Document:

Exhibit 10.01

PACIFIC
CORPORATE CENTER LEASE

by
and between

GREENVILLE INVESTORS, L.P., 

a California limited
partnership

as “Landlord”

and

FORMFACTOR, INC., 

a Delaware corporation

as “Tenant”

Dated as of September 7, 2004

 

 

	
  ARTICLE 1.

  	
   

  	
  BASIC TERMS

  	
   

  	
  1

  
	
  ARTICLE 2.

  	
   

  	
  TERM

  	
   

  	
  2

  
	
  ARTICLE 3.

  	
   

  	
  BASE RENT

  	
   

  	
  2

  
	
  ARTICLE 4.

  	
   

  	
  USE OF PREMISES

  	
   

  	
  3

  
	
  ARTICLE 5.

  	
   

  	
  LETTERS OF CREDIT/SECURITY DEPOSIT

  	
   

  	
  6

  
	
  ARTICLE 6.

  	
   

  	
  UTILITIES

  	
   

  	
  8

  
	
  ARTICLE 7.

  	
   

  	
  REAL PROPERTY TAXES

  	
   

  	
  9

  
	
  ARTICLE 8.

  	
   

  	
  CONSTRUCTION AND ACCEPTANCE

  	
   

  	
  10

  
	
  ARTICLE 9.

  	
   

  	
  REPAIRS AND MAINTENANCE

  	
   

  	
  11

  
	
  ARTICLE 10.

  	
   

  	
  OPERATING AND MAINTENANCE COSTS

  	
   

  	
  13

  
	
  ARTICLE 11.

  	
   

  	
  TRADE FIXTURES AND SURRENDER

  	
   

  	
  16

  
	
  ARTICLE 12.

  	
   

  	
  DAMAGE OR DESTRUCTION

  	
   

  	
  17

  
	
  ARTICLE 13.

  	
   

  	
  EMINENT DOMAIN

  	
   

  	
  18

  
	
  ARTICLE 14.

  	
   

  	
  INSURANCE

  	
   

  	
  18

  
	
  ARTICLE 15.

  	
   

  	
  WAIVER OF SUBROGATION

  	
   

  	
  20

  
	
  ARTICLE 16.

  	
   

  	
  RELEASE AND INDEMNITY

  	
   

  	
  20

  
	
  ARTICLE 17.

  	
   

  	
  INSOLVENCY, ETC. OF TENANT

  	
   

  	
  22

  
	
  ARTICLE 18.

  	
   

  	
  PERSONAL PROPERTY AND OTHER TAXES

  	
   

  	
  22

  
	
  ARTICLE 19.

  	
   

  	
  SIGNS

  	
   

  	
  23

  
	
  ARTICLE 20.

  	
   

  	
  ASSIGNMENT AND SUBLETTING

  	
   

  	
  23

  
	
  ARTICLE 21.

  	
   

  	
  RIGHTS RESERVED BY LANDLORD

  	
   

  	
  24

  
	
  ARTICLE 22.

  	
   

  	
  INTENTIONALLY DELETED

  	
   

  	
  25

  
	
  ARTICLE 23.

  	
   

  	
  RIGHT OF LANDLORD TO PERFORM

  	
   

  	
  25

  
	
  ARTICLE 24.

  	
   

  	
  LANDLORD DEFAULT

  	
   

  	
  25

  
	
  ARTICLE 25.

  	
   

  	
  DEFAULT AND REMEDIES

  	
   

  	
  26

  
	
  ARTICLE 26.

  	
   

  	
  PRIORITY OF LEASE AND ESTOPPEL CERTIFICATE

  	
   

  	
  29

  
	
  ARTICLE 27.

  	
   

  	
  HOLDING OVER

  	
   

  	
  30

  
	
  ARTICLE 28.

  	
   

  	
  NOTICES

  	
   

  	
  31

  
	
  ARTICLE 29.

  	
   

  	
  LIENS

  	
   

  	
  31

  
	
  ARTICLE 30.

  	
   

  	
  QUIET ENJOYMENT

  	
   

  	
  32

  
	
  ARTICLE 31.

  	
   

  	
  ATTORNEYS’ FEES

  	
   

  	
  32

  
	
  ARTICLE 32.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  32

  

 

 i
 

 

SCHEDULE OF EXHIBITS

 

	
  EXHIBIT A

  	
   

  	
  SITE PLAN

  	
   

  	
  A-1

  
	
  EXHIBIT A-1

  	
   

  	
  DEPICTION OF BUILDING 6 DRIP LINE

  	
   

  	
  A1-1

  
	
  EXHIBIT B

  	
   

  	
  CENTER LEGAL DESCRIPTION AND PARCEL MAP

  	
   

  	
  B-1

  
	
  EXHIBIT C

  	
   

  	
  WORK LETTER

  	
   

  	
  C-1

  
	
  EXHIBIT D

  	
   

  	
  INTENTIONALLY DELETED

  	
   

  	
   

  
	
  EXHIBIT E

  	
   

  	
  RULES AND REGULATIONS

  	
   

  	
  E-1

  
	
  EXHIBIT F

  	
   

  	
  DESCRIPTION OF TENANT’S USE OF HAZARDOUS SUBSTANCES

  	
   

  	
  F-1

  
	
  EXHIBIT F-1

  	
   

  	
  MINIMUM STANDARDS FOR HAZARDOUS SUBSTANCE
  USE/STORAGE AREAS

  	
   

  	
  F-1-1

  
	
  EXHIBIT G

  	
   

  	
  COPY OF CENTER COVENANTS, CONDITIONS AND
  RESTRICTIONS

  	
   

  	
  G-1

  
	
  EXHIBIT H

  	
   

  	
  NON-DISCLOSURE AGREEMENT

  	
   

  	
  H-1

  
	
  EXHIBIT I

  	
   

  	
  LIST OF COMPETITORS

  	
   

  	
  I-1

  
	
  EXHIBIT J

  	
   

  	
  ACKNOWLEDGMENT OF COMMENCEMENT DATE

  	
   

  	
  J-1

  

 

 ii

 

PACIFIC CORPORATE CENTER LEASE

THIS LEASE is made and entered into as of September 7,
2004 by and between Greenville Investors, L.P.
a California limited partnership (hereafter, “Landlord”),
and FormFactor, Inc., a Delaware
corporation (hereafter “Tenant”).

A.  DEMISE.  Landlord hereby leases, demises and lets to
Tenant, and Tenant hereby leases, hires and takes from Landlord, those certain
premises (“the Premises”) described as follows:

Approximately 12,303 square feet of gross leasable
area (“GLA”), at the west end of the
commercial Building designated as Building 6 on the Site Plan attached hereto
as Exhibit A (“Building 6”)
with improvements to be constructed by Tenant in accordance with Article 8
and Exhibit C hereof.  The precise
GLA of the Premises shall be determined pursuant to Section 8.5
below.  The exterior walls, roof, air
space above and the area beneath the Premises are not demised and their use
together with the right to install, maintain, use, repair and replace pipes,
ducts, conduits and wires leading through the Premises in locations that will
not materially interfere with Tenant’s use and serving other parts of Building
6, are hereby reserved to the Landlord, except as otherwise expressly provided
herein.  The Premises also shall include
the service yard area of approximately 1,418 square feet shown on the Site Plan
attached as Exhibit A  (“Tenant’s Facility Yard”) which is designated for Tenant’s
use as (i) a Facilities Pad; and (ii) an enclosed/gated storage yard
similar to the storage yard attached to Building 3.

Building 6 is located at 7501 Lawrence Drive,
Livermore, California on the real property more particularly described and
shown on Exhibit B as Parcel 6 (“Parcel 6”).  The address assigned to the Premises is 7545
Longard Rd, Livermore, California. 
Building 6 is a part of Pacific Corporate Center, a common interest
development being developed by Landlord in the City of Livermore, Alameda
County, California, (the “Center”) which
includes eight (8) parcels of real property together with all buildings and
other structures and improvements constructed or to be constructed thereon and
is more particularly described and shown on Exhibit B, the Center Legal
Description and Parcel Map.  All parcels
of real property in the Center owned (in whole or in part) by Landlord from
time to time are hereinafter collectively referred to as “Landlord’s
Parcels”.

B.  TERMS, COVENANTS AND CONDITIONS.  The
parties agree that this Lease is made upon the following terms, covenants and
conditions:

ARTICLE 1.  BASIC TERMS

In all instances, the basic terms set forth in this Article
1 are subject to the main body of the Lease in general and those Articles
noted in parentheses in particular.

	
  (a)

  	
   

  	
  Term: Approximately Seven (7)
  Lease Years, plus Eight (8) months; four (4) options of 5 years each

  	
   

  	
  (Art.2; Addendum

  A-2.1)

  
	
  (b)

  	
   

  	
  Initial Monthly Base Rent:     $0.75
  psf of GLA. Estimated Initial Monthly Base Rent is $9,227. 25**

  	
   

  	
  (Art 3)

  
	
  (c)

  	
   

  	
  Security: None

  	
   

  	
  (Art. 5)

  
	
  (d)

  	
   

  	
  Tenant’s Initial Estimated Monthly Operating
  Expense Payment:     $0.084 psf of
  GLA. Estimated Initial Estimated Monthly Operating Expense Payment is $1,033.45**

  	
   

  	
  (Art.10)

  
	
  (e)

  	
   

  	
  Tenant’s Initial Estimated Monthly Tax
  Payment:      $0.176 psf of GLA.
  Estimated Initial Estimated Monthly Tax Payment is $2,165.33**

  	
   

  	
  (Art. 7)

  
	
  (f)

  	
   

  	
  Tentative Commencement Date: November 15, 2004

  	
   

  	
  (Art.8)

  
	
  (g)

  	
   

  	
  Base Rent Commencement Date:
  Base Rent shall commence on March 15, 2005. All Additional Rent shall
  commence on the Commencement Date of this Lease.

  	
   

  	
  (Art. 2)

  
	
  (h)

  	
   

  	
  Use: Office and research and
  development facilities, “clean rooms”, and related lawful purposes

  	
   

  	
  (Art. 4)

  
	
  (i)

  	
   

  	
  Tenant Improvement
  Allowance:     $25.00 psf of GLA.
  Estimated Tenant Improvement
  Allowance is $307,575. **

  	
   

  	
  (Exhibit C)

  
	
  (j)

  	
   

  	
  Articles and Exhibits: This
  Lease consists of Articles 1 through 32, Addendum to Lease, and
  Exhibits A, B, C, D, E, F, F-1,
  G , H, I and J attached hereto, which are by this
  reference incorporated herein.

  	
   

  	
   

  
	
  (k)

  	
   

  	
  Tenant’s Proportionate Share:     GLA/49,742
  (the GLA for Building 6). Estimated Tenant’s Proportionate Share is 24.73%. **

  	
   

  	
   

  

 

**                  Estimate based on
GLA of 12,303 sf.  The exact amount will be determined when the
precise GLA is certified in accordance with Section 8.5 below.

 1
 

 

ARTICLE 2.  TERM

2.1          Landlord
and Tenant have entered into a lease dated May 3, 2001 for Building 1 located
on Parcel 1 in the Center.  That Lease as
amended is referred to as the (“Building 1 Lease”).
The Term of this Lease shall commence on the date (“Commencement
Date”) that the Premises are delivered to Tenant in the Delivery
Condition (as defined in Article 8) and the initial term shall terminate at
midnight on the date of expiration of the initial term of the Building 1 Lease,
i.e. November 30, 2012.

See Addendum A-2.1

2.2          The
first “Lease Year” shall begin on the
Commencement Date and shall expire on the last day of the month, twelve (12)
full calendar months next following the Rent Commencement Date set forth in
Paragraph 1(g).  If the Rent Commencement
Date occurs on the first day of the calendar month, then the first Lease Year
shall end on the day immediately preceding the first anniversary of the Rent
Commencement Date. Subsequent Lease Years shall be each consecutive twelve (12)
calendar month period thereafter except for the last Lease Year which may be a
partial Lease Year.

2.3          Promptly
after the Rent Commencement Date, Landlord and Tenant shall execute a written
acknowledgment of the Rent Commencement Date in the form attached hereto as Exhibit J.

ARTICLE 3.  BASE RENT

3.1          Tenant
agrees to pay without offset or deduction of any kind (except as expressly set
forth in this Lease) the initial monthly Base Rent amount set forth in Paragraph
1(b) above, as adjusted pursuant to Section 3.2, in advance at Landlord’s
address on the first day of each calendar month during the Term of this
Lease.  Tenant’s obligation to pay Base
Rent shall commence on the Rent Commencement Date.  If the Rent Commencement Date is not the
first day of a calendar month, the first month’s rent shall be prorated on the
basis of a thirty (30) day month, and shall be payable with the first full
monthly rental due hereunder.  Landlord’s
address shall be as set forth below its signature, or as from time to time
designated by Landlord to Tenant in writing.

3.2          As
of the date of commencement of the second Lease Year and as of the commencement
of each Lease Year during the initial Lease Term thereafter, the monthly Base
Rent shall increase by four percent (4%) over the monthly Base Rent in effect
immediately preceding the applicable adjustment date.

ARTICLE 4.  USE OF PREMISES

4.1          The
Premises shall be used and occupied only for the purposes described in Paragraph
1(h) above and for other uses permitted within the light industrial zoning
district within which the Premises is located, unless prohibited by the
Declaration, and provided Tenant’s use otherwise complies with all applicable
governmental requirements. Tenant shall not use the Premises for any other
purposes without Landlord’s prior written consent, which consent may be
withheld in Landlord’s sole discretion.

4.2          Tenant
shall not do or permit to be done in or about the Premises anything which is
illegal or unlawful; or which will cause cancellation of any insurance on the building
of which the Premises are a part.  Tenant
shall not obstruct or interfere with the rights of any other tenants and
occupants of the Center or their invitees, nor injure them, nor operate the
Premises in a manner which unreasonably disturbs other tenants in the use of
their premises in the Center. Tenant shall not cause, maintain or permit any
nuisance on or about the Premises. Tenant shall not use nor permit the use of
the Premises or any part thereof as living quarters.

4.3          Tenant
acknowledges that although Landlord has permitted Tenant the use of Premises
for the purpose described in this Article, neither Landlord nor any agent of
Landlord has made any representation or warranty to Tenant with respect to the
suitability of the present zoning of the Building for such use.  Tenant assumes all responsibility for
investigating the suitability of the zoning for its use and for compliance with
all other laws and regulations governing such use.

4.4          Tenant
shall have use of, and access to, the Premises twenty four (24) hours per day,
three hundred sixty five (365) days per year, subject to the provisions of this
Lease and ordinances and regulations of applicable governmental agencies.

4.5          Tenant
agrees that, at its own cost and expense, it will comply with and conform to
all Legal Requirements (as defined in Section 4.7(d) below) in any way relating
to the use or occupancy of the Premises throughout the entire term of this
Lease; including the Livermore Fire Code requiring all tenants to obtain fire
extinguishers for the Premises and maintain them so that they are fully charged
and operational at all times and inspected annually. Further, subject to
Landlord’s obligation to deliver the Premises to Tenant in the Delivery
Condition, Tenant shall thereafter be obligated at its own cost and expense to
take such action and perform such work (including structural alterations) to
the Premises, as

 2
 

 

required
to comply with the Americans with Disabilities Act (“ADA”) and other applicable
handicapped access codes. Further, if, and to the extent, due to Tenant’s use
of, or alterations to, or work performed by Tenant in the Premises, changes,
alterations or improvements to Building 6, Parcel 6 or other portions of the
Center are required by any governmental agency, Tenant shall be responsible for
the costs of such changes, alterations and improvements. Notwithstanding the
foregoing, nothing contained herein shall limit or affect any
representations, warranties or covenants of Landlord or any of Landlord’s
contractors with respect to any work performed pursuant to Article 8 or Exhibit
C. Except to the extent of Tenant’s compliance obligations set forth above,
Landlord shall be obligated to comply with all Legal Requirements, including,
without limitation, the ADA and other applicable handicapped access codes, with
respect to all portions of Parcel 6 outside of Building 6, subject to
reimbursement as specifically set forth in this Lease and further subject to
the terms of the Declaration.

4.6          Tenant
shall place no loads upon the floors, walls, ceilings or roof of the Building
in excess of the maximum designed load of Building 6 as specified in Exhibit
C.

4.7          Hazardous Substances:

A.  Hazardous Substance; Reportable Uses:  As used herein, the terms “Hazardous Substance” and “HS”
shall mean any product, substance, chemical, material or waste whose presence,
nature, quantity and/or intensity of existence, use, manufacture, disposal,
transportation, spill, release or effect, either by itself or in combination
with other materials expected to be on the Premises, is either: (i) potentially
injurious to the public health, safety or welfare, the environment, or the
Premises; (ii) regulated or monitored by any governmental authority; or (iii) a
basis for potential liability of Landlord to any governmental agency or third
party under any applicable statute. 
Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products or by-products thereof. “Reportable Use” shall mean (i) the installation or use of
any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, 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
(iii) the presence in, on or about the Premises of a Hazardous Substance with
respect to which any Applicable HS Requirements (as defined in subparagraph (F)
hereinafter) require that a notice be given to persons entering or occupying
the Premises or neighboring properties.

B.   Tenant’s Use of Hazardous Substances:

(1)                        Notice of Use of
Hazardous Substances. Tenant may, without Landlord’s prior consent, but
upon notice to Landlord and in compliance with all Applicable HS Requirements
and  all other provisions of this Section
4.7, at Tenant’s sole cost and expense, (i) operate a business on the Premises
which is substantially similar to the business it is operating at its
facilities in Livermore, California as of the Commencement Date, i.e. testing
of solid state electronic components and research and development related
thereto (“Permitted Use”) and (ii) use any ordinary and customary Hazardous
Substances reasonably required to be used by Tenant in the normal course of the
Permitted Use.

(2)                        Tenant’s HS Use.  Tenant shall have the right to use the
Hazardous Substances listed on Exhibit F without Landlord’s prior consent and
without the requirement of additional insurance.  Tenant 
shall use all such Hazardous Substances in accordance with all
Applicable HS Requirements and in compliance with all other provisions of this
Section 4.7, specifically including the notice requirements and restrictions
set forth below. Tenant’s use of the substances referenced in Exhibit F may be
referred to herein as “Tenant’s HS Use”.

(3)                        Control of HS Hazards.

(a)  Plans
for Designated HS Areas. Tenant shall use, store, or otherwise manage HS
only in areas designated by Tenant for such use (“Designated HS Areas”). 
Prior to commencement of Tenant’s HS Use on the Premises, and prior to
modification of or addition to any Designated HS Areas, Tenant shall provide
Landlord with written plans (such as architectural or engineering plans)
regarding the design and planned operation of the Designated HS Areas. The
plans shall include descriptions of the types and quantities of HS that will be
used, stored, or otherwise managed in Designated HS Areas, the maximum design
capacity of each Designated HS Area and descriptions of all equipment and
structures that will be used to control environmental, health, and safety
hazards associated with the HS, including, for example, secondary containment
structures and air pollution control equipment. 
Tenant will also provide copies of all permits and other approvals
required to be obtained to lawfully operate Tenant’s business and Hazardous
Substances on the Premises.

(b)  Commencement
of Tenant’s HS Use. Tenant shall not commence Tenant’s HS Use until
Landlord has approved the plans submitted by Tenant pursuant to subparagraph
(a) above, which approval shall not be unreasonably withheld or delayed.
Landlord shall not withhold its approval, however, if Tenant’s plans comply
with the requirements of subparagraph (a) and the minimum standards set forth
on Exhibit F-1.   Landlord may (but
without any obligation to do so) condition its consent upon Tenant’s taking

 3
 

 

such measures as Landlord, at its reasonable discretion, deems
necessary to protect itself, the public, the Premises, the Center, and the
environment against damage, contamination, injury, and/or liability, including,
but not limited to the installation (and, at Landlord’s option, removal on or
before Lease expiration or earlier termination) of reasonably necessary
protective equipment, structures, or modifications to the Premises.

(c)              Modification/Expansion
of Designated HS Areas. Tenant shall not modify or add to the Designated HS
Areas until Landlord has approved the plans submitted by Tenant pursuant to
subparagraph (a) above for the modification or addition, which approval shall
not be unreasonably withheld or delayed. Landlord shall not withhold its
approval, however, if Tenant’s plans for the modification or addition comply
with the requirements of subparagraph (a) and the minimum standards set forth
on Exhibit F-1.

(4)        Notice
of HS Use.  Tenant shall notify the Landlord
in writing at least five (5) business days prior to any of the following:

(a)  the date Tenant first commences Tenant’s HS
Use on the Premises; or

(b)  the date
Tenant commences to store or use any Hazardous Substance  which is not listed on Exhibit  F (a “New
HS “), if the quantity of the New Hazardous Substance exceeds either
(i) 55 gallons of liquid, 500 pounds of solid, 200 cubic feet of compressed gas
at standard temperature and pressure, or (ii) the applicable Threshold Planning
Quantity listed in 40 CFR Part 355.

After receipt of a notice pursuant to subparagraph
(b) above, Landlord may require Tenant to obtain a policy of pollution
liability insurance in a commercially reasonable form and amounts and with such
insurer as may be reasonably approved by Landlord.  For any insurance policy requirement,
Landlord shall be named as an additional insured under such policy.  Tenant shall deliver a certificate of any
insurance required prior to bringing the Hazardous Substance into the Premises
and Tenant shall maintain such insurance in effect until the closure
requirements set forth in subparagraph (H) below have been satisfied or the New
HS use ceases.

(5)        Contents of New HS  Notice. 
Each notice of a New HS shall specify the names and quantities of any
New HS that Tenant intends to place on the Premises which exceeds the
quantities described in subparagraph 4(b) above together with a copy of all
permits and other approvals required to be obtained to lawfully use, store, or
otherwise manage the New HS on the Premises. Tenant’s notice shall also provide
Landlord with information regarding the Designated HS Areas where the New HS
will be used, stored, or otherwise managed, the new aggregate quantities of all
Hazardous Substances in Designated HS Areas, and the maximum design capacities
of the Designated HS Areas (if changed or modified from the Designated HS Areas
as initially approved consistent pursuant to Section 4.7(B)(3)(b)above.

(6)           Increase in HS
Quantities.  If, at any time during
the term, Tenant intends to increase the quantity of existing Hazardous
Substances and/or add New HS such that the aggregate quantity of all Hazardous
Substances in any Designated HS Area on the Premises exceeds the maximum design
capacity for the Designated HS Area, Tenant shall not increase quantities or
add New HS until Landlord has consented to the modification of or addition to
the Designated HS Areas, pursuant to Section 4.7(B)(3)(c) above.

(7)           Restrictions on
Quantity or Use of HS. Notwithstanding any other provision of this Lease,
Tenant’s use of Hazardous Substances at the Premises is subject to the
following restrictions:

(a)                                                            Tenant shall not use any HS in quantities
such that Tenant would be subject to requirements for preparation of a Risk
Management Plan, as set forth in 40 CFR Part 68.

(b)                                          Tenant
shall not use any HS which emits odors unless the odors can be controlled to
the extent they are not present at objectionable levels in any areas exterior
to the Premises that are accessible to other tenants of the Center or the
general public.  In the absence of any
legal thresholds for identifying objectionable odors, other odor standards may
be used, provided they are generally accepted as being scientifically valid.

(c)                                                            Tenant shall not use any HS in a manner that
would result in “Significant Emissions”. 
Significant Emissions are defined as air emissions originating from the
Premises for which under applicable federal or state law (i) notices or
warnings be given to other occupants of the Center or the general public or
(ii) other occupants of the Center or the general public must receive special
training

 4
 

 

and/or use personal protective equipment.

C.            Plans/Reports:  Within ten (10) days after Tenant submits the
same to any governmental authority, Tenant shall provide Landlord with copies
of all hazardous materials business plans, permits and all other plans, reports
and correspondence pertaining to storage/management of Hazardous Substances at
the Premises, except waste manifests and routine monitoring reports.

D.            Duty to Inform Landlord:  If Tenant knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises or Building or Center, other than as previously permitted or
consented to by Landlord or there has been a spill, release or discharge of any
Hazardous Substances in the Premises (other than discharges permitted,
authorized or otherwise approved by the applicable governmental agencies
regulating the same), Tenant shall immediately give Landlord written notice
thereof, together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to, or received from, any governmental authority or third party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous
Substance including but not limited to all such documents as may be involved in
any Reportable Use involving the Premises. 
Tenant shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under or about the Premises (including, without limitation,
through the plumbing, storm, or sanitary sewer system).

E.             Indemnification:
Tenant shall indemnify, protect, defend and hold Landlord, its agents,
employees, lenders, and the Premises and Center, harmless from and against any
and all damages, liabilities, judgments, costs, claims, liens, expenses,
penalties, loss of permits and attorneys’ and consultants’ fees arising out of
or involving any Hazardous Substance to the extent brought into the Premises
and/or Center by or for Tenant, its employees, agents or contractors.  Tenant’s obligations under this Paragraph
4.7(E) shall include, but not be limited to, the effects of any contamination
or injury to person, property or the environment created or suffered by Tenant,
and the cost of investigation (including reasonable consultants’ and attorneys’
fees and testing), removal, remediation, restoration and/or abatement thereof,
or of any contamination therein involved, and shall survive the expiration or
earlier termination of this Lease.  No
termination, cancellation or release agreement entered into by Landlord and
Tenant shall release Tenant from its obligations under this Lease with respect
to Hazardous Substances, unless specifically so agreed by Landlord in writing
at the time of such agreement.

F.             Tenant’s Compliance with
Requirements:  Tenant shall,
at Tenant’s sole cost and expense fully, diligently and in a timely manner,
comply with all “Legal Requirements”, which term is
used in this Lease to mean all laws, rules, regulations, ordinances,
directives, covenants, easements and restrictions of record, permits, the
requirements of any applicable fire insurance underwriter or rating bureau,
relating in any manner to the Premises or Center (including but not limited to
matters pertaining to (i) industrial hygiene, (ii) environmental conditions on,
in, under or about the Premises, including soil and groundwater conditions, and
(iii) the use, generation, manufacture, production, installation, maintenance,
removal, transportation, storage, spill or release of any Hazardous Substance,
which foregoing (ii) and (iii) Legal Requirements may be referred to as “Applicable HS Requirements”), now in effect or which may
hereafter come into effect. Tenant shall, within twenty (20) business days
after receipt of Landlord’s written request made from time to time, provide
Landlord with copies of all documents and information, including but not
limited to permits, registrations, manifests, applications, reports and
certificates, evidencing Tenant’s compliance with all Applicable HS
Requirements specified by Landlord, and shall within five (5) business days
after receipt, notify Landlord in writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation, warning,
complaint or report pertaining to or involving failure by Tenant or the
Premises to comply with any Legal Requirements. Tenant shall be obligated to
disclose to Landlord which Hazardous Substances are used at the Premises and
how such Hazardous Substances are being handled (but in no event shall Tenant
be required to disclose information regarding formulations or manufacturing processes
or procedures related to such Hazardous Substances) notwithstanding that such
information may be proprietary information or a trade secret. Landlord agrees
to keep as confidential all such proprietary information delivered to Landlord
(including, without limitation, Exhibit F) and which Tenant designates in
writing as confidential, provided that Landlord may disclose the same when
required by law or in litigation between Landlord and Tenant regarding such
information or to Landlord’s lenders or to prospective purchasers provided such
parties have also agreed to keep the same confidential.

G.            Compliance with Law
Governing Hazardous Substances: 
Landlord, Landlord’s agents, employees, contractors and designated
representatives, and the holders of any mortgages, deeds of trust or ground
leases on the Premises (“Lenders”) shall
have the right to enter the Premises at any time in case of an emergency, and
otherwise at reasonable times (but not more often than annually for inspection
of Tenant’s “clean room” on the Premises, if any, or more often than quarterly
for inspection of other parts of the Premises), and upon no less than 10 days’
notice, unless an emergency exists, for the purpose of inspecting the condition
of the Premises and for verifying compliance by Tenant with this Lease and all
Legal Requirements, and Landlord shall be entitled to employ experts and/or
consultants in connection therewith (provided that such experts and/or
consultants are not engaged in a business competitive with Tenant, or consult
or give advice to

 5
 

 

any competitor of Tenant listed on Exhibit I) to
advise Landlord with respect to Tenant’s activities, including but not limited
to  Tenant’s installation, operation,
use, monitoring, maintenance, or removal of any Hazardous Substance on or from
the Premises (“Landlord’s Consultants”). 
Prior to engaging any Landlord’s Consultants, Landlord shall provide
Tenant with written notice of the name of the proposed consultant and Tenant
shall have five (5) business days to object to the engagement based upon Tenant’s
reasonable belief that engagement of the particular individual as Landlord’s
Consultant, and the consequent access to Tenant’s facilities and proprietary
information and trade secrets, could result in competitive injury to Tenant.  Landlord shall not engage with a consultant
as to whom Tenant has objected.  Tenant
shall cooperate with Landlord’s Consultants inspecting the Premises, including
responding to interviews (for a time period not to exceed four (4) hours for
the initial site visit and two (2) hours for site visits thereafter).  Landlord’s Consultants shall at all times be
escorted by Tenant, unless Tenant agrees otherwise. This and all rights to
enter except in the event of an emergency, are subject to Landlord, Landlord’s
agents, employees, contractors, designated representatives, prospective
purchasers and/or Lenders, as the case may be, executing Tenant’s standard
non-disclosure agreement in the form attached hereto as Exhibit H.  The costs and expenses of any such inspections
shall be paid by the party requesting same and in no event shall be borne by or
passed along to Tenant unless requested by Tenant, subject only to the
proceeding sentence.  If the inspection
is performed due to a violation of Applicable HS Requirements, Tenant shall,
upon request, reimburse Landlord or Landlord’s Lender, as the case may be, as
additional rent, for the costs and expenses of such inspections.

