Document:

<PAGE>
                                                                   Exhibit 10.11

                                                                    CONFIDENTIAL

                             US AIRWAYS GROUP, INC.
                               2345 Crystal Drive
                            Arlington, Virginia 22227

                                                              September 16, 2005

Ladies and Gentlemen:

This letter agreement is with reference to (i) the Agreement and Plan of Merger,
dated as of May 19, 2005 (the "Merger Agreement"), by and among US Airways
Group, Inc., a Delaware corporation, and its successors (including, as the
context may require, on or after the effective date of the Plan, as reorganized
pursuant to the Bankruptcy Code) ("East"), America West Holdings Corporation, a
Delaware corporation ("West"), and Barbell Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of East ("Merger Sub"), in respect of
the merger of Merger Sub with and into West, (ii) the Financing Commitments
entered into by and among East, West and the Equity Investors, (iii) the
Stockholders' Agreement (the "Stockholders' Agreement"), by and among East, West
and the Equity Investors, to be executed prior to the Effective Date, and (iv)
the letter agreement, dated as of July 7, 2005 (the "July Letter Agreement"), by
and among East, West and the Equity Investors (other than Tudor). Any
capitalized term not defined in this letter agreement shall have the meaning set
forth in the Merger Agreement or the Financing Commitments, as amended by the
July Letter Agreement, as applicable.

The parties to this letter agreement hereby acknowledge and agree as follows:

(1) Notwithstanding anything in the Financing Commitments or the July Letter
Agreement to the contrary, (a) the Equity Investors hereby agree that East may
offer and issue New Common Stock in an underwritten public offering (the "Public
Offering") pursuant to the registration statement on Form S-1, File No.
333-126226, and further agree that East may use up to $172,500,000 of the
proceeds raised in connection therewith for general corporate purposes, provided
that (i) the public offering price per share of New Common Stock in the Public
Offering is no less than $16.50, (ii) the registration statement for the Public
Offering becomes effective, and the underwriting agreement for the Public
Offering is executed, before 5 p.m., eastern time, on the ninth (9th) Business
Day following the Closing Date, and (iii) the aggregate proceeds, including from
any over-allotment option, from the Public Offering shall not exceed
$172,500,000, and (b) except as provided in paragraphs (5) and (6) of this
letter agreement, prior to the Closing Date, East shall not offer, issue, sell
or agree, commit or obligate itself to offer, issue or sell any Equity
Securities pursuant to Section 6.08(a)(i)(B) or Section 6.08(a)(iv) of the
Financing Commitments (Section 6.07(a)(i)(B) and Section 6.08(a)(iv) in respect
of the Financing Commitment to which Eastshore Aviation, LLC is a party) unless
the Public Offering has been terminated.
<PAGE>
(2) Section 2.02(a) of each of the Financing Commitments is hereby replaced in
its entirety by the following:

             "Section 2.02 Closing. (a) Subject to the satisfaction or, if
permissible, waiver of the conditions set forth in Sections 7.01 and 7.02
hereof, the Closing shall take place at the offices of Arnold & Porter LLP, 555
Twelfth Street, NW, Washington D.C. 20004, at 10:00 a.m., Washington D.C. time,
on the same Business Day as the Effective Time (as such term is defined in the
Merger Agreement) or at such other time, date and place as the parties may agree
(the date on which the Closing occurs, the "Closing Date")."

(3) In addition to the Equity Securities that East is permitted to issue
pursuant to Section 6.08, as amended, of each of the Financing Commitments
(Section 6.07 in respect of the Financing Commitment to which Eastshore
Aviation, LLC is a party) and the Equity Securities to be issued pursuant to the
Public Offering, each of the Equity Investors listed below is hereby granted
options to purchase, at $15.00 per share, up to the number of additional shares
of New Common Stock set forth next to each Equity Investor below, on the same
terms and conditions as such Equity Investor's Financing Commitment:

<TABLE>
<CAPTION>
                                         TRANCHE A OPTIONS     TRANCHE B OPTIONS
                                         -----------------     -----------------
<S>                                      <C>                   <C>
PAR Investment Partners, L.P.:            2,000,000 shares      1,000,000 shares

Peninsula Investment Partners, L.P.:        444,444 shares        222,223 shares

ACE Aviation Holdings Inc.:                 666,667 shares        333,333 shares

Wellington Investors:                     1,333,333 shares        666,667 shares

Tudor Investors:                            577,778 shares        288,889 shares
</TABLE>

The Tranche A Options are exercisable by written notice to East and West on or
prior to the earlier to occur of (a) 5:00 p.m., eastern time, on the Business
Day following the day the underwriting agreement for the Public Offering is
executed and (b) 5:00 p.m., eastern time, on the tenth (10th) Business Day
following the day the New Common Stock starts trading publicly on the New York
Stock Exchange (the "Tranche A Option Expiration Date"). The Tranche B Options
are exercisable by written notice to East and West on or prior to the fifteenth
(15th) calendar day following the Tranche A Option Expiration Date (the "Tranche
B Option Expiration Date" and together with the Tranche A Option Expiration
Date, the "Option Expiration Date"). Payment in respect of the Tranche A Options
and Tranche B Options shall occur on the second Business Day following the
respective Option Expiration Date.

Each foregoing option is transferable, in whole or in part, among the Equity
Investors, up until the respective Option Expiration Date, subject to certain
restrictions on foreign ownership contained in the Parent Charter and Parent
Amended By-Laws. The options to purchase an aggregate of 3,000,000 shares of New
Common Stock that PAR Investment Partners, L.P. has includes Eastshore Aviation,
LLC's option to purchase 1,666,667 shares that Eastshore Aviation, LLC sold to
PAR Investment

                                       2
<PAGE>
Partners, L.P. pursuant to an Option Purchase Agreement, dated as of September
15, 2005.

Upon each Option Expiration Date, East shall make an offer to Eastshore
Aviation, LLC, in an amount equal to one-third of the proceeds received from
exercise of the options, to repurchase shares of East Common Stock held by
Eastshore Aviation, LLC, at a purchase price of $15.00 per share, and Eastshore
Aviation, LLC shall have the right but not the obligation to accept such offer
to repurchase in whole or in part for a period of at least 30 days after the
receipt of such offer.

Paragraph (8) of the July Letter Agreement is replaced in its entirety by the
foregoing, and to the extent this paragraph (3) conflicts with Section 6.08(c)
and (d) of the Tudor Investment Agreement, the provisions of this paragraph (3)
shall be controlling.

(4) The director to be nominated to the Board of Directors of East by each of
ACE Aviation Holdings Inc. and Eastshore Aviation, LLC shall be appointed to the
Board of Directors of East on the date which is two Business Days after the
Effective Time. The Stockholders' Agreement will reflect the provisions of this
paragraph (4).

(5) The parties to this letter agreement consent to the issuance of options as
described in Exhibit A of this letter agreement and agree that the issuance of
such options and the New Common Stock issued upon exercise of such options shall
not reduce the number of shares of New Common Stock available for issuance under
the Employee Pool.

(6) In lieu of the Notes referenced on Schedule 3.05 of each of the Financing
Commitments, the Company may issue up to $125 million principal amount (plus a
15% over-allotment option) of convertible notes to Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and other initial purchasers for
resale to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933 (the "144A Convertible Notes"). Each of the Equity
Investors hereby consents to the issuance of the 144A Convertible Notes in lieu
of the Notes.

(7) Except as expressly modified by this letter agreement, the provisions of the
Merger Agreement, each Financing Commitment and the July Letter Agreement shall
remain unaffected. Moreover, to the extent that Section 4.20 of the Merger
Agreement becomes applicable as a result of any agreement entered into after the
date of this letter agreement, the rights of the Equity Investors, including but
not limited to, Section 6.08 of the Financing Commitments (Section 6.07 in
respect of the Financing Commitment to which Eastshore Aviation, LLC is a party)
and Section 6.09 of the Eastshore Aviation, LLC Junior Secured
Debtor-in-Possession Credit Facility Agreement are fully reserved and unaffected
hereby. To the extent not governed by the Bankruptcy Code, this letter agreement
shall be governed by, and interpreted in accordance with, the Laws of the State
of New York applicable to contracts made and to be performed in that State
without reference to its conflict of laws rules. This letter agreement may be
executed in any number of counterparts, each of which shall be deemed an
original but all of which together shall constitute one single instrument.

              [REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       3
<PAGE>
If the forgoing is in accordance with your understanding, please sign and return
to us one counterpart hereof.

Very truly yours,

US AIRWAYS GROUP, INC.

By: /s/ Elizabeth K. Lanier
    ----------------------------------------------
      Name:  Elizabeth K. Lanier
      Title: Executive Vice President & General Counsel

                              Acknowledged and agreed by:

                              AMERICA WEST HOLDINGS
                              CORPORATION

                              By:
                                  -------------------------
                                      Name:
                                      Title:

                              BARBELL ACQUISITION CORP.

                              By:
                                  -------------------------
                                      Name:
                                      Title:

                              ACE AVIATION HOLDINGS INC.

