**Exhibit10.8**

LEASE AGREEMENT

between

PAUMOULDS CPP-A LLC,

aCalifornia limited liability company

as “**Landlord**”

and

VERIGYUS, INC.

aDelaware corporation

as “**Tenant**”

----

**TABLE OF CONTENTS**
| 1.  |   | PREMISES                                       |   | 1  |
|-----|--------|------------------------------------------------|--------|----|
| 2.  |   | TERM                                           |   | 2  |
| 3.  |   | RENT                                           |   | 4  |
| 4.  |   | SECURITY DEPOSIT                               |   | 8  |
| 5.  |   | USE AND COMPLIANCE WITH LAWS                   |   | 11 |
| 6.  |   | ALTERATIONS                                    |   | 14 |
| 7.  |   | MAINTENANCE AND REPAIRS                        |   | 17 |
| 8.  |   | TENANT’S TAXES                            |   | 19 |
| 9.  |   | UTILITIES AND SERVICES                         |   | 19 |
| 10. |   | EXCULPATION AND INDEMNIFICATION                |   | 20 |
| 11. |   | INSURANCE                                      |   | 21 |
| 12. |   | DAMAGE OR DESTRUCTION                          |   | 23 |
| 13. |   | CONDEMNATION                                   |   | 24 |
| 14. |   | ASSIGNMENT AND SUBLETTING                      |   | 26 |
| 15. |   | DEFAULT AND REMEDIES                           |   | 29 |
| 16. |   | LATE CHARGE AND INTEREST                       |   | 32 |
| 17. |   | PARKING                                        |   | 33 |
| 18. |   | ENTRY, INSPECTION AND CLOSURE                  |   | 33 |
| 19. |   | SURRENDER AND HOLDING OVER                     |   | 33 |
| 20. |   | ENCUMBRANCES                                   |   | 35 |
| 21. |   | ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS |   | 36 |
| 22. |   | NOTICES                                        |   | 36 |
| 23. |   | ATTORNEYS’ FEES                           |   | 37 |
| 24. |   | QUIET POSSESSION                               |   | 37 |
| 25. |   | SECURITY MEASURES                              |   | 37 |
| 26. |   | COMMON AREAS                                   |   | 37 |
| 27. |   | RULES AND REGULATIONS                          |   | 37 |
| 28. |   | LANDLORD’S LIABILITY                      |   | 37 |
| 29. |   | CONSENTS AND APPROVALS                         |   | 38 |
| 30. |   | BROKERS                                        |   | 38 |
| 31. |   | WAIVER                                         |   | 38 |
| 32. |   | ENTIRE AGREEMENT                               |   | 38 |

 

i

----

 
| 33. |   | MISCELLANEOUS    |   | 39 |
|-----|--------|------------------|--------|----|
| 34. |   | TIME             |   | 40 |
| 35. |   | AUTHORITY        |   | 40 |
| 36. |   | TITLE TO PROJECT |   | 40 |

 

ii

----

 

**INDEX OF DEFINED TERMS**
| Additional Rent               | ** ** | **7**      |
|-------------------------------|------------|------------|
| Alterations                   | ** ** | **15**     |
| Award                         | ** ** | **24**     |
|                          | ** ** | ** ** |
| Base Rent                     | ** ** | **4**      |
| Bonus Rent                    | ** ** | **27**     |
| Broker                        | ** ** | **38**     |
| Building                      | ** ** | **1**      |
| Building Systems              | ** ** | **12**     |
| Business Days                 | ** ** | **19**     |
| Business Hours                | ** ** | **19**     |
|                          | ** ** | ** ** |
| Claims                        | ** ** | **20**     |
| Commencement Date             | ** ** | **2**      |
| Common Areas                  | ** ** | **1**      |
| Condemnation                  | ** ** | **25**     |
| Condemnor                     | ** ** | **25**     |
| Controls                      | ** ** | **19**     |
|                          | ** ** | ** ** |
| Date of Condemnation          | ** ** | **25**     |
|                          | ** ** | ** ** |
| Encumbrance                   | ** ** | **35**     |
| Environmental Losses          | ** ** | **13**     |
| Environmental Requirements    | ** ** | **12**     |
| Event of Default              | ** ** | **29**     |
| Expiration Date               | ** ** | **3**      |
|                          | ** ** | ** ** |
| Handled by Tenant             | ** ** | **12**     |
| Handling by Tenant            | ** ** | **12**     |
| Hazardous Materials           | ** ** | **12**     |
| HVAC                          | ** ** | **12**     |
|                          | ** ** | ** ** |
| Interest Rate                 | ** ** | **32**     |
| Invitees                      | ** ** | **12**     |
|                          | ** ** | ** ** |
| Landlord                      | ** ** | **1**      |
| Laws                          | ** ** | **11**     |
| Liens                         | ** ** | **16**     |
|                          | ** ** | ** ** |
| Mortgagee                     | ** ** | **35**     |
|                          | ** ** | ** ** |
| Operating Costs               | ** ** | **4**      |
|                          | ** ** | ** ** |
| Parking Facility              | ** ** | **1**      |
| Permitted Hazardous Materials | ** ** | **13**     |
| Premises                      | ** ** | **1**      |
| Property                      | ** ** | **1**      |
| Proposed Transferee           | ** ** | **27**     |
|                          | ** ** | ** ** |
| Rental Tax                    | ** ** | **19**     |

 

iii

----

 
| Representatives       | ** ** | **12**     |
|-----------------------|------------|------------|
| Rules and Regulations | ** ** | **37**     |
|                  | ** ** | ** ** |
| Service Failure       | ** ** | **20**     |
|                  | ** ** | ** ** |
| Taxes                 | ** ** | **6**      |
| Tenant                | ** ** | **1**      |
| Tenant’s Share   | ** ** | **7**      |
| Tenant’s Taxes   | ** ** | **19**     |
| Term                  | ** ** | **2**      |
| Trade Fixtures        | ** ** | **16**     |
| **Transfer**          |       | 26         |
| Transfer Documents    | ** ** | **27**     |
| Transferee            | ** ** | **27**     |

 

iv

----

**BASIC LEASE INFORMATION**

**Lease Date:**

Foridentification purposes only, the date of this Lease is May       ,2006

**Landlord:**

PAUMOULDS CPP-A LLC, a California limited liability company

**Tenant:**

VerigyUS, Inc., a Delaware corporation

**Project:**

10100-10200Tantau Project

**Building:**

10100-10200North Tantau Avenue, Cupertino, California

**Premises:**

Approximately100,491 square feet of Rentable Area located in the Building, as shown on ExhibitA

**Term:**

OneHundred Twenty (120) full calendar months (plus any partial month at thebeginning of the Term), unless extended or sooner terminated as providedherein.

**Commencement Date:**

September1, 2006 (the “**Commencement Date**”), subject tothe terms and conditions of Sections 2 and 33.10 below.

**Expiration Date:**

Thelast day of the one hundred twentieth (120th) full calendar month in the Term,subject to Section 2 hereof.

**BaseRent:**
| Months       | ** ** | **Monthly Base Rent** | ** ** |
|--------------|------------|---------------------------------|------------|
|   1-12* |       | $                               | 130,638.30 |   |
| 13-24        |       | $                               | 134,557.45 |   |
| 25-36        |       | $                               | 138,594.17 |   |
| 37-48        |       | $                               | 142,752.00 |   |
| 49-60        |       | $                               | 147,034.56 |   |
| 61-72        |       | $                               | 151,445.59 |   |
| 73-84        |       | $                               | 155,988.96 |   |
| 85-96        |       | $                               | 160,668.63 |   |
| 97-108       |       | $                               | 165,488.69 |   |
| 109-120      |       | $                               | 170,453.35 |   |

 

----

*(plusany partial month at the beginning of the Term, the Monthly Base Rent for whichshall be prorated as provided in Section 3.1)

v

----

**Tenant’s Share:**

63.7%

**Security Deposit:**

FiveMillion Dollars ($5,000,000.00), subject to Section 4.

**Landlord’s Address for Payment ofRent and Notices:**

Pau Moulds CPP-A LLC

c/o Sand Hill Property Company

30 East Fourth Avenue

San Mateo, California 94401

Attn:  John Tze

**Tenant’s Address****for Notices:**

Verigy US, Inc.

4700 Innovation Drive

Fort Collins, CO  80525

Attn:Real Estate Manager

**Business Hours:**

8:00a.m. to 6:00 p.m.

**Guarantor(s):**

AgilentTechnologies, Inc., subject to Section 4.

**Broker(s):**

Cushman& Wakefield (Tenant); CPS (Landlord)
| Exhibits:  |   |                              |
|------------|--------|-----------------------------------|
| Exhibit A: |   | The Premises                      |
| Exhibit B: |   | Rules and Regulations             |
| Exhibit C: |   | Work Letter                       |
| Exhibit D: |   | Determination of Fair Market Rent |
| Exhibit E: |   | Form of Agilent Guaranty          |
| Exhibit F: |   | Permitted Hazardous Materials     |

 

TheBasic Lease Information set forth above is part of the Lease.  In the event of any conflict between anyprovision in the Basic Lease Information and the Lease, the Lease shallcontrol.

vi

----

**LEASE**

THISLEASE is made as of the Lease Date set forth in the Basic Lease Information, byand between the Landlord identified in the Basic Lease Information (“**Landlord**”), and the Tenant identified in the Basic LeaseInformation (“**Tenant**”).  Landlord and Tenant hereby agree as follows:

1.             PREMISES.

1.1           Premises.  Landlord hereby leases to Tenant, and Tenanthereby leases from Landlord, on and subject to the terms and conditions of thisLease, the office space identified in the Basic Lease Information as thePremises (the “**Premises**”), in the Buildinglocated at the address specified in the Basic Lease Information (the “**Building**”).  Theapproximate configuration and location of the Premises is shown on Exhibit A.  Landlord and Tenant agree that the RentableArea of the Premises and Tenant’s Share for all purposes under this Lease shallbe the Rentable Area and Tenant’s Share specified in the Basic LeaseInformation (unless modified pursuant to the provisions of this Lease).  Tenant also shall have the right during theTerm of the Lease to the nonexclusive use of the sidewalks, parking facilityserving the Building (the “**Parking Facility**”),elevators, stairs, corridors and other common areas of the Property(collectively, the “**Common Areas**”),subject to the provisions of this Lease regarding such use.  The real property on which the Building islocated and all improvements thereon (including the Building and the CommonAreas) are referred to herein, collectively, as the “**Property**.”  Tenant agrees and acknowledges that allreferences to the “Property” and the “Project” are to that certain realproperty consisting of approximately 9.4 acres and the buildings locatedthereon commonly known as 10100 and 10200 North Tantau Avenue, Cupertino,California.  As of the Commencement Date,Landlord will also own commercial property adjacent to the Property consistingof approximately 2.5 acres of real property and a commercial building locatedthereon commonly known as 5425 Stevens Creek Boulevard, Santa Clara, California(the “**Stevens Creek Property**”).  The Stevens Creek Property is not included inthe Property or the Project for the purposes of determining rent hereunder, andTenant agrees and acknowledges that the Stevens Creek Property may be sold byLandlord and/or redeveloped for other uses at a later date, and Tenant waivesany and all claims arising out of any sale and/or redevelopment of the StevensCreek Property; provided, however, that the foregoing waiver shall not bedeemed to be a waiver of Tenant’s rights as an occupant of the Property toappear at public meetings and otherwise file claims to oppose or support anyplanned use or redevelopment of the Stevens Creek Property in the same mannerand to the same extent as other owners and occupants of real property in thevicinity of the Stevens Creek Property.

1.2           Condition ofPremises.  Tenant acknowledges thatpossession of the Premises is being delivered to Tenant concurrently with theexecution and delivery of this Lease, and except for Landlord’s obligation toperform and pay for certain work in and to the Building as expressly providedin Exhibit C, attached hereto, Tenant hereby accepts Premises in its “asis” condition with “all faults”.  Exceptas expressly provided in Sections 5.1, 7.2, 12 and 13 and Exhibit C, Landlordshall have no obligation whatsoever to alter, remodel, improve, repair,decorate or paint the Premises or any part thereof either prior to or duringthe Term.  Tenant agrees and acknowledgesthat, excepting any express representations and warranties in this Lease,Landlord has not made any representations and warranties to Tenant concerningthe Premises (including its suitability for Tenant’s use) and Tenant has notrelied on any other representations and warranties by Landlord or Landlord’sRepresentatives (defined below) or any other parties concerning thePremises.  Tenant agrees and acknowledgesthat, prior to the date hereof, Tenant has thoroughly examined the Premises forthe suitability of the Premises for Tenant’s use,

1

----

including without limitation the construction andinstallation of all work and equipment required for Tenant’s use and occupancyof the Premises.

1.3           Right of First Offer.  From and after the Commencement Date, so longas no Event of Default has occurred and is continuing, Tenant shall have aright of first offer (“**ROFO**”) on any “ROFOSpace” (defined below) which Landlord may offer for rent to third partiesduring the Term.  If at any time Landlordexecutes a written proposal or letter of intent with a third party for all or aportion of the ROFO Space (a “**Proposal**”),Landlord will immediately offer the proposed space to Tenant on the same termsas contained in the Proposal by delivering written notice of such offer toTenant.  Tenant shall then have ten (10)days to respond to Landlord in writing indicating its election to lease theentire space covered by such Proposal on the terms and conditions of suchProposal or waive its rights to lease the ROFO Space on such terms, in whichcase Tenant shall execute and deliver a lease for such space (together with anypayments and deposits required thereunder) within ten (10) days after Landlord’sdelivery of a written lease reflecting the terms and conditions of theProposal, with all other terms and conditions of any such lease to be the sameas the terms and conditions of this Lease; provided, however, that Tenant’s failure to exercise its election and/orexecute and deliver a lease (submitted by Landlord with all of the requiredterms and conditions) for any ROFO space shall be deemed Tenant’s waiver of itsright to lease such ROFO Space, irrespective of whether the terms andconditions of the lease of such ROFO space to a third party, other than theterms reflected in the Proposal therefor, are different than the terms andconditions of this Lease.  Tenant’s ROFOshall be continuous throughout the Term, and if Landlord subsequently lowersthe rental rate, reduces the length of the term, or materially alters any ofthe other terms of any written proposal rejected or waived by Tenant or entersinto any additional written proposal(s) for any ROFO Space, Landlord shallre-submit the same to Tenant for acceptance or rejection.  Notwithstanding the foregoing, Landlord shallhave no obligations under this paragraph in connection with any transactionwhereby Landlord proposes to sell the Building to a third party purchaser whowill occupy space in the Building, regardless of whether such third party’soccupancy commences before or after its acquisition of the Building.  The right of first offer provided under thisparagraph shall be personal to Tenant (and any Permitted Transferee) andLandlord shall have no obligations under this paragraph if Tenant has assignedthis Lease or sublet more than twenty percent (20%)  of the Premises to any party other than aPermitted Transferee.

As used herein, “**ROFO Space**”means the following:  (i) for the firstthree (3) years of the Term following the Commencement Date, the ROFO Spaceshall consist only of the last full available floor of the two-story portion ofthe Building (the “**HP Premises**”)and the last full available floor of the building located on the Stevens CreekProperty (i.e., until and unless Landlord proposes to enter into a lease whichwould leave less than one complete floor available in either the Stevens CreekProperty or the HP Premises, Landlord is not required to offer the ROFO toTenant for such space); and (ii) after the third (3rd) anniversary of theCommencement Date, any rentable space which is available in the Project and theStevens Creek Property and not included within the Premises; provided, however,that (1) no space in the Stevens Creek Property shall be included in the ROFOSpace from and after the date Landlord sells the Stevens Creek Property, and(2) rentable space in the Project and the Stevens Creek Property which is notpart of the Premises shall not be ROFO Space if any existing tenant wishes toextend or modify the terms and conditions of its lease with respect to its thenexisting premises (as opposed to any new or additional ROFO Space not alreadyleased to such tenant).

2.             TERM.

2.1           InitialTerm.  The term of this Lease (the “**Term**”) shall commence on the Commencement Date   (“**Commencement Date**”)set forth in the Basic Lease Information and, unless sooner terminated or extendedas provided herein, shall expire on the Expiration Date set forth in the

2

----

BasicLease Information (the “**Expiration Date**”);provided, however, that (i) if Landlord has not substantially completed the “DemisingWork” (as the foregoing terms are defined in Exhibit C, attached hereto)on or before September 1, 2006, then the Commencement Date shall be extended byone day for each day beyond September 1, 2006, that Landlord fails tosubstantially complete the Demising Work; (ii) if there is any delay in the “substantialcompletion” of the Demolition Work beyond the Demolition Deadline or the “BaseBuilding Repair Work” beyond the “Base Building Repair Work Deadline” (as theforegoing terms are defined in Exhibit C) and such delay likewise causesa delay to the substantial completion of the Tenant Work (as defined in ExhibitC) or prevents Tenant from commencing its business operations in thePremises on September 1, 2006, then the Commencement Date, and Tenant’sobligation to pay Base Rent, Operating Expenses and Taxes from and after theCommencement Date, shall be delayed by one (1) day for every one (1) day ofdelay in the substantial completion of the Demolition Work beyond theDemolition Deadline or the Base Building Repair Work beyond the Base Building RepairWork Deadline, as applicable; and (iii) the Commencement Date, and Tenant’sobligation to pay Base Rent, Operating Expenses and Taxes from and after theCommencement Date, shall be extended by one (1) day for every one (1) day ofdelay that Tenant is prevented from commencing its business operations in thePremises on September 1, 2006, due to any “Landlord Delays” or “Force MajeureDelays” (as the foregoing terms are defined in Exhibit C); provided,however, that (1) in no event shall any such Force Majeure Delay extend theCommencement Date in excess of one hundred twenty (120) calendar days, and (2)if Tenant has been unable to commence its business operations in the Premisesprior to February 1, 2007, as a result of any Force Majeure Delay, either partyhereto may terminate this Lease by providing written notice to the other party,in which case Landlord shall refund to Tenant all unapplied deposits deliveredby Tenant hereunder and Landlord and Tenant shall thereupon have no furtherliability to the other under this Lease excepting obligations which expresslysurvive the termination hereof.  In theevent of any of the foregoing delays in the Commencement Date, the Lease shallnevertheless remain in full force and effect, Landlord shall not be liable toTenant for any loss, damage, cost or expense resulting from such delay (andTenant waives the provisions of any Laws to the contrary), nor shall this Leasebe void or voidable.  In case of any suchdelay in the Commencement Date, after the Commencement Date has beenestablished, Landlord and Tenant, at the request of either party, shall confirmthe Commencement Date and Expiration Date in writing; provided, however, thatthe failure of Landlord and Tenant to do so shall not alter the CommencementDate or the Expiration Date.

Notwithstanding anything to the contrary in thisSection 2, if the Commencement Date has not occurred prior to December 1, 2006,as a result of Landlord’s failure to complete any of the Landlord Work (subjectto extension as a result of any Tenant Delays or Force Majeure Delays), thenTenant may terminate this Lease by written notice to Landlord, in which caseLandlord shall refund to Tenant all unapplied deposits delivered by Tenanthereunder and Landlord and Tenant shall thereupon have no further liability tothe other under this Lease excepting obligations which expressly survive the termination hereof.

2.2           EarlyDelivery.      Subject to the terms and conditions of Exhibit C, Landlord shall deliveroccupancy of the Premises to Tenant for the purpose of commencing theinstallation of the Tenant Work, (defined in Exhibit C), on the dateboth parties have executed and delivered this Lease (the “**EarlyOccupancy Date**”).  From andafter the Early Occupancy Date, Tenant shall be deemed to be in possession ofthe Premises and shall be subject to all of the terms and conditions of thisLease, save and except the obligation to pay Base Rent and Tenant’s Share ofOperating Costs and Taxes; provided, however, that Tenant shall neverthelesspay Landlord for any and all services and utilities used by Tenant in thePremises during the period commencing on the Early Occupancy Date and ending onthe Commencement Date, as reasonably determined by Landlord, which obligationsshall survive the

3

----

terminationof this Lease.  From and after the EarlyOccupancy Date, Tenant shall provide Landlord and its contractors and agentsaccess to the Premises for the purpose of completing the Landlord Work.

2.3           Optionto Extend.  So long as no Event of Default has occurred andis continuing at the time it exercises the Option to Extend or on theExpiration Date of the Term (or the first Extended Term, as the case may be),Tenant shall have the right and option to extend this lease (“**Option to Extend**”) for two (2) additional optionperiods of five (5) years (each an “**ExtendedTerm**”), upon the same terms and conditions herein set forth exceptthat the Base Rent (as defined in Section 3, below) shall be an amount equal toninety-seven and one-half percent (97.5%) of “**FairMarket Value**” as defined in and determined in accordance with theterms and conditions of Exhibit D,attached hereto.  If Tenant exercises itsOption to Extend, for either Extended Term, Base Rent for the first twelve (12)months of such Extended Term shall be amount determined in accordance with thepreceding sentence, and shall be subject to increases of three percent (3%) foreach subsequent twelve (12) month period during the Extended Term, adjusted asof each annual anniversary of the expiration of the initial Term.  To exercise the Option to Extend, Tenant mustgive Landlord notice in writing sent so as to be received at least two hundredseventy (270) days prior to the Expiration Date.  If Tenant timely exercises an Option toExtend, each applicable Extended Term shall be deemed included within thedefinition of “Term” hereunder; provided, however, that Tenant’s failure toproperly exercise its Option to Extend for the initial Extended Term shallrender Tenant’s right to the second Extended Term null and void.  At Landlord’s election, Tenant’s exercise ofits Option to Extend shall be void if Tenant is in default under this Leasebeyond any applicable notice and cure period on the date it exercises itsOption to Extend or on the Expiration Date.

3.             RENT.

3.1           Paymentof Base Rent.  Commencing on the Commencement Date, andcontinuing throughout the Term of the Lease, Tenant shall pay to Landlord the “**Base Rent**” set forth in the Basic Lease Information, inadvance, without prior notice or demand, on the first day of each and everycalendar month during the Term.  MonthlyBase Rent for any partial month at the beginning or end of the Term shall beprorated based on the actual number of days in the month.  Within five (5) Business Days after theexecution and delivery of this Lease by Tenant and Landlord, Tenant shall paythe sum of One Hundred Twenty Five Thousand and no/100 Dollars ($125,000.00) asan advance payment of Base Rent, which amount shall be credited toward Tenant’sBase Rent payable for the first calendar month (and any partial month)occurring immediately after the Commencement Date.

3.2           AdditionalRent:  Operating Costs and Taxes.

(a)           Definitions.

(1)           “**Operating Costs**” means all costs of owning, managing,operating, maintaining, repairing, replacing and restoring the Property,including all costs, expenditures, fees and charges for the following:  (A) supplying, operating, managing,maintaining, repairing, replacing and restoring utilities, services and systems(including all Building Systems, sewers, storm drains, elevators,telecommunications facilities and equipment, and providing the servicesspecified in Section 9.1), and taxes thereon; (B) maintaining, repairing,restoring and replacing the Parking Facility (including resurfacing, repainting,restriping and cleaning) and other Common Areas of the Property (includinglandscaped areas); (C) compensation (including salaries, wages, employmenttaxes, fringe benefits and other payroll expenses) for persons who performduties in connection with the operation, management, maintenance, repair andimprovement of the Property, such compensation to be appropriately allocatedfor persons who also perform duties unrelated to the Property; (D) premiumsfor property (including

4

----

coveragefor earthquake and flood if carried by Landlord), liability, rental income andother insurance relating to the Property, and expenditures for deductibleamounts paid under such insurance; (E) licenses, permits, certificates andinspections; (F) complying with the requirements of any Laws;(G) amortization of cost incurred for (i) capital improvements to theProperty that are intended to reduce Operating Costs, and (ii) any repair,replacement or restoration of any components of the Building and the Propertythat that under generally accepted accounting principles are properlyclassified as capital expenditures (including without limitation HVACequipment, parking lot resurfacing, roof covering), with interest on theunamortized balance at the rate paid by Landlord on funds borrowed to financesuch capital improvements or replacements (or, if Landlord finances suchimprovements out of Landlord’s funds without borrowing, the rate that Landlordwould have paid to borrow such funds, as reasonably determined by Landlord),over the useful life of such improvements or replacements, as reasonablydetermined by Landlord; (H) property management fees or, if no managing agentis retained for the Property, a sum in lieu thereof which is not in excess ofthe prevailing rate for management services charged by professional managementcompanies for the operation of similar properties (but in no event shall anysuch management fees exceed four percent (4%) of the gross rent);(I) accounting, legal and other professional services incurred in connectionwith the oper­ation of the Property and the calculation of Operating Costs andTaxes; (J) supplies, materials, tools and rental equipment; and (K) any othercost, expenditure, fee or charge, whether or not hereinbefore described whichin accordance with generally accepted property management practices would beconsidered an expense of owning, managing, operating, maintaining, repairing,replacing, restoring, and/or improving the Property.  The portion of Operating Costs that varybased on occupancy for any calendar year during which average occupancy of theBuilding is less than one hundred percent (100%) shall be calculated based uponthe amount of such Operating Costs that would have been incurred if theBuilding had an average occupancy of one hundred percent (100%) during theentire calendar year.

