exv10w3



 







Exhibit 10.3




SUBLEASE

(BUILDING 3)




     THIS SUBLEASE (“Sublease”), dated as of December 21, 2005, is made by and between MAXTOR
CORPORATION, a Delaware corporation (“Sublessor”), and SANDISK CORPORATION, a Delaware corporation
(“Sublessee”).



R E C I T A L S




     A. John Arrillaga, Trustee or his Successor Trustee u/t/a dated 7/20/77 (John Arrillaga
Separate Property Trust), as amended, and Richard T. Peery, Trustee or his Successor Trustee u/t/a
dated 7/20/77 (Richard T. Peery Separate Property Trust), as amended (collectively, “Master
Lessor”), and Quantum Corporation, a Delaware corporation (“Quantum”), have entered into: (i) that
certain Lease Agreement dated April 10, 1992 pursuant to which Quantum leased from Master Lessor
the real property commonly called 900 Sumac Drive, Milpitas, California and the building
constructed thereon (“Building 3” or the “Building”), as amended by that certain Amendment No. 1 to
Lease dated April 16, 1997 and that certain Amendment No. 2 to Lease dated March 22, 2001
(collectively, the “Building 3 Master Lease” or the “Master Lease”); (ii) that certain Lease
Agreement dated September 17, 1990 pursuant to which Quantum leased from Master Lessor the real
property commonly called 1000 Sumac Drive, Milpitas, California and the building constructed
thereon (“Building 4”), as amended by that certain Amendment No. 1 to Lease dated April 16, 1997
and that certain Amendment No. 2 to Lease dated March 26, 2001 (collectively, the “Building 4
Master Lease”); (iii) that certain Lease Agreement dated April 16, 1997 pursuant to which Quantum
leased from Master Lessor the real property commonly called 601 McCarthy Boulevard, Milpitas,
California and the building constructed thereon (“Building 6”), as amended by that certain
Amendment No. 1 to Lease dated April 15, 1998 and that certain Amendment No. 2 to Lease dated March
22, 2001 (collectively, the “Building 6 Master Lease”); and (iv) that certain Lease Agreement dated
March 23, 1994 pursuant to which Quantum leased from Master Lessor the real property commonly
called 1100 Sumac Drive, Milpitas, California and the building constructed thereon (“Building 5”),
as amended by that certain Amendment No. 1 to Lease dated April 16, 1997 and that certain Amendment
No. 2 to Lease dated March 22, 2001 (collectively, the “Building 5 Master Lease”). Pursuant to
Amendment No. 2 to each of the foregoing leases, Sublessor has succeeded to the interest of Quantum
as tenant thereunder. A copy of the Building 3 Master Lease is
attached hereto as Exhibit D.



     B. Sublessee desires to sublease from Sublessor, and Sublessor desires to sublease to
Sublessee, (i) the entire premises covered by the Building 3 Master Lease upon the terms and
conditions hereinafter set forth in this Sublease, (ii) the entire premises covered by the Building
4 Master Lease upon the terms and conditions set forth in that certain Sublease (Building 4) of
even date herewith between Sublessor and Sublessee (the “Building 4 Sublease”), and (iii) the
entire premises covered by the Building 6 Master Lease upon the terms and conditions set forth in
that certain Sublease (Building 6) of even date herewith between Sublessor and Sublessee (the
“Building 6 Sublease”). This Sublease, the Building 4 Sublease and the Building 6 Sublease are
collectively called the “Subleases”.



 









 





     NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Sublessor and
Sublessee agree as follows:



     1. Definitions. All capitalized terms not otherwise defined herein shall have the respective
meanings ascribed to them under the Master Lease.



     2. Subleased Premises. Subject to the terms and conditions contained in this Sublease,
Sublessor
hereby subleases to Sublessee, and Sublessee hereby subleases from Sublessor, the entire
premises covered by the Master Lease as depicted on Exhibit A hereto (the “Subleased Premises”);
provided, however, subject to Section 29 below, Sublessor shall retain for itself and its
employees, agents, contractors, invitees, licensees, successors and assigns (and Sublessee does
hereby grant to each of the foregoing) the right to non-exclusive use of all common areas,
landscaped areas, sidewalks and driveways related to each of Building 3, Building 4 and Building 6
(collectively, the “Buildings”). Moreover, subject to the terms and conditions of this Sublease,
Sublessee shall have non-exclusive use of all common areas, landscaped areas, sidewalks and
driveways related to the Building. For the avoidance of doubt, Sublessee acknowledges that it has
no right to access any building (other than the Buildings and Building 5 if Sublessee exercises the
ROFO, as defined in Section 27.1 below pursuant to the Subleases) in the project that the Buildings
are a part. Sublessee hereby acknowledges and agrees that Building 3 consists of approximately
60,128 rentable square feet. Nevertheless, the parties agree that the foregoing approximation shall
be final and binding for all purposes hereunder; and notwithstanding anything to the contrary
contained herein, no adjustment shall be made to the Base Rent (as defined in Section 5.1(a) below)
if the actual square footage of Building 3 differs from any reference to square footage contained
herein.



     3. Term; Sublease Consent; Early Entry.



          3.1 Term. Provided that Master Lessor has consented to this Sublease (the “Sublease Consent”)
and unless sooner terminated in accordance with the provisions contained herein, the term (“Term”)
of this Sublease shall commence on March 13, 2006 (the “Commencement Date”) and shall expire on
July 31, 2011 (the “Expiration Date”) [sixty (60) days prior to the expiration date of the Master
Lease].




          3.2 Sublease Consent. If Master Lessor has not consented to this Sublease on or prior to
January 15, 2006, then either party hereto shall have the right to terminate this Sublease and the
other Subleases at any time on or prior to March 31, 2006, effective upon written notice to the
other party. Sublessor agrees to use commercially reasonable efforts to obtain a non-disturbance
agreement for the benefit of Sublessee as part of the Sublease Consent.




          3.3 Early Entry (Post-Consent). Upon full execution and delivery of the Sublease Consent,
Sublessee and Sublessee’s employees, agents and contractors shall be permitted to enter the
Subleased Premises during Building business hours (as determined by Sublessor in its sole
discretion) for the purposes of (i) installing and re-configuring furnishings, fixtures and
equipment, (ii) construction and testing of subtenant improvements, and (iii) conducting business
operations. Such entry shall be subject to all of the terms and conditions of the Master Lease and
this Sublease, including without limitation, (a) the indemnity and hold harmless provisions of
Section 9 of this Sublease and (b) the obligation to pay utilities and





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janitorial services; provided, however, other than as provided in Section 5.2 below, Sublessee
shall not be required to pay any Base Rent nor Operating Expense Payments (as defined below) for
Real Property Taxes, insurance premiums and common area expenses with regard to such early entry.
Sublessee shall furnish to Sublessor evidence of the insurance required under Section 7 of this
Sublease prior to any entry into any portion of the Subleased Premises.




          3.4 Early Entry (Pre-Consent). In addition to Sublessee’s rights under Section 3.3 above,
Sublessee and Sublessee’s employees, agents and contractors shall be permitted to enter the
Building during Building business hours (as determined by Sublessor in its sole discretion) for the
sole purposes of (i) testing the Warranted Systems (as defined in Section 4.5 below) therein, and
(ii) preparing construction drawing, plans and specifications, and for no other purposes. Such
entry shall be subject to all of the terms and conditions of the
 Master Lease and this Sublease, including without limitation, (a) the indemnity and hold
harmless provisions of Section 9 of this Sublease and (b) the obligation to pay utilities and
janitorial services; provided, however, other than as provided in Section 5.2 below, Sublessee
shall not be required to pay any Base Rent nor Operating Expense Payments for Real Property Taxes,
insurance premiums and common area expenses with regard to such early entry. Sublessee shall
furnish to Sublessor evidence of the insurance required under Section 7 of this Sublease prior to
any entry into any portion of the Subleased Premises. Moreover, and without limiting the
foregoing, Sublessee shall indemnify, protect, defend with counsel reasonably acceptable to
Sublessor and hold harmless Sublessor and Sublessor’s shareholders, directors, officers, employees,
agents, affiliates, successors and assigns from and against any and all claims, demands,
liabilities, judgments, losses, causes of action, fines, penalties, damages, costs and expenses,
including reasonable attorneys’ and experts’ fees (collectively, “Claims”), caused by or arising in
connection with the early entry described in this Section 3.4, including without limitation, any
Claims by Master Lessor that Sublessor has committed (or allegedly committed) a default and/or
breach under the Master Lease by permitting the early entry described in this Section 3.4.
Sublessee’s indemnification and other covenants provided in this Section 3.4 shall survive the
expiration or termination of this Sublease.