H.            Closure Requirements:  Prior to any termination of the Lease, Tenant, at its sole cost and
expense (except as to those costs and expenses arising out of actions
undertaken by Landlord or by a third party on behalf of Landlord), shall
satisfy the following closure requirements with respect to the Hazardous
Substances Tenant has used in the Premises during the term:

(1)
       Comply with all applicable federal,
state and local closure requirements with respect to Hazardous Substances;

(2)
       Prepare a closure plan (the “Closure Plan”) that specifies the final
disposition of all Hazardous Substances and equipment which may be contaminated
with Hazardous Substances; cleaning and decontamination activities, and
confirmation sampling (e.g. wipe samples, soil/ground water samples and/or
indoor air quality samples, to the extent warranted by the site conditions then
existing).

(3)        At least sixty (60) days prior to the
Lease termination, provide to Landlord a copy of the Closure Plan for review
and reasonable approval. Landlord may, after consultation with Tenant, require
modification of the closure plan to include additional activities, including
sampling activities, if the site conditions indicate that there is a reasonable
probability that “Significant Residual Contamination” is present.  Significant
Residual Contamination shall mean residual contamination which: (i)
exceeds standards or guidance levels typically used by regulatory agencies in
California for evaluating potential threats to human health or the environment;
or (ii) would result in notification requirements under applicable state law of
potential health risks to individuals on the Premises, other tenants of the
Center, and/or the general public; or (iii) would result in potential
environmental liability to Tenant or Landlord; or (iv) would result in the need
for conducting any type of additional decontamination activities prior to
leasing the Premises to a new tenant. If Landlord fails to request modification
of the Closure Plan within ten (10) business days after its receipt thereof,
Tenant’s Closure Plan shall be deemed accepted.

(4)        Notify Landlord of closure schedule and
allow access to Landlord and/or Landlord’s Consultants for inspections prior to
commencing and following completion of the cleaning/decontamination activities.

(5)        Notify Landlord of all sample analysis
results, if any.  Landlord may require
additional closure activities if sampling results disclose Significant Residual
Contamination.

(6)
       Prepare and provide to Landlord
closure report documenting closure activities consistent with the Closure Plan
and sample results, if any, following completion of all closure activities.

Closure shall be deemed to be complete upon Landlord’s
reasonable approval of the closure report and, if applicable, Landlord’s
receipt of a copy of the written closure approval from the local environmental
agency with jurisdiction over the Hazardous Substances at the Premises.

I.              Survival of Obligations:  Tenant’s obligations under this Section 4.7
shall survive the termination of this Lease.

See Addendum A-4.7.

 6
 

 

4.8          Declaration. 
Tenant acknowledges and agrees that this Lease shall be subject to and
subordinate to a recorded Declaration of Covenants, Conditions and Restrictions
which, together with all amendments from time to time, are collectively
referred to as the “Declaration”.  A true and correct copy of the Declaration is
attached hereto as Exhibit G. 
Tenant agrees to bound by and comply with all provisions of the
Declaration.

See Addendum A-4.8.

ARTICLE 5.  INTENTIONALLY DELETED

ARTICLE 6.  UTILITIES

6.1          Tenant,
at its own cost and expense, shall pay for all water, gas, heat, electricity,
garbage disposal, sewer charges, telephone, and any other utility or service
charge related to its occupancy of the Premises, including but not limited to
any hook- up charges. Utilities will be separately metered to the Premises,
except for water as to which Landlord has elected to have a single meter for
the entire Building 6. As a part of Tenant’s initial improvements to the
Premises, Tenant shall install a sub-meter for water at its sole cost and
expense.  Tenant shall pay  water
charges for Building 6 based on the sub-meter
reading.  Tenant shall not be obligated to pay for any other water charges
for Building 6, except that Tenant shall also pay its Proportionate Share of
all water use  and other water charges
with respect to the landscaping and fire protection service on Parcel 6. Tenant
shall also pay Tenant’s Proportionate Share of the electricity for all outdoor
lighting on Parcel 6.  Tenant shall not be responsible for any water or
electrical service costs or expenses with respect to any other parcels in the
Center.

6.2          Except to the extent arising out of
Landlord’s negligence or willful misconduct, Landlord shall not be liable in
damages, consequential or otherwise, nor shall there be any rent abatement,
arising out of any interruption or reduction whatsoever in utility services (i)
which is due to fire, accident, strike, governmental authority, acts of God,
acts of other tenants or other third parties, or other causes beyond the
reasonable control of Landlord or any temporary interruption in such service,
and (ii) which is necessary to the making of alterations, repairs, or
improvements to the Center,  or any part
of it (all of which shall be conducted pursuant to Article 9), or
(iii) to comply with energy conservation measures mandated by a governmental
agency having jurisdiction over the Center.

See Addendum A-6.

ARTICLE 7.  REAL PROPERTY TAXES

7.1          Commencing
on the Commencement Date, Tenant shall pay as Additional Rent Tenant’s
Proportionate Share of all “Taxes” (as
hereinafter defined) which may be levied, assessed or imposed against or become
a lien upon Parcel 6, the tax parcel upon which Building 6 is located, which
will be separately assessed.  The term “Taxes” shall mean and include real estate taxes, assessments
(special or otherwise), including impositions for the purpose of funding
special assessment districts, water and sewer rents, rates and charges
(including water and sewer charges which are measured by the consumption of the
actual user of the item or service for which the charge is made) levies, fees
(including license fees) and all other taxes, governmental levies and charges
of every kind and nature whatsoever (and whether or not the same presently
exist or shall be enacted in the future) which may during the term be levied,
assessed, imposed, become a lien upon or due and payable with respect to, out
of or for the Parcel 6 or any part thereof, or of any land, building or
improvements thereon, or the use, occupancy or possession thereof; and imposed or
based upon or measured by the rents receivable by Landlord for the Parcel 6,
including gross receipts taxes, business taxes, business and occupation taxes.

“Taxes” shall also include interest on installment payments and all
costs and fees (including reasonable attorney’s and appraiser’s fees) incurred
by Landlord in contesting Taxes and negotiating with public authorities as to
the same.  Taxes shall not include,
however, any franchise, estate, inheritance, corporation, transfer, net income,
excess profits tax or any assessments levied by the Association pursuant to the
Declaration. Association assessments shall be payable pursuant to the
provisions of Section 10.4.

7.2          Tenant
shall pay Tenant’s Proportionate Share of Taxes with respect to any tax fiscal
year during the term hereof.  Landlord’s
estimate of Tenant’s initial tax payment for Parcel 6 is that amount set forth
in Paragraph 1(e) above.

7.3          Commencing
on the first day of the month following the month in which the Lease
Commencement Date occurs, Tenant shall pay Landlord monthly, on the first day
of each month, the amount computed in accordance with Paragraph 1(e)
above as an impound toward the Taxes.  If
the Commencement Date does not occur the first day of a month, Tenant’s first
monthly payment shall include the amount payable for the partial month at the
beginning of the term. Tenant’s actual obligation for Taxes shall be determined
and computed by Landlord not less often than annually and at the time each such
computation is made, Landlord and Tenant shall adjust for any difference
between impounded amounts and Tenant’s actual share.  Tenant shall pay Landlord any deficiency (or
Landlord shall pay Tenant any surplus) within thirty (30) days after receipt of
Landlord’s written statement.  At the time
of each such

 7
 

 

computation,
Landlord may revise the monthly payment for Taxes set forth in Paragraph
1(e) above by written notification to Tenant.  Tenant shall pay its share of Taxes during
each year of the Lease Term.  Landlord
shall furnish Tenant with a copy of the tax bills for the Parcel 6 supporting
the amounts charged to Tenant by Landlord.

7.4          If
this Lease shall commence or terminate on any date other than the last day of a
tax fiscal year, the amount payable by Tenant during the applicable tax fiscal
year shall be prorated on the basis which the number of days of the Term within said tax fiscal year bears to 365.  The obligation of Tenant under this Article
7 shall survive the termination of this Lease.

ARTICLE 8.  CONSTRUCTION AND ACCEPTANCE

8.1          Landlord
at its sole cost and expense shall construct “Landlord’s
Work” as described in Exhibit C attached hereto and
incorporated by reference herein. Tenant shall construct “Tenant’s Work” as specified in Exhibit C
and Landlord shall provide a Tenant Improvement Allowance in the amount
specified in Paragraph 1 (i) to be applied to the cost of the Tenant
Improvements constructed by Tenant. If the actual cost of such Tenant
Improvements exceeds the Tenant Improvement Allowance, all excess costs shall
be at Tenant’s sole cost and expense.  If
the cost is less than the Tenant Improvement Allowance, the balance of the
Tenant Improvement Allowance shall be applied to the cost of any Special Tenant
Improvements described in Exhibit C, or if none are specified, to the
cost of Tenant Improvements under any then existing lease between Landlord and
Tenant for other premises in the Center. 
Landlord agrees to notify Tenant at least ten (10) days prior to the
date Landlord anticipates substantial completion of the Base Building portion
of Landlord’s Work as set forth in Exhibit C (“Base Building Work”).  The “Delivery Date”
for the Premises shall be the date upon which Landlord has substantially
completed the Base Building Work, as evidenced by a written certificate of
substantial completion issued by Landlord’s architect.  The remaining Landlord’s Work shall be
substantially completed on or before the Rent Commencement Date. As used
herein, “substantial completion” shall mean completed, except for minor punch
list items which do not interfere with Tenant’s ability to complete its
improvements.  The condition of the
Premises in compliance with the requirements set forth above may sometimes be
referred to herein as the “Delivery Condition.”

8.2          Following
delivery of the Premises to Tenant in the Delivery Condition, Tenant shall
diligently proceed to complete Tenant’s Work, including any Special Tenant
Improvements and such other work as it may deem necessary for the conduct of
its business in the Premises.  Prior to
commencing Tenant’s Work, Tenant shall submit to Landlord for approval plans
and specifications prepared by an architect selected by Tenant, which plans
shall be subject to Landlord’s prior reasonable approval.  Once Tenant’s plans are approved by Landlord,
Tenant’s contractors (which shall also be subject to prior reasonable approval
by Landlord) shall obtain all necessary permits for the work set forth in the
Approved Tenant Plans (the “Tenant ‘s Work”) and proceed to complete Tenant’s
Work in compliance with all applicable governmental requirements.

8.3          Within
thirty (30) days following Delivery Date and within thirty (30) days following
the date of substantial completion of Landlord’s Work, Landlord and Tenant
shall mutually prepare a punch list of items to be corrected in the Base
Building Work and other Landlord’s Work, respectively, including any defects or
non-conformance in Landlord’s construction. 
Landlord shall cause its contractors to promptly complete all punch list
items. Landlord’s Work shall also be under warranty by Landlord’s contractors
for a period of one (1) year.  Landlord
hereby assigns to Tenant all warranties and guaranties received by Landlord
from its contractors with respect to Landlord’s Work.  If Landlord’s contractors shall fail to complete
any punch list items within the 90-day period following completion of the
applicable punchlist, and such failure continues after notice from Tenant and
the cure period provided in Article 24, Tenant may at its option (but shall not
be obligated to) complete the required work at Landlord’s cost.  Landlord shall pay to Tenant within thirty
(30) days the amount shown on any statement describing the necessary work
completed by Tenant accompanied by the invoices for such work.

8.4          Landlord’s Work for Building 6 includes
construction of improvements required for nitrogen truck access to the
Premises. Landlord will use diligent efforts to complete said truck access on
or before November 15, 2004,  subject to
delays in the City approval process or Force Majeure delays as described in
Section 32.8 below.  If Landlord has not
completed the construction of the required improvements by November 15, 2004,
Landlord, at its sole cost and expense, agrees to provide temporary nitrogen
truck access to the Premises on or before November 15, 2004 to ensure access
until the permanent improvements have been constructed.

8.5          After
the Premises has been constructed, Landlord’s architect shall measure the gross
leasable area of the Premises, and shall certify to Landlord such measurement
in writing. The GLA so certified will be deemed to be the GLA of the Premises
for all purposes of this Lease.  To
compute the Premises GLA, Building 6 shall be measured to the drip line as
shown on Exhibit A-1.  The initial
monthly Base Rent, estimated tax and operating expense payments, Tenant’s
Proportionate Share, and the Tenant

 8
 

 

Improvement
Allowance were based on the estimated GLA set forth in Paragraph A of the
Recitals at the beginning of this Lease. 
In the event that the Premises GLA as determined pursuant this Section
8.5 is different from the estimated GLA (which difference shall be
certified by Landlord’s architect and approved by Tenant), the Base Rent,
estimated payments, Tenant’s Proportionate Share, and Tenant Improvement
Allowance amounts set forth in Article 1 shall be adjusted accordingly.

8.6          In
the event that Landlord, at its sole option, permits Tenant to take possession
of the Premises prior to the Commencement Date for the purpose of constructing
its Tenant Improvements, such possession shall be on all the terms and
conditions of this Lease except for payment of Rent, specifically including the
insurance and indemnity provisions in Articles 14 and 16.  In the event that Landlord notifies Tenant
that Tenant’s early possession is causing a delay in Landlord’s Work, Tenant
shall promptly cease its construction activities and cause its contractor to
remove its personnel, subcontractors and equipment from Premises until the
Delivery Date or earlier date acceptable to Landlord.

ARTICLE 9.  REPAIRS AND
MAINTENANCE

9.1          Landlord, at its sole cost and
expense, shall be responsible for the 
repair, maintenance and, if necessary, replacement of the structural
elements, the roof structure, foundation and the structural integrity of floor
slabs of Building 6, provided that Tenant shall pay for the cost of any such
repairs to the extent occasioned by the negligent act, omission or willful
misconduct of Tenant, its agents, employees, invitees, licensees or
contractors, or by the construction of Tenant Improvements by Tenant, but only
to the extent such cost is in excess of any proceeds received by Landlord from
the insurance for Building 6 maintained by Landlord pursuant to Section 14.2.

9.2          Subject
to reimbursement by Tenant as provided in Article 10 hereof, Landlord
shall keep and maintain in good repair (including replacement as necessary),
the roof covering and the exterior surfaces of the exterior walls and window
frames of Building 6 (exclusive of doors, door frames, door checks and other entrances
and windows), all Outdoor Areas (defined in Section 10.1) on Parcel 6, all
Shared Areas (as defined in the Declaration) for the use of Parcel 6 and  all systems (including sewer, gas, electrical
and water lines) serving the Premises to the point of connection to Building
6.  Tenant shall give Landlord prompt
written notice of any damage to the Premises requiring repair by Landlord.

9.3          Except to the extent of Landlord’s
obligations provided in Sections 9.1 and 9.2 hereof, Tenant shall, at its expense,
keep and maintain the Premises and every part thereof in good order, condition
and repair, including, without limiting the generality of the foregoing, all
equipment or facilities specifically serving the Premises, such as plumbing,
heating, air conditioning, ventilating, electrical, lighting facilities,
boilers, fired or unfired pressure vessels, fire hose connections if within the
Premises, fixtures, interior walls, interior surfaces of exterior walls,
ceilings, floors, windows, doors, plate glass, and skylights. Notwithstanding
the foregoing, Tenant shall not be required to make any such repairs to the
extent occasioned by the negligent act or omission or willful misconduct of
Landlord, its agents, employees, or contractors. Tenant shall keep its sewers
and drains open and clear to the perimeter of the Premises, and shall keep the
hallways and/or sidewalks and common areas adjacent to the Premises clean and
free of debris created by Tenant.  Tenant
shall reimburse Landlord on demand for the cost of damage to the Premises,
Building 6 or Landlord’s Parcels caused by Tenant or its employees, agents,
customers, suppliers, shippers, contractors, or invitees which is in excess of
any proceeds received by Landlord from the insurance for Building 6 maintained by
Landlord pursuant to Section 14.2. If Tenant shall fail to comply with the
foregoing requirements within ten (10) days after notice from Landlord,
Landlord may (but shall not be obligated to) effect such maintenance and
repair, and the cost thereof together with interest thereon at the Interest
Rate (defined below) shall be due and payable as Additional Rent to Landlord
within thirty (30) days following receipt of Landlord’s written statement of
such costs.

See Addendum A-9.3

9.4          Tenant
in keeping the Premises in good order, condition, and repair shall exercise and
perform good maintenance practices including obtaining, at its expense, a
contract for the repair and maintenance of the air conditioning and heating
system, if any, exclusively serving the Premises and provide Landlord with a
copy of said contract within thirty (30) days after Tenant takes possession of
the Premises.  The contract shall be for
the benefit of Landlord and Tenant and in a form and placed with a licensed
contractor satisfactory to Landlord. 
Tenant obligations shall include restorations, replacements or renewals
when necessary to keep the Premises and all improvements thereon or a part
thereof in good order, condition and state of repair, except the extent of
Landlord’s obligations expressly set forth in this Lease.

9.5          Tenant
shall not make any exterior or structural alterations, changes or improvements
in or to the Premises or material modifications to any of the Base Building
operating systems within the

 9
 

 

Premises
without first obtaining Landlord’s prior written consent (which may be withheld
by Landlord in its sole discretion as to exterior alterations, and which shall
not be unreasonably withheld or delayed with respect to structural or Base
Building system modifications), and all of the same shall be at Tenant’s sole
cost.  Landlord’s consent shall not be
required for any interior cosmetic alterations or alterations not affecting
Base Building exterior, structure or systems as referenced above, or for any
alterations, changes, replacements or improvements to any interior
nonstructural Special Tenant Improvements or any other elements of Tenant’s
Work; provided that Tenant shall obtain required permits and comply with all
other Legal Requirements and all requirements of Article 8 and Exhibit C
regarding construction by Tenant and shall notify Landlord not less than ten
(10) days prior to commencing any such alterations to give Landlord an
opportunity to post a notice of non-responsibility.  Landlord may impose as a condition of its
consent (when required) such requirements as Landlord, in its reasonable
discretion, may deem necessary, including but not limited to, the requirement
that Tenant utilize for such purposes only contractors, materials, mechanics
and materialmen approved by Landlord, and that good and sufficient plans and
specifications be submitted to Landlord at such times as its consent is
requested. Further, Landlord’s consent to any alteration which Tenant proposes
to make after the Commencement Date shall designate by written notice to Tenant
any of the alterations, additions and improvements (collectively, “Alterations”) which Landlord will require Tenant to remove
at the expiration or termination of the Lease and those Alterations (if any)
which Tenant is not permitted to remove. 
If Landlord so designates, Tenant shall prior to the expiration of the
Term promptly remove the Alterations designated to be removed and repair all
damage caused by such removal at its cost and with all due diligence, and shall
surrender the Premises with all Alterations which Tenant is required to
leave.  Unless Landlord designates as a
condition to granting its consent to any Alterations that removal by Tenant is
required or prohibited, Tenant shall have the right, but not the obligation to remove
from the Premises the Alterations for which consent was obtained so long as
Tenant promptly repairs any damage resulting from such removal.  Except as otherwise expressly provided
herein, all Alterations made by Tenant (specifically excluding Tenant’s
furniture, trade fixtures and equipment) shall become the property of Landlord
and a part of the realty and shall be surrendered to Landlord upon the
expiration or sooner termination of the Term hereof.

See Addendum A-9.5.

ARTICLE 10.  OPERATING AND MAINTENANCE COSTS

10.1           All
Common Areas in the Center shall be operated and maintained by the Association
pursuant to the Declaration.  The term “Common
Areas” as used in this Lease shall include all areas in the Center defined as
Common Areas in the Declaration. Landlord agrees to operate and maintain or
cause to be operated and maintained during the term of this Lease all “Outdoor
Areas” on Parcel 6.  The term “Outdoor
Areas” as used in this Lease shall include all areas on each of Landlord’s
Parcels which are not Common Areas, or areas covered by buildings (“Building
Areas”) and are provided by Landlord for the convenience and exclusive use of
tenants of each of Landlord’s Parcels, their respective employees, customers,
suppliers, shippers, contractors, and invitees.

10.2        The
manner and method of operation, maintenance, service and repair of the Common
Areas and the expenditures therefor, shall be determined in accordance with the
provisions of the Declaration.  The
manner and method of operation, maintenance, service and repair of the Outdoor
Areas shall be determined by Landlord and at minimum shall be comparable to
similar projects in the general vicinity of the Center and shall be in
accordance with all Legal Requirements. 
Except as otherwise expressly provided herein, Landlord reserves the
right from time to time to make changes in, additions to and deletions from the
Outdoor Areas and/or Common Areas including without limitation changes in the
location, size, shape and number of driveways, entrances, parking spaces,
parking areas, loading and unloading areas, ingress, egress, direction of
traffic, landscaped areas, walkways and utility raceways and the purposes to
which they are devoted.  Notwithstanding
the foregoing, in no event shall Landlord make or permit any modifications to
Landlord’s Parcels which materially and adversely affect Tenant’s access to or
from Parcel 6 as shown on Exhibit A or which would reduce the number of
exclusive parking spaces on Parcel 6 available to Tenant, its agents, employees
or contractors.

10.3        Tenant
agrees to comply with such reasonable rules and regulations as the Association
may adopt from time to time for the orderly and proper operation of the Common
Areas.  Tenant further agrees to comply
with and observe all reasonable rules and regulations established by Landlord
from time to time for use of the Outdoor Areas on Parcel 6, including, without
limitation, the removal, storage and disposal of refuse and rubbish.  The initial Rules and Regulations for the
Center are attached hereto as Exhibit E. 
All rules and regulations adopted or amended after the date of this
Lease shall be reasonable and non-discriminatory and shall be subject to the
restrictions set forth in Section A-4.9 of the Addendum.

10.4        Commencing
with the Commencement Date, during the Term of this Lease, Tenant shall pay to
Landlord, as Additional Rent, at the time and in the manner specified in
Section 10.6 below, Tenant’s Proportionate Share of all costs and expenses of
every kind and nature paid or incurred by Association and/ or Landlord in
operating, policing, protecting, lighting, providing sanitation and sewer and
other services to, insuring, repairing, replacing and maintaining in neat,
clean, good order and

 10
 

 

condition,
the Common Areas of the Center and all Outdoor Areas on Landlord’s Parcels and
in operating, insuring and maintaining the Buildings on Landlord’s Parcels (“operating and maintenance costs”) that are allocable to
Building 6 as provided in Section 10.5 below.

Subject to the exclusions set forth below, operating and maintenance
costs shall include, but shall not be limited to, the following:  water, gas and electricity to the Common
Areas and Outdoor Areas, and security and guard services; salaries and wages
(including employment taxes and so called “fringe benefits”) or maintenance
contracts of all persons and management personnel to the extent engaged in the
regular operation, servicing, repair and maintenance, (specifically including
the site coordinator and site superintendent, clerical, and on-site and
off-site accounting staff), repair and replacement of roofs of Buildings on
Landlord’s Parcels, painting and cleaning the exterior surfaces of such
Buildings, premiums for liability, property damage and Workers’ Compensation
insurance (which insurance Landlord, at all times during the Lease term, agrees
to maintain with respect to Landlord’s Parcels); all costs associated with
obtaining such insurance or making any claims under such insurance policies,
including the cost of any deductible portion payable with respect to claims
(subject to subparagraphs (x) and (xxv)); personal property taxes, if any;
charges, excises, surcharges, fees or assessments levied by a governmental
agency by virtue of the parking facilities furnished; costs and expenses of
planting, replanting and relandscaping; trash disposal, if any; lighting,
including exterior building lights; utilities; maintenance and repair of
utility lines, sewers and fire detection and suppression systems (including the
water used in connection with such systems); sweeping, repairing and
resurfacing the blacktop surfaces; repainting and restriping;  exterior signs and any tenant directories for
the Center as a whole, reserves set aside for maintenance and repair, the cost
of any environmental inspections; fees for any licenses and/or permits required
for operation of the Common Areas and Outdoor Areas, or any part thereof;
equipment rental or purchases, supplies, postage, telephone, service
agreements, deliveries, promotion, dues and subscriptions, and reasonable legal
fees.

The following costs shall be
excluded from the operating and maintenance costs payable by Tenant:

(i)            the costs of the initial construction of the Center,
including the Buildings, roads, parking lots, utility lines and similar
improvements shown on Exhibit A;

(ii)                                  debt service (including, without limitation,
principal, interest, late fees, prepayment fees, principal, points, impound
payments and all other charges) with respect to any financing relating to
Landlord’s acquisition or initial construction of the Center or any portion
thereof or any refinancing of such costs;

(iii)                               any fees or other amounts payable with
respect to any ground lease now or hereafter affecting any portion of the
Center;

(iv)                              any costs, fines or penalties incurred as a
result of any violation of  laws, rules
or regulations by Landlord, its agents, employees or contractors;

(v)                                 the cost of any items for which Landlord is
reimbursed (or if Landlord fails to carry the insurance required by Section
14.2, would have been so reimbursed) by insurance proceeds, condemnation
awards, other tenants of the Center, or for which Landlord is otherwise
actually reimbursed;

(vi)                              any real estate brokerage commissions or
other costs (including, without limitation, finder’s fees, legal fees, space
planning fees and review and supervision fees) incurred in connection with the
sale, leasing or subleasing of any portion of the Center, including the
renewal, extension or modification of leases;

(vii)                           any costs representing amounts paid to an
entity or person which is an affiliate of Landlord which is in excess of the
amount which would have been paid in the absence of the relationship,
including, without limitation, any overhead or profit increment paid to
subsidiaries or affiliates of Landlord for goods and/or services to any portion
of the Center to the extent in excess of the amount which would be paid to
unaffiliated third parties on a competitive basis;

(viii)                        capital improvements and expenditures shall
be amortized over the useful life of the capital item in accordance with GAAP.

(ix)                                non-cash items, such as deductions for
depreciation or obsolescence of any improvements or equipment within or used in
connection with the Center, and reserves for future expenditures (except reserves
maintained by the Association pursuant to the Declaration);

(x)                                   costs incurred by Landlord for the repair of
damage to the Center caused by fire, windstorm, earthquake or other casualty,
condemnation or eminent domain; provided that

 11
 

 

an amount equal to the
deductible under Landlord’s insurance policy may be included, up to a maximum
of $5,000 for property damage and $25,000 for liability insurance (collectively
the “Existing  Deductibles”), unless otherwise approved by
Tenant, and specifically excluding any earthquake insurance deductible;

(xi)                                Landlord’s general corporate overhead and
general administrative expenses (including memberships, travel, recruitment and
marketing);

(xii)                             any compensation or benefits paid to clerks
or attendants for parking operations of the Center, including validated parking
for any entity unless the revenues, if any, from such operations are used to
reduce the operating and maintenance costs;

(xiii)                          electric power, water or other utility costs
for which any tenant or occupant of the Center directly contracts with the
local public service company or for which any tenant is separately metered or
submetered and pays Landlord directly;

(xiv)                         penalties, late charges and interest incurred
as a result of Landlord’s failure or negligence to make payments and/or to file
any returns (including tax or other informational returns) when due, unless due
to Tenant’s failure to timely pay the Rent hereunder;

(xv)                            Landlord’s charitable or political
contributions, membership dues to organizations or expenses related to
attendance at or travel to meetings of political, charitable or business
organizations;

(xvi)                         costs associated with the operation of the
business of the corporation, partnership or other entity which constitutes
Landlord as the same are distinguished from the costs of operation of the
Center, including partnership accounting and legal matters, and costs of
selling or mortgaging any of Landlord’s interest in the Center;

(xvii)                      any expenses for repairs or maintenance to
the extent reimbursed through warranties, service contracts or recoveries from
vendors;

(xviii)                   any costs incurred in connection with the
defense of Landlord’s title to the Center or any portion thereof;

(xix)                           fines and penalties incurred by Landlord due
to the violation by Landlord or any tenant of the Center of the terms and
conditions of any lease at the Center, or fines or penalties incurred by
Landlord due to the violation by Landlord or any tenant of the Center of any
law, code, regulation or ordinance;

(xx)                              marketing, advertising and promotional
expenditures ;

(xxi)                           any bad debt or expense, rent loss or
reserves for bad debt or rent loss;

(xxii)                        any amounts constituting “Taxes” as defined
in and to the extent payable pursuant to Article 7 of this Lease;

(xxiii)                     the costs of any building repairs,
maintenance, replacement or casualty insurance for any buildings other than
Building 6;

(xxiv)                    any costs which would duplicate a cost
included in the Association charges payable by Tenant with respect to Parcel 6;

(xxv)                       any premiums for any policy of earthquake
insurance with respect to the Center or any portion thereof or any deductible
amount under such policies.

10.5        Tenant
shall pay its share of the operating and maintenance costs described in Section
10.4 above as provided in this Section 10.5.  Tenant’s share of operating and maintenance
costs for the Common Areas of the Center shall be Tenant’s Proportionate Share
of such costs allocated by the Association to Parcel 6 pursuant to the
Declaration.  Tenant’s share of all other
operating and maintenance costs shall be as follows:  (i) costs related to repairs the Buildings on
Landlord’s Parcels shall be determined by the GLA of the Premises compared to
the aggregate GLA of all Buildings on Landlord’s Parcels, (ii) costs related to
the Outdoor Areas on Landlord’s Parcels shall be determined by the square
footage of Parcel 6 compared to the total square footage of all of Landlord’s
Parcels, and then charging Tenant for Tenant’s Proportionate Share thereof, and
(iii) notwithstanding the foregoing, operating costs which benefit only one or
a portion of all of Landlord’s Parcels shall be allocated only among the
Parcels benefited either by GLA or Parcel square footage, as applicable, and
Tenant shall be charged only for

 12
 

 

Tenant’s
Proportionate Share of that portion of the operating costs that is allocable to
Building 6 or Parcel 6, as the case may be.

10.6        As
Additional Rent, Tenant shall pay Landlord monthly on the first day of each
month, following the Commencement Date and continuing on the first day of each
month thereafter during the Term hereof, an operating and maintenance charge in
an amount estimated by Landlord to be Tenant’s share of the “operating and maintenance costs”.  If the Commencement Date does not occur the
first day of a month, Tenant’s first monthly payment shall include the amount
payable for the partial month at the beginning of the term. The initial monthly
operating and maintenance charge shall be the amount estimated by Landlord as
set forth in Paragraph 1(d). Landlord may adjust said monthly charge at
the end of each calendar year thereafter on the basis of Landlord’s reasonably
anticipated costs for the following calendar year.