Notwithstandingthe foregoing or anything to the contrary contained in this Lease, OperatingCosts shall not include, and Tenant shall have no obligation to pay orreimburse Landlord for any of the following: (i) ground rent payments; (ii)interest and principal payments on loans or indebtedness secured by theProperty; (iii) costs of tenant or other special improvements for Tenant (tothe extent Landlord has agreed to pay for such improvements) or other tenants ofthe Building; (iv) costs of services or other benefits which are not availableto Tenant but which are available to other tenants or occupants, or for whichLandlord is reimbursed by other tenants of the Building other than throughpayment of tenants’ shares of Operating Costs and Taxes; (v) leasingcommissions, attorneys’ fees, advertising expenses, promotional expenses, andother expenses incurred in connection with leasing space in the Building orProject or enforcing such leases; (vi) depreciation, expense reserves, oramortization, other than as permitted under clause (G) of the definition ofOperating Costs in the first paragraph of this provision; (vii) fines orpenalties incurred due to Landlord’s violation of any Law or late payments ofOperating Expenses; (viii) the cost of any repair, improvement, alteration,addition, change, replacement, extraordinary repair, and other item related tothe Building or Project that under generally accepted accounting principles areproperly classified as capital expenditures, except as otherwise provided inclause (G) of the definition of Operating Costs in the first paragraph of thisprovision; (ix) any costs of repair, replacement or restoration work occasionedby any casualty or condemnation, subject to Sections 12 and 13; (x) except formanagement fees (subject to the 4% cap in subsection H of the precedingparagraph), Landlord’s general overhead and any overhead or profit increment toany subsidiary or affiliate of Landlord for services on or to the Building or Project,to the extent that the cost of such service exceeds competitive costs for suchservices rendered by persons or entities of similar skill, competence andexperience other than a subsidiary or affiliate of Landlord; (xi) except formanagement fees (subject to the 4% cap in subsection H of the precedingparagraph), any costs or expenses representing any amount paid for services andmaterials to a (personal or business) related person, firm, or entity to theextent such amount exceeds the amount that would have been paid for suchservice or materials at the then existing market

5

----

ratesin the absence of such relationship; (xii) compensation paid to any employee ofLandlord above the grade of Property Manager/Building Superintendent, includingofficers and executives of Landlord; (xiii) costs of electrical energy or otherutility service furnished and/or metered directly to tenants of the Building orProject other than Tenant, (xiv) insurance deductibles for Landlord’s insurancein excess of $25,000 for any casualty; (xv) costs incurred in connection withthe presence of any Hazardous Materials (defined below), except to the extentcaused by the Handling (defined below) of the Hazardous Materials in questionby Tenant; (xvi) any costs relating to the structural components of theBuilding to the extent such costs are at Landlord’s sole expense under Section7.2 below;  (xvii) the costs of repairsor maintenance to the extent Landlord is reimbursed for the cost thereof underany warranties; (xviii) the costs of repairs, alterations, and generalmaintenance to the extent necessitated as a result of the active negligence orwillful misconduct of Landlord or its agents, employees, or contractors (and tothe extent such costs are incurred as a result of the negligence or willfulmisconduct of any parties other than Tenant or Tenant’s Representatives orInvitees, Landlord agrees to make commercially reasonable efforts to seekcompensation from such parties); (xix) the cost of artwork and décor in theCommon Areas over and above the reasonable costs of such artwork and décortypically installed in similar industrial/commercial buildings in the vicinityof the Property; (xx) costs incurred in installing, operating, maintaining andowning any specialty service or facilities not normally installed, operated ormaintained in buildings comparable to the Building; (xxi) charitablecontributions and donations; or (xxii) any costs or expenses incurred byLandlord in connection with the Demolition Work, Demising Work or Base BuildingRepair Work.

(2)           “**Taxes**” means all real property taxes and general, specialand district assessments and other govern­men­tal impositions, fees, levies andcharges of whatever kind, nature or origin, imposed on or by reason of theownership or use of the Property, including: governmental charges, fees or assessments for transit or trafficmitigation (including area-wide traffic improvement assessments andtransportation system manage­ment fees), housing, police, fire or othergovernmental service or purported benefits to the Property, includingassessments, taxes, fees, levies and charges imposed by governmental agenciesfor such purposes as street, sidewalk, road and utility construction andmaintenance, refuse removal and for other governmental services; personalproperty taxes assessed on the personal property of Landlord used in theoperation of the Property; service payments in lieu of taxes; any tax, fee orexcise on the use or occupancy of any part of the Property, or on rent for theProperty, or for space in the Property; and any other fees, taxes andassessments of any kind or nature whatsoever levied or assessed in addition to,in lieu of or in substi­tution for existing or additional real or personalproperty taxes on the Property or the personal property described above; anyincreases in the foregoing caused by changes in assessed valuation, tax rate orother factors or circumstances; and the reasonable cost of contesting byappropriate proceedings the amount or validity of any taxes, assessments orcharges described above; but excluding (i) income taxes measured by the netincome of Landlord and franchise, transfer, gift, sales, estate and inheritancetaxes; (ii) penalties and interest, other than those attributable to Tenant’sfailure to comply timely with its obligations pursuant to this Lease; (iii)increases in Taxes (whether increases result from increased rate, valuation, orboth) attributable to additional improvements to the Building or Project solong as such increases have increased Taxes by over ten percent (10%) of thethen-applicable amounts, unless such improvements are constructed for Tenant’sprimary benefit or for the common benefit of Tenant and other tenants in theProject; and (iv) any taxes, excises, levies, fees and charges in excess of theamount which would be payable if such expense were paid in installments overthe longest allowable term, but only to the extent Landlord shall have theright to pay such taxes, excises, levies, fees and charges in installments asof the Lease Date without lodging any formal appeal or commencing anyproceeding with any taxing authority to implement installment payments or makea change to any such installment payments existing as of the Lease Date.  To the

6

----

extentpaid by Tenant or other tenants as “Tenant’s Taxes” (as defined inSection 8), “Tenant’s Taxes” shall be excluded from Taxes.

IfTenant disputes the amount or validity of any Taxes payable by Tenanthereunder, then upon not less than thirty (30) days prior written notice,Tenant shall have the right to contest and defend against the same on Landlord’sbehalf, and in good faith to diligently conduct any necessary proceedings inconnection therewith; provided, however, that any such contest shall be atTenant’s sole expense.  Landlord mayelect to participate in any such contest by Tenant, in which case Tenant shallreimburse Landlord’s reasonable out-of-pocket expenses (including attorneys’fees) incurred thereby upon Landlord’s written demand.  Tenant may not postpone or defer payment ofany contested or appealed Taxes, but shall be retroactively credited with anysavings or refund of Taxes obtained by Landlord by reason of Tenant’sappeal.  Tenant shall indemnify, defendand hold Landlord harmless from and against any and all claims, damages,liabilities and costs, including, without limitation, penalties, interest andattorneys’ fees, costs and disbursements, arising from or related to any suchcontest, which obligation shall survive the expiration or earlier terminationof this Lease.

(3)           “**Tenant’s Share**” means the Tenant’s Share as set forth in theBasic Lease Information.  If the rentablearea of the Premises is changed by Tenant’s leasing of additional spacehereunder or for any other reason, Tenant’s Share shall be adjusted accordingly.

(b)           AdditionalRent.

(1)           Commencingon the Commencement Date, and continuing throughout the Term of the Lease,Tenant shall pay Landlord, as “**Additional Rent**,”Tenant’s Share of the sum of Operating Costs and Taxes for each calendar year,or portion thereof, occurring during the Term.

(2)           Assoon as reasonably practicable after the end of each calendar year, Landlordshall notify Tenant of Landlord’s estimate of Operating Costs, Taxes and Tenant’sAdditional Rent for the following calendar year.  Commencing on the first day of January ofeach calendar year and continuing on the first day of every month thereafter insuch year, Tenant shall pay to Landlord one-twelfth (1/12th) of the estimatedAdditional Rent.  If Landlord thereafterestimates that Operating Costs or Taxes for such year will vary from Landlord’sprior estimate, Landlord may, by notice to Tenant, revise the estimate for suchyear (and Additional Rent shall thereafter be payable based on the revisedestimate).

(3)           Assoon as reasonably practicable after the end of each calendar year, Landlordshall furnish Tenant a statement with respect to such year, showing OperatingCosts, Taxes and Additional Rent for the year, and the total payments made byTenant with respect thereto; provided, however, that Landlord’s failure todeliver its statement (for up to, but not in excess of, three hundred sixtyfive (365) days after the end of such year) shall not waive or relinquishLandlord’s right to reconcile Operating Costs and Taxes, collect any underpaymentby Tenant and refund any overpayment by Tenant, and prior to Tenant’s receiptof Landlord’s reconciliation statement Tenant shall continue to pay estimatedOperating Costs and Taxes at the most recent estimated monthly amount providedby Landlord to Tenant.  Unless Tenantraises any objections to Landlord’s statement within one hundred eighty (180)days after receipt of the same, such statement shall conclusively be deemedcorrect and Tenant shall have no right thereafter to dispute such statement orany item therein or the computation of Additional Rent based thereon.  If Tenant does object to such statementwithin the required time period, then Landlord shall provide Tenant withreasonable verification of the figures shown on the statement and the partiesshall negotiate in good faith to resolve any disputes.  Notwithstanding the foregoing,

7

----

Tenantshall only be permitted to engage a certified public accountant, or other thirdparty service provider primarily engaged in providing lease administration andaudit services, to review Landlord’s statement, and in no event shall Tenant beentitled to engage any accountant for such review whose compensation ismeasured, in whole or in part, upon any adjustments to Landlord’s statement asa consequence of such review.  Anyobjection of Tenant to Landlord’s statement and resolution of any dispute shallnot postpone the time for payment of any amounts due Tenant or Landlord basedon Landlord’s statement, nor shall any failure of Landlord to deliver Landlord’sstatement for not more than three hundred sixty five (365) days after the endof the year in question relieve Tenant of Tenant’s obligation to pay anyamounts due Landlord based on Landlord’s statement.

(4)           IfTenant’s Additional Rent as finally determined for any calendar year exceedsthe total payments made by Tenant on account thereof, Tenant shall pay Landlordthe deficiency within thirty (30) days of Tenant’s receipt of Landlord’sstatement.  If the total payments made byTenant on account thereof exceed Tenant’s Additional Rent as finally determinedfor such year, Tenant’s excess payment shall be credited toward the rent nextdue from Tenant under this Lease or refunded to Tenant if such determination isat or after the expiration or earlier termination of the Lease.  For any partial calendar year at thebeginning or end of the Term, Additional Rent shall be prorated on the basis ofa 365-day year by computing Tenant’s Share of the Operating Costs and Taxes forthe entire year and then prorating such amount for the number of days duringsuch year included in the Term. Notwithstanding the termination of this Lease, Landlord shall pay toTenant or Tenant shall pay to Landlord, as the case may be, within thirty (30) daysafter Tenant’s receipt of Landlord’s final statement for the calendar year inwhich this Lease terminates, the difference between Tenant’s Additional Rentfor that year, as finally determined by Landlord, and the total amountpreviously paid by Tenant on account thereof. Notwithstanding the foregoing or anything to the contrary contained inthis Lease, Tenant shall have no obligation to pay for any Operating Costs orTaxes that are fairly allocable to any time period before the Commencement Dateor after the Expiration Date (or earlier termination of this Lease).

Iffor any reason Taxes for any year during the Term are reduced, refunded orotherwise changed, Tenant’s Additional Rent shall be adjusted accordingly.  If Taxes are temporarily reduced as a resultof space in the Building being leased to a tenant that is entitled to anexemption from property taxes or other taxes, then for purposes of determiningAdditional Rent for each year in which Taxes are reduced by any such exemption,Taxes for such year shall be calculated on the basis of the amount the Taxesfor the year would have been in the absence of the exemption.  The obligations of Landlord to refund anyoverpayment of Additional Rent and of Tenant to pay any Additional Rent notpreviously paid shall survive the expiration or earlier termination of thisLease.

3.3           Paymentof Rent.  All amounts payable or reimbursable by Tenantunder this Lease, including late charges and interest, shall constitute rentand shall be payable and recoverable as rent in the manner provided in thisLease.  Any sums payable to Landlord ondemand under the terms of this Lease shall be payable within thirty (30) daysafter notice from Landlord of the amount due. All rent shall be paid without offset, recoupment or deduction in lawfulmoney of the United States of America to Landlord at Landlord’s Address forPayment of Rent as set forth in the Basic Lease Information, or to such otherperson or at such other place as Landlord may from time to time designate.

# 4.             SECURITYDEPOSIT.  Within five (5) Business Days afterboth parties have executed and delivered this Lease (the “**DepositDelivery Date**”), Tenant shall deposit with Landlord the amountspecified in the Basic Lease Information as the Security Deposit (the “**Security Deposit**”) as security for the fulland faithful performance of each and every obligation of Tenant under theLease.  If an Event of Default occursunder this Lease, Landlord may, without prejudice to any other remedy Landlordhas,

8

----

# apply all or a part of the Security Deposit to:  (i) any Event of Default in the paymentof rent or other sum payable hereunder; (ii) any amount that Landlord mayspend in exercising Landlord’s rights under this Lease or otherwise by reasonof the Event of Default:  and/or(iii) any expense, loss or damage that Landlord may suffer because of anyEvent of Default by Tenant hereunder, including costs and reasonable attorneys’fees incurred by Landlord to recover possession of the Premises following anEvent of Default.  In the event Landlordso applies all or a part of the Security Deposit, Tenant shall pay to Landlordon demand an amount sufficient to replenish the Security Deposit to the fullamount thereof, and Tenant’s failure to do so within ten (10) Business Daysafter receipt of such demand from Landlord shall constitute an Event ofDefault.  Within thirty (30) BusinessDays after the expiration of the Term or earlier termination of this Lease andTenant’s surrender of possession of the Premises to Landlord, Landlord shallreturn to Tenant the Security Deposit, less any portion thereof which may havebeen applied by Landlord as permitted hereunder (including without limitationLandlord’s retention of any amounts required to remedy an Event of Defaultarising out of Tenant’s failure to surrender the Premises to Tenant as requiredhereunder, in an amount reasonably estimated by Landlord).  If Landlord transfers its interest in theBuilding, Landlord shall deliver or credit the Security Deposit to Landlord’ssuccessor-in-interest, and Landlord thereupon shall be relieved of furtherresponsibility with respect to the Security Deposit.

Tenant shall be entitled to deliver all or part of theSecurity Deposit in the form of an unconditional and irrevocable letter ofcredit (the “**Letter of Credit Security Deposit**”)in form and issued by a national bank with an office in the San Francisco BayArea (i.e., wherein said letter of credit may be drawn) reasonably satisfactoryto Landlord, as security for the full and faithful performance of everyprovision of this lease to be thereafter performed by Tenant (the Letter ofCredit Security Deposit, together with (1) any cash from time to time heldby Landlord as part of the security deposit following a draw on the Letter ofCredit Security Deposit or (2) any cash from time to time held by Landlordas part of the security deposit under this Section 4, is sometimes referred toherein as the “**Security Deposit**”).  If Tenant defaults with respect to anyprovision of this Lease, and such default remains uncured beyond applicablecure periods provided herein, then Landlord may, as applicable, (i) use,apply or retain all or any part of the Security Deposit which is then held byLandlord in the form of cash (herein, the “**CashSecurity Deposit**”), or (ii) draw on any Letter of CreditSecurity Deposit, in whole or in part, in either case to the extent necessaryin Landlord’s reasonable judgment to cure such default (provided that Landlordmay draw upon any Letter of Credit Security Deposit in whole in the eventTenant defaults in its obligation to timely deliver a replacement letter ofcredit as required hereunder), and Landlord may use, apply or retain all or anypart of the proceeds thereof, for the payment of any rent and any other sum indefault (beyond applicable cure periods provided herein), or for the payment ofany other amount which Landlord is entitled to spend in exercising its rightsunder this Lease or otherwise by reason of Tenant’s default (beyond applicablecure periods provided herein), or to compensate Landlord for any other loss ordamage which Landlord may suffer by reason of Tenant’s Event of Default.  If any portion of the Cash Security Depositor proceeds from a draw on any Letter of Credit Security Deposit is so used orapplied, Tenant shall, within thirty (30) days after written demand therefor,as applicable, cause the issuing bank to restore any Letter of Credit SecurityDeposit to its original amount or deposit cash with Landlord in an amountsufficient to restore the Security Deposit to its original amount, and Tenant’sfailure to do so shall be a material breach of this Lease.  Landlord shall not be obligated to keep anyCash Security Deposit or any proceeds from a draw on the Letter of CreditSecurity Deposit separate from its general funds, and Tenant shall not beentitled to interest on either.

Nothing in this Section 4 shall be construed to limitthe amount of damages recoverable by Landlord or any other remedy to the amountof the Security Deposit.

9

----

Any letter of credit delivered by Tenant hereunder as the Letter ofCredit Security Deposit shall expire no earlier than twelve (12) months afterissuance and shall provide for automatic renewals of one-year periods unlessthe issuer has provided Landlord written notice of non-renewal at least thirty(30) days prior to the then expiration date, in which case Tenant shall providea replacement letter of credit meeting the requirements of this Section 4 nolater than fifteen (15) days prior to the expiration date of the thenoutstanding and expiring letter of credit; provided, however, that anyreplacement letter of credit shall not be required to have an effective dateearlier than the expiration date of the then existing letter of credit being soreplaced.  Each subsequent replacementletter of credit shall expire no earlier than twelve (12) months from theexpiration date of the then outstanding and expiring letter of credit and shallprovide for automatic 1-year renewals as described above.  Tenant shall ensure that at all times duringthe Term of this Lease and for thirty (30) days after expiration of theTerm, cash or one or more unexpired letters of credit in the aggregate amountof the Security Deposit required hereunder shall have been delivered toLandlord.  Failure by Tenant to deliver cashor any replacement letter of credit as required above shall entitle Landlord todraw under the outstanding letter(s) of credit and to retain the entireproceeds thereof for application as the Security Deposit under this Lease.  Each letter of credit shall be for thebenefit of Landlord and its successors and assigns, shall be expresslytransferable to such successor and assigns (and Tenant shall pay all costsassociated with any such transfer), and shall entitle Landlord or itssuccessors or assigns to draw from time to time under the letter of credit inportions or in whole upon presentation of (i) a sight draft, and (ii) astatement executed by Landlord stating that Landlord is entitled to make thesubject draw pursuant to the terms of this Lease.

So long as no Event of Default has occurred and is continuing and/or noEvent of Default has occurred within the previous twelve (12) month period, oneach anniversary of the Commencement Date (or the date Tenant delivers theSecurity Deposit to Landlord pursuant to the following paragraph) Tenant shallbe entitled to reduce the amount of the Security Deposit by Four Hundred FiftyThousand and no/100 Dollars ($450,000.00); provided, however, that in no eventshall the Security Deposit be reduced below the minimum amount of One Millionand no/100 Dollars ($1,000,000.00).  Ifan Event of Default has occurred and is continuing on any date when Tenantwould be entitled to reduce the Security Deposit as provided in this paragraphand/or an Event of Default has occurred within the previous twelve (12) monthperiod, then Tenant shall not be entitled to any reduction of the SecurityDeposit at such time and may only resume such reductions in the SecurityDeposit amount on the following anniversary of the Commencement Date, subjectto the same requirement that no Event of Default has occurred within theprevious twelve (12) month period as a condition to any subsequent reduction.

Notwithstanding anything to the contrary in this Lease, if, prior tothe Deposit Delivery Date, Tenant provides to Landlord a guaranty of this Leaseby Agilent Technologies, Inc., in the form attached hereto as Exhibit E(the “**Agilent Guaranty**”), then Tenant’sobligation to post a Security Deposit hereunder shall be suspended, subject tothe terms and conditions of this Section 4. If, at any time during the Term, Tenant achieves a Standard and Poor’srating of not less than BBB- and maintains the same for a continuous period ofone hundred eighty (180) days after Tenant’s written notice to Landlord that ithas been rated at least BBB- by Standard and Poor’s (the “**MinimumRating**”) or posts the Security Deposit, then the Agilent Guarantymay be revoked and Tenant’s obligation to post the Security Deposit shall besuspended for so long as Tenant continuously satisfies the Minimum Rating thereafter.  Landlord agrees and acknowledges that Tenantis not required to provide the Agilent Guaranty as a condition to theeffectiveness of this Lease, and may instead post the Security Deposit on orbefore the Deposit Delivery Date. Landlord further acknowledges and agrees that if Tenant provides anAgilent Guaranty in lieu of the Security Deposit, then Tenant may at anytimethereafter post the Security Deposit (in the form of cash or a Letter of CreditSecurity Deposit) with Landlord, in which event the Agilent Guaranty shallthereupon be deemed canceled, void and of no further force or effect, andLandlord shall immediately

10

----

return theoriginal executed copy of the Agilent Guaranty to Tenant.  If Tenant has posted the Security Deposit andthereafter achieves the Minimum Rating, Landlord shall refund the SecurityDeposit (including returning any original letter of credit then held byLandlord) upon the expiration of the one hundred eighty (180) day periodrequired to satisfy the Minimum Rating. If Tenant is at any time entitled to suspension of its obligation todeliver the Security Deposit and Tenant thereafter becomes obligated to deliverthe Security Deposit to Landlord pursuant to the terms and conditions of thisSection 4, then Tenant shall be entitled to the reductions in the amount of theSecurity Deposit that Tenant would have obtained pursuant to the precedingparagraph (and subject to the terms and conditions thereof) and shall only berequired to deliver to Landlord the amount of the Security Deposit which wouldhave been held by Landlord at such time if the Security Deposit had beendelivered to Landlord on the Deposit Delivery Date and periodically reducedthereafter in accordance with the preceding paragraph.  During all periods within the Term in whichthe Agilent Guaranty is not in force and Tenant has not delivered the SecurityDeposit to Landlord based on its satisfaction of the Minimum Rating, (1) eachpayment of rent by Tenant shall constitute a representation and warranty byTenant to Landlord that, to Tenant’s knowledge, Tenant maintains the MinimumRating at such time and that Tenant is not aware of any facts or circumstancesthat would be reasonably likely to reduce Tenant’s Standard and Poor’s ratingbelow the Minimum Rating, and (2) Tenant shall make commercially reasonableefforts to update Landlord on the status of its Standard and Poor’s rating, andif during any such period Tenant receives notice that its Standard and Poor’srating has been reduced below BBB-, Tenant shall immediately provide writtennotice thereof to Landlord and shall deliver the Security Deposit to Landlordwithin ten (10) Business Days thereafter.

Tenant waives the provisions of California Civil CodeSection 1950.7, and all other provisions of law now in force or thatbecome in force after the date of execution of this Lease, that provide thatLandlord may claim from a security deposit only those sums reasonably necessaryto remedy Events of Default in the payment of rent, to repair damage caused byTenant, or to clean the Premises. Landlord and Tenant agree that Landlord may, in addition, claim thosesums reasonably necessary to compensate Landlord for any foreseeable orunforeseeable loss or damage caused by an Event of Default.  Tenant may not assign or encumber theSecurity Deposit, and any attempt to do so shall be void and, in all events,not binding upon Landlord.

