Document:

Exhibit 10.28

 

LEASE

	
  Landlord:

  	
  Britannia Hacienda VIII LLC

  
	
   

  	
   

  
	
  Tenant:

  	
  Omnicell, Inc.

  
	
   

  	
   

  
	
  Date:

  	
  June 29, 2007

  

 

TABLE OF CONTENTS

	
  1.

  	
  PROPERTY

  	
   

  	
  1

  
	
   

  	
  1.1

  	
  Lease of Premises

  	
   

  	
  1

  
	
   

  	
  1.2

  	
  Landlord’s Reserved Rights

  	
   

  	
  2

  
	
  2.

  	
  TERM

  	
   

  	
  2

  
	
   

  	
  2.1

  	
  Term

  	
   

  	
  2

  
	
   

  	
  2.2

  	
  Early Possession

  	
   

  	
  3

  
	
   

  	
  2.3

  	
  Condition of Premises

  	
   

  	
  3

  
	
   

  	
  2.4

  	
  Acknowledgment of Rent Commencement Date

  	
   

  	
  6

  
	
   

  	
  2.5

  	
  Holding Over

  	
   

  	
  6

  
	
   

  	
  2.6

  	
  Option to Extend Term

  	
   

  	
  6

  
	
  3.

  	
  RENTAL

  	
   

  	
  7

  
	
   

  	
  3.1

  	
  Minimum Rental

  	
   

  	
  7

  
	
   

  	
   

  	
  (a)

  	
  Rental Amounts

  	
   

  	
  7

  
	
   

  	
   

  	
  (b)

  	
  Rental Amounts During Extended Term

  	
   

  	
  7

  
	
   

  	
   

  	
  (c)

  	
  Square Footage of Premises

  	
   

  	
  7

  
	
   

  	
  3.2

  	
  Late Charge

  	
   

  	
  8

  
	
  4.

  	
  TAXES

  	
   

  	
  8

  
	
   

  	
  4.1

  	
  Personal Property

  	
   

  	
  8

  
	
   

  	
  4.2

  	
  Real Property

  	
   

  	
  8

  
	
  5.

  	
  OPERATING EXPENSES

  	
   

  	
  9

  
	
   

  	
  5.1

  	
  Payment of Operating Expenses

  	
   

  	
  9

  
	
   

  	
  5.2

  	
  Definition of Operating Expenses

  	
   

  	
  9

  
	
   

  	
  5.3

  	
  Determination of Operating Expenses

  	
   

  	
  11

  
	
   

  	
  5.4

  	
  Final Accounting for Expense Year

  	
   

  	
  11

  
	
   

  	
  5.5

  	
  Proration

  	
   

  	
  12

  
	
  6.

  	
  UTILITIES

  	
   

  	
  12

  
	
   

  	
  6.1

  	
  Payment

  	
   

  	
  12

  
	
   

  	
  6.2

  	
  Interruption

  	
   

  	
  13

  
	
  7.

  	
  ALTERATIONS; SIGNS

  	
   

  	
  13

  
	
   

  	
  7.1

  	
  Right to Make Alterations

  	
   

  	
  13

  
	
   

  	
  7.2

  	
  Title to Alterations

  	
   

  	
  14

  
	
   

  	
  7.3

  	
  Tenant Trade Fixtures

  	
   

  	
  15

  
	
   

  	
  7.4

  	
  No Liens

  	
   

  	
  15

  
	
   

  	
  7.5

  	
  Signs

  	
   

  	
  16

  
	
  8.

  	
  MAINTENANCE AND REPAIRS

  	
   

  	
  16

  
	
   

  	
  8.1

  	
  Landlord’s Obligation for Maintenance

  	
   

  	
  16

  
	
   

  	
  8.2

  	
  Tenant’s Obligation for Maintenance

  	
   

  	
  17

  
	
   

  	
   

  	
  (a)

  	
  Good Order, Condition and Repair

  	
   

  	
  17

  

 

 

	
  

  	
   

  	
  (b)

  	
  Landlord’s Remedy

  	
   

  	
  17

  
	
   

  	
   

  	
  (c)

  	
  Condition upon Surrender

  	
   

  	
  18

  
	
  9.

  	
  USE OF PROPERTY

  	
   

  	
  18

  
	
   

  	
  9.1

  	
  Permitted Use

  	
   

  	
  18

  
	
   

  	
  9.2

  	
  Requirements Relating to Vacancy

  	
   

  	
  18

  
	
   

  	
  9.3

  	
  No Nuisance

  	
   

  	
  18

  
	
   

  	
  9.4

  	
  Compliance with Laws

  	
   

  	
  19

  
	
   

  	
  9.5

  	
  Liquidation Sales

  	
   

  	
  19

  
	
   

  	
  9.6

  	
  Environmental Matters

  	
   

  	
  19

  
	
  10.

  	
  INSURANCE AND INDEMNITY

  	
   

  	
  25

  
	
   

  	
  10.1

  	
  Insurance

  	
   

  	
  25

  
	
   

  	
  10.2

  	
  Quality of Policies and Certificates

  	
   

  	
  27

  
	
   

  	
  10.3

  	
  Workers’ Compensation; Employees

  	
   

  	
  28

  
	
   

  	
  10.4

  	
  Waiver of Subrogation

  	
   

  	
  28

  
	
   

  	
  10.5

  	
  Increase in Premiums

  	
   

  	
  28

  
	
   

  	
  10.6

  	
  Indemnification

  	
   

  	
  28

  
	
   

  	
  10.7

  	
  Blanket Policy

  	
   

  	
  29

  
	
  11.

  	
  SUBLEASE AND ASSIGNMENT

  	
   

  	
  29

  
	
   

  	
  11.1

  	
  Assignment and Sublease of Building

  	
   

  	
  29

  
	
   

  	
  11.2

  	
  Rights of Landlord

  	
   

  	
  30

  
	
  12.

  	
  RIGHT OF ENTRY AND QUIET ENJOYMENT

  	
   

  	
  31

  
	
   

  	
  12.1

  	
  Right of Entry

  	
   

  	
  31

  
	
   

  	
  12.2

  	
  Quiet Enjoyment

  	
   

  	
  31

  
	
  13.

  	
  CASUALTY AND TAKING

  	
   

  	
  32

  
	
   

  	
  13.1

  	
  Damage or Destruction

  	
   

  	
  32

  
	
   

  	
  13.2

  	
  Condemnation

  	
   

  	
  33

  
	
   

  	
  13.3

  	
  Reservation of Compensation

  	
   

  	
  34

  
	
   

  	
  13.4

  	
  Restoration of Improvements

  	
   

  	
  34

  
	
  14.

  	
  DEFAULT

  	
   

  	
  35

  
	
   

  	
  14.1

  	
  Events of Default

  	
   

  	
  35

  
	
   

  	
   

  	
  (a)

  	
  Abandonment

  	
   

  	
  35

  
	
   

  	
   

  	
  (b)

  	
  Nonpayment

  	
   

  	
  35

  
	
   

  	
   

  	
  (c)

  	
  Other Obligations

  	
   

  	
  35

  
	
   

  	
   

  	
  (d)

  	
  General Assignment

  	
   

  	
  35

  
	
   

  	
   

  	
  (e)

  	
  Bankruptcy

  	
   

  	
  36

  
	
   

  	
   

  	
  (f)

  	
  Receivership

  	
   

  	
  36

  
	
   

  	
   

  	
  (g)

  	
  Attachment

  	
   

  	
  36

  
	
   

  	
   

  	
  (h)

  	
  Insolvency

  	
   

  	
  36

  
	
   

  	
  14.2

  	
  Remedies upon Tenant’s Default

  	
   

  	
  36

  
	
   

  	
  14.3

  	
  Remedies Cumulative

  	
   

  	
  37

  
	
  15.

  	
  SUBORDINATION, ATTORNMENT AND SALE

  	
   

  	
  37

  
	
   

  	
  15.1

  	
  Subordination to Mortgage

  	
   

  	
  37

  
	
   

  	
  15.2

  	
  Sale of Landlord’s Interest

  	
   

  	
  38

  
	
   

  	
  15.3

  	
  Estoppel Certificates

  	
   

  	
  38

  
	
   

  	
  15.4

  	
  Subordination to CC&R’s

  	
   

  	
  39

  
	
   

  	
  15.5

  	
  Mortgagee Protection

  	
   

  	
  39

  

 

 ii
 

 

	
  16.

  	
  SECURITY

  	
   

  	
  40

  
	
   

  	
  16.1

  	
  Deposit

  	
   

  	
  40

  
	
  17.

  	
  MISCELLANEOUS

  	
   

  	
  41

  
	
   

  	
  17.1

  	
  Notices

  	
   

  	
  41

  
	
   

  	
  17.2

  	
  Successors and Assigns

  	
   

  	
  42

  
	
   

  	
  17.3

  	
  No Waiver

  	
   

  	
  42

  
	
   

  	
  17.4

  	
  Severability

  	
   

  	
  42

  
	
   

  	
  17.5

  	
  Litigation Between Parties

  	
   

  	
  43

  
	
   

  	
  17.6

  	
  Surrender

  	
   

  	
  43

  
	
   

  	
  17.7

  	
  Interpretation

  	
   

  	
  43

  
	
   

  	
  17.8

  	
  Entire Agreement

  	
   

  	
  43

  
	
   

  	
  17.9

  	
  Governing Law

  	
   

  	
  43

  
	
   

  	
  17.10

  	
  No Partnership

  	
   

  	
  43

  
	
   

  	
  17.11

  	
  Financial Information

  	
   

  	
  43

  
	
   

  	
  17.12

  	
  Costs

  	
   

  	
  44

  
	
   

  	
  17.13

  	
  Time

  	
   

  	
  44

  
	
   

  	
  17.14

  	
  Rules and Regulations

  	
   

  	
  44

  
	
   

  	
  17.15

  	
  Brokers

  	
   

  	
  45

  
	
   

  	
  17.16

  	
  Memorandum of Lease

  	
   

  	
  45

  
	
   

  	
  17.17

  	
  Organizational Authority

  	
   

  	
  45

  
	
   

  	
  17.18

  	
  Execution and Delivery

  	
   

  	
  45

  
	
   

  	
  17.19

  	
  Survival

  	
   

  	
  45

  
	
   

  	
  17.20

  	
  Parking

  	
   

  	
  46

  

 

EXHIBITS

	
  EXHIBIT A-1

  	
  Site Plan (The Center)

  
	
  EXHIBIT A-2

  	
  Building Plan

  
	
  EXHIBIT B

  	
  Workletter

  
	
  EXHIBIT C

  	
  Form of Acknowledgment of Rent Commencement Date

  

 

 iii

LEASE

THIS LEASE (“Lease”) is made and entered into as of June 29,
2007 (the “Lease Commencement Date”), by
and between BRITANNIA HACIENDA VIII LLC, a Delaware limited liability company (“Landlord”), and OMNICELL, INC., a Delaware
corporation (“Tenant”).

THE PARTIES AGREE AS FOLLOWS:

1.  PROPERTY

1.1                                 Lease
of Premises.

(a)                                  Landlord
leases to Tenant and Tenant hires and leases from Landlord, on the terms,
covenants and conditions hereinafter set forth, the premises (the “Premises”) consisting of approximately 18,333
rentable square feet of space located on the first floor of the building
commonly known as 2025 Stierlin Court (the “Building”)
located in the Britannia Shoreline Technology Park (referred to interchangeably
herein as the “Center” or the “Property”) in the City of Mountain View, County of
Santa Clara, State of California.  The
Premises consist of the portions of the first floor of the Building designated
as “Premises” on the Building Plan (as defined below).  In addition, Tenant shall have the nonexclusive
right to use those portions of the first floor of the Building designated on
the Building Plan as Building common areas, including (but not limited to) the
entrance lobby, elevator, stairways, common restrooms, storage/loading dock
area and emergency exit corridors.  The
location of the Building within the Center is depicted on the site plan
attached hereto as Exhibit A-1
and incorporated herein by this reference (the “Site
Plan”).  The schematic
layout of the Premises and related common areas of the Building is depicted on
the building plan attached hereto as Exhibit A-2
and incorporated herein by this reference (the “Building
Plan”).  The parking
areas, driveways, sidewalks, landscaped areas and other portions of the Center
that lie outside the exterior walls of the buildings now or hereafter existing
from time to time in the Center, as depicted in the Site Plan and as hereafter
modified by Landlord from time to time in accordance with the provisions of
this Lease, are sometimes referred to herein as the “Common
Areas.”  Such Common Areas
include, but are not limited to, the “recreational area” which is currently
maintained by Landlord in the area between the buildings at 2023 Stierlin
Court and 2025 Stierlin Court, provided that the right of Tenant
and other occupants of the Center to use such “recreational area” is subject to
the right of the City of Mountain View to require that a portion of the
recreational area be paved and converted to parking use at a time to be
determined at the discretion of the City and/or the potential development of
that area by Landlord or any subsequent owner of the Center.

(b)                                 As
an appurtenance to Tenant’s leasing of the Premises pursuant to
Section 1.1(a), Landlord hereby grants to Tenant, for the benefit of
Tenant and its employees, suppliers, shippers, customers and invitees, during
the term of this Lease, the non-exclusive right to use, in common with others
entitled to such use, (i) the interior common areas of the Building as
described above, (ii) those portions of the Common Areas improved from
time to time for use

as parking areas,
driveways, sidewalks, landscaped areas, or for other common purposes, and
(iii) all access easements and similar rights and privileges relating to
or appurtenant to the Center and created or existing from time to time under
any access easement agreements, declarations of covenants, conditions and
restrictions, or other written agreements now or hereafter of record with
respect to the Center, subject however to any limitations applicable to such
rights and privileges under applicable law, under this Lease and/or under the
written agreements creating such rights and privileges.

1.2                                 Landlord’s
Reserved Rights.  To the extent
reasonably necessary to permit Landlord to exercise any rights of Landlord and
discharge any obligations of Landlord under this Lease, Landlord shall have, in
addition to the right of entry set forth in Section 12.1 hereof, the
following rights:  (i) to make
changes to the interior Building common areas and/or the Common Areas,
including, without limitation, changes in the location, size or shape of any
portion of the Building common areas and/or the Common Areas, and to construct
and/or relocate parking structures and/or parking spaces in the Center;
(ii) to close temporarily any of the interior Building common areas or the
Common Areas for maintenance or other reasonable purposes; (iii) to
construct, alter or add to other buildings and Common Area improvements in the
Center; (iv) to use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Center or any portion thereof; and
(v) to do and perform such other acts with respect to the Building common
areas, the Common Areas and the Center as may be necessary or appropriate.  Landlord shall not exercise rights reserved
to it pursuant to this Section 1.2 in such a manner as to cause any
material diminution of Tenant’s rights, or any material increase of Tenant’s
obligations, under this Lease, or in such a manner as to leave Tenant without
reasonable parking or reasonable access to the Premises or otherwise to
materially impair Tenant’s ability to conduct its activities in the Premises in
a normal manner; provided, however, that the foregoing shall not limit
or restrict Landlord’s right to undertake reasonable construction activity and
Tenant’s use of the Premises shall be subject to reasonable temporary
disruption incidental to such activity diligently prosecuted.  Landlord agrees to provide Tenant with
written notice at least three (3) business days prior to undertaking any of the
foregoing activities which will directly affect the Premises or access to the
Premises, except in case of emergency (in which case no such prior notice shall
be required, but Landlord shall still use reasonable efforts to provide prior
notice to the extent the circumstances permit). 
Landlord’s prior notice to Tenant pursuant to the preceding sentence
shall identify the nature and scope of the proposed work and the estimated
start date and estimated completion date for the proposed work.

2.  TERM

2.1                                 Term.  The term of this Lease shall commence on the
Lease Commencement Date as defined above. 
Tenant’s obligation to pay minimum rental and Operating Expenses under
this Lease shall commence on the earlier to occur of (a) October 1,
2007 or (b) the date the Tenant Improvements in the Premises are completed
to such an extent that Tenant is able to (and does) commence actual business
operations in the Premises to a material extent (the earlier of such dates
being referred to herein as the “Rent Commencement Date”)
and shall end on the day immediately preceding the fourth (4th) anniversary of
the Rent Commencement Date (the “Termination Date”),
unless sooner terminated or extended as hereinafter provided.  Thus, if the Rent Commencement Date occurs
(as anticipated) on October 1, 2007, then the Termination Date will be
September 30, 2011.

 2
 

2.2                                 Early
Possession.  Tenant shall have the
right to enter and use the Premises for the purpose of conducting inspections
and measurements, preparing drawings, constructing improvements in the Premises
(subject to all the terms and conditions of Article 7 below and of the
Workletter as defined below), installing fixtures and furniture, laboratory
equipment, computer equipment, telephone equipment, low-voltage data wiring and
personal property and performing other similar work preparatory to the
commencement of Tenant’s business in the Premises, beginning upon the date
Landlord notifies Tenant in writing that the Premises are available for such
early access by Tenant (the “Early Access Date”),
which Early Access Date is presently estimated to be the next business day
following the Lease Commencement Date. 
Such early occupancy and possession by Tenant shall be subject to and
upon all of the terms and conditions of this Lease (including, but not limited
to, conditions relating to the payment of utilities and maintenance of required
insurance by Tenant), except that (i) Tenant shall have no obligation to
pay minimum rental or Operating Expenses for any period prior to the Rent
Commencement Date, and (ii) such early possession shall not advance or
otherwise affect the Rent Commencement Date or Termination Date determined
under Section 2.1.  To the extent
Landlord and/or its contractors or consultants are also performing any work in
the Premises prior to the Rent Commencement Date, Tenant shall not unreasonably
interfere with or delay Landlord’s contractors or consultants by any early
access, occupancy or possession under this Section 2.2, shall coordinate
and cooperate with Landlord and its contractors and consultants (who shall
similarly coordinate and cooperate with Tenant and its contractors) to minimize
any interference or delay by either party with respect to the other party’s
work following the Early Access Date, and shall indemnify Landlord and its
agents and employees to the extent provided in Section 10.6(a) below and
in Paragraph 4(c) of the Workletter in connection with Tenant’s early
entry upon the Premises hereunder.

2.3                                 Condition
of Premises.  Tenant has had an
opportunity to inspect the condition of the Premises and agrees to accept the
Premises “as is” in their condition existing as of the Early Access Date,
without any obligation on the part of Landlord to improve, alter, repair or clean
the Premises in any way for Tenant’s occupancy hereunder, except as otherwise
expressly provided herein. 
Notwithstanding the foregoing:

(a)                                  Landlord
shall deliver the Premises and all Building systems and existing improvements
in “as is” condition, except that Landlord shall, at Landlord’s sole expense,
perform all work necessary to cause the following (collectively, “Landlord’s Work”) to be true as soon as practicable
after the Early Access Date (and in all events prior to the Rent Commencement
Date):  (i) the Building roof shall
be in good and watertight condition; (ii) all existing Building systems
(including, but not limited to, heating, ventilation and air conditioning,
mechanical, electrical, plumbing and life safety systems) and utilities serving
the Premises shall be in good working condition and operable in their current
locations, prior to modifications (or damage, if any) as a result of Tenant’s
improvements or use; and (iii) the Building shell, Premises and existing
improvements therein, as delivered to Tenant prior to modifications (or damage,
if any) as a result of Tenant’s improvements or use, shall comply with all
applicable laws, ordinances, regulations and building codes (including, but not
limited to, the Americans

 3
 

with Disabilities Act (“ADA”), subject to the allocation of ADA compliance
responsibilities under Section 2.3(c) below.  To the extent it is not reasonably
practicable for Landlord’s Work to be completed by the Early Access Date,
Landlord shall proceed diligently and with reasonable efforts to complete
Landlord’s Work as promptly as practicable after the Early Access Date, and
Landlord and Tenant shall continue to cooperate reasonably and in good faith
with one another (and cause their respective consultants and contractors to
cooperate reasonably and in good faith with one another) in the manner
described in Section 2.2 above in connection with the concurrent
performance of their respective work in the Building.  Following Landlord’s written notice to Tenant
that Landlord has completed Landlord’s Work and is delivering the Premises and
the existing Building systems and improvements in the condition required above
in this paragraph (“Landlord’s Completion
Notice”), Tenant shall thereafter during the term of this Lease
be responsible (subject, however, to any corrective obligations of Landlord as
expressly set forth in this Section 2.3) for maintenance, repair and/or
replacement of all such systems and improvements to the extent required under
Article 8 hereof and any other applicable provisions of this Lease.  If Landlord’s obligations with respect to
Landlord’s Work under this paragraph are violated in any respect, then it shall
be the obligation of Landlord, after receipt of written notice from Tenant
setting forth with specificity the nature of the violation, to correct promptly
and diligently, at Landlord’s sole cost, the condition(s) constituting such
violation, except that Tenant shall be responsible for any such corrective work
to the extent the condition(s) constituting the violation are attributable to
modifications (or damage, if any) in the course of Tenant’s improvements to or
use of the Premises; provided, however, that Tenant’s failure to give
such written notice to Landlord regarding any alleged violation within one hundred
twenty (120) days after the Rent Commencement Date shall give rise to a
conclusive and irrebuttable presumption that Landlord has complied with all
Landlord’s obligations under this paragraph; provided further, however,
that the foregoing 120-day notice provision shall not apply to any violation or
alleged violation of Landlord’s ADA compliance responsibilities under this
Section 2.3.  TENANT ACKNOWLEDGES
THAT THE WARRANTIES AND/OR OBLIGATIONS CONTAINED IN THIS SECTION 2.3 ARE
IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PHYSICAL CONDITION OF THE PREMISES, BUILDING SYSTEMS AND EXISTING IMPROVEMENTS
IN THE PREMISES, AND THAT LANDLORD MAKES NO OTHER WARRANTIES EXCEPT AS
EXPRESSLY SET FORTH IN THIS SECTION 2.3.