                              By:
                                  -------------------------
                                      Name:
                                      Title:

                              EASTSHORE AVIATION, LLC

                              By:
                                  -------------------------
                                      Name:
                                      Title:

                                       4
<PAGE>
                              PAR INVESTMENT PARTNERS, L.P.

                              By:     PAR GROUP, L.P.
                                      its general partner

                              By:     PAR CAPITAL MANAGEMENT, INC.
                                      its general partner

                              By:
                                  -------------------------
                                      Name:
                                      Title:

                              PENINSULA INVESTMENT
                              PARTNERS, L.P.

                              By:     PENINSULA CAPITAL
                                      APPRECIATION LLC
                                      its general partner

                              By:
                                  -------------------------
                                      Name:
                                      Title:

                              WELLINGTON MANAGEMENT
                              COMPANY, LLP, AS INVESTMENT ADVISER
                              TO EACH INVESTOR LISTED ON SCHEDULE 1 OF
                              THE WELLINGTON INVESTMENT AGREEMENT

                              By:
                                  -------------------------
                                      Name:
                                      Title:

                              TUDOR INVESTMENT CORP.,
                              AS INVESTMENT ADVISER TO EACH INVESTOR
                              LISTED ON SCHEDULE 1 OF THE TUDOR
                              INVESTMENT AGREEMENT (OTHER THAN
                              TUDOR PROPRIETARY TRADING, L.L.C.)

                              By:
                                     ------------------------------
                              Name:
                                     ------------------------------
                              Title:
                                     ------------------------------

                                       5
<PAGE>
                              TUDOR PROPRIETARY TRADING, L.L.C.

                              By:
                                     ------------------------------
                              Name:
                                     ------------------------------
                              Title:
                                     ------------------------------

                                       6
<PAGE>
                                    EXHIBIT A

                             US AIRWAYS GROUP, INC.

              PRINCIPAL TERMS AND CONDITIONS OF PILOT STOCK OPTIONS

ISSUER:                  US Airways Group, Inc. and any successor

SECURITIES ISSUED:       Options (the "Options") to purchase the common stock of
                         the Issuer (the "Common Stock"). Each Option shall
                         entitle the holder to purchase one share of the common
                         stock at the Exercise Price (see below).

AGGREGATE NUMBER OF      1,100,000 in the aggregate, with the first tranche of
OPTIONS ISSUABLE:        500,000 Options being issued January 31, 2006 (the
                         "First Tranche Options"), a second tranche of 300,000
                         Options to be issued on January 31, 2007 (the "Second
                         Tranche Options") and the third tranche of 300,000
                         Options to be issued on January 31, 2008 (the "Third
                         Tranche Options").

OPTION GRANTEE:          The formula for the allocation of options to the
                         grantees shall be determined by ALPA.

OPTION TERM:             Five (5) years from each grant date.

EXERCISABILITY:          At any time, in whole or in part during the Option
                         Term; provided, however that, upon any change in
                         control event (as defined in the Collective Bargaining
                         Agreement), the issuance of any and all Options shall
                         be immediately issued and accelerated and shall be
                         immediately exercisable.

EXERCISE PRICE:          To be equal in the case of each Tranche of Options to
                         the average of the closing price per share of Common
                         Stock as reflected on the New York Stock Exchange (or
                         other actively traded national securities exchange on
                         which the Common Stock is principally traded)for the
                         20 business day period prior to the applicable
                         Options issuance date in respect of the First, Second
                         or Third Tranche Options, as the case may be.

EXERCISE MECHANISM:      Cashless and otherwise to be determined by ALPA and the
                         Company.

TRANSFER RESTRICTIONS:   Subject to tax and accounting considerations, options
                         may not be transferred at any time except to a
                         beneficiary of a deceased individual holder; provided
                         however that the Company will not unreasonably withhold
                         its consent to a sale of all or a significant portion
                         of such Options pursuant to a sale authorized by ALPA
                         to a financial institution or institutions.

ANTI-DILUTION:           Customary anti-dilution provisions.

                                       7exv10w1

 

Exhibit 10.1

Parties: This Lease, executed in duplicate at Cupertino, California, on April 7 ,
2000, by and between Mission West Properties L.P. III, a Delaware Limited Partnership, and Xicom
Technology, Inc., a California Corporation, hereinafter called respectively Lessor and Lessee,
without regard to number or gender.

Use: Witnesseth: That Lessor hereby leases to Lessee, and Lessee hires from Lessor, for the purpose
of conducting therein office, research and development, light manufacturing, and warehouse
activities, and any other legal activity; and for no other purpose without obtaining the prior
written consent of Lessor.

Premises: The real property with appurtenances as shown on Exhibit A (the “Premises”) situated in
the City of Santa Clara, County of Santa Clara, State of California, and more particularly
described as follows:

The Premises includes 47,480 square feet of building, including all improvements
thereto, as shown on Exhibit A.1 including the right to use up to 180 unreserved
parking spaces. The address for the Premises is 3550 Bassett, Santa Clara,
California. Lessee’s pro-rata share of the Premises is 100%.

Term: The term shall be for eighty four (84) months unless extended pursuant to Section 35 of this
Lease (the “Lease Term”), commencing on the Commencement Date as defined in Section 1 and ending
eighty four (84) months thereafter.

Rent: Base rent shall be payable in monthly installments as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Base rent	 	Estimated CAC*	 	Total
	Months 1 through 12
	 	$	71,220	 	 	$	9,970	 	 	$	81,190	 

Monthly base rent to increase by 4% on the annual anniversary of the Commencement Date each year
during the Lease Term over the prior year’s rent.

 

* CAC charges to be adjusted per Common Area Charges Section below.

Base rent and CAC as scheduled above shall be payable in advance on or before the first day of each
calendar month during the Lease Term. The term “Rent,” as used herein, shall be deemed to be and
to mean the base monthly rent and all other sums required to be paid by Lessee pursuant to the
terms of this Lease. Rent shall be paid in lawful money of the United States of America, without
offset or deduction, and shall be paid to Lessor at such place or places as may be designated from
time to time by Lessor. Rent for any period less than a calendar month shall be a pro rata portion
of the monthly installment. Upon execution of this Lease, Lessee shall deposit with Lessor the
first month’s rent.

Security Deposit: Lessee shall deposit with Lessor the sum of Eighty One Thousand One Hundred
Ninety Dollars ($81,190) (the “Security Deposit”). The Security Deposit shall be held by Lessor
as security for the faithful performance by Lessee of all of the terms, covenants, and conditions
of this Lease applicable to Lessee. If Lessee commits a default as provided for herein, including
but not limited to a default with respect to the provisions contained herein relating to the
condition of the Premises, Lessor may (but shall not be required to) use, apply or retain all or
any part of the Security Deposit for the payment of any amount which Lessor may spend by reason of
default by Lessee. If any portion of the Security Deposit is so used or applied, Lessee shall,
within ten days after written demand therefor, deposit cash with Lessor in an amount sufficient to
restore the Security Deposit to its original amount. Lessee’s failure to do so shall be a default
by Lessee. Any attempt by Lessee to transfer or encumber its interest in the Security Deposit
shall be null and void. Upon execution of this Lease, Lessee shall deposit with Lessor the
Security Deposit.

Common Area Charges: Lessee shall pay to Lessor, as additional Rent, an amount equal to Lessee’s
pro-rate share of the total common area charges of the Premises as defined below (the common area
charges for the Premises is referred to herein as (“CAC”). Lessee shall pay to Lessor as Rent, on
or before the first day of each calendar month during the Lease Term, subject to adjustment and
reconciliation as

 

 

provided
hereinbelow, the sum of Nine Thousand Nine Hundred Seventy Dollars ($9,970), said sum
representing Lessee’s estimated monthly payment of Lessee’s percentage share of CAC. It is
understood and agreed that Lessee’s obligation under this paragraph shall be prorated to reflect
the Commencement Date and the end of the Lease Term. Upon execution of this Lease, Lessee shall
deposit with Lessor the first month’s estimated CAC.

Lessee’s estimated monthly payment of CAC payable by Lessee during the calendar year in which the
Lease commences is set forth above. At or prior to the commencement of each succeeding calendar
year term (or as soon as practical thereafter), Lessor shall provide Lessee with Lessee’s estimated
monthly payment for CAC which Lessee shall pay to Lessor as Rent. Within 120 days of the end of
the calendar year and the end of the Lease Term, Lessor shall provide Lessee a statement of actual
CAC incurred including capital reserves for the preceding year or other applicable period in the
case of a termination year. If such statement shows that Lessee has paid less than its actual
percentage, then Lessee shall on demand pay to Lessor the amount of such deficiency. If such
statement shows that Lessee has paid more than its actual percentage, then Lessor shall, at its
option, promptly refund such excess to Lessee or credit the amount thereof to the Rent next
becoming due from Lessee. Lessor reserves the right to revise any estimate of CAC if the actual or
projected CAC show an increase or decrease in excess of 10% from an earlier estimate for the same
period. In such event, Lessor shall provide a revised estimate to Lessee, together with an
explanation of the reasons therefor, and Lessee shall revise its monthly payments accordingly.
Lessor’s and Lessee’s obligation with respect to adjustments at the end of the Lease Term or
earlier expiration of this Lease shall survive the Lease Term or earlier expiration.