5.             USEAND COMPLIANCE WITH LAWS.

5.1           Use.  The Premises shall be used and occupied onlyfor general business office purposes, research and development (includingsemiconductor testing lab work and related storage uses) and for other legaluses and purposes related thereto. Tenant, at its expense, shall comply with all present and future Lawsrelating to the condition, use or occupancy of the Premises (and shall make anyrepairs, alterations or improvements as required to comply with all such Laws),and shall observe the “Rules and Regulations” (as defined in Section 27);provided, however, that Landlord, not Tenant, shall be required to make and paythe cost of any alterations or improvements to the Premises or Building thatare necessary to comply with any such Laws or Rules and Regulations, unlesssuch alterations or improvements are required as a result of the Tenant’sparticular use of the Premises (as opposed to improvements that are required tobe made by landlords of office and research and development propertiesgenerally) or by Alterations to the Premises made and paid for by Tenant, inwhich case Tenant shall be required to make and pay for such alterations orimprovements.  The term “**Laws**,” as used in this Lease, means all statutes,ordinances, codes, rules, regulations, requirements, licenses, permits,certificates, judgments, decrees, orders or directives of any federal, state,county or local governmental or quasi-governmental authority, agency,department, board, panel or court now in force or which may hereafter be inforce, as same may be amended.  Tenantshall not do, bring, keep or sell anything in or about the Premises that is prohibitedby, or that will cause a cancellation of or an increase

11

----

inthe existing premium for (unless Tenant agrees in writing to pay for suchincrease), any insurance policy covering the Property or any part thereof.  Tenant shall not permit the Premises to beoccupied or used in any manner that will constitute waste or a nuisance, ordisturb the quiet enjoyment of or otherwise annoy other tenants in theBuilding.  Without limiting theforegoing, the Premises shall not be used for educational activities, practiceof medicine or any of the healing arts, providing social services, for anygovernmental use (including embassy or consulate use), or for personnel agency,customer service office, studios for radio, television or other media, travelagency or reservation center operations or uses, except to the extent such usesare merely incidental to Tenant’s primary business operations, or part of theservices provided by Tenant to its employees and customers, at thePremises.  Tenant shall not, without theprior consent of Landlord, (i) bring into the Building or the Premises anythingthat may cause substantial noise, odor or vibration, overload the floors in thePremises or the Building  Systems, orjeopardize the structural integrity of the Building or any part thereof; (ii)connect to the utility systems of the Building any apparatus, machinery orother equipment other than equipment that would exceed the electrical or otherutility capacity of the Building; or (iii) connect to any electrical circuit inthe Premises any equipment or other load with aggregate electrical powerrequirements which would be reasonably likely to overload the rated capacity ofthe circuit or otherwise interfere with the regular operation of the electricalsystems serving the Building.  The term “**Building Systems**,” as used in this Lease, means the heating,ventilating and air-conditioning (“**HVAC**”),mechanical, elevator, plumbing and sewer, electrical, fire protection, lifesafety, security and other systems in the Building and all components thereof,but excluding any supplemental or special HVAC, mechanical, elevator, plumbingand sewer, electrical, fire protection, life safety, security and other systemsinstalled by Tenant in connection with the Lab Work (as defined in Exhibit C)constructed at Tenant cost, as supplemented by any other specific itemsLandlord and Tenant agree in writing to include or exclude from the BuildingSystems at or prior to the time Landlord approves Tenant’s ConstructionDrawings pursuant to Exhibit C.

5.2           HazardousMaterials.

(a)           Definitions.

(1)           “**Hazardous Materials**” shall mean any substance, material orwaste (A) that now or in the future is regulated or governed by, requiresinvestigation or remediation under, or is defined as a hazardous waste,hazardous substance, hazardous material, pollutant or contaminant under anyLaws, including the Comprehensive Environmental Response Compensation andLiability Act, 42 U.S.C. § 9601 etseq., the ResourceConservation and Recovery Act, 42 U.S.C. § 6901 etseq., andSections 25117 and 25316 of the California Health and Safety Code, or(B) that is toxic, explosive, corrosive, flammable, radioactive,carcinogenic, dangerous or otherwise hazardous, including gasoline, dieselfuel, petroleum hydrocarbons, polychlorinated biphenyls (PCBs), asbestos, radonand urea formaldehyde foam insulation.

(2)           “**Environmental Requirements**” shall mean all present andfuture Laws and other requirements of any kind applicable to HazardousMaterials.

(3)           “**Handled**” and “**Handling**” shallmean and refer to any installation, generation, storage, use, disposal,discharge, release or transportation of Hazardous Materials by Tenant orLandlord, as applicable, or their respective agents, employees, contractors,licensees, assignees, sublessees, transferees or representatives (collectively,“**Representatives**”) or their respectiveinvitees (collectively, “**Invitees**”), ator about the Premises and/or the Property.

12

----

(4)           “**Environmental Losses**” shall mean all costs and expenses ofany kind (including attorneys’ fees), damages, including foreseeable andunforeseeable consequential damages, fines and penalties incurred in connectionwith any violation of and/or compliance with Environmental Requirements and alllosses of any kind attributable to the diminution of value, loss of use oradverse effects on marketability or use of any portion of the Premises orProperty.

(b)           Tenant’sCovenants.  No Hazardous Materials shall be Handled byTenant at or about the Premises or Property without Landlord’s prior writtenconsent, which consent may be granted, denied, or conditioned upon compliancewith Landlord’s requirements, all in Landlord’s reasonable discretion.  Notwithstanding the foregoing, (i) normalquantities and use of those products containing small amounts of HazardousMaterials customarily used in the conduct of general office activities, such ascopier fluids and cleaning supplies, and (ii) the Hazardous Materialsdesignated, and limited to the quantities listed, on Exhibit F, attachedhereto (collectively, “**Permitted HazardousMaterials**”), may be used and stored at the Premises without Landlord’sprior written consent, provided that Tenant’s activities at or about thePremises and Property and the Handling by Tenant of all such products and theHazardous Materials therein shall comply at all times with all EnvironmentalRequirements.  At the expiration ortermination of the Lease, Tenant shall promptly remove from the Premises andProperty all Hazardous Materials Handled by Tenant at the Premises or theProperty.  Tenant shall keep Landlordfully and promptly informed of all Handling by Tenant of Hazardous Materialsother than Permitted Hazardous Materials. Tenant shall be responsible and liable for the compliance with all of theprovisions of this Section by all of Tenant’s Representatives and Invitees, andall of Tenant’s obligations under this Section (including its indemnificationobligations under paragraph (e) below) shall survive the expiration or earliertermination of this Lease.

(c)           Compliance.  Tenant shall at Tenant’s expense promptlytake all actions required by any governmental agency or entity in connectionwith or as a result of the Handling by Tenant of Hazardous Materials Handled byTenant or its Representatives at or about the Premises or Property, includinginspection, monitoring and testing, performing all cleanup, removal andremediation work required with respect to such Hazardous Materials, complyingwith all closure requirements and post-closure monitoring, and filing allrequired reports or plans.  All of theforegoing work and all Handling by Tenant of all Hazardous Materials shall beperformed in a good, safe and workmanlike manner by consultants and contractorsqualified and licensed to undertake such work and in a manner that will notinterfere with any other tenant’s quiet enjoyment of the Property or Landlord’suse, operation, leasing and sale of the Property.  Tenant shall deliver to Landlord prior todelivery to any governmental agency, or promptly after receipt from any suchagency, copies of all permits, manifests, closure or remedial action plans,notices, and all other documents or communications relating to the Handling byTenant of Hazardous Materials and/or compliance with Environmental Requirementsregarding same at or about the Premises or Property.  If any lien attaches to the Premises or theProperty in connection with or as a result of the Handling by Tenant ofHazardous Materials, and Tenant does not cause the same to be released, by payment,bonding or otherwise, within ten (10) days after Tenant’s receipt of writtennotice of the attachment thereof, Landlord shall have the right but not theobligation to cause the same to be released and any sums expended by Landlord(plus Landlord’s administrative costs) in connection therewith shall be payableby Tenant within thirty (30) days after its receipt of a written demand.

(d)           Landlord’sRights.  Landlord shall have the right, but not theobligation, to enter the Premises at any reasonable time (upon reasonable priornotice to Tenant and subject to Tenant’s reasonable security requirements)(i) to confirm Tenant’s compliance with the provisions of thisSection 5.2, and (ii) to perform Tenant’s obligations under thisSection if Tenant has failed to do so after reasonable notice to Tenant.  If there is any Handing by Tenant ofHazardous Materials at the Premises

13

----

thatare not Permitted Hazardous Materials, then Landlord shall also have the rightto engage qualified Hazardous Materials consultants to inspect the Premises andreview the Handling by Tenant of Hazardous Materials, including review of allpermits, reports, plans, and other documents regarding same.  Tenant shall pay to Landlord within thirty(30) days after Tenant’s receipt of a written demand any reasonableout-of-pocket costs of Landlord’s consultants’ incurred by Landlord inperforming Tenant’s obligations under this Section.  Landlord shall not be responsible for anyinterference caused by Landlord’s entry into the Premises; provided, however,that Landlord shall use reasonable efforts to minimize any interference withTenant’s business during any such entry.

(e)           Indemnification.  Tenant agrees to indemnify, defend, protectand hold harmless Landlord and its constituent partners or members and its ortheir partners, members, directors, officers, shareholders, employees andagents against and from all Environmental Losses and all other claims, actions,losses, damages, liabilities, costs and expenses of every kind, includingreasonable attorneys’, experts’ and consultants’ fees and costs, incurred atany time and arising from or in connection with the Handling by Tenant ofHazardous Materials at or about the Property in violation of EnvironmentalRequirements.  Landlord agrees toindemnify, defend, protect and hold harmless Tenant and its directors,officers, shareholders, employees and agents against and from all EnvironmentalLosses and all other claims, actions, losses, damages, liabilities, costs andexpenses of every kind, including reasonable attorneys’, experts’ and consultants’fees and costs, incurred at any time and arising from or in connection with (i)the Handling by Landlord of Hazardous Materials at or about the Property inviolation of Environmental Requirements, and (ii) any Hazardous Materialsexisting on,  under, or about theBuilding or Project as of the date of this Lease.

(f)            Landlord’sand Tenant’s Disclaimer.  To the best knowledge of Landlord, (i) noHazardous Materials are present in, on or under the Premises or Property or thesoil, surface water or groundwater thereof in violation of any applicableEnvironmental Requirements, (ii) no underground storage tanks are present onthe Property, and (iii) no action, proceeding or claim is pending or threatenedregarding the Property concerning any Hazardous Materials pursuant to anyEnvironmental Requirements.  Tenantagrees and acknowledges that, except for the express representations in thepreceding sentence, Landlord and its agents have not made any representationsor warranties concerning the environmental condition of the Project andPremises, including without limitation the presence of any Hazardous Materialslocated at or about the Premises or the Project, and Tenant agrees that it hasrelied on its own investigation to determine the environmental condition of thePremises and has elected to proceed with the Lease based on its own evaluationof such condition as it may affect Tenant’s use and occupancy of thePremises.  Landlord has obtained a PhaseI environmental assessment concerning the Project and Tenant acknowledges itsreceipt and review of such report prior to the Lease Date.  Notwithstanding the foregoing or anything tothe contrary in this Lease, under no circumstance shall Tenant be liable forany claims of any type or nature, directly or indirectly arising out of or inconnection with any Hazardous Materials present at any time on or about thePremises or Project, or the violation of any Environmental Requirements, exceptto the extent that any of the foregoing actually results from the Handling ofHazardous Materials  by Tenant or itsRepresentatives or Invitees in violation of applicable EnvironmentalRequirements.

6.             ALTERATIONS.

6.1           Landlord’sConsent.

(a)           Tenantshall not make or permit to be made any alterations, additions, installationsor improvements within, on, to or about the Premises or any part thereof(singularly and

14

----

collectively,“**Alterations**”) without the prior writtenconsent of Landlord in each instance. Notwithstanding the foregoing, Tenant may make the following Alterations(“Minor Alterations”) without the prior written approval of Landlord:  any Alterations that do not materially affectany of the Building Systems, the outside appearance of the Building or thestructural components of the Building, and do not exceed an aggregate cost of$100,000 in any one instance and otherwise conform with the requirements stated in Section 6.1(b) clauses (i)through (iv) below, and that nothing herein shall alter Tenant’s obligation toremove Alterations as provided in this Lease. ** **Tenant shall on request of Landlordpromptly provide Landlord with all cost and other information relating toTenant’s compliance with the foregoing conditions.

(b)           Landlordwill not unreasonably withhold or delay its consent to any Alterations,provided that all of the following conditions shall be satisfied:  (i) the Alterations do not affect theoutside appearance of the Building; (ii) the Alterations do not materiallyadversely affect the structural integrity of the Building or any part thereof;(iii) excepting signage approved by Landlord, the Alterations are to theinterior of the Premises and do not materially adversely affect any part of theBuilding outside of the Premises; and (iv) the Alterations do notadversely affect the proper functioning of the Building Systems or otherutilities, systems and services of the Building, or materially increase theusage thereof by Tenant.  The final plansand specifications for the Alterations, any subsequent changes thereto, and allcontractors and subcontractors who will perform them shall be subject toLandlord’s approval, which approval shall not be unreasonably be withheld.  All costs and expenses incurred in connectionwith the Alterations, including the construction and installation thereof, thepreparation of the plans and specifications therefor, and the attaining of allnecessary governmental approvals and permits, shall be paid by Tenant.  Upon Landlord’s written demand, Tenant shallpay to Landlord the actual out-of-pocket costs and expenses reasonably incurredby Landlord in having its consultants review Tenant’s plans and specificationsand inspecting the Alterations to determine whether they are being performed inaccordance with the approved plans and specifications and in compliance withLaws, including the fees of any architect or engineer employed by Landlord forsuch purpose.

(c)           Notless than fifteen (15) days nor more than thirty (30) days prior tocommencement of any Alterations, Tenant shall notify Landlord of the workcommencement date so that Landlord may post notices of nonresponsibility aboutthe Premises, and to the extent applicable, Tenant shall provide copies toLandlord of any and all permits and plans associated with any Alterations.  All Alterations must comply with all Laws,the other terms of this Lease, and the final plans and specifications approvedby Landlord, and Tenant shall fully and promptly comply with and observe anyrules and regulations of  Landlord thenin force with respect to the making of Alterations and/or imposed by Landlordin connection with its approval of the plans and specifications for theAlterations (to the extent Landlord has approval rights with respectthereto).  Landlord’s review and approvalof Tenant’s plans and specifications are solely for Landlord’s benefit, andLandlord shall have no duty toward Tenant, nor shall Landlord be deemed to havemade any representation or warranty to Tenant, with respect to the safety,adequacy, correctness, efficiency or compliance with Laws of the design of theAlterations, the plans and specifications therefor, or any other matterregarding the Alterations.  Tenant shallbe responsible for any additional alterations and improvements required by Lawsto be made to or in the Building as a result of any Alterations to the Premisesmade by or for Tenant.

6.2           Ownershipand Surrender of Alterations.  If and when Landlord consents to anAlteration, Landlord shall also notify Tenant in writing of Landlord’s electioneither to: (i) allow such improvement to remain at the Premises at thetermination of this Lease; or (ii) require Tenant to remove such improvement atthe termination of this Lease.  Withrespect to Minor Alterations, Tenant may request in writing that Landlord electeither (i) or (ii) above.  Upon theirinstallation, all Alterations,

15

----

including,but not limited to, wall covering, paneling and built-in cabinetry, butexcluding Trade Fixtures (as hereinafter defined), shall become a part of therealty and belong to Landlord and shall be surrendered with the Premises exceptto the extent Landlord has required removal of any such Alterations undersubsection (ii) above (and has not subsequently waived such requirement), inwhich case, as a condition of Tenant’s surrender of the Premises to Landlord,Tenant shall remove from the Premises, at Tenant’s expense, upon the expirationor earlier termination of the Lease, any such Alterations installed by Tenant,and Tenant’s obligation hereunder shall survive the expiration or earliertermination of the Lease. Notwithstanding anything to the contrary in this Lease, Landlord herebyagrees that Tenant shall not be required to remove the “Office TI Work”, asdefined in Exhibit C.

6.3           Liens.  Tenant shall pay when due all claims forlabor, materials and services furnished by or at the request of Tenant orTenant’s Representatives.  Tenant shallkeep the Premises, the Building and the Property free from all liens, securityinterests (with the exception of security instruments on equipment leased byTenant) and encumbrances (including, without limitation, all mechanic’s liensand stop notices) created as a result of or arising in connection with anyAlterations or any other labor, services or materials provided for or at therequest of Tenant or Tenant’s Representatives, or any other act or omission ofTenant or Tenant’s Representatives, or persons claiming through or under them(such liens, security interests and encumbrances singularly and collectivelyare herein called “**Liens**”).  Tenant shall not use materials in connectionwith the Alterations that are subject to any Liens.  Tenant shall indemnify Landlord against, andhold Landlord harmless from: (a) all Liens; (b) the removal of all Liens and any actions orproceedings related thereto; and (c) all Claims in connection with theforegoing.  If Tenant fails to remove anyLiens caused by Tenant within fifteen (15) days after Tenant receives notice ofthe filing of any such Liens, then, in addition to any other rights andremedies available to Landlord, Landlord may take any action necessary to dischargesuch Liens, including payment to the claimant on whose behalf the Lien wasfiled.  Any sums expended by Landlord(plus Landlord’s administrative costs) in connection with any such action shallbe payable by Tenant on demand with interest thereon from the date ofexpenditure by Landlord at the Interest Rate (as defined in Section 16.2).

6.4           AdditionalRequirements.  Tenant shall obtain all necessary permits andcertificates for the commencement and performance of Alterations and for finalapproval thereof upon completion, and shall cause the Alterations to beperformed in compliance therewith and with all applicable Laws and insurancerequirements, and in a good and workmanlike manner.  Tenant, at its expense, shall diligentlycause the cancellation or discharge of all notices of violation arising from orotherwise connected with Alterations, or any other work, labor, services ormaterials done for or supplied to Tenant or Tenant’s Representatives, or by anyperson claiming through or under Tenant or Tenant’s Representatives.  Alterations shall be performed so as not tounreasonably interfere with any other tenant in the Building, cause labordisharmony therein, or delay or impose any additional expense on Landlord in themaintenance, repair or operation of the Building.  Throughout the performance of theAlterations, Tenant, at its expense, shall carry, or cause to be carried, inaddition to the insurance described in Section 11, Workers’ Compensationinsurance in statutory limits and such other insurance as Landlord mayreasonably require, with insurers reasonably satisfactory to Landlord.  Tenant shall furnish Landlord withsatisfactory evidence that such insurance is in effect at or before thecommencement of the Alterations and, upon request, at reasonable intervalsthereafter until completion of the Alterations.

6.5           TradeFixtures.  Subject to the provisions of Section 5, andthe foregoing provisions of this Section, Tenant may install and maintainfurnishings, trade fixtures, movable partitions, and machines and equipment (“**Trade Fixtures**”) in the Premises.  Tenant shall promptly repair any damage tothe Premises or the Building caused by any installation or removal of suchTrade Fixtures.

16

----

6.6           Signage.  At its sole expense, Tenant shall have the rightto install its corporate name and logo on the exterior of the Building, on theentrance doors to the Building and on the existing monument sign located on theProperty, with such signage to be proportional to signage available to or usedby other occupants of the Project based on the size of the Premises in relationto the size of such other occupants’ premises, and subject to limitationsarising due to any preexisting signage of Hewlett Packard. Notwithstanding theforegoing and without limiting the provisions of Exhibit B, Section 2,such signage shall be subject to Landlord’s prior review and approval, not tobe unreasonably withheld; provided, however, that Tenant agrees it shall bereasonable for Landlord to withhold its approval of any signage proposed byTenant that would, under applicable Laws, provide Tenant with disproportionatesignage and restrict or deny Landlord the ability to offer additionalproportionate Building and/or monument signage to other occupants of theProject.  Tenant shall reimburse toLandlord the actual costs reasonably incurred by Landlord in approving anysignage proposed by Tenant.  In anyevent, all such signage installed by Tenant shall comply with applicable Lawsand shall be subject to Landlord’s right to require removal consistent withLandlord’s right to require removal of other Alterations by Tenant.

6.7           RooftopCommunications Equipment.  Tenant may install, at Tenant’s sole cost andexpense, but without the payment of any rent or a license or similar fee orcharge, a satellite or microwave dish or other communications, HVAC or otherequipment servicing the business conducted by Tenant from within the Premises(all such equipment, including non-telecommunication equipment is, for the sakeof convenience, defined collectively as the “**TelecommunicationsEquipment**”) upon the roof of the Building, for Tenant’s personal useand not for any other commercial purpose. The physical appearance and the size of the Telecommunications Equipmentshall be subject to Landlord’s reasonable approval, the location of any suchinstallation of the Telecommunications Equipment shall be designated by Tenantsubject to Landlord’s reasonable approval and Landlord may require Tenant toinstall screening around such Telecommunications Equipment, at Tenant’s solecost and expense, as reasonably required by Landlord.  Tenant shall maintain such TelecommunicationsEquipment at Tenant’s sole cost and expense. In the event Tenant elects to exercise its right to install theTelecommunication Equipment, then Tenant shall give Landlord prior noticethereof.  Such TelecommunicationsEquipment shall be installed pursuant to plans and specifications approved byLandlord, which approval will not be unreasonably withheld, conditioned, ordelayed.  Upon Landlord’s written demand,Tenant shall reimburse to Landlord the actual out-of pocket costs reasonablyincurred by Landlord in approving such Telecommunications Equipment.  Tenant shall remove such TelecommunicationsEquipment upon the expiration or earlier termination of this Lease and shallreturn the affected portion of the rooftop and the Building to the conditionthe rooftop and the Building would have been in had no such TelecommunicationsEquipment been installed (reasonable wear and tear excepted).  Such Telecommunications Equipment shall, inall instances, comply with applicable Laws.

7.             MAINTENANCEAND REPAIRS.

7.1           Tenant’sObligations.  During the Term, Tenant, at Tenant’s expense,but under the direction of Landlord if Landlord so elects and subject toSections 5.1, 7.2, 12 and 13, shall repair and maintain the Premises, includingall specialty equipment or facilities exclusively serving the Premises (e.g.,supplemental HVAC), the interior walls, floor coverings, ceiling (ceiling tilesand grid), Tenant’s Alterations, fire extinguishers, outlets and fixtures(including without limitation bulbs and ballasts), and any appliances(including dishwashers, hot water heaters and garbage disposals) in thePremises, in good condition, and keep the Premises in a clean, safe and orderlycondition.

7.2           Landlord’sObligations.  Subject to Sections 5.1, 12 and 13,Landlord shall maintain or cause to be maintained in good order, condition andrepair the foundations, columns, footings, sub-flooring

17

----

andload-bearing and exterior walls, windows and frames, gutters, and downspouts ofthe Building, the structural portions of the roof and the roof membrane, theBuilding Systems, and the Common Areas of the Property (including thesidewalks, curbs, and Parking Facility); provided, however, that nothingcontained herein shall be construed to negate or limit Tenant’s obligation topay Tenant’s Share of the costs incurred hereunder by Landlord (it beingunderstood and agreed that such costs are Operating Costs, subject to the limitationsin Section 3.2(a)(1)).  Landlord’smaintenance and repair of the structural components of the Building(foundation, columns, footings, floor slab,****load-bearingand exterior walls and structural portions of the roof) shall be at Landlord’ssole expense; provided, however, that with respect to any maintenance andrepair items described in this Section 7.2 Tenant shall pay the entire cost ofrepairs for any damage occasioned by Tenant’s use of the Premises or theProperty, any act or omission of Tenant or Tenant’s Representatives or Inviteesor Tenant’s Alterations, subject to Section 11.3 concerning waiver ofsubrogation rights.  Landlord shall beunder no obligation to inspect the Premises. Tenant shall promptly report in writing to Landlord any condition knownto Tenant which Landlord is required to repair. As a material part of the consideration for this Lease, Tenant herebywaives any benefits of any applicable existing or future Law, including theprovisions of California Civil Code Sections 1932(1), 1941 and 1942, thatallows a tenant to make repairs at its landlord’s expense.

Notwithstanding any of the terms and conditionsset forth in this Lease to the contrary, if Tenant provides Notice (or oralnotice in the event of an “Emergency,” as that term is defined, below) toLandlord of an event or circumstance which requires the action of Landlord withrespect to repair and/or maintenance required to be performed by Landlordhereunder, which event or circumstance with respect to the Building Systems orstructural portions of the Building materially adversely affects the conduct ofTenant’s business from the Premises, and Landlord fails to commence correctiveaction within a reasonable period of time, given the circumstances, after thereceipt of such Notice, but in any event not later than thirty (30) daysafter receipt of such Notice, then Tenant may proceed to take the requiredaction upon delivery of an additional ten (10) Business Days’ Notice toLandlord specifying that Tenant is taking such required action (provided,however, that the initial thirty (30) day Notice and the subsequentten (10) day Notice shall not be required in the event of an Emergency)and if such action was required under the terms and conditions of this Lease tobe taken by Landlord and was not commenced by Landlord within such ten(10) Business Day period (or sooner in the case of Emergency) andthereafter diligently pursued to completion, then Tenant shall be entitled toprompt reimbursement by Landlord of Tenant’s reasonable costs and expenses intaking such action.  Promptly followingcompletion of any work taken by Tenant pursuant to the terms and conditions ofthis Section 7.2, Tenant shall deliver a detailed invoice of the workcompleted, the materials used and the costs relating thereto, and within thirty(30) days after receipt of Tenant’s invoice, Landlord shall either pay thesame or provide a written objection to the payment of such invoice, settingforth with reasonable particularity Landlord’s reasons for its claim that suchaction did not have to be taken by Landlord pursuant to the terms andconditions of this Lease or that the charges are excessive (in which caseLandlord shall pay the amount it contends would not have been commerciallyreasonable).  If Landlord fails to payTenant in a timely fashion the reasonable amount owed as a result of Tenant’sexercise of its rights under this paragraph, then Tenant may withhold suchamount from future Base Rent and Additional Rent until Tenant is reimbursed infull for the sum plus interest at the Interest Rate.  As used herein, an “**Emergency**”shall mean an event threatening immediate and material danger to people locatedin the Building or immediate, material damage to the Building, Building Systemsor Alterations, or creates a realistic possibility of an immediate and materialinterference with, or immediate and material interruption of a material aspectof Tenant’s business operations.