     4. Use; “As Is” Condition; Furniture.



          4.1 Use. Sublessee shall use the Subleased Premises for any legal use permitted under the
Master Lease. Sublessee acknowledges that it is thoroughly familiar with the condition of the
Subleased Premises, and Sublessee agrees that it is subleasing the Subleased Premises on an “AS
IS”, “WHERE IS” basis, subject to all latent or patent defects, without any representation or
warranty by Sublessor or Master Lessor or their respective employees or agents as to the condition
of the Subleased Premises or their fitness for Sublessee’s use, except as otherwise set forth in
this Sublease, and subject to all applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the Subleased Premises, and any easements,
covenants or restrictions of record. Sublessee acknowledges that Sublessor and Master Lessor and
their respective employees or agents have not made any representations or warranties that the
Subleased Premises comply with applicable law, ordinance, rule, regulation or covenant or
restriction of record (collectively, “Applicable Requirements”), including, but not limited to, the
Americans With Disabilities Act, as amended (“ADA”), or any laws relating to earthquake or other
life/safety matters or Hazardous Substances (as defined below), except as set forth in this
Sublease. The parties hereto agree that the plans attached




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hereto as Exhibit B accurately reflect all Alterations (as defined below) in the Subleased Premises
existing as of the date hereof (collectively, the “Existing Alterations”). Sublessor hereby assigns
all of its right, title and interest under any warranties with respect to the Building and/or such
Building’s systems and which are then in effect and which by their terms may be assigned without
the consent of the counterparty thereto (collectively, “Building Warranties”). The assignment of
the Building Warranties is conditioned on this Sublease being in full force and effect and that
upon expiration or termination of this Sublease, the conditional assignment shall terminate
automatically and Sublessee shall not have any further right, title or interest in the Building
Warranties.




          4.2 Alterations. Sublessee shall obtain both Sublessor’s and Master Lessor’s prior written
consent to the architect and contractor engaged by Sublessee to perform work in or about the
Subleased Premises, which consent Sublessor shall not unreasonably withhold. Sublessor agrees that
it shall not charge Sublessee any supervisory fee with respect to any alterations, additions or
improvements (collectively, “Alterations”) that Sublessee makes to the Subleased Premises, other
than any supervisory fee that Master Lessor charges Sublessor with respect thereto (which charge
Sublessee shall pay Sublessor as Additional Rent (as defined
below) hereunder). Except as modified by this Section, Sublessee shall strictly comply with
all obligations of Section 6 of the Master Lease, as incorporated by reference herein.
Notwithstanding anything to the contrary contained in this Sublease, (a) if so required in writing
by Master Lessor, Sublessee shall remove all Alterations made by or on behalf of Sublessee in or to
the Subleased Premises (whether or not Sublessor’s consent was required hereunder) at expiration or
termination of this Sublease and restore the Subleased Premises to the condition shown on Exhibit B
hereto, ordinary wear and tear and damage caused by Sublessor excepted, all at Sublessee’s sole
cost and expense, and (b) Sublessee shall not be required to obtain Sublessor’s consent (but shall
still be required to obtain Master Lessor’s consent, if applicable) to any Alteration to the
Subleased Premises if (i) (A) the total cost (including soft costs) for such Alteration does not
exceed Twenty Thousand Dollars ($20,000), (B) such Alteration does not affect the foundation, roof
or any structural component of the Building, (C) such Alteration does not materially affect the
Building’s mechanical, electrical, plumbing or life safety systems, and (D) Sublessee provides
Sublessor with not fewer than ten (10) days’ prior written notice of Sublessee’s construction or
installation of such Alteration, or (ii) if Master Lessor consents in writing to the Alterations in
question and agrees that it need not be removed at the end of the term of the Master Lease.
Sublessee shall furnish to Sublessor copies of all permits and plans and specifications for all
Alterations made by or for Sublessee to the Subleased Premises, whether or not Sublessor’s consent
thereto is required hereunder. Sublessee shall pay, when due, all Claims for labor or materials
furnished or alleged to have been furnished to or for Sublessee at or for use on the Subleased
Premises. If any mechanic’s lien is recorded for work claimed to have been done for, or on behalf
of, or for materials claimed to be furnished to or for Sublessee, then Sublessee shall, at its
expense, immediately discharge such lien, by bond or otherwise, on demand of Sublessor.



          4.3 Repair and Maintenance. Subject to the provisions of Sections 6.3(c) and 8 below, the
parties hereto agree that Sublessor shall have no obligation to Sublessee, in any manner
whatsoever, to repair and/or maintain the Subleased Premises or the Building, or any portion
thereof or the contents therein (including, without limitation, the Personal Property, as




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defined below). Sublessee shall strictly comply with all other obligations of Section 7 of the
Master Lease, as incorporated by reference herein.




          4.4 License for Personal Property and Infrastructure Systems.
Sublessor
hereby grants Sublessee a license to use in the Subleased Premises during the Term, (i) all cubicle
systems, work stations, furniture, trade fixtures, equipment, art work, cabling, cafeteria and gym
equipment, security systems (including card access, camera and intrusion systems, the “Security
Systems”), and other personal property owned by Sublessor and located in the Subleased Premises as
of the date hereof, including without limitation, those items described in Exhibit C attached
hereto (collectively, the “Personal Property”), and (ii) all generators, uninterruptible power
systems (UPS), heating, ventilation and air conditioning systems (HVAC), and data center systems
and controls, located in the Subleased Premises (collectively, the “Infrastructure Systems”), and
subject to the terms and conditions set forth below:




          (a) The parties shall jointly conduct a walk-through inspection of the Personal Property (and
photograph such Personal Property, if needed), and note on Exhibit C any pre-existing damage or
defective conditions in the Personal Property.




          (b) SUBLESSEE ACCEPTS THE PERSONAL PROPERTY AND THE INFRASTRUCTURE SYSTEMS IN THEIR “AS IS”,
“WHERE IS” CONDITION WITH ALL FAULTS
AND WITHOUT WARRANTIES, EXPRESS OR IMPLIED. SUBLESSOR DISCLAIMS ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. SUBLESSEE EXPRESSLY ASSUMES ALL RISK AND
RESPONSIBILITY FOR ANY DEFECTS (INCLUDING LATENT DEFECTS) IN THE PERSONAL PROPERTY AND THE
INFRASTRUCTURE SYSTEMS.




          (c) Except for pre-existing damage or defective conditions to the Personal Property (as
mutually agreed by Sublessor and Sublessee), Sublessee shall maintain the Personal Property and the
Infrastructure Systems, and all portions thereof, in good condition and repair throughout the Term.
Upon the expiration or earlier termination of this Sublease but subject to Section 4.2(f) below,
Sublessee shall surrender the Personal Property and the Infrastructure Systems in the same
condition as received, ordinary wear and tear excepted. Except for pre-existing damage or
defective conditions to the Personal Property (as mutually agreed by Sublessor and Sublessee) but
subject to Section 4.2(f) below, Sublessee shall reimburse Sublessor, as Additional Rent, for the
reasonable cost of repairing any damage to the Personal Property and the Infrastructure Systems,
ordinary wear and tear excepted.




          (d) Sublessee shall keep the Personal Property and the Infrastructure Systems free from any
liens arising out of work performed, materials furnished or obligations incurred by Sublessee.




          (e) Sublessee shall be permitted to remove the Personal Property from the Subleased Premises;
provided, however, Sublessee shall not transfer its right to use the Personal Property or dispose
of any of the same, without obtaining the prior written consent of Sublessor, and shall comply with
Sublessor’s reasonable instructions regarding such transfer or disposition. Sublessee shall not be
permitted to remove the Infrastructure Systems or any portion thereof




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from its location in the Building, without obtaining the prior written consent of Sublessor, which
consent shall not be unreasonably withheld.




          (f) Provided that this Sublease has not been terminated in accordance with the terms and
conditions contained herein and Sublessee has not surrendered the Personal Property in accordance
with Section 32 below, on the Expiration Date, Sublessee shall purchase the Personal Property on
an “AS IS”, “WHERE IS” basis with all faults and without warranties, express or implied, for the
sum of One Dollar ($1.00), pursuant to a bill of sale in a form mutually agreeable to the parties.




          4.5 Warranted Systems. Sublessor hereby represents and warrants to Sublessee that (i) the
Infrastructure Systems, (ii) the kitchen equipment, and (iii) the central processors and
transponders of the Security Systems in the Building (collectively, the “Warranted Systems”) are in
good working condition as of the Commencement Date. The foregoing representation and warranty of
Sublessor (collectively, the “IS Warranty”) shall expire sixty (60) days after the Commencement
Date (the “IS Warranty Period”). In the event of a breach of the IS Warranty (i.e., Sublessee
determines during the IS Warranty Period that any of the Warranted Systems is not in good working
condition as of the Commencement Date), then Sublessee’s sole remedy shall be to provide Sublessor
with written notice (the “Repair Notice”) describing (in reasonable detail) the Warranted System(s)
that is (are) not in good working condition. Provided that (a) Sublessor receives the Repair Notice
prior to expiration of the IS Warranty Period, and (b) Sublessee has not modified or otherwise
altered the Warranted System this is the subject of the Repair Notice (without having first
obtained Sublessor’s prior written consent to such modification or alteration pursuant to Section
4.2 above), Sublessor shall promptly cause, at Sublessor’s expense, the Warranted System(s)
identified in the Repair Notice to be put into good working condition. In no event shall Sublessee
be permitted to offset or withhold rent due to Sublessor
hereunder in the event of a breach by Sublessor of the IS Warranty or any other obligation of
Sublessor under this Sublease, including without limitation, this Section 4.5.




