fall directly on windows of the Premises.
Tenant shall not obstruct, alter, or in any way impair the efficient operation of Landlord’s
heating, ventilating and air-conditioning system. Tenant shall not improperly tamper with or
change the setting of any thermostats or control valves.



     10. The Premises shall not be used for manufacturing or for the storage of merchandise
except as such storage may be incidental to the permitted use of the Premises (including the
kitchen area of the Premises). Tenant shall not, without Landlord’s prior written consent,
occupy or permit any portion of the Premises to be occupied or used for the manufacture or sale
of liquor or tobacco in any form, or a barber or manicure shop, or as an employment bureau. The
Premises shall not be used for lodging or sleeping or for any improper, objectionable or immoral
purpose. No auction shall be conducted on the Premises.



     11. Tenant shall not make, or permit to be made, any unseemly or disturbing noises, or
disturb or interfere with occupants of Project or neighboring buildings or premises or those
having business with it by the use of any musical instrument, radio, phonographs or unusual
noise, or in any other way.



     12. No vehicles or animals of any kind (except service animals) shall be brought into or
kept in or about the Premises. If Tenant does not lease the entire Project, Tenant shall not
cause or permit any unusual or objectionable odors to be produced in or permeate from or
throughout the Premises.



     13. The sashes, sash doors, skylights, windows and doors that reflect or admit light and air
into the halls, passageways or other public places in the Project shall not be covered or
obstructed by any tenant, nor shall any bottles, parcels or other articles be placed on the
window sills.



     14. No additional locks or bolts of any kind shall be placed upon any of the doors or
windows by any tenant, nor shall any changes be made in existing locks or the mechanisms thereof
unless Landlord is first notified thereof, gives written approval, and is furnished a key
therefor. Each tenant must, upon the termination of his tenancy, give to Landlord all keys and
key cards of stores, offices, or toilets or toilet rooms, either furnished to, or otherwise
procured by, such tenant, and in the event of the loss of any keys so furnished, such tenant
shall pay Landlord the cost of replacing the same or of changing the lock or locks opened by such
lost key if Landlord shall deem it necessary to make such change. If more than two keys for one
lock are desired, Landlord will provide them upon payment therefor by Tenant. Tenant shall not
key or re-key any locks. All locks shall be keyed by Landlord’s locksmith only.



     15. Landlord shall have the right to prohibit any advertising by any tenant which, in
Landlord’s reasonable opinion, tends to impair the reputation of the Project or its desirability
as an office building and upon written notice from Landlord any tenant shall refrain from and
discontinue such advertising.



     16. All doors opening on to public corridors shall be kept closed, except when being used
for ingress and egress. Tenant shall cooperate and comply with any reasonable safety or security
programs, including fire drills and air raid drills, and the appointment of “fire wardens”
developed by Landlord for the Project, or required by law. Before leaving the Premises
unattended, Tenant shall close and securely lock all doors or other means of entry to the
Premises and shut off all lights and water faucets in the Premises.



     17. Canvassing, soliciting and peddling in the Project are prohibited and each tenant shall
cooperate to prevent the same.



     18. All office equipment of any electrical or mechanical nature shall be placed by tenants
in the Premises in settings approved by Landlord, to absorb or prevent any vibration, noise or
annoyance.



     19. No air-conditioning unit or other similar apparatus shall be installed or used by any
tenant without the prior written consent of Landlord.



     20. There shall not be used in any space, or in the public halls of the Project, either by
any tenant or others, any hand trucks except those equipped with rubber tires and side guards.



EXHIBIT “B”

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     21. All electrical ceiling fixtures hung in offices or spaces along the perimeter of the
Project must be fluorescent and/or of a quality, type, design and bulb color approved by
Landlord.



     22. Parking.



          (a) Automobiles must be parked entirely within the stall lines on the floor.




          (b) All directional signs and arrows must be observed.




          (c) Parking is prohibited in areas not striped for parking.




          (d) Landlord (and its operator) may refuse to permit any person who violates the within rules
to park in the Project parking facility, and any violation of the rules shall subject the
automobile to removal from the Project parking facility at the parker’s expense.




          (e) All responsibility for any loss or damage to automobiles or any personal property therein
is assumed by the parker.