18

----

7.3           Landlord’sRights.  Landlord hereby reserves the right, at anytime and from time to time, upon reasonable prior notice to Tenant, withoutliability to Tenant, and without constituting an eviction, constructive orotherwise, or entitling Tenant to any abatement of rent or to terminate thisLease or otherwise releasing Tenant from any of Tenant’s obligations under thisLease:

(a)           Tomake alterations, additions, repairs, improvements to or in or to decrease thesize of area of, all or any part of the Building, the fixtures and equipmenttherein, and the Building Systems, so long as the foregoing does not materiallyadversely affect the Premises or the Building Systems serving the Premises, orTenant’s parking for and access to the Premises;

(b)           Tochange the Building’s name or street address;

(c)           Toinstall and maintain any and all signs on the exterior and interior of theBuilding without any reduction of Tenant’s signage;

(d)           Toreduce, increase, enclose or otherwise change at any time and from time to timethe size, number, location, layout and nature of the Common Areas (includingthe Parking Facility) and other tenancies and premises in the Property and tocreate additional rentable areas through use or enclosure of common areas, solong as the foregoing does not materially adversely affect Tenant’s parking forand access to the Premises; and

(e)           Ifany governmental authority promulgates or revises any Law or imposes mandatorycontrols or guidelines on Landlord or the Property relating to the use orconservation of energy or utilities or the reduction of automobile or otheremissions or reduction or management of traffic or parking on the Property(collectively “**Controls**”), to comply with suchControls, or make any alterations to the Property related thereto.

8.             TENANT’STAXES.  “**Tenant’sTaxes**” shall mean (a) all taxes, assessments, license fees and othergovernmental charges or impositions levied or assessed against or with respectto Tenant’s personal property or Trade Fixtures in the Premises, whether anysuch imposition is levied directly against Tenant or levied against Landlord orthe Property, (b) all rental, excise, sales or transaction privilege taxesarising out of this Lease (excluding, however, state, local and federalpersonal or corporate income taxes measured by the income of Landlord from allsources) imposed by any taxing authority upon Landlord or upon Landlord’sreceipt of, or right to receive, any rent payable by Tenant pursuant to theterms of this Lease (“**Rental Tax**”),and (c) any increase in Taxes attributable to inclusion of a value placedon Tenant’s personal property, Trade Fixtures or Alterations.  Tenant shall pay any Rental Tax to Landlordin addition to and at the same time as Base Rent is payable under this Lease,and shall pay all other Tenant’s Taxes before delinquency (and, at Landlord’srequest, shall furnish Landlord satisfactory evidence thereof).  If Landlord pays Tenant’s Taxes or anyportion thereof, Tenant shall reimburse Landlord within thirty (30) days afterreceipt of written demand for the amount of such payment.

9.             UTILITIESAND SERVICES.

9.1           Descriptionof Services.  Landlord shall furnish to the Premises:  reasonable amounts of water, gas, sewerservice, heat, ventilation and air conditioning during the Business Hoursspecified in the Basic Lease Information (“**Business Hours**”)on weekdays except federal and state holidays (“**BusinessDays**”);  and reasonableamounts of electricity; Landlord shall also provide the Common Areas andexterior of the Building with window washing of outside faces of glass, CommonArea janitorial services five (5) days a week (except federal and stateholidays), Common Area fluorescent

19

----

tubereplacement and Common Area toilet room supplies as reasonably necessary.  Landlord shall provide an exterior area forTenant’s trash receptacles, it being understood that Tenant shall contract fordumpsters and trash removal at its sole expense.  Any additional utilities or services thatLandlord may agree to provide, at Tenant’s request, shall be at Tenant’s soleexpense.

9.2           Paymentfor Additional Utilities and Services.

(a)           Tothe extent Tenant requires the use of Building System HVAC service at timesother than Business Hours on Business Days, Landlord shall furnish such serviceto Tenant and Tenant shall pay for such services at Landlord’s actual cost,consistent with the amounts charged by Landlord for such services duringBusiness Hours on Business Days. Landlord shall make reasonable efforts to allow Tenant to control theBuilding System HVAC serving the Premises.

(b)           Ifthe temperature otherwise maintained in any portion of the Premises by theBuilding Systems HVAC is affected as a result of (i) any lights, machines orequipment used by Tenant in the Premises, or (ii) the occupancy of the Premisesby more than one person per 150 square feet of Rentable Area, then Tenant shallbe solely responsible for installing or upgrading supplemental HVAC service inand to the Premises at its sole expense. Landlord shall not be liable for any failure of the HVAC service to thePremises so long as the Building Systems HVAC continues to perform atsubstantially the same capacity as existed as of the Lease Date.

(c)           IfTenant’s usage of any utility service which (a) cannot be separately meteredsuch that Tenant pays the utility provider directly for the expense thereof,and (b) exceeds the use of such utility Landlord determines to be typical,normal and customary for the uses in the Building permitted under Section 5.1,Landlord may determine the amount of such excess use by any reasonable meansand charge Tenant for the cost of such excess usage.

9.3           Interruptionof Services.  In the event of an interruption in or failureor inability to provide any services or utilities to the Premises or Buildingfor any reason (a “**Service Failure**”),such Service Failure shall not, regardless of its duration, impose uponLandlord any liability whatsoever, constitute an eviction of Tenant,constructive or otherwise, entitle Tenant to an abatement of rent (except asexpressly provided in Section 15.4(b)) or to terminate this Lease or otherwiserelease Tenant from any of Tenant’s obligations under this Lease, and Tenantagrees and acknowledges that Tenant’s remedies under Section 15.4(b) shall beits exclusive remedy for any such Service Failure.  Tenant hereby waives any benefits of anyapplicable existing or future Law, including the provisions of California CivilCode Section 1932(1), permitting the termination of this Lease due to suchinterruption, failure or inability.

10.           EXCULPATIONAND INDEMNIFICATION.

10.1         Tenant’sIndemnification of Landlord.  Tenant shall indemnify, protect, defend andhold harmless Landlord and its constituent partners or members and its or theirpartners, members, directors, officers, shareholders, employees and agentsagainst and from any claims, demands, actions, liabilities, damages, losses,costs and expenses, including reasonable attorneys’ fees (collectively, “**Claims**”), arising out of Tenant’s use of the Premises orresulting from any cause in or on the Premises, and from any negligence orwillful misconduct of Tenant or of any person claiming by, through or underTenant or any of Tenant’s Representatives or Invitees, in or on the Project, orany breach or default under this Lease by Tenant, except to the extent any suchClaims arise out of or result from the negligence or willful misconduct ofLandlord or its agents, employees and contractors.

20

----

10.2         Damageto Tenant and Tenant’s Property.  Landlord shall not be liable to Tenant forany loss, injury or other economic damage to Tenant, Tenant’s Representatives,Tenant’s Invitees or to Tenant’s, Tenant’s Representatives’ or Invitees’property in or about the Premises or the Property from any cause (including,without limitation, defects in the Property or in any equipment in theProperty; fire, explosion or other casualty; bursting, rupture, leakage oroverflow of any plumbing or other pipes or lines, sprinklers, tanks, drains,drinking fountains or washstands in, above, or about the Premises or theProperty; or acts of other tenants in the Property); and Tenant hereby waivesall claims against Landlord for any such loss, injury or damage and the costand expense of defending against claims relating thereto, including any suchloss, injury or damage caused by Landlord’s negligence (whether active orpassive) or willful misconduct, excluding claims for bodily injury arising outof the negligence or willful misconduct of Landlord or its agents, employeesand contractors.  Notwithstanding anyother provision of this Lease to the contrary, in no event shall Landlord beliable to Tenant for any punitive, indirect, special or consequential damagesor damages for loss of business by Tenant.

10.3         Survival.  The rights and obligations of the partiesunder this Section 10 shall survive the expiration or earlier termination ofthis Lease.

11.           INSURANCE.

11.1         Tenant’sInsurance.

(a)           LiabilityInsurance.  Tenant shall maintain in full forcethroughout the Term, commercial general liability insurance providing coverageon an occurrence form basis with limits of not less than Five Million Dollars($5,000,000.00) each occurrence for bodily injury and property damage combined,Five Million Dollars ($5,000,000.00) annual general aggregate, and Five MillionDollars ($5,000,000.00) products and completed operations annualaggregate.  Tenant may provide the partof the foregoing coverage through commercial umbrella coverage, provided thatthe foregoing requirements are met by such coverage.  Tenant’s liability insurance policy orpolicies shall:  (i) include premises andoperations liability coverage, products and completed operations liabilitycoverage, broad form property damage coverage including completed operations,blanket contractual liability coverage including, to the maximum extentpossible, coverage for the indemnification obligations of Tenant under thisLease, and personal and advertising injury coverage; (ii) provide that theinsurance company has the duty to defend all insureds under the policy; (iii)provide that defense costs are paid in addition to and do not deplete any ofthe policy limits, so long as such coverage is then generally available in thecommercial insurance market and can be obtained for an amount equal to or lessthan two percent (2%) of the premium which would otherwise be payable forTenant’s commercial general liability policy; (iv) cover liabilities arisingout of or incurred in connection with Tenant’s use or occupancy of the Premisesor the Property; and (v) extend coverage to cover liability for the actions ofTenant’s Representatives.  Each policy ofliability insurance required by this Section shall:  (A) contain a cross liability endorsement orseparation of insureds clause; (B) provide that any waiver of subrogationrights or release prior to a loss does not void coverage; (C) provide that itis primary to and not contributing with, any policy of insurance carried byLandlord covering the same loss; (D) provide that any failure to comply withthe reporting provisions shall not affect coverage provided to Landlord, itspartners, property managers and Mortgagees; and (E) name Landlord, itsconstituent partners, any property manager of the Property, and such otherparties in interest as Landlord may from time to time reasonably designate toTenant in writing, as additional insureds. All endorsements effecting such additional insured status shall be at leastas broad as additional insured endorsement form number CG 20 11 01 86promulgated by the Insurance Services Office. The insurance requirements set forth herein are independent of Tenant’sindemnification and other obligations under this Lease and shall not beconstrued to restrict, limit or modify such indemnification or otherobligations of Tenant under the Lease.

21

----

(b)           PropertyInsurance.  Tenant shall at all times maintain in effectwith respect to any Alterations and Tenant’s Trade Fixtures and other personalproperty, commercial property insurance providing coverage, on an “all risk” or“special form” basis, in an amount equal to at least 90% of the fullreplacement cost of the covered property. Tenant may carry such insurance under a blanket policy, provided thatsuch policy provides coverage equivalent to a separate policy.  During the Term, the proceeds from any suchpolicies of insurance shall be used for the repair or replacement of theAlterations, Trade Fixtures and personal property so insured, excepting onlysuch Alterations as Landlord has expressly agreed to repair or replace aftercasualty or condemnation under Section 12 or 13 below.  Landlord shall be provided coverage undersuch insurance to the extent of its insurable interest and, if requested byLandlord, both Landlord and Tenant shall sign all documents reasonablynecessary or proper in connection with the settlement of any claim or lossunder such insurance.  Landlord will haveno obligation to carry insurance on any Alterations or on Tenant’s TradeFixtures or personal property other than those Alterations Landlord hasexpressly agreed to repair or replace after casualty or condemnation underSection 12 or 13 below.

(c)           RequirementsFor All Policies.  Each policy of insurance required under thisSection 11.1 shall:  (i) be in a form,and written by an insurer, reasonably acceptable to Landlord, (ii) bemaintained at Tenant’s sole cost and expense, and (iii) require at least thirty(30) days’ written notice to Landlord prior to any cancellation, non-renewal ormodification of insurance coverage. Insurance companies issuing such policies shall have ratingclassifications of “A” or better (or if they are admitted carriers, “A-” orbetter) and financial size category ratings of “VII” or better according to thelatest edition of the A.M. Best Key Rating Guide.  All insurance companies issuing such policiesshall be licensed to do business in the state where the Property islocated.  Tenant shall provide toLandlord, upon request, evidence that the insurance required to be carried byTenant pursuant to this Section, including any endorsement effecting theadditional insured status, is in full force and effect and that premiumstherefor have been paid.

(d)           UpdatingCoverage.  Not more than twice during the Term, Tenantshall increase the amounts of such coverages of insurance as required byLandlord or any Mortgagee, but in no event shall such increases be in excess ofthe amounts of insurance that tenants of similar projects in the market areaare then required to carry.  Any suchincreases shall be effective as of the next renewal of the policy period of theapplicable Tenant’s insurance policy(ies). Any limits set forth in this Lease on the amount or type of coveragerequired by Tenant’s insurance shall not limit the liability of Tenant underthis Lease.

(e)           Certificatesof Insurance.  Prior to occupancy of the Premises by Tenant,and not less than thirty (30) days prior to expiration of any policythereafter, Tenant shall furnish to Landlord a certificate of insurancereflecting that the insurance required by this Section is in force,satisfactory to Landlord in substance and form. Such certificates shall include industry standard languageproviding  that Landlord shall be giventen (10) days notice of cancellation of any of Tenant’s insurance policies fornonpayment and thirty (30) days prior written notice of any cancellation ornonrenewal of any of Tenant’s insurance policies for any other reason, andTenant shall make its best efforts to immediately provide to Landlord a copy ofany such notice received from its insurer.

11.2         Landlord’sInsurance.  During the Term, Landlord shall maintain ineffect insurance on the Building (including any Alterations Landlord hasexpressly agreed to repair or replace after casualty or condemnation underSection 12 or 13 below) with responsible insurers, on an “all risk” or “specialform” basis, insuring the Building in an amount equal to at least 90% of thereplacement cost thereof, excluding land, foundations, footings and undergroundinstallations.  Landlord may, but shallnot be

22

----

obligatedto, carry insurance against additional perils (such as earthquake and/or flood)and/or in greater amounts.

11.3         MutualWaiver of Right of Recovery & Waiver of Subrogation.  Notwithstanding anything to the contrarycontained in this Lease, Landlord and Tenant each hereby waive any right ofrecovery against each other and the partners, members, shareholders, officers,directors and authorized representatives of each other for any loss or damagethat is covered by any policy of insurance maintained (or required by thisLease to be maintained) by either party with respect to the Premises or theProperty or any operation therein, regardless of cause, including negligence(whether active or passive) or willful misconduct of the party benefiting fromthe waiver, to the extent of the loss or damage covered thereby.  If any such policy of insurance relating tothis Lease or to the Premises or the Property does not permit the foregoingwaiver or if the coverage under any such policy would be invalidated as aresult of such waiver, the party maintaining such policy shall obtain from theinsurer under such policy a waiver of all right of recovery by way ofsubrogation against either party in connection with any claim, loss or damagecovered by such policy.

12.           DAMAGEOR DESTRUCTION.

12.1         Landlord’sDuty to Repair.

(a)           Ifall or a substantial part of the Premises are rendered untenantable orinaccessible by damage to all or any part of the Property from fire or othercasualty then, unless either party is entitled to and elects to terminate thisLease pursuant to Sections 12.2 and 12.3, Landlord shall use reasonable effortsto repair and restore the Premises and/or the Property, as the case may be, tosubstantially their former condition to the extent permitted by then applicableLaws; provided, however, in no event shall Landlord have any obligation forrepair or restoration of any of Tenant’s Personal Property, Trade Fixtures orAlterations other than the “Office TI Work”, as defined in Exhibit C,attached hereto, which Landlord shall restore after any fire or other casualty.

(b)           Ifall or any portion of the Premises or Common Area should become unsuitable forTenant’s use as a consequence of fire or other casualty, then Tenant shall beentitled to an equitable abatement of all Base Rent, Operating Costs andExpenses payable hereunder to the extent of the interference with Tenant’s useof the Premises occasioned thereby.  Inno event shall Landlord be liable to Tenant by reason of any injury to orinterference with Tenant’s business or property arising from fire or othercasualty or by reason of any repairs to any part of the Property necessitatedby such casualty.

12.2         Landlord’sRight to Terminate.  Landlord may elect to terminate this Leasefollowing damage by fire or other casualty under the following circumstances:

## (a)           If more than sixty five percent (65%) of the Premises or Property aredamaged and in Landlord’s reasonable judgment the Premises and the Propertycannot be substantially repaired and restored under applicable Laws within 270days from the date of the casualty;

(b)           If,based on Landlord’s reasonable estimate of the cost to repair or restore thePremises, adequate insurance proceeds (excluding the amount of any insurancedeductibles then carried by Landlord) will not for any reason (other thanLandlord’s breach of its obligation to carry property insurance hereunder),including a decision made by any Mortgagee (as defined in Section 20.2),available to Landlord from Landlord’s insurance policies to cover the entirecost of the required repairs in excess of the first One Hundred Fifty ThousandDollars ($150,000.00) therefor, it being agreed that Landlord and Tenant shallsplit equally, on a dollar for dollar basis, the cost of such required repairsup to One

23

----

HundredFifty Thousand Dollars ($150,000.00), and Tenant does not agree to fund suchexcess costs over the first One Hundred Fifty Thousand Dollars ($150,000.00)within twenty (20) days after its receipt of a written termination notice fromLandlord; or

(c)           Ifthe fire or other casualty damage to the Premises occurs during the last yearof the Term and the restoration of the Premises cannot be substantiallycompleted within ninety (90) days after the date of such damage; provided,however, that Landlord may not terminate this Lease pursuant to this Section12.2(c) (without limiting Landlord’s termination rights under Sections 12.2(a)and (b)) if Tenant, at the time of such damage, has an express written optionto extend the Term and Tenant exercises such option within thirty (30) daysfollowing the delivery to Tenant of Landlord’s written termination notice.

Ifany of the circumstances described in subparagraphs (a), (b) or (c) of thisSection 12.2 occur or arise, Landlord shall give Tenant notice within sixty(60) days after the date of the casualty, specifying whether Landlord elects toterminate this Lease as provided above and, if not, Landlord’s estimate of thetime required to complete Landlord’s repair obligations under this Lease.  If Landlord elects to terminate this Lease,the Lease shall terminate thirty (30) days after the date Tenant receivesnotice of Landlord’s election.

12.3         Tenant’sRight to Terminate.  If all or a substantial part of the Premisesare rendered untenantable or inaccessible by damage to all or any part of theProperty from fire or other casualty, and Landlord does not elect to terminateas provided above, then Tenant may elect to terminate this Lease if thereasonable estimate, by an independent general contractor engaged by Landlord,of the time required to complete Landlord’s repair obligations under this Leaseis greater than 270 days from the date of the casualty, in which event Tenantmay elect to terminate this Lease by giving Landlord notice of such election toterminate within fifteen (15) days after Landlord’s notice to Tenant pursuantto Section 12.2.  If Tenant elects toterminate this Lease, the Lease shall terminate thirty (30) days after the dateLandlord receives notice of Tenant’s election. Further, notwithstanding the foregoing, if Landlord elects, or isrequired to repair the Premises or the Building in accordance with the terms ofthis Lease and if the repairs are not completed within 270 days (regardless ofthe time estimated for completion of the repairs), subject to extension for anyForce Majeure Delays (up to, but not in excess of, a total of ninety (90) daysof any such Force Majeure Delays) or other delays caused by Tenant, Tenantshall have the right to terminate this Lease by delivering written noticethereof to Landlord within thirty (30) days after the expiration of the 270-dayperiod (as the same may be extended by up to ninety (90) days of Force MajeureDelays or delays caused by Tenant), with any such termination effective thirty(30) days after delivery of the notice of termination.

12.4         Waiver.  Landlord and Tenant each hereby waive theprovisions of California Civil Code Sections 1932(2), 1933(4) and any otherapplicable existing or future Law permitting the termination of a leaseagreement in the event of damage or destruction under any circumstances otherthan as provided in Sections 12.2 and 12.3.

13.           CONDEMNATION.

13.1         Definitions.

(a)           “**Award**” shall mean all compensation, sums, or anything ofvalue awarded, paid or received on a temporary, total or partial Condemnation.

24

----

(b)           “**Condemnation**” shall mean (i) a permanent taking (or atemporary taking for a period extending beyond the end of the Term) pursuant tothe exercise of the power of condemnation or eminent domain by any public orquasi-public authority, private corporation or individual having such power (“**Condemnor**”), whether by legal proceedings or otherwise, or(ii) a voluntary sale or transfer by Landlord to any such authority, eitherunder threat of condemnation or while legal proceedings for condemnation arepending.

(c)           “**Date of Condemnation**” shall mean the earlier of the datethat title to the property taken is vested in the Condemnor or the date theCondemnor has the right to possession of the property being condemned.

13.2         Effecton Lease.

(a)           Ifthe Premises are totally taken by Condemnation, this Lease shall terminate asof the Date of Condemnation.  If aportion but not all of the Premises is taken by Condemnation, this Lease shallremain in effect; provided, however, that if more than fifteen percent (15%) ofthe floor area of the Premises is taken and the portion of the Premisesremaining after the Condemnation will be unsuitable for Tenant’s continued use,or more than fifteen percent (15%) of the Parking Facility is taken (andLandlord does not provide substitute parking within a reasonable proximity ofthe Premises), then upon notice to Landlord within thirty (30) days afterLandlord notifies Tenant of the Condemnation, Tenant may terminate this Leaseeffective as of the Date of Condemnation.

(b)           Iftwenty-five percent (25%) or more of the parcel of land on which the Buildingis situated, of the Parking Facility or of the floor area in the Building istaken by Condemnation, or if as a result of any Condemnation the Building is nolonger reasonably suitable for use as an office building, whether or not anyportion of the Premises is taken, Landlord may elect to terminate this Lease,effective as of the Date of Condemnation, by notice to Tenant within thirty(30) days after the Date of Condemnation.

(c)           Ifall or a portion of the Premises is temporarily taken by a Condemnor for aperiod not exceeding one (1) year, this Lease shall remain in full force andeffect.

13.3         Restoration.  If this Lease is not terminated as providedin Section 13.2, Landlord shall diligently proceed to repair and restore thePremises to substantially its former condition (to the extent permitted by thenapplicable Laws) and/or repair and restore the Building to an architecturallycomplete office building; provided, however, that (i) Landlord’s obligations toso repair and restore shall be limited to the amount of any Award received byLandlord and not required to be paid to any Mortgagee, and (ii) Tenant shall beentitled to terminate this Lease if Landlord does not or cannot restore thoseportions of the Premises for which Landlord is responsible to substantiallytheir prior condition.  In no event shallLandlord have any obligation to repair or replace any of Tenant’s personalproperty, Trade Fixtures, or Alterations other than the “Office TI Work”, asdefined in Exhibit C, attached hereto.

13.4         Abatementand Reduction of Rent.  If any portion of the Premises is taken in aCondemnation or is rendered permanently untenantable by repairs necessitated bythe Condemnation, and this Lease is not terminated, the Base Rent, OperatingCosts and Taxes payable under this Lease shall be proportionally reduced as ofthe Date of Condemnation based upon the percentage of rentable square feet inthe Premises so taken or rendered permanently untenantable.  In addition, if this Lease remains in effectfollowing a Condemnation and Landlord proceeds to repair and restore thePremises, or Tenant is unable to use and occupy some or all of the Premises dueto a temporary taking as described in

25

----

Section13.2(c) above, the Base Rent, Operating Costs and Taxes payable under thisLease shall be abated with regard to any portion of the Premises that Tenant isprevented from occupying during the period of such repair or restoration, orsuch temporary taking.  In no event shallLandlord be liable to Tenant by reason of any injury to or interference withTenant’s business or property arising from Condemnation or by reason of anyrepairs to any part of the Property necessitated by Condemnation.

13.5         Awards.  Any Award made shall be paid to Landlord, andTenant hereby assigns to Landlord, and waives all interest in or claim to, anysuch Award, including any claim for the value of the unexpired Term; provided,however, that Tenant shall be entitled to receive, or to prosecute a separateclaim for, a separate Award for relocation and moving expenses, theinterruption of or damage to Tenant’s business (including without limitationloss of goodwill) and/or compensation for Tenant’s personal property,Alterations and Trade Fixtures.

13.6         Waiver.  Landlord and Tenant each hereby waive theprovisions of California Code of Civil Procedure Section 1265.130 and any otherapplicable existing or future Law allowing either party to petition for atermination of this Lease upon a partial taking of the Premises and/or theProperty.