10.7        Within
one hundred twenty (120) days after the end of each calendar year, Landlord
shall furnish to Tenant a statement showing the total operating and maintenance
costs, Tenant’s share of such costs, and the total of the monthly payments made
by Tenant to Landlord during the calendar year just ended.  Landlord shall keep good and accurate books
and records concerning the operation, maintenance and management of the
Landlord’s Parcels, and Tenant and its agents shall have the right, upon twenty
(20) days’ written notice given within nine (9) months after receipt of the
statement for a calendar year, and at Tenant’s sole cost and expense to audit,
inspect and copy such books and records with respect to such calendar year at
the office where the same are located. 
If such audit discloses that the annual statement has overstated the
actual operating and maintenance expenses for the calendar year under review,
Landlord shall rebate to Tenant the amount by which Tenant has been overcharged
or, at Tenant’s election, Tenant may offset such amount against operating and
maintenance charges becoming due; and if the audit discloses that Landlord’s
annual statement has overstated such charges by more than five percent (5%),
then, in addition to rebating to Tenant any overcharge, Landlord shall also pay
the reasonable costs incurred by Tenant for such audit. If Landlord disputes
the results of Tenant’s audit, the parties shall submit the dispute for
resolution by arbitration in accordance with the procedures set forth in
Section 10.4 of the Declaration, which shall be deemed to be incorporated herein
by this reference. The decision of the arbitrator shall be binding and
conclusive on the parties.

10.8        If
Tenant’s share of the operating and maintenance costs for the accounting period
exceeds the payments made by Tenant, Tenant shall pay Landlord the deficiency
within ten (10) days after the receipt of Landlord’s statement.  If Tenant’s payments made during the
accounting period exceed Tenant’s pro-rata share of the operating and
maintenance costs, Tenant may deduct the amount of the excess from the
estimated payments next due to Landlord. 
If a credit remains at the end of the Lease Term, such credit shall be
refunded by Landlord to Tenant within twenty (20) business days thereafter.  The obligations of Landlord and Tenant under
this Section 10.8 shall survive the termination of this Lease.

ARTICLE 11.  TRADE FIXTURES AND
SURRENDER

11.1        Upon
the expiration or sooner termination of the Term hereof, Tenant shall surrender
the Premises including, without limitation, all apparatus and fixtures then
upon the Premises, in good condition and repair, reasonable wear and tear
excepted, broom clean and free of trash and rubbish, subject, however to the
following:

a  Tenant shall remove all
Alterations which Landlord has designated to be removed pursuant to Section 9.5
above and shall leave all Alterations which Landlord has designated pursuant to
that Section must remain;

b. If no consent was required or obtained, Tenant shall either remove
or leave all Alterations which Landlord prior to the end of the Term designates
in writing to Tenant must be removed or left in place;

c. Tenant at its election may remove or leave all Alterations with
respect to which Landlord has not made a designation as described in (a) or (b)
above.

d. Tenant shall remove all of Tenant’s Personal Property (as defined in
Section 11.3 below).

e. Tenant shall repair all damage caused by removal of its Personal
Property and any Alterations Tenant is permitted to remove.

Notwithstanding
anything to the contrary herein, Tenant Improvements and any Special Tenant
Improvements shall be the property of Landlord throughout the Term  to the extent of the amount of the Tenant
Improvement Allowance, and such improvements may not be removed by Tenant
without Landlord’s prior written consent. 
To the extent the costs of Tenant Improvements and/or Special Tenant
Improvements exceed the Tenant Improvement Allowance, such improvements shall
be owned by Tenant

 13

 

throughout
the Term. At the end of the Term, all Tenant Improvements and Special Tenant
Improvements which Tenant  is not
required to remove in accordance with the terms hereof shall be surrendered by
Tenant without any injury, damage or disturbance thereto, and Tenant shall not
be entitled to any payment therefor.

11.2        Within
ninety (90) days prior to its Lease expiration, Tenant shall notify Landlord in
writing of the manner and means in which it will remove any and all Hazardous
Substances used in the Premises during its occupancy.  Tenant shall also certify in writing upon
delivery of Premises to Landlord on the date of the Lease expiration that all
Hazardous Substances were removed in accordance with all governmental and
regulatory laws.

11.3        Moveable
trade fixtures, furniture and other personal property (collectively, Tenant’s “Personal Property”) installed in the Premises by Tenant at
its cost shall be Tenant’s property unless otherwise provided in Section 11.1
above and Tenant shall remove all of the same prior to the termination of this
Lease and at its own cost repair any damage to the Premises and Parcel 6 caused
by such removal.  If Tenant fails to
remove any of such property, Landlord may at its option retain such property as
abandoned by Tenant and title thereto shall thereupon vest in Landlord, or
Landlord may remove the same and dispose of it in any manner and Tenant shall,
upon demand, pay Landlord the actual expense of such removal and disposition
plus the cost of repair of any and all damage to said Premises and the building
thereto resulting from or caused by such removal.

ARTICLE 12.  DAMAGE OR
DESTRUCTION

12.1        Except
as otherwise provided in Section 12.2 below, if the Premises are damaged and
destroyed by any casualty covered by fire and special extended coverage
insurance policies which Landlord is required to provide pursuant to Article
14, Landlord shall repair such damage as soon as reasonably possible, to
the extent of the available proceeds, and the Lease shall continue in full
force and effect.

12.2        If
the Premises are damaged or destroyed by any casualty covered by Landlord’s
fire and special extended coverage insurance policies which Landlord is
required to provide pursuant to Article 14, to the extent of
seventy-five percent (75%) or more of the replacement cost thereof, or to the
extent of twenty-five percent (25%) or more of the replacement cost of the
Premises if the damage occurs during the last twelve (12) months of the Term,
or if the insurance proceeds which are received by Landlord, under the policies
Landlord is required to provide, are not sufficient to repair the damage
(specifically including any insufficiency due to payment of such proceeds to
Landlord’s lender, if required), then Landlord may, at Landlord’s option, either
(i) repair such damage as soon as reasonably possible, in which event this
Lease shall continue in full force and effect, or (ii) cancel and terminate
this Lease as of the date of the occurrence of such damage.  Landlord shall deliver to Tenant written notice
of Landlord’s election within sixty (60) days after the date of the occurrence
of the damage, which notice shall also specify the expected time to restore the
Premises if Landlord elects to repair the damages.

12.3        If
at any time during the Term the Premises are damaged and such damage was caused
by a casualty not covered under the insurance policy Landlord is required to
carry pursuant to Section 14.2, Landlord may, at its option, either (i) repair
such damage as soon as reasonably possible at Landlord’s expense, in which
event this Lease shall continue in full force and effect, or (ii) cancel and
terminate this Lease as of the date of the occurrence of such damage, by giving
Tenant written notice of Landlord’s election to do so within thirty (30) days
after the date of occurrence of such damage, in which event this Lease shall so
terminate unless within thirty (30) days thereafter Tenant agrees to repair the
damage at its cost and expense or pay for Landlord’s repair of such damage.

12.4        Notwithstanding
anything to the contrary herein, if it is determined that the damage or
destruction resulting from a casualty cannot be repaired within twelve (12)
months following the date of casualty, Tenant may terminate this Lease by
written notice delivered to Landlord within thirty (30) days following Tenant’s
receipt of Landlord’s written notice given under Section 12.2 or 12.3 above.

12.5        In
the event of any damage or destruction the Base Rent and all Additional Rent
payable by Tenant hereunder shall be proportionately reduced from the date of
casualty until the completion by Landlord of any repair or restoration pursuant
to this Article 12 (provided that the abatement period shall not exceed
twelve (12) months). Said reduction shall be based upon the extent to which the
damage or the making of such repairs or restoration shall interfere with Tenant’s
business conducted in the Premises.

12.6        Landlord
shall in no event be required or obligated to repair, restore or replace any of
Tenant’s Personal Property. Landlord shall restore the Tenant Improvements and
Special Tenant Improvements (if any) to the extent of insurance proceeds
received by Landlord.  In the event of a
termination of this Lease pursuant to this Article 12, Landlord shall pay to
Tenant from the proceeds of the

 14
 

 

insurance
payable to Landlord with respect to the Tenant Improvements and Special Tenant
Improvements an amount equal to the unamortized cost of Tenant’s ownership
interest in the Tenant Improvements and the Special Tenant Improvements.

12.7        In
the event of a dispute by the parties regarding the extent of damage, duration
of repair or rights of termination under Articles 12 or 13 only of the Lease,
either party can request arbitration within ninety (90) days after the date of
the damage has occurred.  In such event
the dispute shall be resolved by arbitration in accordance with the procedures
set forth in Section 10.4 of the Declaration. The decision of the arbitrator
shall be binding and conclusive on the parties.

ARTICLE 13.  EMINENT DOMAIN

13.1        If
all or substantially all of the Premises shall be taken or appropriated by any
public or quasi-public authority under the power of eminent domain (or similar
law authorizing the involuntary taking of private property, which shall include
a sale in lieu thereof to a public body), either party hereto shall have the
right, at its option, to terminate this Lease effective as of the date
possession is taken by said authority, and Landlord shall be entitled to any
and all income, rent, award and any interest thereon whatsoever which may be
paid or made in connection with such public or quasi-public use or
purpose.  Tenant shall have no claim
against Landlord for any portion of Landlord’s award and shall not make a claim
for the value of any unexpired term of this Lease.

13.2        If
only a portion of the Premises is taken such that the Premises are still
accessible and usable for the operation of Tenant’s business, then this Lease
shall continue in full force and effect and the proceeds of the award shall be
used by Landlord to restore the remainder of the improvements on the Premises
so far as practicable to a complete unit of like quality and condition to that
which existed immediately prior to the taking, and all Rent payable by Tenant
hereunder shall be reduced in proportion to the floor area of the Premises
which is no longer available for Tenant’s use. 
Landlord’s restoration work shall not exceed the scope of work done by
Landlord in originally constructing the Premises and the cost of such work
shall not exceed the amount of the award received by Landlord with respect to
the Premises.

13.3        Nothing
hereinbefore contained shall be deemed to deny to Tenant its right to seek a
separate award from the condemning authority for the unamortized costs of
Tenant’s ownership interest in the Tenant Improvements and Special Tenant
Improvements, damage to its trade fixtures and personal property, relocation
expenses or loss of goodwill.

ARTICLE 14.  INSURANCE

14.1        Tenant
shall, at all times during the Term hereof, at its expense, carry and maintain
insurance policies in the amounts and in the form hereafter provided:

(a)           Commercial Liability and Property Damage:  Commercial general liability insurance in an
amount not less than One Million Dollars ($1,000,000) per occurrence and Two
Million Dollars ($2,000,000) in the general
aggregate of bodily injury and property damage insuring against liability of
the insured with respect to the Premises or arising from the maintenance, use
or occupancy thereof.  All such insurance
shall include contractual liability insurance for the bodily injury, personal
injury and property damage liability assumed by Tenant in Article 16
hereof.  Said insurance shall provide
that Landlord is named as an additional insured and will have a “separation of
insureds” clause.  Landlord’s recovery
under Tenant’s insurance as an additional insured shall apply to loss or
damages resulting from Tenant’s negligence and shall not be restricted due to
any contributory negligence on the part of Landlord.  However, Tenant’s insurance shall not
responsible for loss or damage that is determined to be due to the sole
negligence of Landlord.  The insurance by
this policy shall be primary insurance. The liability insurance required to be
provided by Tenant shall be applicable to claims incurred by reason of events
with respect to the Premises or arising from the maintenance, use or occupancy
thereof during the term of this Lease, regardless of when such claims shall be
first made against Tenant and/or Landlord. 
Should any required liability insurance be written on a claims-made
basis, Tenant shall continue to provide evidence of such coverage beyond the
term of this Lease, for a period mutually agreed upon by Landlord and Tenant at
the time of termination, but in no event for a period of less than five years.
Not more frequently than once each year, if in the opinion of Landlord’s lender
or of the insurance consultant retained by Landlord, the amount of liability
insurance coverage at that time is not adequate, Tenant shall increase the
insurance coverage as either required by Landlord’s lender or recommended by
Landlord’s insurance consultant.

(b)           Tenant Personal Property:  Insurance covering all of Tenant’s trade
fixtures, merchandise and other personal property from time to time in the
Premises in an amount equal to their full replacement cost from time to time,
providing protection against the “risks of physical damage” as provided in the ISO Causes of Loss – Special Form (CP 10 30), or equivalent
insurance company form.

 15
 

 

The
proceeds of such insurance shall, so long as this Lease remains in effect, be
used to repair or replace the property damaged or destroyed, as determined by
Tenant.

(c)           Worker’s Compensation:  Worker’s Compensation insurance as required
by the State of California

(d)           Policy Form:  All
insurance to be carried by Tenant hereunder shall be in companies, on forms and
with loss payable clauses satisfactory to Landlord.  The commercial liability and property damage
insurance carried by Tenant pursuant to Section 14.1(a) above shall name
Landlord, its managers, their officers, directors, partners, employees and
agents as additional insureds.  Each
policy shall include a notice of cancellation to additional insured on the Additional
Insured endorsement providing that no such policy shall be canceled except upon
thirty (30) days advance notice to all additional insureds by the issuing
company in the event of cancellation. 
Tenant shall have the right to maintain required insurance under blanket
policies provided that Landlord and such parties as Landlord may reasonably
designate from time are named therein as additional insureds (as to Tenant’s
liability policies)and that the coverage afforded Landlord will not be reduced
or diminished by reason thereof, including self funded insurance reserves.

(e)           Evidence of Insurance:  Concurrent with delivery of possession of the
Premises to Tenant, Tenant shall provide Landlord with the following evidence
of insurance:

(i)         Certificate evidencing
that each of the insurance policies required in subparagraphs (a), (b) and (c)
above are in full force and effect, and

(ii)        A copy of the
applicable provision or endorsement from each of Tenant’s policies specifying
that Landlord and the parties designated by Landlord are additional insureds,
that the insurer recognizes the waiver of subrogation set forth in Article
15 hereof, and that the insurer agrees not to cancel the policy without the
notice to Landlord specified in subparagraph (d) above.

14.2        Subject
to reimbursement by Tenant as provided in Article 10 herein, Landlord
shall obtain and keep in force during the term hereof, a policy or policies of
insurance covering loss or damage to Building 6 and improvements on Landlord’s
Parcels. Landlord’s insurance shall cover the “risks of physical damage” as
provided in the ISO Causes of Loss – Special Form (CP 10
30), or equivalent insurance company form, together with an
endorsement providing for rental income insurance covering all Rent payable by
Tenant hereunder for a period of twelve (12) months.

14.3        Landlord’s
policy described in Section 14.2 shall also insure all Tenant Improvements and
Special Tenant Improvements for one hundred percent of the replacement cost
thereof, with an agreed amount endorsement in lieu of coinsurance.  Tenant shall pay to Landlord the cost of the
insurance covering the Tenant Improvements and Special Tenant Improvements as
provided in Article 10 herein. 
Tenant acknowledges that Landlord’s insurance on the Tenant and Special
Tenant Improvements will not include earthquake insurance.  Upon Tenant’s request, Landlord shall obtain
such coverage at Tenant’s sole cost and expense.

14.4        If
Tenant shall fail to procure and maintain any insurance policy required herein,
Landlord may (but shall not be obligated to), after reasonable written notice
to Tenant procure the same on Tenant’s behalf, and the cost of same shall be
payable as Additional Rent within ten (10) business days after written demand
therefor by Landlord.  Tenant’s failure
to pay such Additional Rent shall constitute an Event of Default of this Lease,
and Landlord may, without any further notice, exercise its remedies specified
in Article 25 hereof.

ARTICLE 15.  WAIVER
OF SUBROGATION

Any fire and special extended coverage insurance and any other property
damage insurance carried by either party with respect to Landlord’s Parcels,
the Common Areas, the Premises and property contained in the Premises or
occurrences related to them shall include a clause or endorsement denying to
the insurer rights of subrogation against the other party to the extent rights
have been waived by the insured prior to occurrence of damage or loss.  Each party, notwithstanding any provisions of
this Lease to the contrary, waives any right of recovery against the other for
injury or loss due to hazards covered by insurance containing such clause or
endorsement to the extent that the damage or loss is covered by such insurance.

ARTICLE 16.  RELEASE
AND INDEMNITY

16.1        Tenant
shall indemnify, defend and hold harmless Landlord against and from any and all
claims, actions, damages, liability and expenses, including reasonable
attorneys’ fees, arising from or out of Tenant’s use of the Premises or from
the conduct of its business or from any activity, work, or other

 16
 

 

things
done, permitted or suffered by the Tenant in or about the Premises or Tenant’s
reserved parking spaces.  Tenant shall
further indemnify, defend and hold Landlord harmless from any and all claims
arising from any negligent act or omission or willful misconduct of Tenant, or
any officer, agent, employee, contractor, guest, or invitee of Tenant, and from
all costs, damages, attorney’s fees, and liabilities incurred in defense of any
such claim of any action or proceeding brought thereon, including any action or
proceeding brought against Landlord by reason of such claim.  Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property or
injury to persons in the Premises, from any cause except to the extent arising
out of or resulting from Landlord’s (or its agents’, employees’ or contractors’)
negligent act or omission or willful misconduct.  Tenant shall give prompt notice to Landlord
in case of casualty or accidents in the Premises.

16.2        Landlord
shall indemnify, defend and hold harmless Tenant against and from any and all
claims, actions, damages, liability and expenses, including reasonable
attorneys’ fees, arising from or out of any activity, work, or other things
done by Landlord, its agents, employees or contractors in or about the Outdoor
Areas and Common Areas on Landlord’s Parcels. 
Landlord shall further indemnify, defend and hold Tenant harmless from
any and all claims arising from the negligent act or omission or willful
misconduct of Landlord, or any officer, agent, employee, or contractor of
Landlord while on any of Landlord’s Parcels or Buildings, and from all costs,
damages, attorney’s fees, and liabilities incurred in defense of any such claim
of any action or proceeding brought thereon, including any action or proceeding
brought against Tenant by reason of such claim.

16.3        Except
to the extent arising out of or resulting from Landlord’s negligent act or
omission or willful misconduct, Landlord shall not be liable for injury or
damage which may be sustained by the person, goods, wares, merchandise or
property of Tenant, its employees, invitees or customers, or by any other
person in or about the Premises caused by or resulting from fire, building
vibrations or movement of floor slab, steam, electricity, gas, water or rain which
may leak or flow from or into any part of the Premises, or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures of the same,
whether said damage or injury results from conditions arising upon the Premises
or from other sources.  Landlord shall
not be liable for any damages arising from any act or neglect of any other
tenant of the Building.  Notwithstanding
the foregoing, nothing contained herein shall limit any representations,
warranties or covenants of Landlord set forth in this Lease, or any warranties
provided with respect to work performed by Landlord’s contractors.  Further, notwithstanding the foregoing, the
terms of Article 12 shall govern with respect to any events of casualty.

ARTICLE 17.  INSOLVENCY,
ETC.  OF TENANT

17.1        The
filing of any petition in bankruptcy whether voluntary or involuntary, or the
adjudication of Tenant as bankrupt or insolvent, or the appointment of a
receiver or trustee to take possession of all or substantially all of Tenant’s
assets, or an assignment by Tenant for the benefit of its creditors, or any
action taken or suffered by Tenant under any State or Federal insolvency or
bankruptcy act including, without limitation, the filing of a petition for or
in reorganization, or the taking or seizure under levy of execution or
attachment of the Premises or any part thereof, shall constitute a breach of
this Lease by Tenant, and in any one or more of said events this Lease shall be
deemed terminated to the extent such result is permitted by relevant bankruptcy
laws and statutes.

17.2        Landlord
shall be entitled, notwithstanding any provision of this Lease to the contrary,
upon re-entry of the Premises in case of a breach under this Article, to
recover from Tenant as damages, and not as a penalty, such amounts as are
specified in Article 25, unless any statute governing the proceeding in
which such damages are to be proved shall lawfully limit the amount thereof
capable of proof, in which later event Landlord shall be entitled to recover as
and for its damages the maximum amount permitted under said statute.

ARTICLE 18.  PERSONAL
PROPERTY AND OTHER TAXES

18.1        Tenant
shall pay, before delinquency, any and all taxes and assessments, sales, use,
business, occupation or other taxes, and license fees or other charges whatever
levied, assessed or imposed upon its business operations conducted in the
Premises.  Tenant shall also pay, before
delinquency, any and all taxes and assessments levied, assessed or imposed upon
its equipment, furniture, furnishings, trade fixtures, merchandise and other
personal property in, on or upon the Premises.

18.2        Tenant
shall pay all taxes and assessments levied, assessed or imposed on Tenant’s
trade fixtures and its leasehold improvements, regardless of whether such
improvements were installed and/or paid for by Tenant or by Landlord, and
regardless of whether or not the same are deemed to be a part of the Building.

 17
 

 

18.3        Tenant
shall pay (or reimburse Landlord therefor forthwith on demand) any excise tax,
gross receipts tax, or any other tax however designated, and whether charged to
Landlord, or to Tenant, or to either or both of them, which is imposed on or
measured by or based on the rentals to be paid under this Lease, or any estate
or interest of Tenant, or any occupancy, use or possession of the Premises by
Tenant.

18.4        Nothing
hereinabove contained in this Article shall be construed as requiring Tenant to
pay any inheritance, estate, succession, transfer, gift, franchise, income or
profits tax or taxes imposed upon Landlord.

ARTICLE 19.  SIGNS

Tenant shall not place, construct or maintain on the
windows, doors or exterior walls or roof of the Premises or any interior
portions that may be visible from the exterior of the Premises, any signs,
advertisements, names, trademarks or other similar item without Landlord’s
consent, which consent shall not be unreasonably withheld or delayed so long as
the signage Tenant installs complies with all Legal Requirements and the master
sign program for the Center.  Upon
written notice from Landlord specifying the violation in reasonable detail,
Tenant shall, at Tenant’s cost, remove any item so placed or maintained which
does not comply with the provisions of this Section.  Landlord agrees that Landlord shall not
install or permit the installation of signs or billboards on the exterior walls
and/or the roof of the Premises.

See Addendum 32.26.

ARTICLE 20.  ASSIGNMENT
AND SUBLETTING

20.1        Subject
to the terms of Section 20.4, Tenant shall not voluntarily,
involuntarily, or by operation of law assign, transfer, hypothecate, or
otherwise encumber this Lease or Tenant’s interest therein, and shall not
sublet nor permit the use by others of the Premises or any part thereof without
first obtaining in each instance Landlord’s written consent.  If consent is once given by Landlord to any
such assignment, transfer, hypothecation or subletting, such consent shall not
operate as a waiver of the necessity for obtaining Landlord’s consent to any
subsequent assignment, transfer, hypothecation or sublease, and no assignment
shall release Tenant from any liability hereunder.  Any such assignment or transfer without
Landlord’s consent shall be void and shall, at Landlord’s option, constitute an
Event of Default of this Lease.  This
Lease shall not, nor shall any interest therein, be assignable as to Tenant’s
interest by operation of law, without Landlord’s express prior written consent.

20.2        The
consent of Landlord required under Section 20.1 above shall not be
unreasonably withheld or delayed.  Should
Landlord withhold its consent for any of the following reasons, the withholding
shall be deemed to be reasonable:

(a)                                                     Conflict of the proposed use with other uses
in the Building or Center;

(b)                                                    Financial inadequacy of the proposed
subtenant or assignee;

(c)                                                     A proposed use which would diminish the
reputation of the Center or the other businesses located therein;

(d)                                                    A proposed use which would have a detrimental
impact on the common facilities or the other tenants in the Center.

20.3        Each
assignee or transferee shall agree to assume and be deemed to have assumed this
Lease and shall be and remain liable jointly and severally with Tenant for the
payment of all rents due here under, and for the due performance during the
term of all the covenants and conditions herein set forth by Tenant to be
performed.  No assignment or transfer
shall be effective or binding on Landlord unless said assignee or transferee
shall, concurrently, deliver to Landlord an assumption agreement by said
assignee or transferee assuming all obligations of Tenant under this Lease.

20.4        Notwithstanding
anything to the contrary herein, Landlord’s consent shall not be required for
any assignment, transfer or sublease to any entity which controls, is
controlled by or under common control with Tenant, or to any entity resulting
from a reorganization, merger or sale of substantially all of the assets of
Tenant.  The term “control” shall mean
the ownership of at least 50% of the stock or assets of Tenant.  Further, Landlord’s consent shall not be
required for any offering of the stock of Tenant on the public market or any
open market transactions involving the stock of Tenant.  If Tenant is not a publicly traded
corporation, or if Tenant is an unincorporated association or a partnership,
the transfer, assignment, or hypothecation or any stock or interest in such
corporation, association or partnership in the aggregate of in excess of fifty
percent (50%) shall be deemed an assignment within the meaning of this Article,
except transfers in connection with Tenant becoming a publicly traded
corporation.  Tenant shall give Landlord

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prior
written notice of all transfers, whether or not consent is required, and in no
event shall Tenant be released from any of its obligations under this Lease.

20.5        If
Tenant intends to assign this Lease and Landlord’s consent to such assignment
is required, Tenant shall give prior written notice to Landlord of each such
proposed assignment or subletting specifying the proposed assignee or subtenant
and the terms of such proposed assignment or sublease.  Landlord shall, within fifteen (15) business
days thereafter, notify Tenant in writing either, that (i) it consents (subject
to any conditions of consent that may be imposed by Landlord) or does not
consent to such transaction, or (ii) it elects to cancel this Lease in which
event the parties would have no further obligations to each other except with
respect to obligations which arose prior to the effective date of termination
or which otherwise survive the termination of this Lease.

20.6        In
the event of an assignment or subletting which requires Landlord’s consent
pursuant to this Article 20, Tenant shall assign to Landlord 75% of any and all
consideration paid to Tenant directly or indirectly for the assignment by
Tenant of its leasehold interest, and 75% of any and all subrentals payable by
sublessees to Tenant which are in excess of the Rent payable by Tenant
hereunder.  Tenant’s brokerage fees shall
be paid by Tenant and deducted from excess proceeds on a pro rata basis monthly
over the term of the sublease.

20.7        Tenant
agrees to reimburse Landlord for Landlord’s reasonable costs and attorneys fees’
incurred in connection with the processing and documentation of any requested
assignment, transfer, hypothecation or subletting of this Lease aforesaid,
whether or not such consent is granted, in an amount not to exceed $2500 in
each instance.

ARTICLE 21.  RIGHTS
RESERVED BY LANDLORD

Subject to Tenant’s reasonable security and trade secret requirements,
upon reasonable prior notice, Landlord or its agents shall have the right to
enter the Premises for the purposes of:

(a)                                                     Inspection of the Premises and the equipment
therein, not to exceed once per calendar quarter (or not to exceed once per
year for inspections of any clean room), except in the event of an emergency or
unless a known problem exists or Landlord is responding to a third party
complaint involving the Premises;

(b)                                                    Making repairs or improvements to the
Premises and/or Building 6 which are the responsibility of Landlord under the
terms of this Lease;

(c)                                                     Performing remodeling, construction or other
work incidental to any portion of the Building 6, including, without
limitation, the premises of another tenant adjacent to, above or below the
Premises. Landlord agrees to coordinate the timing and staging of any major
construction program with Tenant

(d)                                                    Showing the Premises to persons wishing to
purchase or make a mortgage loan upon the same;

(e)                  Posting notice of non-responsibility;

(f)                                                       Posting “For Lease” signs and showing the
Premises to persons wishing to rent the Premises during the last six (6) months
of the term of this Lease.

ARTICLE 22.  INTENTIONALLY DELETED

ARTICLE 23.  RIGHT
OF LANDLORD TO PERFORM

All covenants to be performed by Tenant hereunder shall be performed by
Tenant at its sole cost and expense and without any abatement of any rent to be
paid hereunder, subject to the terms and conditions set forth in this
Lease.  If Tenant shall fail to pay any
sum, other than rent, required to be paid by it or shall fail to perform any
other act on its part to be performed, and such failure shall continue beyond
the applicable notice and grace period set forth in Article 25, Landlord
may (but shall not be obligated to) and without waiving or releasing Tenant
from any of its obligations, make any such payment or perform any such other
act on Tenant’s part to be made or performed as herein provided.  All sums so paid by Landlord and all
necessary incidental costs, together with interest at the Interest Rate from
the date of such payment by Landlord shall be payable by Tenant as Additional
Rent within thirty (30) days after Landlord’s written demand therefor.  Tenant’s failure to pay such Additional Rent
shall constitute an Event of Default of this Lease, and Landlord may, without
any further notice, exercise its remedies specified in Article 25
hereof.

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ARTICLE 24. 
LANDLORD DEFAULT

24.1        If
Landlord shall be in default of any covenant of this Lease to be performed by
it, Tenant, prior to exercising any right or remedy it may have against
Landlord on account thereof, shall give Landlord a thirty (30) day written
notice of such default, specifying the nature of such default.  Notwithstanding anything to the contrary
elsewhere in this Lease, Tenant agrees that if the default specified in said
notice is of such nature that it can be cured by Landlord, but cannot with
reasonable diligence be cured within said thirty (30) day period, then such
default shall be deemed cured if Landlord within said thirty (30) days period
shall have commenced the curing thereof and shall continue thereafter with all
due diligence to cause such curing to proceed to completion.

24.2        If
Landlord shall fail to cure a default of any covenant of this Lease to be
performed by it within the time period provided in Section 24.1, the
same shall be deemed an Event of Default by Landlord and, subject to Section
24.3, Tenant may pursue all remedies available at law or in equity and may
recover all costs and expenses incurred by Tenant by reason of such default by
Landlord.  Notwithstanding the foregoing,
if Tenant shall recover a money judgment against Landlord, such judgment shall
be satisfied solely out of the right, title and interest of Landlord in the
Premises and its underlying realty and out of the rents, or other income from
said property receivable by Landlord, or out of the consideration received by
Landlord’s right, title and interest in said property, but neither Landlord nor
any partner or joint venture of Landlord shall be personally liable for any
deficiency.