     5. Rent; Security Deposit.



          5.1 Base Rent.




          (a) The base rent (“Base Rent”) to be paid by Sublessee to Sublessor under this Sublease is
intended to be absolutely triple net. Subject to Section 5.1(b) below, beginning on July 1, 2006
(the “Rent Commencement Date”) and continuing during the Term, Sublessee shall pay to Sublessor
monthly Base Rent for the Subleased Premises, payable in advance on the first (1st) day
of each month in accordance with the following schedule (“Base Rent Schedule”):




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	Time Period from	 	 	 	 	 	 	Monthly Installment	 
	Rent	 	 	 	 	 	 	of	 
	Commencement	 	 	Monthly Base Rent	 	 	Base Rent	 
	Date	 	 	Rate Per RSF	 	 	(Bldg 3)	 
	Months 1-12
	 	 	$ 0.65	 	 	$ 39,083.20	 
	Months 13-24
	 	 	$ 0.69	 	 	$ 41,488.32	 
	Months 25-36
	 	 	$ 0.73	 	 	$ 43,893.44	 
	Months 37-48
	 	 	$ 0.77	 	 	$ 46,298.56	 
	Months 49-61
	 	 	$ 0.81	 	 	$ 48,703.68	 






          (b) Notwithstanding the foregoing, Sublessee shall pay to Sublessor, upon execution of this
Sublease, the sum of Thirty-Nine Thousand Eighty-Three Dollars and Twenty Cents ($39,083.20), as
prepaid Base Rent for the first (1st) full month of the Term that Base Rent is due
hereunder (i.e., the month of July 2006).




          (c) If the Term commences on a day other than the first (1st) day of a calendar
month or ends on a day other than the last day of a calendar month, Base Rent for the first and/or
last fractional month of the Term shall be prorated on the actual number of days elapsed in such
month.




          5.2
Additional Rent. Sublessee shall pay as additional rent (“Additional Rent”), within
twenty (20) days after demand therefor, all sums or other charges required to be paid by Sublessee
under this Sublease. During the Term, Sublessee shall pay to Sublessor all sums or other charges
required to be paid by Sublessor, as tenant, to Master Lessor under the Master Lease, including
without limitation, (a) all Real Property Taxes, insurance premiums and common area expenses
required to be paid to Master Lessor thereunder (collectively, “Operating Expense Payments”, and
which shall include expenses relating to the Parking Areas and Outdoor Areas, as such terms are
defined below), (b) all “Additional Rent” (as defined in the Master Lease) due from Sublessor, as
tenant, to Master Lessor under Paragraphs 4.D.(a) and (b) of the Master Lease, and (c) the
management fee charged by Master Lessor to Sublessor under the Master Lease, but expressly
excluding (i) any “Basic Rent” due from Sublessor, as tenant, to Master Lessor under the Master
Lease, and (ii) any late charges, default interest and other penalties due from Sublessor, as
tenant, to Master Lessor under the Master Lease provided the same are not caused by the default or
breach of any of Sublessee’s obligations contained in this Sublease. Sublessor shall not charge
Subtenant a management fee with regard to the Building, other than the management fees charged by
Master Lessor under the Master Lease.
Notwithstanding the foregoing, Sublessee’s obligation to pay Operating Expense Payments for
the Subleased Premises shall be tolled until the earlier of (x) such time as twenty-five (25) or
more employees of Sublessee occupy any portion of the Building, or (y) the Commencement Date.
Moreover, Sublessee agrees to pay its proportionate share of any costs and expenses incurred by
Sublessor for (A) any insurance obtained by Sublessor pursuant to Section 55 of the Master Lease,
(B) repair or maintenance of the central courtyard, and (C) repair, maintenance, replacement or new
construction of improvements in such central courtyard, within twenty (20) days after written
demand therefor (which written demand shall contain documentation in reasonable detail evidencing
the costs and expenses incurred by Sublessor); provided, however,





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that Sublessee shall have no obligation to reimburse Sublesssor for any (aa) replacement of an
existing improvement in the central courtyard, or (bb) construction or installation of any new
improvement in the central courtyard, if Sublessor had not first obtained Sublessee’s written
approval thereof, which approval shall not be unreasonably withheld, conditioned or delayed by
Sublessee. Sublessor shall have the same remedies for a default in the payment of Additional Rent
as for a default in the payment of Base Rent. Base Rent and Additional Rent are hereinafter
sometimes referred to collectively as “Rent.”




          5.3 Payment of Rent. Rent shall be paid to Sublessor, without deduction, demand, recoupment,
offset or counterclaim, in lawful money of the United States of America, at Maxtor Corporation, 333
South Street, Shrewsbury, MA 01545, Attn: Gary Leblanc, or to such other person or at such other
place as Sublessor may from time to time designate in writing.




          5.4 Security Deposit; Letter of Credit.




          (a) Upon execution of this Sublease, Sublessee shall deliver to Sublessor a clean,
unconditional, irrevocable, transferable letter of credit in the amount of Six Hundred Ninety-Four
Thousand Thirty-Four Dollars and Ninety-Seven Cents ($694,034.97). (the “Letter of Credit”), in
form and issued by a financial institution (“Issuer”) satisfactory to Sublessor in its sole
discretion, which Letter of Credit (and all sums drawn by Sublessor thereunder) shall constitute a
security deposit to secure Sublessse’s obligations under this Sublease and the other Subleases (the
“Security Deposit”). Sublessee hereby grants to Sublessor a security interest in the Letter of
Credit and all proceeds, replacements and modifications thereof to secure Sublessee’s obligations
herein, including without limitation, the obligation to pay Rent, perform its insurance and
indemnity obligation and to maintain and restore the Subleased Premises. The Letter of Credit shall
permit partial draws, and provide that draws thereunder will be honored upon receipt by Issuer (at
its offices in San Francisco, California or such other location that Sublessor shall approve in its
sole discretion) of the original or a certified copy of the Letter of Credit accompanied by a
written statement signed by Sublessor or its authorized agent stating that Sublessor is entitled to
draw on the Letter of Credit pursuant to the terms of this Sublease. The Letter of Credit shall
have an expiration period of one (1) year from the date of issuance but shall provide that it will
automatically renew by its terms to a date which is sixty (60) days following the Expiration Date
of the Building 6 Sublease unless affirmatively cancelled by Issuer following not fewer than sixty
(60) days prior written notice of such expiration or cancellation from Issuer to Sublessor.
Sublessor shall be entitled to draw the Letter of Credit in part or in full. All costs and expenses
related to the Letter of Credit, including any transfer fees, shall be paid by Sublessee.




     (b) Sublessor shall hold the Security Deposit as security for the full and faithful
performance by Sublessee of its covenants and obligations under this Sublease and the other
Subleases. If Sublessee defaults in the full and timely performance of any or all of Sublessee’s
covenants and obligations under this Sublease or any of the other Subleases, then Sublessor may,
from time to time, without waiving any other remedy available
to Sublessor, use the Security Deposit, or any portion thereof, to the extent necessary to
cure or remedy the default or to compensate Sublessor for all or any part of the damages sustained
by Sublessor resulting from Sublessee’s default. Sublessee shall pay to Sublessor within ten (10)
business days after receipt of demand, the amount so applied in order to restore the Security
Deposit to its original amount.



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Sublessor shall not be required to keep the Security Deposit separate from its general accounts and
no trust relationship is created between Sublessor and Sublessee with respect to the Security
Deposit. If Sublessee performs all of its obligations hereunder and under all of the other
Subleases, the Security Deposit, or so much thereof as has not theretofore been applied by
Sublessor, shall be returned to Sublessee, without interest or other increment for its use, at the
Expiration Date and after Sublessee has vacated the entire Subleased Premises. Sublessee’s failure
to provide and keep the Letter of Credit in full force and effect and otherwise in accordance with
the terms of this Section 5.4 shall constitute a default of this Sublease and the other Subleases.




     6. Master
Lease.



          6.1 Subject to Master Lease. This Sublease is and shall at all times be subject and
subordinate to the Master Lease attached hereto as
Exhibit D, and every provision thereof.
Sublessee acknowledges that (a) Sublessee’s use and enjoyment of the Subleased Premises are subject
to the rights of Master Lessor pursuant to the Master Lease, and (b) Sublessee has reviewed a copy
of each Master Lease and is fully familiar with the provisions thereof. Sublessor represents and
warrants that (i) the copy of the Master Lease attached hereto
as Exhibit D is a true and complete
copy of the Master Lease and all amendments, modifications, written side letter agreements and
recorded memoranda of leases with respect thereto, (ii) Sublessor has not already assigned its
interest in the Master Lease or sublet any of the Subleased Premises, and (iii) as of the date
hereof, the Master Lease is in full force and effect and no defaults exist on the part of Sublessor
or, to the best of Sublessor’s knowledge, Master Lessor under the terms of the Master Lease.
Sublessor shall not assign, terminate or amend the Master Lease (or the Building 5 Master Lease
provided that Sublesssee’s ROFO is in full force and effect) without the prior written consent of
Sublessee, which consent may be withheld in Sublessee’s sole discretion.