14.           ASSIGNMENTAND SUBLETTING.

14.1         Landlord’sConsent Required.  Tenant shall not assign this Lease or anyinterest therein, or sublet or license or permit the use or occupancy of thePremises or any part thereof by or for the benefit of anyone other than Tenant,or in any other manner transfer all or any part of Tenant’s interest under thisLease (each and all a “**Transfer**”),without the prior written consent of Landlord, which consent (subject to theother provisions of this Section 14) shall not be unreasonably withheld.  The term Transfer, as used herein, includesthe following:  (i) the transfer,voluntary or involuntary, either by a single transaction or in a series oftransactions, of a controlling interest in Tenant (or, if Tenant is a trust, inthe trustee of such trust), (ii) any dissolution, merger, consolidation orother reorganization of Tenant, and (iii) the sale, by a single transaction orseries of transactions, within any one (1) year period of assets equaling orexceeding forty percent (40%) (or, if Tenant is a trust, exceeding twenty-fivepercent) of the total value of Tenant’s assets. As used herein, the term “controlling interest” means (a) in the case ofa partnership, limited liability company or other business entity, theownership of partnership interests, membership interests or other indicia ofownership constituting more than fifty percent (50%) of the ownership interestsin Tenant (provided that in the case of a limited partnership or managercontrolled limited liability company, it also means the ownership of more thanfifty percent (50%) of the ownership interests in the general partner ormanager of Tenant), and (b) in the case of a corporation, the ownership and/orthe right to vote stock constituting more than fifty percent (50%) of thevoting stock of Tenant.  Notwithstandingany provision in this Lease to the contrary, Tenant shall not mortgage, pledge,hypothecate or otherwise encumber this Lease or all or any part of Tenant’sinterest under this Lease.  Furthernotwithstanding the foregoing, Tenant may assign this Lease or sublet all orany portion of the Premises, without the requirement of any consent, recapture ortermination right by Landlord and without the sharing of any Bonus Rent, to anysuccessor corporation to Tenant by way of merger, consolidation or othercorporate reorganization, or to any parent, subsidiary or affiliate of Tenant,or to any party acquiring all or substantially all of Tenant’s assets or stock,or to any party acquiring and continuing that portion of Tenant’s businessoperations conducted at or from the Premises, or to any entity with whom Tenantis undertaking or will undertake a joint venture or similar joint research anddevelopment, marketing, distribution, sales or development project at thePremises, so long as (1) any assignee’s net worth (derived in accordance withgenerally accepted accounting principles) is equal to or greater than thelesser of (a) Tenant’s net worth as of the effective date of such assignment;or (b) One Hundred Million Dollars ($100,000,000.00), which amount shall beincreased by three percent (3%) on each

26

----

anniversaryof the Commencement Date; (2) Tenant provides written notice to Landlord of anysuch sublease or assignment not less than thirty (30) days prior to suchtransaction (unless such notice is subject to contractual confidentialityrestrictions, or is restricted by the regulations or requirements of theSecurities and Exchange Commission, and in either case, such notification shallbe made promptly following the date of such assignment or sublease), and in thecase of an assignment such notice shall include evidence reasonablysatisfactory to Landlord that the assignee satisfies the foregoing “net worth”requirement; (3) any such assignee shall assume all of the rights andobligations of Tenant hereunder in a written instrument delivered to Landlordimmediately after the effective date thereof (except in the case of any merger,consolidation or sale of stock where the Tenant entity survives and remains asthe Tenant hereunder, in which such written instrument shall not be required);and (4) any such sublease or assignment shall be subject to the terms andconditions of Section 14.9 below  (collectively, “Permitted Transferees”, individually, “PermittedTransferee”).

14.2         ReasonableConsent.

(a)           Priorto any proposed Transfer, Tenant shall submit in writing to Landlord, not lessthan thirty (30) days prior to the proposed effective date of the Transfer,(i) the name and legal composition of the proposed assignee, subtenant,user or other transferee (each a “**Proposed Transferee**”);(ii) the nature of the business proposed to be carried on in the Premises;(iii) a current balance sheet, income statements for the last two yearsand such other reasonable financial and other information concerning theProposed Transferee as Landlord may request; and (iv) a copy of theproposed assignment, sublease or other agreement governing the proposedTransfer  (“**TransferDocuments**”).  Within fifteen(15) calendar days after Landlord receives all such information it shall notifyTenant whether it approves or disapproves such Transfer.

(b)           Tenantacknowledges and agrees that, among other circumstances for which Landlordcould reasonably withhold consent to a proposed Transfer, it shall bereasonable for Landlord to withhold consent where (i)  Landlord reasonablydisapproves of the Proposed Transferee’s business operating ability or history,reputation or creditworthiness or the character of the business to be conductedby the Proposed Transferee at the Premises, (ii) the Proposed Transfereeis a governmental agency or unit or an existing tenant in the Project (andLandlord then has comparable space available on the comparable terms for leasein the Project) or, for so long as Landlord or any affiliate of Landlord ownsthe Stevens Creek Property, the Stevens Creek Property, (iii) the proposedTransfer would violate any “exclusive” rights of any tenants in the Project,(iv) Landlord or Landlord’s agent has shown space in the Building to theProposed Transferee or responded to any inquiries from the Proposed Transfereeor the Proposed Transferee’s agent concerning availability of space in theBuilding, at any time within the preceding nine months and Landlord then hascomparable space available for lease by such tenant on comparable terms in theProject or, for so long as Landlord or any affiliate of Landlord owns theStevens Creek Property, the Stevens Creek Property, or (v) at the timeTenant requests Landlord’s consent an Event of Default has occurred and iscontinuing or Tenant has committed acts or omissions which with the passage oftime or the giving of notice, or both, would constitute an a monetary ormaterial Event of Default under this Lease. Tenant shall not place any signs in or about the Premises or Building tomarket the Premises for assignment or sublease without Landlord’s prior writtenapproval, not to be unreasonably withheld.

14.3         ExcessConsideration.  If Landlord consents to the Transfer, Tenantshall pay to Landlord as Additional Rent, as and when received by Tenant, fiftypercent (50%) of any Bonus Rent (as hereinafter defined) payable by or onbehalf of any transferee (the “**Transferee**”)for or in connection with the Transfer. The term “**Bonus Rent**,” as used herein, meansany and all rent and other

27

----

consideration,whether denominated rent or otherwise, payable by or on behalf of theTransferee under the terms of the Transfer or any collateral agreement inexcess of the Monthly Base Rent and Additional Rent payable hereunder (or inexcess of the fair market value of any equipment or other goods or servicesincluded as part of the terms of the Transfer or any collateral agreement),less the reasonable cost of any improvements installed by the Tenant, at itsexpense, in the Premises pursuant to the Transfer for the specific subtenant orassignee (and approved by Landlord), reasonable attorneys’ fees incurred byTenant in effecting the Transfer, reasonable leasing commissions actually paidby the Tenant in connection with the Transfer, moving allowances, free rent, orany other inducements necessary to secure an assignment or sublease with theproposed Transferee, without deduction for carrying costs due to vacancy orotherwise.  During any period in which anEvent of Default by Tenant has occurred and is continuing, then at Landlord’soption, upon written notice to the Transferee, Landlord may require theTransferee to pay all or any portion of such Bonus Rent directly to Landlord;provided, however, that Landlord’s acceptance or collection of the Bonus Rentwill not be deemed to be a consent to any Transfer or a cure of any defaultunder this Section 14 or any other provisions of this Lease.  In the case of a sublease, the Bonus Rentshall be determined by comparing the rent and/or other consideration payableunder the sublease to the portion of the Monthly Base Rent and Additional Rentallocable to the subleased portion of the Premises (and the portion of theMonthly Base Rent and Additional Rent allocable to the subleased portion of thePremises shall be determined by multiplying the Monthly Base Rent andAdditional Rent by a fraction, the numerator of which is the Rentable Area ofthe subleased portion of the Premises and the denominator of which is theRentable Area of the Premises).

14.4         NoRelease Of Tenant.  No Transfer shall relieve Tenant of anyobligation to be performed by Tenant under this Lease, whether accruing beforeor after such Transfer.  The consent byLandlord to any Transfer shall not relieve Tenant or any Transferee from theobligation to obtain Landlord’s express prior written consent to any subsequentTransfer by Tenant or any Transferee. The acceptance of rent by Landlord from any other person (whether or notsuch person is an occupant of the Premises) shall not be deemed to be a waiverby Landlord of any provision of this Lease or to be a consent to any Transfer.

14.5         Expensesand Attorneys’ Fees.  Tenant shall pay to Landlord on demand allout-of-pocket costs and expenses (including reasonable attorneys’ fees)reasonably incurred by Landlord in connection with reviewing and responding toany proposed Transfer (including any request for consent to, or any waiver ofLandlord’s rights in connection with, any security interest in any of Tenant’sproperty at the Premises).

14.6         Effectivenessof Transfer.  Except in the case of any Permitted Transfer,prior to the date on which any Transfer becomes effective, Tenant shall deliverto Landlord a counterpart of the fully executed Transfer document and Landlord’sstandard form of Consent to Assignment or Consent to Sublease (subject to suchcommercially reasonable changes requested by Tenant or the Transferee) executedby Tenant and the Transferee in which each of Tenant and the Transfereeconfirms its obligations pursuant to this Lease.  Failure or refusal of a Transferee to executeany such instrument shall not release or discharge the Transferee from anyliability.  The voluntary, involuntary orother surrender of this Lease by Tenant, or a mutual cancellation by Landlordand Tenant, shall not work a merger, and any such surrender or cancellationshall, at the option of Landlord, either terminate all or any existingsubleases or operate as an assignment to Landlord of any or all of suchsubleases.

14.7         Intentionally Deleted.

14.8         Assignmentof Sublease Rents.  Tenant hereby absolutely and irrevocablyassigns to Landlord any and all rights to receive rent and other considerationfrom any sublease and agrees that

28

----

Landlord,as assignee, or a receiver for Tenant appointed on Landlord’s application may(but shall not be obligated to) collect such rents and other consideration andapply the same toward Tenant’s obligations to Landlord under this Lease;provided, however, that Landlord grants to Tenant at all times prior tooccurrence of any Event of Default by Tenant a license to collect such rents(which license shall automatically and without notice be deemed revoked andterminated immediately upon any Event of Default).

14.9         AdditionalRequirements.  Any Transfer shall be null and void unless itcomplies with this Lease and: (i) in the case of an assignment, provides that the assigneeassumes all of Tenant’s obligations under this Lease first accruing after thedate of such assignment, and agrees to be bound by all of the terms of thisLease; and (ii) in the case of a sublease, provides that (a) it issubject and subordinate to this Lease, (b) if there is any conflict orinconsistency between the sublease and this Lease, then as between Tenant andLandlord, or Landlord and the proposed sublessee, this Lease will prevail (butas between Tenant and any such sublessee only, the terms of the subjectsublease will prevail), (c) Landlord may enforce all the provisions of thesublease, including the collection of rent, upon any Event of Default byTenant, (d) the sublease may not be modified without Landlord’s prior writtenconsent (which consent shall not be unreasonably withheld) and that anymodification without such consent shall be null and void, (e) if thisLease is terminated or Landlord reenters or repossesses the Premises, Landlordmay, at its option, take over all of Tenant’s right, title and interest assublessor and, at Landlord’s option, the subtenant shall attorn to Landlord,but Landlord shall not be (x) liable for any previous act or omission ofTenant under the sublease (but Landlord shall be responsible for curing anydefault by Tenant or a continuing nature [e.g., repair and maintenanceobligations]), (y) subject to any existing defense or offset againstTenant, or (z) bound by any previous modification of the sublease madewithout Landlord’s prior written consent or by any prepayment of more than one(1) month’s rent, with the exception of any prepaid Operating Costs.

15.           DEFAULTAND REMEDIES.

15.1         Eventsof Default.  The occurrence of any of the following shallconstitute an “**Event of Default**” by Tenant:

(a)           Tenantfails to make any payment of rent (including, without limitation, Base Rent andAdditional Rent) on the date such payment is due and such failure shallcontinue for ten (10) days after Tenant’s receipt of a written notice ofdelinquency from Landlord.

(b)           Tenantabandons the Premises; provided however, that no abandonment shall beconsidered to occur if the Premises are maintained to the extent necessary tomaintain the insurance on the Premises.

(c)           Tenantfails timely to deliver any subordination document, estoppel certificate orfinancial statement requested by Landlord within the applicable time periodspecified in Sections 20 and 21 and such failure shall continue for five (5)Business Days after a second written notice from Landlord (i.e., a notice inaddition to Landlord’s written request for such document pursuant to Section 20or 21).

(d)           Tenantviolates the restrictions on Transfer set forth in Section 14.

(e)           Tenantceases doing business as a going concern; makes an assignment for the benefitof creditors; is adjudicated an insolvent, files a petition (or files an answeradmitting the material allegations of a petition) seeking relief under anystate or federal bankruptcy or other statute, law or

29

----

regulationaffecting creditors’ rights; all or substantially all of Tenant’s assets aresubject to judicial seizure or attachment and are not released within sixty(60) days, or Tenant consents to or acquiesces in the appointment of a trustee,receiver or liquidator for Tenant or for all or any substantial part of Tenant’sassets.

(f)            Tenantfails, within sixty (60) days after the commencement of any proceedings againstTenant seeking relief under any state or federal bankruptcy or other statute,law or regulation affecting creditors’ rights, to have such proceedingsdismissed, or Tenant fails, within sixty (60) days after an appointment,without Tenant’s consent or acquiescence, of any trustee, receiver orliquidator for Tenant or for all or any substantial part of Tenant’s assets, tohave such appointment vacated.

(g)           Tenantfails to perform or comply with any provision of this Lease other than thosedescribed in (a) through (f) above, and does not fully cure such failure withinfifteen (15) days after notice to Tenant or, if such failure cannot reasonablybe cured within such fifteen (15)-day period, Tenant fails within such fifteen(15)-day period to commence, and thereafter to diligently proceed with, allactions necessary to cure such failure as soon as reasonably possible.

(h)           Tenantfails to replenish the Security Deposit as required under Section 4.

15.2         Remedies.  Upon the occurrence of an Event of Default,Landlord shall have the following remedies, which shall not be exclusive butshall be cumulative and shall be in addition to any other remedies now orhereafter allowed by law:

(a)           Landlordmay terminate Tenant’s right to possession of the Premises at any time bywritten notice to Tenant, subject to applicable legal due processrequirements.  Tenant acknowledges thatin the absence of such written notice from Landlord, no other act of Landlord,including reentry into the Premises, efforts to relet the Premises, relettingof the Premises for Tenant’s account, storage of Tenant’s personal property andTrade Fixtures, acceptance of keys to the Premises from Tenant or exercise ofany other rights and remedies under this Section, shall constitute anacceptance of Tenant’s surrender of the Premises or constitute a termination ofthis Lease or of Tenant’s right to possession of the Premises.  Upon such termination in writing of Tenant’sright to possession of the Premises, as herein provided, this Lease shallterminate and Landlord shall be entitled to recover damages from Tenant,including:  (i) the worth at thetime of the award of the unpaid Base Rent and Additional Rent which had beenearned or was payable at the time of termination; (ii) the worth at thetime of the award of the amount by which the unpaid Base Rent and AdditionalRent which would have been earned or payable after termination until the timeof the award exceeds the amount of such rental loss that Tenant proves couldhave been reasonably avoided; (iii) the worth at the time of the award ofthe amount by which the unpaid Base Rent and Additional Rent which would havebeen paid for the balance of the Term after the time of award exceeds theamount of such rental loss that Tenant proves could have been reasonablyavoided; and (iv) any other amount necessary to compensate Landlord forall detriment proximately caused by Tenant’s failure to perform its obligationsunder the Lease or which in the ordinary course of things would be likely toresult therefrom, including any reasonable costs or expenses incurred byLandlord in maintaining or preserving the Premises, the Building and the restof the Property after such default, the cost of recovering possession of thePremises, reasonable expenses of reletting, including necessary renovation oralteration of the Premises, Landlord’s reasonable attorneys’ fees and costsincurred in connection therewith, and any real estate commissions paid orpayable.  As used in subparts (i)and (ii) above, the “worth at the time of the award” is computed byallowing interest on unpaid amounts at the Interest Rate (as defined in Section16.2).  As used in subpart (iii)above, the “worth at the time of the award” is computed by discounting suchamount at the discount rate of the Federal Reserve Bank of San Francisco at thetime of the award, plus one percent (1%).

30

----

(b)           Landlordshall have the remedy described in California Civil Code Section 1951.4(Landlord may continue this Lease in effect after Tenant’s breach andabandonment and recover rent as it becomes due, if Tenant has the right tosublet or assign, subject only to reasonable limitations).

(c)           Landlordmay, but shall not be obligated to, cure the Event of Default at Tenant’sexpense.  If Landlord pays any sum orincurs any expense in curing the Event of Default, Tenant shall reimburseLandlord upon demand for the amount of such payment or expense with interest atthe Interest Rate from the date the sum is paid or the expense is incurreduntil Landlord is reimbursed by Tenant.

(d)           Subjectto applicable legal due process requirements, Landlord may remove all Tenant’sproperty from the Premises, and such property may be stored by Landlord in apublic warehouse or elsewhere at the sole cost and for the account ofTenant.  If Landlord does not elect tostore any or all of Tenant’s property left in the Premises, Landlord mayconsider such property to be abandoned by Tenant, and Landlord may thereupondispose of such property in any manner deemed appropriate by Landlord.  Any proceeds realized by Landlord on thedisposal of any such property shall be applied first to offset all expenses ofstorage and sale, then credited against Tenant’s outstanding obligations toLandlord under this Lease, and any balance remaining after satisfaction of allobligations of Tenant under this Lease shall be delivered to Tenant.

(e)           Tenantwaives any and all rights of redemption granted by or under any Laws if Tenantis evicted or dispossessed for any cause, or if Landlord obtains possession ofthe Premises by reason of the violation by Tenant of any of the terms,covenants or conditions of this Lease, or otherwise.

15.3         NoticeRequirements.  When this Lease requires service of a notice,that notice shall replace rather than supplement any equivalent or similarstatutory notice, including any notices required by Code of Civil ProcedureSection 1161 or any similar or successor statute, subject to all statutorynotice requirements.

15.4         Landlord’sDefault and Tenant’s Remedies.

(a)           Landlord shall not bedeemed to be in default of its obligations unless Landlord fails to perform anycovenant, condition, or agreement contained in this Lease and fails to cure thenonperformance within a reasonable time, but not later than thirty (30) daysafter receiving written notice of the failure, provided, however, that if thenature of Landlord’s failure to perform reasonably requires more than thirty(30) days to cure, then Landlord shall not be deemed in default if Landlordcommences to cure such failure within said thirty (30) day period andthereafter diligently and in good faith prosecutes such cure to completion.

(b)           In the event thatTenant is prevented from using, and does not use, the Premises or any portionthereof, as a result of (i) any failure to provide services, utilities oringress to and egress from the Building, Property (including the parkingareas), or Premises as a result of the negligence or willful misconduct ofLandlord or its agents, employees or contractors, or (ii) (A) any failure toprovide services, utilities or ingress to and egress from the Building,Property (including the parking areas) not caused by the negligence or willfulmisconduct of Landlord or its agents, employees or contractors and/or Tenant orTenant’s Representatives, or (B) the presence of any Hazardous Materials notbrought onto the Premises or otherwise Handled by Tenant or Tenant’sRepresentatives or Invitees (any such circumstances to be known as an “**Abatement Event**”), then Tenant shall give Landlord writtennotice of

31

----

such Abatement Event, andif such Abatement Event continues for three (3) consecutive Business Days afterLandlord’s receipt of any such notice (the “**EligibilityPeriod**”), then the Base Rent and Tenant’s Share of Operating Costsand Taxes shallbe abated or reduced, as the case may be, after expiration of the EligibilityPeriod for such time that Tenant continues to be so prevented from using, anddoes not use, the Premises, or a portion thereof, in the proportion that therentable area of the portion of the Premises that Tenant is prevented fromusing, and does not use bears to the total rentable area of the Premises;provided, however, that in the case of any Abatement Event arising undersubsection (ii) above (i.e., interruption of services, utilities or access for which neither party isresponsible or Hazardous Materials for which Tenant is not responsible), Tenantshall only be entitled abatement of rent, and the Eligibility Period shall onlycontinue for so long as, to the extent of and during any periods for which anyrental loss insurance which may then be carried by Landlord compensatesLandlord for such abated rent, without imposing any obligation on Landlord tocarry such rental loss insurance.  Suchright to abate Base Rent and Tenant’s Share of Tenant’s Share of OperatingCosts and Taxes shall beTenant’s sole and exclusive remedy at law or in equity for an Abatement Event;provided, however, that if Landlord has not cured such Abatement Event withinone hundred eighty (180) days after receipt of notice from Tenant, Tenant shallhave the right to terminate this Lease during the first five (5) Business Daysof each calendar month following the end of such 180-day period until such timeas Landlord has cured the Abatement Event, which right may be exercised bydelivery of written notice to Landlord during such five (5) Business Dayperiod, and shall be effective thirty (30) days after Landlord’s receiptthereof  Notwithstanding anythingcontained in this paragraph to the contrary, any termination notice provided byTenant hereunder shall be null and void if Landlord cures such Abatement Eventwithin such thirty (30) day period following receipt of such notice.  Except as expressly provided in this Section15.4(b) or Sections 12 and 13, nothing contained in this Lease shall beinterpreted to mean that Tenant is excused from paying rent due hereunder.

16.           LATECHARGE AND INTEREST.

16.1         LateCharge.  Tenant acknowledges that late payment of rentwill cause Landlord to incur costs not contemplated by this Lease, the exactamount of which will be extremely difficult to ascertain.  These costs include processing and accountingcharges, and late charges which may be imposed on Landlord by the terms of anyground leases and/or mortgages. Accordingly, if any payment of rent is not received by Landlord withinfive (5) days after the date when such payment is due, Tenant shall pay toLandlord on demand as a late charge an additional amount equal to five percent (5%)of the overdue payment.  A late chargeshall not be imposed more than once on any particular installment not paid whendue, but imposition of a late charge on any payment not made when due does noteliminate or supersede late charges imposed on other (prior) payments not madewhen due or preclude imposition of a late charge on other installments orpayments not made when due.  Tenantagrees that the late charge imposed by this provision is a fair and reasonableestimate of the costs Landlord will incur by reason of the late payment byTenant.  Notwithstanding the foregoing oranything to the contrary contained herein, no later charge or interest shall bedue on the first and only the first late payment of rent by Tenant in anycalendar year during the Term so long as Tenant makes such payment within three(3) days after its receipt of a written notice of delinquency from Landlord

16.2         Interest.  In addition to the late charges referred toabove, which are intended to defray Landlord’s costs resulting from latepayments, any payment from Tenant to Landlord not paid when due shall atLandlord’s option bear interest from the date due until paid to Landlord byTenant at the rate of twelve percent (12%) per annum or the maximum rate thatLandlord may charge to Tenant under applicable Laws, whichever is less (the “**Interest Rate**”). Acceptance of any late charge and/or interest shall not constitute awaiver of Tenant’s default with respect to the overdue sum or prevent Landlordfrom exercising any of its other rights and remedies under this Lease.

32

----

17.           PARKING.  Tenant shall have the right to use throughoutthe Term (including any Extended Term), on a non-exclusive basis, at noadditional charge to Tenant, three hundred fifteen (315) non-reservedautomobile parking spaces in the Parking Facility located on the Property;provided, however, that the number of non-reserved automobile parking spacesprovided to Tenant is based on a ratio of three and 14/100 (3.14) such parkingspaces per one thousand (1,000) square feet of Rentable Area included in thePremises and, accordingly, the number of such spaces is subject to pro rataadjustment on the basis of the foregoing formula if the Rentable Area includedin the Premises is adjusted.  All parkingby Tenant, Tenant’s Representatives and Tenant’s Invitees shall be incompliance with all reasonable Rules and Regulations of Landlord regarding theuse of the Parking Facility, as such Rules and Regulations may be modifiedreasonably from time to time.  In addition,if Tenant, Tenant’s Representatives or Tenant’s Invitees violate the Rules andRegulations, Landlord shall have the right after reasonable notice to Tenant toremove any vehicles so violating the Rules and Regulations, at Tenant’sexpense, and Landlord shall not be liable for any damage incurred in connectionwith such removal.  Landlord reserves theright to require Tenant, Tenant’s Representatives and Tenant’s Invitees to usestickers or any other identification system established by Landlord; provided,however, that any such stickers or other form of identification supplied byLandlord shall remain the property of Landlord, and shall not betransferable.  All responsibility fordamage to vehicles or persons in or about the Parking Facility is assumed bythe owner of the vehicle and/or its driver. Landlord reserves the right to designate certain areas of the ParkingFacility as visitors’ parking, to be reserved for guests and/or visitors, andneither Tenant nor Tenant’s employees shall park in such designated areas.  Landlord also reserves the right to allowpersons other than tenants of the Building and their guests and/or visitors touse the Parking Facility, provided the foregoing does not prevent Tenant fromits use of the parking rights granted hereunder.