As used in this Lease, CAC shall include but is not limited to: (i) items as specified in Sections
5(b), 6, 16 and 31; (ii) all costs and
expenses including but not limited to supplies, materials, equipment and tools used or required in
connection with the operation and maintenance of the Premises; (iii) licenses, permits and
inspection fees; (iv) all other costs incurred by Lessor in maintaining and operating the
Premises; (v) all reserves for capital replacements and government regulations imposed on the
Premises not related to Lessee’s use and occupancy of the Premises; and (vi) an amount equal to one
and one-half percent (1.5%) of total rent including CAC, as compensation for Lessor’s accounting
and processing services. Lessee shall have the right to review the basis and computation analysis
used to derive the CAC applicable to this Lease annually.

Late Charges: Lessee hereby acknowledges that a late payment made by Lessee to Lessor of Rent and
other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such costs include, but are not limited
to, processing and accounting charges, and late charges, which may be imposed on Lessor according
to the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment
of Rent or any other sum due from Lessee is not received by Lessor or Lessor’s designee within five
(5) days after such amount is due, Lessee shall pay to Lessor a late charge equal to five (5%)
percent of such overdue amount. The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Lessor will incur by reason of late payments made by Lessee.
Acceptance of such late charges by Lessor shall in no event constitute a waiver of Lessee’s default
with respect to such overdue amount, nor shall it prevent Lessor from exercising any of the other
rights and remedies granted hereunder.

Quiet Enjoyment: Lessor covenants and agrees with Lessee that upon Lessee paying Rent and
performing its covenants and conditions under this Lease, Lessee shall and may peaceably and
quietly have, hold and enjoy the Premises for the Lease Term, subject, however, to the rights
reserved by Lessor hereunder.

It Is Further Mutually Agreed Between The Parties As Follows:

1. Possession: Possession shall be deemed tendered and the term shall commence May 1, 2000. (the
“Commencement Date”)

2.0 Acceptance Of Premises And Covenants To Surrender: Lessee accepts the Premises in an “AS IS”
condition and “AS IS” state of repair, subject to Lessor’s representation that the Premises are in
good order and repair, and comply with all requirements for occupancy as of the Commencement Date.
Lessee agrees on the last day of the Lease Term, or on the sooner termination of this Lease, to
surrender the Premises to Lessor in Good Condition and Repair. “Good Condition and Repair” shall
generally mean that the Premiese are in the condition that one would expect the Premises to be in,
if throughout the Lease Term Lessee (i) uses and maintains the Premises in a commercially
reasonable manner and in an accordance with the requirements of this Lease and (ii) makes all
Required Replacements. “Required Replacements” are the replacements to worn-out equipment,
fixtures, and improvements that a commercially reasonable owner-

 

 

user would make. All of the following shall be in Good Condition and Repair: (i) the interior
walls and floors of all offices and other interior areas, (ii) all suspended ceilings and any
carpeting shall be clean and in good condition, (iii) all glazing, windows, doors and door
closures, plate glass, and (iv) all electrical systems including light fixtures and ballasts,
plumbing, and temperature control systems. Lessee, on or before the end of the Lease Term or
sooner termination of this Lease, shall remove all its personal property and trade fixtures from
the Premises, and all such property not so removed shall be deemed to be abandoned by Lessee.
Lessee shall reimburse Lessor for all disposition costs incurred by Lessor relative to Lessee’s
abandoned property. If the Premises are not surrendered at the end of the Lease Term or earlier
termination of this Lease, Lessee shall indemnify Lessor against loss or liability resulting from
any delay caused by Lessee in surrendering the Premises including, without limitation, any claims
made by any succeeding Lessee founded on such delay.

3. Uses Prohibited: Lessee shall not commit, or suffer to be committed, any waste upon the
Premises, or any nuisance, or other act or thing which may disturb the quiet enjoyment of any other
tenant in or around the buildings in which the subject Premises are located or allow any sale by
auction upon the Premises, or allow the Premises to be used for any improper, immoral, unlawful or
objectionable purpose, or place any loads upon the floor, walls, or ceiling which may endanger the
structure, or use any machinery or apparatus which will in any manner vibrate or shake the Premises
or the building of which it is a part, or place any harmful liquids in the drainage system of the
building. No waste materials or refuse shall be dumped upon or permitted to remain upon any part
of the Premises outside of the building proper. No materials, supplies, equipment, finished
products or semi-finished products, raw materials or articles of any nature shall be stored upon or
permitted to remain on any portion of the Premises outside of the building structure, unless
approved by the local, state federal or other applicable governing authority. Lessor consents to
Lessee’s use of materials which are incidental to the normal, day-to-day operations of any office
user, such as copier fluids, cleaning materials, etc., but this does not relieve Lessee of any of
its obligations not to contaminate the Premises and related real property or violate any Hazardous
Materials Laws.

4. Alterations And Additions: Lessee shall not make, or suffer to be made, any alteration or
addition to said Premises, or any part thereof, without the express, advance written consent of
Lessor; any addition or alteration to said Premises, except movable furniture and trade fixtures,
shall become at once a part of the realty and belong to Lessor at the end of the Lease Term or
earlier termination of this Lease. Alterations and additions which are not deemed as trade
fixtures shall include HVAC systems, lighting systems, electrical systems, partitioning, carpeting,
or any other installation which has become an integral part of the Premises. Lessee agrees that it
will not proceed to make such alterations or additions until all required government permits have
been obtained and after having obtained consent from Lessor to do so, until five (5) days from the
receipt of such consent, so that Lessor may post appropriate notices to avoid any liability to
contractors or material suppliers for payment for Lessee’s improvements. Lessee shall at all times
permit such notices to be posted and to remain posted until the completion of work. At the end of
the Lease Term or earlier termination of this Lease, Lessee shall remove and shall be required to
remove its special tenant improvements, all related equipment, and any additions or alterations
installed by Lessee at or during the Lease Term and Lessee shall return the Premises to the
condition that existed before the installation of the tenant improvements. Notwithstanding the
above, Lessor agrees to allow any reasonable alterations and improvements and will use its best
efforts to notify Lessee at the time of approval if such improvements or alterations are to be
removed at the end of the Lease Term or earlier termination of this Lease.

5. Maintenance Of Premises:

(a) Lessee shall at its sole cost and expense keep, repair, and maintain the interior of the
Premises in Good Condition and Repair, including, but not limited to, the interior walls and
floors of all offices and other interior areas, doors and door closures, all lighting systems,
temperature control systems, and plumbing systems, including any Required Replacements. Lessee
shall provide interior and exterior window washing as needed.

(b) Lessor shall, at Lessee’s expense, keep, repair, and maintain in Good Condition and Repair
including replacements (based on a pro-rata share of (i) costs based on square footage or (ii)
costs directly related to Lessee’s use of the Premises) the following, which shall be included
in the monthly CAC:

1. The exterior of the building, any appurtenances and every part thereof, including
but not limited to, glazing, sidewalks, parking areas, electrical systems, and
painting of exterior walls. The parking lot to receive a finish coat every five to
seven years.

 

 

2. The HVAC by a service contract with a licensed air conditioning and heating
contractor which contract shall provide for a minimum of quarterly maintenance of
all air conditioning and heating equipment at the Premises including HVAC repairs or
replacements which are either excluded from such service contract or any existing
equipment warranties.

3. The landscaping by a landscape contractor to water, maintain, trim and replace,
when necessary, any shrubbery, irrigation parts, and landscaping at the Premises.

4. The roof membrane by a service contract with a licensed reputable roofing
contractor which contract shall provide for a minimum of semi-annual maintenance,
cleaning of storm gutters, drains, removing of debris, and trimming overhanging
trees, repair of the roof and application of a finish coat every five years to the
building at the Premises.

5. Exterior pest control.

6. Fire monitoring services.

7. Parking lot sweeping.

These Monthly CAC expenses breakdown approximately as listed below:

	 	 	 	 	 
	Property Tax
	 	$	.10	 
	HVAC maintenance/repair
	 	$	.03	 
	Roof Replacement/Repair
	 	$	.018	 
	Exterior/Parking Lot
	 	$	.008	 
	Landscape Maintenance
	 	$	.018	 
	Fire Monitoring
	 	$	.002	 
	Insurance
	 	$	.01	 
	Management Fee
	 	$	.024	 
	Total
	 	$.21 per sq. ft. per month

(c) Lessee hereby waives any and all rights to make repairs at the expense of Lessor as provided
in Section 1942 of the Civil Code of the State of California, and all rights provided for by
Section 1941 of said Civil Code.

(d) Lessor shall be responsible for the repair of any structural defects in the Premises
including the roof structure (not membrane), exterior walls and foundation during the Lease
Term.