          6.2
No Violation of Master Lease. Neither Sublessor nor Sublessee shall commit or permit to
be committed any act or omission which would violate any term or condition of the Master Lease. If
a Master Lease terminates, this Sublease shall terminate as to the portion of the Subleased
Premises covered thereby and the parties shall be relieved of any further liability or obligation
under this Sublease with respect thereto; provided, however, that if the Master Lease terminates as
a result of a default or breach by either Sublessor or Sublessee under this Sublease and subject to
Section 13 of this Sublease, then the defaulting party shall be liable to the other party for the
damage suffered as a result of such termination. Furthermore, Sublessor agrees not to voluntarily
terminate the Master Lease without the written consent of Sublessee, which consent shall not be
unreasonably withheld, conditioned or delayed.




          6.3
Incorporation of Master Lease.




          (a) Subject to and in accordance with the exceptions, qualifications and modifications set
forth below and elsewhere in this Sublease, all the provisions of the Master Lease, as set forth in
Exhibit D hereto, are hereby incorporated by reference and made a part of this Sublease, and to the
extent that such provisions impose obligations or duties on Sublessor as tenant under the Master
Lease and are incorporated by reference into the terms of this Sublease, Sublessee does hereby
expressly assume and agree with Sublessor to perform and to comply with such obligations and duties
of Sublessor as tenant thereunder, as the same accrue
on and after the Commencement Date, subject to the provisions of Sections 3.3 and 3.4 above.
In the event of




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any conflict between any provision of the Master Lease incorporated herein and a provision
contained in this Sublease, the provision contained in this Sublease shall prevail.




          (b) Except as otherwise expressly provided herein and except for those provisions that are not
incorporated into this Sublease, the term “Landlord” (and similar terms) as used in the Master
Lease shall mean “Sublessor” hereunder; the term “Tenant” (and similar terms) as used in the Master
Lease shall mean “Sublessee” hereunder; the term “Premises” (and similar terms) as used in the
Master Lease shall mean “Subleased Premises” hereunder; and the term “Lease” as used in the Master
Lease shall mean this “Sublease”.




          (c) Sublessor shall have no obligation to operate or maintain (i) the Building or any other
premises covered by the Master Lease, (ii) any common areas in the Building or any other premises
covered by the Master Lease, or (iii) provide any Building services or utilities. With respect to
all services to be performed or provided by Master Lessor under the Master Lease, Sublessor’s sole
obligation shall be to exercise commercially reasonable efforts (without litigation or the threat
thereof) to require Master Lessor to comply with its obligations to perform or provide such
services under the Master Lease, including promptly notifying Master Lessor of its nonperformance
if so requested by Sublessee in writing.




          (d) Notwithstanding anything to the contrary contained herein, in no event shall Sublessor be
deemed to be in default under this Sublease or liable to Sublessee for any failure of Master Lessor
to perform its obligations under the Master Lease. Wherever the Master Lease requires the consent
of the landlord be obtained, both Master Lessor’s consent and Sublessor’s consent shall be required
and the standard for such consent by Sublessor shall be a consent not unreasonably withheld or
delayed. For the avoidance of doubt, Sublessee shall be required to obtain both Sublessor’s and
Master Lessor’s consent for (i) any assignment or sub-subletting of the Subleased Premises
(provided that Sublessor’s consent shall not be required for assignments to entities controlled by
or under common control with Sublessee if Sublessee is not released from its obligations under this
Sublease), or (ii) any Alterations to the Subleased Premises or any portion thereof, in accordance
with the provisions of the Master Lease, as incorporated be referenced herein, but subject to the
terms and conditions contained in Section 4.2 above.




          6.4
Exclusions from Master Lease. Sublessor and Sublessee expressly agree that the following
provisions of the Master Lease are not incorporated in this Sublease: the first full paragraph of
the Master Lease; Sections 2, 4.A and 4.B; Sections 4.E and 4.F; the first two sentences of Section
5; the seventh sentence of Section 6; the first sentence of Section 9; the first sentence of
Section 12; Sections 13 and 23; the term “Landlord” in the first and second sentences of Section
21, the second paragraph of Section 22 and in Section 27 shall be replaced with “Master Lessor”;
Sections 29, 31, 34, 36, 38.G, 39 through 44 (inclusive), 45 through 51 (inclusive), 52.A through D
(inclusive); the term “Landlord” in Section 53 shall be replaced with “Master Lessor” and all
references to extension rights or periods in such Section 53 shall be deleted (i.e., not
incorporated by reference into this Sublease); Sections 55, 62, 63, 64 and 65; the term “for lease”
in Section 59(ii) shall be replaced with “for sublease”; Sections 1 through 5 (inclusive), Sections
8, 9, 11, 12, 14, 17, 18 and 19 of Amendment No. 1 to Lease; and all of Amendment No. 2 to Lease.





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          6.5 Time for Notices and Demands. Whenever in the Master Lease a time is specified for the
giving of any notice or the making of any demand by the tenant thereunder, such time is hereby
changed (for the purpose of this Sublease only) by subtracting five (5) days thereto (unless the
time specified is less than five (5) days in which event two (2) business days shall be subtracted
thereto instead); and whenever in the Master
Lease a time is specified for the giving of any notice or the making of any demand by the
landlord thereunder, such time is hereby changed (for the purpose of this Sublease only) by adding
five (5) days if such notice, request or demand of the landlord thereunder relates to any subject
other than the payment of fixed annual rent or additional rent under the Master Lease (unless the
time specified is less than five (5) days in which event two (2) business days shall be added
thereto instead). Whenever in the Master Lease a time is specified within which the tenant
thereunder must give notice or make a demand following an event, or within which the tenant
thereunder must respond to any notice, request or demand previously given or made by the landlord
thereunder, or to comply with any obligation on the tenant’s part thereunder, such time is hereby
changed (for the purpose of this Sublease only) by subtracting five (5) days if the same shall
relate to any obligation other than the payment of fixed annual rent or additional rent under the
Master Lease or under this Sublease (unless the time specified is less than five (5) days in which
event two (2) business days shall be subtracted thereto instead). Wherever in the Master Lease a
time is specified within which the landlord thereunder must give notice or make a demand following
an event, or within which the landlord thereunder must respond to any notice, request or demand
previously given or made by the tenant thereunder, such time is hereby changed (for the purpose of
this Sublease only) by adding five (5) days thereto (unless the time specified is less than five
(5) days in which event two (2) business days shall be added thereto instead). It is the purpose
and intent of the foregoing provisions, among other things, to provide Sublessor with time within
which to transmit to the Master Lessor any notices or demands received from Sublessee and to
transmit to Sublessee any notices or demands received from the Master Lessor.




          6.6 Options to Extend Under Master Lease; Amendment to Sublease. In the event that (a)
Sublessee notifies Sublessor in writing that Sublessee is actively negotiating a direct lease with
Master Lessor (“Direct Lease”) with regard to the Subleased Premises for a term commencing
immediately after the Expiration Date, and (b) provided that Sublessee is not then in default under
this Sublease, then Sublessor agrees that it will not exercise its Option to Extend with regard to
the Subleased Premises until such time as Sublessee notifies Sublessor in writing that it is no
longer negotiating a Direct Lease with Master Lessor for the Subleased Premises. Sublessee hereby
agrees to respond (in the affirmative or negative), from time to time, within ten (10) business
days of its receipt of a written inquiry from Sublessor requesting that Sublessee confirm that
Sublessee is or is not actively negotiating a Direct Lease with Master Lessor. In the event that
Sublessee and Master Lessor execute and deliver a Direct Lease for the Subleased Premises, with a
term commencing immediately after the Expiration Date, then (1) Sublessor shall agree to amend the
Master Lease to delete its Options to Extend thereunder, and (2) Sublessor and Sublessee shall
execute and deliver an amendment to this Sublease providing: (I) the Expiration Date for the
Building shall be extended to be co-terminus with the expiration date of the Master Lease; (II)
Sublessee shall assume the obligations of Sublessor under the Master Lease to remove any
Alterations to the applicable Building that Master Lessor requires be removed and to restore the
same in accordance with the terms of the Master Lease (collectively, the “Restoration
Obligations”); and (III) Sublessee shall indemnify, defend and hold harmless Sublessor and the
Sublessor Indemnitees from and against all Claims related to the Restoration




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Obligations assumed by Sublessee. In the event that Sublessee executes a Direct Lease with Master
Lessor for the Subleased Premises, then Sublessor agrees to execute a quitclaim deed with respect
thereto for delivery and recordation at expiration or termination of the Master Lease.




     7. Sublessee’s Insurance. Notwithstanding anything to the contrary contained in the
Master Lease, Sublessee, at its sole cost and expense, shall keep in force at all times during the
Term a policy of commercial general liability insurance with combined single limit coverage of not
less than Three Million
Dollars ($3,000,000) per occurrence and Five Million Dollars ($5,000,000) in the aggregate for
bodily injury and property damage occurring in, on or about the Subleased Premises, including
parking and landscaped areas. All insured policies required to be maintained by Sublessee hereunder
shall name Sublessor and Master Lessor as additional insureds. Except as modified by this Section,
Sublessee shall strictly comply with all other obligations under Section 10 of the Master Lease, as
incorporated by reference herein.