18.           ENTRY,INSPECTION AND CLOSURE.  Upon reasonable(i.e., 24 hours) oral or written notice to Tenant (and without notice inemergencies), Landlord and its authorized representatives may enter thePremises during Business Hours (and at any time in case of Emergency), andsubject to Tenant’s reasonable security requirements (except in the event ofEmergency), to:  (a) determinewhether the Premises are in good condition, (b) determine whether Tenantis complying with its obligations under this Lease, (c) perform anymaintenance or repair of the Premises or the Building that Landlord has theright or obligation to perform, (d) install or repair improvements forother tenants where access to the Premises is required for such installation orrepair, (e) serve, post or keep posted any notices required or allowedunder the provisions of this Lease, (f) show the Premises to prospectivebrokers, agents, buyers, transferees, Mortgagees or, during the last onehundred eighty (180) days of the Term only, tenants, or (g) do any otheract or thing necessary for the safety or preservation of the Premises or theBuilding.  When reasonably necessaryLandlord may temporarily close entrances, doors, corridors, elevators or otherfacilities in the Building without liability to Tenant by reason of suchclosure.  Landlord shall conduct itsactivities under this Section in a commercially reasonable manner that willminimize inconvenience to Tenant.  In noevent shall Tenant be entitled to an abatement of rent on account of any entryby Landlord, and Landlord shall not be liable in any manner for anyinconvenience, loss of business or other damage to Tenant or other personsarising out of Landlord’s entry on the Premises in accordance with thisSection.  No action by Landlord pursuantto this paragraph shall constitute an eviction of Tenant, constructive orotherwise, entitle Tenant to an abatement of rent or to terminate this Lease orotherwise release Tenant from any of Tenant’s obligations under this Lease.

19.           SURRENDERAND HOLDING OVER.

19.1         Surrender.  Upon the expiration or earlier termination ofthis Lease, Tenant shall surrender the Premises and all Alterations to Landlordbroom clean and in their condition as of the

33

----

CommencementDate, except for normal wear and tear, damage from casualty or condemnation andany changes resulting from approved Alterations that Tenant is not required toremove; provided, however, that prior to the expiration or earlier terminationof this Lease Tenant:  (i) shall removeall telephone and other cabling installed in the Building by Tenant, all ofTenant’s personal property, furniture, decorations, interior or exterior signs,and Trade Fixtures, and all Alterations that Landlord timely elects inaccordance with this Lease to require Tenant to remove; and (ii) shall repairany damage  to the Premises, theBuilding, Common Areas and perform any restoration work caused or occasioned byTenant’s compliance with this Section. Tenant shall patch and refinish allpenetrations made by Tenant or its agents or employees to the floor, walls, orceiling of the Premises necessitated by Tenant’s removal of Alterations and/orTrade Fixtures, whether or not made or installed with Landlord’s approval.Tenant shall repair or replace all stained or damaged ceiling tiles, wall coverings,and floor coverings to the extent the same require repair or replacement beyondnormal wear and tear.  All repairs shallbe made to Landlord’s reasonable satisfaction. If any such removal or repair isnot completed before the expiration or earlier termination of the Term,Landlord shall have the right (but no obligation) to cause such removal orrepair  to be performed and to repair anydamage and perform any restoration work caused or occasioned by such removal.Tenant shall pay Landlord on demand for all costs of removal, repair andrestoration, for storage of Tenant’s property and for the rental value of thePremises for the period from the end of the Term through the end of the timereasonably required for such removal, repair and restoration.  Landlord shall also have the right to retainor dispose of all or any portion of Tenant’s property if Tenant does not payall such costs and retrieve the property within ten (10) days after notice fromLandlord (in which event title to all such property described in Landlord’snotice shall be transferred to and vest in Landlord).  Tenant waives all Claims against Landlord forany damage or loss to Tenant resulting from Landlord’s removal, storage,retention, or disposition of Tenant’s property. Upon expiration or earlier termination of this Lease or of Tenant’spossession, whichever is earliest, Tenant shall surrender all keys to thePremises or any other part of the Building and shall deliver to Landlord allkeys for or make known to Landlord the combination of locks on all safes,cabinets and vaults that may be located in the Premises.  The term “normal wear and tear,” for purposesof this provision, shall be construed to mean wear and tear caused to thePremises by the natural aging process that occurs in spite of prudentapplication of good standards for maintenance and repair; and it is notintended, nor shall it be construed, to include items of neglected or deferredmaintenance which would have or should have been attended to during the Term ofthe Lease if good standards had been applied to properly maintain and keep thePremises at all times in good condition and repair.  Tenant’s obligations under this Section shallsurvive the expiration or earlier termination of this Lease.

19.2         HoldingOver.  If Tenant (directly or through any Transfereeor other successor-in-interest of Tenant) remains in possession of the Premisesafter the expiration or earlier termination of this Lease, Tenant’s continuedpossession shall be on the basis of a tenancy at the sufferance ofLandlord.  In such event, Tenant shallcontinue to comply with and perform all the terms and obligations of Tenantunder this Lease, except that the Monthly Base Rent during Tenant’s holdingover shall be one hundred fifty percent (150%) of the Monthly Base Rent payablein the last full month prior to the expiration or termination hereof.  Acceptance by Landlord of rent after suchexpiration or termination shall not constitute a renewal of this Lease; and nothingcontained in this provision shall be deemed to waive Landlord’s right ofreentry or any other right hereunder or at law. Tenant shall indemnify, defend and hold Landlord harmless from andagainst all Claims arising or resulting directly or indirectly from Tenant’sfailure to timely surrender the Premises, including (i) any rent payable by orany loss, cost, or damages claimed by any prospective tenant of the Premises,and (ii) Landlord’s damages as a result of such prospective tenant rescindingor refusing to enter into the prospective lease of the Premises or delaying thecommencement of rent payable thereunder by reason of Tenant’s failure to timelysurrender the Premises.

34

----

20.           ENCUMBRANCES.

20.1         Subordination.  This Lease is expressly made subject andsubordinate to any mortgage, deed of trust, ground lease, underlying lease orlike encumbrance affecting any part of the Property or any interest of Landlordtherein which is now existing or hereafter executed or recorded (“**Encumbrance**”); provided, however, that such subordinationshall only be effective as to Encumbrances created by Landlord after theCommencement Date of this Lease if the holder of the Encumbrance agrees that solong as this Lease is in full force and effect and there exists no Event ofDefault hereunder, Tenant’s right to possession of the Premises shall not bedisturbed by reason of foreclosure, exercise of the statutory power of sale, orreceipt of a deed in lieu of foreclosure in the case of any mortgage or deed oftrust that constitutes the Encumbrance or termination in the case of any groundlease that constitutes the Encumbrance. Tenant shall execute and deliver to Landlord, within ten (10) days afterwritten request therefor by Landlord and in a commercially reasonable form requestedby Landlord, any additional documents evidencing the subordination of thisLease with respect to any such Encumbrance, provided that, in any case whereTenant is entitled to the above-described nondisturbance agreement, eitherprior to or concurrently with the request Tenant is provided the requirednondisturbance agreement by the holder of the Encumbrance.  If the interest of Landlord in the Propertyis transferred pursuant to or in lieu of proceedings for enforcement of anyEncumbrance, provided the new owner requires Tenant to do so or Tenant is partyto a nondisturbance agreement as herein described, Tenant shall attorn to thenew owner, and this Lease shall continue in full force and effect as a directlease between the transferee and Tenant on the terms and conditions set forthin this Lease.  Anything in this Section20.1 to the contrary notwithstanding, if a Mortgagee so elects in writing, thisLease shall be deemed superior to the Encumbrance held by the Mortgagee,regardless of the date of recordation of the Encumbrance, and Tenant willexecute an agreement confirming the Mortgagee’s election on request.

20.2         MortgageeProtection.  Tenant agrees to give any holder of anyEncumbrance covering any part of the Property (“**Mortgagee**”),by registered mail, a copy of any notice of default served upon Landlord,provided that prior to such notice Tenant has been notified in writing (by wayof notice of assignment of rents and leases, or otherwise) of the address ofsuch Mortgagee.  If Landlord shall havefailed to cure such default within thirty (30) days from the effective date ofsuch notice of default, then the Mortgagee shall have an additional thirty (30)days within which to cure such default or if such default cannot be curedwithin that time, then such additional time as may reasonably be necessary tocure such default, and this Lease shall not be terminated so long as suchremedies are being diligently pursued; provided, however, that nothingcontained in this Section 20.2 shall be construed to (i) limit Tenant’s offsetor abatement rights under Sections 7.2 or 15.4(b) as against the Landlord atthe time that the act or omission resulting in such offset right (“**Act**”) arises; provided, however, that upon any Mortgageeforeclosure or acceptance of a deed in lieu of foreclosure (collectively “**Foreclosure**”, and the Mortgagee or other party acquiring thePremises thereby being the “**Successor**”),Tenant may not offset or abate any amounts due to Tenant arising from anypre-Foreclosure Act against any rent or other amounts due Successor after Foreclosure,or (ii) impose any obligation on a Mortgagee to cure such default.  Landlord represents and warrants to Tenantthat, as of the Lease Date, the only Mortgage encumbering the Property is deedof trust in favor of Wrightwood Capital Lender LLC (“**Wrightwood**”).  Notwithstanding the foregoing or anything tothe contrary contained here, within thirty (30) days after the Lease DateLandlord shall obtain a nondisturbance agreement from Wrightwood in acommercially reasonable form.  IfLandlord has not obtained such nondisturbance agreement as provided in thepreceding sentence, then Tenant may terminate this Lease by written notice toLandlord, in which case Landlord shall refund to Tenant all funds and depositsdelivered by Tenant hereunder and Landlord and

35

----

Tenantshall thereupon have no further liability to the other under this Lease,excepting obligations which expressly survive the termination hereof.

21.           ESTOPPELCERTIFICATES AND FINANCIAL STATEMENTS.

21.1         EstoppelCertificates.  Within ten (10) days after written requesttherefor, Tenant shall execute and deliver to Landlord, in a form provided byor satisfactory to Landlord, a certificate stating that this Lease is in fullforce and effect, describing any amendments or modifications hereto, acknowledgingthat this Lease is subordinate or prior, as the case may be, to any Encumbranceand stating any other information Landlord may reasonably request, includingthe Term, the date on which the Term began and expires, the monthly Base Rent,the date to which rent has been paid, the amount of any security deposit orprepaid rent, whether either party hereto is in default under the terms of theLease, and whether Landlord has completed its construction obligationshereunder (if any).  If Tenant failstimely to execute and deliver such certificate as provided above then Tenantshall be deemed to have confirmed the information in any such estoppelcertificate provided by Landlord and to have waived its right to contest theaccuracy of such information at any later date. Any person or entity purchasing, acquiring an interest in or extendingfinancing with respect to the Property shall be entitled to rely upon any suchcertificate.  If Tenant fails to deliversuch certificate within five (5) Business Days after Landlord’s second writtenrequest therefor, the Tenant’s failure or refusal to timely execute or deliversuch estoppel certificate shall be an Event of Default.

21.2         FinancialStatements. Within ten (10) daysafter written request therefor, but not more than once a year, and only inconnection with a sale or refinancing of Landlord’s interest in the Project orat any time Tenant is in default of its obligations hereunder, and only ifTenant’s financial statements are not publicly available, Tenant shall deliverto Landlord a copy of the financial statements (including at least a year endbalance sheet and a statement of profit and loss) of Tenant (and of eachguarantor, if any, of Tenant’s obligations under this Lease, but only if thefinancial statements of such guarantor are not publicly available) for each ofthe three most recently completed years, prepared in accordance with generallyaccepted accounting principles (and, if such is Tenant’s normal practice,audited by an independent certified public accountant), all then availablesubsequent interim statements, and such other financial information as mayreasonably be requested by Landlord or required by any Mortgagee.  Landlord agrees to keep such financialreports (to the extent the same are not publicly available) confidential,although Landlord may disclose the contents thereof to Landlord’s professionaladvisors and to potential lenders and buyers pursuant to such parties’agreement to maintain the confidentiality of such information.

22.           NOTICES.  Any notice, demand, request, consent orapproval that either party desires or is required to give to the other partyunder this Lease shall be in writing and shall be served personally, deliveredby independent messenger or overnight courier service, sent by U.S. certifiedmail, return receipt requested, postage prepaid, addressed to the other partyat the party’s address set forth in the Basic Lease Information.  Notices shall be deemed to have been givenand be effective on the earlier of (i)  receipt (or refusal of delivery)if personally delivered or sent by independent messenger service, (ii) one (1)day after acceptance by an overnight courier service for delivery if sent byovernight courier service, or (iii) three (3) days after mailing if sent by mailin accordance with this Section.  If anynotice or other act that is permitted or required under this Lease shall comedue on a Saturday, Sunday or legal holiday, it shall be deemed to be due on thenext business day.  Landlord or Tenantmay change its address for notices hereunder, effective fifteen (15) days afternotice to the other party complying with this Section.  If Tenant sublets the Premises, notices fromLandlord shall be effective on the subtenant when given to Tenant pursuant tothis Section.

36

----

23.           ATTORNEYS’FEES.  In the event of any disputebetween Landlord and Tenant in any way related to this Lease, thenon-prevailing party shall pay to the prevailing party all reasonable attorneys’fees and costs and expenses of any type incurred by the prevailing party inconnection with any action or proceeding (including any appeal and theenforcement of any judgment or award), whether or not the dispute is litigatedor prosecuted to final judgment.  The “prevailingparty” shall be determined based upon an assessment of which party’s majorarguments or positions taken in the action or proceeding could fairly be saidto have prevailed (whether by compromise, settlement, abandonment by the otherparty of its claim or defense, final decision, after any appeals, or otherwise)over the other party’s major arguments or positions on major disputed issues.

24.           QUIETPOSSESSION.  Subject to Tenant’s full andtimely performance of all of Tenant’s obligations under this Lease and subjectto the terms of this Lease, including Section 20, Tenant shall have the quietpossession of the Premises throughout the Term as against any persons orentities lawfully claiming by, through or under Landlord.

25.           SECURITYMEASURES.  Landlord may, but shall beunder no obligation to, implement security measures for the Property, such asthe registration or search of all persons entering or leaving the Building,requiring identification for access to the Building, evacuation of the Buildingfor cause, suspected cause, or for drill purposes, the issuance of magneticpass cards or keys for Building or elevator access and other actions thatLandlord deems necessary or appropriate to prevent any threat of property lossor damage, bodily injury or business interruption; provided, however, that suchmeasures shall be implemented in a way as not to inconvenience tenants of theBuilding unreasonably.  Landlord shall atall times have the right to change, alter or reduce any such security servicesor measures.  Tenant shall cooperate andcomply with, and cause Tenant’s Representatives and Invitees to cooperate andcomply with, such security measures. Landlord, its agents and employees shall have no liability to Tenant orits Representatives or Invitees for the implementation or exercise of, or the failureto implement or exercise, any such security measures or for any resultingdisturbance of Tenant’s use or enjoyment of the Premises.

26.           COMMONAREAS.  Without Landlord’s prior writtenapproval, Tenant will not obstruct the Common Areas, and Tenant will not usethe Common Areas for any purpose other than ingress and egress to and from thePremises and parking in the Parking Facility as permitted under the Lease.  The Common Areas, except for the sidewalks,are not open to the general public and Landlord reserves the right to controland prevent access to the Common Areas by any person whose presence, inLandlord’s opinion, would be prejudicial to the safety, reputation andinterests of the Building and its tenants.

27.           RULESAND REGULATIONS.  Tenant shall be boundby and shall comply with the rules and regulations attached to and made a partof this Lease as Exhibit B, as well as any reasonable modificationsthereof and/or additions thereto hereafter adopted by Landlord for all tenantsof the Building upon notice to Tenant thereof (collectively, the “**Rules and Regulations**”). Landlord shall not be responsible to Tenant or to any other person forany violation of, or failure to observe, the Rules and Regulations by any othertenant or other person.  In the event ofany conflict between the rules and regulations and the other provisions of thisLease, the other provisions of this Lease shall govern.

28.           LANDLORD’SLIABILITY.  The term “Landlord,” as usedin this Lease, shall mean only the owner or owners of the Property at the timein question.  In the event of anyconveyance of title to the Property, then from and after the date of suchconveyance, the transferor Landlord shall be relieved of all liability withrespect to Landlord’s obligations to be performed under this Lease firstaccruing after the date of such conveyance. Notwithstanding any other term or provision of this Lease, the liabilityof

37

----

Landlordarising out of or based upon its obligations under this Lease is limited solelyto Landlord’s interest in the Property as the same may from time to time beencumbered (and any sales, assignment insurance or condemnation proceedsreceived by Landlord), and no personal liability shall at any time be assertedor enforceable against any other assets of Landlord or against Landlord’sconstituent partners or members or its or their respective partners,shareholders, members, directors, officers or managers on account of any ofLandlord’s obligations or actions under or related to this Lease.

29.           CONSENTSAND APPROVALS.  The review and/orapproval by Landlord of any item or matter to be reviewed or approved byLandlord under the terms of this Lease or any Exhibits hereto shall not imposeupon Landlord any liability for the accuracy or sufficiency of any such item ormatter or the quality or suitability of such item for its intended use.  Any such review or approval is for the solepurpose of protecting Landlord’s interest in the Property, and no thirdparties, including Tenant or the Representatives and Invitees of Tenant or anyperson or entity claiming by, through or under Tenant, shall have any rights asa consequence thereof.  If it isdetermined that Landlord failed to give its consent where it was required to doso under this Lease, Tenant shall be entitled to injunctive relief and actualdamages resulting therefrom so long as (i) Tenant requested such consent inwriting and (ii) provided written notice to Landlord promptly after Landlord’srefusal or failure to respond as required hereunder of Tenant’s assertion thatsuch consent was wrongfully withheld; provided, however that in no event shallTenant be entitled to terminate this Lease for Landlord’s failure to give anyconsent required to be given by Landlord under this Lease.

30.           BROKERS.  Landlord shall have no obligation to pay afee or commission to any broker or brokers identified in the Basic LeaseInformation (the “**Broker**”) exceptin accordance with a separate written agreement with any such Broker signed byLandlord.  Each party hereto warrants andrepresents to the other party that in connection with the negotiating andmaking of this Lease neither the warranting party nor anyone acting on itsbehalf has dealt with any broker or finder who might be entitled to a fee orcommission for this Lease other than the Broker acting on behalf of thewarranting party identified in the Basic Lease Information.  Each party hereto shall indemnify and holdthe other party harmless from any Claims asserted by any other person or entityfor a fee, commission or other compensation based upon any dealings with orstatements made by the indemnifying party or the indemnifying party’sRepresentatives.

31.           WAIVER.  No provisions of this Lease shall be deemedwaived by Landlord or Tenant unless such waiver is in a writing signed by thewaiving party.  The waiver by Landlord orTenant of any breach of any provision of this Lease shall not be deemed awaiver of such provision or of any subsequent breach of the same or any otherprovision of this Lease.  No delay oromission in the exercise of any right or remedy of Landlord or Tenant upon anydefault by the other party shall impair such right or remedy or be construed asa waiver.  Landlord’s acceptance of anypayments of rent due under this Lease shall not be deemed a waiver of anydefault by Tenant under this Lease (including Tenant’s recurrent failure totimely pay rent) other than Tenant’s nonpayment of the accepted sums, and noendorsement or statement on any check or payment or in any letter or documentaccompanying any check or payment shall be deemed an accord andsatisfaction.  Landlord’s consent to orapproval of any act by Tenant requiring Landlord’s consent or approval shallnot be deemed to waive or render unnecessary Landlord’s consent to or approvalof any subsequent act by Tenant requiring Landlord’s consent or approval.

32.           ENTIREAGREEMENT.  This Lease, including theExhibits attached hereto, all of which Exhibits are incorporated into and madea part of this Lease by this reference thereto, constitutes the entireagreement between Landlord and Tenant with respect to the leasing of space byTenant in the Building, and supersedes all prior or contemporaneous agreements,understandings, proposals and other

38

----

representationsby or between Landlord and Tenant, whether written or oral, all of which aremerged herein.  Neither Landlord norLandlord’s agents have made any representations or warranties whatsoever withrespect to the Premises, the Building, the Property or this Lease except asexpressly set forth herein, and no rights, easements or licenses shall beacquired by Tenant by implication or otherwise unless expressly set forthherein. This Lease may be amended or modified only by a written instrumentsigned by Landlord and Tenant.

33.           MISCELLANEOUS.

33.1         Submissionof Lease. The submission of thisLease for examination does not constitute an option or offer to lease thePremises or a reservation of the Premises in favor of Tenant.  This Lease shall become effective as abinding agreement only upon execution and delivery thereof by Landlord toTenant.

33.2         Successorsand Assigns.  Subject to Sections 14 and 28, this Leaseshall be binding on and shall inure to the benefit of the parties and theirrespective successors, assigns and legal representatives.

33.3         Severability.  The determination that any provisions hereofmay be void, invalid, illegal or unenforceable shall not impair any otherprovisions hereof and all such other provisions of this Lease shall remain infull force and effect.  Theunenforceability, invalidity or illegality of any provision of this Lease underparticular circumstances shall not render unenforceable, invalid or illegalother provisions of this Lease, or the same provisions under othercircumstances.

33.4         GoverningLaw.  This Lease shall be governed by and construedand interpreted in accordance with the laws (excluding conflicts of lawsprinciples) of the State of California.

33.5         Interpretation.  The provisions of this Lease shall beconstrued in accordance with the fair meaning of the language used and shallnot be strictly construed against either party, even if such party drafted theprovision in question.  When required bythe context of this Lease, the singular includes the plural and vice versa, andthe masculine, feminine and neuter genders each include the others.  Wherever the term “including” is used in thisLease, it shall mean “including, but not limited to” the matter or mattersthereafter enumerated.  The captionscontained in this Lease are for purposes of convenience only and are not to beused to interpret or construe this Lease. In any provision of this Lease relating to the conduct, acts oromissions of Tenant, the term “Tenant” shall include Tenant’s Representatives,and shall only include Tenant’s Invitees where expressly provided.

33.6         Jointand Several Liability.  If more than one person or entity isidentified as Tenant hereunder, the obligations of each and all of them underthis Lease shall be joint and several.

33.7         Recordation.  Neither Landlord nor Tenant shall record thisLease or a memorandum thereof.

33.8         SuiteIdentification.  Landlord will provide, at Landlord’s expense,Tenant’s name plate on the suite door and Tenant’s name on the directory forthe Building, both of which shall be in building standard size and design.

33.9         Counterparts.This Lease may be executed in counterparts with the same effect as if bothparties hereto had executed the same document. Both counterparts shall be construed together and shall constitute asingle lease.

39

----

33.10       AccessControl System:  Tenant may install, maintain, control, andoperate, an electronic proximity card-reader access control system (the “AccessControl System”) to regulate entry into the Premises and the Building;provided, however, that Landlord shall be provided with updated copies of allcard keys in connection with such system for the purposes of Landlord’s rightof entry hereunder.

34.           TIME.  Time is of the essence for the performance ofeach and every obligation to be performed by Tenant under this Lease.

35.           AUTHORITY.  If either party hereto is a corporation,partnership, limited liability company or other form of business entity, suchparty and each of the persons executing this Lease on behalf of such partywarrant and represent to the other party hereto that such party is a dulyorganized and validly existing entity, that such party has full right andauthority to enter into this Lease and that the persons signing on behalf ofsuch party are authorized to do so and have the power to bind such party tothis Lease.  Upon request, either partyhereto shall provide the other party with evidence reasonably satisfactory tothe other party confirming the foregoing representations.

36.           TITLETO PROJECT.  Landlord represents andwarrants to Tenant that, as of the Lease Date, Landlord is the owner of feetitle to the Project.