          (f) The parking facilities are for the sole purpose of parking one automobile per space.
Washing, waxing, cleaning or servicing of any vehicles by the parker or his agents is prohibited.




          (g) Tenant agrees to acquaint all employees with these Rules and Regulations.




          (h) No vehicle shall be stored in the Project parking facility for a period of more than one
(1) week without Landlord’s prior reasonable approval.




     23. The Project is a non-smoking Project. Smoking or carrying lighted cigars or cigarettes in
the Premises or the Project, including the elevators in the Project, is prohibited.



     24. Tenant shall not, without Landlord’s prior written consent (which consent may be granted
or withheld in Landlord’s absolute discretion), allow any employee or agent to carry any type of
gun or other firearm in or about any of the Premises or Project.



EXHIBIT “B”

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EXHIBIT “C”




NOTICE OF TERM DATES

AND TENANT’S PROPORTIONATE SHARE




	 	 	 	 	 	 	 	 	 	 	 
	TO:

	 	 	 	 	 	DATE:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 





	 	 	 
	RE:

	 	Lease dated          
           ,
20___, between  
               
                
                
            
                 
    (“Landlord”), and        
             
              
       (“Tenant”
), concerning Suite                     , located at
            
               
                 
                
               
     .





Ladies and Gentlemen:




     In accordance with the Lease, Landlord wishes to advise and/or confirm the following:



     1. That the Tenant has taken possession of the Premises and acknowledges that under the
provisions of the Lease the Term of said Lease shall commence as of
                     for a term of
                                                             ending on
                 
              
              
               .



     2. That in accordance with the Lease, Basic Rental commenced to accrue on
                                                            .



     3. If the Commencement Date of the Lease is other than the first day of the month, the first
billing will contain a prorata adjustment. Each billing thereafter shall be for the full amount
of the monthly installment as provided for in said Lease.



     4. Rent is due and payable in advance on the first day of each and every month during the
Term of said Lease. Your rent checks should be made payable to
                                         at
                                                                                .



     5. The
exact number of rentable square feet within the Premises is                      square feet.



     6. Tenant’s Proportionate Share, as adjusted based upon the exact number of rentable square
feet within the Premises is                     %.



AGREED AND ACCEPTED:




TENANT:




	 	 	 	 	 	 	 
	 
 	, 	 
	 
	a
	 	 	 	 	 	 
	 	 	 	 	 
	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 





EXHIBIT ONLY

***DO NOT SIGN – INITIAL ONLY***




EXHIBIT “C”




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EXHIBIT “D”




TENANT WORK LETTER




ARUBA NETWORK, INC.




     This Tenant Work Letter shall set forth the terms and conditions relating to the renovation of
the tenant improvements in the Premises. This Tenant Work Letter is essentially organized
chronologically and addresses the issues of the renovation of the Premises, in sequence, as such
issues will arise.



SECTION 1




LANDLORD’S INITIAL CONSTRUCTION IN THE PREMISES




     In addition to providing the Improvement Allowance, pursuant to Section 2 below, Landlord
shall at Landlord’s sole cost and expense, perform the following work (collectively, “Landlord’s
Work”) at Landlord’s sole cost and expense and utilizing Project-standard materials of good quality
and specifications reasonably as determined by Landlord: (a) replace all missing or broken light
bulbs throughout the Premises, clean all light fixtures and replace ballasts within the Premises as
reasonably determined by Landlord to be necessary, (b) replace damaged and/or stained ceiling tiles
throughout the Premises, (c) cause all bathroom fixtures and door handles for the restrooms to be
in proper working order, (d) cause all life safety systems within the Premises to be in proper
working order, and (e) remove the batteries from the non-functional UPS system for the Premises.
Landlord’s Work shall be performed in a prompt, good and workmanlike manner, and in accordance with
all applicable laws, ordinances, rules and regulations. Landlord has constructed, at its sole cost
and expense, the base, shell and core (i) of the Premises, and (ii) of the floors of the Project on
which the Premises is located (collectively, the “Base, Shell and Core”). The improvements to be
initially installed in the Premises by Tenant shall be designed and constructed pursuant to this
Tenant Work Letter. Any costs of initial design and construction of any improvements to the
Premises shall be an “Improvement Allowance Item”, as that term is defined in Section 2.2 of this
Tenant Work Letter.