(b)                                 As
set forth in the Workletter attached hereto as Exhibit B
and incorporated herein by this reference (the “Workletter”),
Landlord shall provide Tenant with a tenant improvement allowance in the amount
of up to Thirty-Five Dollars ($35.00) per square foot, equivalent to an
aggregate allowance of up to Six Hundred Forty-One Thousand Six Hundred
Fifty-Five and No/100 Dollars ($641,655.00) (the “Tenant
Improvement Allowance”) towards the construction of Tenant
Improvements by Tenant in the Premises. 
Tenant’s construction of such Tenant Improvements shall be governed by
the provisions of Article 7 hereof and of the Workletter, and such Tenant
Improvements shall be constructed in compliance with all of the provisions
thereof (including, without limitation, all conditions relating to Landlord’s
approval of plans and specifications), as well as the provisions of this
Section 2.3.  The Tenant Improvement
Allowance shall not be used or useable by Tenant for any moving or relocation
expenses of Tenant, or for any cost or expense associated with any

 4
 

moveable furniture, trade
fixtures, personal property or any other item or element which, under the
applicable provisions of this Lease, will not become Landlord’s property and
remain with the Building upon expiration or termination of this Lease.  The Tenant Improvement Allowance may,
however, be applied toward all costs of hiring a licensed architect for the
design of all Tenant Improvements to be constructed by Tenant pursuant to the
Workletter and for the cost of all permits and inspections required by any
governmental authority in connection with the construction of such Tenant
Improvements.  Any portion of the Tenant
Improvement Allowance which has not been claimed or drawn by Tenant by February 28,
2009 shall expire and shall no longer be available to Tenant thereafter.  Additional conditions and procedures relating
to the disbursement of the Tenant Improvement Allowance shall be as set forth
in the Workletter or as otherwise reasonably prescribed in writing by Landlord
or its Project Manager (as designated in the Workletter).  The Tenant Improvement Allowance is provided
as part of the basic consideration to Tenant under this Lease and will not
result in any rental adjustment or additional rent beyond the rental amounts
expressly provided in Section 3.1 hereof, nor shall the expiration of any
unused portion of the Tenant Improvement Allowance as provided above result in
any credit against or other adjustment with respect to the rental amounts set
forth in Section 3.1 hereof.

(c)                                  Landlord
warrants to Tenant that the Premises as they exist on the date of Landlord’s
Completion Notice, but without regard to Tenant’s improvements therein or to
the particular use for which Tenant will occupy the Premises, shall not violate
any covenants or restrictions of record or any applicable law, building code,
regulation or ordinance in effect on the date of Landlord’s Completion
Notice.  Tenant warrants to Landlord that
the Tenant Improvements and any other improvements constructed by Tenant in or about
the Premises from time to time shall not violate any applicable law, building
code, regulation or ordinance in effect at the time such improvements are
placed in service.  Without limiting the
generality of the foregoing, the parties intend and acknowledge that Landlord
shall be responsible for ADA and building code compliance for all improvements
in the Building shell, Building common areas and Common Areas of the Center
(including, but not limited to, existing Building access points, doors, entrances,
elevators, ramps and common restrooms) as they exist on the date of Landlord’s
Completion Notice (except to the extent, if any, that such improvements in the
Building and/or Common Areas consist of or are materially affected by the
improvements constructed by Tenant or by Tenant’s particular use of the
Premises), subject to the express assignment of certain areas of responsibility
to Tenant as set forth below, and that Tenant shall be responsible for ADA and
building code compliance with respect to the interior spaces within the
Premises and any other ADA and building code compliance required in connection
with or as a result of improvements constructed by Tenant.  If it is determined that any of these
warranties has been violated, then it shall be the obligation of the warranting
party, after written notice from the other party, to correct the condition(s)
constituting such violation promptly, at the warranting party’s sole cost and
expense.  TENANT ACKNOWLEDGES THAT EXCEPT
AS EXPRESSLY SET FORTH IN THIS LEASE, NEITHER LANDLORD NOR ANY AGENT OF
LANDLORD HAS MADE ANY REPRESENTATION OR WARRANTY AS TO THE PRESENT OR FUTURE
SUITABILITY OF THE CENTER OR THE PREMISES FOR THE CONDUCT OF TENANT’S BUSINESS
OR PROPOSED BUSINESS THEREIN.

 5
 

2.4                                 Acknowledgment
of Rent Commencement Date.  Promptly
following the Rent Commencement Date, Landlord and Tenant shall execute a
written acknowledgment of the Rent Commencement Date, Termination Date and
related matters, substantially in the form attached hereto as Exhibit C (with appropriate
insertions), which acknowledgment shall be deemed to be incorporated herein by
this reference.  Notwithstanding the
foregoing requirement, the failure of either party to execute such a written
acknowledgment shall not affect the determination of the Rent Commencement
Date, Termination Date and related matters in accordance with the provisions of
this Lease.

2.5                                 Holding
Over.  If Tenant holds possession of
the Premises or any portion thereof after the term of this Lease with
Landlord’s written consent, then except as otherwise specified in such consent,
Tenant shall become a tenant from month to month at one hundred twenty-five
percent (125%) of the minimum rental and otherwise upon the terms herein
specified for the period immediately prior to such holding over and shall
continue in such status until the tenancy is terminated by either party upon
not less than thirty (30) days prior written notice.  If Tenant holds possession of the Premises or
any portion thereof after the term of this Lease without Landlord’s
written consent, then Landlord in its sole discretion may elect (by written
notice to Tenant) to have Tenant become a tenant either from month to month or
at will, at one hundred fifty percent (150%) of the minimum rental (prorated on
a daily basis for an at-will tenancy, if applicable) and otherwise upon the
terms herein specified for the period immediately prior to such holding over,
or may elect to pursue any and all legal remedies available to Landlord under
applicable law with respect to such unconsented holding over by Tenant.  Tenant shall indemnify and hold Landlord
harmless from any loss, damage, claim, liability, cost or expense (including
reasonable attorneys’ fees) resulting from any delay by Tenant in surrendering
the Premises or any portion thereof, including but not limited to any claims
made by a succeeding tenant by reason of such delay.  Acceptance of rent by Landlord following
expiration or termination of this Lease shall not constitute a renewal of this
Lease.

2.6                                 Option
to Extend Term.  Tenant shall have
the option to extend the term of this Lease, at the minimum rental set forth in
Section 3.1(b) and otherwise upon all the terms and provisions set forth
herein with respect to the initial term of this Lease, for one (1) additional
period of two (2) years, commencing upon the expiration of the initial
term hereof.  Exercise of such option
shall be by written notice to Landlord at least nine (9) months and not
more than twelve (12) months prior to the expiration of the initial term
hereof.  If Tenant is in default
hereunder, beyond any applicable notice and cure periods, on the date of such
notice or on the date the extended term is to commence, then the exercise of
the option shall be of no force or effect, the extended term shall not commence
and this Lease shall expire at the end of the then current term hereof (or at
such earlier time as Landlord may elect pursuant to the default provisions of
this Lease).  If Tenant properly
exercises the extension option under this Section, then all references in this
Lease (other than in this Section 2.6) to the “term” of this Lease shall
be construed to include the extension term thus elected by Tenant.  Except as expressly set forth in this
Section 2.6, Tenant shall have no right to extend the term of this Lease
beyond its prescribed term.

 6
 

3.  RENTAL

3.1                                 Minimum
Rental.

(a)                                  Rental
Amounts.  Tenant shall pay to
Landlord as minimum rental for the Premises, in advance, without deduction,
offset, notice or demand, on or before the Rent Commencement Date and on or
before the first day of each subsequent calendar month of the initial term of
this Lease, the following amounts per month:

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Monthly

  	
   

  
	
  Months

  	
   

  	
  Sq Feet

  	
   

  	
  PSF/mo

  	
   

  	
  Minimum Rental

  	
   

  
	
  01 – 12

  	
   

  	
  18,333

  	
   

  	
  $

  	
  2.400

  	
   

  	
  $

  	
  43,999.20

  	
   

  
	
  13 – 24

  	
   

  	
  18,333

  	
   

  	
  $

  	
  2.496

  	
   

  	
  $

  	
  45,759.17

  	
   

  
	
  25 – 36

  	
   

  	
  18,333

  	
   

  	
  $

  	
  2.596

  	
   

  	
  $

  	
  47,592.47

  	
   

  
	
  37 – 48

  	
   

  	
  18,333

  	
   

  	
  $

  	
  2.700

  	
   

  	
  $

  	
  49,499.10

  	
   

  

 

If the obligation to pay
minimum rental hereunder for the initial term or for any renewal term commences
on other than the first day of a calendar month or if the initial term or any
renewal term of this Lease terminates on other than the last day of a calendar
month, the minimum rental for such first or last month of the applicable
initial or renewal term of this Lease, as the case may be, shall be prorated
based on the number of days the applicable term of this Lease is in effect
during such month.  If an increase in
minimum rental becomes effective on a day other than the first day of a calendar
month, the minimum rental for that month shall be the sum of the two applicable
rates, each prorated for the portion of the month during which such rate is in
effect.

(b)                                 Rental
Amounts During Extended Term.  If
Tenant properly exercises its renewal option pursuant to Section 2.6
hereof, then the monthly minimum rental during the extended term shall be as
follows (“Months” are measured from the initial Rent Commencement Date):

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Monthly

  	
   

  
	
  Months

  	
   

  	
  Sq Feet

  	
   

  	
  PSF/mo

  	
   

  	
  Minimum Rental

  	
   

  
	
  49 – 60

  	
   

  	
  18,333

  	
   

  	
  $

  	
  2.808

  	
   

  	
  $

  	
  51,479.06

  	
   

  
	
  61 – 72

  	
   

  	
  18,333

  	
   

  	
  $

  	
  2.920

  	
   

  	
  $

  	
  53,532.36

  	
   

  

 

(c)                                  Square
Footage of Premises.  The Building
and Premises were fully constructed prior to the date of this Lease, have been
measured by Landlord’s Architect and, applying the measurement formula
customarily used by Landlord to measure square footage of buildings in the
Center, the Premises have been determined to contain 18,333 rentable square
feet (including any “load factors,” allocations of electrical rooms, mechanical
rooms, shafts and other similar service areas, allocations of Building common
areas or access space, etc.), which measurement is final and binding on the
parties, is hereby accepted by the parties for all purposes under this Lease
and is not subject to remeasurement or adjustment.

 7
 

3.2                                 Late
Charge.  If Tenant fails to pay when
due rental or other amounts due Landlord hereunder and such amounts remain
unpaid for more than five (5) days after the date due, such unpaid amounts
shall bear interest for the benefit of Landlord at a rate equal to the lesser
of twelve percent (12%) per annum or the maximum rate permitted by law, from
the date due to the date of actual payment. 
In addition to such interest, Tenant shall pay to Landlord a late charge
in an amount equal to six percent (6%) of any installment of minimum rental and
any other amounts due Landlord if not paid in full on or before the fifth (5th)
day after such rental or other amount is due. 
Tenant acknowledges that late payment by Tenant to Landlord of rental or
other amounts due hereunder will cause Landlord to incur costs not contemplated
by this Lease, including, without limitation, processing and accounting charges
and late charges which may be imposed on Landlord by the terms of any loan
relating to the Center.  Tenant further
acknowledges that it is extremely difficult and impractical to fix the exact
amount of such costs and that the late charge set forth in this
Section 3.2 represents a fair and reasonable estimate thereof.  Acceptance of any late charge by Landlord
shall not constitute a waiver of Tenant’s default with respect to overdue
rental or other amounts, nor shall such acceptance prevent Landlord from
exercising any other rights and remedies available to it.  Acceptance of rent or other payments by
Landlord shall not constitute a waiver of late charges or interest accrued with
respect to such rent or other payments or any prior installments thereof, nor
of any other defaults by Tenant, whether monetary or non-monetary in nature,
remaining uncured at the time of such acceptance of rent or other payments.

4.  TAXES

4.1                                 Personal
Property.  From and after the Rent
Commencement Date (or, in the case of items brought onto the Property by Tenant
prior to the Rent Commencement Date, from and after the date such items are
brought onto the Property by Tenant), Tenant shall be responsible for and shall
pay prior to delinquency all taxes and assessments levied against or by reason
of any and all alterations, additions and items existing on or in the Premises
from time to time during the term of this Lease and taxed as personal property
rather than as real property, including (but not limited to) all personal
property, trade fixtures and other property placed by Tenant on or about the
Premises.  Upon written request by
Landlord, Tenant shall furnish Landlord with reasonably satisfactory evidence
of Tenant’s payment thereof.  If at any
time during the term of this Lease any of said alterations, additions or
personal property, whether or not belonging to Tenant, shall be taxed or
assessed as part of the Center, then such tax or assessment shall be paid by
Tenant to Landlord within thirty (30) days after presentation by Landlord of
copies of the tax bills in which such taxes and assessments are included and
shall, for the purposes of this Lease, be deemed to be personal property taxes
or assessments under this Section 4.1.

4.2                                 Real
Property.  To the extent any real
property taxes and assessments on the Premises are assessed directly to Tenant,
Tenant shall be responsible for and shall pay prior to delinquency all such
taxes and assessments levied against the Premises.  Upon written request by Landlord, Tenant
shall furnish Landlord with reasonably satisfactory evidence of Tenant’s
payment thereof.  Notwithstanding the
foregoing provisions, if Tenant receives a bill or assessment for real property
taxes or assessments covering more than just the Premises, Tenant shall
promptly forward such bill or assessment to Landlord and Landlord shall make
the required

 8
 

payment and allocate
Tenant’s share of such payment back to Tenant in accordance with the provisions
of this Lease.  To the extent the
Premises are taxed or assessed to Landlord following the Rent Commencement
Date, such real property taxes and assessments shall constitute Operating
Expenses (as that term is defined in Section 5.2 of this Lease) and shall
be paid in accordance with the provisions of Article 5 of this Lease.

5.  OPERATING
EXPENSES

5.1                                 Payment
of Operating Expenses.

(a)                                  Tenant
shall pay to Landlord, at the time and in the manner hereinafter set forth, as
additional rental, Tenant’s Operating Cost Share of the Operating Expenses
defined in Section 5.2, subject to adjustment pursuant to
Section 5.1(b) when applicable.  For
purposes of this Section 5.1, “Tenant’s Operating
Cost Share” shall be: 
(i) in the case of Operating Expenses that are reasonably allocable
solely to the Premises, one hundred percent (100%); (ii) in the case of
Operating Expenses that are reasonably allocable to the Building, forty-five
and eighty-three hundredths percent (45.83%) and (ii) in the case of
Operating Expenses (if any) that are determined and allocated on a Center-wide
basis, two and five tenths percent (2.5%).

(b)                                 Tenant’s
Operating Cost Share as specified in Section 5.1(a) with respect to
matters allocable to the Building or to the entire Center, as applicable, is
based upon an area of 18,333 square feet for the Premises, an area of 40,004
square feet for the Building and an aggregate area of 726,508 square feet for
all of the buildings presently located in the Center.  If the actual area of the Premises or of any
of the buildings existing from time to time in the Center changes for any
reason (including, but not limited to, modification of existing buildings,
construction of new buildings in the Center, or construction of new buildings
on any adjacent property owned by Landlord and operated, for common area
purposes, on an integrated basis with the Center), then Tenant’s Operating Cost
Share shall be adjusted proportionately to reflect the new actual areas of the
Premises and/or such other buildings, as applicable, as determined in good
faith by Landlord’s architect on the same basis of measurement as applied in
determining the existing square footage of the Building.

5.2                                 Definition
of Operating Expenses.

(a)                                  Subject
to the exclusions and provisions hereinafter contained and the allocation
principles set forth in Section 5.1, the term “Operating
Expenses” shall mean the total costs and expenses incurred by
Landlord for management, operation and maintenance of the Building and the
Center, including, without limitation, costs and expenses of (i) insurance
(which may include, at Landlord’s option, environmental and seismic insurance
as part of or in addition to any casualty or property insurance policy),
property management, landscaping, and the operation, repair and maintenance of
buildings and Common Areas; (ii) all utilities and services;
(iii) real and personal property taxes and assessments or substitutes
therefor levied or assessed against the Center or any part thereof, including
(but not limited to) any possessory interest, use, business, license or other
taxes or fees, any taxes imposed directly on gross rents or services, and any
assessments or charges for police or fire protection, housing, transit, open
space, street or sidewalk construction or maintenance or other similar services
from time to time by any

 9
 

governmental or
quasi-governmental entity; (iv) supplies, equipment, utilities and tools
used in management, operation and maintenance of the Center; (v) capital
improvements to the Center or the improvements therein, amortized over the
useful life of such capital improvements as determined reasonably and in good
faith by Landlord or its accountants, (aa) which reduce or will cause
future reduction of other items of Operating Expenses for which Tenant is
otherwise required to contribute or (bb) which are required by law,
ordinance, regulation or order of any governmental authority (excluding,
however, any such expenses incurred by Landlord in complying with Landlord’s
obligations under Section 2.3) or (cc) of which Tenant has use or
which benefit Tenant, and which in either case under this clause (cc) are
reasonably consistent with the nature and quality of the Center as a
first-class office and research and development campus; and (vi) any other
costs (including, but not limited to, any parking or utilities fees or
surcharges not otherwise specifically addressed elsewhere in this Lease)
allocable to or paid by Landlord, as owner of the Center, pursuant to any
applicable laws, ordinances, regulations or orders of any governmental or
quasi-governmental authority or pursuant to the terms of the Declaration (as
hereinafter defined) or of any other declarations of covenants, conditions and
restrictions now or hereafter affecting the Center or any other property over
which Tenant has non-exclusive usage rights as contemplated in
Section 1.1(b) hereof.  Operating
Expenses shall not include any costs attributable to the initial construction
of buildings or Common Area improvements in the Center, nor any costs
attributable to buildings the square footage of which is not taken into account
in determining Tenant’s Operating Cost Share under Section 5.1 for the
applicable period.  The distinction
between items of ordinary operating maintenance and repair and items of a
capital nature shall be made in accordance with generally accepted accounting
principles applied on a consistent basis or in accordance with tax accounting
principles, as determined reasonably and in good faith by Landlord’s
accountants.

(b)                                 Notwithstanding
any other provisions of this Section 5.2, the following shall not be
included within Operating Expenses: 
(i) rent paid to any ground lessor; (ii) the cost of
constructing tenant improvements for any tenant of the Center; (iii) the
costs of special services, goods or materials provided to any other tenant of
the Center and not offered or made available to Tenant; (iv) repairs
covered by proceeds of insurance or from funds provided by Tenant or any other
tenant of the Center, or as to which any other tenant of the Center is
obligated to make such repairs or to pay the cost thereof; (v) legal fees,
advertising costs or other related expenses incurred by Landlord in connection
with the leasing of space to individual tenants of the Center;
(vi) repairs, alterations, additions, improvements or replacements needed
to rectify or correct any defects in the design, materials or workmanship of
the Building, the Center or the Common Areas; (vii) damage and repairs necessitated
by the negligence or willful misconduct of Landlord or of Landlord’s employees,
contractors or agents; (viii) executive salaries or salaries of service
personnel (not above the level of property manager) to the extent that such
personnel perform services other than in connection with the management,
operation, repair or maintenance of the Building or the Center;
(ix) Landlord’s general overhead expenses not related to the Building or
the Center; (x) legal fees, accountants’ fees and other expenses incurred
in connection with disputes with tenants or other occupants of the Center, or
in connection with the enforcement of the terms of any leases with tenants or
the defense of Landlord’s title to or interest in the Center or any part
thereof; (xi) costs incurred due to a violation by Landlord or any other
tenant of the Center of the terms and conditions of any lease;

 10
 

(xii) costs of any
service provided to Tenant or to other occupants of the Center for which
Landlord is reimbursed other than through recovery of Operating Expenses;
(xiii) personal property taxes due and payable by any other tenant of the
Center; (xiv) costs incurred by Landlord pursuant to Article 13 of
this Lease in connection with an event of casualty or condemnation (including,
but not limited to, any applicable deductible and/or co-insurance amounts under
applicable insurance policies with respect to any seismic event);
(xv) costs incurred by Landlord in complying with its obligations under
Section 2.3 of this Lease; (xvi) capital expenditures (except to the
extent allowed pursuant to Section 5.2(a)); and (xvii) costs incurred
in connection with the presence of any hazardous substance or hazardous waste
(as such terms are defined in Section 9.6) on, under or about the Property
or the Center (but in the event of any use or release of such a hazardous
substance or hazardous waste by Tenant or related parties as described in
Section 9.6, Tenant’s responsibility therefor shall be determined pursuant
to Section 9.6).

5.3                                 Determination
of Operating Expenses.  On or before
the Rent Commencement Date and during the last month of each calendar year of
the term of this Lease (“Expense Year”),
or as soon thereafter as practical, Landlord shall provide Tenant notice of
Landlord’s estimate of the Operating Expenses for the ensuing Expense Year or
applicable portion thereof.  On or before
the first day of each month during the ensuing Expense Year or applicable
portion thereof, beginning on the Rent Commencement Date, Tenant shall pay to
Landlord Tenant’s Operating Cost Share of the portion of such estimated
Operating Expenses allocable (on a prorata basis) to such month; provided,
however, that if such notice is not given in the last month of an Expense Year,
Tenant shall continue to pay on the basis of the prior year’s estimate, if any,
until the month after such notice is given. 
If at any time or times it appears to Landlord that the actual Operating
Expenses for an Expense Year will vary from Landlord’s previous estimate by
more than five percent (5%), Landlord may, by notice to Tenant, revise its
estimate for the applicable Expense Year and subsequent payments by Tenant for
such Expense Year shall be based upon such revised estimate.