40

----

INWITNESS WHEREOF, Landlord and Tenant have entered into this Lease as of theLease Date.
| TENANT:                                  |   | LANDLORD:                                                    |
|------------------------------------------|--------|--------------------------------------------------------------|
|                                     |   |                                                         |
| VERIGY US, INC.,  a Delaware corporation |   | PAU MOULDS CPP-A LLC  a California limited liability company |
|                                     |   |                                                         |
|                                     |   |                                                         |
| By:                                      |   |                                                         |   | By: |   |   |
| Name:                                    |   |                                                         |   |   | Peter Pau, Manager |
| Title:                                   |   |                                                         |   |   |
|                                     |   |                                                         |   |
|                                     |   |                                                         |   |
| By:                                      |   |                                                         |   |   |
| Name:                                    |   |                                                         |   |   |
| Title:                                   |   |                                                         |   |   |

 

41

----

EXHIBITA

THEPREMISES

1

----

EXHIBIT B

RULES AND REGULATIONS

The following Rules and Regulations areadditional provisions of the foregoing Lease. Capitalized terms used herein have the meanings ascribed to them in theLease.

1.             NoAccess to Roof.  Except as expressly permitted under theLease, Tenant has no right of access to the roof of the Building and will notinstall, repair or replace any antenna, aerial, aerial wires, fan, airconditioner, satellite dish or other device on the roof of the Building,without the prior written consent of Landlord. Any such device installed without such written consent is subject toremoval at Tenant’s expense without notice at any time.  In any event Tenant will be liable for anydamages or repairs incurred or required as a result of its installation, use,repair, maintenance or removal of such devices on the roof and agrees toindemnify, protect, defend and hold harmless Landlord from any Claims arisingfrom any activities of Tenant or of Tenant’s Representatives on the roof of theBuilding.

2.             Signage.  Except as may be expressly permittedhereunder, no sign, placard, picture, name, advertise­ment or notice visiblefrom the exterior of the Premises will be inscribed, painted, affixed orotherwise displayed by Tenant on or in any part of the Premises or the Buildingwithout the prior written consent of Landlord. Landlord reserves the right to adopt general guidelines relating tosigns in or on the Building.  Approvedsignage, if any, will be inscribed, painted or affixed at Tenant’s expense by aperson approved by Landlord.

3.             ProhibitedUses.  The Premises will not be used formanufacturing, for the storage of merchandise held for sale to the generalpublic at the Premises, for lodging or for the sale of goods to the generalpublic.  The foregoing prohibitions shallbe in addition to, and not in lieu of, any other prohibitions applicable to theuse of the Premises under the Lease and/or applicable Laws.  Except for seeing-eye dogs, neither Tenantnor its employees, agents, contractors, or invitees shall bring any animal orpet into the Premises, the halls or corridors or any other part of theBuilding, or the common areas, without the prior written consent of Landlord,which shall not be unreasonably refused as to animals which are required onaccount of an established disability.

4.             Keysand Locks.  Landlord will furnish Tenant, free of charge,a reasonable number of keys to each door or lock in the Premises.  Landlord may make a reasonable charge for anyreplacement keys.  Tenant will notduplicate any keys, alter any locks or install any new or additional lock orbolt on any door of its Premises or on any other part of the Building withoutthe prior written consent of Landlord and, in any event, Tenant will provideLandlord with a key for any such lock. On the termination of the Lease, Tenant will deliver to Landlord allkeys to any locks or doors in the Building which have been obtained by Tenant.

5.             Freight.  An elevator will be made available for Tenant’suse for transportation of freight, subject to such scheduling as reasonablyappropriate.  Tenant shall not transportfreight in loads exceeding the weight limitations of such elevator.  Landlord reserves the right to prescribe in areasonable fashion the weight, size and position of all equipment, materials,furniture or other property brought into the Building.  Landlord reserves the right to require thatheavy objects will stand on wood strips of such length and thickness as isnecessary to properly distribute the weight. Landlord will not be

B-1

----

responsiblefor loss of or damage to any such property from any cause associated withTenant’s use of the elevator, and Tenant will be liable for all damage orinjuries caused by moving or maintaining such property.

6.             Nuisancesand Dangerous Substances.  Tenant will not conduct itself or permitTenant’s Representatives or Invitees to conduct themselves, in the Premises oranywhere on or in the Property in a manner which is offensive or undulyannoying to any other tenant or Landlord’s property managers.  Tenant will not install or operate anyphonograph, radio receiver, musical instrument, or television or other similardevice in any part of the Common Areas and shall not operate any such deviceinstalled in the Premises in such manner as to disturb or annoy other tenantsof the Building.  Tenant will not use orkeep in the Premises or the Property any kerosene, gasoline or othercombustible fluid or material other than limited quantities thereof reasonablynecessary for the maintenance of Tenant’s equipment.  Tenant will not use or keep any foul ornoxious gas or substance in the Premises or permit or suffer the Premises to beoccupied or used in a manner offensive or objectionable to Landlord or otheroccupants of the Building by reason of noise, odors or vibrations, or interferein any way with other tenants or those having business therein.

7.             BuildingName and Address.  Without Landlord’s prior written consent,Tenant will not use the name of the Building in connection with or in promotingor advertising Tenant’s business except as Tenant’s address.

8.             BuildingDirectory.  A directory for the Building will be providedfor the display of the name and location of tenants.  Landlord reserves the right to approve ordisapprove placing any additional names Tenant desires to place in thedirectory and, if so approved, Landlord may assess a reasonable charge foradding such additional names.

9.             WindowCoverings.  No curtains, draperies, blinds, shutters,shades, awnings, screens or other coverings, window ventilators, hangings,decorations or similar equipment shall be attached to, hung or placed in, orused in or with any window of the Building without the prior written consent ofLandlord.

10.           FloorCoverings.  Tenant will not lay or otherwise affixlinoleum, tile, carpet or any other floor covering to the floor of the Premisesin any manner except as approved in writing by Landlord.  Tenant will be liable for the cost of repairof any damage resulting from the violation of this rule or the removal of anyfloor covering by Tenant or its contractors, employees or invitees.

11.           Wiringand Cabling Installations.  Landlord will reasonably direct Tenant’selectricians and other vendors as to where and how data, telephone, andelectrical wires and cables are to be installed.  No boring or cutting portions of the Buildingoutside the Premises for wires or cables will be allowed without the priorwritten consent of Landlord unless the same is a component of any Alterationsapproved by Landlord and/or is limited to the interior of the Premises and willnot affect the Building structure or any Building Systems.  The location of burglar alarms, smokedetectors, telephones, call boxes and other office equipment affixed to thePremises shall be subject to the written approval of Landlord.

12.           OfficeClosing Procedures.  Tenant will see that the doors of thePremises are closed and locked and that all water faucets, water apparatus andutilities are shut off before Tenant or its employees leave the Premises, so asto prevent waste or damage.  Tenant willbe liable for all damage or injuries sus­tained by other tenants or occupantsof the Building or Landlord resulting from Tenant’s carelessness

B-2

----

inthis regard or violation of this rule. Tenant will keep the doors to the Building corridors closed at all timesexcept for ingress and egress.

13.           PlumbingFacilities.  The toilet rooms, toilets, uri­nals, washbowls and other apparatus shall not be used for any purpose other than that forwhich they were constructed and no foreign substance of any kind whatsoevershall be disposed of therein.  Tenantwill be liable for any breakage, stoppage or damage resulting from theviolation of this rule by Tenant, its employees or invitees.

14.           Useof Hand Trucks.  Tenant will not use or permit to be used inthe Premises or in the Common Areas any hand trucks, carts or dollies exceptthose equipped with rubber tires and side guards or such other equipment asLandlord may approve.

15.           Refuse.  Tenant shall store all Tenant’s trash andgarbage within the Premises or in other facilities designated by Landlord forsuch purpose.  Tenant shall not place inany trash box or receptacle any material which cannot be disposed of in theordinary and customary manner of removing and disposing of trash and garbage inthe city in which the Building is located without being in violation of any lawor ordinance governing such disposal. All trash and garbage removal shall be made in accordance withreasonable directions issued from time to time by Landlord, only through suchCommon Areas provided for such purposes and at such times as Landlord mayreasonable designate.  Tenant shallcomply with the requirements of any recycling program adopted by Landlord forthe Building.

16.           Soliciting.  Canvassing, peddling, soliciting and/ordistribution of handbills or any other written materials in the Building areprohibited, and Tenant will cooperate to prevent the same.

17.           Parking.  Tenant will use, and cause Tenant’sRepresentatives and Invitees to use, any parking spaces to which Tenant isentitled under the Lease in a manner consistent with Landlord’s directionalsigns and markings in the Parking Facility. Specifically, but without limitation, Tenant will not park, or permitTenant’s Representatives or Invitees to park, in a manner that impedes accessto and from the Building or the Parking Facility or that violates spacereservations for handicapped drivers registered as such with the CaliforniaDepartment of Motor Vehicles.  Landlord mayuse such reasonable means as may be necessary to enforce the directional signsand markings in the Parking Facility, including but not limited to towingservices, and Landlord will not be liable for any damage to vehicles towed as aresult of noncompliance with such parking regulations.

18.           Fire,Security and Safety Regulations.  Tenant will comply with all reasonable ormandatory safety, security, fire protection and evacuation measures andprocedures established by any governmental agency.

19.           Responsibilityfor Theft.  Tenant assumes any and all responsibility forprotecting the Premises from theft, robbery and pilferage, which includeskeeping doors locked and other means of entry to the Premises closed.

20.           Salesand Auctions.  Tenant will not conduct or permit to beconducted any sale by auction in, upon or from the Premises or elsewhere in theProperty, whether said auction be voluntary, involuntary, pursuant to anyassignment for the payment of creditors or pursuant to any bankruptcy or otherinsolvency proceeding.

21.           Waiverof Rules.  Landlord may waive any one or more of theseRules and Regulations for the benefit of any particular tenant or tenants, butno such waiver by Landlord will be construed as a

B-3

----

waiverof such Rules and Regulations in favor of any other tenant or tenants nor preventLandlord from thereafter enforcing these Rules and Regulations against any orall of the tenants of the Building.

22.           Effecton Lease.  These Rules and Regulations are in additionto, and shall not be construed to in any way modify or amend, in whole or inpart, the terms, covenants, agreements and conditions of the Lease.  In the event of any conflict or inconsistencybetween these Rules and Regulations and the provisions of the Lease, theprovisions of the Lease shall control. Violation of these Rules and Regulations constitutes a failure to fullyperform the provisions of the Lease, as referred to in Section 15.1.

23.           NondiscriminatoryEnforcement.  Subject to the provisions of the Lease (andthe provisions of other leases with respect to other tenants), Landlord shalluse reasonable efforts to enforce these Rules and Regulations in anondiscriminatory manner, but in no event shall Landlord have any liability forany failure or refusal to do so (and Tenant’s sole and exclusive remedy for anysuch failure or refusal shall be injunctive relief preventing Landlord fromenforcing any of the Rules and Regulations against Tenant in a manner thatdiscriminates against Tenant).

24.           Additionaland Amended Rules.  Landlord reserves the right to rescind or amendthese Rules and Regulations and/or to adopt any other rules and regulations asin its reasonable judgment may from time to time be needed for the safety, careand cleanliness of the Building and the Property and for the preservation ofgood order therein and thereon.

B-4

----

**EXHIBIT C**

**WORK LETTER**

This Work Letter shall set forth the terms and conditions relating tothe construction of tenant improvements in and to the Premises and the Buildingby both Tenant and Landlord.  Allreferences in this Work Letter to Articles or Sections of “the Lease” shallmean the relevant portions of the Lease Agreement to which this Work Letter isattached as  Exhibit C and ofwhich this Work Letter forms a part, and all references in this Work Letter toSections of “this Work Letter” shall mean the relevant portion this ExhibitC.  All capitalized terms used inthis Work Letter and not defined shall have the meaning set forth in the Lease.

SECTION 1

CONDITION OF PREMISES AND BASE BUILDING

Tenant acknowledges that Tenant has accepted the Premises, and hasagreed to Landlord’s obligations for the initial construction of Alterations inand to the Premises, subject to the terms and conditions of Section 1.2 of theLease.

SECTION 2

TENANT AND LANDLORD WORK

The work to be performed pursuant to this Work Letter shall include thefollowing components of work in and to the Premises and the Building:

2.1           Demolition Work.  Landlord shall perform certain demolitionwork in the Premises necessary to prepare the Premises for the “Office TI Work”(defined below), consisting of the work described on Schedule 1,attached hereto (the “**Demolition Work**”).  The Landlord shall engage a contractor of itschoice to perform the Demolition Work, and such work shall be completed at nocost or expense to Tenant.  The DemolitionWork shall be substantially completed on or before the later of (i) June 30,2006, or (ii) the date all required governmental permits and approvalsnecessary to commence the Office TI Work (defined below) have been issued andcopies of the same have been provided to Landlord by Tenant (such later dateshall be the “**Demolition Deadline**”).  As used herein and elsewhere in this WorkLetter, the terms “substantially completed” and “substantial completion” shallmean the date by which all of the following have occurred:  (a) the work at issue shall have beencompleted in accordance with the requirements of this Work Letter, except forpunch list items that are minor in character and do not materially, adverselyinterfere with Tenant’s use or enjoyment of the Premises or the commencementand completion of the Tenant Work (as defined below); and (b) Landlord (orTenant, as applicable) shall have obtained any and all governmental permits andapprovals required for the completion of the work at issue.

2.2           Demising Work.  Landlord shall perform certain work to demisethe Premises from that portion of the Building designated as 10200 North TantauAvenue and, with respect to the Building Systems serving the Premises, shalleither (i) separate such Building Systems so that discrete components of theBuilding Systems serve the Premises exclusively, or (ii) if such separation isnot reasonably practicable, provide separate metering for the Building Systemsserving the Premises (the “**Demising Work**”).  In addition, as part of the “Demising Work”,the Landlord shall also engage a contractor to

C-1

----

power-wash the exterior of the Building.  The Landlord shall engage one or morecontractors of its choice to perform the Demising Work, and such work shall becompleted at no cost or expense to Tenant. The Demising Work shall be substantially completed on or beforeSeptember 1, 2006 (the “**Demising Deadline**”).

2.3           Base Building RepairWork.  Landlord shall perform certainrepair work in and to the Building and the Premises, consisting of those itemsspecified on Schedule 1 attached hereto (the “**BaseBuilding Repair Work**”).  TheLandlord shall engage one or more contractors of its choice to perform theDemising Work, and such work shall be completed by licensed and qualifiedcontractors at no cost or expense to Tenant. The Base Building Repair Work shall be substantially completed on orbefore the Commencement Date (the “**Base Building Repair Work****Deadline**”).  All Demising Work, Demolition Work, and BaseBuilding Repair Work shall be completed in a good and workmanlike manner, usingnew materials and equipment of good quality, and in accordance with allapplicable governmental laws, rules and regulations.  Landlord and Tenant shall reasonablycooperate with each other in coordinating the Demising Work, Demolition Workand Base Building Repair Work (including the plans therefor) with the designand construction of the Tenant Work (defined below).

2.4           Office TI Work.  The Tenant shall construct interiorimprovements in and to the Premises which are in the nature of standard officetenant improvement work, including without limitation construction/relocationof interior walls, floor and wall coverings, installation/relocation of ceilingand lighting, installation/relocation of standard office electrical, plumbingand HVAC facilities, and installation of built-in shelving and cabinetry, allas shown on construction plans and specifications to be approved by Landlord(not to be unreasonably withheld) (collectively, the “**Office TIWork**”).  Tenant agrees andacknowledges that the “Office TI Work” does not include (i) the “Lab Work”(defined below), (ii) installation of network and communications cabling andequipment for Tenant’s operations in the Premises, and (iii) Tenant’sfurnishings, fixtures and equipment (“**FF&E**”).  Landlord shall pay Tenant for the cost ofspecific components of the Office TI Work, as described on Schedule 1,attached hereto (the “**Landlord TI Work**”)based on the approved final costs of such work included in Tenant’s contractwith Tenant’s Contractor.  Fifty percent(50%) of such costs shall be due and payable by Landlord to Tenant uponcompletion of fifty percent (50%) of the Landlord TI Work, within fifteen (15)days after Tenant has notified Landlord that such work is fifty percent (50%)complete, subject to Landlord’s right to inspect and approve the same (whichapproval shall not be unreasonably withheld) within such fifteen (15) dayperiod.  The remaining fifty percent(50%) of the final cost of such work (and any additional costs for such workincluded in any change orders for such work approved by Landlord) shall be paidwithin fifteen (15) days after the substantial completion of Tenant’sWork.  Save and except for the costcharged by Tenant’s Contractor for the Landlord TI Work, any and all other workand expenses necessary to construct the Office TI Work and any other TenantWork, including without limitation “**soft costs**”thereof, such as design costs, permit fees, insurance and the cost of anytesting required by applicable governmental authorities for the Tenant Work,shall be at no cost to Landlord.

The Office TI Work shall be performed by Tenant’sgeneral contractor, Scates Construction, Inc., or any other general contractorapproved in writing by Landlord, which approval shall not be unreasonablywithheld or delayed (“**Tenant’s Contractor**”).  Prior to commencement of the Office TI Work,Landlord shall have approved (which approval shall not be unreasonablywithheld) Tenant’s construction contract for the Office TI Work, includingwithout limitation (i) the economic terms of the construction contract for theOffice TI Work (e.g., stipulated sum or guaranteed maximum price, contractor’soverhead and profit, profit on change orders, etc.), (ii) the line item budgetfor the Office TI Work, (iii) the stipulated sum or guaranteed maximum pricefor the Landlord TI Work and (iv) the schedule for completion of the Office TIWork (including milestone dates).  Inaddition, prior to Tenant’s  approval of(and the commencement of any work under) any change orders for the Office TIWork,

C-2

----

Tenant shall provide copies of such change orders to Landlord, andLandlord shall have the right to approve (which approval shall not beunreasonably withheld) any and all such change orders to the extent such changeorders would (A) increase the cost of the Landlord TI Work, or (B) materiallyalter the scope of the Office TI Work. Landlord shall reimburse Tenant for the cost of the Landlord TI Work,including any adjustments arising out of change orders approved by Landlord(which approval shall not be unreasonably withheld) for the Landlord TI Work,upon substantial completion of the Office TI Work.

2.5           Lab Work.  Tenant shall be permitted to construct withinthe Premises a laboratory, which may include a “clean room” and shall alsoinclude Tenant’s equipment to be used in the laboratory and all supplementaryHVAC, mechanical, electrical and plumbing equipment and facilities located inand serving the laboratory and/or upgrades and additions to the BuildingSystems existing as of the Lease Date. All of the foregoing work and installations, together with the interiorfinishes, ceiling and lighting within the laboratory, and all “soft costs” (asdescribed in Paragraph 2.3 above) with respect to construction of thelaboratory, shall be referred to herein as the “**Lab Work**”.  Tenant shall construct and complete the LabWork at no expense to Landlord and shall engage a contractor for the Lab Workwho shall be subject to Landlord’s prior approval, not to be unreasonablywithheld; provided, however, that if Tenant intends to use the same contractorto perform the Office TI Work and the Lab Work, Landlord’s approval of Tenant’sContractor for the Office TI Work shall constitute Landlord’s approval of suchcontractor for performance of the Lab Work. Landlord shall have the right to review and approve Tenant’sconstruction contract for the Lab Work prior to Tenant’s executing the same,which approval shall not be unreasonably withheld.  In addition, prior to Tenant’s  approval of (and the commencement of any workunder) any change orders for the Lab Work, Tenant shall provide copies of suchchange orders to Landlord, and Landlord shall have the right to reasonablyapprove any and all such change orders to the extent such change orders wouldmaterially alter the scope of the Lab Work.

2.6           Landlord Work andTenant Work.  As used in this WorkLetter and in the Lease, the term “**LandlordWork**” means, collectively, the Demolition Work, Demising Work andthe Base Building Repair Work.  The term “**Tenant Work**” means, collectively, the Office TI Work(subject to Landlord’s obligation to reimburse the cost of the Landlord TIWork), the Lab Work and any and all other work performed by Tenant for the useand occupancy of the Premises, including without limitation installation ofTenant’s cabling and FF&E.  AllLandlord Work and Tenant Work shall be completed by licensed and qualifiedcontractors in a good and workmanlike manner, using new materials and equipmentof good quality, and in accordance with all applicable governmental laws, rulesand regulations.    Landlord shallprovide Tenant with at least ten (10) days’ prior written notice of the dateupon which, in Landlord’s judgment, substantial completion the Demolition Work,Demising Work and Landlord’s Base Building Repair Work will occur and shallthereafter keep Tenant informed as to any change in Landlord’s estimate of thedate which substantial completion of such work will occur.  All Tenant Work to be performed under thisWork Letter shall be considered to be “Alterations”, as the same is defined inthe Lease and subject to all of the terms and conditions of the Leaserespecting Alterations, with the exception of Section 6.1(b), which Sectionshall not be applicable to the Tenant Work; provided, however, thatnotwithstanding the provisions of Section 6 of the Lease, (i) the time periodsand conditions of Landlord’s consent to the Tenant Work shall be governed bythis Work Letter, (ii) the Lab Work shall not be deemed to be owned byLandlord, and (iii) the insurance requirements applicable to the performance ofthe Tenant Work shall be governed by this Work Letter.

C-3

----

SECTION 3

CONSTRUCTION DRAWINGS

3.1           ConstructionDrawings.  Landlord acknowledges thatTenant has retained Chicago Design Network, as its architect/space planner inconnection with the Office TI Work and the Lab Work (collectively, the “**Tenant-Designed Work**”). Landlord also acknowledges that it has conceptually approved thepreliminary plans for the Office TI Work identified on Schedule 2attached hereto, it being understood that such conceptual approval shall notlimit Tenant’s obligations under this Work Letter.  As soon as reasonably practicable, Tenantshall submit its proposed construction plans for all of the Tenant-DesignedWork to Landlord for review and approval, which approval shall not beunreasonably withheld.  All such plansand construction drawings, including any reasonable revisions required byLandlord and/or revisions required by applicable governmental authorities shallbe at no cost to Landlord.  Theconstruction plans and drawings to be prepared for the Tenant-Designed Workshall be referred to collectively as the “**Construction Drawings**.”  Tenant’s Contractor shall verify, in thefield, the dimensions and conditions as shown on the relevant portions of theexisting Building plans;  Landlord shallhave no responsibility in connection therewith. Landlord’s review of the Construction Drawings shall be for its solepurpose and shall not imply Landlord’s approval of the same for quality,design, compliance with applicable Laws or other like matters.  Accordingly, Landlord shall have no liabilitywhatsoever in connection therewith and shall not be responsible for any omissionsor errors contained in the Construction Drawings, and without limiting thescope thereof, Tenant’s waiver and indemnity set forth in the Lease shallspecifically apply to the Construction Drawings.

3.2           Landlord’s Approval.  If Landlord fails to approve or disapprove ofthe proposed Construction Drawings (or any subsequent material changes thereto)or any other items subject to Landlord’s approval under Sections 2.4 and 2.5above in writing within five (5) days following delivery to Landlord of theproposed Construction Drawings (or subsequent material changes thereto) orTenant’s written request for any other approval under Sections 2.4 and 2.5above, the Construction Drawings (or subsequent material changes thereto) orother Tenant request shall be deemed approved. If Landlord disapproves of the proposed Construction Drawings (orsubsequent material changes thereto) or any other Tenant request for Landlord’sapproval in any respect, Landlord shall deliver to Tenant its detailed writtenresponse indicating the reasons for its disapproval (and for the ConstructionDrawings and any material changes thereto, Landlord’s proposal for requiredchanges) and the parties shall negotiate in good faith to reach agreement onany item in dispute. With respect to all disputed items, if Landlord and Tenantfail to agree with respect to such disputed item(s) within three (3) days ofLandlord delivering its written notice of disapproval, any such continueddisapproval shall be deemed to be a Force Majeure Delay (on a day-for-day basisuntil Landlord and Tenant have agreed on any disputed item subject to Landlord’sapproval).  Notwithstanding to thecontrary in this Work Letter, Tenant shall have the right to make subsequentchanges to the Landlord-approved Construction Drawings and Landlord shall nothave any right to approve such changes to the extent any such changes in theConstruction Drawings and/or the work to be performed pursuant thereto (a) isrequired by the City of Cupertino or other applicable governmental body havingjurisdiction over the Tenant-Designed Work, and (1) is reasonably consistentwith the design intent of the approved Construction Drawings, and (2) Tenantagrees to pay for any additional cost to the Landlord TI Work caused by theproposed changes; or (b) consists of minor field changes that (1) arereasonably consistent with the intent or required for the proper execution ofthe Construction Drawings, and (2) that will not materially adversely affectthe Building Systems, any of the Landlord Work and/or the design, use, oroperation of the Premises.