SECTION 2




IMPROVEMENTS




     2.1 Improvement Allowance. Tenant shall be entitled to a one-time improvement
allowance (the “Improvement Allowance”) in the amount of Two Hundred Sixty-Three Thousand Five
Hundred Dollars $263,500.00 for the costs relating to the initial design and construction of
Tenant’s improvements which are affixed to the Premises (the “Improvements”). In no event shall
Landlord be obligated to make disbursements pursuant to this Tenant Work Letter in a total amount
which exceeds the Improvement Allowance and in no event shall Tenant be entitled to any credit for
any unused portion of the Improvement Allowance not used by Tenant within six (6) months after the
Must Take Commencement Date; provided, however, that if Tenant deliver a Termination Notice
pursuant to Article 33 of the Lease, Tenant shall immediately cease construction of the
Improvements (unless Landlord designates otherwise to Tenant in writing) and Landlord shall have no
obligation to fund the Improvement Allowance for any work conducted after delivery of the
Termination Notice (unless Landlord so designates that Tenant continue construction).



     2.2 Disbursement of the Improvement Allowance. Except as otherwise set forth in this
Tenant Work Letter, the Improvement Allowance shall be disbursed by Landlord (each of which
disbursements shall be made pursuant to Landlord’s disbursement process provided below) for costs
related to the construction of the Improvements and for the following items and costs
(collectively, the “Improvement Allowance Items”): (i) payment of the fees of the “Architect” and
the “Engineers,” as those terms are defined in Section 3.1 of this Tenant Work Letter, and payment
of the fees incurred by, and the cost of documents and materials supplied by, Landlord and
Landlord’s consultants in connection with the preparation and review of the “Construction
Drawings,” as that term is defined in Section 3.1 of this Tenant Work Letter; (ii) the cost of
permits and construction supervision fees; (iii) the cost of the construction and installation of
the Improvements, including, without limitation, any changes in the Base, Shell and Core required
by the Construction Drawings; (iv) the cost of any changes to the Construction Drawings or
Improvements required by applicable building codes (the “Code”); (v) the “Landlord Coordination
Fee”, as that term is defined in



EXHIBIT “D”




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Section 4.3 of this Tenant Work Letter; and (vi) the cost of installation of cabling on the
Premises. However, in no event shall more than Seventy Thousand Dollars ($70,000.00) of the
Improvement Allowance be used for the items described in (vi) above; any additional amount incurred
as a result of (vi) above shall be paid by Tenant. During the construction of the Improvements,
Landlord shall make monthly disbursements of the Improvement Allowance for Improvement Allowance
Items for the benefit of Tenant and shall authorize the release of monies for the benefit of Tenant
as follows.




          2.2.1 Monthly Disbursements. On or before the first day of each calendar month during
the construction of the Improvements (or such other date as Landlord may designate), Tenant shall
deliver to Landlord: (i) a request for payment of the “Contractor,” as that term is defined in
Section 4.1 of this Tenant Work Letter, approved by Tenant, in a form to be provided by Landlord,
showing the schedule, by trade, of percentage of completion of the Improvements in the Premises,
detailing the portion of the work completed and the portion not completed; (ii) invoices from all
of “Tenant’s Agents,” as that term is defined in Section 4.2 of this Tenant Work Letter, for labor
rendered and materials delivered to the Premises; (iii) executed conditional mechanic’s lien
releases from all of Tenant’s Agents which shall comply with the appropriate provisions, as
reasonably determined by Landlord, of California Civil Code Section 3262(d); and (iv) all other
information reasonably requested by Landlord. Thereafter, Landlord shall deliver a check to Tenant
in payment of the lesser of: (A) the amounts so requested by Tenant, as set forth in this
Section 2.2.1, above, less a ten percent (10%) retention (the aggregate amount of such retentions
to be known as the “Final Retention”), and (B) the balance of any remaining available portion of
the Improvement Allowance (not including the Final Retention), provided that Landlord does not
dispute any request for payment based on non-compliance of any work with the “Approved Working
Drawings,” as that term is defined in Section 3.4 below, or due to any substandard work.
Landlord’s payment of such amounts shall not be deemed Landlord’s approval or acceptance of the
work furnished or materials supplied as set forth in Tenant’s payment request.