5.4                                 Final
Accounting for Expense Year.

(a)                                  Within
ninety (90) days after the close of each Expense Year, or as soon after such
90-day period as practicable, Landlord shall deliver to Tenant a statement of
Tenant’s Operating Cost Share of the Operating Expenses for such Expense Year
prepared by Landlord from Landlord’s books and records.  If on the basis of such statement Tenant owes
an amount that is more or less than the total sum of the estimated payments for
such Expense Year previously made by Tenant, Tenant or Landlord, as the case
may be, shall pay the deficiency to the other party within thirty (30) days
after delivery of the statement.  Failure
or inability of Landlord to deliver the annual statement within such ninety
(90) day period shall not impair or constitute a waiver of Tenant’s obligation
to pay Operating Expenses, or cause Landlord to incur any liability for
damages.

(b)                                 At
any time within three (3) months after receipt of Landlord’s annual statement
of Operating Expenses as contemplated in Section 5.4(a), Tenant shall be
entitled, upon reasonable written notice to Landlord and during normal business
hours at Landlord’s office or such other reasonable places as Landlord shall
designate, to inspect and examine those

 11
 

books and records of
Landlord relating to the determination of Operating Expenses for the immediately
preceding Expense Year covered by such annual statement or, if Tenant so elects
by written notice to Landlord, to request an independent audit of such books
and records.  Any such independent audit
of the books and records shall be conducted by a certified public accountant
reasonably acceptable to both Landlord and Tenant or, if the parties are unable
to agree, by a certified public accountant appointed by the Presiding Judge of
the Santa Clara County Superior Court upon the application of either Landlord
or Tenant (with notice to the other party). 
In either event, such certified public accountant shall be one who is
not then employed in any capacity by Landlord or Tenant or by any of their
respective affiliates.  The audit shall
be limited to the determination of the amount of Operating Expenses for the
subject Expense Year, and shall be based on generally accepted accounting
principles and tax accounting principles, consistently applied.  If it is determined, by mutual agreement of
Landlord and Tenant or by independent audit, that the amount of Operating
Expenses billed to or paid by Tenant for the applicable Expense Year was
incorrect, then the appropriate party shall pay to the other party the
deficiency or overpayment, as applicable, within thirty (30) days after the
final determination of such deficiency or overpayment.  All costs and expenses of the audit shall be
paid by Tenant unless the audit shows that Landlord overstated Operating
Expenses for the subject Expense Year by more than five percent (5%), in which
case Landlord shall pay all costs and expenses of the audit.  Tenant shall be deemed to have approved
Landlord’s annual statement of Operating Expenses, and shall be barred from
raising any claims regarding Operating Expenses for the period covered by such
annual statement, except to the extent Tenant specifically identifies any
objections or claims based on such annual statement, in reasonable detail, by
written notice to Landlord within four (4) months after Tenant’s receipt of the
applicable annual statement.  To the
extent Tenant provides Landlord with timely written notice of any such
objections or claims, Landlord and Tenant shall cooperate reasonably and in
good faith to try to resolve the objections or claims raised by Tenant, which
cooperation may include the use of an independent audit initiated by Tenant as
contemplated above.  Each party agrees to
maintain the confidentiality of the findings of any audit in accordance with
the provisions of this Section 5.4.

5.5                                 Proration.  If the date on which Tenant’s obligation for
payment of Tenant’s Operating Cost Share commences falls on a day other than
the first day of an Expense Year or if this Lease terminates on a day other
than the last day of an Expense Year, then the amount of Operating Expenses
payable by Tenant with respect to such first or last partial Expense Year shall
be prorated on the basis which the number of days during such Expense Year in
which this Lease is in effect bears to 365. 
The termination of this Lease shall not affect the obligations of
Landlord and Tenant pursuant to Section 5.4 to be performed after such
termination.

6.  UTILITIES

6.1                                 Payment.  Commencing with the Early Access Date and
until the Lease Commencement Date (including the early possession period under
Section 2.2 above), and thereafter from the Lease Commencement Date
throughout the remaining term of this Lease, Tenant shall be responsible for
and shall pay, before delinquency, all charges for water, gas, heat, light,
electricity, power, sewer, telephone, alarm system, janitorial and other
services or utilities supplied to or consumed in or with respect to the
Premises (other than any costs for water, electricity or other services or
utilities furnished with respect to the Building common areas or

 12
 

the Common Areas of the
Center, which costs shall be paid by Landlord and shall constitute Operating
Expenses under Section 5.2 hereof), including any taxes on such services
and utilities.  Notwithstanding the foregoing
provisions, if Tenant receives a direct billing for any utilities that serve or
apply to more than just the Premises, Tenant shall promptly forward such
billing to Landlord and Landlord shall make the required payment and allocate
Tenant’s share of such payment back to Tenant in accordance with the provisions
of this Lease.  To the extent the
utilities and services supplied to the Premises are not separately metered,
then the amount thereof shall be allocated in a reasonable, good faith and
appropriate manner by Landlord between the Premises and the remainder of the
Building or other areas sharing such utilities or services, and the portion
thereof allocable to the Premises may, in Landlord’s discretion, either be
included in Operating Expenses allocable to the Premises under Section 5.1
hereof or be billed directly to Tenant and paid or reimbursed by Tenant within
thirty (30) days after receipt of Landlord’s statement and request for payment,
accompanied by reasonable supporting documentation evidencing the calculation
or determination of the amount for which payment or reimbursement is
requested.  Notwithstanding the foregoing
provisions, during any portion of the period prior to the Rent Commencement
Date in which Landlord is performing repairs or construction of improvements in
the Premises, (a) if Tenant is neither operating its business in the
Premises nor performing any material construction of improvements in the
Premises, Landlord shall bear all utilities charges for the Premises; and
(b) if Tenant is operating its business in the Premises and/or performing
any material construction of improvements in the Premises, utilities charges
for the Premises shall be allocated between Landlord and Tenant on the basis of
Landlord’s reasonable, good faith estimate of their respective usage of such
utilities.

6.2                                 Interruption.  There shall be no abatement of rent or other
charges required to be paid hereunder and Landlord shall not be liable in
damages or otherwise for interruption or failure of any service or utility
furnished to or used with respect to the Premises, the Building or the Center
because of accident, making of repairs, alterations or improvements, severe
weather, difficulty or inability in obtaining services or supplies, labor
difficulties or any other cause. 
Notwithstanding the foregoing provisions of this Section 6.2,
however, in the event of any interruption or failure of any service or utility
to the Premises that (a) is caused in whole or in material part by the
active negligence or willful misconduct of Landlord or its agents, employees or
contractors and (b) continues for more than three (3) business days
and (c) materially impairs Tenant’s ability to use the Premises for
the intended purpose hereunder, then following such three (3) business day
period, Tenant’s obligations for payment of rent and other charges under this
Lease shall be abated in proportion to the degree of impairment of Tenant’s use
of the Premises, and such abatement shall continue until Tenant’s use of the
Premises is no longer materially impaired thereby.  Tenant expressly waives any benefits of any
applicable existing or future law (including, but not limited to, the
provisions of California Civil Code Section 1932(1)) permitting the
termination of a lease due to any such interruption or failure of any service
or utility, it being the intention of the parties that their respective rights
in such circumstances shall be governed solely by the provisions of this
Section 6.2.

7.  ALTERATIONS;
SIGNS

7.1                                 Right
to Make Alterations.  Tenant shall
make no alterations, additions or improvements to the Premises, other than
interior non-structural alterations in the Premises

 13

costing less than
(i) Thirty-Five Thousand Dollars ($35,000) for any single alteration or
improvement or set of related and substantially concurrent alterations or
improvements, and (ii) Seventy-Five Thousand Dollars ($75,000) in the
aggregate during any twelve (12) month period, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed.  All such
alterations, additions and improvements shall be completed with due diligence
in a good and workmanlike manner, in compliance with plans and specifications
approved in writing by Landlord and in compliance with all applicable laws,
ordinances, rules and regulations, and to the extent Landlord’s consent is not
otherwise required hereunder for such alterations, additions or improvements,
Tenant shall give prompt written notice thereof to Landlord.  Tenant shall cause any contractors engaged by
Tenant for work in the Building or in the Center to maintain public liability
and property damage insurance, and other customary insurance, with such terms
and in such amounts as Landlord may reasonably require, naming as additional
insureds Landlord and any of its partners, shareholders, property managers,
project managers and lenders designated in writing by Landlord to Tenant for
this purpose, and shall furnish Landlord with certificates of insurance or
other evidence that such coverage is in effect. 
Notwithstanding any other provisions of this Section 7.1, under no
circumstances shall Tenant make any structural alterations or improvements, or
any changes to the roof or equipment installations on the roof, or any
alterations materially affecting any building systems, without Landlord’s prior
written consent (which consent shall not be unreasonably withheld, conditioned
or delayed).

7.2           Title to Alterations.  All alterations, additions and improvements
installed by Tenant in, on or about the Premises, the Building or the Center
(including, but not limited to, lab benches, fume hoods, clean rooms, cold
rooms and other similar improvements and equipment, if applicable) shall become
part of the Property and shall become the property of Landlord, unless Landlord
elects to require Tenant to remove the same upon the termination of this Lease;
provided, however, that the foregoing shall not apply to Tenant’s
movable furniture, equipment and trade fixtures, except to the extent any such
items are specifically described in the parenthetical in the initial portion of
this sentence and are designed to be portable or removable in nature (i.e.,
installable and removable without any material adverse impact on the existing
improvements and Building systems in the Building).  Tenant shall promptly repair any damage
caused by its removal of any such furniture, equipment or trade fixtures.  Notwithstanding any other provisions of this
Article 7, however, (a) under no circumstances shall Tenant have any
right to remove from the Premises or the Building, at the expiration or
termination of this Lease, any lab benches, fume hoods, clean rooms, cold rooms
or other similar improvements and equipment (if applicable) installed in the
Building, even if such equipment and improvements were installed by Tenant
(other than portable or removable clean rooms described at the end of the first
sentence of this Section, if applicable); (b) under no circumstances shall
Tenant have any right to remove from the Premises or the Building, at the
expiration or termination of this Lease, any alterations, additions,
improvements or equipment acquired, constructed or installed with the use, in
whole or in part, of any funds from the Tenant Improvement Allowance;
(c) if Tenant requests Landlord’s written consent to any alterations,
additions or improvements under Section 7.1 hereof and, in requesting such
consent, asks that Landlord specify whether Landlord will require removal of
such alterations, additions or improvements upon termination or expiration of
this Lease (or, for those alterations not requiring Landlord’s consent, if
Tenant so

 14
 

requests Landlord’s
determination in writing), then Landlord shall not be entitled to require such
removal unless Landlord specified its intention to do so at the time of
granting of Landlord’s consent to the requested alterations, additions or
improvements; and (d) in the case of Tenant Improvements constructed by
Tenant under the Workletter, Landlord shall not be entitled to require removal
of such Tenant Improvements upon termination or expiration of this Lease unless
Landlord specifies its intention to do so at the time of granting of Landlord’s
approval of the plans and specifications for the applicable elements of such
Tenant Improvements.  Notwithstanding any
other provisions of this Article 7, (i) it is the intention of the
parties that Landlord shall be entitled to claim all tax attributes associated
with alterations, additions, improvements and equipment constructed or
installed by Tenant or Landlord with funds provided by Landlord pursuant to the
Tenant Improvement Allowance; and (ii) it is the intention of the parties
that Tenant shall be entitled to claim, during the term of this Lease, all tax
attributes associated with alterations, additions, improvements and equipment
constructed or installed by Tenant with Tenant’s own funds (and without any
payment or reimbursement by Landlord pursuant to the Tenant Improvement
Allowance), despite the fact that the items described in this clause (ii)
are characterized in this Section 7.2 as becoming Landlord’s property upon
installation, in recognition of the fact that Tenant will have installed and
paid for such items, will have the right of possession of such items during the
term of this Lease and will have the obligation to pay (directly or indirectly)
property taxes on such items, carry insurance on such items to the extent
provided in Article 10 hereof and bear the risk of loss with respect to
such items to the extent provided in Article 13 hereof.  If and to the extent it becomes necessary, in
implementation of the foregoing intentions, to identify (either specifically or
on a percentage basis, as may be required under applicable tax laws) which
alterations, additions, improvements and equipment constructed as part of the
Tenant Improvements have been funded through the Tenant Improvement Allowance
and which (if any) have been constructed or installed with Tenant’s own funds,
Landlord and Tenant agree to cooperate reasonably and in good faith to make
such an identification by mutual agreement.

7.3           Tenant Trade Fixtures.  Subject to the third sentence of
Section 7.2 and to Section 7.5, Tenant may install, remove and
reinstall trade fixtures without Landlord’s prior written consent, except that
installation and removal of any trade fixtures which affect the Building
systems or the exterior or structural portions of the Building shall require
Landlord’s written approval, which approval shall not be unreasonably withheld,
conditioned or delayed.  Subject to the
provisions of Section 7.5, the foregoing shall apply to Tenant’s signs,
which Tenant shall have the right to place and remove and replace (a) only
with Landlord’s prior written consent as to location, size and composition,
which consent shall not be unreasonably withheld, conditioned or delayed, and
(b) only in compliance with all restrictions and requirements of
applicable law and of any covenants, conditions and restrictions or other
written agreements now or hereafter applicable to the Center.  Tenant shall immediately repair any damage
caused by installation and removal of trade fixtures under this
Section 7.3.

7.4           No Liens.  Tenant shall at all times keep the Building
and the Center free from all liens and claims of any contractors,
subcontractors, materialmen, suppliers or any other parties employed either
directly or indirectly by Tenant in construction work on the Building or the
Center.  Tenant may contest any claim of
lien, but only if, prior to such contest, Tenant either

 15
 

(i) posts security
in the amount of the claim, plus estimated costs and interest, or
(ii) records a bond of a responsible corporate surety in such amount as
may be required to release the lien from the Building and the Center.  Tenant shall indemnify, defend and hold
Landlord harmless against any and all liability, loss, damage, cost and other
expenses, including, without limitation, reasonable attorneys’ fees, arising
out of claims of any lien for work performed or materials or supplies furnished
at the request of Tenant or persons claiming under Tenant.

7.5           Signs.  Landlord shall provide Tenant with monument
signage consistent with the size, quality and nature of the existing signage,
at Landlord’s sole expense and at no cost to Tenant or to the Tenant
Improvement Allowance.  Without limiting
the generality of the provisions of Section 7.3 hereof, Tenant shall have
the right to install building signage consistent with the size, quality and
nature of the existing signage (if any), at Tenant’s sole expense, subject to
Landlord’s prior approval as to location, size, design and composition (which
approval shall not be unreasonably withheld or delayed), subject to the
established sign criteria for the Center and subject to all restrictions and
requirements of applicable law and of any covenants, conditions and
restrictions or other written agreements now or hereafter applicable to the
Center.  In addition, Tenant shall have
the right, at Tenant’s sole expense and subject to Landlord’s prior approval as
to location, size, design and composition (which approval shall not be
unreasonably withheld, conditioned or delayed), to install directional signage
and/or door signage in the first floor lobby of the Building indicating the
location and/or suite number of Tenant’s Premises.

8.  MAINTENANCE
AND REPAIRS

8.1           Landlord’s Obligation for
Maintenance.  Landlord shall repair,
maintain and replace or cause to be repaired, maintained and replaced, as
reasonably determined by Landlord to be necessary or appropriate, the Common
Areas of the Center; the common or shared lobbies, corridors, bathrooms and
other common or shared areas or facilities in the Building; the roof, exterior
walls and other structural portions of the Building; exterior windows and
exterior plate glass; the elevators serving the Building; and the mechanical
(including HVAC), electrical, plumbing and sewer (main external service lines
and from such external lines up to the “T” junction(s) serving the Premises)
systems and fire/life safety systems serving the Building and the
Premises.  Landlord shall make HVAC
service available to the Premises in quantities appropriate for customary office
usage during normal business hours (at least from 7:00 am to 7:00 pm Monday
through Friday, excluding holidays), at no extra charge to Tenant, and shall
also make after-hours HVAC service available to the Premises, upon request by
Tenant, for an additional charge calculated on the basis of a commercially
reasonable rate specified by Landlord from time to time.  Landlord shall also provide night janitorial
service each weekday night for the Premises. 
The cost of all work performed by Landlord under this Section 8.1
may, in Landlord’s discretion, either (x) be treated as an Operating
Expense hereunder or (y) be charged back by Landlord for direct
reimbursement by the tenant(s) to whose premises the applicable work relates,
in which event such reimbursement shall be paid to Landlord within thirty (30)
days after Tenant’s receipt of Landlord’s written statement identifying the
requested reimbursement and providing reasonable supporting information for the
nature and cost of the work for which reimbursement is requested; provided,
however, that Landlord shall consult reasonably and in good faith with Tenant
prior to electing to apply the direct chargeback approach described in the
preceding clause (y) with respect to any particular item of work or

 16
 

expense.  The cost provisions of the preceding sentence
shall not apply, however, to the extent the applicable work by Landlord
(i) is required due to the negligence of Landlord; (ii) involves the
repair or correction of a condition or defect that Landlord is required to
correct pursuant to Section 2.3 hereof; (iii) is a capital expense
not includible (or in excess of the amounts includible on an amortized basis)
as an Operating Expense under Section 5.2 hereof, or is otherwise
expressly excluded from treatment as an Operating Expense under any other
applicable provision of Section 5.2 hereof; (iv) results from an
event of casualty or condemnation covered by Article 13 hereof (in which
event the provisions of such Article 13 shall govern the parties’
respective rights and obligations); or (v) is required due to the
negligence or willful misconduct of Tenant or its agents, employees or invitees
(in which event Tenant shall bear the full cost of such work pursuant to the
indemnification provided in Section 10.6 hereof, subject to the release set
forth in Section 10.4 hereof). 
Tenant knowingly and voluntarily waives the right to make repairs at
Landlord’s expense, or to offset the cost thereof against rent, under any law,
statute, regulation or ordinance now or hereafter in effect.

8.2           Tenant’s Obligation for
Maintenance.

(a)           Good Order, Condition and Repair.  Except as provided in Section 8.1
hereof, and subject to the provisions of Article 13 hereof (which shall be
controlling in the event of any casualty or condemnation covered by such
Article 13) and of Section 2.3 hereof (which shall be controlling in
the event of any repairs or corrective work covered by such Section 2.3),
Tenant at its sole cost and expense shall keep and maintain in good and
sanitary order, condition and repair the Premises and every part thereof,
wherever located, including but not limited to Tenant’s signs, the interior,
ceiling, plumbing and sewer systems (within the Premises and from the Premises
up to the “T” junction(s) serving the Premises), telephone and communications systems
serving the Premises, any supplemental or auxiliary mechanical systems
(including, but not limited to, any supplemental or auxiliary HVAC equipment,
if applicable) installed by Tenant to serve the Premises, all doors, door
checks, interior windows, interior plate glass (if any), door fronts, fixtures,
partitions, interior side of demising walls, lighting, wall surfaces, floor
surfaces and coverings and ceiling surfaces and coverings of the Premises, and
all other interior repairs, foreseen and unforeseen, with respect to the
Premises, as required.  To the extent
Landlord has any third-party warranties or service contracts on any
improvements or systems in the Premises which are Tenant’s obligation to
maintain during the term of this Lease, Landlord agrees to assign such
warranties or service contracts to Tenant, to the extent practicable, and to
use reasonable efforts to enforce for Tenant’s benefit (and at Tenant’s
expense) any such warranties or service contracts which it is not practicable
to assign to Tenant.

(b)           Landlord’s Remedy.  If Tenant fails to make or perform promptly
any repairs or maintenance which are the obligation of Tenant hereunder and
such failure continues for more than ten (10) days after written notice from
Landlord specifying the required repairs (except in case of emergency, in which
event no such prior notice shall be required, and except that in the case of
repairs or maintenance which cannot reasonably be performed within such 10-day
period, the provisions of this paragraph shall apply only if Tenant fails to
commence performance within such 10-day period and thereafter to pursue such
performance diligently to completion), then Landlord shall have the right, but
shall not be required, to enter the Premises in accordance with Section 12.1
of this Lease and make the repairs or perform the maintenance

 17
 

necessary to restore the
Premises to good and sanitary order, condition and repair.  The cost of making such repairs shall be due
and payable by Tenant to Landlord within thirty (30) days after Tenant’s
receipt of Landlord’s written demand for payment.

(c)           Condition upon Surrender.  At the expiration or sooner termination of
this Lease, Tenant shall surrender the Premises and Building and the
improvements located therein, including any additions, alterations and
improvements thereto (except for items which Tenant is permitted and elects to
remove, or is required to remove, pursuant to the provisions of this Lease),
broom clean, in good and sanitary order, condition and repair, ordinary wear
and tear and casualty damage (the latter of which shall be governed by the
provisions of Article 13 hereof) excepted, first, however, removing all
goods and effects of Tenant, all signage installed by Tenant and all fixtures
and items required to be removed or specified to be removed at Landlord’s
election pursuant to this Lease (including, but not limited to, any such
removal required as a result of an election duly made by Landlord to require
such removal as contemplated in Section 7.2), and repairing any damage
caused by such removal.  Tenant expressly
waives any and all interest in any personal property and trade fixtures not
removed from the Center by Tenant at the expiration or termination of this
Lease, agrees that any such personal property and trade fixtures may, at
Landlord’s election, be deemed to have been abandoned by Tenant, and authorizes
Landlord (at its election and without prejudice to any other remedies under
this Lease or under applicable law) to remove and either retain, store or dispose
of such property at Tenant’s cost and expense, and Tenant waives all claims
against Landlord for any damages resulting from any such removal, storage,
retention or disposal.

9.  USE OF
PROPERTY

9.1           Permitted Use.  Subject to Sections 9.3, 9.4 and 9.6
hereof, Tenant shall use the Premises solely for an office, research and
development, engineering and storage facility, including (but not limited to)
lab (if applicable), administrative offices, and other lawful purposes and
facilities reasonably related to or incidental to such specified uses (subject
in each case to receipt of all necessary approvals from the City of Mountain
View and all other governmental agencies having jurisdiction over the
Premises), and for no other purpose, unless Landlord in its sole discretion
otherwise consents in writing.