     8. Casualty; Condemnation.



          (a) In the event that Sublessor’s interest as tenant under the Master Lease is terminated by
reason of damage or destruction, condemnation, or any other reason, then this Sublease shall
terminate as to Sublessor’s interest therein only (and not as to all Sublessor interests under the
Master Lease) on the same date as the termination of such interest, without liability of Sublessor
to Sublessee, and Sublessee shall not be entitled to any insurance proceeds or other remuneration
from Sublessor except for insurance proceeds from insurance policies purchased by Sublessee for its
own personal property. Sublessor agrees to give written notice to Sublessee promptly should
Sublessor’s interest in any portion of the Subleased Premises be terminated, or be threatened to be
terminated, under the Master Lease. Sublessor shall not terminate the Master Lease due to a
casualty or condemnation without the prior written consent of Sublessee, which consent may be
withheld in Sublessee’s sole and absolute discretion.




          (b) If the Subleased Premises or any portion thereof is damaged by fire or other casualty, and
if the Master Lease is not terminated, then:




               (i) This Sublease shall continue in full force and effect;



               (ii) Sublessor shall have no obligation to repair or restore the damaged space;



               (iii) Sublessor shall use commercially reasonable efforts (without litigation or the threat
thereof), as set forth in Section 6.3(c) above, to cause Master Lessor to perform the repairs which
Master Lessor is required to perform under the Master Lease; provided that Sublessor shall not be
liable for any damages, nor shall Rent due hereunder be abated, nor shall Sublessee be relieved
from the performance of any term or covenant hereunder, nor shall Sublessee be deemed to have been
evicted, due to any aspect of the repair and restoration of the damaged space (including without
limitation any delay of such repair and restoration), except to the extent so abated, relieved or
evicted under the Master Lease; and



               (iv) There shall be no reduction or abatement of Rent for any period during which Sublessee is
unable to use the affected portion of the Subleased Premises, in whole



-12-









 




or part, due to damage or destruction of the same or the Building, unless Sublessor actually
receives a reduction or abatement of rent under the Master Lease.




          (c) In the event eminent domain or condemnation is instituted against the Subleased Premises
or any portion thereof, and the Master Lease is terminated with respect to all or a portion of the
Subleased Premises as a result thereof pursuant to the Master Lease, (i) this Sublease shall
terminate as of the date the Master Lease terminates with respect to such portion of the Subleased
Premises without any liability on the part of Sublessor to Sublessee, and Sublessee shall not be
entitled to any award of damages for Sublessee’s interest in the Subleased Premises, except that
Sublessee may make a claim against the condemning authority for loss of or damage to Sublessee’s
trade fixtures and personal property, relocation expenses, and unamortized subtenant improvements
costs that have been paid by Sublessee, and (ii) Sublessor shall have no obligation to
rebuild or restore the Subleased Premises. If this Sublease is terminated as to less than all
of the Subleased Premises, this Sublease shall continue in full force and effect as to the
remaining portion of the Subleased Premises, except that the Base Rent payable hereunder shall be
equitably reduced but only to the extent (if any) that rent applicable to the affected portion of
the Subleased Premises is reduced under the Master Lease.




          (d) Sublessee expressly waives the provisions of California Civil Code Section 1932(2) and
Section 1933(4). Sublessor and Sublessee expressly waive the provisions of California Code of Civil
Procedure Sections 1265.120 and 1265.130.




          9. Indemnity; Hold Harmless.




          (a) Sublessor shall not be liable to Sublessee or Sublessee’s employees, agents, invitees,
licensees or visitors, or to any other person, for any injury to person, or damage to or loss of
property on or about the Subleased Premises or the Building arising from any cause whatsoever,
except to the extent caused solely by the gross negligence or willful misconduct of Sublessor.
Except to the extent caused solely by the gross negligence or willful misconduct of Sublessor,
Sublessee shall indemnify, protect, defend with counsel reasonably acceptable to Sublessor and hold
harmless Sublessor and Sublessor’s shareholders, directors, officers, employees, agents,
affiliates, successors and assigns (collectively, “Sublessor Indemnitees”) from and against any and
all Claims caused by or arising in connection with: (i) the use or occupancy of the Subleased
Premises, the Building, the Infrastructure Systems and the Personal Property by Sublessee or its
employees, contractors, agents, invitees, licensees, permitted sub-sublessees or assignees or
permitted sublessees pursuant to Section 32 below; or (ii) the negligence or willful misconduct of
Sublessee or its employees, contractors, agents, invitees, licensees or permitted sub-sublessees or
assignees; or (iii) a default or breach of Sublessee’s obligations under this Sublease; or (iv) a
default or breach of Sublessor’s obligations under the Master Lease to the extent caused by
Sublessee’s default or breach of any of its obligations contained in this Sublease; or (v) any
negligence, gross negligence or willful misconduct of Sublessee or its agents, employees,
contractors, invitees, licensees, permitted sub-sublessees or assignees or permitted sublessees
pursuant to Section 32 below in, on or about the Subleased Premises or the Building; or (vi) any
failure of Sublessee to surrender the Subleased Premises (or any portion thereof) to Sublessor at
the end of the Term hereof (or such sooner date as provided in this Sublease) or otherwise in the
condition required hereunder to the extent required pursuant to the terms of this Sublease, or
(vii) all Claims for labor or materials furnished or alleged to





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have been furnished to or for Sublessee at or for use on the Subleased Premises. Sublessee’s
indemnification and other covenants provided in this Section 9 shall survive the expiration or
termination of this Sublease.




          (b) Except to the extent caused solely by the gross negligence or willful misconduct of
Sublessee but subject to Sections 3.3 and 3.4 above, Sublessor shall indemnify, protect, defend
with counsel reasonably acceptable to Sublessee and hold harmless Sublessee and Sublessee’s
shareholders, directors, officers, employees, agents, affiliates, successors and assigns
(collectively, “Sublessee Indemnitees”) from and against any and all Claims caused by or arising in
connection with: (i) a default or breach of Sublessor’s obligations under the Master Lease that is
not caused by Sublessee’s default or breach of any of its obligations contained in this Sublease;
or (ii) any negligence, gross negligence or willful misconduct of Sublessor or its agents,
employees, contractors, invitees, licensees or permitted sub-sublessees or assignees in, on or
about the Subleased Premises or the Building; or (iii) all Claims for labor or materials furnished
or alleged to have been furnished to or for Sublessor at or for use on the Subleased Premises.
Sublessor’s indemnification and other covenants provided in this Section 9 shall survive the
expiration or termination of this Sublease.




     10. Utilities; System Connections; Vendors. Pursuant to Section 8 of the Master Lease, as
incorporated by reference herein, Sublessee shall be responsible and shall pay directly all
utilities and services furnished to the Subleased Premises, including security and janitorial
services. Sublessor shall cause, at Sublessor’s expense, Infrastructure Systems and Security
Systems within the Building to be separated from Infrastructure Systems and Security Systems for
other buildings; and thereafter, Sublessee shall cause, at Sublessee’s expense, Infrastructure
Systems and Security Systems within the Building to be reconnected (if necessary). Subject to the
terms of the Master Lease and provided that Sublessee obtains both Sublessor’s and Master Lessor’s
prior written consent (which consent Sublessor shall not unreasonably withhold), Sublessee shall be
permitted to select its own vendors for its repair and maintenance of the Subleased Premises and
for janitorial, security and other services to the Subleased Premises.



     11. Notices.



          11.1 Notices Under Sublease. All notices, consents, demands, requests and other
communications from one party to the other given pursuant to the terms of this Sublease shall be in
writing and shall be delivered by hand, air courier or by United States mail, certified or
registered, postage prepaid, and addressed to Sublessee or Sublessor at the addresses respectively
specified below or to such other place as Sublessee or Sublessor may from time to time designate in
a written notice to the other. Notices shall be deemed given on the earliest of (i) receipt, (ii)
one (1) business day after deposit with an courier for overnight delivery, or (iii) three (3)
business days after deposit in the United States mail.