24.3        Tenant
agrees to give any mortgagee and/or trust deed holders (“Mortgagee”),
by registered mail, a copy of any notice of default served upon the Landlord,
provided that prior to such notice Tenant has been notified in writing (by way
of Notice of Assignment of Rents and Leases, or otherwise) of the address of
such Mortgagee.  Tenant further agrees
that if Landlord shall have failed to cure such default within the time
provided for in this Lease, then the Mortgagee shall have an additional sixty
(60) days within which to cure such default or if such default cannot be cured
within that time, then such additional time as may be necessary to cure such
default shall be granted if within such sixty (60) days Mortgagee has commenced
and is diligently pursuing the remedies necessary to cure such default
(including, but not limited to, commencement of foreclosure proceedings, if
necessary to effect such cure), in which event the Lease shall not be terminated
while such remedies are being so diligently pursued.

ARTICLE 25.  DEFAULT
AND REMEDIES

25.1                     The occurrence of any of
the following shall constitute an “Event of Default”
under this Lease by Tenant:

(a)                  Any failure
by Tenant to pay when due any of the Rent required to be paid by Tenant
hereunder where such failure continues for five (5) business days after Tenant’s
receipt of written notice that the same is overdue;

(b)                 A failure by
Tenant to observe and perform any other provision of this Lease to be observed
or performed by Tenant where such failure continues for thirty (30) days after
written notice thereof from Landlord; provided, that if the nature of such
default is such that the same cannot with due diligence be cured within said
period, Tenant shall not be deemed to be in default if it shall within said
period commence such during and thereafter diligently prosecutes the same to
completion;

(c)                  Any
default by Tenant under any other lease between Landlord and Tenant for other
premises in the Center;

(d)                 The
abandonment or vacation of the Premises, provided that if Tenant has vacated
the Premises and is actively seeking a subtenant or assignee, no default shall
be deemed to exist under this Lease so long as Tenant is paying the Rent
required to be paid hereunder; and

(e)                  Any other
event herein specified to be an Event of Default under this Lease.

25.2        In
the event of any Event of Default by Tenant as aforesaid, in addition to any
and all other remedies available to Landlord at law or in equity, Landlord
shall have the right to immediately terminate this Lease and all rights of
Tenant hereunder by giving written notice to Tenant of its election to do
so.  If Landlord shall elect to terminate
this Lease, then it may recover from Tenant:

(a)                  The worth at
the time of the award of the unpaid rent payable hereunder which had been
earned at the date of such termination; plus

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(b)                 The worth at
the time of the award of the amount by which the unpaid rent which would have
been earned after termination and until the time of the award exceeds the
amount of such rental loss which Tenant proves could have been reasonably
avoided; plus

(c)                  The worth at
the time of the award of the amount by which the unpaid rent for the balance of
the term after the time of the award exceeds the amount of such rental loss
which Tenant proves could be reasonably avoided; plus

(d)                 Any other
amounts necessary to compensate Landlord for all detriment proximately caused
by Tenant’s failure to perform its obligations hereunder or which, in the
ordinary course of affairs, would likely result therefrom, and

(e)                  At Landlord’s
election, such other amounts in addition to or in lieu of the foregoing as may
be permitted by applicable California law from time to time.

25.3        As
used in subparagraphs (a) and (b) above, the “worth at the time of the award”
is computed by allowing interest at the rate of twelve (12%) percent per annum
(the “Interest Rate”).  As used in subparagraph (c) above, the “worth
at the time of the award” is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of the
award plus one (1%) percent.

25.4        Following
the occurrence of an Event of Default by Tenant, Landlord shall also have the
right, with or without terminating this Lease, to re-enter the Premises and
remove all property and persons therefrom, and any such property may be removed
and stored in a public warehouse or elsewhere at the cost and for the account
of Tenant, all in accordance with all Legal Requirements.

25.5        If
Landlord (in accordance with California Civil Code Section 1951.4) shall elect
to re-enter as above provided or shall take possession of the Premises pursuant
to legal proceedings or pursuant to any notice provided by law, and if Landlord
has not elected to terminate this Lease, Landlord may continue this Lease and
may either recover all rental as it becomes due or relet the Premises or any
part or parts thereof for such term or terms and upon such provisions as
Landlord, in its sole judgment, may deem advisable and shall have the right to
make repairs to and alterations of the Premises.

25.6                     If
Landlord shall elect to relet as aforesaid, then rentals received by Landlord
therefrom shall be applied as follows:

(a)        to the payment
of any indebtedness other than rent due hereunder from Tenant;

(b)        to the payment
of all costs and expenses incurred by Landlord in connection with such
reletting;

(c)        to the payment
of the cost of any alterations of and repairs to the Premises; and

(d)        to the payment of rent due
and unpaid hereunder and the residue, if any, shall be held by Landlord and
applied in payment of future rent as the same may become due and payable
hereunder.

In no event shall Tenant be entitled to any excess rental received by
Landlord over and above that which Tenant is obligated to pay hereunder.  Should that portion of such rentals received
from such reletting during any month, which is applied to the payment of rent
hereunder, be less than the rent payable hereunder during that month by Tenant,
then Tenant shall pay such deficiency to Landlord forthwith upon demand, and
said deficiency shall be calculated and paid monthly.  Tenant shall also pay Landlord as soon as
ascertained and upon demand, all costs and expenses incurred by Landlord in
connection with such reletting and in making any such alterations and repairs
which are not covered by the rentals received from such reletting.

25.7                     No re-entry or taking
possession of the Premises by Landlord under this Article shall be construed as
an election to terminate this Lease unless a written notice of such intention
is given to Tenant or unless the termination thereof be adjudged by a court of
competent jurisdiction.  Notwithstanding
any reletting without termination by Landlord because of Tenant’s default,
Landlord may at any time after such reletting elect to terminate this Lease
because of such default.

25.8                     Nothing contained in this
Article shall constitute a waiver of Landlord’s right to recover damages by
reason of Landlord’s efforts to mitigate the damages to it caused by Tenant’s
default; nor shall anything in this Article adversely affect Landlord’s right,
as in this Lease elsewhere provided, to indemnification against liability for
injury or damage to persons or property occurring prior to a termination of
this Lease.

 21
 

 

25.9                     If Landlord shall retain an
attorney for the purpose of collecting any rental due from Tenant or enforcing
any other covenant of this Lease, Tenant shall pay the reasonable fees of such
attorney for his services regardless of the fact that no legal proceeding or
action may have been filed or commenced.

25.10                  Any unpaid rent and any other sums due and
payable hereunder by Tenant shall bear interest at the maximum lawful rate per
annum from the due date and until payment thereof.

25.11                  The terms “Rent,”
“rent” and “rental”
as used herein and elsewhere in this Lease shall be deemed to be and mean the
Base Rent, all Additional Rent, rental adjustments and any and all other sums,
however designated, required to be paid by Tenant hereunder.

25.12                  Tenant acknowledges that late payment by
Tenant to Landlord of rent will cause Landlord to incur costs not contemplated
by this Lease, the exact amount of such costs being extremely difficult and
impracticable to fix.  Such costs
include, without limitation, processing and accounting charges, and late
charges that may be imposed on Landlord by the terms of any encumbrance and
note secured by any encumbrance covering the Premises.  Therefore, if any installment of rent due
from Tenant is not received by Landlord when due more than once in any calendar
year during the Term, Tenant shall pay to Landlord as additional rent an
additional sum of six percent (6%) of the overdue rent as a late charge.  The parties agree that this late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of late payment by Tenant. 
Acceptance of any late charge shall not constitute a waiver of Tenant’s
default with respect to the overdue amount, nor prevent Landlord from exercising
any of the other rights and remedies available to Landlord.

25.13                  If Landlord shall retain a
collection agency for the purpose of collecting any moneys due from Tenant
arising out of an Event of Default hereunder, Tenant shall pay all fees of such
collection agency for their services.

ARTICLE 26.  PRIORITY
OF LEASE AND ESTOPPEL CERTIFICATE

26.1                     At Landlord’s election, this Lease shall be
either superior to or subordinate to any and all trust deeds, mortgages, or
other security instruments, ground leases, or leaseback financing arrangements
now existing or which may hereafter be executed covering the Premises and/or
the land underlying the same or any part or parts of either thereof, and for
the full amount of all advances made or to be made thereunder together with
interest thereon, and subject to all the provisions thereof, all without the
necessity of having further instruments executed by Tenant to effectuate the
same.  Tenant agrees to execute,
acknowledge and deliver upon request by Landlord any and all documents or
instruments which are or may be deemed necessary or proper by Landlord to more
fully and certainly assure the superiority or the subordination of this Lease
and to any such trust deeds, mortgages or other security instruments, ground leases,
or leasebacks provided  that as a condition to any such
subordination and if this Lease shall be made subordinate to any future
security instrument, any person or persons purchasing or otherwise acquiring
any interest at a foreclosure sale under said trust deed, mortgages or other
security instruments, or by termination of said ground leases or leasebacks,
shall continue this Lease in full force and effect in the same manner as if
such person or persons had been named as Landlord herein and this Lease shall
continue in full force and effect as aforesaid, and Tenant shall automatically
become the tenant of Landlord’s successor in interest and shall attorn to said
successor in interest.  The words “person” and “persons” as
used herein or elsewhere in this Lease shall mean individuals, partnerships,
firms, associations and corporations.

See Addendum A-26.1

26.2                     Landlord and Tenant shall
at any time and from time to time execute, acknowledge and deliver to the other
party hereto, within ten (10) business days after such party’s written request
therefor, a written statement certifying as follows:

(a)        that this Lease is
unmodified and in full force (or if there has been modification thereof, that
the same is in full force as modified and stating the nature thereof);

(b)        that to the best of its
knowledge, there are no uncured defaults or matters which, upon the passage of
time and the giving of notice, or both, would constitute a default or breach by
Tenant or Landlord, as applicable (or if such exist, the specific nature and
extent);

(c)        that no claims or
defenses exist on the part of the certifying party and no events exist that
would constitute a basis for such claim or defense (or if such exist, the
specific nature and extent);

(d)        the date to which any
rents and other charges have been paid in advance, if any;

 22
 

 

(e)        such other matters
which are reasonably requested by the requesting party with respect to the
Lease and its status, including status of construction; and

(f)         in the case of Tenant’s
certificate, that Tenant will not enter into any agreements or modification of
the Lease without the prior written consent of the lender specified by
Landlord, provided such consent would not be unreasonably withheld.

If Landlord or Tenant shall fail to execute and deliver any such
statement to the requesting party within ten (10) business days, the requesting
party may deliver a second written notice requesting the statement.  If the party required to deliver the
statement fails to make such delivery within five (5) business days following
such second notice, the failure shall constitute an Event of Default hereunder
entitling the requesting party to pursue available remedies as set forth in
this Lease.

26.3                     At Landlord’s election, this Lease shall be
subordinate to any and all encumbrances, covenants, restrictions, conditions
and easements of record now existing or which hereafter may be executed (“Record
Matters”) covering the Premises and/or the land underlying the same or any
parts thereof without the necessity of having further instruments executed by
Tenant to effectuate the same, provided that any future encumbrances shall be
subject to the provision of Section 26.1 above and any other Record
Matters recorded after the date of this Lease shall not materially and adversely
affect Tenant’s use of the Premises. 
Landlord hereby confirms that it has no present knowledge of the
existence of any encumbrances, covenants, restrictions, conditions or easements
of record which now exist ,or which will be recorded in the future with respect
to Parcel 6, that would materially and adversely affect Tenant’s use of the
Premises other than those shown in the title report for Center attached hereto
as Exhibit H.

ARTICLE 27.  HOLDING OVER

If, without the execution of a new lease or written extension of this
Lease, and with the consent of Landlord, Tenant shall hold over after the
expiration of the Term of this Lease, Tenant shall be deemed to be occupying
the Premises as a tenant from month-to-month, which tenancy may be terminated
as provided by law.  During said tenancy,
the Base Rent payable to Landlord by Tenant shall be one hundred fifty percent
(150%) of the Base Rent set forth in Article 3 of this Lease which is
payable immediately preceding the date of expiration of this Lease, and upon
all of the other terms, covenants and conditions set forth in this Lease so far
as the same are applicable.

If Tenant shall holdover and fail to surrender the Premises upon the
termination of this Lease without Landlord’s consent, in addition to any other
liabilities to Landlord arising therefrom, Tenant shall and does hereby agree
to indemnify and hold Landlord harmless from loss or liability resulting from
such failure including, but not limited to, claims made by any succeeding
tenant founded on such failure.

ARTICLE 28.  NOTICES

All notices, approvals, demands, consents or other communications
required or permitted under this Lease shall be in writing and shall be deemed
to have been given when personally served or received by certified mail, postage
prepaid, or on the next business day sent by telefax, Express Mail, Federal
Express or similar reputable overnight delivery service, addressed to the
appropriate party at the address indicated next to each party’s signature
below.  Notwithstanding the foregoing,
notices during the initial construction of the Premises relating to
construction matters shall be governed by the provisions of Exhibit C.

ARTICLE 29.  LIENS

29.1                     Tenant shall pay all costs
for work done by it or caused to be done by it in the Premises and Tenant shall
keep the Premises and the Center free and clear of all mechanics’ liens and
other liens of account or work done for Tenant or persons claiming under
it.  Notwithstanding the foregoing,
Tenant shall have no responsibility or liability with respect to liens filed
with respect to the Base Building, and Tenant Improvements or any other work
performed by Landlord pursuant to Article 8, Exhibit C or
otherwise.  Tenant agrees to and shall
indemnify and hold Landlord harmless against liability, loss, damage, costs,
attorneys’ fees, and any other expenses on account of claims of liens of
laborers or materialmen for work performed or materials or supplies furnished
for Tenant or persons claiming under it. 
If any such lien shall attach to the Premises or the Center by reason of
any work performed by Tenant, Tenant shall promptly, and in any event within
twenty (20) days thereafter, discharge it as a matter of record or bond over
it.  If necessary to accomplish same,
Tenant shall furnish and record a bond to insure the protection of Landlord,
the Premises, and the Center (including all buildings located thereon or of
which they form a part) from loss by virtue of any such lien.

29.2                     Any bond furnished by
Tenant pursuant to the provisions of Section 29.1 above shall be a lien
release bond issued by a corporation authorized to issue surety bonds in the
State of

 23
 

 

California
in an amount equal to one and one-half the amount of such claim of lien.  The bond shall meet the requirements of Civil
Code section 3143 and shall provide for the payment of any sum that the
claimant may recover on the claim, together with said lien claimant’s costs of
suit if he recovers therein.

29.3                     If a mechanics’ lien which
is Tenant’s responsibility pursuant to Section 29.1 above has been
filed, and Tenant shall not have discharged same of record within the time
permitted by that Section, Landlord may (but shall not be obligated to) pay
said claim and any costs, and the amount so paid, together with reasonable
attorneys’ fees incurred in connection therewith shall be payable by Tenant to
Landlord as Additional Rent within five (5) days after written demand
therefor.  Tenant’s failure to pay such
Additional Rent shall constitute an Event of Default of this Lease, and
Landlord may, without any further notice, exercise its remedies specified in Section
25 hereof.

29.4                     Tenant shall, at least ten
(10) days prior to commencing any work which might result in a lien as
aforesaid, give Landlord written notice of its intention to commence such work,
to enable Landlord to post, file and record a legally effective notice of
non-responsibility.  Landlord or its
representatives shall have the right to enter into the Premises and inspect the
same at all reasonable times, and shall have the right to post and keep posted
thereon said notices of non-responsibility and such other notices as Landlord
may deem proper to protect its interest therein.

ARTICLE 30.  QUIET ENJOYMENT

Landlord agrees that Tenant, upon payment of the Base Rent, Additional
Rent, and all other sums and charges required to be paid by Tenant hereunder,
and the due and punctual performance of all of Tenant’s other covenants and
obligations under this Lease, shall have the quiet and undisturbed possession
of the Premises.

ARTICLE 31.  ATTORNEYS’ FEES

Should either party hereto institute any action or proceeding in court
to enforce any provision hereof or for damages or for declaratory or other
relief hereunder, the prevailing party shall be entitled to receive from the
losing party, in addition to court costs, such amount as the court may adjudge
to be reasonable as attorneys’ fees for services rendered to said prevailing
party, and said amount may be made a part of the judgment against the losing
party.

ARTICLE 32.  MISCELLANEOUS

32.1                     Nothing contained in this
Lease shall be deemed or construed as creating a partnership or joint venture
between Landlord and Tenant or between Landlord and any other party, or cause
Landlord to be in any manner responsible for the debts or obligations of Tenant,
or any other party.  The covenants in
this Lease are made between the parties to the Lease and shall not be deemed or
construed as creating any rights in any other party claiming to be a third
party beneficiary of this agreement.

32.2                     If any provision of this
Lease shall be determined to be void or voidable by any court of competent
jurisdiction, such determination shall not affect any other provision of this
Lease and all such other provisions shall remain in effect.  It is the intention of the parties hereto
that if any provision of this Lease is capable of two constructions, one of
which would render the provision void or voidable and the other of which would
render the provision valid, then the provision shall have the meaning which
renders it valid.

32.3                     If Tenant hereunder is a
corporation or partnership, the parties executing this Lease on behalf of
Tenant represent and warrant to Landlord that: 
they are authorized to enter into this Lease; this Lease is executed in
the usual course of business of Tenant and that neither the corporate Articles
nor Bylaws of Tenant or any partnership agreement of Tenant, as the case may
be, require the consent of its shareholders or partners, as applicable,
thereto; Tenant is a valid and existing corporation or partnership, as
applicable; all things necessary to qualify Tenant to do business in California
have been accomplished prior to the date of this Lease; all franchise and other
taxes have been paid to the date of this Lease; all forms, reports, fees, and taxes
required to be filed or paid by Tenant in compliance with  all Legal Requirements will be filed and paid
when due.

32.4                     The entire agreement
between the parties hereto is set forth in this Lease, and any agreement
hereafter made shall be ineffective to change, modify, alter or discharge it in
whole or in part unless such agreement is in writing and signed by both parties
hereto.  It is further understood that
there are no oral agreements between the parties hereto affecting this Lease,
and that this Lease supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between the
parties hereto or displayed by Landlord to Tenant with respect to the subject
matter of this

 24
 

 

Lease,
and none of the same shall be available to interpret or construe this
Lease.  All negotiations and oral
agreements acceptable to both parties hereto have been merged into and are
included in this Lease.

32.5                     Landlord reserves the
absolute right to effect such other tenancies in the Center. Tenant does not
rely on the fact nor does Landlord represent that any specific tenant or number
of tenants shall during the term of this Lease occupy any space in any
Building.

32.6                     The laws of the State of
California shall govern the validity, performance and enforcement of this
Lease.  Should either party institute
legal suit or action for enforcement of any obligation herein, it is agreed
that the venue of such suit or action shall be in Alameda County, California,
and Tenant expressly consents to Landlord’s designating Alameda County as the
venue of any such suit or action.

32.7                     A waiver of any breach or
default shall not be a waiver of any other breach or default.  Landlord’s consent to or approval of, any act
by Tenant requiring Landlord’s consent or approval shall not be deemed to waive
or render unnecessary Landlord’s consent to or approval of any subsequent
similar act by Tenant.  The acceptance by
Landlord of any rental or other payments due hereunder with knowledge of the
breach of any of the covenants of this Lease by Tenant shall not be construed
as a waiver of any such breach.  The
acceptance at any time or times by Landlord of any sum less than that which is
required to be paid by Tenant shall, unless Landlord specifically agrees
otherwise in writing, be deemed to have been received only on account of the
obligation for which it is paid, and shall not be deemed an accord and
satisfaction notwithstanding any provisions to the contrary written on any
check or contained in a letter of transmittal.

32.8                     Any prevention, delay or
stoppage due to strikes, lockouts, labor disputes, acts of God, inability to
obtain labor or materials or reasonable substitutes therefore, failure of
power, including delays by PG&E in hooking up utilities to the Premises,
governmental restrictions, regulations or controls, enemy or hostile
governmental action, riot, civil commotion, fire or other casualty, inclement
weather beyond seasonal norm and other causes of a like nature beyond the
reasonable control of the party obligated to perform (any such event being “Force
Majeure”), shall excuse the performance by such party for a period equal to any
such prevention, delay or stoppage, except that Tenant’s obligations to pay
Rent and any other sums or charges specifically due and payable pursuant to
this Lease shall not be affected thereby.

32.9                     The term “Landlord” as used in this Lease, so far as covenants or
obligations on the part of Landlord are concerned, shall be limited to mean and
include only the owner or owners at the time in question of the Premises, and
in the event of any transfer or transfers of title thereto, Landlord herein
named (and in case of any subsequent transfers or conveyances, the then
grantor) shall be automatically freed and relieved from and after the date of
such transfer or conveyance of all liability as respects the performance of any
covenants or obligations hereunder of the part of Landlord to be performed
thereafter.

32.10                  The voluntary or other
surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not
work a merger, and shall, at the option of the Landlord terminate all or any
existing subleases and subtenancies, or may, at Landlord’s option, operate as
an assignment to it of any or all such subleases or subtenancies.

32.11                  Although the printed
provisions of this Lease were prepared and drawn by Landlord, this Lease shall
not be construed either for or against Landlord or Tenant, but its construction
shall be at all times in accord with the general tenor of the language so as to
reach a fair and equitable result.

32.12                  Except as otherwise expressly
provided in this Lease, any and all “approvals”, “consents”  and “permissions” that either party is
obligated or required to provide under this Lease shall not be unreasonably
withheld or delayed.

32.13                   Upon Landlord’s written request not more
often than once per year, Tenant shall promptly furnish to Landlord, from time
to time, financial statements reflecting Tenant’s current financial
condition.  If Tenant is a publicly held
company, Tenant may furnish to Landlord Tenant’s most recent publicly filed
annual or quarterly report to satisfy this request.

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

32.15                  Each and all of the provisions
of this Lease shall be binding upon and inure to the benefit of the parties
hereto and (except as set forth in Section 32.9 above and as otherwise
specifically provided elsewhere in this Lease), their respective personal representatives,
successors and assigns, subject

 25
 

 

at
all times to all provisions and restrictions elsewhere in this Lease respecting
the assignment, transfer, encumbering or subletting of all or any part of the
Premises or Tenant’s interest in this Lease.

See Addendum A-32.15

32.16                   Submission of this instrument by or on
behalf of Landlord for examination or execution by Tenant does not constitute a
reservation of or option for lease, and this instrument shall not be effective
as a lease or otherwise until executed and delivered by both Landlord and
Tenant.

32.17                  The captions shown in this
Lease are for convenience or reference only, and shall not, in any manner, be
utilized to construe the scope or the intent of any provisions thereof.

32.18                  This Lease shall not be
recorded, but Tenant may record a short form Memorandum of this Lease at its
expense and Landlord agrees to execute such a memorandum in a form reasonably
approved by Landlord upon Tenant’s request. In such event, upon Landlord’s
written request Tenant agrees to execute a quitclaim deed at the end of the
term relinquishing any interest in the Premises.

32.19                  Intentionally Deleted.

32.20                  All agreements herein by
Tenant, whether expressed as covenants or conditions, shall be deemed to be
conditions for the purpose of this Lease.

32.21                  The parties represent and warrant to each
other that each has not dealt with any real estate agent other than Colliers
International, as to Landlord, and The Staubach Company as to Tenant. Each
agrees to indemnify and hold the other harmless from and against all loss, cost
and expenses incurred by reason of the breach of such representation and
warranty.  Landlord shall be responsible
for paying all commissions due, in accordance with the terms of a separate
written agreement.

32.22                  The terms of this Lease are confidential and
constitute proprietary information of the parties. Neither party, nor its
respective employees or agents, shall disclose the terms of this Lease to any
other person without the prior written consent of the other party hereto, which
consent may be withheld in such party’s sole discretion. However, either party
may disclose the terms of this Lease to its lenders, accountants and
prospective transferees, provided that such lenders, accountants, and prospective
transferees have a reasonable bona fide need to know such terms, and provided
that the disclosing party ensures that such lenders, accountants and
prospective transferees maintain the confidentiality of such terms In addition,
either party may disclose the terms of this Lease in litigation or other
dispute resolution proceeding between Landlord and Tenant with respect to the
Lease subject to the Lease being filed under seal if the filing of the document
would otherwise make it publicly available and if the court approves of filing
under seal, and:  (i) pursuant to an
order of a court of competent jurisdiction, provided that the disclosing party
promptly notifies the other party of any motion to compel such disclosure and
the disclosure order, and/or (ii) in order to comply with any applicable
Securities Exchange Commission laws, rules or regulations, provided that the
disclosing party notifies the other party of the fact that such disclosure will
take place, subject, however, to the disclosing party in each of (i) and (ii),
using commercially reasonable best efforts to limit the scope and extent of the
disclosure.

32.23                  The
Addendum attached hereto is hereby made a part of this Lease.

See Addendum A-32.24-32.27.

WITNESS the signatures of the parties hereto, the
day and year first above written.

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  GREENVILLE
  INVESTORS, L.P.

  By: Greenville Ventures, Inc.

  Title: General Partner

  	
   

  	
  FORMFACTOR, INC.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ WILLIAM A.
  DRUMMOND

  	
   

  	
   

  	
  By:

  	
  /s/ STUART L. MERKADEAU

  	
   

  
	
   

  	
  William A.
  Drummond

  	
   

  	
   

  	
  Stuart L. Merkadeau

  	
   

  
	
  Its:

  	
  Vice President

  	
   

  	
  Its:

  	
    SVP, General
  Counsel & Secretary

  	
   

  
	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
  675 Hartz
  Avenue, Suite 300

  	
   

  	
  ADDRESS:

  	
  2020 Research Drive

  
	
   

  	
  Danville, CA
  94526

  	
   

  	
   

  	
  Livermore, CA 94550

  
									

 

 26

 

EXHIBIT A

SITE PLAN

[Site Plan]

 A-1

 

EXHIBIT A-1

DEPICTION OF BUILDING 6
DRIP LINE

[Depiction of
Building 6 Drip Line]

 A1-1

 

EXHIBIT B

CENTER LEGAL DESCRIPTION
AND PARCEL MAP

[Legal Description
of Parcel]

 B-1

 

EXHIBIT C

WORK
LETTER

[Work Letter]

 

EXHIBIT D

INTENTIONALLY DELETED

[Intentionally
Deleted]

 D-1

 

EXHIBIT E

RULES AND REGULATIONS

[Rules And
Regulations]

 E-1

 

EXHIBIT F

DESCRIPTION OF TENANT’S
USE OF

HAZARDOUS SUBSTANCES

[Product Names of
Hazardous Substances]

 F-1

 

EXHIBIT G

COPY OF
CENTER COVENANTS, CONDITIONS AND RESTRICTIONS

[Copy Of Center
Covenants, Conditions And Restrictions]

 G-1

 

EXHIBIT H

NON-DISCLOSURE
AGREEMENT

[Non-Disclosure
Agreement]

 H-1

 

ADDENDUM TO LEASE

A-2.1              Options to Renew.  Provided that no Event of Default by Tenant under this Lease exists as
of the date of exercise of the applicable option or at the expiration of the
initial term or preceding Option Term, and provided further that Tenant has not
assigned this Lease, Tenant shall have the option to extend the initial lease
term for four (4) additional, successive terms of five (5) years each (each, an
“Option Term”).  Tenant shall exercise the option, if at all,
by delivering to Landlord written notice of the exercise no sooner than fifteen
(15) months nor later than twelve (12) months prior to the expiration of the
initial Lease Term or preceding Option Term, as applicable.  Tenant’s right to exercise each option shall
be conditioned upon Tenant delivering to Landlord with Tenant’s notice of
exercise, current financial reports which evidence that Tenant’s financial
condition on the date of exercise is equal to or better than Tenant’s financial
condition on the date of execution of this Lease.  If Tenant’s financial condition has declined
in Landlord’s business judgment, Landlord may refuse to accept Tenant’s
exercise unless Tenant agrees to provide a Letter of Credit with terms and
amounts acceptable to Landlord in its business judgment to secure Tenant’s
obligations during the applicable Option Term.

All terms, provisions, conditions and covenants of
this Lease shall remain in full force and effect during the Option Terms,
provided that Tenant shall have no additional option periods and the Base Rent
payable during the first Lease Year of each Option Term (and for increases
during the Option Term, as applicable) shall be the market rate then prevailing
as projected for the commencement of the applicable Option Term, for premises
comparable in size, quality and location in comparable class R&D/Office
buildings throughout the Tri-Valley/Livermore area taking into account all
relevant factors (the “market rent”).  Base Rent for the Option Term shall be
determined prior to the commencement of the applicable Option Term in the
following manner:

If Landlord and Tenant are unable to agree on the
market rent within sixty (60) days after Tenant gives notice of its exercise of
the Option Term, then Tenant shall have the right to revoke its exercise of the
option by delivering written notice within ten (10) days following the
expiration of such 60-day period.  In the
event of such revocation, Tenant shall forfeit all rights to thereafter
exercise any option under this Lease and the Lease shall terminate at the end
of the initial term, or then Option Term, as applicable.  If Tenant does not revoke its exercise and
elects to proceed with the determination of market rent, then the monthly Base
Rent and Additional Rent payable during the Option Term shall be determined by
appraisal in the following manner:

If Landlord and Tenant can
agree on a single appraiser, then the rate set by such appraiser as set forth
below shall be the Base Rent for the Option Term.  If the parties cannot agree on a single
appraiser, then each party, by giving written notice to the other party, shall
appoint as an appraiser an experienced commercial real estate agent in the area
in which the Premises are located.  Said
appointment shall be made within ten (10) days following the expiration of the
sixty (60) day period aforesaid, and if one of the parties does not appoint an
appraiser within that time, the single appraiser named shall be the sole
appraiser and shall set the monthly Base Rent for the Option Term.