6. Insurance:

A) Hazard Insurance: Lessee shall not use, or permit said Premises, or any part thereof, to be
used, for any purpose other than that for which the Premises are hereby leased; and no use shall
be made or permitted to be made of the Premises, nor acts done, which may cause a cancellation
of any insurance policy covering the Premises, or any part thereof, nor shall Lessee sell or
permit to be kept, used or sold, in or about said Premises, any article which may be prohibited
by a fire and extended coverage insurance policy. Lessee shall comply with any and all
requirements, pertaining to said Premises, of any insurance organization or company, necessary
for the maintenance of reasonable fire and extended coverage insurance, covering the Premises.
Lessor shall, at Lessee’s sole cost and expense, purchase and keep in force fire and extended
coverage insurance, covering loss or damage to the Premises in an amount equal to the full
replacement cost of the Premises, as determined by Lessor, with proceeds payable to Lessor. In
the event of a loss per the insurance provisions of this paragraph, Lessee shall be responsible
for deductibles up to a maximum of $5,000 per occurrence. Lessee acknowledges that the
insurance referenced in this paragraph does not include coverage for Lessee’s personal property.

B) Loss of Rents Insurance: Lessor shall, at Lessee’s sole cost and expense, purchase and
maintain in full force and effect, a policy of rental loss insurance, in an amount equal to the
amount of Rent payable by Lessee commencing within sixty (60) days of the date of the loss or on
the date of loss if reasonably available for the next ensuing one (1) year, as reasonably
determined by Lessor with proceeds payable to Lessor (“Loss of Rents Insurance”).

C) Liability and Property Damage Insurance: Lessee, as a material part of the consideration to
be rendered to Lessor, hereby waives all claims against Lessor and Lessor’s Agents for damages
to goods, wares and merchandise, and all other personal property in,

 

 

upon, or about the Premises, and for injuries to persons in, upon, or about the Premises, from
any cause arising at any time, and Lessee will hold Lessor and Lessor’s Agents exempt and
harmless from any damage or injury to any person, or to the goods, wares, and merchandise and
all other personal property of any person, arising from the use or occupancy of the Premises by
Lessee, or from the failure of Lessee to keep the Premises in Good Condition and Repair, as
herein provided. Lessee shall, at Lessee’s sole cost and expense, purchase and keep in force a
standard policy of commercial general liability insurance and property damage policy covering
the Premises and all related areas insuring the Lessee having a combined single limit for both
bodily injury, death and property damage in an amount not less than four million dollars
($4,000,000.00) and Lessee’s insurance shall be primary. The limits of said insurance shall
not, however, limit the liability of Lessee hereunder. Lessee shall, at its sole cost and
expense, comply with all of the insurance requirements of all local, municipal, state and
federal authorities now in force, or which may hereafter be in force, pertaining to Lessee’s use
and occupancy of the said Premises.

D) Personal Property Insurance: Lessee shall obtain, at Lessee’s sole cost and expense, a policy
of fire and extended coverage insurance including coverage for direct physical loss special form
insuring the personal property of Lessee. The proceeds from any personal property damage policy
shall be payable to Lessee.

All insurance policies required in 6 C) and 6 D) above shall: (i) provide for a certificate of
insurance evidencing the insurance required herein, being deposited with Lessor ten (10) days prior
to the Commencement Date, and upon each renewal, such certificates shall be provided 30 days prior
to the expiration date of such coverage, (ii) be in a form reasonably satisfactory to Lessor and
shall provide the coverage required by Lessee in this Lease, (iii) be carried with companies with a
Best Rating of A minimum, (iv) specifically provide that such policies shall not be subject to
cancellation, reduction of coverage, or other change except after 30 days prior written notice to
Lessor, (v) name Lessor, Lessor’s lender, and any other party with an insurable interest in the
Premises as additional insureds by endorsement to policy, and (vi) shall be primary.

Lessee agrees to pay to Lessor, as additional Rent, on demand, the full cost of the insurance
polices referenced in 6 A) and 6 B) above as evidenced by insurance billings to Lessor which shall
be included in the CAC. If Lessee does not occupy the entire Premises, the insurance premiums
shall be allocated to the portion of the Premises occupied by Lessee on a pro-rata square footage
or other equitable basis, as determined by Lessor. It is agreed that Lessee’s obligation under
this paragraph shall be prorated to the reflect the Commencement Date and the end of the Lease
Term.

Lessor and Lessee hereby waive any rights each may have against the other related to any loss or
damage caused to Lessor or Lessee as the case may be, or to the Premises or its contents, and which
may arise from any risk covered by fire and extended coverage insurance and those risks required to
be covered under Lessee’s personal property insurance. The parties shall provide that their
respective insurance policies insuring the property or the personal property include a waiver of
any right of subrogation which said insurance company may have against Lessor or Lessee, as the
case may be.

7. Abandonment: Lessee shall not vacate or abandon the Premises at any time during the Lease Term;
and if Lessee shall abandon, vacate or surrender said Premises, or be dispossessed by process of
law, or otherwise, any personal property belonging to Lessee and left on the Premises shall be
deemed to be abandoned, at the option of Lessor. Notwithstanding the above, the Premises shall not
be considered vacated or abandoned if Lessee maintains the Premises in Good Condition and Repair,
provides security and is not in default.

8. Free From Liens: Lessee shall keep the subject Premises and the property in which the subject
Premises are situated, free from any and all liens including but not limited to liens arising out
of any work performed, materials furnished, or obligations incurred by Lessee. However, the Lessor
shall allow Lessee to contest a lien claim, so long as the claim is discharged prior to any
foreclosure proceeding being initiated against the property and provided Lessee provides Lessor a
bond if the lien exceeds $5,000.

9. Compliance With Governmental Regulations: Lessee shall, at its sole cost and expense, comply
with all of the requirements of all local, municipal, state and federal authorities now in force,
or which may hereafter be in force, pertaining to the Premises, and shall faithfully observe in
the use and occupancy of the Premises all local and municipal ordinances and state and federal
statutes now in force or which may hereafter be in force.

 

 

10. Intentionally Omitted.

11. Advertisements And Signs: Lessee shall not place or permit to be placed, in, upon or about the
Premises any unusual or extraordinary signs, or any signs not approved by the city, local, state,
federal or other applicable governing authority. Lessee shall not place, or permit to be placed
upon the Premises, any signs, advertisements or notices without the written consent of the Lessor,
and such consent shall not be unreasonably withheld. A sign so placed on the Premises shall be so
placed upon the understanding and agreement that Lessee will remove same at the end of the Lease
Term or earlier termination of this Lease and repair any damage or injury to the Premises caused
thereby, and if not so removed by Lessee, then Lessor may have the same removed at Lessee’s
expense.

12. Utilities: Lessee shall pay for all water, gas, heat, light, power, telephone and other
utilities supplied to the Premises. Any charges for sewer usage, Silicon Valley Power and
telephone site service or related fees shall be the obligation of Lessee and paid for by Lessee.
If any such services are not separately metered to Lessee, Lessee shall pay a reasonable proportion
of all charges which are jointly metered, the determination to be made by Lessor acting reasonably
and on any equitable basis. Lessor and Lessee agree that Lessor shall not be liable to Lessee for
any disruption in any of the utility services to the Premises.

13. Attorney’s Fees: In case suit should be brought for the possession of the Premises, for the
recovery of any sum due hereunder, because of the breach of any other covenant herein, or to
enforce, protect, or establish any term, conditions, or covenant of this Lease or the right of
either party hereunder, the losing party shall pay to the Prevailing Party reasonable attorney’s
fees which shall be deemed to have accrued on the commencement of such action and shall be
enforceable whether or not such action is prosecuted to judgment. The term “Prevailing Party”
shall mean the party that received substantially the relief requested, whether by settlement,
dismissal, summary judgment, judgment, or otherwise.

14.1 Default: The occurrence of any of the following shall constitute a default and breach of this
Lease by Lessee: a) Any failure by Lessee to pay Rent or to make any other payment required to be
made by Lessee hereunder when due if not cured within ten (10) days after written notice thereof by
Lessor to Lessee; b) The abandonment or vacation of the Premises by Lessee except as provided in
Section 7; c) A failure by Lessee to observe and perform any other provision of this Lease to be
observed or performed by Lessee, where such failure continues for thirty days after written notice
thereof by Lessor to Lessee; provided, however, that if the nature of such default is such that the
same cannot be reasonably cured within such thirty (30) day period, Lessee shall not be deemed to
be in default if Lessee shall, within such period, commence such cure and thereafter diligently
prosecute the same to completion; d) The making by Lessee of any general assignment for the benefit
of creditors; the filing by or against Lessee of a petition to have Lessee adjudged a bankrupt or
of a petition for reorganization or arrangement under any law relating to bankruptcy; e) the
appointment of a trustee or receiver to take possession of substantially all of Lessee’s assets or
Lessee’s interest in this Lease, or the attachment, execution or other judicial seizure of
substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease.