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	The address for
	 	 
	Sublessor is:

	 	Maxtor Corporation
	 

	 	333 South Street
	 

	 	Shrewsbury, MA 01545
	 

	 	Attn: Gary Leblanc
	 
	 	 
	with a copy to:

	 	Maxtor Corporation
	 

	 	2452 Clover Basin Drive

Longmont, CO 80503
	 

	 	Attention: General Counsel
	 
	 	 
	The address for
	 	 
	Sublessee is:

	 	[Prior to the Commencement Date]
	 
	 	 
	 

	 	SanDisk Corporation
	 

	 	140 Caspian Court
	 

	 	Sunnyvale, CA 94089
	 

	 	Attn: General Counsel
	 
	 	 
	with a copy to:

	 	SanDisk Corporation
	 

	 	140 Caspian Court
	 

	 	Sunnyvale, CA 94089
	 

	 	Attn: Edward Palma
	 
	 	 
	 

	 	[On and after the Commencement Date]
	 
	 	 
	 

	 	SanDisk Corporation
	 

	 	601 McCarthy Boulevard
	 

	 	Milpitas, CA 95035
	 

	 	Attn: General Counsel
	 
	 	 
	with a copy to:

	 	SanDisk Corporation
	 

	 	601 McCarthy Boulevard
	 

	 	Milpitas, CA 95035
	 

	 	Attn: Edward Palma






          11.2 Notices Under Master Lease. Sublessor shall promptly provide Sublessee with a copy of any
notice it receives from Master Lessor relating to the Subleased Premises or the Master Lease.
Sublessee shall promptly provide Sublessor with a copy of any notice it receives from Master Lessor
relating to the Subleased Premises or the Master Lease.




     12. Confidentiality. Sublessee acknowledges and agrees that the terms and conditions set forth
in this Sublease constitute Sublessor’s “Confidential Information” (as defined in the NDA, as
defined below) and that such terms and conditions shall be subject to the Mutual Nondisclosure
Agreement executed by Sublessor and Sublessee and made effective as of May 4, 2004 (the “NDA”).



-15-









 





     13. Limitation of Liability. Notwithstanding anything to the contrary contained in this
Sublease, (a) no director, officer, shareholder, employee, adviser or agent of Sublessor or
Sublessee shall be personally liable in any manner or to any extent under or in connection with
this Sublease, and (b) neither Sublessor nor any of the Sublessor Indemnitees shall be responsible
or liable for any consequential or punitive damages in connection with this Sublease, including,
without limitation, on account of lost profits or the interruption of Sublessee’s business.



     14. Signage. Subject to the terms and conditions of the Master Lease, Sublessee, at its sole
cost and expense, shall have the same signage rights as Sublessor has under the Master Lease with
regard to the Building subleased to Sublessee hereunder, provided that at Sublessee’s sole cost (a)
Sublessee shall obtain the prior written consent of Master Lessor thereto, (b) other than with
respect to signage for Building 6, Sublessee shall obtain the prior written consent of Sublessor
thereto (which consent of Sublessor shall not be unreasonably withheld), (c) Sublessee shall obtain
all necessary permits and approvals from all applicable government agencies with respect thereto,
(d) Sublessee shall install, maintain, repair and, to the extent required by Master Lessor, remove
all signage at expiration or earlier termination of this Sublease, and (e) Sublessee shall repair
all damage to the Subleased Premises caused by the removal of all signage at expiration or earlier
termination of this Sublease.



     15. Brokers. Sublessor shall pay The Staubach Company any brokerage commission earned in
connection with this Sublease pursuant to a separate agreement. Sublessee represents and warrants
to Sublessor that no real estate broker, agent or finder negotiated or was instrumental in
negotiating or representing Sublessee in the negotiation of this Sublease, other than CPS/Cushman &
Wakefield. Sublessor represents and warrants to Sublessee that no real estate broker, agent or
finder negotiated or was instrumental in negotiating or representing Sublessor in the negotiation
of this Sublease, other than The Staubach Company. Sublessee and Sublessor shall each indemnify and
hold the other harmless from and against any Claims resulting from breach of such party’s
representation and warranty contained above.



     16. Counterparts. This Sublease may be executed in separate counterparts, each of which shall
be an original, and all of which taken together shall constitute one and the same agreement.



     17. No Recording. Neither party hereto shall record this Sublease nor any memorandum hereof
without the written consent of the other party.



     18. Curing Defaults.



     (a) If Sublessee shall be in default in the performance of any of its obligations hereunder
beyond any applicable notice and cure period, Sublessor, without any obligation to do so, in
addition to any other rights it may have in law or equity, may elect (but shall not be obligated)
to cure such default after the applicable cure period at any time after delivery of five (5)
business days’ notice to Sublessee. Sublessee shall reimburse Sublessor, upon demand for one
hundred percent (100%) of all costs and expenses paid or incurred by Sublessor in curing such
default, and interest thereon from the respective dates of Sublessor’s making the payments and
incurring such costs, at the lesser of (i) the prime rate announced by Bank of America



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NT&SA from time to time (the “Prime Rate”) plus two percent (2%), or (ii) the maximum amount
allowed by law, which sums and costs together with interest thereon shall be deemed Additional Rent
payable promptly upon being billed therefor.




     (b) If Sublessor shall be in default in the performance of any of its obligations under the
Master Lease beyond any applicable notice and cure period, Sublessee, without any obligation to do
so, in addition to any other rights it may have in law or equity, may elect (but shall not be
obligated) to cure such default after the applicable cure period at any time after delivery of five
(5) business days’ notice to Sublessor. Sublessor shall reimburse Sublessee, upon demand for one
hundred percent (100%) of all costs and expenses paid or incurred by Sublessee in curing such
default, and interest thereon from the respective dates of Sublessee’s making the payments and
incurring such costs, at the lesser of (i) the Prime Rate plus two percent (2%), or (ii) the
maximum amount allowed by law, which sums and costs together with interest thereon shall be payable
promptly upon being billed therefor.



     19. Time. In all instances where Sublessee is required by the provisions of this Sublease to
pay any sum of money or to do any act at a particular indicated time or within any indicated
period, it is understood and agreed that TIME IS OF THE ESSENCE.



     20. Authority. The individual or individuals signing this Sublease on behalf of Sublessee or
Sublessor, represent and warrant that: (i) Sublessee or Sublessor, respectively, is a corporation
duly incorporated and organized and validly existing and in good standing under the laws of the
State of Delaware; (ii) Sublessee or Sublessor, respectively has full power and authority to enter
into this Sublease and to perform its obligations under this Sublease; (iii) the execution,
delivery and performance of this Sublease by Sublessee or Sublessor have been duly and validly
authorized by all necessary corporate action on the part of Sublessee or Sublessor and all required
consents and approvals have been duly obtained; and (iv) this Sublease is a legal, valid and
binding obligation of Sublessee or Sublessor, respectively, enforceable against Sublessee or
Sublessor, respectively in accordance with its terms, subject to the effect of applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws affecting the
rights of creditors generally.



     21. Attorneys’ Fees. If as a result of any breach or default on the part of Sublessee under
this Sublease, Sublessor uses the services of an attorney in order to secure compliance with this
Sublease, Sublessee shall reimburse Sublessor upon demand as Additional Rent for any and all
reasonable attorneys’ fees and expenses incurred by Sublessor, whether or not formal legal
proceedings are instituted. Should either party bring an action against the other party, by reason
of or alleging the failure of the other party to comply with any or all of its obligations
hereunder, whether for declaratory or other relief, then the party which prevails in such action
shall be entitled to its reasonable attorneys’ fees and expenses related to such action, in
addition to all other recovery or relief. A party shall be deemed to have prevailed in any such
action (without limiting the generality of the foregoing) if such action is dismissed upon the
payment by the other party of the sums allegedly due or the performance of obligations allegedly
not complied with, or if such party obtains substantially the relief
sought by it in the action, irrespective of whether such action is prosecuted to judgment.
Attorneys’ fees shall include, without limitation, fees incurred in discovery, contempt
proceedings, and bankruptcy litigation. The non-prevailing party shall also pay the reasonable
attorneys’ fees and costs incurred by the prevailing party in



-17-









 




any post-judgment proceedings to collect and enforce the judgment. The covenant in the preceding
sentence is separate and several and shall survive the merger of this provision into any judgment
on this Sublease.




     22. Successors. The terms, covenants and conditions of this Sublease shall be binding upon and
inure to the benefit of Sublessor and Sublessee and their respective successors, and except as
otherwise provided, their assigns.



     23. Remedies; Cross-Defaults. Sublessor shall have the right, upon Sublessee’s default
hereunder, in addition to the remedies set forth in this Sublease, to exercise against Sublessee
any and all of the rights and remedies described in the Master Lease as available to Master Lessor
in the event of a default by the tenant under the Master Lease. Moreover, any default by Sublessee
of any of its obligations or duties under any Sublease shall constitute a default by Sublessee
under all of the Subleases.



     24. Not Offer. The submission of this Sublease for review or signature by Sublessee shall not
constitute an offer or option to sublease the Subleased Premises, nor shall this Sublease be
effective as a sublease or otherwise until both parties execute and deliver execution counterparts
of this Sublease and Master Lessor approves this Sublease in writing.



     25. Construction. This Sublease is the result of negotiations between the parties and their
respective attorneys and shall be construed in an even and fair manner, regardless of the party who
drafted this Sublease or any provision hereof. The headings or captions of sections in this
Sublease are for convenience and reference only, and in no way define, limit, or describe the scope
or intent of this Sublease or the provisions of such sections. The term “including” shall mean
“including, but not limited to.”