If
the two appraisers are appointed as provided herein, each shall independently
prepare an estimate of the market rent within sixty (60) days.  If the higher of the two estimates so
determined is within ten percent (10%) of the lower estimate, then the monthly
Base Rent to be paid by Tenant during the Option Term shall be the average of
the amounts determined by the appraisers. 
If the difference between the two estimates exceeds ten percent (10%) of
the lower one, the two appraisers shall select a third appraiser meeting the qualifications
set forth hereinabove within ten (10) days thereafter who will likewise
independently estimate the market rate within sixty (60) days after the
appointment.  The average of the two
closest appraisals shall be set as the monthly Base Rent.

Each party shall pay the
fees of the appraiser appointed by such party and the parties will share
equally the fees of any third appraiser appointed pursuant to this Section
A-2.1.

Notwithstanding the above, the Base Rent payable by
Tenant during each Option Term shall be in addition to all Additional Rent and
other sums and charges payable by Tenant under the terms of this Lease.

Tenant acknowledges that the options granted herein
are personal to Tenant and may not be assigned with an assignment of this Lease
except in connection with an assignment to an entity which controls, is
controlled by or is under common control with Tenant (as defined in Article 20
of this Lease) or which is a successor to Tenant by merger, consolidation or
sale of substantially all of Tenant’s assets with Landlord’s prior written
consent, not to be unreasonably withheld.

 1
 

 

A-4.7.             Hazardous Substances. 
Landlord hereby represents that it has, prior to the date of this Lease,
provided to Tenant copies of all environmental reports in its possession,
regarding the presence of Hazardous Substances at the Center or upon, around or
under Parcel 6.  Except as specifically
disclosed in the reports delivered to Tenant, Landlord represents and warrants
that to its actual knowledge, Landlord does not know of any Hazardous
Substances in the Center. Landlord shall indemnify, defend and hold Tenant
harmless for any claims, costs or liabilities (collectively, “Claims”) arising
out of or relating to any breach or misrepresentation by Landlord of the foregoing
representation and warranty. Landlord’s confidentiality obligations under
Section 4.7 and its indemnity obligations pursuant to this Section A-4.7 shall
survive the termination of this Lease.

A-4.8              Declaration. 
Notwithstanding
the provisions of Section 4.8, Landlord shall not amend the Declaration in a
manner which (i) reduces the number of Tenant’s exclusive parking spaces on
Parcel 6, (ii) restricts Tenant ‘s permitted use described in Article 4, (iii)
adversely and materially affects Tenant’s access to or from Parcel 6 and
Lawrence Road or South Front Road or (iv) increases the share of Common Area
Costs assessed against Parcel 6 or Parcel 6’s proportionate share of Shared
Maintenance Costs, without the prior written consent of Tenant which shall not
be unreasonably withheld or delayed.

A-6                 Utility Use Restrictions.  Tenant agrees that during the term of the Lease Tenant’s use of the
following Building 6 utilities shall not exceed the consumption limits listed
below:

1.  Electrical Power:  1200 amps.

2.  Water: 
40 gallons per minute

3.  Industrial Waste Line:  20 gallons per minute

In the event that Tenant’s use of any of the above
utility services exceed the capacities above, and the operations of other
Building 6 tenants are affected thereby, Landlord may require Tenant to take
necessary steps acceptable to Landlord 
to increase the capacities of the Building 6 utilities affected at
Tenant’s sole cost and expense.

A-9.3              Repairs by Tenant.  Notwithstanding the provisions of Section 9.4, except to the extent
necessary due to damage caused by the negligence of Tenant, its employees,
agents or contractors, Tenant shall have no obligation to replace the HVAC
system or any other essential building system serving Building 6 (specifically
excluding any special HVAC system for Tenant’s operations in the Premises, such
as the HVAC serving any “clean room”, the replacement of which shall be at
Tenant’s sole cost and expense) within the last eighteen (18) months of the
Term.  If any such replacement is
necessary, Landlord and Tenant shall mutually agree on the type of equipment to
be installed and a commercially reasonable cost sharing arrangement which will
take into account the number of years of the useful life of such equipment or
system which will occur following the expiration of the Term.  If Tenant subsequently exercises an option to
extend the Lease, however, the replacement shall be at Tenant’s sole option,
cost and expense and within thirty (30) days after Tenant’s exercise of the
option, Tenant shall reimburse Landlord for all amounts previously paid by
Landlord for the system replaced.

A-9.5.             Tenant Equipment/Improvements.   
The equipment Tenant initially intends to install in the Premises is
described on Exhibit C attached hereto. 
If Landlord wishes to require removal of any Tenant Improvements,
Landlord shall designate as a part of its approval pursuant to the terms of Exhibit
C of the plans for Tenant’s Work, any Tenant Improvements and/or Special
Tenant Improvements (if any) or equipment which Landlord will require Tenant to
remove at the expiration of the Term.  In
connection with any such required removal by Tenant, Tenant shall repair all
damage caused by such removal.

A-26.1.           Non-Disturbance Agreement. 
Landlord shall use commercially reasonable efforts to obtain an
agreement from Landlord’s existing construction lender prior to the Delivery
date to not disturb Tenant’s possession under this Lease so long as Tenant is
not in default of its obligations hereunder.

A-32.15.        Restriction on Sale.  Notwithstanding
the provisions of Section 32.15 of the Lease, during the term of this Lease and
provided that Tenant is not then in default of this Lease beyond any applicable
cure period, Landlord shall not sell Parcel 6 or Building 6 to an entity on
Tenant’s competitor list which is attached hereto as Exhibit I without
Tenant’s prior written consent, which may be withheld in Tenant’s sole
discretion.

 2
 

 

A-32.24.        Building Sale Notice Rights.  Landlord shall provide written notice to
Tenant the first time Landlord responds in writing to a new interested third
party to purchase Building 6, provided that Tenant is not then in default of
this Lease beyond any applicable cure period. 
Landlord shall only be required to notify Tenant of third party interest
one time with respect to the Building. 
Tenant shall have five (5) days to indicate its interest in negotiating
a purchase of the Building.  Landlord may
negotiate concurrently with Tenant and interested third party(ies).  Landlord’s obligation to notify Tenant as described
herein shall in no way obligate Landlord to sell Building 6 to Tenant.  Tenant’s notice rights shall expire upon
Landlord’s execution of a sale agreement with a third party.  Tenant acknowledges that the sale of Building
6 will be subject to all existing leases affecting said Building.

A- 32.25.       Parking.  Tenant has been allocated 30 parking stalls
adjacent to the Premises on Parcel 6. 
The aforementioned parking stalls shall be in addition to any parking
stalls within Tenant’s Facility Yard.  Landlord hereby
acknowledges that Tenant, subject to applicable codes, may designate additional
areas within Tenant’s  Facility Yard for
parking and/or parking stalls as Tenant sees fit. Tenant is also leasing from
Landlord the buildings designated as “Building 1”, “Building 2” and “Building 3”
on Exhibit A. So long as Tenant’s lease of Building 1 is in effect, Tenant may
use a portion of the parking spaces on Parcel 1 in connection with its use of
Building 6; so long as the Tenant’s lease of Building 2 is in effect, Tenant
may use a portion of the parking spaces on Parcel 2 in connection with its use
of Building 6; and  so long as the Tenant’s
lease of Building 3 is in effect, Tenant may use a portion of the parking
spaces on Parcel 3 in connection with its use of Building 6.

A-32.26         Signage.  All of Tenant’ s signage at
the Premises and Parcel 6 must be in accordance with the City-approved
master sign program for the Center.  The
program provides 2’ x 16’ signage areas at each entry structure and a
2’6” x 5’0” signage area on a monument at the street in front of each
building.  Notwithstanding the foregoing,
Landlord shall allow Tenant to install the same signage (i.e., the same size,
style, shape and type) on the exterior walls of the Premises as Tenant has installed
on the exterior of Buildings 1, 2 and 3. 
Tenant’s corporate logo and tradestyle are permitted to be used in
accordance with the parameters of the sign program.  Any additional signage outside the scope of
the master signage program shall be subject to the approval of the Landlord
(which shall not be unreasonably withheld) and the City of Livermore.  Subject to City and Landlord’s approval,
Landlord shall permit Tenant to install a temporary sign or banner in the
Center, in a location approved by Landlord, announcing the Center as Tenant’s
new headquarters location.

A-32.27        Use of Roof.  Tenant acknowledges that Landlord has reserved the right to use the
roof of Building 6, including the right to lease or license its use.  Tenant and no employee or invitee of Tenant
shall go upon the roof of the Building, except as otherwise expressly provided
herein.

Tenant shall have the exclusive right to use that portion of the roof
directly above the Premises, to install such mechanical equipment as may be
reasonably necessary to serve the Premises as part of the Tenant Improvements
approved by Landlord (“Mechanical Equipment”),
and may make such penetrations of the roof as may be reasonably necessary in
connection therewith.  Tenant also shall
have the exclusive right to use a portion of the roof directly above the
Premises, to install a satellite dish or cluster of dishes and ancillary
telecommunications equipment in connection with Tenant’s business
operations.  Tenant’s roof use shall be
on the following terms and conditions set forth herein.  Subject to Applicable Laws, Tenant shall have
the right to install or cause to be installed rooftop equipment (“Rooftop Equipment”) pursuant to plans and specifications
which shall be subject to Landlord’s prior written approval, which shall not be
unreasonably withheld or delayed on the roof of the Building, in a location as
Landlord and Tenant may mutually agree. 
There shall be no additional charge payable by Tenant to Landlord for
the use of such area or for the installation of the Mechanical Equipment and
Rooftop Equipment.  If the Rooftop
Equipment is to be installed on the roof, Tenant shall notify Landlord in
writing that the Rooftop Equipment is to be installed on the roof.  Tenant shall be solely responsible for complying
with (or causing its vendor to comply with) the requirements of such roof
warranty or roof bond in connection with the installation, maintenance, repair,
replacement or removal of the Mechanical Equipment and Rooftop Equipment.  Tenant shall repair any damage to the roof
caused by the installation, maintenance, repair, replacement or removal of the
Mechanical Equipment and Rooftop Equipment. 
Landlord shall permit Tenant reasonable access to the designated area as
reasonably necessary to install, maintain and remove the Mechanical Equipment
and Rooftop Equipment, and Tenant shall indemnify Landlord and be solely
responsible, at Tenant’s cost and expense, for the maintenance and repair of
the Mechanical Equipment and Rooftop Equipment, and Landlord shall have no
responsibility with respect thereto unless the same

 3
 

 

was made necessary by the negligence or willful act of Landlord or
Landlord’s Agents.  Tenant hereby agrees
to defend, indemnify and hold Landlord harmless form any mechanics or
materialmen’s liens upon the Premises or the Center which result from work
associated with the installation of the Rooftop Equipment.  Tenant shall obtain all licenses or approvals
required to install and operate the Rooftop Equipment.  The Rooftop Equipment shall remain the
property of Tenant and upon expiration of the Lease, Tenant shall remove the
Rooftop Equipment and repair the Premises and any damage to the area upon which
the Rooftop Equipment was located to the original condition, normal wear and
tear excepted.  Landlord shall have the
right to request that Tenant relocate the Rooftop Equipment, if necessary, at
Landlord’s sole cost and expense to facilitate Landlord’s use of the roof.  Tenant covenants that the Rooftop Equipment
will be installed, maintained and removed in accordance with all Applicable
Requirements. Tenant shall be responsible for all damage caused by the
installation, maintenance, repair and/or removal of Tenant’s Rooftop
Equipment.  Tenant’s access to the roof
to exercise its rights hereunder shall be subject to Landlord’s prior approval,
which shall not be unreasonably withheld, provided that Tenant exercises such
access rights in a manner that does not void any roof warranty.  Tenant’s Rooftop Equipment shall not
interfere with the operation of any existing roof top equipment which has been
installed on the portion of the roof used by Landlord.  Landlord shall not install or permit the
installation of any rooftop equipment which will interfere with any Rooftop
Equipment for which Tenant has submitted installation plans to Landlord or
which Tenant has previously installed on the portion of the roof for Tenant’s
use.

 4

 

EXHIBIT C

WORK LETTER

[Work Letter]

This Work Letter sets
forth the terms and conditions relating to the construction of the Premises.

SECTION 1

BUILDING AND THE PREMISES

1.1                 Base Building.  The Base Building has been constructed in
accordance with the plans for such improvements listed on the plan list
attached as Schedule 1 to this Exhibit C (the “Plan List”) as modified by the “as-built”
plan set which have been provided to Tenant. 
The Base Building shall include, without limitation:

a)             Fully enclosed tilt-up concrete
building(s) with 5” thick concrete slab and grade doors as shown on the
construction drawings listed in the Plan List;

b)            Water and gas service stubbed into the Building;

c)             A sanitary sewer gut line as shown
on the construction drawings;

d)            Four (4) 4”
telephone conduits and 8’ x 8’ plywood terminal board in the electrical room;

Two (2) of the four conduits
shall be dedicated to Tenant for connectivity to Buildings 1, 2 and 3

e)                                      Fire sprinklers at roof to meet Legal
Requirements for the Building shell.

f)                                        A 2500 amp, 480/208, 3 phase electrical
service for use by all Building 6 tenants, from which Tenant may install one
(1) 1600 amp breaker and meter. This service shall be installed in such a
manner as to permit the installation of future electrical services for future
tenants of Building 6 within the space provided for tenant electrical service
within the electrical room.

Tenant
acknowledges that the Base Building and Parcel 6 Site Work have been completed
and agrees to accept possession of the Premises “as-is” in its existing
condition except for Landlord’s Work.

1.2                 Special Tenant Improvements.
 Landlord shall install and construct the following improvements at its
sole cost and expense (except as provided below):

·                  Replace the
existing one-inch (1”) water meter for Building 6 with a one and one-half inch
(1 1⁄2”) meter (Tenant agrees to pay to Landlord 50% of the cost of such work)

·                  Modifications to
the Common Areas as necessary to provide for adequate nitrogen delivery truck
access to the Premises, including without limitation modifying curbs, sidewalks
and paving.

1.3                 Landlord’s Work.  “Landlord’s Work”
shall mean all work constructed and to be constructed by Landlord described in
Sections 1.1 and 1.2 above.

1.4                 Tenant’s Work.  “Tenant’s Work”
will include designing, providing and installing all Tenant Improvements
(defined hereafter) and providing the required furnishings, fixtures and
equipment for Tenant’s use of the Premises. As used in this Lease, the term “Tenant Improvements” shall mean all improvements set forth
in the Approved Tenant Improvement Plans. Tenant shall
obtain all necessary permits and approvals for and shall construct the “Tenant Improvements” in accordance with the Approved Tenant
Improvement Plans (as defined in Section 2.4 below). Landlord
will disburse the Tenant Improvement Allowance described in Section 4 below to
pay for Tenant Improvement Costs (defined hereafter).  All such costs of completing Tenant’s Work
which are in excess of the Tenant Improvement Allowance shall be paid by Tenant
pursuant to the terms of the Lease and this Work Letter.

SECTION 2

TENANT IMPROVEMENT PLANS

2.1      Architect/Construction Plans.
Tenant has retained CAS Architects, Inc. (the “Architect”) to prepare the
construction plans for all Tenant Improvements and Special Tenant
Improvements.    Tenant shall retain
engineering consultants (the “Engineers”) approved by Landlord (which approval
shall not be unreasonably

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withheld or delayed)
to prepare all plans and engineering working drawings relating to the Tenant
Improvements, including without limitation, all structural, HVAC, electrical,
plumbing,  life safety, and sprinkler
work in the Premises which is not part of the Base Building. The final working
plans and drawings to be prepared by Architect and the Engineers hereunder
shall be known collectively as the “Tenant Improvement Plans”. The scope, form
and content of all plans and drawings shall be discussed in reasonable detail
at each of the weekly meetings held pursuant to the terms of Section 3.2.6
below. All Tenant Improvement Plans shall be in a form suitable for bidding and
construction by qualified contractors, shall meet the requirements of the City
of Livermore, and shall be subject to Landlord’s approval, which shall not be
unreasonably withheld or delayed. Tenant and Architect shall verify, in the
field, the dimensions and conditions as shown on the relevant portions of the
Base Building plans, and Tenant and Architect shall be solely responsible for
the same, and Landlord shall have no responsibility in connection therewith.
Landlord’s review of the Tenant Improvement Plans as set forth in this Section
2, shall be for its sole purpose and shall not obligate Landlord to review the
same, for quality, design, code compliance or other like matters. Accordingly,
notwithstanding that any Tenant Improvement Plans are reviewed by Landlord or
its architect, engineers and consultants, and notwithstanding any advice or
assistance which may be rendered to Tenant by Landlord or Landlord’s space planner,
architect, engineers, and consultants, Landlord shall have no liability
whatsoever in connection therewith and shall not be responsible for any
omissions or errors contained in the Tenant Improvement Plans, and Tenant’s
waiver and indemnity set forth in Section 16 of this Lease shall specifically
apply to the Tenant Improvement Plans.

2.2      Final Design Drawings. Tenant and
the Architect shall prepare the final design drawings and specifications  for Tenant Improvements in the Premises
(collectively, the “Final Design Drawings”) and shall deliver the same to
Landlord for Landlord’s approval. The Final Design Drawings shall include a
layout and designation of all offices, rooms and other partitioning.  Landlord may request clarification or more
specific drawings for special use items not included in the Final Design
Drawings. Landlord shall advise Tenant within five (5) business days after
Landlord’s receipt of the Final Design Drawings for the Premises if the same
are unsatisfactory or incomplete in any respect. If Tenant is so advised,
Tenant shall promptly cause the Final Design Drawings to be revised to correct
any deficiencies or other matters Landlord may reasonably require.

2.3      Final Working Drawings. After the
Final Design Drawings have been approved by Landlord, Tenant shall promptly
cause the Architect and the Engineers to complete the architectural and
engineering drawings for the Premises, and Architect shall compile a fully
coordinated set of architectural, structural, mechanical, electrical and
plumbing working drawings in a form which is sufficiently complete to allow
subcontractors with a reasonable level of competence and experience in the
industry to bid on the work and to obtain all permits required for the
construction of the Tenant Improvements (the “Permits”)
and shall submit the same (collectively, the “Final
Working  Drawings”)
to Landlord for Landlord’s approval, which approval shall not be unreasonably
withheld or delayed. Tenant shall supply Landlord with three (3) copies signed
by Tenant of such Final Working Drawings. Landlord shall advise Tenant within
five (5) business days after Landlord’s receipt of the Final Working Drawings
for the Premises if the same are unsatisfactory or incomplete in any respect.
If Tenant is so advised, Tenant shall promptly cause the Final Working Drawings
to be revised in accordance with such review and any disapproval of Landlord in
connection therewith.

2.4      Approved Tenant Improvement Plans.  The Final Working Drawings shall be approved
by Landlord (the “Approved Tenant Improvement Plans”) prior to the commencement
of construction of the Tenant Improvements by Tenant. In order to expedite the
permitting process, however, prior to Landlord’s approval pursuant to Section
2.3 above, Tenant may submit the Final Working Drawings to the appropriate
municipal authorities for all Permits necessary to allow Tenant’s contractor to
commence and fully complete the construction of the Tenant Improvements.
Notwithstanding the foregoing, Tenant acknowledges that Landlord does not waive
the right to approve the Final Working Drawings and by electing to submit the
Final Working Drawings for permit prior to Landlord’s approval, Tenant is
assuming the risk that Landlord may require changes in such drawings after the
same have been submitted for permits. Tenant hereby agrees that neither
Landlord nor Landlord’s consultants shall be responsible for obtaining any of
the Permits or a certificate of occupancy for the Premises and that obtaining
the same shall be Tenant’s responsibility; provided, however, that Landlord
shall cooperate with Tenant in executing permit applications and performing
other ministerial acts reasonably necessary to enable Tenant to obtain any such
permit or certificate of occupancy. No changes, modifications or alterations in
the Approved Tenant Improvement Plans may be made without the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed, provided that if a proposed change would directly or indirectly delay
the “Substantial Completion” of Landlord’s
Work as that term is defined in Article 8 of the Lease, Landlord may proceed to
establish a Tenant Delay pursuant to Section 5 hereof.

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SECTION 3

CONSTRUCTION OF TENANT
IMPROVEMENTS

3.1      Tenant’s Selection of Contractors.

3.1.1       Tenant’s
Contractor. A general contractor shall be retained by Tenant to construct
the Tenant Improvements. Such general contractor (“Tenant’s
Contractor”) shall be subject to Landlord’s prior approval, which
approval shall not be unreasonably withheld or delayed.

3.1.2       Tenant’s
Agents. All subcontractors, laborers, materialmen, and suppliers used by
Tenant (such subcontractors, laborers, materialmen, and suppliers, and Tenant’s
Contractor to be known collectively as “Tenant’s Agents”)
must be approved in writing by Landlord, which approval shall not be
unreasonably withheld or delayed. If Landlord does not approve any of Tenant’s
proposed subcontractors, laborers, materialmen or suppliers, Tenant shall
submit other proposed subcontractors, laborers, materialmen or suppliers for
Landlord’s written approval. Notwithstanding the foregoing, Tenant shall retain
subcontractors designated or reasonably approved by Landlord in connection with
any structural, mechanical, electrical, plumbing or heating, air-conditioning
or ventilation work to be performed in the Premises. Further Landlord’s
approval shall not be required for any of Tenant’s Agents performing work or
providing materials costing less than $10,000.

3.2      Construction of Tenant Improvements by
Tenant’s Agents.

3.2.1       Tenant’s Construction Contract; Cost
Budget. Prior to Tenant’s execution of the construction contract and
general conditions with Tenant’s Contractor (“Tenant’s
Construction Contract”), Tenant shall submit Tenant’s Construction
Contract to Landlord for its approval, which approval shall not be unreasonably
withheld or delayed. Prior to the commencement of the construction of the
Tenant Improvements, and after Tenant has accepted all bids for the Tenant
Improvements, Tenant shall provide Landlord with a detailed breakdown, by
trade, of the final costs to be incurred or which have been incurred in
connection with the design and construction of the Tenant Improvements to be
performed by or at the direction of Tenant or Tenant’s Contractor, which costs
form a basis for the amount of Tenant’s Construction Contract (the “Final Costs”).
If the costs of the Tenant Improvements exceed the Tenant Improvement
Allowance, Tenant shall also provide Landlord with its computation of
percentage that the Tenant Improvement Allowance bears to the total costs of
the Tenant Improvements (the “Allowance Percentage”)

3.2.2       Tenant’s
Agents.

A.               Landlord’s
General Terms for Tenant’s Agents and Tenant Improvement Work. Tenant’s and
Tenant’s Agent’s construction of the Tenant Improvements shall comply with the
following: (i) the Tenant Improvements shall be constructed in accordance with
the Approved Tenant Improvement Plans; (ii) Tenant’s Agents shall submit
schedules of all work relating to the Tenant Improvements to Tenant’s
Contractor and Tenant’s Contractor shall, within five (5) business days of
receipt thereof, inform Tenant’s Agents of any changes which are necessary
thereto, and Tenant’s Agents shall adhere to such corrected schedule; and (iii)
Tenant shall abide by all rules made by Landlord with respect to storage of
materials, coordination of work with the contractors of other tenants and
Landlord, and any other matter in connection with this Work Letter, including,
without limitation, the construction of the Tenant Improvements.

B.                Indemnity.
Tenant’s indemnity of Landlord as set forth in Section 16.1 of this
Lease shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities related in any way to any act or omission of Tenant or
Tenant’s Agents, or anyone directly or indirectly employed by any of them, or
in connection with Tenant’s non-payment of any amount arising out of the Tenant
Improvements and/or Tenant’s disapproval of all or any portion of any request
for payment. Such indemnity by Tenant, as set forth in Section 16.1 of
this Lease, shall also apply with respect to any and all costs, losses,
damages, injuries and liabilities related in any way to Landlord’s performance
of any ministerial acts reasonably necessary (i) to permit Tenant to complete
the Tenant Improvements, and (ii) to enable Tenant to obtain any building
permit or certificate of occupancy for the Premises.

C.                Requirements
of Tenant’s Agents. Each of Tenant’s Agents shall guarantee to Tenant and
for the benefit of Landlord that the portion of the Tenant Improvements for
which it is responsible shall be free from any defects in workmanship and
materials for a period of not less than one (1) year from the date of
completion thereof. Each of Tenant’s Agents shall be responsible for the
replacement or repair, without additional charge, of all work done or furnished
in accordance with its contract that shall become defective within one (1) year
after the later to occur of (i) completion of the work performed by such contractor
or subcontractors and (ii) the Lease Commencement Date. The correction of such
work shall include, without additional charge, all additional expenses and
damages incurred in connection with such removal or replacement of all or any
part of the Tenant Improvements, and/or the Building and/or common areas that
may be damaged or disturbed thereby. All such warranties or guarantees as to
materials or workmanship of or with respect to the Tenant Improvements shall be
contained in the Contract or subcontract and shall be written such that such
guarantees or warranties shall inure to the benefit of both Landlord and
Tenant, as their respective interests may appear, and can be directly enforced
by either. Tenant covenants to give to Landlord any assignment or other
assurances which may be necessary to effect such right of direct enforcement.

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D.                Insurance
Requirements.

1.                    General
Coverages. All of Tenant’s Agents shall carry worker’s compensation
insurance covering all of their respective employees, and shall also carry
public liability insurance, including property damage, all with limits, in form
and with companies as are required to be carried by Tenant as set forth in Article  14 of this Lease.

2.                    Special
Coverages. Tenant shall carry “Builder’s All Risk” insurance in an amount
approved by Landlord covering the construction of the Tenant Improvements, and
such other insurance as Landlord may require, it being understood and agreed
that the Tenant Improvements shall be insured by Landlord pursuant to Article
14 of this Lease upon completion thereof. Tenant’s policy of Builder’s All
Risk insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Landlord including, but not
limited to, the requirement that all of Tenant’s Agents shall carry Excess
Liability and Products and Completed Operation Coverage insurance, each in
amounts not less than $1,000,000 per incident, $2,000,000 in aggregate, and in
form and with companies as are required to be carried by Tenant as set forth in
Article 14 of this Lease.

3.                    General
Terms. Certificates for all insurance carried pursuant to this Section
3.2.2(D) shall be delivered to Landlord before the commencement of construction
of the Tenant Improvements and before the equipment of Tenant’s Contractor is
moved onto the site. All such policies of insurance must contain a provision
that the company writing said policy will give Landlord thirty (30) days’ prior
written notice of any cancellation or lapse of the effective date or any
reduction in the amounts of such insurance. In the event that the Tenant
Improvements are damaged by any cause during the course of the construction
thereof, Tenant shall immediately repair the same at Tenant’s sole cost and
expense. Tenant’s Agents shall maintain all of the foregoing insurance coverage
in force until the Tenant Improvements are fully completed and accepted by
Landlord, except for any Products and Completed Operation Coverage insurance
required by Landlord, which is to be maintained for ten (10) years following
completion of the work and acceptance by Landlord and Tenant. All policies
carried under this Section 3.2.2(D) shall insure Landlord and Tenant, as their
interests may appear, as well as Tenant’s Contractor and Tenant’s Agents. All
insurance, except Workers’ Compensation, maintained by Tenant’s Agents shall
preclude subrogation claims by the insurer against anyone insured thereunder.
Such insurance shall provide that it is primary insurance as respects the
Landlord and that any other insurance maintained by Landlord is excess and
noncontributing with the insurance required hereunder. The requirements for the
foregoing insurance shall not derogate from the provisions for indemnification
of Landlord by Tenant under Section 3.2.2(B) of this Work Letter.

3.2.3       Governmental
Compliance. The Tenant Improvements shall comply in all respects with the
following: (i) all building codes and other state, federal, city or
quasi-governmental laws, codes, ordinances and regulations, as each may apply
according to the rulings of the controlling public official, agent or other
person; (ii) applicable standards of the American Insurance Association
(formerly, the National Board of Fire Underwriters) and the National Electrical
Code; and (iii) building material manufacturer’s specifications.

3.2.4       Mechanic’s
Liens.  Tenant shall keep the
Premises and the Center free and clear of mechanics’ liens arising out of its
construction of Tenant’s Work as provided in Article 29.  All provisions of Article 29 shall apply to
Tenant’s Work as if fully set forth into this Work Letter.

3.2.5       Inspection
by Landlord. Landlord shall have the right to inspect the Tenant
Improvements at all times, provided however, that Landlord’s failure to inspect
the Tenant Improvements shall in no event constitute a waiver of any of
Landlord’s rights hereunder nor shall Landlord’s inspection of the Tenant
Improvements constitute Landlord’s approval of the same. Should Landlord
reasonably disapprove any portion of the Tenant Improvements, Landlord shall
notify Tenant in writing of such disapproval and shall specify the items
disapproved. Any material defects or deviations in, and/or disapproval by
Landlord of, the Tenant Improvements shall be rectified by Tenant at no expense
to Landlord, provided however, that in the event Landlord determines that a
defect or deviation exists or disapproves of any matter in connection with any
portion of the Tenant Improvements and such defect, deviation or matter might
adversely affect the mechanical, electrical, plumbing, heating, ventilating and
air-conditioning or life-safety systems of the Building, the structure or
exterior appearance of the Building or any other tenant’s use of such other
tenant’s leased premises, Landlord after giving Tenant at least three (3)
business days advance written notice and an opportunity to cure or otherwise
demonstrate compliance, may take such action as Landlord deems necessary, at
Tenant’s expense and without incurring any liability on Landlord’s part, to
correct any such defect, deviation and/or matter, including, without
limitation, causing the cessation of performance of the construction of the
Tenant Improvements until such time as the defect, deviation and/or matter is
corrected to Landlord’s satisfaction.