14.2 Surrender Of Lease: In the event of any such default by Lessee, then in addition to any other
remedies available to Lessor at law or in equity, Lessor shall have the immediate option to
terminate this Lease before the end of the Lease Term and all rights of Lessee hereunder, by giving
written notice of such intention to terminate. In the event that Lessor terminates this Lease due
to a default of Lessee, then Lessor may recover from Lessee: a) the worth at the time of award of
any unpaid Rent which had been earned at the time of such termination; plus b) the worth at the
time of award of unpaid Rent which would have been earned after termination until the time of award
exceeding the amount of such rental loss that the Lessee proves could have been reasonably avoided;
plus c) the worth at the time of award of the amount by which the unpaid Rent for the balance of
the Lease Term after the time of award exceeds the amount of such rental loss that the Lessee
proves could have been reasonably avoided; plus d) any other amount necessary to compensate Lessor
for all the detriment proximately caused by Lessee’s failure to perform his obligations under this
Lease or which in the ordinary course of things would be likely to result therefrom; and e) at
Lessor’s election, such other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable California law. As used in (a) and (b) above, the “worth
at the time of award” is computed by allowing interest at the rate of Wells Fargo’s prime rate plus
two percent (2%) per annum. As used in (c) above, the “worth at the time of award” is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).

 

 

14.3 Right of Entry and Removal: In the event of any such default by Lessee, Lessor shall also have
the right, with or without terminating this Lease, to re-enter the Premises and remove all persons
and property from the Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Lessee.

14.4 Abandonment: In the event of the vacation or abandonment, except as provided in Section 7, of
the Premises by Lessee or in the event that Lessor shall elect to re-enter as provided in paragraph
14.3 above or shall take possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, and Lessor does not elect to terminate this Lease as provided in Section
14.2 above, then Lessor may from time to time, without terminating this Lease, either recover all
Rent as it becomes due or relet the Premises or any part thereof for such term or terms and at such
rental rates and upon such other terms and conditions as Lessor, in its sole discretion, may deem
advisable with the right to make alterations and repairs to the Premises. In the event that Lessor
elects to relet the Premises, then Rent received by Lessor from such reletting shall be applied;
first, to the payment of any indebtedness other than Rent due hereunder from Lessee to Lessor;
second, to the payment of any cost of such reletting; third, to the payment of the cost of any
alterations and repairs to the Premises; fourth, to the payment of Rent due and unpaid hereunder;
and the residue, if any, shall be held by Lessor and applied to the payment of future Rent as the
same may become due and payable hereunder. Should that portion of such Rent received from such
reletting during any month, which is applied by the payment of Rent hereunder according to the
application procedure outlined above, be less than the Rent payable during that month by Lessee
hereunder, then Lessee shall pay such deficiency to Lessor immediately upon demand therefor by
Lessor. Such deficiency shall be calculated and paid monthly. Lessee shall also pay to Lessor, as
soon as ascertained, any costs and expenses incurred by Lessor in such reletting or in making such
alterations and repairs not covered by the rentals received from such reletting.

14.5 No Implied Termination: No re-entry or taking possession of the Premises by Lessor pursuant to
Section 14.3 or Section 14.4 of this Lease shall be construed as an election to terminate this
Lease unless a written notice of such intention is given to Lessee or unless the termination
thereof is decreed by a court of competent jurisdiction. Notwithstanding any reletting without
termination by Lessor because of any default by Lessee, Lessor may at any time after such reletting
elect to terminate this Lease for any such default.

15. Surrender Of Lease: The voluntary or other surrender of this Lease by Lessee, or a mutual
cancellation thereof, shall not work a merger, and shall, at the option of Lessor, terminate all or
any existing subleases or sub tenancies, or may, at the option of Lessor, operate as an assignment
to him of any or all such subleases or sub tenancies.

16. Taxes: Lessee shall pay and discharge punctually and when the same shall become due and payable
without penalty, all real estate taxes, personal property taxes, taxes based on vehicles utilizing
parking areas in the Premises, taxes computed or based on rental income (other than federal, state
and municipal net income taxes), environmental surcharges, privilege taxes, excise taxes, business
and occupation taxes, school fees or surcharges, gross receipts taxes, sales and/or use taxes,
employee taxes, occupational license taxes, water and sewer taxes, assessments (including, but not
limited to, assessments for public improvements or benefit), assessments for local improvement and
maintenance districts, and all other governmental impositions and charges of every kind and nature
whatsoever, regardless of whether now customary or within the contemplation of the parties hereto
and regardless of whether resulting from increased rate and/or valuation, or whether extraordinary
or ordinary, general or special, unforeseen or foreseen, or similar or dissimilar to any of the
foregoing (all of the foregoing being hereinafter collectively called “Tax” or “Taxes”) which, at
any time during the Lease Term, shall be applicable or against the Premises, or shall become due
and payable and a lien or charge upon the Premises under or by virtue of any present or future
laws, statutes, ordinances, regulations, or other requirements of any governmental authority
whatsoever. The term “Environmental Surcharge” shall include any and all expenses, taxes, charges
or penalties imposed by the Federal Department of Energy, Federal Environmental Protection Agency,
the Federal Clean Air Act, or any regulations promulgated thereunder, or any other local, state or
federal governmental agency or entity now or hereafter vested with the power to impose taxes,
assessments or other types of surcharges as a means of controlling or abating environmental
pollution or the use of energy in regard to the use, operation or occupancy of the Premises. The
term “Tax” shall include, without limitation, all taxes, assessments, levies, fees, impositions or
charges levied, imposed, assessed, measured, or based in any manner whatsoever (i) in whole or in
part on the Rent payable by Lessee under this Lease, (ii) upon or with respect to the use,
possession, occupancy, leasing, operation or management of the Premises, (iii) upon this
transaction or any document to which Lessee is a party creating or transferring an interest or an
estate in the Premises, (iv) upon Lessee’s business operations conducted at the Premises, (v) upon,
measured by or reasonably attributable to the cost or value of Lessee’s equipment, furniture,
fixtures and other personal property located on the Premises or the cost or value of any leasehold
improvements made in or to the Premises by or for Lessee, regardless of whether title to

 

 

such improvements shall be in Lessor or Lessee, or (vi) in lieu of or equivalent to any Tax set
forth in this Section 16. In the event any such Taxes are payable by Lessor and it shall not be
lawful for Lessee to reimburse Lessor for such Taxes, then the Rent payable thereunder shall be
increased to net Lessor the same net rent after imposition of any such Tax upon Lessor as would
have been payable to Lessor prior to the imposition of any such Tax. It is the intention of the
parties that Lessor shall be free from all such Taxes and all other governmental impositions and
charges of every kind and nature whatsoever. However, nothing contained in this Section 16 shall
require Lessee to pay any Federal or State income, franchise, estate, inheritance, succession,
transfer or excess profits tax imposed upon Lessor. If any general or special assessment is
levied and assessed against the Premises, Lessor agrees to use its best reasonable efforts to cause
the assessment to become a lien on the Premises securing repayment of a bond sold to finance the
improvements to which the assessment relates which is payable in installments of principal and
interest over the maximum term allowed by law. It is understood and agreed that Lessee’s
obligation under this paragraph will be prorated to reflect the Commencement Date and the end of
the Lease Term. It is further understood that if Taxes cover the Premises and Lessee does not
occupy the entire Premises, the Taxes will be allocated to the portion of the Premises occupied by
Lessee based on a pro-rata square footage or other equitable basis, as determined by Lessor. Taxes
billed by Lessor to Lessee shall be included in the monthly CAC.

Subject to any limitations or restrictions imposed by any deeds of trust or mortgages now or
hereafter covering or affecting the Premises, Lessee shall have the right to contest or review the
amount or validity of any Tax by appropriate legal proceedings but which is not to be deemed or
construed in any way as relieving, modifying or extending Lessee’s covenant to pay such Tax at the
time and in the manner as provided in this Section 16. However, as a condition of Lessee’s right
to contest, if such contested Tax is not paid before such contest and if the legal proceedings
shall not operate to prevent or stay the collection of the Tax so contested, Lessee shall, before
instituting any such proceeding, protect the Premises and the interest of Lessor and of the
beneficiary of a deed of trust or the mortgagee of a mortgage affecting the Premises against any
lien upon the Premises by a surety bond, issued by an insurance company acceptable to Lessor and in
an amount equal to one and one-half (1 1/2) times the amount contested or, at Lessor’s option, the
amount of the contested Tax and the interest and penalties in connection therewith. Any contest as
to the validity or amount of any Tax, whether before or after payment, shall be made by Lessee in
Lessee’s own name, or if required by law, in the name of Lessor or both Lessor and Lessee. Lessee
shall defend, indemnify and hold harmless Lessor from and against any and all costs or expenses,
including attorneys’ fees, in connection with any such proceedings brought by Lessee, whether in
its own name or not. Lessee shall be entitled to retain any refund of any such contested Tax and
penalties or interest thereon which have been paid by Lessee. Nothing contained herein shall be
construed as affecting or limiting Lessor’s right to contest any Tax at Lessor’s expense.