9.2           Requirements Relating to Vacancy.  Tenant shall not at any time leave the
Premises unoccupied or vacant (a) where the coverage of any property
insurance required under this Lease is jeopardized as a result of such vacancy;
(b) without providing a commercially reasonable level of security for the
Premises; and/or (c) without providing reasonable assurances to minimize
potential vandalism to the Premises.

9.3           No Nuisance.  Tenant shall not use the Premises for or
carry on or permit within the Center or any part thereof any offensive, noisy
or dangerous trade, business, manufacture, occupation, odor or fumes, or any
nuisance or anything against public policy, nor interfere with the rights or
business of Landlord in the Building or the Center, nor commit or allow to be
committed any waste in, on or about the Center. 
Tenant shall not do or permit anything to be done in or about the
Center, nor bring nor keep anything therein, which will in any way cause the
Center or any portion thereof to be uninsurable with respect to the insurance
required by this Lease or with respect to standard fire and extended coverage
insurance with vandalism, malicious mischief and riot endorsements.

 18
 

9.4           Compliance with Laws.  Tenant shall not use the Premises, the
Building or the Center or permit the Premises, the Building or the Center to be
used in whole or in part for any purpose or use that is in violation of any
applicable laws, ordinances, regulations or rules of any governmental agency or
public authority.  Tenant shall keep the
Premises equipped with all safety appliances required by law, ordinance or
insurance on the Center, or any order or regulation of any public authority,
because of Tenant’s particular use of the Premises.  Tenant shall procure all licenses and permits
required for Tenant’s use of the Premises. 
Tenant shall use the Premises in strict accordance with all applicable
ordinances, rules, laws and regulations and shall comply with all requirements
of all governmental authorities now in force or which may hereafter be in force
pertaining to the use of the Premises and the Center by Tenant, including,
without limitation, regulations applicable to noise, water, soil and air
pollution, and making such nonstructural alterations and additions thereto as
may be required from time to time by such laws, ordinances, rules, regulations
and requirements of governmental authorities or insurers of the Center
(collectively, “Requirements”) because of
Tenant’s construction of improvements in or other particular use of the
Premises or the Center.  Any structural
alterations or additions required from time to time by applicable Requirements
because of Tenant’s construction of improvements in the Premises or other
particular use of the Center shall, at Landlord’s election, either (i) be
made by Tenant, at Tenant’s sole cost and expense, in accordance with the
procedures and standards set forth in Section 7.1 for alterations by
Tenant, or (ii) be made by Landlord at Tenant’s sole cost and expense, in
which event Tenant shall pay to Landlord as additional rent, within
ten (10) days after demand by Landlord, an amount equal to all reasonable
costs incurred by Landlord in connection with such alterations or additions.

9.5           Liquidation Sales.  Tenant shall not conduct or permit to be
conducted any auction, bankruptcy sale, liquidation sale, or going out of
business sale, in, upon or about the Center, whether said auction or sale be
voluntary, involuntary or pursuant to any assignment for the benefit of
creditors, or pursuant to any bankruptcy or other insolvency proceeding.

9.6           Environmental Matters.

(a)           For purposes of this Section, “hazardous substance” shall mean (i) the
substances included within the definitions of the term “hazardous substance”
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. §§ 9601 et  seq., and the
regulations promulgated thereunder, as amended, (ii) the substances
included within the definition of “hazardous substance” under the California
Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health
& Safety Code §§ 25300 et  seq., and regulations
promulgated thereunder, as amended, (iii) the substances included within
the definition of “hazardous materials” under the Hazardous Materials Release
Response Plans and Inventory Act, California Heath & Safety Code
§§ 25500 et  seq., and regulations promulgated thereunder, as
amended, (iv) the substances included within the definition of “hazardous
substance” under the Underground Storage of Hazardous Substances provisions set
forth in California Health & Safety Code §§ 25280 et seq., and
(v) petroleum or any fraction thereof; “hazardous
waste” shall mean (i) any waste listed as or meeting the

 19
 

identified characteristics
of a “hazardous waste” under the Resource Conservation and Recovery Act of
1976, 42 U.S.C. §§ 6901 et  seq., and regulations promulgated
pursuant thereto, as amended (collectively, “RCRA”),
(ii) any waste meeting the identified characteristics of “hazardous waste,”
“extremely hazardous waste” or “restricted hazardous waste” under the
California Hazardous Waste Control Law, California Health & Safety Code
§§ 25100 et  seq., and regulations promulgated pursuant
thereto, as amended (collectively, the “CHWCL”),
and/or (iii) any waste meeting the identified characteristics of “medical
waste” under California Health & Safety Code §§ 25015-25027.8, and
regulations promulgated thereunder, as amended; “hazardous
waste facility” shall mean a hazardous waste facility as defined
under the CHWCL; and “pollutant”
shall mean all substances defined as a “pollutant,” “pollution,” “waste,” “contamination”
or “hazardous substance” under the Porter-Cologne Water Quality Control Act,
California Water Code §§ 13000 et seq.

(b)           Without limiting the generality of
the obligations set forth in Section 9.4 of this Lease:

(i)            Tenant
shall not cause or permit any hazardous substance or hazardous waste to be
brought upon, kept, stored or used in or about the Center without the prior
written consent of Landlord, which consent shall not be unreasonably withheld,
except that Tenant, in connection with its permitted use of the Premises and
the Center as provided in Section 9.1, may keep, store and use materials
that constitute hazardous substances which are customary for such permitted
use, provided such hazardous substances are kept, stored and used in quantities
which are customary for such permitted use and are kept, stored and used in
full compliance with clauses (ii) and (iii) immediately below.

(ii)           Tenant
shall comply with all applicable laws, rules, regulations, orders, permits,
licenses and operating plans of any governmental authority with respect to the
receipt, use, handling, generation, transportation, storage, treatment and/or
disposal of hazardous substances or wastes by Tenant or its agents or
employees, and Tenant will provide Landlord with copies of all permits,
licenses, registrations and other similar documents that authorize Tenant to
conduct any such activities in connection with its authorized use of the
Premises and the Center from time to time.

(iii)          Tenant
shall not (A) operate on or about the Center any facility required to be
permitted or licensed as a hazardous waste facility or for which interim status
as such is required, nor (B) store any hazardous wastes on or about the
Center for ninety (90) days or more, nor (C) conduct any other activities
on or about the Center that could result in the Center or any portion thereof
being deemed to be a “hazardous waste facility” (including, but not limited to,
any storage or treatment of hazardous substances or hazardous wastes which
could have such a result), nor (D) store any hazardous wastes on or about
the Center in violation of any federal or California laws or in violation of
the terms of any federal or state licenses or permits held by Tenant.

(iv)          Tenant
shall not install any underground storage tanks on the Property without the
prior written consent of Landlord and prior approval by all

 20
 

applicable
governmental authorities.  If and to the
extent that Tenant obtains all such required consents and approvals and
installs any underground storage tanks on the Property, Tenant shall comply
with all applicable laws, rules, regulations, orders and permits relating to such
underground storage tanks (including any installation, monitoring, maintenance,
closure and/or removal of such tanks) as such tanks are defined in California
Health & Safety Code § 25281(x), including, without limitation,
complying with California Health & Safety Code §§ 25280-25299.7 and
the regulations promulgated thereunder, as amended.  Tenant shall furnish to Landlord copies of
all registrations and permits issued to or held by Tenant from time to time for
any and all underground storage tanks located on or under the Property.

(v)           If
applicable, Tenant shall provide Landlord in writing the following information
and/or documentation within fifteen (15) days after the Rent Commencement Date,
and shall update such information at least annually, on or before each
anniversary of the Rent Commencement Date, to reflect any change in or addition
to the required information and/or documentation (provided, however,
that in the case of the materials described in subparagraphs (B), (C) and (E)
below, Tenant shall not be required to deliver copies of such materials to
Landlord but shall maintain copies of such materials to such extent and for
such periods as may be required by applicable law and shall permit Landlord or
its representatives to inspect and copy such materials during normal business
hours at any time and from time to time upon reasonable notice to Tenant):

(A)          A
list of all hazardous substances, hazardous wastes and/or pollutants that
Tenant receives, uses, handles, generates, transports, stores, treats or
disposes of from time to time in connection with its operations in the Center,
other than de minimis amounts of hazardous substances found in customary
commercial office and cleaning supplies.

(B)           All
Material Safety Data Sheets (“MSDS’s”),
if any, required to be completed with respect to the operations of Tenant at
the Center from time to time in accordance with Title 26, California Code
of Regulations § 8-5194 or 42 U.S.C. § 11021, or any amendments
thereto, and any Hazardous Materials Inventory Sheets that detail the MSDS’s.

(C)           All
Hazardous Waste Manifests, if any, that Tenant is required to complete from
time to time under California Health & Safety Code § 25160, any
regulations promulgated thereunder, any similar successor provisions and/or any
amendments to any of the foregoing, in connection with its operations in the
Center.

(D)          Any
Hazardous Materials Management Plan required from time to time with respect to
Tenant’s operations in the Center, pursuant to California Health & Safety
Code §§ 25500 et  seq., any regulations promulgated
thereunder, any similar successor provisions and/or any amendments to any of
the foregoing.

 21
 

(E)           Any
Air Toxics Emissions Inventory Plan required from time to time with respect to
Tenant’s operations in the Center, pursuant to California Health & Safety
Code §§ 44340 et seq., any regulations promulgated thereunder, any
similar successor provisions and/or any amendments to any of the foregoing.

(F)           Any
biennial Hazardous Waste Generator reports or notifications furnished by Tenant
to the California Department of Toxic Substances Control or other applicable
governmental authorities from time to time pursuant to California Code of
Regulations Title 22, § 66262.41, any similar successor provisions
and/or any amendments to any of the foregoing, in connection with Tenant’s
operations in the Center.

(G)           Any
Hazardous Waste Generator Reports regarding source reductions, as required from
time to time pursuant to California Health & Safety Code §§ 25244.20 et
seq., any regulations promulgated thereunder, any similar successor
provisions and/or any amendments to any of the foregoing, in connection with
Tenant’s operations in the Center.

(H)          Any
Hazardous Waste Generator Reports or notifications not otherwise described in
the preceding subparagraphs and required from time to time pursuant to
California Health & Safety Code § 25153.6, California Code of
Regulations Title 22, Division 4.5, Chapter 12, §§66262.10 et
seq. (“Standards Applicable to Generators of Hazardous Waste”), any other
regulations promulgated thereunder, any similar successor provisions and/or any
amendments to any of the foregoing, in connection with Tenant’s operations in
the Center.

(I)            All
industrial wastewater discharge permits issued to or held by Tenant from time
to time in connection with its operations in the Center, and all air quality
management district permits issued to or held by Tenant from time to time in
connection with its operations in the Center.

(J)            Copies
of any other lists or inventories of hazardous substances, hazardous wastes
and/or pollutants on or about the Center that Tenant is otherwise required to
prepare and file from time to time with any governmental or regulatory
authority.

(vi)          Tenant
shall secure Landlord’s prior written approval for any proposed receipt,
storage, possession, use, transfer or disposal of “radioactive materials” or “radiation,”
as such materials are defined in Title 26, California Code of Regulations
§ 17-30100, and/or any other materials possessing the characteristics of
the materials so defined, which approval Landlord may withhold in its sole and
absolute discretion; provided, that such approval shall not be required
for any radioactive materials (x) for which Tenant has secured prior
written approval of the Nuclear Regulatory Commission and delivered to Landlord
a copy of such approval (if applicable), or (y) which Tenant is authorized
to use pursuant to the terms of any radioactive materials license issued by the

 22
 

State
of California.  Tenant, in connection
with any such authorized receipt, storage, possession, use, transfer or
disposal of radioactive materials or radiation, shall:

(A)          Comply
with all federal, state and local laws, rules, regulations, orders, licenses
and permits issued to or applicable to Tenant with respect to its operations in
the Center;

(B)           Maintain,
to such extent and for such periods as may be required by applicable law, and
permit Landlord and its representatives to inspect during normal business hours
at any time and from time to time upon reasonable notice to Tenant, a list of
all radioactive materials or radiation received, stored, possessed, used,
transferred or disposed of by Tenant or in connection with Tenant’s operations
in the Center from time to time, to the extent not already disclosed through
delivery of a copy of a Nuclear Regulatory Commission approval with respect
thereto as contemplated above; and

(C)           Maintain,
to such extent and for such periods as may be required by applicable law, and
permit Landlord or its representatives to inspect during normal business hours
at any time and from time to time upon reasonable notice to Tenant, all
licenses, registration materials, inspection reports, governmental orders and
permits in connection with the receipt, storage, possession, use, transfer or
disposal of radioactive materials or radiation by Tenant or in connection with
Tenant’s operations in the Center from time to time.

(vii)         Tenant
shall comply with any and all applicable laws, rules, regulations and orders of
any governmental authority with respect to the release into the environment of
any hazardous wastes, hazardous substances, pollutants, radiation or
radioactive materials by Tenant or its agents or employees.  Tenant shall give Landlord immediate verbal
notice of any unauthorized release of any such hazardous wastes, hazardous
substances, pollutants, radiation or radioactive materials into the
environment, shall follow such verbal notice with written notice to Landlord of
such release within two (2) business days of the time at which Tenant became
aware of such release, and shall provide Landlord with a copy of any written
report or disclosure filed by Tenant with any governmental authority with
respect to such release, substantially concurrently with Tenant’s filing of
such written report or disclosure with the applicable governmental authority.

(viii)        Tenant
shall indemnify, defend and hold Landlord harmless from and against any and all
claims, losses (including, but not limited to, loss of rental income), damages,
liabilities, costs, legal fees and expenses of any sort to the extent arising
out of or relating to (A) any failure by Tenant to comply with any
provisions of this Section 9.6(b), or (B) any receipt, use handling,
generation, transportation, storage, treatment, release and/or disposal of any
hazardous substance, hazardous waste, pollutant, radioactive material or
radiation on or about the Center as a proximate result of Tenant’s use of the
Center or as a result of any intentional or negligent acts or omissions of
Tenant or of any agent, employee or invitee of Tenant.

 23
 

(ix)           Tenant
shall cooperate with Landlord in furnishing Landlord with reasonably complete
information regarding Tenant’s receipt, handling, use, storage, transportation,
generation, treatment and/or disposal of any hazardous substances, hazardous
wastes, pollutants, radiation or radioactive materials in or about the
Center.  Upon prior request, but subject
to Tenant’s reasonable operating and security procedures, Tenant shall grant
Landlord reasonable access at reasonable times to the Premises to inspect
Tenant’s receipt, handling, use, storage, transportation, generation, treatment
and/or disposal of hazardous substances, hazardous wastes, pollutants,
radiation and radioactive materials, without Landlord thereby being deemed
guilty of any disturbance of Tenant’s use or possession or being liable to
Tenant in any manner.

(x)            Notwithstanding
Landlord’s rights of inspection and review under this Section 9.6(b),
Landlord shall have no obligation or duty to so inspect or review, and no third
party shall be entitled to rely on Landlord to conduct any sort of inspection
or review by reason of the provisions of this Section 9.6(b).

(xi)           Landlord
has made available for review by Tenant, prior to execution of this Lease,
copies of all third-party studies and reports (if any) in Landlord’s possession
regarding environmental conditions in the Building and/or the Property.  Landlord has also engaged an environmental
consultant, at Landlord’s sole expense, to conduct a further environmental
study of the Premises, evaluating the presence or absence of hazardous
substances, hazardous wastes, pollutants, radiation and radioactive materials
in and about the Premises, and Landlord shall provide a copy of such study to
Tenant when it becomes available.  The
purposes of this study is to provide evidence of the “baseline” condition of
the Premises prior to Tenant’s occupancy and use thereof, although such
evidence is not intended to be conclusive or irrebuttable.  Tenant shall also have the right (but not the
obligation), if it so elects and at its sole expense, to conduct its own
environmental study of the Premises and common areas of the Building, prior to
or at the time of Tenant’s occupancy of the Premises, in which event Tenant shall
provide a copy of such study to Landlord, provided that prior to any
drilling, excavation or other physically invasive testing on the Building or
Property, Tenant or its consultant shall provide Landlord with a detailed scope
of work and such work shall be subject to Landlord’s prior written approval
(which approval shall not be unreasonably withheld or delayed, but may be
conditioned upon compliance by Tenant and its consultant with reasonable
insurance requirements, upon notice requirements prior to actual entry on the
Property, and upon other reasonable and customary requirements).

(xii)          If
Tenant or its employees, agents, contractors, vendors, customers or guests
receive, handle, use, store, transport, generate, treat and/or dispose of any
hazardous substances (other than de minimis amounts of such substances found in
customary commercial office and cleaning supplies) or wastes or radiation or
radioactive materials on or about the Center at any time during the term of
this Lease, then within thirty (30) days after the termination or expiration of
this Lease, Tenant shall be solely responsible for obtaining, at Tenant’s sole
cost and expense, (A) any environmental tests, studies or reports required
by any governmental authority for site or permit closure purposes or other
similar purposes, and (B) to the extent not fully covered by any tests,

 24
 

studies
or reports obtained under the immediately preceding clause (A), a further
environmental study, performed by an expert reasonably satisfactory to
Landlord, evaluating the presence or absence of hazardous substances, hazardous
wastes, pollutants, radiation and radioactive materials on and about those
portions of the Center affected by Tenant’s operations in the Center.  Such further environmental study (if applicable)
shall be based on a reasonable and prudent level of tests and investigations of
the Center (if appropriate), which tests shall be conducted no earlier than the
date of termination or expiration of this Lease.  Tenant shall furnish Landlord promptly with a
copy of each test, report and/or study obtained by Tenant pursuant to this
subparagraph (xii).  Liability for
any remedial actions required or recommended on the basis of such study shall
be allocated in accordance with Sections 9.4, 9.6, 10.6 and other
applicable provisions of this Lease.

(c)           Landlord shall indemnify, defend and
hold Tenant harmless from and against any and all claims, losses, damages,
liabilities, costs, legal fees and expenses of any sort arising out of or
relating to (i) the presence on the Center of any hazardous substances,
hazardous wastes, pollutants, radiation or radioactive materials present on the
Center as of the Rent Commencement Date (other than as a result of any
intentional or negligent acts or omissions of Tenant or of any agent, employee
or invitee of Tenant), and/or (ii) any unauthorized release into the
environment (including, but not limited to, the Center) of any hazardous
substances. hazardous wastes, pollutants, radiation or radioactive materials to
the extent such release results from the negligence of or willful misconduct or
omission by Landlord or its agents or employees.

(d)           The provisions of this
Section 9.6 shall survive the termination of this Lease.

10.  INSURANCE
AND INDEMNITY

10.1         Insurance.

(a)           Tenant shall procure and maintain in
full force and effect at all times during the term of this Lease, from and
after the Early Access Date, at Tenant’s cost and expense, commercial general
liability insurance to protect against liability to the public, or to any
invitee of Tenant or Landlord, arising out of or related to the use of or
resulting from any accident occurring in, upon or about the Premises, with
limits of liability of not less than (i) Three Million Dollars
($3,000,000.00) per occurrence for bodily injury, personal injury and death,
and Five Hundred Thousand Dollars ($500,000.00) per occurrence for property
damage, or (ii) a combined single limit of liability of not less than Five
Million Dollars ($5,000,000.00) per occurrence for bodily injury (including
personal injury and death) and property damage. 
Such insurance shall name Landlord, its general partners, its property
manager and any lender holding a deed of trust on the Center from time to time
(as designated in writing by Landlord to Tenant from time to time) as
additional insureds thereunder.  The
amount of such insurance shall not be construed to limit any liability or
obligation of Tenant under this Lease. 
Tenant shall also procure and maintain in full force and effect at all
times during the term of this Lease, at Tenant’s cost and expense,
products/completed operations coverage on terms and in amounts customary in
Tenant’s industry for companies engaged in the marketing of products on a scale
comparable to that in which Tenant is engaged from time to time.

 25
 

(b)           Landlord shall procure and maintain
in full force and effect at all times during the term of this Lease, at
Landlord’s cost and expense (but reimbursable as an Operating Expense under
Section 5.2 hereof), commercial general liability insurance to protect
against liability arising out of or related to the use of or resulting from any
accident occurring in, upon or about the Center, with a combined single limit
of liability of not less than Five Million Dollars ($5,000,000.00) per occurrence
for bodily injury (including personal injury and death) and property damage.

(c)           Landlord shall procure and maintain
in full force and effect at all times during the term of this Lease, at
Landlord’s cost and expense (but reimbursable as an Operating Expense under
Section 5.2 hereof), policies of property insurance providing protection
against “all risk of direct physical loss” (as defined by and detailed in the
Insurance Service Office’s Commercial Property Program “Cause of Loss—Special
Form [CP1030]” or its equivalent) for the shell of the Building and for the
improvements in the Common Areas of the Center, on a full replacement cost
basis (with no co-insurance or, if coverage without co-insurance is not
reasonably available, then on an “agreed amount” basis or with a commercially
reasonable margin clause).  Such
insurance may include earthquake and/or environmental coverage, as part of the
same policy or as a separate policy or policies, to the extent Landlord in its
sole discretion elects to carry such coverage, and shall have such commercially
reasonable deductibles and other terms as Landlord in its discretion determines
to be appropriate.  Landlord shall have
no obligation to carry property damage insurance for any alterations, additions
or improvements installed by Tenant in the Building or on or about the Center.