          2.2.2 Final Retention. Subject to the provisions of this Tenant Work Letter, a check
for the Final Retention payable to Tenant shall be delivered by Landlord to Tenant following the
completion of construction of the Premises, provided that (i) Tenant delivers to Landlord properly
executed mechanics lien releases from all of Tenant’s Agents in compliance with both California
Civil Code Section 3262(d)(2) and either Section 3262(d)(3) or Section 3262(d)(4), (ii) Landlord
has determined that no substandard work exists which materially and adversely affects the
mechanical, electrical, plumbing, heating, ventilating and air conditioning, life-safety or other
systems of the Project, the curtain wall of the Project, the structure or exterior appearance of
the Project, or any other tenant’s use of such other tenant’s leased premises in the Project and
(iii) Architect delivers to Landlord a certificate, in a form reasonably acceptable to Landlord,
certifying that the construction of the Improvements in the Premises has been substantially
completed.




          2.2.3 Other Terms. Landlord shall only be obligated to make disbursements from the
Improvement Allowance to the extent costs are incurred by Tenant for Improvement Allowance Items.
All Improvement Allowance Items for which the Improvement Allowance has been made available shall
be deemed Landlord’s property. If the total estimated cost of Improvement Allowance Items exceeds
the Improvement Allowance, Tenant shall be required to first fund such excess prior to the
commencement of Landlord’s obligation to fund the Improvement Allowance and Landlord may require
reasonable evidence that Tenant has funded such excess prior to Landlord’s disbursement of the
Improvement Allowance. The Improvements to be constructed by Tenant shall include installation of
an alarm system on the emergency exit doors of the Premises. In no event, however, shall Tenant
modify the existing emergency exiting for the Project (e.g., no exit doors may be modified in
violation of Code nor may any doors be dead-bolted).




SECTION 3




CONSTRUCTION DRAWINGS




     3.1 Selection of Architect/Construction Drawings. Tenant shall retain an
architect/space planner reasonably approved by Landlord (the “Architect”) to prepare the
“Construction Drawings,” as that term is defined in this Section 3.1. Tenant shall also retain the
engineering consultants reasonably approved by Landlord (the “Engineers”) to prepare all plans and
engineering working drawings relating to the structural, mechanical, electrical, plumbing, HVAC and
life safety work of the Improvements, if applicable. The plans and drawings to be prepared by
Architect and the Engineers hereunder shall be known collectively as the “Construction Drawings.”
All Construction Drawings shall comply with the drawing format and specifications as reasonably
determined by



EXHIBIT “D”




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Landlord, and shall be subject to Landlord’s reasonable approval. Tenant and Architect shall
verify, in the field, the dimensions and conditions as shown on the relevant portions of the base
building plans, and Tenant and Architect shall be solely responsible for the same, and Landlord
shall have no responsibility in connection therewith. Landlord’s review of the Construction
Drawings as set forth in this Section 3, shall be for its sole purpose and shall not imply
Landlord’s review of the same, or obligate Landlord to review the same, for quality, design, Code
compliance or other like matters. Accordingly, notwithstanding that any Construction Drawings are
reviewed by Landlord or its space planner, architect, engineers and consultants, and
notwithstanding any advice or assistance which may be rendered to Tenant by Landlord or Landlord’s
space planner, architect, engineers, and consultants, Landlord shall have no liability whatsoever
in connection therewith and shall not be responsible for any omissions or errors contained in the
Construction Drawings.




     3.2 Final Space Plan. Tenant and the Architect shall prepare the final space plan for
Improvements in the Premises (collectively, the “Final Space Plan”), which Final Space Plan shall
include a layout and designation of all offices, rooms and other partitioning, their intended use,
and equipment to be contained therein, and shall deliver the Final Space Plan to Landlord for
Landlord’s approval.



     3.3 Final Working Drawings. Architect and the Engineers shall complete the
architectural and engineering drawings for the Premises, and the final architectural working
drawings in a form which is complete to allow subcontractors to bid on the work and to obtain all
applicable permits (collectively, the “Final Working Drawings”) and shall submit the same to
Landlord for Landlord’s approval.