3.3           Permits.  Promptly after Landlord’s approval, Tenant shall cause the approvedConstruction Drawings to be submitted to the appropriate municipal authoritiesfor all applicable

C-4

----

building permits necessary to allow the contractorsperforming such work to commence and fully complete the construction of theTenant-Designed Work and, in connection therewith, Tenant shall coordinate withLandlord in order to allow Landlord, at its option, to observe all phases ofthe permitting process.  Tenant shalldeliver to Landlord copies of all required permits for the construction ofTenant Work prior to commencing such work. Tenant shall undertake commercially reasonable efforts to obtain thePermits for the Tenant Work from the appropriate municipal authorities and todeliver such Permits to Landlord as soon as reasonably practicable.  Notwithstanding anything to the contrary setforth in this Work Letter, Tenant hereby agrees that neither Landlord norLandlord’s consultants shall be responsible for obtaining any building permitfor the Tenant-Designed Work or any signed-off permits for the completedTenant-Designed Work, and in any event Tenant shall be responsible forobtaining a certificate of occupancy (or signed-off building permit) for theOffice TI Work and Lab Work upon completion of the Tenant Work and shallprovide the same to Landlord immediately upon receipt thereof; provided howeverthat Landlord shall, in any event, cooperate with Tenant in executing permitapplications and performing other acts reasonably necessary to enable Tenant toobtain any such permit, including any work that needs to be performed inconnection with the Landlord Work to obtain such permit.  No material changes, modifications or alterationsin the approved Construction Drawings may be made without the prior writtenconsent of Landlord, which consent shall not be unreasonably withheld.

3.4           Landlord Oversightof Tenant Work.  During theperformance of the Tenant Work and in addition to Landlord’s rights underSections 2.4 and 2.5 above with respect to change orders, Landlord shall havethe right to observe the progress of the Tenant Work, as Landlord reasonablydeems necessary or appropriate, in all aspects of the construction of theTenant Work (including without limitation weekly meetings and inspections ofthe in-progress Tenant Work).  Landlordshall be provided with copies of all change orders as well as all writtennotices exchanged between Tenant and its contractors, architects and engineersto the extent such notices involve any changes to the cost or schedule of theTenant Work and/or any disputes involving the performance of or payment for theTenant Work.  Tenant agrees andacknowledges that Landlord’s exercise of its rights to participate in andoversee the performance of the Tenant Work shall be for its sole purpose andshall not imply Landlord’s approval of the same for quality, design, compliancewith applicable Laws or other like matters. Accordingly, Landlord shall have no liability whatsoever in connection therewithand shall not be responsible for any omissions or errors in the performance ofthe Tenant Work, and without limiting the scope thereof, Tenant’s waiver andindemnity set forth in the Lease shall specifically apply to the performance ofthe Tenant Work.

3.5           Coordination.  Landlord and Tenant shall require theirrespective contractors performing the Landlord Work and Tenant Work, and theirrespective architects and engineers to the extent the design of any Tenant Workimpacts any Landlord Work, or vice versa, to cooperate with the other party’scontractors and, as applicable, architects and engineers, including scheduleand staging coordination to the extent necessary and appropriate.  Tenant agrees and acknowledges that, becauseTenant is responsible for providing an integrated set of Construction Drawingsfor all Tenant-Designed Work and because both Landlord and Tenant shall haveapproved the scope of the Tenant Work, Tenant hereby waives any and all claimsagainst Landlord, under this Lease or otherwise, for any delays, liabilities,losses, costs and expenses arising out of the failure of any components of thedesign of the Tenant-Designed Work to be properly and efficiently coordinatedand integrated.

SECTION 4

CONSTRUCTION OF THE TENANT WORK

4.1           Tenant’sContractor(s).  Tenant shall requirethat Tenant’s Contractor and any other contractors performing Tenant Worksubject to a direct contract with Tenant indemnify Landlord and any

C-5

----

parties designated by Landlord in writing who have aninterest in the Building (e.g., Landlord’s lender) to the same extent thatTenant is indemnified by Tenant’s Contractor in such contract.  Tenant shall require its contractors to carrycommercial general liability insurance meeting the requirements of the Leasewith limits of liability that are not in excess of $2,000,000 or such otherinsurance as is approved by Landlord, including without limitation namingLandlord and such additional parties designated by Landlord in writing who havean interest in the building as Additional Insureds thereunder.  Tenant shall require its project architect tocarry professional liability insurance for all professional design workperformed in connection with the preparation of the Construction Drawings.  Tenant shall also carry, or cause itscontractors to carry, “builder’s risk” insurance insuring all materials andincomplete Tenant Work during the construction of the Tenant Work.  Evidence reasonably satisfactory to Landlordthat Tenant has complied with the foregoing requirements shall be provided toLandlord prior to Tenant’s commencing any work in the Premises.

4.2           SubstantialCompletion of Tenant Work.  Tenantshall notify Landlord in writing upon substantial completion of the TenantWork, whereupon Landlord, Tenant, Tenant’s Contractor (and any other contractor’sengaged by Tenant for such work) and the architects and engineers who preparedthe Construction Drawings for the Tenant-Designed Work shall promptly arrangefor a joint “walk-through” of the Premises to inspect such work and identifyany “punch list” items to be corrected or completed in connectiontherewith.  Unless any party has objectedto any components of the Tenant-Designed Work within ten (10) days after thewalk-through, such party shall be deemed to have accepted the Tenant Work.

4.3           Notice of Completion.  Within ten (10) days after completion ofconstruction of the Tenant Work, Tenant shall cause a Notice of Completion tobe recorded in the office of the Recorder of the County of Santa Clara inaccordance with Section 3093 of the California Civil Code or any successorstatute and furnish a copy thereof to Landlord upon recordation, and timelygive all notices required pursuant to Section 3259.5 of the California CivilCode or any successor statute.  Inaddition, promptly after the substantial completion of all of theTenant-Designed Work, at its sole expense Tenant shall cause its architects andengineers to prepare and deliver to Landlord a set of “as built” plans andspecifications (including all working drawings), consisting of two (2) hardcopies and one set of “CAD” drawings, for the completed Tenant-Designed Work.

SECTION 5

DELAYS

5.1           Tenant Delays.  Landlord’s time for completion of anyLandlord Work or for any other obligations of Landlord under this Work Letter,and under the Lease where expressly noted therein, shall be extended one (1)day for each day of any “Tenant Delay” as described below.  A “Tenant Delay” shall be any act or omissionby Tenant or Tenant’s Representatives which delays Landlord’s performance ofthe Landlord Work, and Tenant fails to perform or cure the same within two (2)days after Tenant’s receipt of Landlord’s written notice of any such act oromission.  Landlord’s time forperformance of the Landlord Work affected by a Tenant Delay shall be tolled bythe number of days of delay to such work caused by any Tenant Delay, but onlyto the extent the same is the proximate cause of a delay in the performance ofany of the Landlord Work.

5.2           Force Majeure.  The term “**ForceMajeure Delay**” shall mean any prevention, delay or stoppage duesolely to acts of God, acts of war, terrorism, civil commotions, any strikes,labor disputes or lockouts affecting the Silicon Valley area or any particulartrade in such area, any extraordinary or unusual delay b any governmentalauthority to process and issue necessary permits for the Landlord

C-6

----

Work or Tenant Work, any delays identified in Section3.2 as Force Majeure Delays, any delay caused by the discovery, investigationor remediation of any Hazardous Materials discovered at the Building or theProject, or fire or other casualty, but only to the extent the same is theproximate cause of a delay in the performance of any obligation of Landlord orTenant hereunder.  Landlord and Tenantshall be excused for their time of performance under this Work Letter (and tothe extent expressly provided in the Lease, under the Lease) for a period equalto any such Force Majeure Delay; provided, however, that (i) if either partybelieves such a Force Majeure Delay has occurred, such party shall waive itsright to any claim for delay based thereon unless it provides written notice tothe other party within ten (10) days after the occurrence of the conditionsgiving rise to such delay, which notice shall specify the nature and anticipatedduration of such delay, and (ii) neither party to the Lease shall be excused asa result of any Force Majeure Delays, nor shall the defined term “Force MajeureDelays” be deemed incorporated into the Lease, unless and only to the extentexpressly set forth in the Lease.

5.3           Landlord Delays.  The term “Landlord Delay” shall mean anydelays in the Demolition Deadline, Base Building Work Deadline or DemisingDeadline which are caused by (i) Landlord’s failure to comply with itsobligation to complete the Demolition Work, Base Building Work and/or DemisingWork by the applicable deadlines, (ii) changes requested by Landlord to theLandlord-approved Construction Drawings, to the extent the foregoing are notthe result of any Force Majeure Delay or Tenant Delay, and (iii) any disruptionto or interference with the Tenant Work caused by Landlord’s employees orcontractors that is not cured within two (2) days after Landlord’s receipt ofTenant’s written notice of same.

SECTION 6

MISCELLANEOUS

6.1           Tenant’sRepresentative.  Tenant hasdesignated Michael Fisher of Agilent Technologies as its sole representativewith respect to the matters set forth in this Work Letter, who, until furthernotice to Landlord, shall have full authority and responsibility to act onbehalf of the Tenant as required in this Work Letter.

6.2           Landlord’sRepresentative.  Landlord has designated Rochelle Cahn of SandHill Property Company as its sole representative with respect to the mattersset forth in this Work Letter, who, until further notice to Tenant, shall havefull authority and responsibility to act on behalf of the Landlord as requiredin this Work Letter.

6.3           Time of the Essencein This Work Letter.  Time is of theessence in the performance of the parties’ obligations under this WorkLetter.  Unless otherwise indicated, allreferences herein to a “number of days” shall mean and refer to calendar days.

6.4           Tenant’s LeaseDefault.  Notwithstanding anyprovision to the contrary contained in this Lease, if an Event of Default asdescribed in Article 15 of the Lease has occurred at any time on or before theSubstantial Completion of any component of the Landlord Work, then (i) inaddition to all other rights and remedies granted to Landlord pursuant to theLease, Landlord shall have the right to suspend Landlord’s installation of suchLandlord Work  (in which case, Tenantshall be responsible for any delay caused by such work stoppage), and (ii) allother obligations of Landlord under the terms of this Work Letter shall be suspendeduntil such time as such default is cured pursuant to the terms of the Lease.

C-7

----

Schedule 1 toExhibit C

A.                                   TheDemolition Work shall consist generally of the following:  removal of non-structural walls andcarpeting, all as specifically identified to Landlord by Tenant in a timelymanner prior to start of Demolition Work.

B.                                     The“Base Building Repair Work” shall consist of the following items:

1.               Repair or replacecooling tower media and mist elimination;

2.               Repair or replacehot water heaters within Premises;

3.               Grind and epoxyfill crack in the southeast corner of Premises concrete floor;

4.               Upgrade Premiseselevator to meet ADA compliance

5.               Install hand railsfor handicap ramps if required by the City of Cupertino;

6.               Apply asphaltsealant and re-stripe parking areas;

7.               Repair roof androof components;

8.               Perform mechanicalequipment shutdown inspections and associated repair and maintenance;

9.               Repair or replacesand filter pump system, if necessary;

10.         Perform GFI and infraredtesting and associated repair/replacement

11.         Install refrigerationdetection and exhaust system if required by the City of Cupertino; and

12.         Installseismic shut off valve on existing gas line if required by the City ofCupertino.

C.                                     The“Landlord TI Work” shall consist of the following:  reconfiguration of the ceiling, lighting,mechanical and sprinkler systems within the cross-hatched, two-story portion ofthe Premises shown on Exhibit A to the Lease, which work shall bedescribed in a “reflected ceiling plan” to be prepared by Tenant as part of theConstruction Drawings for the Tenant-Designed Work.

C-8

----

Schedule 2 toExhibit C

Office Plan Sheets SP-4and SP-4 F2, dated 4/21/06 by Chicago Design Networks, as revised 4/27/06

C-9

----

EXHIBITD

DETERMINATION OFFAIR MARKET VALUE

The term “**Fair Market Value**”of Base Rent for each Extended Term, as used in Section 2.3,  shall mean the average of the annual rentalrates then being charged in the market area in comparable buildings for spaceof comparable size and condition to the space for which the Fair Market Valueis being determined, taking into consideration all relevant factors, including,without limitation, such factors as credit-worthiness of the tenant, theduration of the term, the automatic three percent (3%) annual increases statedin Section 2.3, any rental or other concessions granted, whether a broker’scommission or finder’s fee will be paid and responsibility for OperatingCosts.  The Fair Market Value shall bedetermined as follows: Within forty five (45) days after receiving Tenant’snotice exercising its Option to Extend, Landlord shall notify Tenant of itsdetermination of the Fair Market Value. Tenant shall have thirty (30) days from the date of such notice (the “**Response Period**”) to notify Landlordwhether it disagrees with such determination. If Tenant fails to so timely notify Landlord during the Response Period,the Fair Market Value shall be as provided in Landlord’s notice.  If Tenant gives Landlord timely notice of itsdisagreement, Landlord and Tenant shall negotiate in good faith to agree onFair Market Value for an additional fifteen (15) day period.  If the parties have not resolved Fair MarketValue within such time, then within fifteen (15) days thereafter each shallspecify in writing to each other the name and address of a person to act as theappraiser or broker on its behalf and at its cost.  Each such person shall be a licensedcommercial real estate broker or MAI certified appraiser with at least five (5)years of experience with commercial and industrial properties in Santa Clara,Cupertino and the surrounding area.  Ifeither party fails to timely appoint an appraiser or broker within such fifteen(15) day period, then the determination of the timely appointed appraiser orbroker shall be final and binding.

The two appraiser/brokersshall have thirty (30) days from the day of their respective appointments (the “**Determination Period**”) to make theirrespective determinations and arrange for a simultaneous exchange of suchwritten determinations.  If the twoappraisers’ determinations are within five percent (5%) of one another, theaverage of the two determinations shall be deemed Fair Market Value; otherwisethe two appraisers shall within ten (10) days after expiration of theDetermination Period jointly appoint an impartial third appraiser withqualifications similar to those of the first two appraisers and within thirty(30) days after his or her appointment, the third appraiser shall independentlymake a determination of Fair Market Value without reference to the previousdeterminations of the parties’ respective appraisers (and such priordeterminations shall not be disclosed to the third appraiser prior to the thirdappraiser’s making his or her determination of Fair Market Value).  On or prior to the expiration of such thirty(30) day period, the third appraiser shall provide written notice of his or herdetermination of Fair Market Value to the parties’ respective appraisers and tothe parties, whereupon the parties’ respective appraisers shall promptlydeliver their previous written determinations to the third appraiser.  Within ten (10) days of receipt thereof,third appraiser shall select which of the two previous determinations moreclosely approximates the third appraiser’s determination, and shall calculatethe average of his or her determination and such other determination andprovide written notice of the result to the parties’ respective appraisers andto the parties.  Such average amount calculatedby the third appraiser shall conclusively be deemed Fair Market Value.  Each party shall pay the cost of its ownappraiser and shall share equally the cost of the third appraiser.

In the event the appraisershave not determined Fair Market Value Base Rent as of the date the applicableExtended Term is to begin, Tenant shall on an interim basis pay Landlord  Base Rent based upon the Base Rent payablefor the last month of the preceding Term. If the appraisers’ finaldetermination is less than the preceding month’s rent, Tenant shall be entitledto a credit against the next rental payment(s) due from Tenant hereunder in theamount of the difference.  Alternatively,if the

D-1

----

appraisers’ final determination is more than thepreceding month’s rent, Tenant shall pay such difference with the next rentalpayment(s) due.

D-2

----

EXHIBITE

FORM OF AGILENT GUARANTY

**GUARANTY OF LEASE**

IN CONSIDERATION OF andas an inducement to the agreement by PAU MOULDS CPP-A LLC, a California limitedliability company, as Landlord, to suspend its requirement for a SecurityDeposit under the terms and conditions of that certain Office Lease dated as of                ,2006, with VERIGY US, INC, a Delaware corporation, as Tenant, for certainoffice space in the building located at 10100 North Tantau Avenue,Cupertino, California (the “**Lease**”) and othervaluable consideration, the receipt of which is hereby acknowledged, theundersigned, AGILENT TECHNOLOGIES, INC., a Delaware corporation (hereinafterreferred to as the “**Guarantor**”),hereby absolutely and unconditionally guarantees to Landlord, any assignees ofLandlord’s interest under the Lease, or any parties entitled to enforceLandlord’s right thereunder, or any subsequent owner of the premises, theprompt and punctual payment of all rents and all other sums to be paid byTenant under the Lease during the term thereof and during the period of anyextension or renewal thereof; provided, however, that notwithstanding theforegoing or anything in this Guaranty to the contrary, in no event shallGuarantor’s liability under this Guaranty exceed an aggregate total amount ofFive Million Dollars ($5,000,000).  

Guarantor hereby agreesthat no extension of time granted to Tenant for the payment of said rents orother sums, or for the performance of any of the obligations of Tenant orforbearance or delay on the part of Landlord to enforce any of the provisions,covenants, agreements, conditions and stipulations of the Lease, or waiver byLandlord of any of said provisions, covenants, agreements, conditions andstipulations, shall operate to release or discharge the Guarantor from its fullliability under this instrument of guaranty or prejudice the rights of Landlordhereunder.

Guarantor herebyexpressly waives notice of acceptance of this Guaranty, notice of any defaultof Tenant, notice of any other action taken or omitted to be taken by Landlordwith reference to the Lease, any and all other notices whatsoever given orreceived by Landlord under said Lease, and any duty of Landlord to adviseGuarantor of any information known to Landlord regarding the financialcondition of Tenant and all other circumstances affecting Tenant’s ability toperform its obligations to Landlord and agrees that no assignment by Tenant ofsaid Lease, or any other transfer of Tenant’s interest therein and nobankruptcy, insolvency or similar proceedings shall operate to release ordischarge this Guaranty or the obligations of the Guarantor hereunder.Guarantor further agrees that if said Lease contains provisions regardingacceptance of the improvements by Tenant, any such acceptance by Tenant shallbe binding on the Guarantor hereunder the same as if the Guarantor had joinedin the execution of such acceptance, and it shall not be necessary for theGuarantor to join in the execution or be notified of such acceptance.

Guarantor hereunderfurther agrees that Tenant may, as determined in its sole discretion, enterinto any one or more agreements with Landlord amending the Lease, and any suchamendment shall be binding upon the Guarantor hereunder without the necessityof the Guarantor joining in the execution of or being notified of any suchamendment.

All of Landlord’s rightsand remedies under the Lease and under this Guaranty shall be distinct,separate and cumulative, and no such right or remedy therein or herein setforth shall be in exclusion of or a waiver of any other rights or remedy towhich Landlord shall be entitled at law or in equity with respect to the Leaseor this Guaranty.

----

Theobligations of the Guarantor hereunder shall be independent of the obligationsof Tenant under the Lease, and Landlord may proceed to enforce this Guarantywithout first proceeding against Tenant or joining Tenant. Guarantor furtherexpressly agrees that, except as expressly provided herein, nothing shalloperate as a release of this Guaranty, and this Guaranty shall be a continuingGuaranty and shall remain in full force and effect until the satisfaction ofthe express conditions hereunder for the cancellation of this Guaranty.  Notwithstanding the foregoing or anything tothe contrary contained in this Guaranty, this Guaranty shall automatically bedeemed void, terminated and of no further force or effect, and Landlord shallpromptly return the original executed copy of this Guaranty to Guarantor, uponthe first to occur of (i) Landlord’s receipt of the “Security Deposit”, or (ii)Tenant’s satisfaction of the “Minimum Rating” pursuant to (and as such termsare defined in) Section 4 of the Lease. Guarantor acknowledges receipt of the Lease and agrees that it isfamiliar with the terms and conditions of the Lease governing the conditionsupon which this Guaranty may be cancelled.

Guarantor hereby waivesany defense, except payment, which Guarantor might have, including specificallybut without limitation, any rights of subrogation Guarantor may have againstTenant until the guaranteed obligations are paid in full. Guarantor consents toany form or election of remedy pursued by the Landlord to enforce its rightsunder the Lease, in whatever order it may choose, including any remedies thatmay result in a relinquishment of any deficiency judgment in its favor againstTenant and Guarantor waives any right Guarantor may have under California CivilCode Sections 2809, 2810, 2819, 2839, 2845, 2848, 2849, 2850, 2899 and 3433, orany successor sections.

Guarantor agrees to payall costs and expenses including reasonable attorneys’ fees, which may beincurred by Landlord in any effort to collect or enforce the Lease or theobligations of Guarantor hereunder, whether or not any lawsuit is filed,including without limitation, all costs and attorneys’ fees incurred byLandlord in any bankruptcy proceeding and in any judicial or nonjudicialforeclosure action.

If, prior to thetermination of this Guaranty, any amount received by Landlord from Tenant inpayment of Tenant’s obligations under the Lease is held to constitute apreference, fraudulent conveyance or similar voidable payment under any law nowor hereinafter if effect, and Landlord is required to repay all or any part ofsaid amount, then, notwithstanding any revocation or termination of thisGuaranty or the termination of the Lease, Guarantor shall be and remain liableto Landlord for the amount so repaid to the same extent as if such amount hadnever originally been received by Landlord.

This Guaranty has been executedand delivered pursuant to, and shall be interpreted in accordance with, thelaws of the State of California and shall be binding upon Guarantor and thelegal representatives of Guarantor, and shall inure to the benefit of Landlord,its successors, transferees and assigns.

Guarantor herebyexpressly consents to the jurisdiction of any California State Court or FederalCourt sitting in Santa Clara County, California and any appellate court fromany such court in any action or proceeding arising under this Guaranty.

Guarantor herebyrepresents and warrants to Landlord that the individual signing this Guarantyon behalf of Guarantor is authorized to bind Guarantor to the terms andconditions of this Guaranty.
| Dated: |   | , 2006                       |   | GUARANTOR: |
|--------|--------|------------------------------|--------|------------|
|   |   |                         |
|   |   | AGILENT  TECHNOLOGIES, INC., |
|   |   | A Delaware  corporation      |
|   |   |                         |
|   |   | By:                          |   |       |
|   |   | Name:                        |   |       |
|   |   | Its:                         |   |       |
|        |        |                              |        |            |  |  |  |  |

----

EXHIBITF

PERMITTED HAZARDOUS MATERIALS

CONTACT: **HAI TO**

PHONE: **553-6819**

BUSINESS UNIT: ATG **CALIFORNIA SEMICONDUCTOR TEST DIVISION**

 

**ChemicalInventory**

 
| ** **                        | ** ** | **MSDS**          | ** ** | ** **             |
|-----------------------------------|------------|-------------------|------------|------------------------|
| **TRADE NAME**                    | ** ** | **MANUFACTURER**  | ** ** | **Quantity**           |
| Flux off Rosin                    |       | Chemtronics       |       | 2-13.5 oz aerosol cans |
| LPS dry  lubricant                |       | LPS               |       | 11 oz Aerosol can      |
| Derusto enamel  paint             |       | Dap               |       | 2-12 oz Aerosol cans   |
| TFE dry  lubricant                |       | Miller-stephanson |       | 500ml Aerosol can      |
| High Vacuum  Grease               |       | Dow Corning       |       | 3-5.3 oz tubes         |
| 340 Heat sink  compound           |       | Dow Corning       |       | 1-5oz tube             |
| Epoxi patch/seal  repair resin    |       | DEXTER            |       | 2.54 oz tube           |
| Epoxi patch/seal  repair hardener |       | DEXTER            |       | 0.81 oz tube           |
| Loctite 444                       |       | Loctite           |       | 0.70 bottle            |
| Loctite 7452                      |       | Loctite           |       | 1.75 oz bottle         |
| Water soluble  flux               |       | Qualitek          |       | 2 oz bottle            |
| Tread anti-seize                  |       | Weller            |       | 0.5 oz tube            |
| Epoxy                             |       | Hardman           |       | 2-3.5 oz packages      |
| Acrilic top coat  nail polish     |       | long nails        |       | 0.5 oz bottle          |
| Duco Cement                       |       | Duco              |       | 1 oz tube              |
| CPM #9 ink                        |       | Mercury           |       | 2-5oz bottles          |
| Smoke detector  test smoke        |       | Home Safeguard    |       | 8-2.5 oz cans          |
| Connector  cleaner plus           |       | Miller-stephanson |       | 504 ml aerosol can     |
| Staticide                         |       | GC electronics    |       | 16 oz bottle           |
| Expo dry erase  cleaner           |       | Sanford           |       | 8 oz bottle            |
| plate glass lens  cleaner         |       | xerox             |       | 4 oz bottle            |
| Paint touch up                    |       | I/D/E/A           |       | 2 oz bottle            |
| Isopropyl  alcohol                |       | pure tronics      |       | 32 oz bottle           |
| Super clean  de-flux              |       | microcare         |       | 12 oz aerosol can      |
| acetone                           |       | Bortz             |       | 1 gallon can           |
| Flux-off                          |       | chemtronics       |       | 2-1 gallon cans        |
| Foaming Rosin  flux               |       | kester            |       | 1 gallon can           |
| Water soluble  flux 2331-zx       |       | kester            |       | 1 gallon can           |

 

Updated 4/18/2006

----