(d)           Landlord shall procure and maintain
in full force and effect at all times during the term of this Lease, at Tenant’s
cost and expense (chargeable, in Landlord’s discretion, either as an Operating
Expense allocable 100% to Tenant or as a direct pass-through to Tenant),
policies of property insurance providing protection against “all risk of direct
physical loss” (as defined by and detailed in the Insurance Service Office’s
Commercial Property Program “Cause of Loss—Special Form [CP1030]” or its
equivalent) for the tenant improvements existing in the Premises on the Early
Access Date (but excluding Tenant’s Property as defined in paragraph (e)
below, which it shall be Tenant’s responsibility to insure pursuant to such
paragraph), on a full replacement cost basis (with no co-insurance or, if
coverage without co-insurance is not reasonably available, then on an “agreed
amount” basis or with a commercially reasonable margin clause).  Such insurance may have such commercially
reasonable deductibles and other terms as Landlord in its reasonable discretion
determines to be appropriate.  The
coverage required to be maintained under this paragraph (d) may, in
Landlord’s discretion, be added to or combined with Landlord’s master policy
carried under paragraph (c) above. 
Tenant shall provide to Landlord from time to time, upon request by
Landlord annually or at other reasonable intervals, an updated schedule of
values for such existing tenant improvements (the intended purpose of such
updating being to reflect any modification or removal of items that would
affect the scope of Landlord’s insurance obligation under this
paragraph (d)), and Landlord shall have no obligation or liability to
Tenant with respect to any underinsurance of tenant improvements that results
from Tenant’s failure to keep Landlord informed from time to time, on a current

 26
 

basis, of the insurable
value of such tenant improvements. 
Landlord, in its discretion, may elect from time to time to obtain
appraisals of any or all alterations, additions, improvements and tenant
improvements (if any) which Landlord is required to insure hereunder, but no
such ordering or receipt of appraisals by Landlord shall constitute a waiver or
release of Tenant’s obligations under the immediately preceding sentence.

(e)           Tenant shall procure and maintain in
full force and effect at all times during the term of this Lease, from and
after the Early Access Date, at Tenant’s cost and expense, policies of property
insurance providing protection against “all risk of direct physical loss” (as
defined by and detailed in the Insurance Service Office’s Commercial Property
Program “Cause of Loss-Special Form [CP1030]” or its equivalent) for Tenant’s
movable personal property, office furniture, movable equipment and trade
fixtures, for the Tenant Improvements constructed by Tenant pursuant to the
Workletter, and for all other alterations, additions and improvements placed or
installed by Tenant from time to time in or about the Premises (collectively, “Tenant’s Property,” which term is not intended to
imply any conclusion regarding ultimate ownership of alterations, additions and
improvements that are otherwise covered by Article 7 above, but is used
solely as a defined term for purposes of the specific contexts in which it is
used as such in this Lease), on a full replacement cost basis (with no
co-insurance or, if coverage without co-insurance is not reasonably available,
then on an “agreed amount” basis or with a commercially reasonable margin
clause).  Such insurance may have such
commercially reasonable deductibles and other terms as Tenant in its discretion
determines to be appropriate, and shall name both Tenant and Landlord as
insureds as their interests may appear. 
Without limiting the generality of the foregoing provisions, Tenant’s
property insurance on Tenant’s Property shall in all events include earthquake
insurance in an amount at least equal to the amount of the Tenant Improvement
Allowance paid by Landlord pursuant to this Lease in connection with the
construction of the Tenant Improvements.

(f)            During the construction of the
Tenant Improvements, Tenant shall also procure and maintain in full force and
effect, at its sole cost and expense, a policy of builder’s risk insurance on
the Tenant Improvements, in such amounts and with such commercially reasonable
deductibles as Landlord and Tenant may mutually and reasonably determine to be
appropriate with respect to such insurance. 
Without limiting the generality of the foregoing provisions, Tenant’s
builder’s risk insurance with respect to the Tenant Improvements shall in all
events include earthquake insurance in an amount at least equal to the
cumulative amount of the Tenant Improvement Allowance paid by Landlord from
time to time in connection with the construction of such Tenant Improvements.

10.2         Quality of Policies and Certificates.  All policies of insurance required hereunder
shall be issued by responsible insurers and, in the case of policies carried or
required to be carried by Tenant, shall be written as primary policies not
contributing with and not in excess of any coverage that Landlord may
carry.  Tenant shall deliver to Landlord
copies of policies or certificates of insurance showing that said policies are
in effect.  The coverage provided by such
policies shall include the clause or endorsement referred to in
Section 10.4.  If Tenant fails to
acquire, maintain or renew any insurance required to be maintained by it under
this Article 10 or to pay the premium therefor, then Landlord, at its
option and in addition to its other remedies, but without obligation so to do,
may procure such insurance, and any sums expended by it to procure

 27

any such insurance on
behalf of or in place of Tenant shall be repaid upon demand, with interest as
provided in Section 3.2 hereof. 
Tenant shall give Landlord at least thirty (30) days prior written
notice of any cancellation or nonrenewal of insurance required to be maintained
under this Article 10, and shall obtain written undertakings from each
insurer under policies required to be maintained by it to endeavor to notify
all insureds thereunder at least thirty (30) days prior to cancellation of coverage.

10.3         Workers’ Compensation; Employees.  Tenant shall maintain in full force and
effect during the term of this Lease workers’ compensation insurance in at
least the minimum amounts required by law, covering all of Tenant’s employees
working at or about the Premises.  In
addition, Tenant shall maintain in full force and effect during the term of
this Lease employer’s liability coverage with limits of liability of not less
than One Hundred Thousand Dollars ($100,000) per accident, One Hundred Thousand
Dollars ($100,000) per employee for disease, and Five Hundred Thousand Dollars
($500,000) policy limit for disease.

10.4         Waiver of Subrogation.  Notwithstanding anything to the contrary
contained in this Lease, to the extent permitted by law and without affecting
the coverage provided by insurance required to be maintained hereunder,
Landlord and Tenant each waive any right to recover against the other with
respect to (i) damage to property, (ii) damage to the Center or any
part thereof, or (iii) claims arising by reason of any of the foregoing,
but only to the extent that any of the foregoing damages and claims under
clauses (i)-(iii) hereof are covered, and only to the extent of such
coverage, by property insurance actually carried or required to be carried hereunder
by either Landlord or Tenant.  This
provision is intended to waive fully, and for the benefit of each party, any
rights and claims which might give rise to a right of subrogation in any
insurance carrier.  Each party shall
procure a clause or endorsement on any property insurance policy denying to the
insurer rights of subrogation against the other party to the extent rights have
been waived by the insured prior to the occurrence of injury or loss.  Coverage provided by insurance maintained by
Landlord or Tenant shall not be limited, reduced or diminished by virtue of the
subrogation waiver herein contained.

10.5         Increase in Premiums.  Tenant shall do all acts and pay all expenses
necessary to ensure that the Premises are not used for purposes prohibited by
any applicable fire insurance, and that Tenant’s use of the Premises, Building
and Center complies with all requirements necessary to obtain any such
insurance.  If Tenant uses or permits the
Premises, Building or Center to be used in a manner which increases the
existing rate of any insurance carried by Landlord on the Center and such use
continues for longer than a reasonable period specified in any written notice
from Landlord to Tenant identifying the rate increase and the factors causing
the same, then Tenant shall pay the amount of the increase in premium caused
thereby, and Landlord’s costs of obtaining other replacement insurance
policies, including any increase in premium, within ten (10) days after
demand therefor by Landlord.

10.6         Indemnification.

(a)           Except as otherwise expressly
provided for in this Lease, Tenant shall indemnify, defend and hold Landlord
and its members, partners, shareholders, officers, directors, agents, employees
and contractors harmless from any and all liability for injury to or death of

 28
 

any person, or loss of or
damage to the property of any person, and all actions, claims, demands, costs
(including, without limitation, reasonable attorneys’ fees), damages or
expenses of any kind arising therefrom which may be brought or made against
Landlord or which Landlord may pay or incur by reason of the use, occupancy and
enjoyment of the Center by Tenant or any invitees, sublessees, licensees,
assignees, employees, agents or contractors of Tenant or holding under Tenant
(including, but not limited to, any such matters arising out of or in
connection with any early entry upon the Center by Tenant pursuant to
Section 2.2 hereof) from any cause whatsoever other than negligence or
willful misconduct or omission by Landlord or its agents, employees or
contractors.  Except as otherwise
expressly provided for in this Lease, Landlord and its members, partners,
shareholders, officers, directors, agents, employees and contractors shall not
be liable for, and Tenant hereby waives all claims against such persons for,
damages to goods, wares and merchandise in or upon the Center, or for injuries
to Tenant, its agents or third persons in or upon the Center, from any cause
whatsoever other than negligence or willful misconduct or omission by Landlord
or its agents, employees or contractors. 
Tenant shall give prompt notice to Landlord of any casualty or accident
in, on or about the Center.

(b)           Except as otherwise expressly
provided for in this Lease, Landlord shall indemnify, defend and hold Tenant
and its partners, shareholders, officers, directors, agents, employees and
contractors harmless from any and all liability for injury to or death of any
person, or loss of or damage to the property of any person, and all actions,
claims, demands, costs (including, without limitation, reasonable attorneys’
fees), damages or expenses of any kind arising therefrom which may be brought
or made against Tenant or which Tenant may pay or incur, to the extent such
liabilities or other matters arise in, on or about the Center by reason of any
negligence or willful misconduct or omission by Landlord or its agents,
employees or contractors.

10.7         Blanket Policy.  Any policy required to be maintained
hereunder may be maintained under a so-called “blanket policy” insuring
other parties and other locations so long as the amount of insurance required
to be provided hereunder is not thereby diminished.  Without limiting the generality of the
requirement set forth at the end of the preceding sentence, property insurance
provided under a blanket policy shall provide full replacement cost coverage
and liability insurance provided under a blanket policy shall include per
location aggregate limits meeting or exceeding the limits required under this
Article 10.

11.  SUBLEASE
AND ASSIGNMENT

11.1         Assignment and Sublease of Building.  Except in the case of a Permitted Transfer,
Tenant shall not have the right or power to assign its interest in this Lease,
or make any sublease of the Premises or any portion thereof, nor shall any interest
of Tenant under this Lease be assignable involuntarily or by operation of law,
without on each occasion obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld, conditioned or delayed.  Any purported sublease or assignment of
Tenant’s interest in this Lease requiring but not having received Landlord’s
consent thereto (to the extent such consent is required hereunder) shall be
void.  Except in the case of a Permitted
Transfer, any dissolution, consolidation, merger or other reorganization of
Tenant, or any sale or transfer of substantially all of the stock or assets of
Tenant in a single transaction or series of related transactions, shall be
deemed to be an

 29
 

assignment hereunder and
shall be void without the prior written consent of Landlord as required
above.  Notwithstanding the foregoing,
(i) neither an initial public offering of the common stock of Tenant nor
any other sale of Tenant’s capital stock through any public securities exchange
or market nor any other issuance of Tenant’s capital stock for bona fide
financing purposes, nor any consolidation, merger or reorganization in which
Tenant is the surviving entity, shall be deemed to be an assignment, subletting
or transfer hereunder; and (ii) Tenant shall have the right to assign this
Lease or sublet the Premises, or any portion thereof, without Landlord’s
consent (but with prior or concurrent written notice by Tenant to Landlord), to
any Affiliate of Tenant, or to any entity which results from a merger or consolidation
involving Tenant, or to any entity which acquires substantially all of the
stock or assets of Tenant as a going concern (each, a “Permitted
Transfer”).  For purposes
of the preceding sentence, an “Affiliate”
of Tenant shall mean any entity in which Tenant owns at least a fifty percent
(50%) equity interest, any entity which owns at least a fifty percent (50%)
equity interest in Tenant, and/or any entity which is related to Tenant by a
chain of ownership interests involving at least a fifty percent (50%) equity
interest at each level in the chain. 
Landlord shall have no right to terminate this Lease in connection with,
and shall have no right to any sums or other economic consideration resulting
from, any Permitted Transfer.  Except as
expressly set forth in this Section 11.1, however, the provisions of
Section 11.2 shall remain applicable to any Permitted Transfer and the
transferee under such Permitted Transfer shall be and remain subject to all of
the terms and provisions of this Lease.

11.2         Rights of Landlord.

(a)           Consent by Landlord to one or more
assignments of this Lease, or to one or more sublettings of the Premises or any
portion thereof, or collection of rent by Landlord from any assignee or
sublessee, shall not operate to exhaust Landlord’s rights under this
Article 11, nor constitute consent to any subsequent assignment or
subletting.  No assignment of Tenant’s
interest in this Lease and no sublease shall relieve Tenant of its obligations
hereunder, notwithstanding any waiver or extension of time granted by Landlord
to any assignee or sublessee, or the failure of Landlord to assert its rights
against any assignee or sublessee, and regardless of whether Landlord’s consent
thereto is given or required to be given hereunder.  In the event of a default by any assignee,
sublessee or other successor of Tenant in the performance of any of the terms
or obligations of Tenant under this Lease, Landlord may proceed directly
against Tenant without the necessity of exhausting remedies against any such assignee,
sublessee or other successor.  In
addition, Tenant immediately and irrevocably assigns to Landlord, as security
for Tenant’s obligations under this Lease, all rent from any subletting of all
or a part of the Premises as permitted under this Lease, and Landlord, as
Tenant’s assignee and as attorney-in-fact for Tenant, or any receiver for
Tenant appointed on Landlord’s application, may collect such rent and apply it
toward Tenant’s obligations under this Lease; except that, until the occurrence
(and then only during the continuance) of an event of default by Tenant, Tenant
shall have the right to collect such rent and to retain all sublease profits
(subject to the provisions of Section 11.2(c), below).

(b)           Upon any assignment of Tenant’s
interest in this Lease for which Landlord’s consent is required under
Section 11.1 hereof, Tenant shall pay to Landlord, within ten (10) days
after receipt thereof by Tenant from time to time, one-half (1⁄2) of all cash
sums and other tangible economic considerations paid or delivered to Tenant in
connection with or as a

 30
 

result of such
assignment, after first deducting therefrom (i) any costs incurred by
Tenant for leasehold improvements (including, but not limited to, third-party
architectural and space planning costs) in the Premises in connection with such
assignment, amortized over the remaining term of this Lease, and (ii) any
reasonable real estate commissions and/or reasonable attorneys’ fees actually
incurred by Tenant in connection with such assignment.

(c)           Upon any sublease of all or any
portion of the Premises for which Landlord’s consent is required under
Section 11.1 hereof, Tenant shall pay to Landlord, within ten (10) days
after receipt thereof by Tenant from time to time, one-half (1⁄2) of all cash
sums and other tangible economic considerations paid or delivered to Tenant in
connection with or as a result of such sublease, after first deducting
therefrom (i) the minimum rental and Operating Expenses due hereunder for
the corresponding period, prorated (on the basis of the average per-square-foot
cost paid by Tenant for the Premises for the applicable period under this
Lease) to reflect the size of the subleased portion of the Premises,
(ii) any costs incurred by Tenant for leasehold improvements in the subleased
portion of the Premises (including, but not limited to, third-party
architectural and space planning costs) for the specific benefit of the
sublessee in connection with such sublease, amortized over the remaining term
of this Lease, and (iii) any reasonable real estate commissions and/or
reasonable attorneys’ fees actually incurred by Tenant in connection with such
sublease, amortized over the term of such sublease.

12.  RIGHT
OF ENTRY AND QUIET ENJOYMENT

12.1         Right of Entry.  Landlord and its authorized representatives
shall have the right, subject to Tenant’s reasonable operating and security
procedures, to enter the Premises at any time during the term of this Lease
during normal business hours and upon not less than forty-eight (48) hours
prior notice, except in the case of emergency (in which event no notice shall
be required and entry may be made at any time), for the purpose of inspecting
and determining the condition of the Premises and Building or for any other
proper purpose including, without limitation, to make repairs, replacements or
improvements which Landlord may deem necessary, to show the Premises and
Building to prospective purchasers, to show the Premises and Building to
prospective tenants (but only during the final nine (9) months of the term of
this Lease), and to post notices of nonresponsibility.  Landlord shall not be liable for
inconvenience, annoyance, disturbance, loss of business, quiet enjoyment or
other damage or loss to Tenant by reason of making any repairs or performing any
work upon the Building or the Center or by reason of erecting or maintaining
any protective barricades in connection with any such work, and the obligations
of Tenant under this Lease shall not thereby be affected in any manner
whatsoever, provided, however, Landlord shall use reasonable efforts to
minimize the inconvenience to Tenant’s normal business operations caused
thereby.

12.2         Quiet Enjoyment.  Landlord covenants that Tenant, upon paying
the rent and performing its obligations hereunder and subject to all the terms
and conditions of this Lease, shall peacefully and quietly have, hold and enjoy
the Premises and the Center throughout the term of this Lease, or until this
Lease is terminated as provided by this Lease.

 31
 

13.  CASUALTY
AND TAKING

13.1         Damage or Destruction.

(a)           If the Premises or any portion of the
Building or Common Areas of the Center reasonably necessary for Tenant’s use
and occupancy of the Premises is damaged or destroyed in whole or in any
substantial part during the term of this Lease, Landlord shall obtain from
Landlord’s architect, as soon as practicable (and in all events within
forty-five (45) days) following the damage or destruction, (i) the
architect’s reasonable, good faith estimate of the time within which repair and
restoration of the Premises, Building and Common Areas (if applicable) can
reasonably be expected to be completed to the extent necessary to enable Tenant
to resume its full business operations in the Premises without material
impairment and (ii) the architect’s reasonable, good faith opinion as to
whether repair and restoration to that extent will be permitted under
applicable governmental laws, regulations and building codes then in effect
(collectively, the “Architect’s Estimate”).  If the damage or destruction materially
impairs Tenant’s ability to conduct its business operations in the Premises,
and if either (A) the estimated repair time specified in the Architect’s
Estimate exceeds six (6) months (or, in the case of an occurrence during the
final year of the term of this Lease, sixty (60) days) or (B) the
Architect’s Estimate states that repair and restoration of the affected areas
to the extent necessary to enable Tenant to resume its full business operations
in the Premises without material impairment will not be permitted under
applicable governmental laws, regulations and building codes then in effect,
then in either such event either Landlord or Tenant may terminate this Lease as
of the date of the occurrence by giving written notice to the other party within
thirty (30) days after the date of the occurrence or fifteen (15) days after
delivery of the Architect’s Estimate, whichever is later.  In addition, Landlord shall have a similar
termination right if the damage or destruction arises from a risk that is not
required to be insured against (and is not actually insured against) by
Landlord under this Lease and if Landlord’s architect reasonably estimates that
the uninsured cost to restore the portions of the Premises and Building for
which Landlord is responsible to the condition required above would exceed five
percent (5%) of the then applicable replacement cost of the entire
Premises.  If the circumstances creating
a termination right under the preceding two sentences do not exist, or if such
circumstances exist but neither party timely exercises any applicable
termination right, then this Lease shall remain in full force and effect and
(x) Landlord, as to the Common Areas of the Center and as to the shell of
the Building and the alterations, additions and improvements that Landlord is
required to insure under Section 10.1(d) above, and (y) Tenant, as to
the alterations, additions and improvements that Tenant is required to insure
under Section 10.1(e) above, shall respectively commence and complete,
with all due diligence and as promptly as is reasonably practicable under the
conditions then existing, the repair and restoration of such respective
portions of the Property and Premises to a condition substantially comparable
to that which existed immediately prior to the damage or destruction; provided,
however, that Tenant in its discretion may elect not to repair, rebuild or
replace any or all of the items which would otherwise be Tenant’s
responsibility under clause (y) of this sentence to the extent such items
were constructed or installed at Tenant’s sole expense and without any use of
funds from the Tenant Improvement Allowance.

 32
 

(b)           If this Lease is terminated pursuant
to the foregoing provisions of this Section 13.1 following an occurrence
which is a peril actually insured or required to be insured against pursuant to
Section 10.1(c), (d) and/or (e), Landlord and Tenant agree (and any Lender
shall be asked to agree) that such insurance proceeds shall be allocated
between Landlord and Tenant in a manner which fairly and reasonably reflects
their respective ownership rights under this Lease, as of the termination or
expiration of the term of this Lease, with respect to the improvements,
fixtures, equipment and other items to which such insurance proceeds are
attributable.

(c)           From and after the date of an
occurrence resulting in damage to or destruction of the Premises or of Common
Areas necessary for Tenant’s use and occupancy of the Premises, and continuing
until repair and restoration thereof are completed to the extent necessary to
enable Tenant to resume operation of its business in the Premises without
material impairment, there shall be an equitable abatement of minimum rental
and of Tenant’s Operating Cost Share of Operating Expenses based upon the degree
to which Tenant’s ability to conduct its business in the Premises is impaired.

(d)           Each party expressly waives the
provisions of California Civil Code Sections 1932(2), 1933(4) and any
other applicable existing or future law permitting the termination of a lease
agreement in the event of damage to or destruction of the leased property, it
being the intention of the parties that their respective rights in such
circumstances shall be governed solely by the provisions of this
Article 13.