17. Notices: Unless otherwise provided for in this Lease, any and all written notices or other
communication (the “Communication”) to be given in connection with this Lease shall be given in
writing and shall be given by personal delivery, facsimile transmission or by mailing by registered
or certified mail with postage thereon or recognized overnight courier, fully prepaid, in a sealed
envelope addressed to the intended recipient as follows:

	 	 	 	 	 
	(a)

	 	to the Lessor at:
	 	10050 Bandley Drive
	 

	 	 	 	Cupertino, California 95014
	 

	 	 	 	Attention: Carl E. Berg
	 

	 	 	 	Fax No: (408) 725-1626
	 
	 	 	 	 
	(b)

	 	to the Lessee at:	 	 
	 

	 	 	 	3550 Bassett Street
	 

	 	 	 	Santa Clara, CA
	 

	 	 	 	attn: Walt Wood

or such other addresses, facsimile number or individual as may be designated by a Communication
given by a party to the other parties as aforesaid. Any Communication given by personal delivery
shall be conclusively deemed to have been given and received on a date it is so delivered at such
address provided that such date is a business day, otherwise on the first business day following
its receipt, and if given by registered or certified mail, on the day on which delivery is made or
refused or if given by recognized overnight courier, on the first business day following deposit
with such overnight courier and if given by facsimile transmission, on the day on which it was
transmitted provided such day is a business day, failing which, on the next business day
thereafter.

 

 

18. Entry By Lessor: Lessee shall permit Lessor and its agents to enter into and upon said Premises
at all reasonable times using the minimum amount of interference and inconvenience to Lessee and
Lessee’s business, subject to any security regulations of Lessee, for the purpose of inspecting the
same or for the purpose of maintaining the building in which said Premises are situated, or for the
purpose of making repairs, alterations or additions to any other portion of said building,
including the erection and maintenance of such scaffolding, canopies, fences and props as may be
required, without any rebate of Rent and without any liability to Lessee for any loss of occupation
or quiet enjoyment of the Premises; and shall permit Lessor and his agents, at any time within
ninety (90) days prior to the end of the Lease Term, to place upon said Premises any usual or
ordinary “For Sale” or “For Lease” signs and exhibit the Premises to prospective tenants at
reasonable hours.

19. Destruction Of Premises: In the event of a partial destruction of the said Premises during the
Lease Term from any cause which is covered by Lessor’s property insurance, Lessor shall forthwith
repair the same, provided such repairs can be made within one hundred eighty (180) days after
receipt of building permit under the laws and regulations of State, Federal, County, or Municipal
authorities, but such partial destruction shall in no way annul or void this Lease, except that
Lessee shall be entitled to a proportionate reduction of Rent while such repairs are being made to
the extent of payments received by Lessor under its Loss of Rents Insurance coverage. With respect
to any partial destruction which Lessor is obligated to repair or may elect to repair under the
terms of this paragraph, the provision of Section 1932, Subdivision 2, and of Section 1933,
Subdivision 4, of the Civil Code of the State of California are waived by Lessee. In the event
that the building in which the subject Premises may be situated is destroyed to an extent greater
than thirty-three and one-third percent (33 1/3%) of the replacement cost thereof, Lessor may, at
its sole option, elect to terminate this Lease, whether the subject Premises is insured or not. A
total destruction of the building in which the subject Premises are situated shall terminate this
Lease. Notwithstanding the above, Lessor is only obligated to repair or rebuild to the extent of
available insurance proceeds including any deductible amount paid by Lessee. Should Lessor
determine that insufficient or no insurance proceeds are available for repair or reconstruction of
Premises, Lessor, at its sole option, may terminate the Lease. Lessee shall have the option of
continuing this Lease by agreeing to pay all repair costs to the subject Premises.

20. Assignment And Subletting: Lessee shall not assign this Lease, or any interest therein, and
shall not sublet the said Premises or any part thereof, or any right or privilege appurtenant
thereto, or cause any other person or entity (a bona fide subsidiary or affiliate of Lessee
excepted) to occupy or use the Premises, or any portion thereof, without the advance written
consent of Lessor. Any such assignment or subletting without such consent shall be void, and
shall, at the option of the Lessor, terminate this Lease. This Lease shall not, or shall any
interest therein, be assignable, as to the interest of Lessee, by operation of law, without the
written consent of Lessor. Notwithstanding Lessor’s obligation to provide reasonable approval,
Lessor reserves the right to withhold its consent for any proposed sublessee or assignee of Lessee
if the proposed sublessee or assignee is a user or generator of Hazardous Materials. If Lessee
desires to assign its rights under this Lease or to sublet, all or a portion of the subject
Premises to a party other than a bona fide subsidiary or affiliate of Lessee, Lessee shall first
notify Lessor of the proposed terms and conditions of such assignment or subletting. Lessor shall
have the right of first refusal to enter into a direct Lessor-lessee relationship with such party
under such proposed terms and conditions, in which event Lessee shall be relieved of its
obligations hereunder to the extent of the Lessor-lessee relationship entered into between Lessor
and such third party. Notwithstanding the foregoing, Lessee may assign this Lease to a successor
in interest, whether by merger or acquisition, provided there is no substantial reduction in the
net worth of the resulting entity and the resulting entity is not a user or generator of Hazardous
Materials. Whether or not Lessor’s consent to a sublease or assignment is required, in the event
of any sublease or assignment, Lessee shall be and shall remain primarily liable for the
performance of all conditions, covenants, and obligations of Lessee hereunder and, in the event of
a default by an assignee or sublessee, Lessor may proceed directly against the original Lessee
hereunder and/or any other predecessor of such assignee or sublessee without the necessity of
exhausting remedies against said assignee or sublessee. Notwithstanding the above, Xicom may
sublet space to Intevac without written consent of Lessor.

21. Condemnation: If any part of the Premises shall be taken for any public or quasi-public use,
under any statute or by right of eminent domain or private purchase in lieu thereof, and a part
thereof remains which is susceptible of occupation hereunder, this Lease shall as to the part so
taken, terminate as of the date title vests in the condemnor or purchaser, and the Rent payable
hereunder shall be adjusted so that the Lessee shall be required to pay for the remainder of the
Lease Term only that portion of Rent as the value of the part remaining. The rental adjustment
resulting will be computed at the same Rental rate for the remaining part not taken; however,
Lessor shall have the option to terminate this Lease as of the date when title to the part so taken
vests in the condemnor or purchaser. If all of the Premises, or such part

 

 

thereof be taken so that there does not remain a portion susceptible for occupation hereunder, this
Lease shall thereupon terminate. If a part or all of the Premises be taken, all compensation
awarded upon such taking shall be payable to the Lessor. Lessee may file a separate claim and be
entitled to any award granted to Lessee.

22. Effects Of Conveyance: The term “Lessor” as used in this Lease, means only the owner for the
time being of the land and building constituting the Premises, so that, in the event of any sale of
said land or building, or in the event of a Lease of said building, Lessor shall be and hereby is
entirely freed and relieved of all covenants and obligations of Lessor hereunder, and it shall be
deemed and construed, without further agreement between the parties and the purchaser of any such
sale, or the Lessor of the building, that the purchaser or lessor of the building has assumed and
agreed to carry out any and all covenants and obligations of the Lessor hereunder. If any security
is given by Lessee to secure the faithful performance of all or any of the covenants of this Lease
on the part of Lessee, Lessor may transfer and deliver the security, as such, to the purchaser at
any such sale of the building, and thereupon the Lessor shall be discharged from any further
liability.

23. Subordination: This Lease, in the event Lessor notifies Lessee in writing, shall be subordinate
to any ground lease, deed of trust, or other hypothecation for security now or hereafter placed
upon the real property at which the Premises are a part and to any and all advances made on the
security thereof and to renewals, modifications, replacements and extensions thereof. Lessee agrees
to promptly execute any documents which may be required to effectuate such subordination.
Notwithstanding such subordination, if Lessee is not in default and so long as Lessee shall pay the
Rent and observe and perform all of the provisions and covenants required under this Lease,
Lessee’s right to quiet possession of the Premises shall not be disturbed or effected by any
subordination.

24. Waiver: The waiver by Lessor or Lessee of any breach of any term, covenant or condition, herein
contained shall not be construed to be a waiver of such term, covenant or condition or any
subsequent breach of the same or any other term, covenant or condition therein contained. The
subsequent acceptance of Rent hereunder by Lessor shall not be deemed to be a waiver of Lessee’s
breach of any term, covenant, or condition of the Lease.

25. Holding Over: Any holding over after the end of the Lease Term requires Lessor’s written
approval prior to the end of the Lease Term, which, notwithstanding any other provisions of this
Lease, Lessor may withhold. Such holding over shall be construed to be a tenancy at sufferance
from month to month. Lessee shall pay to Lessor monthly base rent equal to one and one-half (1.5)
times the monthly base rent installment due in the last month of the Lease Term and all other
additional rent and all other terms and conditions of the Lease shall apply, so far as applicable.
Holding over by Lessee without written approval of Lessor shall subject Lessee to the liabilities
and obligations provided for in this Lease and by law., including, but not limited to those in
Section 2.0 of this Lease. Lessee shall indemnify and hold Lessor harmless against any loss or
liability resulting from any delay caused by Lessee in surrendering the Premises, including without
limitation, any claims made or penalties incurred by any succeeding lessee or by Lessor. No
holding over shall be deemed or construed to exercise any option to extend or renew this Lease in
lieu of full and timely exercise of any such option as required hereunder.

26. Lessor’s Liability: If Lessee should recover a money judgment against Lessor arising in
connection with this Lease, the judgment shall be satisfied only out of the Lessor’s interest in
the Premises and neither Lessor or any of its partners shall be liable personally for any
deficiency.