     3.4 Permits. The Final Working Drawings shall be approved by Landlord (the “Approved
Working Drawings”) prior to the commencement of the construction of the Improvements. Tenant shall
cause the Architect to promptly submit the Approved Working Drawings to the appropriate municipal
authorities for all applicable building permits necessary to allow “Contractor,” as that term is
defined in Section 4.1, below, to commence and fully complete the construction of the Improvements
(the “Permits”). No changes, modifications or alterations in the Approved Working Drawings may be
made without the prior written consent of Landlord, which consent shall not be unreasonably
withheld.



SECTION 4




CONSTRUCTION OF THE IMPROVEMENTS




     4.1 Contractor. A general contractor shall be retained by the Tenant to construct the
Improvements. Such general contractor (“Contractor”) shall be selected by the Tenant and approved
by Landlord.



     4.2 Tenant’s Agents. All subcontractors, laborers, materialmen, and suppliers used by
the Tenant (such subcontractors, laborers, materialmen, and suppliers, and the Contractor to be
known collectively as “Tenant’s Agents”) must be approved in writing by Landlord, which approval
shall not be unreasonably withheld or delayed. If Landlord does not approve any of the Tenant’s
proposed subcontractors, laborers, materialmen or suppliers, the Tenant shall submit other proposed
subcontractors, laborers, materialmen or suppliers for Landlord’s written approval.
Notwithstanding the foregoing, the Tenant shall be required to utilize subcontractors designated by
Landlord for any mechanical, electrical, plumbing, life-safety, sprinkler, structural and
air-balancing work, as long as such subcontractors are available to perform the work at a
commercially reasonable cost.



     4.3 Construction of Improvements by Contractor. The Tenant shall independently
retain, in accordance with Section 4.1 above, Contractor to construct the Improvements in
accordance with the Approved Working Drawings. The Tenant shall pay a logistical coordination fee
(the “Landlord Coordination Fee”) to Landlord in an amount equal to three percent (3%) of the
total amount of the construction contract and general conditions between the Tenant and the
Contractor. Tenant acknowledges that construction of the Landlord’s Work and the Improvements may
occur during the Term of the Lease, that certain inconveniences may be associated with such
construction, but that Tenant shall not be entitled to abatement of rent nor shall Tenant be deemed
to be constructively evicted from the Premises as a result of such construction.



EXHIBIT “D”




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     4.4 Indemnification & Insurance.



          4.4.1 Indemnity. Tenant’s indemnity of Landlord as set forth in Article 13 of the
Lease shall also apply with respect to any and all costs, losses, damages, injuries and liabilities
related in any way to any act or omission of Tenant or Tenant’s Agents.




          4.4.2 Requirements of Tenant’s Agents. Each of Tenant’s Agents shall warrant to
Tenant that the portion of the Improvements for which it is responsible shall be free from any
defects in workmanship and materials for a period of not less than one (1) year from the date of
completion thereof. All such warranties or guarantees as to materials or workmanship of or with
respect to the Improvements shall be contained in the contract or subcontract and shall be written
such that such warranties can be directly enforced by Tenant . Tenant covenants to give to
Landlord any assignment or other assurances which may be necessary to effect a direct right of
enforcement of such warranties by Landlord in the event the Lease is terminated.




          4.4.3 Insurance Requirements.




               4.4.3.1 General Coverages. All of Tenant’s Agents shall carry worker’s compensation
insurance covering all of their respective employees, and shall also carry public liability
insurance, including property damage, with limits of at least $1,000,000.00 per occurrence, in form
and with companies reasonably acceptable to Landlord.




               4.4.3.2 Special Coverages. Tenant shall carry “Builder’s All Risk” insurance in an
amount covering the cost of construction of the Improvements, and such other insurance as Landlord
may reasonably require. Such insurance shall be in amounts and shall include such extended
coverage endorsements as may be reasonably required by Landlord.




               4.4.3.3 General Terms. Certificates for all insurance carried pursuant to this
Section 4.4.3 shall be delivered to Landlord before the commencement of construction of the
Improvements and before the Contractor’s equipment is moved onto the site. In the event that the
Improvements are damaged by any cause during the course of the construction thereof, Tenant shall
immediately repair the same at Tenant’s sole cost and expense, so long as the Lease is not
terminated. To the extent the Improvement Allowance Items are expected to cost more than
$100,000.00 in excess of the Improvement Allowance, Landlord may, in its discretion, require Tenant
to obtain a lien and completion bond or some alternate form of security satisfactory to Landlord in
an amount sufficient to ensure the lien-free completion of the Improvements and naming Landlord as
a co-obligee.