13.2         Condemnation.

(a)           If during the term of this Lease the
Premises or any Common Areas of the Center that are necessary for Tenant’s use
and occupancy of the Premises, or any substantial part of either of them, is
taken by eminent domain or by reason of any public improvement or condemnation
proceeding, or in any manner by exercise of the right of eminent domain
(including any transfer in lieu of or in avoidance of an exercise of the power
of eminent domain), or receives irreparable damage by reason of anything
lawfully done by or under color of any public authority, then (i) this
Lease shall terminate as to the entire Premises at Landlord’s election by
written notice given to Tenant within thirty (30) days after the taking has
occurred, and (ii) this Lease shall terminate as to the entire Premises at
Tenant’s election, by written notice given to Landlord within thirty (30)
days after the nature and extent of the taking have been finally determined, if
the portion of the Building or Center taken is of such extent and nature as
substantially to handicap, impede or permanently impair Tenant’s use or
occupancy of the Premises.  If Tenant
elects to terminate this Lease, Tenant shall also notify Landlord of the date
of termination, which date shall not be earlier than thirty (30) days nor
later than ninety (90) days after Tenant has notified Landlord of Tenant’s
election to terminate, except that this Lease shall terminate on the date of
taking if such date falls on any date before the date of termination designated
by Tenant.  If neither party elects to
terminate this Lease as hereinabove provided, this Lease shall continue in full
force and effect (except that there shall be an equitable abatement of minimum
rental and of Tenant’s Operating Cost Share of Operating Expenses based upon
the degree to which Tenant’s ability to conduct its business in the Premises is
impaired), Landlord shall restore the improvements for which Landlord is
responsible under clause (x) of Section 13.1(a) above to a complete
architectural whole and a functional condition and as nearly as reasonably
possible to the condition existing before the taking, and Tenant shall

 33
 

restore the improvements
for which Tenant is responsible under clause (y) of Section 13.1(a)
above to a complete architectural whole and a functional condition and as
nearly as reasonably possible to the condition existing before the taking; provided,
however, that Tenant in its discretion may elect not to repair, restore or
replace any or all of the items which would otherwise be Tenant’s responsibility
to the extent such items were constructed or installed at Tenant’s sole expense
and without any use of funds from the Tenant Improvement Allowance.  In connection with any such restoration, each
party shall use reasonable efforts (including, without limitation, any
necessary negotiation or intercession with its respective lender, if any) to
ensure that any severance damages or other condemnation awards intended to
provide compensation for rebuilding or restoration costs are promptly collected
and made available to Landlord and Tenant in portions reasonably corresponding
to the cost and scope of their respective restoration obligations, subject only
to such payment controls as either party or its lender may reasonably require
in order to ensure the proper application of such proceeds toward the
restoration of the Building and the Center. 
Each party expressly waives the provisions of California Code of Civil
Procedure Section 1265.130 and of any other existing or future law
allowing either party to terminate (or to petition the Superior Court to
terminate) a lease in the event of a partial condemnation or taking of the
leased property, it being the intention of the parties that their respective
rights in such circumstances shall be governed solely by the provisions of this
Article 13.

(b)           If this Lease is terminated pursuant
to the foregoing provisions of this Section 13.2, or if this Lease remains
in effect but any condemnation awards or other proceeds become available as
compensation for the loss or destruction of the Building and/or the Center,
then Landlord and Tenant agree (and any Lender shall be asked to agree) that
such proceeds shall be allocated between Landlord and Tenant, respectively, in
the respective proportions in which Landlord and Tenant would have shared,
under Section 13.1(b), the proceeds of any applicable insurance following
damage to or destruction of the applicable improvements due to an insured
casualty.

13.3         Reservation of Compensation.  Landlord reserves, and Tenant waives and
assigns to Landlord, all rights to any award or compensation for damage to the
Center, the improvements located therein and the leasehold estate created
hereby, accruing by reason of any taking in any public improvement,
condemnation or eminent domain proceeding or in any other manner by exercise of
the right of eminent domain or of anything lawfully done by public authority,
except that (a) Tenant shall be entitled to pursue recovery from the
applicable public authority for Tenant’s moving expenses, trade fixtures and
equipment and any leasehold improvements installed by Tenant in the Premises or
Building at its own sole expense, but only to the extent Tenant would have been
entitled to remove such items at the expiration of the term of this Lease and then
only to the extent of the then remaining unamortized value of such improvements
computed on a straight-line basis over the term of this Lease, and (b) any
condemnation awards or proceeds described in Section 13.2(b) shall be
allocated and disbursed in accordance with the provisions of
Section 13.2(b), notwithstanding any contrary provisions of this
Section 13.3.

13.4         Restoration of Improvements.  In connection with any repair or restoration
of improvements by either party following a casualty or taking as hereinabove
set forth, the party responsible for such repair or restoration shall, to the
extent possible, return such improvements

 34
 

to a condition
substantially equal to that which existed immediately prior to the casualty or
taking.  To the extent such party wishes
to make material modifications to such improvements, such modifications shall
be subject to the prior written approval of the other party (not to be
unreasonably withheld or delayed), except that no such approval shall be
required for modifications that are required by applicable governmental
authorities as a condition of the repair or restoration, unless such required
modifications would impair or impede Tenant’s conduct of its business in the
Premises (in which case any such modifications in Landlord’s work shall require
Tenant’s consent, not unreasonably withheld or delayed) or would materially and
adversely affect the exterior appearance, the structural integrity or the
mechanical or other operating systems of the Premises or Building (in which
case any such modifications in Tenant’s work shall require Landlord’s consent,
not unreasonably withheld or delayed).

14.  DEFAULT

14.1         Events of Default.  The occurrence of any of the following shall
constitute an event of default on the part of Tenant:

(a)           Abandonment.  Abandonment of the Premises.  “Abandonment”
is hereby defined to include, but is not limited to, any absence by Tenant from
the Premises for thirty (30) consecutive days or more while Tenant is in
default under any other provision of this Lease.  Tenant waives any right Tenant may have to
notice under Section 1951.3 of the California Civil Code, the terms of
this subsection (a) being deemed such notice to Tenant as required by said
Section 1951.3;

(b)           Nonpayment.  Failure to pay, when due, any amount payable
to Landlord hereunder, such failure continuing for a period of five (5)
business days after written notice of such payment being delinquent; provided,
however, that any such notice shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure Section 1161 et
seq., as amended from time to time;

(c)           Other Obligations.  Failure to perform any obligation, agreement
or covenant under this Lease other than those matters specified in
subsection (b) hereof (including, but not limited to, any breach by Tenant
of the Declaration as defined in Section 15.4 below), such failure
continuing for thirty (30) days after written notice of such failure; provided,
however, that if such failure is curable in nature but cannot reasonably be
cured within such 30-day period, then Tenant shall not be in default if, and so
long as, Tenant promptly (and in all events within such 30-day period)
commences such cure and thereafter diligently pursues such cure to completion;
and provided further, however, that any such notice shall be in lieu of,
and not in addition to, any notice required under California Code of Civil
Procedure Section 1161 et seq., as amended from time to time;

(d)           General Assignment.  A general assignment by Tenant for the
benefit of creditors;

 35
 

(e)           Bankruptcy.  The filing of any voluntary petition in
bankruptcy by Tenant, or the filing of an involuntary petition by Tenant’s
creditors, which involuntary petition remains undischarged for a period of sixty (60)
days.  In the event that under applicable
law the trustee in bankruptcy or Tenant has the right to affirm this Lease and
continue to perform the obligations of Tenant hereunder, such trustee or Tenant
shall, in such time period as may be permitted by the bankruptcy court having
jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date
of the affirmance of this Lease and provide to Landlord such adequate
assurances as may be necessary to ensure Landlord of the continued performance
of Tenant’s obligations under this Lease. 
Specifically, but without limiting the generality of the foregoing, such
adequate assurances must include assurances that the Premises continue to be
operated only for the use permitted hereunder. 
The provisions hereof are to assure that the basic understandings
between Landlord and Tenant with respect to Tenant’s use of the Center and the
benefits to Landlord therefrom are preserved, consistent with the purpose and
intent of applicable bankruptcy laws;

(f)            Receivership.  The employment of a receiver appointed by
court order to take possession of substantially all of Tenant’s assets or the
Premises, if such receivership remains undissolved for a period of
thirty (30) days;

(g)           Attachment.  The attachment, execution or other judicial
seizure of all or substantially all of Tenant’s assets or the Premises, if such
attachment or other seizure remains undismissed or undischarged for a period of
thirty (30) days after the levy thereof; or

(h)           Insolvency.  The admission by Tenant in writing of its
inability to pay its debts as they become due, the filing by Tenant of a
petition seeking any reorganization or arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, the filing by Tenant of an answer admitting or failing
timely to contest a material allegation of a petition filed against Tenant in
any such proceeding or, if within sixty (60) days after the commencement
of any proceeding against Tenant seeking any reorganization or arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, such proceeding shall not have
been dismissed.

14.2         Remedies upon Tenant’s Default.

(a)           Upon the occurrence of any event of
default described in Section 14.1 hereof, Landlord, in addition to and
without prejudice to any other rights or remedies it may have, shall have the
immediate right (subject to compliance with applicable laws) to re-enter the
Premises or any part thereof and repossess the same, expelling and removing
therefrom all persons and property (which property may be stored in a public
warehouse or elsewhere at the cost and risk of and for the account of Tenant),
using such force as may be necessary to do so (as to which Tenant hereby waives
any claim for loss or damage that may thereby occur).  In addition to such re-entry, and without
prejudice to any other rights or remedies it may have, Landlord shall have the
right to terminate this Lease and recover from Tenant all damages incurred by
Landlord as a result of Tenant’s default, as hereinafter provided.  Alternatively, in lieu of such re-entry, and
without prejudice to any other rights or remedies it may have, Landlord shall
have the right to continue this Lease in effect and recover rent and other
charges and amounts as they become due.

 36
 

(b)           Even if Tenant has breached this
Lease and abandoned the Premises, this Lease shall continue in effect for so
long as Landlord does not terminate Tenant’s right to possession under
subsection (a) hereof and Landlord may enforce all of its rights and
remedies under this Lease, including the right to recover rent as it becomes
due, and Landlord, without terminating this Lease, may exercise all of the
rights and remedies of a lessor under California Civil Code Section 1951.4
(lessor may continue lease in effect after lessee’s breach and abandonment and
recover rent as it becomes due, if lessee has right to sublet or assign,
subject only to reasonable limitations), or any successor Code section.  Acts of maintenance, preservation or efforts
to relet the Premises or the appointment of a receiver upon application of
Landlord to protect Landlord’s interests under this Lease shall not constitute
a termination of Tenant’s right to possession.

(c)           If Landlord terminates this Lease
pursuant to this Section 14.2, Landlord shall have all of the rights and
remedies of a landlord provided by Section 1951.2 of the Civil Code of the
State of California, or any successor Code section, which remedies include
Landlord’s right to recover from Tenant (i) the worth at the time of award
of the unpaid rent and additional rent which had been earned at the time of
termination, (ii) the worth at the time of award of the amount by which
the unpaid rent and additional rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided, (iii) the worth at the
time of award of the amount by which the unpaid rent and additional rent for
the balance of the term after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably avoided, and (iv) any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or which
in the ordinary course of things would be likely to result therefrom,
including, but not limited to, the cost of recovering possession of the
Premises, expenses of reletting, including necessary repair, renovation and
alteration of the Premises, reasonable attorneys’ fees, and other reasonable
costs.  The “worth at
the time of award” of the amounts referred to in
clauses (i) and (ii) above shall be computed by allowing interest at ten
percent (10%) per annum from the date such amounts accrued to Landlord.  The “worth at the time of
award” of the amounts referred to in clause (iii) above
shall be computed by discounting such amount at one percentage point above the
discount rate of the Federal Reserve Bank of San Francisco at the time of
award.

14.3         Remedies Cumulative.  All rights, privileges and elections or
remedies of Landlord contained in this Article 14 are cumulative and not
alternative to the extent permitted by law and except as otherwise provided
herein.

15.  SUBORDINATION,
ATTORNMENT AND SALE

15.1         Subordination to Mortgage.  This Lease, and any sublease entered into by
Tenant under the provisions of this Lease, shall be subject and subordinate to
any ground lease, mortgage, deed of trust, sale/leaseback transaction or any
other hypothecation for security now or hereafter placed upon the Premises, the
Building, the Center, or any of them, and the rights of any assignee of
Landlord or of any ground lessor, mortgagee, trustee, beneficiary or leaseback
lessor under any of the foregoing, and to any and all advances made on the
security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof; provided,

 37
 

however, that such
subordination in the case of any future ground lease, mortgage, deed of trust,
sale/leaseback transaction or any other hypothecation for security placed upon
the Premises, the Building, the Center, or any of them shall be conditioned on Tenant’s
receipt from the ground lessor, mortgagee, trustee, beneficiary or leaseback
lessor of a Non-Disturbance Agreement in a form reasonably acceptable to Tenant
(i) confirming that so long as Tenant is not in material default hereunder
beyond any applicable cure period (for which purpose the occurrence and
continuance of any event of default under Section 14.1 hereof shall be
deemed to be “material”), Tenant’s rights hereunder shall not be disturbed by
such person or entity and (ii) agreeing that the benefit of such
Non-Disturbance Agreement shall be transferable to any transferee under a
Permitted Transfer and to any other assignee or subtenant that is acceptable to
the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor at the
time of transfer.  If any mortgagee,
trustee, beneficiary, ground lessor, sale/leaseback lessor or assignee elects
to have this Lease be an encumbrance upon the Center prior to the lien of its
mortgage, deed of trust, ground lease or leaseback lease or other security
arrangement and gives notice thereof to Tenant, this Lease shall be deemed
prior thereto, whether this Lease is dated prior or subsequent to the date
thereof or the date of recording thereof. 
Tenant, and any sublessee, shall execute such documents as may
reasonably be requested by any mortgagee, trustee, beneficiary, ground lessor,
sale/leaseback lessor or assignee to evidence the subordination herein set
forth, subject to the conditions set forth above, or to make this Lease prior
to the lien of any mortgage, deed of trust, ground lease, leaseback lease or
other security arrangement, as the case may be. 
Upon any default by Landlord in the performance of its obligations under
any mortgage, deed of trust, ground lease, leaseback lease or assignment,
Tenant (and any sublessee) shall, notwithstanding any subordination hereunder,
attorn to the mortgagee, trustee, beneficiary, ground lessor, leaseback lessor
or assignee thereunder upon written demand and become the tenant of the
successor in interest to Landlord, at the option of such successor in interest,
and shall execute and deliver any instrument or instruments reasonably
requested by such successor in interest to confirm the attornment herein
provided for.  Landlord represents and
warrants to Tenant that as of the Lease Commencement Date, neither the Premises
nor the Building nor the Center is subject to any existing ground lease,
mortgage, deed of trust, sale/leaseback transaction or any other hypothecation
for security.

15.2         Sale of Landlord’s Interest.  Upon sale, transfer or assignment of Landlord’s
entire interest in the Building and the Center, subject to the provisions of
Section 17.2 below, Landlord shall be relieved of its obligations
hereunder with respect to liabilities accruing from and after the date of such
sale, transfer or assignment.

15.3         Estoppel Certificates.  Tenant or Landlord (the “responding
party”), as applicable, shall at any time and from time to time,
within ten (10) business days after written request by the other party
(the “requesting party”), execute,
acknowledge and deliver to the requesting party a certificate in writing
stating: (i) that this Lease is unmodified and in full force and effect,
or if there have been any modifications, that this Lease is in full force and
effect as modified and stating the date and the nature of each modification;
(ii) the date to which rental and, to the responding party’s actual
knowledge, all other sums payable hereunder have been paid; (iii) that to
the responding party’s best knowledge, the requesting party is not in default
in the performance of any of its obligations under this Lease, that the
responding party has given no

 38

notice of default to the
requesting party and that no event has occurred which, but for the expiration
of the applicable time period, would constitute an event of default hereunder,
or if the responding party alleges that any such default, notice or event has
occurred, specifying the same in reasonable detail; and (iv) such other
matters as may reasonably be requested by the requesting party or by any
institutional lender, mortgagee, trustee, beneficiary, ground lessor,
sale/leaseback lessor or prospective purchaser of the Center, or prospective
sublessee or assignee of this Lease.  Any
such certificate provided under this Section 15.3 may be relied upon by
any lender, mortgagee, trustee, beneficiary, assignee or successor in interest
to the requesting party, by any prospective purchaser, by any purchaser on
foreclosure or sale, by any grantee under a deed in lieu of foreclosure of any
mortgage or deed of trust on the Property, by any subtenant or assignee, or by
any other third party.  Failure to
execute and return within the required time any estoppel certificate requested
hereunder, if such failure continues for five (5) days after a second written
request by the requesting party for such estoppel certificate, shall be deemed
to be an admission of the truth of the matters set forth in the form of
certificate submitted to the responding party for execution.  Notwithstanding the foregoing provisions, in
no event shall the provisions of this Section be construed to require Tenant,
in connection with the execution of a requested estoppel certificate, to
execute or agree to any provisions that would materially reduce Tenant’s rights
under this Lease or materially increase Tenant’s obligations under this Lease,
whether such provisions are embodied in the requested estoppel certificate
itself or in a requested lease amendment tendered in connection with the
estoppel certificate.

15.4         Subordination to
CC&R’s.  This Lease, and any
permitted sublease entered into by Tenant under the provisions of this Lease,
and the interests in real property conveyed hereby and thereby shall be subject
and subordinate (a) to any declarations of covenants, conditions and
restrictions or other recorded restrictions affecting the Center or any portion
thereof from time to time and delivered to Tenant in writing, provided
that the terms of such declarations or restrictions are reasonable (or, to the
extent they are not reasonable, are mandated by applicable law), do not
materially impair Tenant’s ability to conduct the uses permitted hereunder on
the Premises and in the Center, and do not discriminate against Tenant relative
to other similarly situated tenants occupying the portion(s) of the Center
covered by such declarations or restrictions, and (b) to the Declaration
of Covenants, Conditions and Restrictions of Shoreline Technology Park,
Mountain View, California, dated October 24, 1986 and recorded on
October 24, 1986 as Instrument No. 8997310, Book J895, Page 456,
Official Records of Santa Clara County, as the same may be amended from time to
time (the “Declaration”), the provisions
of which Declaration are an integral part of this Lease.  Tenant agrees to execute, upon request by
Landlord, any documents reasonably required from time to time to evidence the
foregoing subordination.

15.5         Mortgagee Protection.  If, following a default by Landlord under any
mortgage, deed of trust, ground lease, leaseback lease or other security
arrangement covering the Building, the Center, or any portion of them, the
Building and/or the Center, as applicable, is acquired by the mortgagee,
beneficiary, master lessor or other secured party, or by any other successor
owner, pursuant to a foreclosure, trustee’s sale, sheriff’s sale, lease
termination or other similar procedure (or deed in lieu thereof), then any such
person or entity so acquiring the Building and/or the Center shall not be:

 39
 

(a)           liable for any act or
omission of a prior landlord or owner of the Center (including, but not limited
to, Landlord);

(b)           subject to any offsets
or defenses that Tenant may have against any prior landlord or owner of the
Center (including, but not limited to, Landlord);

(c)           bound by any rent or
additional rent that Tenant may have paid in advance to any prior landlord or
owner of the Center (including, but not limited to, Landlord) for a period in
excess of one month, or by any security deposit, cleaning deposit or other
prepaid charge that Tenant may have paid in advance to any prior landlord or
owner (including, but not limited to, Landlord), except to the extent such deposit
or prepaid amount has been expressly turned over to or credited to the
successor owner thus acquiring the Center;

(d)           liable for any
warranties or representations of any nature whatsoever, whether pursuant to
this Lease or otherwise, by any prior landlord or owner of the Center
(including, but not limited to, Landlord) with respect to the use,
construction, zoning, compliance with laws, title, habitability, fitness for
purpose or possession, or physical condition (including, without limitation,
environmental matters) of the Building or the Center; or

(e)           liable to Tenant in any
amount beyond the interest of such mortgagee, beneficiary, master lessor or
other secured party or successor owner in the Center as it exists from time to
time, it being the intent of this provision that Tenant shall look solely to
the interest of any such mortgagee, beneficiary, master lessor or other secured
party or successor owner in the Center for the payment and discharge of the
landlord’s obligations under this Lease and that such mortgagee, beneficiary,
master lessor or other secured party or successor owner shall have no separate
personal liability for any such obligations.

16.  SECURITY

16.1         Deposit.  Within ten (10) days after the Lease
Commencement Date, Tenant shall deposit with Landlord the sum of Forty-Nine
Thousand Five Hundred and No/100 Dollars ($49,500.00), which sum (the “Security Deposit”) shall be held by Landlord as
security for the faithful performance of all of the terms, covenants and
conditions of this Lease to be kept and performed by Tenant during the term
hereof.  If Tenant defaults (beyond any
applicable cure period) with respect to any provision of this Lease, including,
without limitation, the provisions relating to the payment of rental and other
sums due hereunder, Landlord shall have the right, but shall not be required,
to use, apply or retain all or any part of the Security Deposit for the payment
of rental or any other amount which Landlord may spend or become obligated to
spend by reason of Tenant’s default or to compensate Landlord for any other
loss or damage which Landlord may suffer by reason of Tenant’s default.  If any portion of the Security Deposit is so
used or applied, Tenant shall, within thirty (30) days after written demand
therefor, deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount and Tenant’s failure to do so shall be
a material breach of this Lease. 
Landlord shall not be required to keep any deposit under this Section
separate from Landlord’s general funds, and Tenant shall not be entitled to
interest thereon.  Provided that no
uncured event of default by Tenant then exists under this Lease, the Security
Deposit, or any balance thereof, shall be returned to Tenant

 40
 

or, at Landlord’s option,
to the last assignee of Tenant’s interest hereunder (unless alternative
instructions have been presented to Landlord in a writing signed by both Tenant
and such assignee), in no event more than thirty (30) days after (i) the
term of this Lease has expired, (ii) Tenant has vacated the Property and
surrendered possession of the Premises to Landlord, and (iii) Tenant has
obtained any signoffs, releases or other required actions or documents from any
applicable governmental authorities and has completed any other applicable
decommissioning, site closure or other procedures required by any applicable
governmental authorities as a result of or in connection with Tenant’s prior
use and occupancy of the Premises or the cessation of such use and occupancy,
and has delivered written evidence of such compliance to Landlord.  In the event of termination of Landlord’s
interest in this Lease, Landlord shall transfer all deposits then held by
Landlord under this Section to Landlord’s successor in interest, whereupon
Tenant agrees to release Landlord from all liability for the return of such
deposit or the accounting thereof.

17.  MISCELLANEOUS

17.1         Notices.  All notices, consents, waivers and other
communications which this Lease requires or permits either party to give to the
other shall be in writing and shall be deemed given when delivered personally
(including delivery by private same-day or overnight courier or express
delivery service) or by telecopier with mechanical confirmation of
transmission, effective upon personal delivery to or refusal of delivery by the
recipient (in the case of personal delivery by any of the means described
above) or upon telecopier transmission during normal business hours at the
recipient’s office (in the case of telecopier transmission, with any
transmission outside of normal business hours being effective as of the
beginning of the first business day commencing after the time of actual
transmission) to the parties at their respective addresses as follows:

	
  

  	
  To Tenant:

  	
  Omnicell, Inc.