3.2.6       Meetings.
Commencing upon the execution of this Lease, Tenant shall hold weekly meetings
at a reasonable time, with the Architect and the Tenant’s Contractor regarding
the progress of the preparation of the Tenant Improvement Plans and the
construction of the Tenant Improvements, and Landlord and/or its agents shall
receive prior notice of, and shall have the right to attend, all such meetings,
and, upon Landlord’s request, certain of Tenant’s Agents shall attend such

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meetings. Such meetings shall include a detailed
review of the plans, drawings and specifications prepared to date and all
participants in the meeting shall make a good faith effort to raise any issues
or concerns they may have regarding the scope, form or content of any plan
submitted.

3.3      Notice of Completion; Copy of Record
Set of Plans. Within ten (10) days after completion of construction of the
Tenant Improvements, Tenant shall cause a Notice of Completion with respect to
the Tenant Improvements to be recorded in the office of the Recorder of the
County of Alameda in accordance with Section 3093 of the Civil Code of the
State of California or any successor statute, and shall furnish a copy thereof
to Landlord upon such recordation. If Tenant fails to do so, Landlord may
execute and file the same on behalf of Tenant as Tenant’s agent for such
purpose, at Tenant’s sole cost and expense. At the conclusion of construction,
(i) Tenant shall cause the Architect and Tenant’s Contractor (A) to update the
Approved Working Drawings as necessary to reflect all changes made to the
Approved Working Drawings during the course of construction, (B) to certify to
the best of their knowledge that the “record-set” of mylar as-built drawings
are true and correct, which certification shall survive the expiration or
termination of this Lease, and (C) to deliver to Landlord two (2) sets of
copies of such record set of drawings within ninety (90) days following
issuance of a certificate of occupancy for the Premises, and (ii) Tenant shall
deliver to Landlord a copy of all warranties, guaranties, and operating manuals
and information relating to the improvements, equipment, and systems in the
Premises.

SECTION 4

TENANT IMPROVEMENT ALLOWANCE;
CONSTRUCTION COSTS

4.1      Tenant Improvement Allowance.
Tenant shall be entitled to a one-time tenant improvement allowance (the “Tenant
Improvement Allowance”) in the amount of $25.00 per square foot of the Premises
GLA for the costs relating to the initial design and construction of the Tenant
Improvements.  In no event shall Landlord
be obligated to make disbursements pursuant to this Work Letter in a total
amount which exceeds the Tenant Improvement Allowance.  Tenant initially desired to lease premises at
the east end of Building 6 which were closer to the existing sewer and water
facilities necessary for Tenant’s use. Landlord acknowledges that Tenant’s
agreement  to lease the Premises, which
are located at the west end of Building 6, will increase the costs to Tenant of
bringing such utilities to the Premises. 
Therefore, in addition to the Tenant Improvement Allowance, Landlord
agrees to pay 50% of the following costs which Tenant would not have incurred
had Tenant’s Premises been located at 
the east end of Building 6:  (i)
Tenant’s cost of running Tenant’s Industrial Waste Line an additional 244
linear feet, and (ii) Tenant’s cost of running Tenant’s Water Supply Line an
additional 267 linear feet. Landlord shall pay its share of the foregoing costs
as they are incurred, in accordance with Section 4.2 below.

4.2      Disbursement of the Tenant Improvement
Allowance.

4.2.1       Tenant
Improvement Allowance Items. Except as otherwise set forth in this Work
Letter, the Tenant Improvement Allowance shall be disbursed by Landlord only
for the following items and costs (collectively the “Tenant Improvement
Allowance Items”):

A.               Payment
of the fees of the Architect and the Engineers

B.                The
payment of plan check, permit and license fees relating to construction of the
Tenant Improvements;

C.                The
cost of construction of the Tenant Improvements, including, without limitation,
testing and inspection costs, utility usage, trash removal costs, and
contractors’ fees and general conditions;

D.                The
cost of any changes in the Base Building when such changes are required by the
Tenant Improvement Plans, such cost to include all direct architectural and/or
engineering fees and expenses incurred in connection therewith;

E.                The
cost of any changes to the Tenant Improvement Plans or Tenant Improvements
required by Code; and

F.                The
payment of Tenant’s 50% share of the costs of the new 1 1⁄2” water meter for
Building 6 described in Section 1.2 above.

4.2.2       Disbursement
of Tenant Improvement Allowance. During the construction of the Tenant
Improvements, Landlord shall make monthly disbursements of the Tenant
Improvement Allowance for Tenant Improvement Allowance Items:

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A.               Monthly
Disbursements. No more frequently than monthly, during the construction of
the Tenant Improvements (or such other date as Landlord may designate), Tenant
shall deliver to Landlord: (i) a request for payment of Tenant’s Contractor,
approved by Tenant, in a form to be provided by Landlord, showing the schedule,
by trade, of percentage of completion of the Tenant Improvements in the
Premises, detailing the portion of the work completed and the portion not
completed; (ii) invoices from all of Tenant’s Agents, for labor rendered and
materials delivered to the Premises; (iii) executed mechanic’s lien releases
from all of Tenant’s Agents which shall comply with the appropriate provisions,
as reasonably determined by Landlord, of California Civil Code Section 3262(d);
and (iv) all other information reasonably requested by Landlord. Tenant’s
request for payment shall be deemed Tenant’s approval of the work furnished
and/or the materials supplied as set forth in Tenant’s payment request. After
receipt of the foregoing and provided that Landlord does not dispute any
request for payment based on non-compliance of any work with the Approved
Tenant Improvement Plans, or due to any substandard work, or for any other
reason, Landlord shall deliver a check to Tenant in an amount equal to the
lesser of: (a) the Allowance Percentage of the Tenant Improvement costs for
which payment is so requested less a ten percent (10%) retention (the aggregate
amount of such retentions to be known as the “Final Retention”), or (b) the
balance of the undisbursed Tenant Improvement Allowance (excluding the Final
Retention). Landlord’s payment of such amounts shall not be deemed Landlord’s
approval or acceptance of the work furnished or materials supplied as set forth
in Tenant’s payment request.

B.          Final Retention.
Subject to the provisions of this Work Letter, a check for the Final Retention
shall be delivered by Landlord to Tenant within fifteen (15) days after all the
following  conditions have been
satisfied: (i) Tenant delivers to Landlord a properly executed unconditional
waiver and  lien release from Tenant’s
Contractor in compliance with applicable sections of the California Civil Code,
(ii) Landlord has determined that no substandard work exists, (iii) Architect
delivers to Landlord a certificate, in a form reasonably acceptable to
Landlord, certifying that the construction of the Tenant Improvements in the
Premises has been substantially completed, (iv) Tenant has recorded a Notice of
Completion with respect to Tenant’s Work and thirty (30) days has expired from
the date of such recording with no liens having been filed during such thirty
day period, and (v) there is no existing Event of Default by Tenant under the
Lease nor has Landlord notified Tenant of any default which would become an
Event of Default under the Lease with the passage of time if not cured.

C.          Other Terms. Landlord shall only be obligated to
make disbursements from the Tenant Improvement Allowance to the extent costs
are incurred by Tenant for Tenant Improvement Allowance Items.  No disbursements shall be made to pay for
Special Improvements unless the Tenant Improvement Allowance exceeds the costs
of all other Tenant Improvements.  All
costs of completing Tenant’s Work in excess of the Tenant Improvement Allowance shall be at Tenant’s sole
cost and expense.

D.                Other
Landlord Costs.  Tenant shall also be
responsible for the payment of (i) the fees incurred by Landlord for Landlord’s
consultants in connection with design drawing review and routine construction
support related to the Tenant Improvements, (ii) the cost of documents and
materials supplied by Landlord and Landlord’s consultants, and (iii) all other
verifiable, directly related costs, such as blueprint costs and delivery, fax
and copy charges incurred by Landlord and Landlord’s consultants related to the
design/routine construction support of the Tenant Improvements.  When the Tenant Improvement Plans have been
approved by Landlord, Landlord shall submit to Tenant Landlord’s estimate of
the foregoing costs. The Tenant Improvement Allowance will not be used to pay
the foregoing costs.  Tenant shall pay
such costs to Landlord from time to time within ten (10) days after receipt
from Landlord of statements of such expenses. The Tenant Improvement Allowance
will not be used to pay the foregoing costs. 
Tenant shall pay such costs to Landlord from time to time within ten
(10) days after receipt from Landlord of statements of such expenses.

SECTION 5

CONSTRUCTION DELAYS

5.1      Tenant Delays. As used in this
Lease, the term “Tenant Delay” shall mean the
period of an actual delay or delays in the Substantial Completion of Landlord’s
Work or in the occurrence of any of the other conditions precedent to the
Delivery Date, as set forth in Article 8 of the Lease, to the extent
resulting from:

a.            Tenant’s
failure to approve any matter requiring Tenant’s approval within the time
period specifically provided in this Work Letter for such approval;

b.           A
breach by Tenant of the terms of this Work Letter or the Lease;

c.            Changes
to the Base Building work described in the Plan List required by the Approved
Tenant Improvement Drawings or requested in writing by Tenant; or

d.           Any
other acts or omissions of Tenant, or its agents, or employees,

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(each a “Tenant Delay”).  Landlord shall provide prompt (within 48
hours of becoming aware of any such delay) written notice to Tenant (“Delay
Notice”) specifying the action or inaction which Landlord contends constitutes
a Tenant Delay hereunder. The period of delay, however, shall commence to run
on the date of the action or inaction and not on the date of the Delay Notice.
To the extent an action or inaction by Tenant specified in any Delay Notice
constitutes a Tenant Delay as defined above and actually results in a delay in
the Substantial Completion of the Premises (after taking into account any
delays resulting from Landlord Delays and/or Force Majeure Delays described
below), a Tenant Delay shall be deemed to have been established.  .

5.2    Tenant’s Lease Default.  Notwithstanding any provision to the contrary
contained in this Lease: (i) if an Event of Default as described in Article 25
of the Lease has occurred or, (ii) a default by Tenant under this Work Letter
has occurred at any time on or before the substantial completion of Landlord’s
Work and Tenant fails to remedy the default within such 48 hours after written
notice from Landlord, then Landlord may thereafter:  (i) in addition to all other rights and
remedies granted to Landlord pursuant to the Lease, Landlord shall have the
right to withhold payment of all or any portion of the Tenant Improvement
Allowance and/or Landlord may cause Contractor to cease the construction of the
Premises (in which case, Tenant shall be responsible for any Tenant  Delay resulting from such work stoppage as
set forth in Section 4.1 above of this Work Letter), and (ii) all other
obligations of Landlord under the terms of this Work Letter shall be deferred
until such time as such default is cured pursuant to the terms of the Lease.

5.3  Landlord Delay.  As used herein, “Landlord Delay” shall mean: (i) any actual delay in the
completion of the work Tenant is required to perform hereunder which results
from any failure of Landlord to act or provide approvals within five (5)
business days or (ii) the actual delay in the Substantial Completion of
Landlord’s Work due to any failure of Landlord, its agents, employees or
contractors to perform the Base Building work or other work required to be
provided by Landlord hereunder in compliance with the terms hereof and in
compliance with applicable laws, rules and regulations or any other acts or
omissions of Landlord, or its agents, or employees.  Tenant shall provide prompt (within 48 hours
of becoming aware of any such delay) written notice to Landlord (“Delay Notice”)
specifying the action or inaction which Tenant contends constitutes a Landlord
Delay hereunder. The period of delay, however, shall commence to run on the
date of the action or inaction and not on the date of the Delay Notice.

5.4            Force Majeure Delays.  The term “Force
Majeure Delays” shall mean delays caused by any event of force
majeure described in Section 32.8 of the Lease.

5.5            Substantial Completion.  The date set forth in Section 8.4 of the
Lease for Landlord’s Substantial Completion of the Base Building work shall be
extended for the period of any Tenant Delays and Force Majeure Delays.

SECTION 6

MISCELLANEOUS

6.1    Tenant’s Representative. Tenant has
designated Ed Traverso and Alan Moyal
as its sole representatives with respect to the matters set forth in this Work
Letter, each of whom, until further notice to Landlord, shall have full
authority and responsibility to act on behalf of the Tenant as required in this
Work Letter.

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

6.3    Time of the Essence in This Work Letter.
Unless otherwise indicated, all references herein to a “number of days” shall
mean and refer to calendar days. In all instances where Tenant is required to
approve or deliver an item, if no written notice of approval is given or the
item is not delivered within the stated time period, at Landlord’s sole option,
at the end of such period the item shall automatically be deemed approved or
delivered by Tenant and the next succeeding time period shall commence.

 C-7

 

FIRST
AMENDMENT TO

BUILDING 6 LEASE

THIS FIRST AMENDMENT TO BUILDING 6 LEASE (the “First Amendment”) is made and entered into as of August 16,
2006 (the “First  Amendment
Effective Date”) by and between Greenville Holding Company
LLC a California limited liability company (hereafter, “Landlord”), and FormFactor, Inc.,
a Delaware corporation (hereafter “Tenant”).

RECITALS

A.            Greenville Investors
L.P., a California limited partnership (“Investors”) and
Tenant entered into a Lease Agreement dated October 5, 2004 (the “Lease”) relating to certain premises consisting of
approximately 12,303 square feet located at the west end of Building 6 on
Parcel 6 in the Pacific Corporate Center and “Tenant’s Facility Yard” on Parcel
6 as described in said Lease (collectively, the “Existing
Premises”).

B.            The Rent Commencement Date referred to in the Lease was
March 15, 2005.

C.            The interest of
Investors in the Lease has been assigned to Landlord.

D.            Tenant now desires
to expand its Existing Premises to include the remainder of Building 6
consisting of 37,439 square feet of gross leasable area (“GLA”)
of additional space (the “Additional Premises”)
as depicted on the floor plan attached hereto as Exhibit A, and to
construct improvements in the Additional Premises.

E.             Landlord and Tenant
desire to amend the Lease to provide for such expansion and construction on the
terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants made herein,
Landlord and Tenant agree as follows:

AGREEMENTS

1.             Premises.  Subject to
the reservation set forth in the introductory Paragraph A of the Lease,
Landlord hereby leases to Tenant and Tenant hereby takes from Landlord on the
terms and conditions of the Lease, as amended hereby, the Additional Premises
consisting of 37,439 square feet of GLA. 
From and after the First Amendment Effective Date, the term “Premises”
as used in the Lease shall include both the Existing Premises and the Additional
Premises aggregating 49,742 square feet. 
Commencing on the First Amendment Effective Date, all terms and
provisions of the Lease, as amended hereby, specifically including the
insurance and indemnity provisions, shall apply to both the Existing Premises
and the Additional Premises; provided that, the monthly Base Rent payable by
Tenant and Tenant’s Proportionate Share of Operating and Maintenance Costs payable
pursuant to Article 10 of the Lease shall not increase until the “Base Rent
Adjustment Date”, as defined in Paragraph 3 below.

A.            Use.  Landlord and Tenant hereby agree to expand
the Use of the Premises as set forth in Paragraph 1(h) of the Lease to include facilities
for research, development, design, manufacture (including with clean room
facilities), and sale of components and devices relating to the testing and
packaging of semiconductor devices.  In
addition, Section 4.7(B)(1) of the Lease is hereby amended by replacing the
phrase in subparagraph (i):  “i.e.,
testing of solid state electronic components and research and development
related thereto” with the following:  “i.e.,
research, development, design, manufacture (including with clean room
facilities), and sale of components and devices relating to the testing and
packaging of semiconductor devices”.

B.            Hazardous
Substances.  Landlord and
Tenant hereby agree to amend Section 4.7 of the Lease in its entirety to read
as set forth on Exhibit C attached hereto, and to replace the list of
Hazardous Substances set forth on Exhibit F to the Lease in its entirety
with the replacement Exhibit F attached hereto.  The parties agree that the Exhibit F-1
referenced

 1
 

 

in
the replacement Exhibit F attached hereto shall refer to the existing Exhibit
F-1 of the Lease.

C.            Utility Use
Restrictions.  Landlord and
Tenant hereby agree to delete the “Utility Use Restrictions” set forth in Addendum
A-6 to the Lease.  Any increase in
the existing utility capacities required by Tenant’s use of Building 6 shall be
made by Tenant at Tenant’s sole cost and expense and shall be subject to
Section 9.5 of the Lease.

D.            Use of
Roof.  Landlord and Tenant
hereby agree to amend Section A-32.27 of the Lease in its entirety to read as
follows:

“A-32.27     Use of Roof.  Landlord and Tenant agree
that Tenant shall be permitted to use the roof subject to the following terms
and conditions.  Subject to Applicable
Laws, Tenant shall have the right to install or cause to be installed mechanical
equipment on the roof (“Mechanical Equipment”).  With respect to any remaining portion of the
roof on which Mechanical Equipment has not been installed by Tenant (the “Remaining Roof”), Landlord and Tenant agree that (i)
Landlord shall have the exclusive right to use 50% of the Remaining Roof, and
(ii) Tenant shall have the exclusive right to use 50% of the Remaining Roof to
install a satellite dish or cluster of dishes and ancillary telecommunications
equipment, or other equipment in connection with Tenant’s business operations
(collectively, the “Rooftop Equipment”),
with the apportionment of the Remaining Roof to be reasonably acceptable to
Landlord and Tenant.

There shall be no
additional charge payable by Tenant to Landlord for the use of any portion of
the roof or for the installation of any equipment on the roof.

Tenant agrees to
install or cause to be installed the Rooftop Equipment pursuant to plans and
specifications which shall be subject to Landlord’s prior written approval,
which shall not be unreasonably withheld or delayed, on the roof of the
Building, in a location as Landlord and Tenant may mutually agree.  If the Rooftop Equipment is to be installed
on the roof, Tenant shall notify Landlord in writing that the Rooftop Equipment
is to be installed on the roof.  Tenant
shall be solely responsible for complying with (or causing its vendor to comply
with) the requirements of such roof warranty or roof bond in connection with
the installation, maintenance, repair, replacement or removal of the Rooftop
Equipment.  Tenant shall repair any
damage to the roof caused by the installation, maintenance, repair, replacement
or removal of the Rooftop Equipment. 
Landlord shall permit Tenant reasonable access to the designated area as
reasonably necessary to install, maintain and remove the Rooftop Equipment, and
Tenant shall indemnify Landlord and be solely responsible, at Tenant’s cost and
expense, for the maintenance and repair of the Rooftop Equipment, and Landlord
shall have no responsibility with respect thereto unless the same was made
necessary by the negligence or willful act of Landlord or Landlord’s
Agents.  Tenant hereby agrees to defend,
indemnify and hold Landlord harmless form any mechanics or materialmen’s liens
upon the Premises or the Center which result from work associated with the
installation of the Rooftop Equipment. 
Tenant shall obtain all licenses or approvals required to install and
operate the Rooftop Equipment.  The
Rooftop Equipment shall remain the property of Tenant and upon expiration of
the Lease, Tenant shall remove the Rooftop Equipment and repair the Premises
and any damage to the area upon which the Rooftop Equipment was located to the
original condition, normal wear and tear excepted.  Tenant covenants that the Rooftop Equipment
will be installed, maintained and removed in accordance with all Applicable
Requirements. Tenant shall be responsible for all damage caused by the
installation, maintenance, repair and/or removal of Tenant’s Rooftop
Equipment.  Tenant’s access to the roof
to exercise its rights hereunder shall be subject to Landlord’s prior approval,
which shall not be unreasonably withheld, provided that Tenant exercises such
access rights in a manner that does not void any roof warranty.

Landlord shall not
install or permit the installation of any rooftop equipment on the Remaining
Roof reserved for Landlord the operation of which will interfere with: (i) any
Rooftop Equipment for which Tenant has submitted installation plans to Landlord
or which Tenant has previously installed on the portion of the roof for Tenant’s
use, or (ii) the operations of the Tenant’s business in Building 6 as conducted
at the time of such installation. Prior to Landlord’s installation of such
rooftop equipment, Landlord shall provide to Tenant plans and specifications
for Tenant’s review. All installation work shall

 2
 

 

be done in a
manner to minimize the interference with Tenant’s business operations. Further,
to comply with Tenant’s security requirements for the Building, Landlord shall
coordinate any roof access with Tenant.”

2.             Taxes.  Commencing on
the First Amendment Effective Date and continuing throughout the Term of the
Lease, Tenant’s Proportionate Share of Taxes payable pursuant to Section 7.1 of
the Lease shall be 100%. On the first day of the month after the First
Amendment Effective Date, Tenant’s Estimated Monthly Tax Payment shall increase
to $7,636.00.

3.             Base Rent Adjustment Date. Commencing on the date (the “Base Rent Adjustment Date”) which is the earlier of July 15,
2007 or the date Tenant has installed its equipment at the Additional Premises
for the purpose of manufacturing its products: 
(i) the Monthly Base Rent in the amount of $9,596.34 currently payable
under the Lease shall increase to $36,809.08 for the Existing Premises and the
Additional Premises;  and  (ii) 
Tenant’s Proportionate Share of Operating and Maintenance Costs shall be
100%.

4.             Base Rent Increases.  Pursuant
to the provisions of Section 3.2 of the Lease, the monthly Base Rent increases
by 4% on March 31 of each Lease Year during the Term of the Lease.  The next increase of the Monthly Base Rent
for the Existing Premises shall occur on March 31, 2007. The parties agree that
commencing on March 31, 2008 and continuing on each March 31 during the Term of
the Lease thereafter, the monthly Base Rent, as adjusted to include the
Additional Premises pursuant to Paragraph 3 above, shall be increased by 4%
pursuant to the provisions of Section 3.2.

5.             Parking.  Tenant
acknowledges that a tenant of Building 4 has the right to use 10 parking spaces
on Parcel 6 the parcel upon which Building 6 is located, in the location
depicted on Exhibit D attached hereto. 
During the term of the Lease, Tenant shall have the right to use all of
the remaining 121 existing parking spaces on Parcel 6.  Landlord and Tenant acknowledge that Tenant’s
parking will be reduced by approximately 12 spaces if Tenant uses a portion of its
existing spaces to expand Tenant’s facility yard on Parcel 6, which will result
in a total of 109 parking spaces available to Tenant.

6.             Landlord’s Work. 
Landlord agrees to complete Landlord’s Work described in the Work Letter
(Additional Premises) attached hereto as Exhibit B (the “Work Letter (Additional Premises)”) prior to the Base Rent
Adjustment Date.

7.             Approved Tenant Improvement Plans.  The Tenant Improvements for the Additional
Premises shall be set forth in plans to be attached hereto as Exhibit B-1
once such plans have been prepared by Tenant and approved by Landlord.  Once attached, the plans shall be deemed to
be the “Approved Tenant Improvement Plans” referred to in Section 2.4 of the
Work Letter (Additional Premises).

8.             Work
Letter.  The Work Letter attached as Exhibit C
to the Lease shall apply only to the Existing Premises.  Landlord’s Work and Tenant’s Work with
respect to the Additional Premises shall be constructed in accordance with the
terms and conditions set forth in the Work Letter (Additional Premises).  The Work Letter (Additional Premises)
provides for a Tenant Improvement Allowance of ($935,975.00) ($25 psf of the
Additional Premises),

9.             Term.  The parties hereby agree to extend
the initial term of the Lease described in Section 2.1 of the Lease. The termination
date of the initial term shall be extended to midnight on the fifteenth
anniversary of the First Amendment Effective Date.  The references to “Term” in the Lease shall
include both the initial term and the two “Option Terms” described in Paragraph
10 below.

10.           Options to
Renew.  The first sentence of
Section A-2.1 of the Addendum to Lease is amended to read as follows: “Provided
that no Event of Default by Tenant under this Lease exists as of the date of
exercise of the applicable option or at the expiration of the initial term or
preceding Option Term, and provided further that Tenant has not assigned this
Lease, Tenant shall have the option to extend the initial lease term for two
(2) additional, successive terms of five (5) years each (each, an “Option Term”).”

11.           Building Sale or Lease
Notice Rights.  Landlord shall
provide written

 3
 

 

notice to Tenant the first time Landlord responds in writing to a new
interested third party to purchase or lease Building 4, 5 and/or 7, provided
that Tenant is not then in default of this Lease beyond any applicable cure
period.  Tenant shall have five (5) days
to indicate its interest in negotiating a sale or lease.  Landlord may negotiate concurrently with
Tenant and interested third party(ies). 
Landlord’s obligation to notify Tenant as described herein shall in no
way obligate Landlord to sell or lease Building 4, 5 or 7 to Tenant.  Tenant’s notice rights with respect to a
Building shall expire upon Landlord’s sale of the Building or execution of a lease
agreement with a third party for premises in the Building.

 

The parties agree
that with respect to any building sale or lease notice rights and obligations for
Building 7 that are set forth in Addendums A-32.24 and A-32.25 of that certain
Pacific Corporate Center Lease dated as of May 3, 2001 by and between Landlord
and Tenant (as amended or supplemented from time to time, the “Building 1 Lease”),
this Section 11 shall supersede such rights and obligations for Building 7 in
Addendums A-32.24 and A-32.25 of the Building 1 Lease.  Except as otherwise expressly provided in the
sentence above, from and after the Effective Date of this First Amendment, all
provisions of the Building 1 Lease shall remain unchanged and in full force and
effect.

12.           Restriction
on Sale.  Landlord and Tenant
hereby agree to replace the Tenant’s competitor list set forth on Exhibit I
to the Lease in its entirety with the competitor list set forth on the
replacement Exhibit I attached hereto.

[remainder of this page intentionally left blank]

 4
 

 

13.           Effectiveness of Lease.  Except as otherwise expressly provided
herein, from and after the Effective Date of this First Amendment, all
provisions of the Lease shall remain unchanged and in full force and effect and
all references to the “Lease” shall mean the Lease as amended by this First
Amendment.  All capitalized terms used in
this First Amendment which are not defined shall have the same definition as those
same terms in the Lease.

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to Building 6 Lease as of the day and year first written above.

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  GREENVILLE
  HOLDING COMPANY, LLC

  a Delaware limited liability company

  	
   

  	
  FORMFACTOR, INC.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
   Greenville Investors II LLC,

  	
   

  	
  By:

  	
  /s/ STUART L. MERKADEAU

  	
   

  
	
   

  	
  a Delaware
  limited liability company

  	
   

  	
   

  	
  Stuart L. Merkadeau

  
	
   

  	
  (dba in
  California as Greenville Pacific

  	
   

  	
  Its:

  	
  SVP, General Counsel & Secretary

  	
   

  
	
  Corporate Center
  LLC)

  	
   

  	
   

  
	
  Its:

  	
  Managing Member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  Greenville Investors
  LP,

  	
   

  	
   

  
	
   

  	
  a California
  limited partnership

  	
   

  	
   

  
	
  Its:

  	
  Managing Member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  Greenville
  Ventures, Inc.,

  	
   

  	
   

  
	
   

  	
  a California
  corporation

  	
   

  	
   

  
	
  Its:

  	
  General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ JEFFREY W.
  ABRAMSON

  	
   

  	
   

  	
   

  
	
   

  	
  Jeffrey W.
  Abramson

  	
   

  	
   

  
	
  Its:

  	
     President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
  675 Hartz Avenue
  

  	
   

  	
  ADDRESS:

  	
  7005 Southfront Road

  
	
   

  	
  Danville, CA
  94526

  	
   

  	
   

  	
  Livermore, CA 94551

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  8-16-06

  	
   

  	
   

  	
  Dated:

  	
  16 August 2006

  	
   

  
												

 

 5

 

EXHIBIT A

Floor Plan of Additional Premises

[Floor Plan of Additional Premises]

 1

 

EXHIBIT
B

WORK LETTER

(ADDITIONAL PREMISES)

[Work Letter – Additional
Premises]

This
Work Letter sets forth the terms and conditions relating to the construction of
the Premises.

SECTION 1

BUILDING AND THE PREMISES

1.1           Base Building.  The Base Building has been constructed in
accordance with the plans for such improvements listed on the plan list
attached as Schedule 1 to this Exhibit B (the “Plan List”) as modified by the “as-built”
plan set which has been provided to Tenant.

Tenant
acknowledges that the Base Building and Parcel 6 Site Work have been completed
and agrees to accept possession of the Premises “as-is” in its existing
condition except for Landlord’s Work.

1.2           Landlord’s Work. 
Landlord shall install,
construct, repair and correct, at its sole cost and expense, “Landlord’s Work” which consists of the
following work on Parcel 6: the parking, landscaping and site lighting
work in the southeast corner of Parcel 6 as shown on the Parcel 6 Drawing A-1.1
dated 01-12-01, a copy of which is attached hereto as Schedule 1, and
the items set forth on Schedule 2 attached hereto.

1.3           Tenant’s Work.  “Tenant’s Work”
will include designing, providing and installing all Tenant Improvements
(defined hereafter) and providing the required furnishings, fixtures and equipment
for Tenant’s use of the Premises, as expanded by the Additional Premises. As
used in the Lease, the term “Tenant Improvements”
shall mean all improvements set forth in the Approved Tenant Improvement Plans.
Tenant shall obtain all necessary permits and
approvals for and shall construct the “Tenant Improvements”
in accordance with the Approved Tenant Improvement Plans (as defined in Section
2.4 below). Landlord will disburse the Tenant
Improvement Allowance described in Section 4 below to pay for Tenant
Improvement Costs (defined hereafter). 
All such costs of completing Tenant’s Work which are in excess of the
Tenant Improvement Allowance shall be paid by Tenant pursuant to the terms of
the Lease and this Work Letter.