     26. Entire Agreement; Amendment; Severability. Sublessor and Sublessee hereby agree to
mutually terminate that certain Sublease dated as of November 30, 2005 with respect to the
Buildings (as amended, the “Prior Sublease”). Sublessor and Sublessee hereby also agree that,
notwithstanding the terms of the Prior Sublease, all covenants, duties, obligations and indemnities
contained in the Prior Sublease shall not survive the termination thereof. There are no oral
agreements between Sublessor and Sublessee affecting this Sublease, and this Sublease (along with
the NDA) supersedes and cancels any and all prior negotiations, arrangements, correspondence,
communications, agreements and understandings, if any, whether oral or written, between Sublessor
and Sublessee with respect to the subject matter of this Sublease (including the Prior Sublease),
and none of the foregoing shall be used to construe this Sublease. No amendment or modification of
this Sublease shall be binding or valid unless expressed in writing and executed and delivered by
Sublessor and Sublessee. If any one or more of the provisions contained in this Sublease shall be
invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the
remaining provisions contained herein shall not in any way be affected or impaired.



     27. Right of First Offer.



          27.1 Right of First Offer. During the Term, Sublessee shall have a right of first offer
(“ROFO”) to sublease all of Building 5, containing approximately 94,484 rentable square





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feet, if and when Building 5 becomes Available (as defined below) and subject to Sublessor’s
obtaining Master
Lessor’s consent thereto in the Sublease Consent or another writing. As used in this Sublease,
“Available” shall mean that the entire Building 5 is then offered in the marketplace to the public
at large for rent, free and clear of all claims and rights of other parties, and Building 5 shall
be deemed not to be or not to have become “Available” if as to Building 5 there is a lease, lease
option or option or other right of extension, renewal, expansion, refusal, negotiation or similar
or other right, pursuant to any lease, sublease or written agreement in existence, with respect to
any portion of Building 5, on or before July 1, 2006, including any option or right of extension or
renewal thereof in existence on or before July 1, 2006 (and any subsequent exercise thereof).
Sublessor will notify Sublessee in writing (“Sublessor’s Notice”) if the entire Building
5 (and not less than all of Building 5) becomes Available, which Sublessor’s Notice shall include,
but not be limited to, (a) the date that Sublessor anticipates that Building 5 will become
Available, and (b) Sublessor’s proposed terms and conditions for subleasing Building 5, including
any subtenant improvement allowance that Sublessor shall provide. Sublessee shall have fifteen (15)
days following Sublessor’s delivery of Sublessor’s Notice (“Election Notice Period”) to provide
Sublessor irrevocable written notice (“Election Notice”) of Sublessee’s election to exercise its
ROFO on the exact same terms and conditions as contained in Sublessor’s Notice. If Sublessee fails
to deliver the Election Notice to Sublessor within the Election Notice Period or if Sublessee
declines to exercise its ROFO, then Sublessee’s ROFO shall be null and void and at any time
thereafter Sublessor shall be free to sublease Building 5 to any third party on the terms and
conditions contained in Sublessor’s Notice or such other term and conditions that are not less than
five percent (5%) lower (on an overall economic basis) than the terms and conditions described in
Sublessor’s Notice.




          27.2 Terms and Conditions. If Sublessee duly and timely delivers its Election Notice to
Sublessor, then Sublessor shall prepare and Sublessee shall execute a direct sublease with respect
to Building 5, subject to Sublessor’s termination right pursuant to Section 27.3 below, on the same
terms and conditions as contained in the Building 6 Sublease except as follows: (a) Sublessee shall
accept Building 5 in its then “As-built” and “AS IS” condition without any obligation of Sublessor
to repaint, remodel, improve or alter Building 5 or any portion thereof for Sublessee’s occupancy
or to provide Sublessee any allowance therefor (unless Sublessor’s Notice provides otherwise); (b)
Sublessor shall deliver Building 5 to Sublessee on the date (“Delivery Date”) that is the later of
(i) thirty (30) days after Sublessor regains possession of all of Building 5, and (ii) the date
that Master Lessor consents to Sublessee’s subleasing of Building 5; (c) the term of Sublessee’s
sublease of Building 5, and obligation to pay Rent therefor, shall commence on the Delivery Date
and shall expire sixty (60) days prior to the expiration date of the Building 5 Master Lease; and
(d) the Letter of Credit shall be increased by an amount to three (3) months’ Base Rent for
Building 5; and (f) as otherwise expressly provided in this Section 27.




          27.3 Termination of ROFO. Upon the occurrence of any of the following events, Sublessor shall
have the option, exercisable at any time prior to the commencement of the term as to Building 5, to
terminate all of the provisions of this Section 27, whereupon all rights of Sublessee pursuant to
the ROFO shall terminate and shall be of no further force and effect:




          (a) Sublessee’s failure to timely exercise the ROFO in strict accordance with this Section 27.





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          (b) The existence at the time of exercise of the ROFO (or anytime thereafter) of a default or
breach by Sublessee under this Sublease.




     28. No Solicitation. During the Term, Sublessee shall not solicit nor hire any employee of
Sublessor with first obtaining the prior written consent of Sublessor, which consent may be
withheld in Sublessor’s sole
discretion. Sublessee hereby agrees that money damages will not be a sufficient remedy for any
breach of this Section 28, such that Sublessor shall be entitled to injunctive relief, specific
performance, or both as a remedy for any such breach. Such remedy shall not be deemed to be the
exclusive remedy for any such breach but shall be in addition to all other remedies available at
law or equity.



     29. Parking. Sublessee shall have the right to use, on an unassigned, non-exclusive basis, all
parking spaces in the parking areas designated for the Building, as shown on Exhibit A hereto (the
“Parking Areas”). Notwithstanding the foregoing but subject to Applicable Requirements (including
those relating to handicap parking), Sublessor agrees to use commercially reasonable efforts to
ensure that its employees, agents, contractors and invitees do not park in a reasonable number of
“visitors” parking spaces that shall be designated by Sublessee in front of Building 3. The use of
the Parking Areas shall be subject to, and is conditioned upon, compliance by Sublessee with all
rules and regulations governing the Parking Areas promulgated by Master Lessor or Sublessor from
time to time (and Sublessee shall cause all of its employees, agents, contractors and invitees to
comply with the same).



     30. Outdoor Areas. Sublessee shall have the right to use, on a non-exclusive basis, the
outdoor sunken amphitheatre, basketball and volleyball courts, seating and lawn areas and other
outdoor areas associated with the Buildings (collectively, the “Outdoor Areas”). The use of the
Outdoor Areas shall be subject to, and is conditioned upon, compliance by Sublessee with all rules
and regulations governing the Outdoor Areas promulgated by Master Lessor or Sublessor from time to
time (and Sublessee shall cause all of its employees, agents, contractors and invitees to comply
with the same). In the event that Sublessee desires to reserve an Outdoor Area for its exclusive
use (a “Reservation”), it may do so subject to the following requirements: (a) Sublessee shall
deliver to Sublessor written notice specifying which Outdoor Area it proposes to reserve and the
date and time of the proposed Reservation at least fifteen (15) days’ prior to the proposed
Reservation date; (b) Sublessee shall not be permitted to reserve an Outdoor Area if Sublessor or
Master Lessor intends to use such Outdoor Area (or any portion thereof) during the proposed
Reservation period; (c) Sublessee shall not be permitted to reserve an Outdoor Area for longer than
a twenty-four (24) hour period (unless otherwise approved in writing by Sublessor which approval
shall not be unreasonably withheld, conditioned or delayed); (d) Sublessee shall set up and clean
up the Outdoor Area at Sublessee’s sole cost; and (e) Sublessee shall comply with all rules and
regulations governing the Outdoor Areas promulgated by Master Lessor or Sublessor from time to
time, including without limitation, any requirement by Sublessor that Sublessee obtain additional
insurance or provide Sublessor with additional indemnities in connection with any alcoholic
beverages served by or for Sublessee in or around the Outdoor Area.



     31. Hazardous Substances.



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          31.1 Definitions. As used in this Sublease, the term “Hazardous Substance” shall mean any
product, substance, or waste whose presence, use, manufacture, disposal, transportation, or
release, either by itself or in combination with other materials expected to be on the Subleased
Premises, is: (i) potentially injurious to the public health, safety or welfare, the environment or
the Subleased Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis
for potential liability of Sublessor to any governmental agency or third party under any applicable
statute or common law theory. Hazardous Substances shall include, but not be limited to, PCB’s,
hydrocarbons, petroleum, gasoline, asbestos and/or crude oil or any products, by-products or
fractions thereof. As used in this Sublease, the term “Reportable Use” shall mean (i) the
installation or use of any above ground storage tank, (ii) the generation, possession, storage,
use, transportation, release or disposal of a Hazardous Substance that requires a permit from, or
with respect to which a report, notice, registration or business plan is required to be filed with,
any governmental authority, and/or (iii) the presence at
the Subleased Premises of a Hazardous Substance with respect to which any Applicable Requirement
requires that a notice be given to persons entering or occupying the Subleased Premises or
neighboring properties.