  
	
   

  	
   

  	
  1201 Charleston
  Road

  
	
   

  	
   

  	
  Mountain View,
  CA 94043

  
	
   

  	
   

  	
  Attn: General
  Counsel

  
	
   

  	
   

  	
  Telecopier:
  (650) 230-7149

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
  Omnicell, Inc.

  
	
   

  	
   

  	
  1201 Charleston
  Road

  
	
   

  	
   

  	
  Mountain View,
  CA 94043

  
	
   

  	
   

  	
  Attn: Facilities
  Operations Manager

  
	
   

  	
   

  	
  Telecopier:
  (650) 251-6266

  
	
   

  	
   

  	
   

  
	
   

  	
  To Landlord:

  	
  Britannia Hacienda VIII LLC

  
	
   

  	
   

  	
  c/o Slough
  Estates USA Inc.

  
	
   

  	
   

  	
  444 North
  Michigan Avenue, Suite 3230

  
	
   

  	
   

  	
  Chicago, IL
  60611

  
	
   

  	
   

  	
  Attn: Randy
  Rohner

  
	
   

  	
   

  	
  Telecopier:
  (312) 755-0717

  

 

 41
 

 

	
  

  	
  with a copy to:

  	
  Britannia Management Services, Inc.

  
	
   

  	
   

  	
  555 Twelfth
  Street, Suite 1650

  
	
   

  	
   

  	
  Oakland, CA
  94607

  
	
   

  	
   

  	
  Attn: Magdalena
  Shushan Acosta

  
	
   

  	
   

  	
  Telecopier:
  (510) 763-6262

  
	
   

  	
   

  	
   

  
	
   

  	
  and a copy to:

  	
  Folger Levin & Kahn LLP

  
	
   

  	
   

  	
  Embarcadero
  Center West

  
	
   

  	
   

  	
  275 Battery
  Street, 23rd Floor

  
	
   

  	
   

  	
  San Francisco,
  CA 94111

  
	
   

  	
   

  	
  Attn: Donald E.
  Kelley, Jr.

  
	
   

  	
   

  	
  Telecopier:
  (415) 986-2827

  

 

or to such other
address(es) as may be contained in a notice of address change given by either
party to the other pursuant to this Section, effective no earlier than
fifteen (15) days after delivery of such notice to the receiving
party.  Rental payments and other sums
required by this Lease to be paid by Tenant shall be delivered to Landlord in
care of Britannia Management Services, Inc., 555 Twelfth Street, Suite 1650,
Oakland, CA  94607, or at such other
address as Landlord may from time to time specify in writing to Tenant, and
shall be deemed to be paid only upon actual receipt.

17.2         Successors and Assigns.  The obligations of this Lease shall run with
the land, and this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
original Landlord named herein and each successive Landlord under this Lease
shall be liable only for obligations accruing during the period of its
ownership of the Center, and any liability for obligations accruing after
termination of such ownership shall terminate as of the date of such
termination of ownership and shall pass to the successor lessor.  Nothing in this Lease shall be construed to
require Tenant to recognize any successor lessor or successor owner of the
Property until Tenant has received actual written notice of the transfer to the
successor lessor or successor owner, and Landlord agrees to use commercially
reasonable efforts to cause such notice to be given to Tenant concurrently with
or as soon as practicable after the applicable transfer.

17.3         No Waiver.  The failure of either party to seek redress for
violation, or to insist upon the strict performance, of any covenant or
condition of this Lease shall not be deemed a waiver of such violation, or
prevent a subsequent act which would originally have constituted a violation
from having all the force and effect of an original violation.

17.4         Severability.  If any provision of this Lease or the
application thereof is held to be invalid or unenforceable, the remainder of
this Lease or the application of such provision to persons or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each of the provisions of this Lease shall be valid and
enforceable, unless enforcement of this Lease as so invalidated would be
unreasonable or grossly inequitable under all the circumstances or would
materially frustrate the purposes of this Lease.

 42
 

17.5         Litigation Between
Parties.  In the event of any
litigation or other dispute resolution proceedings between the parties hereto
arising out of or in connection with this Lease, the prevailing party shall be
reimbursed for all reasonable costs, including, but not limited to, reasonable
accountants’ fees and attorneys’ fees, incurred in connection with such
proceedings (including, but not limited to, any appellate proceedings relating
thereto) or in connection with the enforcement of any judgment or award
rendered in such proceedings.  “Prevailing party” within the meaning of this Section
shall include, without limitation, a party who dismisses an action for recovery
hereunder in exchange for payment of the sums allegedly due, performance of
covenants allegedly breached or consideration substantially equal to the relief
sought in the action.

17.6         Surrender.  A voluntary or other surrender of this Lease
by Tenant, or a mutual termination thereof between Landlord and Tenant, shall
not result in a merger but shall, at the option of Landlord, operate either as
an assignment to Landlord of any and all existing subleases and subtenancies,
or a termination of all or any existing subleases and subtenancies.  This provision shall be contained in any and
all assignments or subleases made pursuant to this Lease.

17.7         Interpretation.  The provisions of this Lease shall be
construed as a whole, according to their common meaning, and not strictly for
or against Landlord or Tenant.  The
captions preceding the text of each Section and subsection hereof are included
only for convenience of reference and shall be disregarded in the construction
or interpretation of this Lease.

17.8         Entire Agreement.  This written Lease, together with the
exhibits hereto, contains all the representations and the entire understanding
between the parties hereto with respect to the subject matter hereof.  Any prior correspondence, memoranda or
agreements are replaced in total by this Lease and the exhibits hereto.  This Lease may be modified only by an
agreement in writing signed by each of the parties.

17.9         Governing Law.  This Lease and all exhibits hereto shall be
construed and interpreted in accordance with and be governed by all the
provisions of the laws of the State of California.

17.10       No Partnership.  The relationship between Landlord and Tenant
is solely that of a lessor and lessee. 
Nothing contained in this Lease shall be construed as creating any type
or manner of partnership, joint venture or joint enterprise with or between
Landlord and Tenant.

17.11       Financial Information.  Subject to the provisions set forth below in
this Section for periods when Tenant is a company with publicly-traded
securities, (a) from time to time Tenant shall promptly provide directly
to prospective lenders and purchasers of the Center designated by Landlord such
financial information pertaining to the financial status of Tenant as Landlord
may reasonably request; provided, Tenant shall be permitted to provide
such financial information in a manner which Tenant deems reasonably necessary
to protect the confidentiality of such information, and (b) in addition,
from time to time, Tenant shall provide Landlord with such financial information
pertaining to the financial status of Tenant as Landlord may reasonably
request.  Landlord agrees that all
financial information supplied to Landlord by

 43
 

Tenant (other than
information which is already publicly available by virtue of being contained in
Tenant’s periodic filings with the Securities and Exchange Commission or
otherwise) shall be treated as confidential material, and shall not be
disseminated to any party or entity (including any entity affiliated with
Landlord) without Tenant’s prior written consent, except that Landlord shall be
entitled to provide such information, subject to reasonable precautions to
protect the confidential nature thereof, (i) to Landlord’s partners and
professional advisors, solely to use in connection with Landlord’s execution
and enforcement of this Lease, and (ii) to prospective lenders and/or
purchasers of the Center, solely for use in connection with their bona fide
consideration of a proposed financing or purchase of the Center, provided
that such prospective lenders and/or purchasers are not then engaged in
businesses directly competitive with the business then being conducted by
Tenant.  For purposes of this Section,
without limiting the generality of the obligations provided herein, it shall be
deemed reasonable for Landlord to request copies of Tenant’s most recent
audited annual financial statements, or, if audited statements have not been
prepared, unaudited financial statements for Tenant’s most recent fiscal year,
accompanied by a certificate of Tenant’s chief financial officer that such
financial statements fairly present Tenant’s financial condition as of the
date(s) indicated.  Notwithstanding any
other provisions of this Section 17.11, during any period in which Tenant
has outstanding a class of publicly traded securities and is filing with the
Securities and Exchange Commission, on a regular basis, Forms 10Q and 10K and
any other periodic filings required under the Securities Exchange Act of 1934,
as amended, Landlord agrees to rely upon its ability to download from Tenant’s
web site or from other publicly available sources copies of Tenant’s filings
with the Securities and Exchange Commission, and Tenant shall not be required
to furnish any other financial information to Landlord under this
Section 17.11 during such period.

In the case of any period
during which Tenant is not a company with a class of publicly-traded securities
outstanding, Landlord and Tenant recognize the need of Tenant to maintain the
confidentiality of information regarding its financial status and the need of
Landlord to be informed of, and to provide to prospective lenders and
purchasers of the Center financial information pertaining to, Tenant’s
financial status.  Landlord and Tenant
agree to cooperate with each other in achieving these needs within the context
of the obligations set forth in this Section.

17.12       Costs.  If Tenant requests the consent of Landlord
under any provision of this Lease for any act that Tenant proposes to do
hereunder, including, without limitation, assignment or subletting of the
Premises, Tenant shall, as a condition to doing any such act and the receipt of
such consent, reimburse Landlord promptly for any and all reasonable costs and
expenses incurred by Landlord in connection therewith, including, without
limitation, reasonable attorneys’ fees.

17.13       Time.  Time is of the essence of this Lease, and of
every term and condition hereof.

17.14       Rules and Regulations.  Tenant shall observe, comply with and obey,
and shall cause its employees, agents and, to the best of Tenant’s ability,
invitees to observe, comply with and obey such reasonable rules and regulations
for the safety, care, cleanliness, order and use of the Building and the Center
as Landlord may promulgate and deliver to Tenant in writing from time to time.

 44
 

17.15       Brokers.  Landlord agrees to pay a brokerage commission
in connection with the consummation of this Lease (a) to Landlord’s
broker, CB Richard Ellis, Inc., and (b) to Tenant’s broker, Cornish &
Carey Commercial, each in accordance with a separate written agreement.  Each party represents and warrants that no
other broker participated in the consummation of this Lease and agrees to
indemnify, defend and hold the other party harmless against any liability, cost
or expense, including, without limitation, reasonable attorneys’ fees, arising
out of any claims for brokerage commissions or other similar compensation in
connection with any conversations, prior negotiations or other dealings by the
indemnifying party with any other broker.

17.16       Memorandum of Lease.  At any time during the term of this Lease,
either party, at its sole expense and with the prior written consent of the
other party (which consent shall not be unreasonably withheld, conditioned or
delayed), shall be entitled to record a memorandum of this Lease and, if either
party so requests, both parties agree to cooperate in the preparation,
execution, acknowledgment and recordation of such document in reasonable
form.  If such a memorandum of lease is
recorded, then upon expiration or termination of this Lease, Tenant agrees
promptly to execute, acknowledge and deliver to Landlord, upon written request
by Landlord, a Termination of Memorandum of Lease in such form as Landlord may
reasonably request, for the purpose of terminating any continuing effect of the
previously recorded memorandum of lease as a cloud upon title to the Property.

17.17       Organizational Authority.  Each party to this Lease represents and
warrants that the person signing this Lease on behalf of such respective party
is fully authorized to do so and, by so doing, to bind such party.

17.18       Execution and Delivery.  Submission of this Lease for examination or
signature by Tenant does not constitute an agreement or reservation of or
option for lease of the Premises.  This
instrument shall not be effective or binding upon either party, as a lease or
otherwise, until executed and delivered by both Landlord and Tenant.  This Lease may be executed in one or more
counterparts and by separate parties on separate counterparts, but each such
counterpart shall constitute an original and all such counterparts together
shall constitute one and the same instrument.

17.19       Survival.  Without limiting survival provisions which
would otherwise be implied or construed under applicable law, the provisions of
Sections 2.5, 5.4, 7.2, 7.3, 7.4, 8.2, 9.6, 10.6, 16.1(a), 17.5 and 17.16
hereof shall survive the termination of this Lease with respect to matters
occurring prior to the expiration of this Lease; provided, however, that
nothing in this Section is intended, or shall be construed, to extend any
applicable statute of limitations with respect to the matters covered by the
foregoing survival provision or by the surviving provisions described therein.

 45
 

17.20       Parking.  Landlord agrees that the Common Areas, taken
as a whole, shall include parking in amounts sufficient to satisfy the minimum
parking requirements of the City of Mountain View applicable to the Center from
time to time; that Tenant shall have the non-exclusive and non-reserved use of
not fewer than approximately 3.0 automobile parking stalls per 1,000 rentable
square feet of space in the Premises; and that there shall be no additional
cost or charge to Tenant for the nonexclusive use of such parking by Tenant and
its employees and invitees.

[signature page follows]

 46
 

IN WITNESS WHEREOF, the
parties hereto have executed this Lease as of the day and year first set forth
above.

	
   “Landlord”

  	
   

  	
   

  	
  “Tenant”

  	
   

  
	
   

  	
   

  	
   

  
	
  BRITANNIA
  HACIENDA VIII LLC, a

  Delaware limited liability company

  	
   

  	
  OMNICELL, INC.,
  a Delaware

  corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Slough Estates USA Inc., a

  	
   

  	
   

  	
   

  
	
   

  	
  Delaware
  corporation, Its

  	
   

  	
  By:

  	
  /s/ Robin G. Seim

  
	
   

  	
  Operations
  Manager and Member

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Robin G. Seim

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  CFO

  
	
  By:

  	
  /s/ Jonathan M. Bergschneider

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Jonathan M. Bergschneider

  	
   

  	
   

  	
   

  
	
   

  	
  Senior Vice
  President

  	
   

  	
  By:

  	
  /s/ Randall A. Lipps

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Randall A. LIpps

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  CEO

  
								

 

 47
 

EXHIBITS

EXHIBIT A-1                        Site Plan
(The Center)

EXHIBIT A-2                        Building
Plan

EXHIBIT B                            Workletter

EXHIBIT C                            Form of Acknowledgment of
Rent Commencement Date

 48

EXHIBIT A-1

SITE PLAN (THE CENTER)

[See attached one (1) page.]

EXHIBIT A-1 TO LEASE

Shoreline Technology Park, Mountain View, CA                                                                                                            EXHIBIT
A-1

EXHIBIT A-2

BUILDING PLAN

[See attached two (2) pages.]

EXHIBIT A-2 TO LEASE

 

EXHIBIT A-2

 

Shoreline Technology Park, Mountain View, CA.

 

 1
 

 

 2

EXHIBIT B

WORKLETTER

This Workletter (“Workletter”)
constitutes part of the Lease dated as of June 29, 2007 (the “Lease”) between BRITANNIA HACIENDA
VIII LLC, a Delaware limited liability company (“Landlord”),
and OMNICELL, INC., a Delaware corporation (“Tenant”).  The terms of this Workletter are incorporated
in the Lease for all purposes.

NOTE:  The
provisions of this Workletter are intended to apply only to Tenant Improvements
constructed by Tenant in the Premises. 
The work that Landlord is required to perform under Section 2.3 of
the Lease (such work being defined in the Lease as “Landlord’s Work”) shall be
governed solely by such Section 2.3 and any other applicable provisions of
the main Lease, and not by this Workletter. 
In the event of any conflict between Tenant’s obligations under this
Workletter and the provisions of the Lease, the provisions of the Lease shall
govern.

1.                                       Defined
Terms.  As used in this Workletter,
the following capitalized terms have the following meanings:

(a)                                  Approved
Plans:  Plans and specifications
prepared by the Architect for the Tenant Improvements and approved by Landlord
in accordance with Paragraph 2 of this Workletter, subject to further
modification from time to time to the extent provided in and in accordance with
such Paragraph 2.

(b)                                 Architect:  The Architect for the Tenant Improvements
shall be selected by Tenant with the written approval of Landlord, which
approval shall not be unreasonably withheld, conditioned or delayed.

(c)                                  Cost
of Improvement:  See definition in
Paragraph 2(b) hereof.

(d)                                 Final
Working Drawings:  See definition in
Paragraph 2(a) hereof.

(e)                                  General
Contractor:  The General Contractor
for the Tenant Improvements shall be selected by Tenant with the written
approval of Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed, as contemplated in Paragraph 4(a) hereof.

(f)                                    Project
Manager.  Britannia Management
Services, Inc. (contact person:  Ann
Nelson), or any other project manager designated by Landlord in its sole discretion
from time to time by written notice to Tenant to act in an oversight and
coordinating capacity on behalf of Landlord, as contemplated in
Paragraph 2(d) below, in connection with the design and/or construction of
Landlord’s Work and the Tenant Improvements.

(g)                                 Tenant
Improvements:  The improvements to or
within the Premises as shown on the Approved Plans from time to time and to be
constructed by Tenant pursuant to the Lease and this Workletter, subject to the
procedures set forth in this Workletter for preparation and approval of such
Approved Plans and subject to receipt of all necessary permits and governmental
approvals.

 B-1
 

(h)                                 Capitalized
terms not otherwise defined in this Workletter shall have the definitions set
forth in the Lease.

2.                                       Plans,
Cost of Improvements and Construction. 
Landlord and Tenant shall comply with the procedures set forth in this
Paragraph 2 in preparing, delivering and approving matters relating to the
Tenant Improvements.

(a)                                  Approved
Plans and Working Drawings for Tenant’s Work.  Tenant shall promptly and diligently cause to
be prepared and delivered to Landlord for approval (which approval shall not be
unreasonably withheld, conditioned or delayed by Landlord) a space plan and
outline specifications for the Tenant Improvements that Tenant wishes to
construct in the Premises (the “Schematic
Plans”).  Following mutual
approval of the Schematic Plans, Tenant shall then promptly and diligently
cause to be prepared and delivered to Landlord for approval (which approval
shall not be unreasonably withheld, conditioned or delayed by Landlord) final
working drawings and specifications for the Tenant Improvements, including any
applicable life safety, mechanical and electrical working drawings and final
architectural drawings (collectively, the “Final
Working Drawings”).  The
Final Working Drawings shall substantially conform to the approved Schematic
Plans.  Within ten (10) days after
receipt of the Final Working Drawings from Tenant, Landlord shall either
approve the Final Working Drawings or set forth in writing with particularity
any changes necessary to bring the Final Working Drawings into substantial
conformity with the approved Schematic Plans or into a form which will be
acceptable to Landlord.  Upon approval of
the Final Working Drawings by Landlord and Tenant, the Final Working Drawings
shall constitute the “Approved Plans,”
superseding (to the extent of any inconsistencies) any inconsistent features of
the previously approved Schematic Plans. 
After Approved Plans are available, Tenant may submit the same to the
appropriate governmental authorities for all applicable building permits.  Tenant agrees that neither Landlord nor
Landlord’s consultants shall be responsible for obtaining any building permit
or 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 and, if applicable, shall submit plans and
complete all of Landlord’s Work under Section 2.3 of the Lease with
reasonable diligence as reasonably required to allow Tenant to obtain a permit
or certificate of occupancy.  Prior to
commencing construction of the Tenant Improvements, Tenant shall provide
Landlord with a copy of all required permits.

(b)                                 Cost
of Improvements.  “Cost of Improvement” shall mean, with
respect to any item or component for which a cost must be determined in order
to allocate such cost, or an increase in such cost, to Landlord and/or Tenant
pursuant to this Workletter, the sum of the following (unless otherwise agreed
in writing by Landlord and Tenant with respect to any specific item or
component or any category of items or components):  (i) all sums paid to contractors or
subcontractors for labor and materials furnished in connection with
construction of such item or component; (ii) all costs, expenses,
payments, fees and charges (other than penalties) paid or incurred to or at the
direction of any city, county or other governmental or quasi-governmental
authority or agency which are required to be paid in order to obtain all
necessary governmental permits, licenses, inspections and approvals relating to
construction of such item or component; (iii) engineering and
architectural fees for services rendered in

 B-2
 

connection
with the design and construction of such item or component (including, but not
limited to, the Architect for such item or component and an electrical
engineer, mechanical engineer and civil engineer, if applicable);
(iv) sales and use taxes; (v) testing and inspection costs;
(vi) the cost of power, water and other utility facilities and the cost of
collection and removal of debris required in connection with construction of
such item or component; and (vii) all other “hard” and “soft” costs
incurred in the construction of such item or component in accordance with the
Approved Plans and this Workletter.

(c)                                  Changes.  If Tenant at any time desires to make any
substantial changes, alterations or additions to the Approved Plans, such
changes, alterations or additions shall be subject to approval by Landlord in
the same manner as the original Approved Plans as provided above.  For purposes of this paragraph, a “substantial”
change, alteration or addition shall mean one which affects the Building shell
(including, but not limited to, structural elements, roof and exterior walls
and windows), Building systems, common areas of the Building, or premises
leased to other tenants within the Building, or which has a cost impact in
excess of $25,000.

(d)                                 Project
Management.  Unless and until revoked
by Landlord by written notice delivered to Tenant, Landlord hereby
(i) delegates to Project Manager the authority to exercise all approval
rights and other rights and powers of Landlord under this Workletter with
respect to the design and construction of the Tenant Improvements, and
(ii) requests that Tenant work with Project Manager with respect to any
and all logistical or other coordination matters arising in the course of
construction of the Tenant Improvements, in which regard Project Manager’s role
on behalf of Landlord may include (but need not be limited to) reviewing and
processing Tenant’s requests for disbursement of the Tenant Improvement
Allowance, monitoring Tenant’s and Landlord’s compliance with their respective
obligations under this Workletter and under the Lease in connection with the
design and construction of the Tenant Improvements, and facilitating and
assisting in coordination between teams performing Landlord’s Work and teams
constructing the Tenant Improvements, to the extent any such construction
activity is occurring concurrently. 
Tenant acknowledges the foregoing delegation and request, and agrees to
cooperate reasonably with Project Manager as Landlord’s representative pursuant
to such delegation and request.  As
between Landlord and Tenant, however, Landlord shall be bound by and be fully
responsible for all acts and omissions of Project Manager and for the
performance of all of Landlord’s obligations under the Lease and this
Workletter, notwithstanding such delegation of authority to Project
Manager.  Notwithstanding the preceding
sentence, neither Landlord’s delegation of authority to Project Manager nor
Project Manager’s performance of the functions and responsibilities
contemplated in this paragraph shall cause Landlord or Project Manager to incur
any obligations or responsibilities for the design, construction or delivery of
the Tenant Improvements, except to the extent of the specific obligations and
responsibilities expressly set forth in the Lease and in this Workletter.  All fees and charges of Project Manager for
its services rendered to or on behalf of Landlord in connection with the Tenant
Improvements and Landlord’s Work shall be at Landlord’s sole expense, and shall
not be chargeable to Tenant or to the Tenant Improvement Allowance.