SECTION 5




MISCELLANEOUS




     5.1 Tenant’s Representative. The Tenant has designated Mark Deiters as its sole
representative with respect to the matters set forth in this Tenant Work Letter, who, until further
notice to Landlord, shall have full authority and responsibility to act on behalf of the Tenant as
required in this Tenant Work Letter.



     5.2 Landlord’s Representative. Prior to commencement of construction of Improvements,
Landlord shall designate a representative with respect to the matters set forth in this Tenant Work
Letter, who, until further notice to the Tenant, shall have full authority and responsibility to
act on behalf of the Landlord as required in this Tenant Work Letter.



     5.3 Time of the Essence in This Tenant Work Letter. Unless otherwise indicated, all
references herein to a “number of days” shall mean and refer to calendar days. Time is of the
essence regarding Landlord’s and Tenant’s obligations under this Tenant Work Letter. With respect
to any item requiring Landlord’s consent or approval under this Tenant Work Letter (each a “Consent
Requirement”), Landlord shall notify Tenant of its approval or disapproval of each such Consent
Requirement within five (5) business days after its receipt of notice of Tenant’s request therefor.
If Landlord fails to notify Tenant that it disapproves of the Consent Requirement within such five
(5) day period (or, in the case of resubmitted Consent Requirements after Landlord’s initial
disapproval thereof, within three (3) business days after receipt of notice of Tenant’s request
therefor), Tenant may provide Landlord with a second notice of such item indicating that if
Landlord fails to respond within two (2) business days, Landlord shall be deemed to have approved
such item,



EXHIBIT “D”




-4-









 




and if Landlord fails to notify Tenant that it disapproves of such item within such two (2)
business day period, Landlord shall be deemed to have approved such item.




     5.4 Early Entry. Provided that Tenant and its agents, employees and contractors do
not interfere with the Landlord’s Work, Landlord shall provide Tenant with access to the Premises
upon full execution and delivery of the Lease to commence the performance of the Improvements, but
subject to all other terms and conditions of this Tenant Work Letter (e.g., the conditions
regarding permits and insurance). Prior to Tenant’s entry into the Premises as permitted by the
terms of this Section 5.4, Tenant shall submit a schedule to Landlord (and Landlord’s general
contractor, if so requested by Landlord), for their approval, which schedule shall detail the
timing and purpose of Tenant’s entry. The terms and conditions of Article 13 of the Lease shall
apply to any such early entry.



     5.5 Outside Date. Landlord shall use reasonable efforts to cause the Landlord’s Work
to be substantially complete (i.e., complete other than punch list items) by the “Outside Date,”
which shall be the date which is thirty (30) days after the date of full execution and delivery of
this Lease by Landlord and Tenant, and which date may be extended by a maximum of sixty (60) days
by the number of days of “Force Majeure Delays” (as defined below). If the Landlord’s Work is not
substantially complete by the Outside Date, then the sole remedy of Tenant shall be to invoke
Tenant’s rights under Section 9(a)(ii) of the Lease (which Tenant may do notwithstanding that
Tenant does not currently lease the entire Project). For purposes of this Section 5.5, “Force
Majeure Delays” shall mean and refer to a period of delay or delays encountered by Landlord
affecting the work of construction of the Landlord’s Work because of delays due to excess time in
obtaining governmental permits or approvals beyond the time period normally required to obtain such
permits or approvals for similar space, similarly improved, in comparable office buildings in
Sunnyvale, California; fire, earthquake or other acts of God; acts of the public enemy; riot;
public unrest; insurrection; governmental regulations of the sales of materials or supplies or the
transportation thereof; required evacuation; strikes or boycotts; shortages of material or labor or
any other cause beyond the reasonable control of Landlord.



EXHIBIT “D”




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EXHIBIT “D”




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EXHIBIT “E”




MUST TAKE SPACE FURNITURE INVENTORY



220 cubicles



230 chairs



7 tables




EXHIBIT “E”





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