          31.2 Reportable Uses and Hazardous Substances Require Consent. Except as expressly provided
below and subject to the Master Lease, Sublessee shall not engage in any activity in or on the
Subleased Premises which constitutes a Reportable Use of Hazardous Substances, nor shall Sublessee
generate, possess, store, use, release or dispose of any Hazardous Substances in, on, under or
about the Subleased Premises or the Building, without the express prior written consent of both
Sublessor and Master Lessor (which consent Sublessor shall not unreasonably withhold), and
Sublessee’s timely compliance (at Sublessee’s expense) with all Applicable Requirements.




          31.3 Duty to Inform Sublessor. If Sublessee knows that a Hazardous Substance has come or may
have come to be located in, on, under or about the Subleased Premises, Sublessee shall immediately
give written notice of such fact to Sublessor, and provide Sublessor with a copy of any report,
notice, claim or other documentation which it has concerning the presence of such Hazardous
Substance.




          31.4 Sublessee Remediation. Sublessee shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under, or about the Subleased Premises (including through the plumbing
or sanitary sewer system) and shall promptly, at Sublessee’s sole cost and expense, take all
investigatory and/or remedial action reasonably recommended, whether or not formally ordered or
required, for the cleanup of any contamination of, and for the maintenance, security and/or
monitoring of the Subleased Premises or neighboring properties, that was caused or materially
contributed to by Sublessee, or pertaining to or involving any Hazardous Substance brought onto or
released in, on or under the Subleased Premises the Subleased Premises by or for Sublessee or
Sublessee’s employees, contractors, agents, invitees, licensees or permitted sub-sublessees or
assignees. Sublessee shall be solely responsible for the remediation of any condition concerning
any Hazardous Substance brought onto or released in, on or under the Subleased Premises by or for
Sublessee or Sublessee’s employees, contractors, agents, invitees, licensees or permitted
sub-sublessees or assignees.




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          31.5 Investigations and Remediations. Sublessee shall have responsibility and shall pay for
any investigations or remediation measures required by governmental entities having jurisdiction
with respect to the existence of Hazardous Substances brought onto or released in, on or under the
Subleased Premises by or for Sublessee or Sublessee’s employees, contractors, agents, invitees,
licensees or permitted sub-sublessees or assignees. Sublessee shall cooperate fully in any such
activities at the request of Sublessor or Master Lessor, including allowing Sublessor and Master
Lessor and their respective employees and agents to have reasonable access to the Subleased
Premises at reasonable times in order to carry out any investigative and remedial actions which
Sublessor or Master Lessor may elect to do.




          31.6 Sublessee’s Compliance with Applicable Requirements. Sublessee shall obtain, maintain and
strictly comply with, at Sublessee’s sole cost and expense, any and all Applicable Requirements
with the generation, possession, storage, use, release or disposal of any Hazardous Substance
brought onto or released in, on or under the Subleased Premises by or for Sublessee or Sublessee’s
employees, contractors, agents, invitees, licensees or permitted sub-sublessees or assignees.
Sublessee shall, within ten (10) days after receipt of Sublessor’s or Master Lessor’s written
request, provide Sublessor and Master Lessor with copies of all permits and other documents, and
other information evidencing Sublessee’s compliance with any Applicable Requirements specified by
Sublessor or Master Lessor, and shall immediately upon receipt by Sublessee, notify Sublessor and
Master Lessor in writing (and immediately provide to Sublessor and Master Lessor copies of any
documents involved) of any threatened or actual claim, notice, citation, warning, complaint or
report pertaining
to or involving the failure of Sublessee or the Subleased Premises to comply with any Applicable
Requirements or the provisions of this Section 31.




          31.7 Inspection; Compliance. Sublessor and Master Lessor and their respective employees and
agents shall have the right to enter the Subleased Premises at any time, in the case of an
emergency, and otherwise at reasonable times upon reasonable prior notice, which may be verbal, for
the purpose of inspecting the condition of the Subleased Premises and for verifying compliance by
Sublessee with this Section 31. The reasonable cost of any such inspections shall be paid by
Sublessor, unless such inspection reveals that Sublessee has violated the provisions of this
Section 31 in which case Sublessee shall reimburse Sublessor for the reasonable out of pocket costs
of such inspections. Moreover, Master Lessor shall be permitted at any time (a) to cause testing
wells to be installed in or around the Subleased Premises, and (b) to cause ground water to be
tested to detect the presence of Hazardous Substances.




          31.8 Sublessee Indemnification. Sublessee shall indemnify, defend and hold harmless each of
Sublessor, the Sublessor Indemnitees and the Master Lessor from and against any and all Claims
arising out of or involving any Hazardous Substance brought onto or released in, on or under the
Subleased Premises by or for Sublessee or Sublessee’s employees, contractors, agents, invitees,
licensees or permitted sub-sublessees or assignees. Sublessee’s obligations shall include, but not
be limited to, the effects of any contamination or injury to person, property or the environment
created or suffered by Sublessee, and the cost of investigation, removal, remediation, restoration
and/or abatement, and shall survive the expiration or termination of this Sublease. No
termination, cancellation or release agreement entered into by Sublessor and Sublessee shall
release Sublessee from its obligations under this Sublease with respect to Hazardous Substances,
unless Sublessor specifically agrees thereto in




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writing at the time of such agreement and such agreement specifically identifies this Section 31 of
this Sublease.




          31.9 Sublessor Indemnification. Sublessor shall indemnify, defend and hold harmless each of
Sublessee and the Sublessee Indemnitees from and against any and all Claims arising out of or
involving (a) any Hazardous Substance existing in, on or under the Subleased Premises prior to the
Commencement Date other than any Hazardous Substance brought onto or released in, on or under the
Subleased Premises by or for Sublessee or Sublessee’s employees, contractors, agents, invitees or
licensees prior to the Commencement Date, or (b) any Hazardous Substance brought onto or released
in, on or under the Subleased Premises by or for Sublessor on and after the Commencement Date.
Sublessor’s obligations shall include, but not be limited to, the cost of investigation, removal,
remediation, restoration and/or abatement, and shall survive the expiration or termination of this
Sublease. No termination, cancellation or release agreement entered into by Sublessor and Sublessee
shall release Sublessor from its obligations under this Section 31, unless Sublessee specifically
agrees thereto in writing at the time of such agreement and such agreement specifically identifies
this Section 31 of this Sublease.




     32. Proposed Sub-Subletting; Recapture. In the event that Sublessee desires to sub-sublet all
or a portion of the Subleased Premises, Sublessee shall submit to Sublessor for its review the
terms and conditions of such proposed sub-sublease transaction. Sublessor shall have the option for
a period of thirty (30) days, commencing upon the delivery to Sublessor of all of the information
described in the succeeding sentence, to elect in Sublessor’s sole discretion to terminate this
Sublease (as to the portion of the Subleased Premises that Sublessee proposes to sub-sublet) and
enter into a direct sublease (the “Direct Sublease”) with the prospective sub-sublessee (the
“Recapture”). In connection with Sublessor’s review process, Sublessee shall submit to Sublessor
in writing (i) the name of the proposed sub-sublessee, (ii) such information as to such
sub-sublessee’s
financial condition and general standing in the community as may be available to Sublessee,
(iii) all of the terms and conditions upon which the proposed transaction is to be made, and (iv)
such other information as Sublessor shall reasonably request. The parties hereto acknowledge and
agree that, if Sublessor elects to Recapture: (a) the consent of Master Lessor is required for the
Direct Sublease (the “Direct Sublease Consent”); (b) the parties hereto shall use commercially
reasonable efforts to negotiate in good faith to obtain, execute and deliver the Direct Sublease
Consent as soon as reasonably practicable; (c) Sublessee shall execute and deliver a guaranty, in
form and substance reasonably acceptable to Sublessor and Sublessee, wherein Sublessee shall
guaranty for the benefit of Sublessor the prompt payment and performance of each and every
obligation of the sublessee under the Direct Sublease; (d) upon the effective date of the Recapture
(provided that Master Lessor has executed the Direct Sublease Consent), Sublessee shall surrender
possession of the portion of the Subleased Premises covered by the Direct Sublease and any
applicable Personal Property and Infrastructure Systems in accordance with the terms and conditions
contained in this Sublease for the surrender of the same; and (e) Sublessee shall execute and
deliver an amendment to this Sublease modifying the description of the Subleased Premises, the Base
Rent and any other relevant provisions contained herein. The provisions contained in this Section
32 are in addition to (and not in lieu of) the provisions contained in Sections 16, 56 and 57 of
the Master Lease, as the same have been incorporated by reference into this Sublease.



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     IN WITNESS WHEREOF, the parties have executed this Sublease as of the date first hereinabove
written.



	 	 	 	 	 
	 	 	Sublessor:
	 
	 	 	 	 
	 	 	MAXTOR CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	/s/ Duston Williams
	 

	 	 	 	 
	 

	 	Name:	 	Duston Williams
	 

	 	 	 	 
	 

	 	Title:	 	Chief Financial Officer
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Sublessee:
	 
	 	 	SANDISK CORPORATION
	 
	 

	 	By:	 	/s/ Judy Bruner
	 

	 	 	 	 
	 

	 	Name:	 	Judy Bruner
	 

	 	 	 	 
	 

	 	Title:
	 	Executive Vice President and Chief
Financial Officer
	 

	 	 	 	 





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