SECTION 2

TENANT IMPROVEMENT PLANS

2.1      Architect/Construction Plans.
Tenant has retained CAS Architects, Inc. (the “Architect”)
to prepare the construction plans for all Tenant Improvements and Special
Tenant Improvements.    Tenant shall
retain engineering consultants (the “Engineers”)
approved by Landlord (which approval shall not be unreasonably withheld or
delayed) to prepare all plans and engineering working drawings relating to the
Tenant Improvements, including without limitation, all structural, HVAC,
electrical, plumbing,  life safety, and
sprinkler work in the Premises which is not part of the Base Building. The
final working plans and drawings to be prepared by Architect and the Engineers
hereunder shall be known collectively as the “Tenant Improvement Plans”. The
scope, form and content of all plans and drawings shall be discussed in
reasonable detail at each of the weekly meetings held pursuant to the terms of
Section 3.2.6 below. All Tenant Improvement Plans shall be in a form suitable
for bidding and construction by qualified contractors, shall meet the
requirements of the City of Livermore, and shall be subject to Landlord’s
approval, which shall not be unreasonably withheld or delayed. Tenant and
Architect shall verify, in the field, the dimensions and conditions as shown on
the relevant portions of the Base Building plans, and Tenant and Architect
shall be solely responsible for the same, and Landlord shall have no
responsibility in connection therewith. Landlord’s review of the Tenant
Improvement Plans as set forth in this Section 2, shall be for its sole purpose
and shall not obligate Landlord to review the same, for quality, design, code
compliance or other like matters. Accordingly, notwithstanding that any Tenant
Improvement Plans are reviewed by Landlord or its architect, engineers and
consultants, and notwithstanding any advice or assistance which may be rendered
to Tenant by Landlord or Landlord’s space planner, architect, engineers, and
consultants, Landlord shall have no liability whatsoever in connection
therewith and shall not be responsible for any omissions or errors contained in
the Tenant Improvement Plans, and Tenant’s waiver and indemnity set forth in
Article 16 of the Lease shall specifically apply to the Tenant

 1
 

 

Improvement
Plans.

2.2      Final Design Drawings. Tenant and
the Architect shall prepare the final design drawings and specifications  for Tenant Improvements in the Premises
(collectively, the “Final Design Drawings”)
and shall deliver the same to Landlord for Landlord’s approval. The Final
Design Drawings shall include a layout and designation of all offices, rooms
and other partitioning.  Landlord may
request clarification or more specific drawings for special use items not
included in the Final Design Drawings. Landlord shall advise Tenant within five
(5) business days after Landlord’s receipt of the Final Design Drawings for the
Premises if the same are unsatisfactory or incomplete in any respect. If Tenant
is so advised, Tenant shall promptly cause the Final Design Drawings to be
revised to correct any deficiencies or other matters Landlord may reasonably
require.

2.3      Final Working Drawings. After the
Final Design Drawings have been approved by Landlord, Tenant shall promptly
cause the Architect and the Engineers to complete the architectural and engineering
drawings for the Premises, and Architect shall compile a fully coordinated set
of architectural, structural, mechanical, electrical and plumbing working
drawings in a form which is sufficiently complete to allow subcontractors with
a reasonable level of competence and experience in the industry to bid on the
work and to obtain all permits required for the construction of the Tenant
Improvements (the “Permits”) and
shall submit the same (collectively, the “Final  Working  Drawings”) to
Landlord for Landlord’s approval, which approval shall not be unreasonably
withheld or delayed. Tenant shall supply Landlord with three (3) copies signed
by Tenant of such Final Working Drawings. Landlord shall advise Tenant within
five (5) business days after Landlord’s receipt of the Final Working Drawings
for the Premises if the same are unsatisfactory or incomplete in any respect.
If Tenant is so advised, Tenant shall promptly cause the Final Working Drawings
to be revised in accordance with such review and any disapproval of Landlord in
connection therewith.

2.4      Approved
Tenant Improvement Plans.  The Final
Working Drawings shall be approved by Landlord (the “Approved
Tenant Improvement Plans”) prior to the commencement of construction
of the Tenant Improvements by Tenant. In order to expedite the permitting
process, however, prior to Landlord’s approval pursuant to Section 2.3 above,
Tenant may submit the Final Working Drawings to the appropriate municipal
authorities for all Permits necessary to allow Tenant’s contractor to commence
and fully complete the construction of the Tenant Improvements. Notwithstanding
the foregoing, Tenant acknowledges that Landlord does not waive the right to
approve the Final Working Drawings and by electing to submit the Final Working
Drawings for permit prior to Landlord’s approval, Tenant is assuming the risk
that Landlord may require changes in such drawings after the same have been
submitted for permits. Tenant hereby agrees that neither Landlord nor Landlord’s
consultants shall be responsible for obtaining any of the Permits or a
certificate of occupancy for the Premises and that obtaining the same shall be
Tenant’s responsibility; provided, however, that Landlord shall cooperate with
Tenant in executing permit applications and performing other ministerial acts
reasonably necessary to enable Tenant to obtain any such permit or certificate
of occupancy. No changes, modifications or alterations in the Approved Tenant
Improvement Plans may be made without the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed.

SECTION 3

CONSTRUCTION OF TENANT
IMPROVEMENTS

3.1      Tenant’s Selection of Contractors.

3.1.1       Tenant’s Contractor. A general
contractor shall be retained by Tenant to construct the Tenant Improvements.
Such general contractor (“Tenant’s Contractor”)
shall be subject to Landlord’s prior approval, which approval shall not be
unreasonably withheld or delayed.

3.1.2       Tenant’s Agents. All
subcontractors, laborers, materialmen, and suppliers used by Tenant (such
subcontractors, laborers, materialmen, and suppliers, and Tenant’s Contractor
to be known collectively as “Tenant’s Agents”)
must be approved in writing by Landlord, which approval shall not be
unreasonably withheld or delayed. If Landlord does not approve any of Tenant’s
proposed subcontractors, laborers, materialmen or suppliers, Tenant shall
submit other proposed subcontractors, laborers, materialmen or suppliers for
Landlord’s written approval. Notwithstanding the foregoing, Tenant shall retain
subcontractors designated or reasonably approved by Landlord in connection with
any structural, mechanical, electrical, plumbing or heating, air-conditioning
or ventilation work to be performed in the Premises. Further Landlord’s
approval shall not be required for any of Tenant’s Agents performing work or
providing materials costing less than $10,000.

 2
 

 

3.2      Construction of Tenant Improvements by
Tenant’s Agents.

3.2.1       Tenant’s
Construction Contract; Cost Budget. Prior to Tenant’s execution of the
construction contract and general conditions with Tenant’s Contractor (“Tenant’s Construction Contract”), Tenant shall submit Tenant’s
Construction Contract to Landlord for its approval, which approval shall not be
unreasonably withheld or delayed. Prior to the commencement of the construction
of the Tenant Improvements, and after Tenant has accepted all bids for the
Tenant Improvements, Tenant shall provide Landlord with a detailed breakdown,
by trade, of the final costs to be incurred or which have been incurred in
connection with the design and construction of the Tenant Improvements to be
performed by or at the direction of Tenant or Tenant’s Contractor, which costs
form a basis for the amount of Tenant’s Construction Contract (the “Final Costs”).
If the costs of the Tenant Improvements exceed the Tenant Improvement
Allowance, Tenant shall also provide Landlord with its computation of
percentage that the Tenant Improvement Allowance bears to the total costs of
the Tenant Improvements (the “Allowance Percentage”)

3.2.2       Tenant’s Agents.

A.               Landlord’s General Terms for
Tenant’s Agents and Tenant Improvement Work. Tenant’s and Tenant’s Agent’s
construction of the Tenant Improvements shall comply with the following: (i)
the Tenant Improvements shall be constructed in accordance with the Approved
Tenant Improvement Plans; (ii) Tenant’s Agents shall submit schedules of all
work relating to the Tenant Improvements to Tenant’s Contractor and Tenant’s
Contractor shall, within five (5) business days of receipt thereof, inform Tenant’s
Agents of any changes which are necessary thereto, and Tenant’s Agents shall
adhere to such corrected schedule; and (iii) Tenant shall abide by all rules
made by Landlord with respect to storage of materials, coordination of work
with the contractors of other tenants and Landlord, and any other matter in
connection with this Work Letter, including, without limitation, the
construction of the Tenant Improvements.

B.                Indemnity. Tenant’s
indemnity of Landlord as set forth in Section 16.1 of the Lease shall
also apply with respect to any and all costs, losses, damages, injuries and
liabilities related in any way to any act or omission of Tenant or Tenant’s
Agents, or anyone directly or indirectly employed by any of them, or in
connection with Tenant’s non-payment of any amount arising out of the Tenant
Improvements and/or Tenant’s disapproval of all or any portion of any request
for payment. Such indemnity by Tenant, as set forth in Section 16.1 of
the Lease, shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities related in any way to Landlord’s performance of any
ministerial acts reasonably necessary (i) to permit Tenant to complete the
Tenant Improvements, and (ii) to enable Tenant to obtain any building permit or
certificate of occupancy for the Premises.

C.                Requirements of Tenant’s
Agents. Each of Tenant’s Agents shall guarantee to Tenant and for the
benefit of Landlord that the portion of the Tenant Improvements for which it is
responsible shall be free from any defects in workmanship and materials for a
period of not less than one (1) year from the date of completion thereof. Each
of Tenant’s Agents shall be responsible for the replacement or repair, without
additional charge, of all work done or furnished in accordance with its
contract that shall become defective within one (1) year after the later to
occur of (i) completion of the work performed by such contractor or
subcontractors and (ii) the Lease Commencement Date. The correction of such
work shall include, without additional charge, all additional expenses and
damages incurred in connection with such removal or replacement of all or any
part of the Tenant Improvements, and/or the Building and/or common areas that
may be damaged or disturbed thereby. All such warranties or guarantees as to
materials or workmanship of or with respect to the Tenant Improvements shall be
contained in the Contract or subcontract and shall be written such that such
guarantees or warranties shall inure to the benefit of both Landlord and
Tenant, as their respective interests may appear, and can be directly enforced
by either. Tenant covenants to give to Landlord any assignment or other
assurances which may be necessary to effect such right of direct enforcement.

D.                Insurance Requirements.

1.                    General Coverages.
All of Tenant’s Agents shall carry worker’s compensation insurance covering all
of their respective employees, and shall also carry public liability insurance,
including property damage, all with limits, in form and with companies as are
required to be carried by Tenant as set forth in Article 14 of the
Lease.

2.                    Special Coverages.
Tenant shall carry “Builder’s All Risk” insurance in an amount approved by
Landlord covering the construction of the Tenant Improvements, and such other
insurance as Landlord may require, it being understood and agreed

 3
 

 

that
the Tenant Improvements shall be insured by Landlord pursuant to Article 14
of the Lease upon completion thereof. Tenant’s policy of Builder’s All Risk
insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Landlord including, but not
limited to, the requirement that all of Tenant’s Agents shall carry Excess
Liability and Products and Completed Operation Coverage insurance, each in
amounts not less than $1,000,000 per incident, $2,000,000 in aggregate, and in
form and with companies as are required to be carried by Tenant as set forth in
Article 14 of the Lease.

3.                    General Terms.
Certificates for all insurance carried pursuant to this Section 3.2.2(D) shall
be delivered to Landlord before the commencement of construction of the Tenant
Improvements and before the equipment of Tenant’s Contractor is moved onto the
site. All such policies of insurance must contain a provision that the company
writing said policy will give Landlord thirty (30) days’ prior written notice
of any cancellation or lapse of the effective date or any reduction in the
amounts of such insurance. In the event that the Tenant Improvements are
damaged by any cause during the course of the construction thereof, Tenant
shall immediately repair the same at Tenant’s sole cost and expense. Tenant’s
Agents shall maintain all of the foregoing insurance coverage in force until
the Tenant Improvements are fully completed and accepted by Landlord, except
for any Products and Completed Operation Coverage insurance required by
Landlord, which is to be maintained for ten (10) years following completion of
the work and acceptance by Landlord and Tenant. All policies carried under this
Section 3.2.2(D) shall insure Landlord and Tenant, as their interests may
appear, as well as Tenant’s Contractor and Tenant’s Agents. All insurance,
except Workers’ Compensation, maintained by Tenant’s Agents shall preclude
subrogation claims by the insurer against anyone insured thereunder. Such
insurance shall provide that it is primary insurance as respects the Landlord
and that any other insurance maintained by Landlord is excess and
noncontributing with the insurance required hereunder. The requirements for the
foregoing insurance shall not derogate from the provisions for indemnification
of Landlord by Tenant under Section 3.2.2(B) of this Work Letter.

3.2.3       Governmental Compliance. The
Tenant Improvements shall comply in all respects with the following: (i) all
building codes and other state, federal, city or quasi-governmental laws,
codes, ordinances and regulations, as each may apply according to the rulings
of the controlling public official, agent or other person; (ii) applicable standards
of the American Insurance Association (formerly, the National Board of Fire
Underwriters) and the National Electrical Code; and (iii) building material
manufacturer’s specifications.

3.2.4       Mechanic’s Liens.  Tenant shall keep the Premises and the Center
free and clear of mechanics’ liens arising out of its construction of Tenant’s
Work as provided in Article 29 of the Lease.  All provisions of Article 29 shall apply to
Tenant’s Work as if fully set forth into this Work Letter.

3.2.5       Inspection by Landlord. Landlord
shall have the right to inspect the Tenant Improvements at all times, provided
however, that Landlord’s failure to inspect the Tenant Improvements shall in no
event constitute a waiver of any of Landlord’s rights hereunder nor shall
Landlord’s inspection of the Tenant Improvements constitute Landlord’s approval
of the same. Should Landlord reasonably disapprove any portion of the Tenant
Improvements, Landlord shall notify Tenant in writing of such disapproval and
shall specify the items disapproved. Any material defects or deviations in,
and/or disapproval by Landlord of, the Tenant Improvements shall be rectified
by Tenant at no expense to Landlord, provided however, that in the event
Landlord determines that a defect or deviation exists or disapproves of any
matter in connection with any portion of the Tenant Improvements and such
defect, deviation or matter might adversely affect the mechanical, electrical,
plumbing, heating, ventilating and air-conditioning or life-safety systems of
the Building, the structure or exterior appearance of the Building or any other
tenant’s use of such other tenant’s leased premises, Landlord after giving
Tenant at least three (3) business days advance written notice and an
opportunity to cure or otherwise demonstrate compliance, may take such action
as Landlord deems necessary, at Tenant’s expense and without incurring any
liability on Landlord’s part, to correct any such defect, deviation and/or
matter, including, without limitation, causing the cessation of performance of
the construction of the Tenant Improvements until such time as the defect,
deviation and/or matter is corrected to Landlord’s satisfaction.

3.2.6        Meetings. Commencing upon the
execution of the First Amendment, Tenant shall hold weekly meetings at a
reasonable time, with the Architect and the Tenant’s Contractor regarding the
progress of the preparation of the Tenant Improvement Plans and the
construction of the Tenant Improvements, and Landlord and/or its agents shall
receive prior notice of, and shall have the right to attend, all such meetings,
and, upon Landlord’s request, certain of Tenant’s Agents shall attend such
meetings. Such meetings shall include a detailed review of the plans, drawings
and specifications prepared to date and all participants in the

 4
 

 

meeting
shall make a good faith effort to raise any issues or concerns they may have
regarding the scope, form or content of any plan submitted.

3.3      Notice of Completion; Copy of Record
Set of Plans. Within ten (10) days after completion of construction of the
Tenant Improvements, Tenant shall cause a Notice of Completion with respect to
the Tenant Improvements to be recorded in the office of the Recorder of the
County of Alameda in accordance with Section 3093 of the Civil Code of the State
of California or any successor statute, and shall furnish a copy thereof to
Landlord upon such recordation. If Tenant fails to do so, Landlord may execute
and file the same on behalf of Tenant as Tenant’s agent for such purpose, at
Tenant’s sole cost and expense. At the conclusion of construction, (i) Tenant
shall cause the Architect and Tenant’s Contractor (A) to update the Approved
Working Drawings as necessary to reflect all changes made to the Approved
Working Drawings during the course of construction, (B) to certify to the best
of their knowledge that the “record-set” of mylar as-built drawings are true
and correct, which certification shall survive the expiration or termination of
this Lease, and (C) to deliver to Landlord two (2) sets of copies of such
record set of drawings within ninety (90) days following issuance of a
certificate of occupancy for the Premises, and (ii) Tenant shall deliver to
Landlord a copy of all warranties, guaranties, and operating manuals and
information relating to the improvements, equipment, and systems in the
Premises.

SECTION 4

TENANT IMPROVEMENT ALLOWANCE;
CONSTRUCTION COSTS

4.1      Tenant Improvement Allowance.
Tenant shall be entitled to a one-time tenant improvement allowance (the “Tenant
Improvement Allowance”) in the amount of $25.00 per square foot of the Premises
GLA for the costs relating to the initial design and construction of the Tenant
Improvements.  In no event shall Landlord
be obligated to make disbursements pursuant to this Work Letter in a total
amount which exceeds the Tenant Improvement Allowance.

4.2      Disbursement of the Tenant Improvement
Allowance.

4.2.1       Tenant Improvement Allowance Items.
Except as otherwise set forth in this Work Letter, the Tenant Improvement
Allowance shall be disbursed by Landlord only for the following items and costs
(collectively the “Tenant Improvement Allowance Items”):

A.               Payment of the fees of the
Architect and the Engineers

B.                The payment of plan check,
permit and license fees relating to construction of the Tenant Improvements;

C.                The cost of construction of the
Tenant Improvements, including, without limitation, testing and inspection
costs, utility usage, trash removal costs, and contractors’ fees and general
conditions;

D.                The cost of any changes in the
Base Building when such changes are required by the Tenant Improvement Plans,
such cost to include all direct architectural and/or engineering fees and
expenses incurred in connection therewith; and

E.              The cost of any changes to the
Tenant Improvement Plans or Tenant Improvements required by Code.

F.              Any costs payable to Landlord
pursuant to Section 4.2.2 (D) below.

4.2.2       Disbursement of Tenant Improvement
Allowance. During the construction of the Tenant Improvements, Landlord
shall make monthly disbursements of the Tenant Improvement Allowance for Tenant
Improvement Allowance Items:

A.               Monthly Disbursements. No
more frequently than monthly, during the construction of the Tenant
Improvements (or such other date as Landlord may designate), Tenant shall
deliver to Landlord: (i) a request for payment of Tenant’s Contractor, approved
by Tenant, in a form to be provided by Landlord, showing the schedule, by
trade, of percentage of completion of the Tenant Improvements in the Premises,
detailing the portion of the work completed and the portion not completed; (ii)
invoices from all of Tenant’s Agents, for labor rendered and materials
delivered to the Premises; (iii) executed mechanic’s lien releases from all of
Tenant’s Agents

 5
 

 

which
shall comply with the appropriate provisions, as reasonably determined by
Landlord, of California Civil Code Section 3262(d); and (iv) all other
information reasonably requested by Landlord. Tenant’s request for payment
shall be deemed Tenant’s approval of the work furnished and/or the materials
supplied as set forth in Tenant’s payment request. After receipt of the
foregoing and provided that Landlord does not dispute any request for payment
based on non-compliance of any work with the Approved Tenant Improvement Plans,
or due to any substandard work, or for any other reason, Landlord shall deliver
a check to Tenant in an amount equal to the lesser of: (a) the Allowance
Percentage of the Tenant Improvement costs for which payment is so requested
less a ten percent (10%) retention (the aggregate amount of such retentions to
be known as the “Final Retention”), or (b) the
balance of the undisbursed Tenant Improvement Allowance (excluding the Final
Retention). Landlord’s payment of such amounts shall not be deemed Landlord’s
approval or acceptance of the work furnished or materials supplied as set forth
in Tenant’s payment request.

B.              Final Retention.
Subject to the provisions of this Work Letter, a check for the Final Retention
shall be delivered by Landlord to Tenant within fifteen (15) days after all the
following  conditions have been
satisfied: (i) Tenant delivers to Landlord a properly executed unconditional
waiver and  lien release from Tenant’s
Contractor in compliance with applicable sections of the California Civil Code,
(ii) Landlord has determined that no substandard work exists, (iii) Architect
delivers to Landlord a certificate, in a form reasonably acceptable to
Landlord, certifying that the construction of the Tenant Improvements in the
Premises has been substantially completed, (iv) Tenant has recorded a Notice of
Completion with respect to Tenant’s Work and thirty (30) days has expired from
the date of such recording with no liens having been filed during such thirty
day period, and (v) there is no existing Event of Default by Tenant under the
Lease nor has Landlord notified Tenant of any default which would become an
Event of Default under the Lease with the passage of time if not cured.

C.              Other Terms. Landlord shall only be obligated to
make disbursements from the Tenant Improvement Allowance to the extent costs
are incurred by Tenant for Tenant Improvement Allowance Items.  No disbursements shall be made to pay for
Special Improvements unless the Tenant Improvement Allowance exceeds the costs
of all other Tenant Improvements.  All
costs of completing Tenant’s Work in excess of the Tenant Improvement Allowance shall be at Tenant’s sole
cost and expense.  Notwithstanding
anything to the contrary herein, Tenant shall not be required to commence or
complete the  installation of office
cubicles down on Tenant’s Plans to obtain the Final Retention if the cost of
Tenant’s Improvements excluding the office cubicle installation work exceeds
the Tenant Improvement Allowance.

D.                Other Landlord Costs.  Tenant shall also be responsible for the
payment of up to $10,000 of the following costs: (i) the fees incurred by
Landlord for Landlord’s consultants in connection with design drawing review
and routine construction support related to the Tenant Improvements, (ii) the
cost of documents and materials supplied by Landlord and Landlord’s
consultants, and (iii) all other verifiable, directly related costs, such as
blueprint costs and delivery, fax and copy charges incurred by Landlord and
Landlord’s consultants related to the design/routine construction support of the
Tenant Improvements.  When the Tenant
Improvement Plans have been approved by Landlord, Landlord shall submit to
Tenant Landlord’s estimate of the foregoing costs. The Tenant Improvement
Allowance shall be used to pay the foregoing costs.  Landlord shall submit invoices for Landlord’s
actual and documented costs to Tenant and pay the same as incurred from the
Tenant Improvement Allowance.

SECTION 5

CONSTRUCTION DELAYS

5.1      Tenant Delays. As used in this
Lease, the term “Tenant Delay” shall mean the period
of an actual delay or delays in the Substantial Completion of Landlord’s Work
or in the occurrence of any of the other conditions precedent to the Delivery
Date, as set forth in Article 8 of the Lease, to the extent resulting
from:

a.            Tenant’s failure to approve any
matter requiring Tenant’s approval within the time period specifically provided
in this Work Letter for such approval;

b.           A breach by Tenant of the terms of
this Work Letter or the Lease;

c.            Changes to the Base Building work
described in the Plan List required by the Approved Tenant Improvement Drawings
or requested in writing by Tenant; or

d.           Any other acts or omissions of
Tenant, or its agents, or employees,

 6
 

 

(each
a “Tenant Delay”).  Landlord shall
provide prompt (within 48 hours of becoming aware of any such delay) written
notice to Tenant (“Delay Notice”) specifying the action or inaction which
Landlord contends constitutes a Tenant Delay hereunder. The period of delay,
however, shall commence to run on the date of the action or inaction and not on
the date of the Delay Notice. To the extent an action or inaction by Tenant
specified in any Delay Notice constitutes a Tenant Delay as defined above and
actually results in a delay in the Substantial Completion of the Premises
(after taking into account any delays resulting from Landlord Delays and/or
Force Majeure Delays described below), a Tenant Delay shall be deemed to have
been established.

5.2    Tenant’s Lease Default.  Notwithstanding any provision to the contrary
contained in this Lease: (i) if an Event of Default as described in Article 25
of the Lease has occurred or, (ii) a default by Tenant under this Work Letter
has occurred at any time on or before the substantial completion of Landlord’s
Work and Tenant fails to remedy the default within such 48 hours after written
notice from Landlord, then Landlord may thereafter:  (i) in addition to all other rights and
remedies granted to Landlord pursuant to the Lease, Landlord shall have the
right to withhold payment of all or any portion of the Tenant Improvement
Allowance and/or Landlord may cause Contractor to cease the construction of the
Premises (in which case, Tenant shall be responsible for any Tenant  Delay resulting from such work stoppage as
set forth in Section 5.1 above of this Work Letter), and (ii) all other
obligations of Landlord under the terms of this Work Letter shall be deferred
until such time as such default is cured pursuant to the terms of the Lease.

5.3    Landlord Delay.  As used herein, “Landlord Delay” shall mean: (i) any actual delay in the
completion of the work Tenant is required to perform hereunder which results
from any failure of Landlord to act or provide approvals within five (5)
business days or (ii) the actual delay in the Substantial Completion of
Landlord’s Work due to any failure of Landlord, its agents, employees or
contractors to perform the Base Building work or other work required to be
provided by Landlord hereunder in compliance with the terms hereof and in
compliance with applicable laws, rules and regulations or any other acts or
omissions of Landlord, or its agents, or employees.  Tenant shall provide prompt (within 48 hours
of becoming aware of any such delay) written notice to Landlord (“Delay Notice”)
specifying the action or inaction which Tenant contends constitutes a Landlord
Delay hereunder. The period of delay, however, shall commence to run on the
date of the action or inaction and not on the date of the Delay Notice.

5.4    Force Majeure Delays.  The term “Force
Majeure Delays” shall mean delays caused by any event of force
majeure described in Section 32.8 of the Lease.

5.5    Substantial Completion.  The date of July 15, 2007 for Landlord’s
Substantial Completion of the Landlord’s Work shall be extended for the period
of any Tenant Delays and Force Majeure Delays.

SECTION 6

MISCELLANEOUS

6.1    Tenant’s Representative. Tenant has
designated Ed Traverso and Alan Moyal
as its sole representatives with respect to the matters set forth in this Work
Letter, each of whom, until further notice to Landlord, shall have full
authority and responsibility to act on behalf of the Tenant as required in this
Work Letter.

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

6.3    Time of the Essence in This Work Letter.
Unless otherwise indicated, all references herein to a “number of days” shall
mean and refer to calendar days.

 7
 

 

SCHEDULE
1 TO EXHIBIT B

PARCEL
6 DRAWING A-1.1 DATED 01-12-01

[Parcel 6
Drawing]

 8
 

 

SCHEDULE
2 TO EXHIBIT B

ADDITIONAL
LANDLORD’S WORK

[Landlord’s
Additional Work]

 9
 

 

EXHIBIT
B-1

DESCRIPTION
OF TENANT IMPROVEMENT PLANS

[Tenant
Improvement Plans – Descriptions]

 10
 

 

EXHIBIT C

LEASE PROVISIONS REGARDING HAZARDOUS SUBSTANCES

[Hazardous Substances – Lease Provisions)

From
and after the First Amendment Effective Date, Section 4.7 of the Lease is
amended its entirety and the following Section 4.7 substituted therefor:

4.7          Hazardous Substances:

A.            Hazardous Substance;
Reportable Uses:  As used
herein, the terms “Hazardous Substance”
and “HS” shall mean any product,
substance, chemical, material or waste whose presence, nature, quantity and/or
intensity of existence, use, manufacture, disposal, transportation, spill,
release or effect, either by itself or in combination with other materials
expected to be on the Premises, is either: (i) potentially injurious to the public
health, safety or welfare, the environment, or the Premises; (ii) regulated or
monitored by any governmental authority; or (iii) a basis for potential
liability of Landlord to any governmental agency or third party under any
applicable statute.  Hazardous Substance
shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude
oil or any products or by-products thereof. “Reportable
Use” shall mean (i) the installation or use of any above or below
ground storage tank, (ii) the generation, possession, storage, use,
transportation, 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 (iii) the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable HS Requirements (as defined in subparagraph (F) hereinafter) require
that a notice be given to persons entering or occupying the Premises or
neighboring properties.

B.            Tenant’s Use of Hazardous
Substances:

(1)           Notice of Use of Hazardous
Substances. Tenant may, without Landlord’s prior consent, but upon notice
to Landlord and in compliance with all Applicable HS Requirements and all other
provisions of this Section 4.7, at Tenant’s sole cost and expense, (i)
operate a business on the Premises which is substantially similar to the
business it is operating at its facilities in Livermore, California as of the
Commencement Date, i.e. research,
development, design, manufacture (including with clean room facilities), and
sale of components and devices relating to the testing and packaging of
semiconductor devices (“Permitted Use”),
and (ii) use any ordinary and customary Hazardous Substances reasonably
required to be used by Tenant in the normal course of the Permitted Use.

(2)           Tenant’s HS Use.  Tenant shall have the right to use the
Hazardous Substances listed on Exhibit F without Landlord’s prior consent and
without the requirement of additional insurance.  Tenant 
shall use all such Hazardous Substances in accordance with all
Applicable HS Requirements and in compliance with all other provisions of this
Section 4.7, specifically including the notice requirements and restrictions
set forth below. Tenant’s use of the substances referenced in Exhibit F may be
referred to herein as “Tenant’s HS Use”.

(3)           Control of HS Hazards.

(a)           Plans for Designated HS Areas.  Tenant shall use, store, or otherwise manage
HS only in areas designated by Tenant for such use (“Designated HS Areas”). 
Prior to commencement of Tenant’s HS Use on the Premises, and prior to
modification of or addition to any Designated HS Areas, Tenant shall provide
Landlord with written plans (such as architectural or engineering plans)
regarding the design and planned operation of the Designated HS Areas. The
plans shall include descriptions of the types and quantities of HS that will be
used, stored, or otherwise managed in Designated HS Areas, the maximum design
capacity of each Designated HS Area and descriptions of all equipment and
structures that will be used to control environmental, health, and safety
hazards associated with the HS, including, for example, secondary containment
structures

 11
 

 

and air pollution control
equipment.  Tenant will also provide
copies of all permits and other approvals required to be obtained to lawfully
operate Tenant’s business and Hazardous Substances on the Premises.

(b)           Commencement of Tenant’s HS Use.  Tenant shall not commence Tenant’s HS Use
until Landlord has approved the plans submitted by Tenant pursuant to
subparagraph (a) above, which approval shall not be unreasonably withheld or
delayed.   Landlord may (but without any
obligation to do so) condition its approval upon Tenant’s taking such measures
as Landlord, at its reasonable discretion, deems necessary to protect itself,
the public, the Premises, the Center, and the environment against damage,
contamination, injury, and/or liability, including, but not limited to the
installation (and, at Landlord’s option, removal on or before Lease expiration
or earlier termination) of reasonably necessary protective equipment,
structures, or modifications to the Premises. Tenant’s plans shall be deemed
approved, however, if Tenant’s plans comply with the requirements of
subparagraph (a) and the minimum standards set forth on Exhibit F-1.