27. Estoppel Certificates: Lessee shall at any time during the Lease Term, upon not less than ten
(10) days prior written notice from Lessor, execute and deliver to Lessor a statement in writing
certifying that, this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification) and the dates to which the Rent and other charges have been paid
in advance, if any, and acknowledging that there are not, to Lessee’s knowledge, any uncured
defaults on the part of Lessor hereunder or specifying such defaults if they are claimed. Any such
statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises. Lessee’s failure to deliver such a statement within such time shall be conclusive upon
the Lessee that (a) this Lease is in full force and effect, without modification except as may be
represented by Lessor; (b) there are no uncured defaults in Lessor’s performance.

28. Time: Time is of the essence of the Lease.

 

 

29. Captions: The headings on titles to the paragraphs of this Lease are not a part of this Lease
and shall have no effect upon the construction or interpretation of any part thereof. This
instrument contains all of the agreements and conditions made between the parties hereto and may
not be modified orally or in any other manner than by an agreement in writing signed by all of the
parties hereto or their respective successors in interest.

30. Party Names: Landlord and Tenant may be used in various places in this Lease as a substitute
for Lessor and Lessee respectively.

31. Earthquake Insurance: As a condition of Lessor agreeing to waive the requirement for earthquake
insurance, Lessee agrees that it will pay, as additional Rent, which shall be included in the
monthly CAC, an amount not to exceed Eighteen Thousand Eight Hundred Dollars ($18,800) per year
for earthquake insurance if Lessor desires to obtain some form of earthquake insurance in the
future, if and when available, on terms acceptable to Lessor as determined in the sole and absolute
discretion of Lessor.

32. Habitual Default: Notwithstanding anything to the contrary contained in Section 14 herein,
Lessor and Lessee agree that if Lessee shall have defaulted in the payment of Rent for two or more
times during any twelve month period during the Lease Term, then such conduct shall, at the option
of the Lessor, represent a separate event of default which cannot be cured by Lessee. Lessee
acknowledges that the purpose of this provision is to prevent repetitive defaults by the Lessee
under the Lease, which constitute a hardship to the Lessor and deprive the Lessor of the timely
performance by the Lessee hereunder.

33. Hazardous Materials

33.1 Definitions: As used in this Lease, the following terms shall have the following meaning:

a. The term “Hazardous Materials” shall mean (i) polychlorinated biphenyls; (ii) radioactive
materials and (iii) any chemical, material or substance now or hereafter defined as or
included in the definitions of “hazardous substance” “hazardous water”, “hazardous
material”, “extremely hazardous waste”, “restricted hazardous waste” under Section 25115,
25117 or 15122.7, or listed pursuant to Section 25140 of the California Health and Safety
Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as “hazardous
substance” under Section 25316 of the California Health and Safety Code, Division 20,
Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substances Account Act), (iii) defined as
“hazardous material”, “hazardous substance”, or “hazardous waste” under Section 25501 of the
California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release,
Response, Plans and Inventory), (iv) defined as a “hazardous substance” under Section 25181
of the California Health and Safety Code, Division 20l, Chapter 6.7 (Underground Storage of
Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) listed under Article 9 or defined
as “hazardous” or “extremely hazardous” pursuant to Article II of Title 22 of the California
Administrative Code, Division 4, Chapter 20, (viii) defined as “hazardous substance”
pursuant to Section 311 of the Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq.
or listed pursuant to Section 1004 of the Federal Water Pollution Control Act (33 U.S.C.
1317), (ix) defined as a “hazardous waste”, pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq., (x) defined as “hazardous substance”
pursuant to Section 101 of the Comprehensive Environmental Responsibility Compensations, and
Liability Act, 42 U.S.C. 9601 et seq., or (xi) regulated under the Toxic Substances Control
Act, 156 U.S.C. 2601 et seq.

b. The term “Hazardous Materials Laws” shall mean any local, state and federal laws, rules,
regulations, or ordinances relating to the use, generation, transportation, analysis,
manufacture, installation, release, discharge, storage or disposal of Hazardous Material.

c. The term “Lessor’s Agents” shall mean Lessor’s agents, representatives, employees,
contractors, subcontractors, directors, officers and partners.

d. The term “Lessee’s Agents” shall mean Lessee’s agents, representatives, employees,
contractors, subcontractors, directors, officers, partners, invitees or any other person in
or about the Premises.

33.2 Lessee’s Right to Investigate: Lessee shall be entitled to cause such inspection, soils and
ground water tests, and other evaluations to be made of the Premises as Lessee deems necessary
regarding (i) the presence and use of Hazardous Materials in or about the Premises, and (ii) the
potential for exposure to Lessee’s employees and other persons to any Hazardous Materials used and
stored by previous occupants in or about the Premises. Lessee shall provide Lessor with copies of
all inspections, tests and evaluations. Lessee shall indemnify, defend and hold Lessor harmless
from any cost, claim or expense arising from such entry by Lessee or from the performance of any
such investigation by such Lessee.

 

 

33.3 Lessor’s Representations: Lessor hereby represents and warrants to the best of Lessor’s
knowledge that the Premises are, as of the date of this Lease, in compliance with all Hazardous
Material Laws.

33.4 Lessee’s Obligation to Indemnify: Lessee, at its sole cost and expense, shall indemnify,
defend, protect and hold Lessor and Lessor’s Agents harmless from and against any and all cost or
expenses, including those described under subparagraphs i, ii and iii herein below set forth,
arising from or caused in whole or in part, directly or indirectly by:

a. Lessee’s or Lessee’s Agents’ use, analysis, storage, transportation, disposal, release,
threatened release, discharge or generation of Hazardous Material to, in, on, under, about
or from the Premises; or

b. Lessee’s or Lessee’s Agents failure to comply with Hazardous Material laws; or

c. Any release of Hazardous Material to, in, on, under, about, from or onto the Premises
caused by or occurring as a result of acts or omissions of Lessee or Lessee’s Agents or
occurring during the Lease Term, except ground water contamination from other parcels where
the source is from off the Premises not arising from or caused by Lessee or Lessee’s Agents.

The cost and expenses indemnified against include, but are not limited to the following:

i. Any and all claims, actions, suits, proceedings, losses, damages, liabilities,
deficiencies, forfeitures, penalties, fines, punitive damages, cost or expenses;

ii. Any claim, action, suit or proceeding for personal injury (including sickness, disease,
or death), tangible or intangible property damage, compensation for lost wages, business
income, profits or other economic loss, damage to the natural resources of the environment,
nuisance, pollution, contamination, leaks, spills, release or other adverse effects on the
environment;

iii. The cost of any repair, clean-up, treatment or detoxification of the Premises necessary
to bring the Premises into compliance with all Hazardous Material Laws, including the
preparation and implementation of any closure, disposal, remedial action, or other actions
with regard to the Premises, and expenses (including, without limitation, reasonable
attorney’s fees and consultants fees, investigation and laboratory fees, court cost and
litigation expenses).

33.5 Lessee’s Obligation to Remediate Contamination: Lessee shall, at its sole cost and expense,
promptly take any and all action necessary to remediate contamination of the Premises by Hazardous
Materials during the Lease Term as a result of acts or omissions by Lessee or Lessee’s Agents.

33.6 Obligation to Notify: Lessor and Lessee shall each give written notice to the other as soon as
reasonably practical of (i) any communication received from any governmental authority concerning
Hazardous Material which related to the Premises and (ii) any contamination of the Premises by
Hazardous Materials which constitutes a violation of any Hazardous Material Laws.

33.7 Survival: The obligations of Lessee under this Section 33 shall survive the Lease Term or
earlier termination of this Lease.

33.8 Certification and Closure: On or before the end of the Lease Term or earlier termination of
this Lease, Lessee shall deliver to Lessor a certification executed by Lessee stating that, to the
best of Lessee’s knowledge, there exists no violation of Hazardous Material Laws resulting from
Lessee’s obligation in Paragraph 33. If pursuant to local ordinance, state or federal law, Lessee
is required, at the expiration of the Lease Term, to submit a closure plan for the Premises to a
local, state or federal agency, then Lessee shall comply at its sole cost and expense with the
requirements of the closure plan and furnish to Lessor a copy of such plan.

33.9 Prior Hazardous Materials: Lessee shall have no obligation to clean up or to hold Lessor
harmless with respect to any Hazardous Material or wastes discovered on the Premises, except as a
result of Environmental Surcharges, which were not introduced into, in, on, about, from or under
the Premises during the Lease Term or ground water contamination from other parcels where the
source is from off the Premises not arising from or caused by Lessee or Lessee’s Agents.

34. Brokers: Lessor and Lessee represent that they have not utilized or contacted a real estate
broker or finder with respect to this Lease. Lessee agrees to indemnify and hold Lessor harmless
against any claim, cost, liability or cause of action asserted by any broker or finder claiming
through Lessee. Lessor represents and warrants that it has not utilized or contacted a real
estate broker or finder with respect to this Lease. Lessor agrees to indemnify and hold Lessee
harmless against any claim, cost, liability or cause of action asserted by any broker or finder
claiming through Lessor.