3.                                       Payment
of Costs.  Except as otherwise
expressly provided in this Workletter, in the Lease or by mutual written
agreement of Landlord and Tenant, the cost of construction of the Tenant
Improvements shall be paid or reimbursed by Landlord up to a maximum
contribution by Landlord equal to Thirty-Five Dollars ($35.00) per square foot,
equivalent to an aggregate

 B-3
 

allowance of up to Six Hundred Forty-One Thousand Six
Hundred Fifty-Five and No/100 Dollars ($641,655.00), toward the Cost of
Improvements for such Tenant Improvements (the “Tenant
Improvement Allowance”), less any reduction in or charge against
such sums pursuant to any applicable provisions of the Lease or of this
Workletter.  Except as otherwise
expressly provided in this Workletter or in the Lease, Tenant shall be
responsible, at its sole cost and expense, for payment of the entire Cost of
Improvements of the Tenant Improvements in the Premises in excess of the Tenant
Improvement Allowance or such portion thereof as Tenant elects to use (if any
such excess occurs), including (but not limited to) any costs or cost increases
incurred as a result of unavoidable delays, governmental requirements or
unanticipated conditions, but Tenant shall be entitled to utilize the entire
Tenant Improvement Allowance (or so much thereof as Tenant elects to use) for
the Tenant Improvements prior to being required to expend any of Tenant’s own
funds on an unreimbursed basis for the Tenant Improvements (except to the
extent any costs are incurred which are not eligible for payment or
reimbursement out of the Tenant Improvement Allowance under the express
provisions governing the Tenant Improvement Allowance, including, without
limitation, the express restrictions set forth below in this paragraph).  The funding of the Tenant Improvement
Allowance (or so much thereof as Tenant elects to use) shall be made on a
monthly basis or at other convenient intervals mutually approved by Landlord
and Tenant, and in all other respects shall be based on such commercially
reasonable disbursement conditions and procedures as Landlord, Project Manager
and Landlord’s lender (if any) may reasonably prescribe (which conditions may
include, without limitation, delivery of invoices, architect’s certifications
and/or other evidence reasonably satisfactory to Landlord or Project Manager
that expenses have been incurred for the design and construction of alterations
and improvements for which the Tenant Improvement Allowance is eligible to be
expended or applied, and delivery of conditional or unconditional lien releases
from all parties performing the applicable work).  All allowable reimbursements shall be paid to
Tenant no later than sixty (60) days after Landlord’s receipt of all required
documentation as described above. 
Notwithstanding the foregoing provisions, (i) under no
circumstances shall the Tenant Improvement Allowance or any portion thereof be
used or useable for any moving or relocation expenses of Tenant, or for any
Cost of Improvement (or any other cost or expense) associated with any moveable
furniture, trade fixtures, personal property or any other item or element
which, under the applicable provisions of the Lease, will not become Landlord’s
property and remain with the Building upon expiration or termination of the
Lease (the Tenant Improvement Allowance may, however, be applied toward all
costs of hiring a licensed architect for the design of all Tenant Improvements
to be constructed by Tenant pursuant to this Workletter and for the cost of all
permits and inspections required by any governmental authority in connection
with the construction of such Tenant Improvements), and (ii) any portion
of the Tenant Improvement Allowance which has not been claimed or drawn by
Tenant as of February 28, 2009 shall expire and shall no longer be
available to Tenant thereafter.  The
Tenant Improvement Allowance is provided as part of the basic consideration to
Tenant under the Lease and will not result in any rental adjustment or
additional rent beyond the rental amounts expressly provided in
Section 3.1 of the Lease.

4.                                       Tenant’s
Work.  Tenant shall construct and
install the Tenant Improvements in the Premises substantially in accordance
with the Approved Plans.  Tenant’s
construction of the Tenant Improvements shall be performed in accordance with,
and shall in all respects be subject to, the terms and conditions of the Lease
(to the extent not inconsistent with this Workletter), and shall also be
subject to the following conditions:

 B-4
 

(a)                                  Contractor
Requirements.  The general contractor
engaged by Tenant for construction of the Tenant Improvements, and any
subcontractors, shall be duly licensed in California and shall be subject to
Landlord’s prior written approval, which approval shall not be unreasonably
withheld, conditioned or delayed.  Tenant
shall engage only union contractors for the construction of the Tenant Improvements
and for the installation of Tenant’s fixtures and equipment in the Building,
and shall require all such contractors engaged by Tenant, and all of their
subcontractors, to use only union labor on or in connection with such work,
except to the extent Landlord determines, in its reasonable discretion, that
the use of non-union labor would not create a material risk of labor disputes,
picketing or work interruptions at the Center, in which event Landlord shall,
to that extent, waive such union labor requirement at Tenant’s request.

(b)                                 Costs
and Expenses of Tenant Improvements. 
Subject to Landlord’s payment or reimbursement obligations under
Paragraph 3 hereof with respect to Landlord’s share of the Cost of
Improvements for the Tenant Improvements, Tenant shall promptly pay all costs
and expenses arising out of the design and construction of the Tenant
Improvements (including the costs of permits) and shall furnish Landlord with
evidence of payment on request.  Tenant
shall provide Landlord with ten (10) days prior written notice before
commencing any construction activities on the Property.  Upon completion of construction of the Tenant
Improvements, Tenant shall deliver to Landlord a release and unconditional lien
waiver executed by each contractor, subcontractor and materialman involved in
the design or construction of the Tenant Improvements.

(c)                                  Tenant’s
Indemnification.  Tenant shall
indemnify, defend (with counsel reasonably satisfactory to Landlord) and hold
Landlord harmless from all suits, claims, actions, losses, costs and expenses
(including, but not limited to, claims for workers’ compensation,  attorneys’ fees and costs) based on personal
injury or property damage or contract claims (including, but not limited to,
claims for breach of warranty) arising from the design and construction of the
Tenant Improvements from any cause whatsoever other than negligence or willful
misconduct or omission by Landlord or its agents, employees or
contractors.  Tenant shall repair or
replace (or, at Landlord’s election, reimburse Landlord for the cost of
repairing or replacing) any portion of the buildings or other existing
improvements on the Property and/or any of Landlord’s real or personal property
or equipment that is damaged, lost or destroyed in the course of or in
connection with the construction of the Tenant Improvements, except to the
extent (i) any such damage, loss or destruction is caused by negligence or
willful misconduct or omission by Landlord or its agents, employees or
contractors, or (ii) any demolition or removal of existing improvements is
explicitly contemplated in the Approved Plans as approved by Landlord.

(d)                                 Insurance.  With respect to the construction of the
Tenant Improvements, Tenant’s contractors shall obtain and provide to Landlord certificates
evidencing workers’ compensation, employer’s liability, public liability and
property damage insurance in amounts and forms and with companies reasonably
satisfactory to Landlord, and Tenant shall provide to Landlord certificates
evidencing Tenant’s compliance with the insurance requirements of
Article 10 of the Lease (except to the extent any such requirements, by
their nature or terms, are clearly relevant only after Tenant’s commencement of
business operations on the Premises).  In
addition, to the extent Landlord or Project Manager advises Tenant of any
specific insurance

 B-5
 

requirements
that are commercially reasonable and customary during a “course of construction”
period (such as, but not limited to, designation of specified “additional insureds”
who would not ordinarily be required to be named in that capacity during the
Lease term under Article 10 of the Lease), Tenant shall comply with and/or
cause its contractors (as applicable) to comply with such additional
requirements.

(e)                                  Rules
and Regulations; Construction Signage. 
Tenant and Tenant’s contractors shall comply with any rules, regulations
and requirements that Landlord, Project Manager or Landlord’s property manager
or general contractor (if any) may reasonably impose and deliver to Tenant in
writing with respect to the construction of the Tenant Improvements.  Tenant’s agreement with Tenant’s contractors
shall require each contractor to provide reasonable and customary daily cleanup
of the construction area to the extent that such cleanup is necessitated by the
performance of such contractor’s activities in connection with the construction
of the Tenant Improvements.  Any
temporary construction signage (including, but not limited to, directional
signage and/or identifying signage) which Tenant or any of its contractors or
subcontractors may wish to place anywhere in or about the Center shall be
subject to all of the provisions of Section 7.5 of the Lease, including
(but not limited to) prior written approval of the location, size, design and
composition of such signage by Landlord, or by either Project Manager or
Landlord’s property manager on behalf of Landlord, which approval shall not be
unreasonably withheld, delayed or conditioned.

(f)                                    Risk
of Loss.  All materials, work,
installations and decorations of any nature brought onto or installed in the
Building, by or at the direction of Tenant or in connection with the
construction of the Tenant Improvements, prior to the Rent Commencement Date
shall be at Tenant’s risk, and neither Landlord nor any party acting on
Landlord’s behalf shall be responsible for any damage, loss or destruction
thereof.

(g)                                 Condition
of Tenant’s Work.  All work performed
by Tenant shall be performed in a good and workmanlike manner, shall be free
from defects in design, materials and workmanship, and shall be completed in
compliance with the Approved Plans in all material respects and in compliance
with all applicable governmental laws, ordinances, codes and regulations in
force at the time such work is completed. 
Without limiting the generality of the foregoing, Tenant shall be
responsible (i) for obtaining all permits and approvals necessary for the
construction of the Tenant Improvements, and (ii) for compliance of all
Tenant Improvements with the requirements of the ADA and all similar or related
requirements under federal, state or local laws pertaining to access by persons
with disabilities.

(h)                                 As-Built
Drawings; Permit Signoffs.  At the
conclusion of construction, Tenant shall cause the Architect and General
Contractor (i) to update the Approved Plans as necessary to reflect all
changes made to the Approved Plans during the course of construction,
(ii) to certify to the best of their knowledge that the “record set” of
as-built drawings are true and correct, which certification shall survive the
expiration or termination of this Lease, and (iii) to deliver to Landlord,
within sixty (60) days following issuance of a certificate of occupancy for the
Premises or for the Tenant Improvements, (A) two (2) set of copies of such
record set of drawings and (B) a copy of the final, signed version of
building permit for the Tenant Improvements.

 B-6
 

5.                                       No
Agency.  Nothing contained in this
Workletter shall make or constitute Tenant as the agent of Landlord.

6.                                       Survival.  Without limiting any survival provisions
which would otherwise be implied or construed under applicable law, the
provisions of Paragraph 4(c) of this Workletter shall survive the
termination of the Lease with respect to matters occurring prior to expiration of
the Lease; provided, however, that nothing in this Paragraph 6 is
intended, or shall be construed, to extend any applicable statute of
limitations with respect to the matters covered by the foregoing survival
provision or by the surviving provisions described therein.

7.                                       Miscellaneous.  All references in this Workletter to a number
of days shall be construed to refer to calendar days, unless otherwise
specified herein.  If any item requiring
approval by Landlord is disapproved by Landlord in a timely manner, the
procedure for preparation and approval of that item shall be repeated.

[rest of
page intentionally left blank]

 B-7
 

IN WITNESS WHEREOF, the
parties have executed this Workletter concurrently with and as of the date of
the Lease.

	
  “Landlord”

  	
   

  	
  “Tenant”

  
	
   

  	
   

  	
   

  
	
  BRITANNIA HACIENDA VIII LLC, a

  Delaware limited liability company

  	
   

  	
  OMNICELL, INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Slough Estates USA Inc., a Delaware

  	
   

  	
  By:

  	
  /s/ Robin G. Seim

  
	
   

  	
  corporation, Its Operations Manager

  	
   

  	
   

  	
   

  
	
   

  	
  and Member

  	
   

  	
  Its:

  	
  CFO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan M. Bergschneider

  	
   

  	
   

  	
  By:

  	
  /s/ Randall A. Lipps

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jonathan M. Bergschneider

  	
   

  	
  Its:

  	
  CEO

  
	
   

  	
   

  	
  Senior Vice President

  	
   

  	
   

  	
   

  
							

 

 B-8

EXHIBIT C

ACKNOWLEDGMENT OF RENT
COMMENCEMENT DATE

This Acknowledgment is
executed as of                                   ,
2007, by BRITANNIA HACIENDA VIII LLC, a Delaware limited liability company (“Landlord”), and OMNICELL, INC., a Delaware
corporation (“Tenant”), pursuant to
Section 2.4 of the Lease dated June 29, 2007 between Landlord and
Tenant (the “Lease”) covering premises
located on the first floor of the building at 2025 Stierlin Court, Mountain
View, CA 94043 (the “Premises”).

Landlord and Tenant
hereby acknowledge and agree as follows:

1.             The Rent Commencement Date under the Lease is                               ,
2007.

2.             The termination date under the Lease shall be                               ,
2011, subject to any applicable provisions of the Lease for extension or early
termination thereof.

3.             The square footage of the Premises is 18,333 square
feet.

4.             Tenant accepts the Premises, subject only to Landlord’s
warranties, representations and obligations expressly set forth in
Section 2.3 of the Lease.

This
Acknowledgment is executed as of the date first set forth above.

	
  “Landlord”

  	
   

  	
  “Tenant”

  
	
   

  	
   

  	
   

  
	
  BRITANNIA HACIENDA VIII LLC, a

  Delaware limited liability company

  	
   

  	
  OMNICELL, INC., a Delaware

  corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Slough Estates USA Inc., a

  	
   

  	
   

  	
   

  
	
   

  	
  Delaware corporation, Its

  	
   

  	
  By:

  	
   

  
	
   

  	
  Operations Manager and Member

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jonathan M. Bergschneider

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Senior Vice President

  	
   

  	
   

  	
   

  
							

 

 

EXHIBIT C
TO LEASEExhibit
10.1

UNITED STATES
CELLULAR CORPORATION

2007 EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN

Effective January 1, 2007

I.                                        PURPOSE

·                  To provide incentive for the officers of U.S.
Cellular (USCC) to extend their best efforts towards achieving superior results
in relation to key business measures;

·                  To reward USCC’s executive officers in
relation to their success in meeting and exceeding the performance targets; and

·                  To
help USCC attract and retain talented leaders in positions of critical
importance to the success of the company.

II.                                    ELIGIBLE
PARTICIPANTS AND TARGETS

Executive Vice Presidents and Senior Vice
President.  Each participant’s target
incentive is expressed as a percentage of his/her base salary.

III.                                BONUS
POOL

The officer bonus plans of USCC are discretionary in
nature, and are based in part, on company performance, individual performance,
and individual bonus targets, which contribute to the formation and size of an
aggregate bonus pool for all USCC officers.

This officer bonus pool is determined by
taking each officers target annual bonus payout (calculated as a
percentage of the officers base salary) multiplied by the company /
regional performance percentage attainment number achieved under the
applicable officers bonus plan.  The President and CEO will consider the
performance factors (See Performance Measures
in Section IV below) and any other information he deems relevant in
determining the amount available under the bonus pool.  This pool
is not earned, nor are payouts vested until the bonus payout date.  (See Attachment I — Administrative Guidelines)

The President and CEO determines the actual payout
that each officer will receive and is not bound to adhere to any guideline. 
However, the sum of all participants’ actual
awards cannot deviate from the officer bonus pool by + /-18% for 2007.  
The Chairman must approve all officer bonuses prior to payout.

IV.                               PERFORMANCE
MEASURES

The following performance measures, using weights and
definitions as approved by the Chairman, will be considered in evaluating the
achievements of the officer team for the purposes of this plan.  These components were selected as the best
measures of USCC’s growth and success, and are consistent with those used for
other levels of USCC management.  Payouts
based on each of these measures will be evaluated using the 2007 Officer Annual
Incentive Plan Matrices and the relative weighting of each measure that are
approved by the Chairman.

	
  Performance Measures

  
	
  Growth
  Factors

  
	
   

  	
  *

  	
  Customer Addition
  Equivalents

  
	
   

  	
  *

  	
  Customer
  Defections

  
	
   

  	
  *

  	
  Consolidated
  Revenue

  
	
  Profit
  Factors

  
	
   

  	
  *

  	
  Improvement on
  Return on Capital

  
	
   

  	
  *

  	
  Consolidated
  Cash Flow

  

 

 1
 

 

V.                                   MISCELLANEOUS
PROVISIONS

Management reserves the right to amend or discontinue
the Plan at any time, with or without notice.

There are no oral agreements or understandings between
USCC and the participants affecting or relating to this plan not referenced
herein.  If the participant fails to
adhere to the ethical and legal standards as referenced by USCC policy, USCC
shall have the right to revoke this program, reduce or eliminate compensation
as it applies to the violator, or any other remedy as provided by corporate
policy or law.

This program shall
not be construed as an employment contract or as a promise of continuing
employment between USCC and the associate. 
Employment with USCC is terminable at will, i.e.; either the participant
or USCC may terminate the relationship at any time, with or without cause.

	
  /s/ John E. Rooney

  	
   

  	
  8-1-07

  	
   

  
	
  President and
  CEO

  	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Leroy T.
  Carlson Jr.

  	
   

  	
  8 August 2007

  	
   

  
	
  Chairman

  	
   

  	
  Date

  	
   

  

 

 

 2

 

Attachment I

Administrative Guidelines

	
  PLAN EFFECTIVE DATES:

  	
   

  	
  January 1, 2007 — December 31, 2007

  
	
   

  	
   

  	
   

  
	
  GENERAL ADMINISTRATION:

  	
   

  	
  Exempt Associates:   The
  target annual bonus payout for an exempt participant will be based on the
  associate’s base salary as of December 31, 2007

  
	
   

  	
   

  	
   

  
	
  VESTING

  	
   

  	
  The bonus is not ‘earned,’ and does not vest unless
  the associate remains employed through the actual bonus payout date. Special
  rules apply to those associates who retire or die before the actual bonus
  payout date (see below).

  
	
   

  	
   

  	
   

  
	
  INDIVIDUAL PERFORMANCE

  	
   

  	
  Any associate who receives a 2007 annual individual
  performance rating of ‘Partially Meets (PM),’ or ‘Fails to Meet Expectations
  (FM),’ is not eligible for a 2007 Plan payout.

  
	
   

  	
   

  	
   

  
	
  SEPARATION PRIOR TO PAYOUT VESTING DATE

  	
   

  	
  Not eligible for a payout unless separation is
  because of retirement or death (see below), or unless approved by the Sr.
  Vice President of Human Resources.

  
	
   

  	
   

  	
   

  
	
  RETIREMENT/DEATH During 

  Plan Year:

  	
   

  	
  Payout based on a proration for time worked during
  the plan year (2007), individual performance, and the plan attainment
  percentage assigned by the CEO.

  
	
   

  	
   

  	
   

  
	
  LOA (FMLA) During Plan
  Year

  	
   

  	
  Full payout made; no prorations.

  
	
   

  	
   

  	
   

  
	
  LOA (NON-FMLA) During Plan
  

  Year:

  	
   

  	
  Payout based on a proration for time worked during
  the plan year (2007), individual performance, and the plan attainment
  percentage assigned by the CEO.

  
	
   

  	
   

  	
   

  
	
  MILITARY LEAVE

  	
   

  	
  If an associate works during any part of the plan
  year, full payout made; no prorations.

  
	
   

  	
   

  	
   

  
	
  TRANSFERS/PROMOTIONS 

  DURING PLAN YEAR

  	
   

  	
   

  
	
  Within/ Between Annual Plans:

  	
   

  	
  If an associate is promoted / transferred within or
  between incentive plan(s), no prorations will be made in determining the
  bonus pool. The pool allocation will be based on the associate’s plan as of 12/31/07.
  The actual bonus payout will be recommended by the associate’s immediate
  leader and approved by the EVP/SVP. It will be based on plan attainment as
  well as individual performance.

  
	
   

  	
   

  	
   

  
	
  Between an Annual Plan
  and 

  a Quarterly or Monthly Plan:

  	
   

  	
  Prorated payouts from both positions/plans will be
  determined following end of plan year. The following factors will be
  considered in the determination of the payout: both plans’ attainment
  percentages, individual performance in each job/plan, the last base salary
  from each position occupied during the plan year (if applicable), target
  incentive assigned for each position’s pay grade, and percentage of time
  worked in each position/plan during the plan year (2007).

  
	
   

  	
   

  	
   

  
	
  NEW HIRES DURING THE 

  PLAN YEAR

  	
   

  	
  Associates hired during 2007 will be eligible to
  participate in the Plan on a prorated (percentage of time worked in the year)
  basis. The associate must have a start date of at least 11/30/07 in order to
  be eligible to receive a prorated payout. Any associate hired between
  12/01/07 and 12/31/07 will not receive a payout from the 2007 Plan.

  
	
   

  	
   

  	
   

  
	
  TRANSFERS TO/ FROM TDS 

  DURING THE PLAN YEAR

  	
   

  	
  If an associate transfers to/from another TDS
  business unit, he/she will receive a prorated payout based on the factors
  listed above.

  
	
   

  	
   

  	
   

  
	
  BONUS PAYOUT DATE

  	
   

  	
  Bonuses are to be paid during the period commencing
  on January 1, 2008 and ending on March 15, 2008.  Historically bonuses have been paid on
  March 15th
  of each year following the end of the plan effective date
  (12/31).   Notwithstanding the foregoing, in the event that
  payment by March 15, 2008 is administratively impracticable and such
  impracticability was unforeseeable (in each case, such that the payment
  continues to qualify as a “short-term deferral” within the meaning of section
  409A of the Internal Revenue Code), payment will be made as soon as
  administratively practicable after March 15, 2008, but in no event later
  than December 31, 2008. Payment will be in the form of a lump sum.

  

 

 

 3

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