(c)           Modification/Expansion of
Designated HS Areas.  Tenant shall
not modify or add to the Designated HS Areas until Landlord has approved the
plans submitted by Tenant pursuant to subparagraph (a) above for the
modification or addition, which approval shall not be unreasonably withheld or
delayed. Tenant’s plans shall be deemed approved, however, if Tenant’s plans
for the modification or addition comply with the requirements of subparagraph
(a) and the minimum standards set forth on Exhibit F-1.

(4)           Notice of HS Use.  Tenant
shall notify the Landlord in writing at least five (5) business days prior to
any of  the following:

(a)  the date
Tenant first commences Tenant’s HS Use on the Premises; or

(b)  the date
Tenant commences to store or use any Hazardous 
Substance  which is not listed on
Exhibit  F (a “New HS “), if the quantity of the New Hazardous Substance
exceeds either (i) 55 gallons of liquid, 500 pounds of solid, 200 cubic feet of
compressed gas at standard temperature and pressure, or (ii) the applicable
Threshold Planning Quantity listed in 40 CFR Part 355.

After receipt of a
notice pursuant to subparagraph (b) above, if Tenant’s use of the New HS in the
Premises is materially more dangerous than Tenant’s use of Hazardous Substances
listed on Exhibit F, Landlord may require Tenant to obtain a policy of
pollution liability insurance in a commercially reasonable form and amounts and
with such insurer as may be reasonably approved by Landlord.  For any insurance policy requirement,
Landlord shall be named as an additional insured under such policy.  Tenant shall deliver a certificate of any
insurance required prior to bringing the Hazardous Substance into the Premises
and Tenant shall maintain such insurance in effect until the closure
requirements set forth in subparagraph (H) below have been satisfied or the New
HS use ceases.

(5)           Contents
of New HS  Notice.  Each notice of a New HS shall specify the
names and quantities of any New HS that Tenant intends to place on the Premises
which exceeds the  quantities described
in subparagraph 4(b) above together with a copy of all permits and other
approvals required to be obtained to lawfully use, store, or otherwise manage
the New HS on the Premises. Tenant’s notice shall also provide Landlord with
information regarding the Designated HS Areas where the New HS will be used,
stored, or otherwise managed, the new aggregate quantities of all Hazardous
Substances in Designated HS Areas, and the maximum design capacities of the
Designated HS Areas (if changed or modified from the Designated HS Areas as
initially approved consistent pursuant to Section 4.7(B)(3)(b) above).

(6)           Increase in HS Quantities.  If, at any time during the Term, Tenant
intends to increase the  quantity of
existing Hazardous Substances and/or add New HS

 12
 

 

such that the
aggregate quantity of all Hazardous Substances in any Designated HS Area on the
Premises exceeds the maximum design capacity for the Designated HS Area, Tenant
shall not increase quantities or add New HS until Landlord has consented to the
modification of or addition to the Designated HS Areas, pursuant to Section
4.7(B)(3)(c) above.

(7)           Restrictions on Quantity or Use of
HS. Notwithstanding any other provision of this Lease, but subject to
Tenant’s right to engage in a Permitted Use consistent with the standards of Exhibit
F-1, Tenant’s use of Hazardous Substances at the Premises is subject to the
following restrictions:

(a)                                  Tenant
shall not, without Landlord’s consent, use any HS in quantities such that
Tenant would be subject to requirements for preparation of a Risk Management
Plan, as set forth in 40 CFR Part 68 (as such requirements exist on the date of
execution of this Lease without regard to amendments which may be enacted after
the date hereof) and such HS use is materially more dangerous than the HS use
presently being carried on by Tenant.

(b)                                 Tenant
shall not, without Landlord’s consent, use any HS which emits odors unless the
odors can be controlled to the extent they are not present at objectionable
levels in any areas exterior to the Premises that are accessible to other
tenants of the Center or the general public. 
In the absence of any legal thresholds for identifying objectionable
odors, other odor standards may be used, provided they are generally accepted
as being scientifically valid.

(c)                                  Tenant
shall not, without Landlord’s consent, use any HS in a manner that would result
in “Significant Emissions”.  Significant Emissions are defined as air
emissions originating from the Premises for which under applicable federal or
state law (i) notices or warnings must be given to other occupants of the
Center or the general public based upon their proximity to the Building, as
opposed to entry therein, or (ii) other occupants of the Center or the general
public must receive special training and/or use personal protective equipment.

C.            Plans/Reports:  Within ten (10) days after Tenant submits the
same to any governmental authority, Tenant shall provide Landlord with copies
of all hazardous materials business plans, permits and all other plans, reports
and correspondence pertaining to storage/management of Hazardous Substances at
the Premises, except waste manifests and routine monitoring reports.

D.            Duty to Inform Landlord:  If Tenant knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises or Building or Center, other than as previously permitted or
consented to by Landlord or there has been a spill, release or discharge of any
Hazardous Substances in the Premises (other than discharges permitted,
authorized or otherwise approved by the applicable governmental agencies
regulating the same), Tenant shall immediately give Landlord written notice
thereof, together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to, or received from, any governmental authority or third party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous
Substance including but not limited to all such documents as may be involved in
any Reportable Use involving the Premises. 
Tenant shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under or about the Premises (including, without limitation,
through the plumbing, storm, or sanitary sewer system).

 13
 

 

E.             Indemnification:
Tenant shall indemnify, protect, defend and hold Landlord, its agents,
employees, lenders, and the Premises and Center, harmless from and against any
and all damages, liabilities, judgments, costs, claims, liens, expenses,
penalties, loss of permits and attorneys’ and consultants’ fees arising out of
or involving any Hazardous Substance to the extent brought into the Premises
and/or Center by or for Tenant, its employees, agents or contractors.  Tenant’s obligations under this Section
4.7(E) shall include, but not be limited to, the effects of any contamination
or injury to person, property or the environment created or suffered by Tenant,
and, except as otherwise provided in Section 4.7(G), the cost of investigation
(including reasonable consultants’ and attorneys’ fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein involved, and shall survive the expiration or earlier termination of
this Lease.  No termination, cancellation
or release agreement entered into by Landlord and Tenant shall release Tenant
from its obligations under this Lease with respect to Hazardous Substances,
unless specifically so agreed by Landlord in writing at the time of such
agreement.

F.             Tenant’s
Compliance with Requirements: 
Tenant shall, at Tenant’s sole cost and expense fully, diligently and in
a timely manner, comply with all “Legal Requirements”,
which term is used in this Lease to mean all laws, rules, regulations,
ordinances, directives, covenants, easements and restrictions of record,
permits, the requirements of any applicable fire insurance underwriter or
rating bureau, relating in any manner to the Premises or Center  (including but not limited to matters
pertaining to (i) industrial hygiene, (ii) environmental conditions on, in,
under or about the Premises, including soil and groundwater conditions, and
(iii) the use, generation, manufacture, production, installation, maintenance,
removal, transportation, storage, spill or release of any Hazardous Substance,
which foregoing (ii) and (iii) Legal Requirements may be referred to as “Applicable HS Requirements”), now in effect or which may hereafter
come into effect. Tenant shall, within twenty (20) business days after receipt
of Landlord’s written request made from time to time, provide Landlord with
copies of all documents and information, including but not limited to permits,
registrations, manifests, applications, reports and certificates, evidencing
Tenant’s compliance with all Applicable HS Requirements specified by Landlord,
and shall within five (5) business days after receipt, notify Landlord in
writing (with copies of any documents involved) of any threatened or actual
claim, notice, citation, warning, complaint or report pertaining to or
involving failure by Tenant or the Premises to comply with any Legal
Requirements. Tenant shall be obligated to disclose to Landlord which Hazardous
Substances are used at the Premises and how such Hazardous Substances are being
handled (but in no event shall Tenant be required to disclose information
regarding formulations or manufacturing processes or procedures related to such
Hazardous Substances) notwithstanding that such information may be proprietary
information or a trade secret. Landlord agrees to keep as confidential all such
proprietary information delivered to Landlord (including, without limitation,
Exhibit F) and which Tenant designates in writing as confidential, provided
that Landlord may disclose the same when required by law or in litigation
between Landlord and Tenant regarding such information or to Landlord’s lenders
or to prospective purchasers provided such parties have also agreed to keep the
same confidential.

G.            Compliance with Law
Governing Hazardous Substances: 
Landlord, Landlord’s agents, employees, contractors and designated
representatives, and the holders of any mortgages, deeds of trust or ground
leases on the Premises (“Lenders”) shall
have the right to enter the Premises at any time in case of an emergency, and
otherwise at reasonable times (but not more often than annually for inspection
of Tenant’s “clean room” on the Premises, if any, or more often than quarterly
for inspection of other parts of the Premises), and upon no less than 10 days’
notice, unless an emergency exists, for the purpose of inspecting the condition
of the Premises and for verifying compliance by Tenant with this Lease and all
Legal Requirements, and Landlord shall be entitled to employ experts and/or
consultants in connection therewith(provided that such experts and/or
consultants are not engaged in a business competitive with Tenant, or consult
or give advice to any competitor of Tenant listed on Exhibit I) to
advise Landlord with respect to Tenant’s activities, including but not limited
to Tenant’s installation, operation, use, monitoring, maintenance, or removal
of any Hazardous Substance on or from the Premises (“Landlord’s Consultants”). 
Prior to engaging any Landlord’s Consultants,

 14
 

 

Landlord shall provide
Tenant with written notice of the name of the proposed consultant and Tenant
shall have five (5) business days to object to the engagement based upon Tenant’s
reasonable belief that engagement of the particular individual as Landlord’s
Consultant, and the consequent access to Tenant’s facilities and proprietary
information and trade secrets, could result in competitive injury to
Tenant.  Landlord shall not engage with a
consultant as to whom Tenant has objected. 
Tenant shall cooperate with Landlord’s Consultants inspecting the
Premises, including responding to interviews (for a time period not to exceed
four (4) hours for the initial site visit and two (2) hours for site visits
thereafter).  Landlord’s Consultants
shall at all times be escorted by Tenant, unless Tenant agrees otherwise. This
and all rights to enter except in the event of an emergency are subject to
Landlord, Landlord’s agents, employees, contractors, designated
representatives, prospective purchasers and/or Lenders, as the case may be,
executing Tenant’ s standard non-disclosure agreement in the form attached
hereto as Exhibit H.  The costs
and expenses of any such inspections shall be paid by the party requesting same
and in no event shall be borne by or passed along to Tenant unless requested by
Tenant, subject only to the proceeding sentence.  If the inspection is performed due to a
violation of Applicable HS Requirements, Tenant shall, upon request, reimburse
Landlord or Landlord’s Lender, as the case may be, as additional rent, for the
costs and expenses of such inspections.

H.            Closure Requirements:  Prior to any  termination of
the Lease, Tenant, at its sole cost and expense(except as to those costs and
expenses arising out of actions undertaken by Landlord or by a third party on
behalf of Landlord), shall satisfy the following closure requirements with
respect to the Hazardous Substances Tenant has used in the Premises during the
Term:

(1)           Comply
with all applicable federal, state and local closure requirements with respect
to Hazardous Substances;

(2)           Prepare
a closure plan (the “Closure Plan”)
that specifies the final disposition of all Hazardous Substances and equipment
which may be contaminated with Hazardous Substances; cleaning and
decontamination activities, and confirmation sampling (e.g. wipe samples,
soil/ground water samples and/or indoor air quality samples, to the extent
warranted by the site conditions then existing).

(3)           At
least sixty (60) days prior to the Lease termination, provide to Landlord a
copy of the Closure Plan for review and reasonable approval. Landlord may,
after consultation with Tenant, require modification of the Closure Plan to
include additional activities, including sampling activities, if the site
conditions indicate that there is a reasonable probability that “Significant
Residual Contamination” is present.  Significant Residual Contamination shall
mean residual contamination which: (i) exceeds standards or guidance levels
typically used by regulatory agencies in California for evaluating potential
threats to human health or the environment; or (ii) would result in
notification requirements under applicable state law of potential health risks
to individuals on the Premises, other tenants of the Center, and/or the general
public; or (iii) would result in potential environmental liability to Tenant or
Landlord; or (iv) would result in the need for conducting any type of
additional decontamination activities prior to leasing the Premises to a new
tenant.  If Landlord fails to request
modification of the Closure Plan within ten (10) business days after its
receipt thereof, Tenant’s Closure Plan shall be deemed accepted.

(4)           Notify
Landlord of closure schedule and allow access to Landlord and/or Landlord’s
Consultants for inspections prior to commencing and following completion of the
cleaning/decontamination activities.

(5)           Notify
Landlord of all sample analysis results, if any.  Landlord may require additional closure
activities if sampling results sampling results disclose Significant Residual
Contamination.

 15
 

 

(6)           Prepare
and provide to Landlord closure report documenting closure activities
consistent with the Closure Plan and sample results, if any, following
completion of all closure activities.

Closure shall be
deemed to be complete upon Landlord’s reasonable approval of the closure report
and, if applicable, Landlord’s receipt of a copy of the written closure
approval from the local environmental agency with jurisdiction over the
Hazardous Substances at the Premises.

I.              Survival of
Obligations:  Tenant’s
obligations under this Section 4.7 shall survive the termination of this Lease.

See Addendum A-4.7.

 16
 

 

EXHIBIT D

LOCATION OF PARKING SPACES

ALLOCATED
TO BUILDING 4 TENANT

[Building 4 -
Location of Parking Spaces]

 17
 

 

EXHIBIT F

(Replacement)

DESCRIPTION OF TENANT’S USE OF

HAZARDOUS SUBSTANCES

[Product
Names of Hazardous Substances]

 18
 

 

EXHIBIT I

(Replacement)

LIST OF
COMPETITORS

[List
of Competitors]

AMST
Co., Ltd.

Cascade Microtech, Inc.

Feinmetall GmbH

Japan Electronic Materials Corporation

Kulicke and Soffa

SV Probe, Inc.

Micronics Japan Co., Ltd.

Phicom Corporation

Tessera

Tokyo Cathode Laboratory Co., Ltd.

Tokyo Electron Ltd.

Wentworth

 19EXHIBIT 10.1

Advanced BioEnergy, LLC

Restricted
Unit Agreement

Name of Holder:   Stephenson
Holdings, Inc.

 

	
  No. of Restricted Units:   up to
  300,000

  	
   

  	
  Date of Grant:

  

 

Restricted Units — Earnings Criteria for Restricted Units (“Earnings Criteria”):

 

From and after June 1, 2006, upon the occurrence of an
Event (as defined below), one restricted Unit (“RU”)
will be issued under this Agreement for each 1,000 gallons of additional
ethanol production or co-production facility acquired or built by the Company
on or prior to April 3, 2009 in addition to the Company’s currently proposed
facility located near Fairmont, Nebraska, subject to a maximum of 300,000 RUs
being issued under this Agreement.  The
determination of the timing of the acquisition or development by the Company of
an additional ethanol production or co-production facility, as well as the
number of gallons of ethanol produced or co-produced at such facility, will be
determined by the Board or the Committee in its sole discretion.  Each of the following constitutes an “Event:”

 

(1)                                  The
Board resolves to develop and build a new ethanol production facility, or
acquires the assets or equity of a third party that intends to establish one or
more such facilities, and:

 

(a)                                  acquires
appropriate real property on which to build such facility;

 

(b)                                 obtains
a letter of intent or similar commitment from a general contractor experienced
in the design and construction of ethanol facilities;

 

(c)                                  approves
of a plan and timeframe for construction and production capacity for such
facility; and

 

(d)                                 affirmatively
determines that the Company is reasonably likely to be able to finance the
proposed facility, whether by debt, through the sale of additional equity or
otherwise; or

 

(2)                                  Approval
by the Board of the acquisition of assets or equity of a third party ethanol
producer.

 

RU Vesting Schedule (Cumulative):

 

	
  Vesting
  Date(s)

  	
   

  	
  Percentage of Earned RUs 

  That Are Vested on Such Date

  
	
  Date the board of
  directors certifies operations relating to additional production capacity (“Certification Date”)

  	
   

  	
  50%

  
	
  First anniversary of
  the Certification Date

  	
   

  	
  25%

  
	
  Second anniversary of
  the Certification Date

  	
   

  	
  25%

  

 

This is a Restricted Unit
Agreement (“Agreement”) between Advanced BioEnergy, LLC,
a Delaware limited liability company (the “Company”), and
the above-named holder of the RUs (the “Holder”).

RECITALS

A.                                   The board of directors
of the Company (the “Board”) or a
committee of two or more directors of the Company (the “Committee”)
has the authority to grant and administer equity awards (if the Board has not
appointed a committee to administer the awards, then the Board shall constitute
the Committee).

B.                                     The Committee has
determined that the Holder is eligible to receive an award in the form of a
restricted unit grant pursuant to the terms of Section 4(c) of that certain
Employment Agreement dated as of April 7, 2006 (the “Employment
Agreement”), between the Company and Revis L. Stephenson III (the “Employee”), who is the sole stockholder of the Holder.  All capitalized terms used herein but not
otherwise defined shall have the meanings set forth in the Employment
Agreement.

C.                                     The Company desires to
give the Employee, through his ownership of the Holder, an inducement to
acquire a proprietary interest in the Company and an added incentive to advance
the interests of the Company by granting the Holder restricted units (“RUs”) on the terms and conditions and subject to the
restrictions set forth herein.

The
Company hereby grants the right to be issued RUs to the Holder under the terms
and conditions as follows.

TERMS AND CONDITIONS

1.                                       Issuance
and Terms of Restricted Units.

(a)                                  Subject to the terms
and conditions of this Agreement, the Company has granted to the Holder the
right to be issued the number of RUs specified at the beginning of this
Agreement, and will grant RUs to the Holder in accordance with the terms and
subject to the conditions of this Agreement.

(b)                                 Each RU represents one
Unit of the Company as defined in the Company’s Operating Agreement, as may be amended
from time to time, except that;

(1)                                  The Capital Account
balance of such RU as of the date of grant specified above shall be zero;

(2)                                  For purposes of
Section 3 of the LLC Agreement (relating to allocations of profits and
losses), the holder of the RU shall be treated the same as the holder of a
Unit.  However, upon the occurrence of a “Liquidity
Event” as defined below, if and to the extent that the Company generates a
capital gain upon such Liquidity Event, notwithstanding the provisions of
Section 3 of the LLC Agreement of the Company, an amount of such capital
gain shall be allocated 100% to the Holder until the Capital Account balance
attributable to each RU is equal to the Capital Account balance attributable to
one Unit.  Capital gain generated by the
Company in excess 

 2
 

 

of the amount specially allocated to the Holder
under the preceding sentence shall be allocated in the manner specified in
Section 3.1 of the LLC Agreement (i.e., among all holders of Units in
proportion to their respective number of Units, including the Holder with
respect to the RUs).

(3)                                  For purposes of this
Agreement, a Liquidity Event shall be deemed to have occurred if (a) the
Company sells all or substantially all of its assets, (b) the Company
merges with or into any other entity, (c) the Company converts (by
whatever means) into an entity taxed as a corporation for federal income tax
purposes, or (d) a Dissolution Event (as defined in the LLC Agreement)
occurs.

2.                                       Forfeiture
and Transfer Restrictions.

(a)                                  Forfeiture.  Any issued RUs not otherwise vested will be
forfeited by the Holder and deemed immediately cancelled and the Holder will
thereafter have no right, title or interest whatsoever in such RUs if

(1)                                  the Employee’s
employment with the Company, or a parent or subsidiary thereof, is terminated
by the Company for Cause (as defined in the Employment Agreement) or by the
Employee without Good Reason (as defined in the Employment Agreement); or

(2)                                  the Board determines
that the Event giving rise to the issuance of RUs to the Holder will not be
reasonably likely to result in additional ethanol production capacity or that
the Company should no longer pursue the development of such additional ethanol
production capacity for a period of at least 12 months.

Any
RUs which are forfeit will be deemed to be eligible for issuance to the Holder
in connection with and on the occurrence of subsequent Events.

(b)                                 Limitation
on Transfer.  Until such time as the RUs have
been issued and vested as provided in this Agreement, the Holder shall not
transfer the RUs and the RUs shall not be subject to pledge, hypothecation,
execution, attachment or similar process. 
Any attempt to assign, transfer, pledge, hypothecate or otherwise
dispose of any RUs contrary to the provisions hereof, and any attempt to levy
any attachment or pursue any similar process with respect to them, shall be
null and void.  Any RUs issued to the
Holder and otherwise vested will continue to remain subject to any restrictions
on transfer set forth in the Company’s Operating Agreement (as amended and
restated from time to time) or as otherwise agreed to by the Holder.

3.                                       Vesting of
RUs.

(a)                                  Normal
Vesting.  The RUs issued pursuant to the Earnings
Criteria shall vest upon satisfaction of the 
Vesting Criteria, on the dates specified in the Schedule at the
beginning of this Agreement.  Once such
RUs have vested, they shall no longer be 

 3
 

 

subject
to forfeiture under Section 2 of this Agreement, and will not be subject to any
further restrictions under this Agreement.

(b)                                 Accelerated
Vesting.  In
the event of a Fundamental Change the Committee may, but shall not be obligated
to:

(i)                                     if the Fundamental Change is a merger or
consolidation or statutory unit exchange, make appropriate provision for the protection of the RUs by the substitution
for these RUs of membership units or restricted voting membership units or
common stock of the company surviving any merger or consolidation or, if
appropriate, the parent company of the Company or such surviving company; or

(ii)                                  at least ten days before the occurrence of
the Fundamental Change, declare, and provide written notice to the Holder of
the declaration, that RUs shall vest for the maximum number of RUs as if both
the Earnings Criteria and the Vesting Criteria had been satisfied immediately
before the occurrence of the Fundamental Change.

“Fundamental Change” means a dissolution or liquidation of
the Company, a sale of substantially all of the assets of the Company, a merger
or consolidation of the Company with or into any other company, regardless of
whether the Company is the surviving company, or a statutory unit exchange
involving equity securities of the Company; provided, that the primary purpose
of such transaction is not to change the state of organization of the Company.

(c)                                  Change in Control.  In
the event of (i) a Change in Control and (ii) the Employee’s employment with
the Company or its successor is terminated by the Company or its successor
within one year after consummation of the Change in Control transaction, then,
without any action by the Committee or the Board, or their successors, each RU
issued shall, immediately before the effective time, vest.

(d)                                 Discretionary Acceleration. 
Notwithstanding any other provisions of this Agreement to the contrary,
the Committee may, in its sole discretion, declare at any time that RUs shall
be issued and vest as if all Earnings Criteria and Vesting Criteria for the
maximum number of RUs has been satisfied.

(e)                                  Death or Disability.  If
the Employee’s employment or other relationship with the Company and its
affiliates terminates prior to the date any RUs issued under this Agreement
have vested, the Company will treat the Vesting Criteria as also having been
satisfied.

(f)                                    Mechanics
of Issuance.  Each
RU will be evidenced by a duly issued unit certificate (which may represent
more than one RU) registered in the name of the Holder.  The Holder will have all rights of a member
of the Company with respect to each RU (including the right to receive dividends
and other distributions, if any).  Each
certificate evidencing any RU may contain such legends and transfer 

 4
 

 

instructions
or limitations as may be determined or authorized by the Company in its sole
discretion or as otherwise required under the Company’s Operating Agreement.

4.                                       Representations,
Warranties and Covenants of Holder.  Holder
represents, warrants and covenants to the Company as follows:

(a)                                  Charter
Documents.  Holder is a corporation duly organized, validly existing and in corporate good
standing under the laws of the state of Minnesota.

(b)                                 Sole Stockholder. 
Revis L. Stephenson III is the sole stockholder, director and executive
officer of Holder.  Without the Company’s
prior written consent, Holder will not change its ownership or management
structure so that any person or entity other than Revis L. Stephenson III will
be a stockholder, director or officer of Holder.

(c)                                  Corporate Authority. 
Holder has all corporate power and authority to enter into and to
perform its obligations under this Agreement. 
This Agreement constitutes the legal, valid and binding obligation of
Holder, enforceable against Holder in accordance with its terms, subject to
(a) laws of general application relating to bankruptcy, insolvency and the
relief of debtors, and (b) rules of law governing specific performance,
injunctive relief and other equitable remedies.

5.                                       Tax
Withholding.  The parties hereto
recognize that the Company or a subsidiary of the Company may be obligated to
withhold federal and state taxes or other taxes upon the issuance of the RUs.  The Holder agrees that, at such time, if the
Company or a subsidiary is required to withhold such taxes, the Holder will
promptly pay, in cash upon demand to the Company or the subsidiary having such
obligation, such amounts as shall be necessary to satisfy such obligation.  The
Holder further acknowledges that the Company has directed the Holder and the
Employee to seek independent advice regarding the applicable provisions of the
Internal Revenue Code of 1986, and the income tax laws of any municipality,
state or foreign country in which the Holder or the Employee may reside or in
which the Company does business.

6.                                       Restrictive Legends and
Stop-Transfer Orders.

(a)                                  Legends.  The
certificate or certificates representing the RUs shall bear the following legend
(as well as any legends required by applicable state and federal limited
liability company and securities laws) noting the existence of the restrictions
and the Company’s rights set forth in this Agreement:

“THE UNITS REPRESENTED BY
THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A
RESTRICTED UNIT AGREEMENT BETWEEN THE COMPANY AND THE HOLDER, A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE COMPANY.”

(b)                                 Stop-Transfer Notices.  The Holder agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate “stop 

 5
 

 

transfer”
instructions to its transfer agent, if any, and that, if the Company transfers
its own securities, it may make appropriate notations to the same effect in its
own records.

(c)                                  Refusal to Transfer.  The
Company shall not be required (i) to transfer on its books any RUs that
have been sold or otherwise transferred in violation of any of the provisions
of this Agreement or (ii) to treat as owner of the RUs or to accord the
right to vote or pay dividends to any purchaser or other transferee to whom the
RUs shall have been so transferred.

7.                                       Interpretation
of this Agreement.  All decisions
and interpretations made by the Committee with regard to any question arising
hereunder shall be binding and conclusive upon the Company, the Holder and the
Employee.

8.                                       Discontinuance
of Employment.  This Agreement shall not give
the Employee a right to continued employment with the Company or any parent or
subsidiary of the Company, and the Company or any such parent or subsidiary
employing the Employee may terminate his or her employment at any time and
otherwise deal with the Employee without regard to the effect it may have upon
him or her under this Agreement.  From
and after the termination of employment of the Employee, the Holder will no
longer be entitled to be issued any RUs under this Agreement.

9.                                       Discretionary
Adjustment.  In the event of any
reorganization, merger, consolidation, recapitalization, liquidation, reclassification,
unit dividend, unit split, combination of Units, rights offering, or
extraordinary dividend or divestiture (including a spin-off), or any
other change in the company structure or Units of the Company, the Committee
(or if the Company does not survive any such transaction, a comparable
committee of the board of directors of the surviving company) may, without the
consent of the Holder, make such adjustment as it determines in its discretion
to be appropriate as to the number and kind of securities subject to and
reserved under this Agreement and, in order to prevent dilution or enlargement
of rights of the Holder, the number and kind of securities issuable upon lapse
of the forfeiture restrictions of the RUs.

10.                                 Binding
Effect.  This Agreement shall be binding in all respects
on the heirs, representatives, successors and assigns of the Holder.

11.                                 Choice of
Law.  This Agreement is entered into under the laws of the
State of Delaware and shall be construed and interpreted thereunder (without
regard to its conflict of law principles).

12.                                 Entire
Agreement.  This Agreement, together with
the Employment Agreement, sets forth the entire agreement and understanding of
the parties hereto with respect to the issuance of the RUs and supersedes all
prior agreements, arrangements, plans, and understandings relating to the
issuance of these RUs.  In the event of a
conflict between the provisions of Section 4(c) of the Employment Agreement and
this Agreement, the provisions of this Agreement will govern.

 6
 

 

13.                                 Amendment
and Waiver.  This Agreement may be amended,
waived, modified, or canceled only by a written instrument executed by the
parties or, in the case of a waiver, by the party waiving compliance.

14.                               RUs Subject to Articles of
Organization and Operating Agreement.  The Holder acknowledges that
the RUs granted under this Agreement are subject to the Company’s Articles of
Organization, as amended from time to time, and the Company’s operating
agreement, as amended from time to time, and any applicable federal or state
laws, rules or regulations.  The Holder
acknowledges and agrees that the Holder will become a party to the Company’s
operating agreement, as currently in effect, if such Holder is not already a
party to that agreement.

15.                                 Section 409A.  Notwithstanding anything in this Agreement to
the contrary, any payments hereunder that would be subject to an additional or
accelerated tax under Section 409A of the Internal Revenue Code of 1986 shall
be adjusted to the minimum extent necessary that such payments may be made
without the imposition of such tax.

16.                                 Capital
Account Balance.  The parties
specifically acknowledge that the RUs issued under this Agreement will have an
initial capital account balance of $0, which is consistent with the parties
understanding that that the Holder’s initial interest will be a “profit
interest.”

(remainder of this page intentionally left blank)

 7
 

 

IN WITNESS WHEREOF, the Holder and the Company have
executed this Agreement as of the 7th day of November, 2006.

	
   

  	
   

  	
  STEPHENSON HOLDINGS, INC.,

  
	
   

  	
   

  	
  a Minnesota corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Revis L. Stephenson III

  	
   

  
	
   

  	
   

  	
  Revis L. Stephenson III

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ADVANCED BIOENERGY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
  /s/ Larry L. Cerny

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Larry L. Cerny

  	
   

  
	
   

  	
   

  	
  Its:

  	
   Secretary

  	
   

  
							

 

 8

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