 

 

35. Option to Extend

A. Option: Lessor hereby grants to Lessee one (1) option to extend the Lease Term, with the
extended term to be for a period of five (5) years, on the following terms and conditions:

(i) Lessee shall give Lessor written notice of its exercise of its option to extend no
earlier than twelve (12) , nor later than six (6) calendar months before the Lease Term
would end but for said exercise. If Lessee and Lessor have not agreed to rental terms in
writing, Lessee may withdraw its notice of exercise of an extension option prior to six (6)
months before the Lease Term would end but for said exercise. Lessor shall provide Lessee
with Lessor’s proposed base monthly rent for the option period within twenty (20) days of
Lessee’s written request. However, once Lessee delivers a notice of exercise of an option
to extend the Lease Term it may not be withdrawn except as provided for herein and subject
to the provisions of this Section 35, such notice shall operate to extend the Lease Term.
Upon any extension of the Lease Term pursuant to this Section 35, the term “Lease Term” as
used in this Lease shall thereafter include the then extended term. Time is of the essence.

(ii) Lessee may not extend the Lease Term pursuant to any option granted by this Section 35
if Lessee is in default as of the date of the exercise of its option. If Lessee has
committed a default by Lessee as defined in Section 14 or 32 that has not been cured or
waived by Lessor in writing by the date that any extended term is to commence, then Lessor
may elect not to allow the Lease Term to be extended, notwithstanding any notice given by
Lessee of an exercise of this option to extend.

(iii) All terms and conditions of this Lease shall apply during the extended term, except
that the base rent and rental increases for each extended term shall be determined as
provided in Section 35 (B) below

(iv) The option rights of Xicom Technology, Inc. granted under this Section 35 are granted
for Xicom Technology, Inc.’s personal benefit and may not be assigned or transferred by
Xicom Technology, Inc. or exercised if Xicom Technology, Inc. is not occupying the Premises
at the time of exercise.

B. Extended Term Rent — Option Period: The monthly Rent for the Premises during the
extended term shall equal the fair market monthly Rent for the Premises as of the commencement date
of the extended term, but in no case, less than the Rent during the last month of the prior Lease
term. Promptly upon Lessee’s exercise of the option to extend, Lessee and Lessor shall meet and
attempt to agree on the fair market monthly Rent for the Premises as of the commencement date of
the extended term. In the event the parties fail to agree upon the amount of the monthly Rent for
the extended term prior to commencement thereof, the monthly Rent for the extended term shall be
determined by appraisal in the manner hereafter set forth; provided, however, that in no event
shall the monthly Rent for the extended term be less than in the immediate preceding period.
Annual base rent increases during the extended term shall be four percent (4%) per year. In the
event it becomes necessary under this paragraph to determine the fair market monthly Rent of the
Premises by appraisal, Lessor and Lessee each shall appoint a real estate appraiser who shall be a
member of the American Institute of Real Estate Appraiser (“AIREA”) and such appraisers shall each
determine the fair market monthly Rent for the Premises taking into account the value of the
Premises and the amenities provided by the outside areas, the common areas, and the Building, and
prevailing comparable Rentals in the area. Such appraisers shall, within twenty (20) business days
after their appointment, complete their appraisals and submit their appraisal reports to Lessor and
Lessee. If the fair market monthly Rent of the Premises established in the two (2) appraisals
varies by five percent (5%) or less of the higher Rent, the average of the two shall be
controlling. If said fair market monthly Rent varies by more than five percent (5%) of the higher
Rental, said appraisers, within ten (10) days after submission of the last appraisal, shall appoint
a third appraiser who shall be a member of the AIREA and who shall also be experienced in the
appraisal of Rent values and adjustment practices for commercial properties in the vicinity of the
Premises. Such third appraiser shall, within twenty (20) business days after his appointment,
determine by appraisal the fair market monthly Rent of the Premises taking into account the same
factors referred to above, and submit his appraisal report to Lessor and Lessee. The fair market
monthly Rent determined by the third appraiser for the Premises shall be controlling, unless it is
less than that set forth in the lower appraisal previously obtained, in which case the value set
forth in said lower appraisal shall be controlling, or unless it is greater than that set forth in
the higher appraisal previously obtained in which case the Rent set for in said higher appraisal
shall be controlling. If either Lessor or Lessee fails to appoint an appraiser, or if an
appraiser appointed by either of them fails,

 

 

after his appointment to submit his appraisal within the required period in accordance with the
foregoing, the appraisal submitted by the appraiser properly appointed and timely submitting his
appraisal shall be controlling. If the two appraisers appointed by Lessor and Lessee are unable to
agree upon a third appraiser within the required period in accordance with the foregoing,
application shall be made within twenty (20) days thereafter by either Lessor or Lessee to AIREA,
which shall appoint a member of said institute willing to serve as appraiser. The cost of all
appraisals under this subparagraph shall be borne equally be Lessor and Lessee.

36. Approvals: Whenever in this Lease the Lessor’s or Lessee’s consent is required, such consent
shall not be unreasonably or arbitrarily withheld or delayed. In the event that the Lessor or
Lessee does not respond to a request for any consents which may be required of it in this Lease
within ten business days of the request of such consent in writing by the Lessee or Lessor, such
consent shall be deemed to have been given by the Lessor or Lessee.

37. Authority: Each party executing this Lease represents and warrants that he or she is duly
authorized to execute and deliver the Lease. If executed on behalf of a corporation, that the
Lease is executed in accordance with the by-laws of said corporation (or a partnership that the
Lease is executed in accordance with the partnership agreement of such partnership), that no other
party’s approval or consent to such execution and delivery is required, and that the Lease is
binding upon said individual, corporation (or partnership) as the case may be in accordance with
its terms.

38. Indemnification of Lessor: Except to the extent caused by the sole negligence or willful
misconduct of Lessor or Lessor’s Agents, Lessee shall defend, indemnify and hold Lessor harmless
from and against any and all obligations, losses, costs, expenses, claims, demands, attorney’s
fees, investigation costs or liabilities on account of, or arising out of the use, condition or
occupancy of the Premises or any act or omission to act of Lessee or Lessee’s Agents or any
occurrence in, upon, about or at the Premises, including, without limitation, any of the foregoing
provisions arising out of the use, generation, manufacture, installation, release, discharge,
storage, or disposal of Hazardous Materials by Lessee or Lessee’s Agents. It is understood that
Lessee is and shall be in control and possession of the Premises and that Lessor shall in no event
be responsible or liable for any injury or damage or injury to any person whatsoever, happening on,
in, about, or in connection with the Premises, or for any injury or damage to the Premises or any
part thereof. This Lease is entered into on the express condition that Lessor shall not be liable
for, or suffer loss by reason of injury to person or property, from whatever cause, which in any
way may be connected with the use, condition or occupancy of the Premises or personal property
located herein. The provisions of this Lease permitting Lessor to enter and inspect the Premises
are for the purpose of enabling Lessor to become informed as to whether Lessee is complying with
the terms of this Lease and Lessor shall be under no duty to enter, inspect or to perform any of
Lessee’s covenants set forth in this Lease. Lessee shall further indemnify, defend and hold
harmless Lessor from and against any and all claims arising from any breach or default in the
performance of any obligation to Lessee’s part to be performed under the terms of this Lease. The
provisions of Section 38 shall survive the Lease Term or earlier termination of this Lease with
respect to any damage, injury or death occurring during the Lease Term.

39. Successors And Assigns: The covenants and conditions herein contained shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and
assigns of all of the parties hereto; and all of the parties hereto shall be jointly and severally
liable hereunder.

40. Miscellaneous Provisions: All rights and remedies hereunder are cumulative and not alternative
to the extent permitted by law and are in addition to all other rights or remedies in law and in
equity.

41. Choice of Law: This lease shall be construed and enforced in accordance with the substantive
laws of the State of California. The language of all parts of this lease shall in all cases be
construed as a whole according to its fair meaning and not strictly for or against either Lessor or
Lessee.

42. Entire Agreement: This Lease is the entire agreement between the parties, and there are no
agreements or representations between the parties except as expressed herein. Except as otherwise
provided for herein, no subsequent change or addition to this Lease shall be binding unless in
writing and signed by the parties hereto.

 

 

In Witness Whereof, Lessor and Lessee have executed this Lease, the day and year first above
written.

	 	 	 	 	 	 	 	 	 
	Lessor	 	 	 	Lessee
	Mission West Properties LP	 	 	 	Xicom Technology, Inc.
	By:

	 	Mission West Properties, Inc., G.P.	 	 	 	 	 	 
	 

	 	/s/ Carl E. Berg
	 	 	 	By:
	 	/s/ Walt C Wood
	 

	 	 
	 	 	 	 	 	 
	signature of authorized representative	 	 	 	signature of authorized representative
	 
	 	 	 	 	 	 	 	 
	Carl E. Berg	 	 	 	Walt C Wood
	 	 	 	 	 
	printed name	 	 	 	printed name
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	President
	 	 	 	 	 
	title	 	 	 	title
	 
	 	 	 	 	 	 	 	 
	April, 7, 2000	 	 	 	April 7, 2000
	 	 	 	 	 
	date	 	 	 	date

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